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2015 DIGILAW 1710 (KER)

Hindustan Newsprint Ltd v. Hnl Casual And Contract Workers Centre

2015-12-21

ANIL K.NARENDRAN, P.R.RAMACHANDRA MENON

body2015
JUDGMENT P.R. Ramachandra Menon, J. 1. Would the 'non-renewal' of licence issued to a contractor under the relevant provisions of the Contract Labour (Regulation and Abolition)Act,1970 ['CLRA Act' in short], that too for a short period, grant any automatic/vested right to the workers engaged by the contractor to raise a claim for being treated as employees of the principal employer? Will it amount to a 'dispute' as envisaged under section 2(k) of the Industrial Disputes Act, if any such claim is raised by the workers/Unions and is it obligatory for the Conciliation Officer to have the issue conciliated and on failure, to send a referral report to the Government for causing adjudication? These are the legal issues involved in this appeal. 2. The challenge is mainly against the verdict passed by the learned Single Judge, whereby the claim of the Union /writ petitioner has been accepted, setting aside the impugned order and directing the conciliation authority to have the matter conciliated, despite the fact that the claim for regularisation raised by the Unions earlier, was adjudicated by the Labour Court, Ernakulam in I.D.No. 154/1995 holding it against the workers/Unions. 3. The appellant Company is a wholly owned Government undertaking, engaged in the manufacture of newsprint, having a factory at Newsprint Nagar at Velloor in Kottayam district. So as to cater to the organizational requirements of the appellant, apart from the permanent workers, the Company also entrusts works to various contractors, who engage their own workmen. The 4th respondent herein is one of such contractors. The first respondent Union is stated as representing about 35' casual workers; among the total of more than 200 similar workers engaged by the 4th respondent/contractor in connection with the works in the appellant's establishment. It is contended that the workers were being engaged as above, right from 1982-83, although the Union got registered only in the year 2006. 4. By the year 2008, the first respondent Union came across an amendment of the earlier notification issued by the Central Government, authorising the authorities of the State Government, to function as the Conciliation Officer in respect of establishments like the appellant herein. Subsequently, the said notification was amended by the Central Government as per the notification dated 05.05.2008, whereby the third respondent herein came to be the Conciliation Officer for the Central Government Companies like the appellant. Subsequently, the said notification was amended by the Central Government as per the notification dated 05.05.2008, whereby the third respondent herein came to be the Conciliation Officer for the Central Government Companies like the appellant. The first respondent Union gathered information/data as to the licence particulars of the 4th respondent and as per Ext.P2 dated 04.06.2008 obtained under the RTI Act, it was let known that the 4th respondent was not included in the list of 'licensed contractors' engaged by the appellant Company. It was in the said circumstance, that Ext.P3 complaint was preferred before the third respondent/Conciliation Officer to conciliate the dispute for reguterisation of contract workers engaged by the appellant through the unlicensed contractor/4th respondent. On receipt of Ext.P3, the matter was considered by the third respondent, who issued Ext.P4 reply pointing out that it was not a subject matter to be dealt with as an industrial dispute under section 2 5. The 3rd and 4th respondents in the writ petition (appellant and third respondent herein) filed separate counter affidavits, which are complementary to each other. It was contended by the appellant that there was absolutely no merit or bonafides for the claim mooted by the Union and that the decision rendered by the Apex Court sought to be relied on by the Union in Gujarat Electricity Board, Ukai v. Hind Mazdoor Sabhaf, AIR 1995 SC 1893 and in Secretary, Haryana State Electricity Board v. Suresh and others, AIR 1999 SC 1160 were having no application at all. It was asserted that the issue was squarely covered by the ruling rendered by the Apex Court in Steei Authority of India Limited v. National Union Waterfront Workers, (2001) 7 SCC 1 , whereby it was categorically held that consequence of non-compliance with Section 7 and 12 of the CLRA Act by the principal 'employer' and the 'licensee' respectively would only attract penal provisions under Sections 23 and 25 of the CLRA Act and that, merely since the contractor or the employer had violated any provisions of the Act or Rules, the employees of the contractor would not automatically become the employees of the principal employer. It was also pointed out that the 4th respondent contractor had licence from 30.04.2005 to 29.11.2006, which was renewed upto 29.11.2007, though it could not be renewed for a snort period thereafter. It was also pointed out that the 4th respondent contractor had licence from 30.04.2005 to 29.11.2006, which was renewed upto 29.11.2007, though it could not be renewed for a snort period thereafter. Later, on issuance of a work order, the contractor renewed the licence for the period commencing from 24.07.2008, which was still in force. The competence/authority of the first respondent Union to expose the alleged cause was also challenged, stating that the Union did not represent substantial number of workers engaged by the contractor. 6. The first respondent Union/writ petitioner has filed a reply affidavit. It is conceded in paragraph 4 of the said affidavit that, in the event of abolition of the contract labour by the Board, regularization is not automatic, however contending that the position would be different if the contract is sham or camouflage as held by the Apex Court in Steel Authority's case (cited supra). Referring to three different instances/circumstances dealt with by the Apex Court, it was stated that the demand of the Union was under the second limb, i.e. whether contract was found to be a 'sham' or 'camouflage' under which case, such workers are to be deemed as the workers of the principal employer. But, it has to be observed that, such a case appears to be a 'new one', as no such plea is raised anywhere in Ext.P3 complaint or in the writ petition. 7. After hearing both the sides, referring to the counter affidavit filed by the 4th respondent, it was observed by the learned Single Judge that the 4th respondent was having valid licence under Section 12(1) of the CLRA Act issued by the Asst. Labour Officer (Central) Thiruvananthapuram, with effect from 01.11.2005 as borne by Ext.R4(l), which was renewed as per Ext.R4(2) on 02.02.2006 also giving sanction to increase the number of workers to be engaged from 222 to 246. Since it could not be renewed before its expiry ie. before 31.10.2007, the 4th respondent contended that he had applied for a fresh licence to run the contract and that he obtained such fresh licnece vide Ext.R4(3) on 24.07.2008. Subsequently, on explaining the reason for the delay before the concerned authority, the original licence was got renewed vide Ext.R4(5) on 24.07.2009 . before 31.10.2007, the 4th respondent contended that he had applied for a fresh licence to run the contract and that he obtained such fresh licnece vide Ext.R4(3) on 24.07.2008. Subsequently, on explaining the reason for the delay before the concerned authority, the original licence was got renewed vide Ext.R4(5) on 24.07.2009 . However, it was observed in paragraph 6 of the judgment that, in view of the order proposed to be passed, it was not necessary to deal with the rival contentions of both the sides and it was noted in the next paragraph, that Ext.P4 issued by the third respondent herein did not contain reasons and hence it was liable to be interfered on that sole ground. The learned Single Judge observed in the next sentence, that the position could be interpreted/construed in two ways and since the name of the 4th respondent was not included in the list of licenced contractors of the appellant as discernible from Ext.P2, the workers/Union could contend that they had become employees of the principal employer and that Ext.R4(4) and R4(5) were only a camouflage to deny the benefit to the contract workers, which in fact was the contention of the writ petitioner/Union. 8. Referring to the decision of the Supreme Court in Steel Authority's case, as noted in paragraph 10 of the judgment, it was observed that, if at all the contractor of the employees had violated any provisions of the CLRA Act/Rules , the writ court in proceedings under Article 226 of the Constitution of India, could not issue any mandamus deeming the contractors' labourers, as having become the employees of the principal employer. But whether they had become employees of the principal employer in the course of time and whether Exts. R4(4) or R4{5) were obtained to deprive the right accrued by the contract labourers were held as questions of facts and as such, the same suggested existence of an 'industrial dispute', which was required to be conciliated under the relevant provisions of law. It was accordingly, that Ext.P4 was set aside and the Conciliation Officer/third respondent herein was directed to take appropriate steps based on Ext.P3 petition within the time as prescribed therein, thus leading to the judgment which is under challenge in this appeal. 9. Heard Mr. E.K. Nandakumar, the learned Sr. Counsel appearing for the appellant and Mr. It was accordingly, that Ext.P4 was set aside and the Conciliation Officer/third respondent herein was directed to take appropriate steps based on Ext.P3 petition within the time as prescribed therein, thus leading to the judgment which is under challenge in this appeal. 9. Heard Mr. E.K. Nandakumar, the learned Sr. Counsel appearing for the appellant and Mr. K.S.Madbusoodanan, the learned Counsel appearing for the first respondent Union and also the learned Counsel appearing for the 4th respondent/contractor, besides the learned ASG for the second respondent/Union of India. 10. It is brought to the notice of this Court that the petitioner Union had approached this Court earlier by filing W.P (C) 15399 of 2009, on being aggrieved of a notice issued oy the Labour Commissioner, Govt.of Kerala, Thiruvanantbapuram proposing to initiate conciliation proceedings for regularisation of casual/contract workers. According to the writ petitioner/Union the Labour Commissioner, State of Kerala had no jurisdiction in this regard on the date of issuance of the said notice. 8y virtue of the supersession of the earlier notification issued by the Central Government by the subsequent notification dated 05.05.2008 (produced as Ext.Pl and P2 in the said writ petition), the third respondent herein became the conciliation officer and the State Government ceased to have jurisdiction in respect of" the subject matter involved. Relegating the writ petitioner to move the Labour Commissioner with reference to the relevant notification issued by the Central Government, in turn directing the Labour Commissioner, Govt.of Kerala to consider and deckle the same, the writ petition was closed as evident from Ext. PI judgment produced along with the present writ petition. 11. During the course of hearing, a copy of the award passed by the Labour Court, Ernakulam on 24.01.2004 in I.D.No. 154 of 1995 was placed for perusal of this Court, in support of the contention raised by the appellant that the issue was considered earlier, holding that no right of regularisation was there for the casual workers in the appellant's estabishment for violation of the provisions of the CLRA Act, if any, and this being the position, the matter was covered by the principles of 'res judicata'. The workmen involved in the said case were being represented by 'six' different Trade Unions. The issue referred for adjudication was "whether the casual contract workers engaged in Hindustan Newsprint Limited are eligible to get regularisation? The workmen involved in the said case were being represented by 'six' different Trade Unions. The issue referred for adjudication was "whether the casual contract workers engaged in Hindustan Newsprint Limited are eligible to get regularisation? If not, what relief they are entitled to?" 12. M.W.I was examined from the side of the Management Company and several documents were marked from Ex.Ml to M25A. Three witnesses were examined from the part of the Union as WW1 to WW3 and Exts. Wl to W26 were marked . It was observed by the Labour Court that the object of the Act was to regulate employment of the contract labourers and provide for its abolition in certain circumstances and for matters connected therewith. It was further observed that the consequence of non-registration of the establishment under the 'CLRA Act' was only by way of prosecution of the violator under Section 23 and 25 of the CLRA Act and that there cannot be any automatic absorption of the contract labourers, for violation of the provisions of the Act including non-registration of the establishment under the Act. It was also noted that the Union had no case that the Management had no registration under the CLRA Act or that the contract between the principal employer and the contractor was 'sham'. Based on the pleadings and evidence let in, it was held that the first Management/principal employer had proved that they were engaging contract labourers based on the agreement entered with the contractors and that such contract labourers were not the employees of the principal employer/Management Company and that there was no employer -employee relationship in between. Referring to the point to be considered as to whether the contract was genuine or a camouflage, with reference to the decision rendered by the Supreme Court in Secretary, HSEB v. Suresh and others (1999) 3 SCC 601 and in Municipal Corporation of Greater Mumbai v. K.V.Shramik Sanqh & others, (2002) 4 SCC 609 , it was observed by the Labour Court in paragraph 22 of the award, that the Trade Unions had not pleaded that the principal employer did not possess registration and that the contractors were having no licence under the 'CLRA Act' and that the arrangement was not genuine one or a mere camouflage. As a matter of fact, the registration under CLRA Act was obtained by the first management/prl. As a matter of fact, the registration under CLRA Act was obtained by the first management/prl. employer as early as in the year 1977, i.e. at the time of setting up of the Committee itself. After analysing the evidence adduced by both the sides, it was concluded that the casual workers represented -by the Unions were contract labourers working under the 'Second Management1 and that they were being engaged for work under the principal employer/first management company based on the valid contract executed between the principal employer and the contractor and hence that they were not entitled for regularisation under the principal employer. It was accordingly that an award was passed holding that the workers were not entitled to get regularisation, which in turn has become final. 13. Coming to the instant case, there is an observation by the learned single Judge (in paragraph 10 and elsewhere of the judgment) as if the case of the writ petitioner Union was that there was some disputed question of fact as to the nature of engagement, so as to have it categorised as a 'sham contract'. We respectfully disagree with the said observation, as no such case is ever mooted by the petitioner Union anywhere in Ext.P3 complaint or in the writ petition. Such a vague plea comes up for the first time only as given in 'paragraph 4' of the reply affidavit dated 04.09.2010. The point to be considered is whether the non renewal of a licence by the contractor could be branded as an instance to deem the contract as a sham one or camouflage. 14. It is the specific case of the appellant and 4th respondent/contractor that the appellant Company, apart from engaging permanent workers, was also engaging casual employees through registered contractors having licence under the 'CLRA Act'. The 4th respondent was one of such contractors, who had obtained a licence in terms of Section 12 of the Act in the year 2005 itself and the same was valid till 29.11.2007. Since it could not be renewed immediately on expiry, a new licence was applied for and obtained from 24.07.2008. The competent authority granted the renewal of Ext.R4(l) licence, as per Ext.R4(2) dated 02.02.2006, also permitting to increase the number of workers to be engaged from 222 to 246. Since it could not be renewed immediately on expiry, a new licence was applied for and obtained from 24.07.2008. The competent authority granted the renewal of Ext.R4(l) licence, as per Ext.R4(2) dated 02.02.2006, also permitting to increase the number of workers to be engaged from 222 to 246. Ext.R4(3) is the 'fresh licence' issued on 24.7.2008, as the original licence could not be renewed before the expiry as mentioned above and since licence was necessary to have any work assigned by the appellant/principal employer. Subsequently, on substantiating the facts and figures including the delay, the original licence itself was renewed by the competent authority vide Ext.R4(5) dated 24.07.2009. Thus, it is evident that earnest efforts were being made by the 4th respondent to get the licence renewed, though initially there was a short break from 30.11.2007 to 24.07.2008. The point to be considered is whether such break would make the arrangement a 'sham' one or a camouflage. 15. If some clandestine arrangement was being made by the principal employer, showing the name of some stranger as the licencee (as a name lender) or if any engagement of workers was beng made through unlicensed contractor, it could be said that it is a 'sham contract' or a 'camouflage'. The instance of engaging workers through contractors in the appellant's establishment for the past several years is an established fact and the workers represented by the writ petitioner's Union, who were engaged by the 4th respondent/contractor, were admittedly working for the past several years. The 4th respondent was having licence under Section 12 of the CLRA Act from 2005 and the same was being renewed from time to time, as evident from Ext.R4(l), R4(2), R4(4) and R4(5). As it stands so, such engagement by the contractor for performing work in the establishment of the appellant Company deploying the workers represented by writ petitioner's Union could never be termed as a clandestine one; nor could the contract be called as a sham one or camouflage. Non-renewal of the licence for a short span; i.e. from 30..11.2007 to 24.07.2008 cannot lead to any inference that the nature of engagement was a bogus or fictitious one; more so, when the original licence itself was renewed by the competent authority subsequently. Non-renewal of the licence for a short span; i.e. from 30..11.2007 to 24.07.2008 cannot lead to any inference that the nature of engagement was a bogus or fictitious one; more so, when the original licence itself was renewed by the competent authority subsequently. This being the position, the attempt made by the writ petitioner Union, through a vague statement in paragraph 4 of the reply affidavit, that the arrangement was a sham one, does not inspire the confidence of this Court; more so when no such plea was ever raised either in Ext.P3 complaint or in the writ petition. The factual position stands answered against the writ petitioner Union. 16. The next point to be considered is whether there is any legal provision or binding precedent in support of the case projected by the writ petitioner Union to hold that, if there is an infringement of Section 12 of the CLRA Act (stipulating the necessity to have licence for the contractor), it will enable the employees engaged by unlicensed contractor to be deemed as the employees of the principal employer. Reliance is sought to be placed by the petitioner Union on decisions rendered by the Supreme Court in Gujarat Electricity Board, Ukai v. Hind Mazdoor Sabha, AIR 1995 SC 1893 and in Secretary, Haryana State Electricity Board v. Suresh and others, AIR 1999 SC 1160 . Reference is also made on the recent decision rendered by.the Supreme Court in Ariane Orqachem Private Limited v. Wyeth Employees Union and others, ( 2015) 7 SCC 561 to the effect that the conciliating authority cannot adjudicate the dispute and when there is a disputed question of fact, it is to be referred to the adjudicating authority. As against this, reliance placed by the appellant Company is on the decision rendered by the Apex Court in Dena Nath v. National Fertilisers Ltd and others, 1992-1- LLJ 289, which has been affirmed/approved by the Constitution Bench of the Supreme Court in Steel Authority of India and others v. National Union Waterfront Workers and others, 2001(7) SCC 1 holding that violation of Section 12 of the CLRA Act, if at all any, would only attract penal consequence under Section 23 and 25 of the CLRA Act and that there will be no automatic cadre change, making them as employees of the principal employer. 17. Coming to the statutory prescription. 17. Coming to the statutory prescription. Section 12 of the CLRA Act reads as follows: "12. Licensing of contractors: (1) With effect from such date as the appropriate Government may, by notification in the Official Gazette, appoint, no contractor to whom this Act applies, shall undertake or execute any work through contract labour except under and in accordance with a licence issued in that behalf by the licensing officer. (2) Subject to the provisions of this Act, a licence under sub-section (1) may contain such conditions including, in particular, conditions as to hours of work, fixation of wages and other essential amenities in respect of contract labour as the appropriate Government may deem fit to impose in accordance with the rules, if any, made under section 35 and shall be issued on payment of such fees and on the deposit of such sum, if any, as security for the due performance of the conditions as may be prescribed. ". By virtue of the above provision, it is very much obligatory for the contractor who is engaged by the principal employer to have applied and obtained licence to engage the workers in the establishment of the principal employer to which the Act applies. Then the question is whether the statute moots any proposition that , if for any reason the contractor has not obtained licence or fails to renew the licence for the relevant period, it would be deemed that the workers engaged by the contractor under such circumstance would automatically be considered as workmen of the principal employer. No sucn enabling provision is seen in the statute nor is it cited from the part of the first respondent Union. On the contrary, the fact that such regularisation is not automatic is virtually conceded by the first respondent Union, as given in paragraph 4 of their reply affidavit ; however adding that it has to be presumed so, in the case of a 'sham contract'. It is however asserted in the writ petition and also before us, that such deemed regularisation is possible in the light of the ruling rendered by the Apex Court in AIR 1995 SC 1893 and AIR 1999 SC 1160 (cited supra). With regard to the case dealt with by the Supreme Court in AIR 1995 SC 1893 , the common question of law considered was in relation to the abolition of contract system of labour. With regard to the case dealt with by the Supreme Court in AIR 1995 SC 1893 , the common question of law considered was in relation to the abolition of contract system of labour. Referring to the sequence of events, the Apex Court observed that the matter referred to, for adjudication by a joint reference under Section 10(2) of the ID Act contained the terms of reference as given below : "(I) Whether the workers whose services are engaged by the contractors, but who are working in the Thermal Power Station of Gujarat Electricity Board at Ukai, can legally claim to be the employees of the G.E.B? (2) If yes, whether such employees can claim the following rights which the other employees of Gujarat Electricity Board are already enjoying ? a. weekly off, b. sick leave, c. C.L., d. Earned or Privilege Leave, e. Maternity Leave and other benefits to female employees , f. -Gratuity, g. Provident Fund, h. Bonus and i. Wage scales etc. (3) if they are not held to be the employees of Gujarat Electricity Board, what are their rights in respect of the matters mentioned in (2) above, against their respective employers? (4) Whether such employees prove that during the years 1979, 1980 and 1981 they or any of them were made to work overtime. If yes, what would be due to them on that account andfrom whom (5) Whether such employees are entitled to revision of their present wages? If yes, what should be their revised wages and from which date? (6) Whether the said employees prove that so far as their services are concerned, there have been breaches of any of the provisions of the Factories Act, Employees Provident Fund Act, Maternity Benefits and Workmen's Compensation Act. If yes what relief can be legally given to them in that respect and from which date ? " After considering the rival contentions, the questions which fell for consideration in the batch of appeals, which was found as common in all the cases were formulated as given below : "(a) Whether an industrial dispute can be raised for abolition of the contract labour system in view of the provisions of the Act? (b) If so, who can raise such dispute? (b) If so, who can raise such dispute? (c) Whether the Industrial Tribunal or the appropriate Government has the power to abolish the contract labour system/ and (d) In case the contract labour system is abolished, what is the status of the erstwhile workmen of the contractors? " After detailed discussion with reference to the provisions of law and the precedents, the Apex Court considered the question as to who can raise an industrial dispute for absorption of the workers of the ex-contractor by the principal contractor, as dealt with in 'paragraph 16' of the verdict. The Court observed that, if the contract is not genuine, the workmen of the contractor themselves can raise such dispute, but the situation will be obviously different when the labour contract is genuine and there is no relationship of employer-employee between the principal employer and workmen of the contractor. It was also added that no industrial dispute can be raised by the workers of the contractor either before or after the contract labour is abolished by the appropriate Government under Section 10 of the CLRA Act. But the hurdle will disappear, if it is raised by the direct workmen of the principal employer who have (i) a community of interest with a contract labour; (ii) a substantial interest in the subject matter of dispute; and (iii) when the employer can grant the relief, as already held in the relevant decision cited therein. The conclusion on the discussion is summarised in 'paragraph 18 of the verdict which is extracted below: "J8. Our conclusions and answers to the questions raised are, therefore, asfollows:- (i) In view of the provisions of Section 10 of the Act, it is only the appropriate Government which has the authority to abolish genuine labour contract in accordance with the provisions of the said Section. No court including the industrial adjudicator had jurisdiction to do so. (ii) if the contract is sham or not genuine, the workmen of the so called contractor can raise an industrial dispute for declaring that they were always the employees of the principal employer and for claiming the appropriate service conditions . When such dispute is raised, it is not a dispute for abolition of the labour contract and hence the provisions of Section 10 of the Act will not bar either the raising or the adjudication of the dispute. When such dispute is raised, it is not a dispute for abolition of the labour contract and hence the provisions of Section 10 of the Act will not bar either the raising or the adjudication of the dispute. When such dispute is raised, the industrial adjudicator has to decide whether the contract is sham or genuine. It is only if the adjudicator comes to the conclusion that the contract is sham, that he will have jurisdiction to adjudicate the dispute. If however, he comes to the conclusion that the contract is genuine , he may refer the workmen to the appropriate Government for abolition of the contract labour under Section 10 of the Act and keep the dispute pending. However, he can do so if the dispute is espoused by the direct workmen of the principal employer. If the workmen of the principal employer have not espoused the dispute , the adjudicator after coming to the conclusion that the contract is genuine, has to reject the reference, the dispute being not an industrial dispute within the meaning of Section 2(k) of the ID Act. He will not be competent to give any relief to the workmen of the erstwhile contractor even if the labour contract is abolished by the appropriate Government under Section 10 of the Act. (iii) If the labour contract is genuine a composite industrial dispute can still be raised for abolition of the contract labour and their absorption. However the dispute, will have to be raised invariably by the direct employees of the v principal employer. The industrial adjudicator, after receipt of the reference of such dispute will have first to direct the workmen to approach the appropriate Government for abolition of the contract labour under Section 10 of the Act and keep the reference pending. If pursuant to such reference , the contract labour is abolished by the appropriate Government, the industrial adjudicator will have to give opportunity to the parties to place the necessary material before him to decide whether the workmen of the erstwhile contract should be directed to be absorbed by the principal employer, how many of them and on what terms, if, however, the contract labour is not abolished, the industrial adjudicator has to reject the reference.. iv) Even after the contract labour system is abolished, the direct employees of the principal employer can raise an industrial dispute for absorption of the ex-contractor's workmen and the adjudicator on the material placed before him can decide as to who and how many of the workmen should be absorbed and on what terms. " From the above, it is crystal clear that the deemed regularisation is possible only in the case of a sham contract or the nature of a engagement is a clandestine one and such inference cannot be drawn if the contract is a genuine one. However, the dispute will have to be invariably raised by the direct employees of the principal employer, if the contract is a genuine one and not by the workers of the contractor or the trade union representing them. 18. In the case of Secretary, Haryana State Electricity Board v. Suresh and others, AIR 1999 SC 1160 , the Apex Court referred to doctrine of lifting of veil and applied the same to see whether the contract system was a mere 'camouflage' or not. Based on the materials on record, a finding was arrived on fact, that it was not a case in which there was any genuine contract labour system prevailing in the Board and that the contractor named therein was a mere name lender. It was accordingly held, that the finding rendered by the Labour Court in this regard , as upheld by the High Court granting the relief to the workers did not require any interference. The observation in 'paragraph 19' in this regard are relevant and the same is reproduced below: "19. It has to be kept in view that this is not a case in which it is found that there was any genuine contract labour system prevailing with the Board. If it was a genuine contract system, then obviously, it had to be abolished as per Section 10 of the Contract Labour Regulation and Abolition Act after following the procedure laid down therein. However, on the facts of the present case, it was found by the Labour Court and as confirmed by the High Court that the so called contractor Kashmir Singh was a mere name lender and had procured labour for the Board from the open market. He was almost a broker or an agent of the Board for that purpose. However, on the facts of the present case, it was found by the Labour Court and as confirmed by the High Court that the so called contractor Kashmir Singh was a mere name lender and had procured labour for the Board from the open market. He was almost a broker or an agent of the Board for that purpose. The Labour Court also noted that the Management witness Shri A.K. Chaudhary also could not tell whether Shri Kashmir Singh was a licensed contractor or not. That workmen had made a statement that Shri Kashmir Singh was not a licensed contractor. Under these circumstances, it has to be held that factually there was no genuine contract system prevailing at the relevant time wherein the Board could have acted as only the principal employer and Kashmir Singh as a licensed contractor employing labour on his own account. It is also pertinent to note that nothing was brought on record to indicate that even the Board at the relevant time, was registered as principal employer under the Contract Labour Regulation and Abolition Act. Once the Board was not a principal employer and the so called contractor Kashmir Singh was not a licensed contractor under the Act, the inevitable conclusion that had to be reached was to the effect that the so called contract system was a mere camouflage , smoke and a screen and disguised in almost a transparent veil which could easily be pierced and the real contractual relationship between the Board, on the one hand and the employees, on the other could be clearly visualised. " The question is, whether the circumstance contemplated by the Apex Court in AIR 1999 SC 1160 is available in the instant case to hold (c) that the contract was a "sham one', for want of licence for the 4th respondent for the period from 30.11.2007 to 24.07.2008. The decision sought to be relied on by the appellant is mainly the verdict passed by the Apex Court in Dena Nath v. National Fertilisers Ltd and others, 1992-1- LLJ 289. The decision sought to be relied on by the appellant is mainly the verdict passed by the Apex Court in Dena Nath v. National Fertilisers Ltd and others, 1992-1- LLJ 289. The question considered by the Supreme Court as given in 'paragraph 2' was that, if the principal employer did not get registration under Section 7 of the CLRA Act and/or the contractor does not get a licence under section 12 of the CLRA Act, whether the persons so appointed by the principal employer through the contract would be deemed to he the direct employees of the principal employer or not?. 19. The Apex Court observed with reference to the relevant provisions of law, that the 'CLRA Act' serves two fold purposes.-(l) regulation of conditions of service of the workers employed by the contractor who is engaged by a principal employer and (2) also provides for the appropriate Government abolishing contract labour altogether, in certain notified processes, operation or other works in any establishment; simultaneously making it clear that neither the Act nor the rules framed by the Central Government or by any appropriate Government proyide that, upon abolition of contract labour, the labourer would be directly absorbed by the principal employer. The Court proceeded further to consider the question as to, when the Act does not provide for such a measure, but contains itself by merely regulating the service of conditions of contract labour, can the Court in a proceeding under Article 226 of the Constitution of India, where the prl. employer or the licenced contractor violates the provision of Sec. 9 or 12 respectively, direct that the contract labourer so employed would become directly the employee of the principal employer. 20. After detailed discussion on the above question, with reference to various judgments rendered at different points of time, it was observed in 'paragraph 20 as follows: "20. It is not for the High court to inquire into the question and decide whether the employment of contract labour in any process, operation or in any other work in any establishment should be abolished or not. It is a matter for the decision of the Government after considering the matter, as required to be considered under Section 10 of the Act. It is a matter for the decision of the Government after considering the matter, as required to be considered under Section 10 of the Act. The only consequences provided in the Act where either the principal employer or the labour contractor violates the provisions of Section 9 and 12 respectively is the penal provision, as envisaged under the Act for which reference may be made to Sections 23 and 25 of the Act. We are thus of the firm view that in proceedings under Article 226 of the Constitution merely because contractor or the employer had violated any provision of the Act or the rules, the Court could not issue any mandamus for deeming the contract labour as having become the employees of the principal employer. We would not like to express any view on the decision of the Karnataka High Court or the Gujarat High Court (supra) since these decisions are under challenge in this court, but we would place on record that we do not agree with the afore quoted observations of the Madras High Court about the effect of non-registration of the principal employer or the non-licensing of the labour contractor nor with the view of Bombay High Court in the aforesaid case. We are of the view that the decisions of the Kerala High Court and Delhi High Court are correct and we approve the same." 21. From the above, it is clear that the view expressed by this Court as per the judgment in P.Karunakaran v. the Chief Commissioner,Superintendent, Southern Railway and others, 1989 1 LLJ 8 was approved as the correct law (as ordered by the Delhi High Court as well.). 22. There was occasion for the Apex Court to have the issue considered once again , when the case filed by the Steel Authority of India Ltd and others came up for consideration -before the Constitution Bench, whereupon -the entire case law on the subject was discussed in detail as borne by the judgment reported in [{2001) 7 SCC 1]. It was specifically held by the Bench that the provisions of the Contract Labour ( Regulation and Abolition) Act, 1970 do not imply the concept of 'automatic absorption' of contract labour by the principal employer, on issuance of the abolition notification. The rights and liberties of the parties concerned have been laid down in crystal clear terms. It was specifically held by the Bench that the provisions of the Contract Labour ( Regulation and Abolition) Act, 1970 do not imply the concept of 'automatic absorption' of contract labour by the principal employer, on issuance of the abolition notification. The rights and liberties of the parties concerned have been laid down in crystal clear terms. Reference was also made to the verdict passed by a 'Two Judges Bench' of the Apex Court in Dena Nath's case (cited supra) and 'Three Judges Bench' in The Standard Vacuum Refining Co. of India Ltd. v. Their Workmen and another, AIR 1960 SC 948 observing that infringement of the provisions of the Act would only attract the penal consequences under Section 23 and 25 of the CLRA Act and that the High Court, in exercise of the power under Article 226 of the Constitution, cannot issue a writ of mandamus for deeming the contract labourer as having become the employees of the principal employer . 23. Coming back to the case in hand, the point to be considered is whether any 'valid industrial dispute' was raised by the first respondent Union before the third respondent, as envisaged under Section 2(k) of the I.D.Act, to have it considered and conciliated by such authority and whether the learned Single Judge was right in setting aside Ext.P4 reply given by the third respondent Conciliation officer holding that no dispute was in existence and that violation of the provisions of the Act was to be dealt with separately, calls for any interference. 24. As pointed out already, this is a case where the work was being assigned by the appellant/principal employer to the contractors like the 4th respondent and the latter used to execute the work by engaging their own workers. It has also been let in evidence that the 4th respondent was having proper licence under the CLRA Act right from 2005 till 29.11.2007 and the same was subsequently renewed after a short break from 30.11.2007 to 24.07.2008. It is with reference to the said break in licence, that the claim has been mooted by the first respondent Union seeking regularisation of the workers as the employees of the principal employer/appellant, by setting the machinery under the conciliation authority in motion. It is with reference to the said break in licence, that the claim has been mooted by the first respondent Union seeking regularisation of the workers as the employees of the principal employer/appellant, by setting the machinery under the conciliation authority in motion. Going by the judgments of the Supreme Court already discussed above, no vested right is there for the workers of the contractor or the Union representing them to put up such a claim, unless they have got a case that engagement through contractor having no licence was a 'sham' contract. As mentioned already, no such case was ever put up by the first respondent Union in Ext.P3 complaint, nor was there any such plea in the writ petition . This being the position, the idea and understanding of the first respondent Union is thoroughly wrong and misconceived and hence the interference made by the learned single Judge on mistaken fact is not liable to be sustained. This is more so, when the claim for regularisation by the workers of the contractors represented by different Unions was a subject matter of dispute before the Labour Court, Ernakulam in I.D.Nol54/1995, pursuant to failure report submitted by the conciliation officer and after threadbare analysis of the facts and figures, an award was passed by the Labour Court holding that they were not entitled to have any relief. This aspect has not been considered by the learned Single Judge while intercepting Ext.P4 and directing the Conciliation Officer to initiate steps for conciliation. 25. It is true that the conciliation officer is having no power to adjudicate the issue; more so when there are disputed questions of fact as made clear by the Apex Court on many occasions, even as per the recent decision in (2015) 7 SCC 561 (cited supra). It is also true that a reference order made by the incompetent authority is not correct or sustainable . Admittedly, as per the earlier Notification issued by the Central Government, the State /authorities of the State were competent to deal with the disputes, if any, in relation to the affairs of the appellant establishment. The notification came to be varied only subsequently on 05.05.2008, after which the third respondent came to be the conciliation officer in relation to the establishment like the appellant. The notification came to be varied only subsequently on 05.05.2008, after which the third respondent came to be the conciliation officer in relation to the establishment like the appellant. This being the position, there is nothing wrong or irregular with regard to the reference already ordered by the State, leading to adjudication of I.D.154 of 1995 before the Labour Court, Ernakulam, which was much prior to the change in circumstance. The only point to be considered is whether there is any valid dispute under Section 2(k) of the I.D Act to direct the conciliation officer to initiate the proceedings. The said question can only be answered in the 'negative', for the discussion made hereinbefore and as such the reliance sought to be placed on (2015)7 SCC 561 (cited supra) by the first respondent Union does not support their case in any manner. The change in the authority for conciliation, pursuant to the subsequent notification dated 05.05.2008 issued by the Central Government is of no significance and it does not support their case. In the above facts and circumstances, the appellant is entitled to succeed. The judgment passed by the learned Single Judge is set aside. Appeal stands allowed. No cost.