REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.   7872         OF 2011 [Arising out of SLP(C)No. 369 of 2010)  

M/s. Delhi International Airport Pvt. Ltd. …Appellant

Versus

Union of India & Others …Respondents WITH

CIVIL APPEAL NO.     7873       OF 2011 [Arising out of SLP(C)No. 377 of 2010)  

M/s. Delhi International Airport Limited  versus  Indira Gandhi Airport   TDI Karamchari Union & Ors.

WITH CIVIL APPEAL NO.   7874         OF 2011

[Arising out of SLP(C)No. 1713 of 2010)  Airport Authority of India  versus  Indira Gandhi Airport TDI Karamchari   

Union & Ors. WITH

CIVIL APPEAL NO.   7875         OF 2011 [Arising out of SLP(C)No. 1814 of 2010)  

Airport Authority of India  versus  Union of India & Ors.

WITH CIVIL APPEAL NO.   7876         OF 2011

[Arising out of SLP(C)No. 10647 of 2010)  Indira Gandhi Airport TDI Karamchari Union versus  Union of India &  

Ors. WITH

CIVIL APPEAL NOS.  7878-7879          OF 2011 [Arising out of SLP(C)Nos. 9757-9758 of 2010)  

Airport Authority of India versus  Union of India & Ors.

J U D G M E N T Dalveer Bhandari, J.

1. Leave granted in all the Special Leave Petitions.

2. These appeals emanate from the judgment of  the High  

Court of Delhi delivered in LPA No.38 of 2007, LPA No.1065 of  

2007, Writ Petition (C) No.139 of 2008 and Writ Petition (C)  

No.6763 of 2008 on December 18, 2009.

3. The  short  question  which  arises  for  consideration  in  

these  appeals  is  whether  the  Notification  dated   26th July,  

2004 issued by the Central Government under Section 10 (1)  

of  the Contract Labour (Regulation and Abolition)  Act, 1970  

(for short, ‘CLRAA’) prohibiting employment of contract labour  

of  trolley  retrievals  in  the  establishment  of  the  Airport  

Authority  of  India  (for  short,  ‘AAI’)  at  the  Indira  Gandhi  

International Airport and Domestic Airport at Delhi  would be  

applicable  to  the  Delhi  International  Airport  Private  Limited  

(for short, ‘DIAL’) or not?

4. This  judgment  would  decide  these  appeals  preferred  

before this Court against the following Letters Patent Appeals  

and Writ Petitions decided by the High Court:

a) Indira Gandhi International  Airport  TDI Karamchari    Union    v.   Union of  India and others  -  LPA No.38 of    2007  

This Letters Patent Appeal was filed against the judgment  

of the learned Single Judge dated 28th November, 2006 in Writ  2

Petition  (C)  No.15156  of  2006.   The  workers’  Union  had  

preferred the writ petition for seeking implementation of the  

Notification  of  prohibition  dated  26th July,  2004  and  for  

absorption  in  service  amongst  other  things.   The  learned  

Single Judge took notice of the fact that from 4th April, 2006 a  

new private entity, DIAL had taken over the Airports (Domestic  

and International).  Hence at the airport, there was no longer  

any establishment  of AAI existing but a new establishment of  

DIAL was operating due to which the notification dated 26th  

July, 2004, prohibiting the engagement of contract labour in  

trolley   retrieval  activity  in  the  establishment  of  AAI  at  the  

Delhi Airports could not automatically apply to the new entity,  

DIAL and a new notification by the appropriate  government  

would have to be issued.

b) Union of India   v.   Indira Gandhi International Airport    TDI Karamchari Union - LPA No.1065 of 2007  

This Letters Patent Appeal was preferred by the Union of  

India against the learned Single Judge’s judgment dated 28th  

November, 2006 passed in Writ Petition (C) No.15156 of 2008  

on a very limited point of certain observation in the judgment.

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c) Airports  Authority  of  India  v.  Union  of  India  Writ    Petition (C) No.6763 of 2008

AAI  after  getting  permission  of  the  High  Powered  

Committee  to  go  ahead  with  the  litigation  challenged  the  

notification  dated  26th July,  2004  by  filing  the  said  writ  

petition.

d) Delhi International Airports P.Ltd. v. Union of India    Writ Petition  (C) No.139 of 2008

DIAL  had  preferred  this  writ  petition  challenging  the  

order of the Chief Labour Commissioner, Government of India  

dated 24th September, 2007 by which the Central Government  

was held to be the ‘appropriate government’ for DIAL for the  

purposes of Industrial Disputes Act, 1947 (hereinafter referred  

to as “ID Act”) and CLRAA. The order dated 22nd November,  

2007 of Chief Secretary, Government of NCT of Delhi by which  

all documents concerning DIAL were directed to be shifted to  

the Central Government machinery was also impugned.

5. Both the writ petitions of AAI and DIAL were heard and  

disposed of by the Division Bench of the High Court along with  

these LPAs by the impugned judgment.

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BRIEF FACTS:

6. 136 workers were employed by the contractor M/s. TDI  

International Pvt. Ltd. to do the work of trolley retrieving at the  

Domestic and at the International Airport at Delhi in the year  

1992.  In  view  of  the  perennial  nature  of  the  work,  the  

workmen approached the Contract Labour Court for abolition  

of contract labour system and for their absorption as regular  

employees.  AAI  came  into  force  merging  the  International  

Airport Authority Act, 1971 and the National Airport Authority  

Act,  1985.  On  26th July,  2004  the  Central  Government  

accepted the recommendations of the Contract Labour Court  

and issued notification dated 26th July, 2004 abolishing the  

contract labour system.   

7. This notification was challenged by AAI before the High  

Court of Delhi.  Taking note of the ONGC judgment reported in  

Oil  and  Natural  Gas  Commission  and  Another  Vs.   

Collector  of  Central  Excise 1992 Suppl.  (2)  SCC 432 the  

High Court vide judgment dated 3rd February, 2005 held that  

the  present  proceedings  cannot  be  proceeded  with  till  the  

matter  is  resolved  by  the  High  Powered  Committee  (HPC).  

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Accordingly, the matter went to the HPC and the notification  

was not given effect to.

8. Meanwhile,  136  workers  who  were  engaged  as  Trolley  

retrievers  by  the  contractor  M/s.  TDI  International  Private  

Limited working at the airport since 1992 were removed from  

service  on 5th December,  2003 as  the  contract  of  M/s.  TDI  

International Private Limited had come to an end and a new  

contractor  Sindhu  Holdings  came  in  its  place.  These  136  

members  filed  Writ  Petition  No.15156  of  2006  before  the  

learned Single Judge of  the High Court of Delhi praying for  

their  absorption  in  service  as  regular  employees  and  for  

implementation of the notification dated 26th July, 2004.

9. The learned Single Judge of the High Court after hearing  

the parties including DIAL vide judgment dated 28th November,  

2006  held  that  the  establishment  of  AAI  is  no  longer  in  

existence and has changed.  As such, the notification dated  

26th July, 2004 cannot be applied to the new entity DIAL.  The  

appropriate  government  shall  have  to  issue  a  fresh  

notification.  Consequently, the Writ Petition filed by the said  

136 workers stood dismissed by the learned Single Judge of  

the High Court.

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10. Indira  Gandhi  International  Airport  TDI  Karamchari  

Union preferred LPA No.38 of 2007 against the judgment of  

the learned Single Judge.  The Union of India also preferred  

LPA  No.1065  of  2007  against  the  judgment  of  the  learned  

Single Judge.

11. During the pendency of these LPAs, an order dated 24th  

September,  2007  was  passed  by  the  Chief  Labour  

Commissioner,  Government  of  India  holding  that  the  

appropriate government for DIAL is the Central Government.  

By order dated 22nd November, 2007 the documents and file  

relating to DIAL were sent to the Central Government.  These  

orders were challenged by DIAL in Writ Petition (C) No.139 of  

2008.   After  getting  the  permission,  AAI  filed  another  Writ  

Petition (C) No.6763 of 2008 challenging the said notification  

on merit.   The Division Bench of  the  High Court  heard all  

these matters together and passed the impugned order of 18th  

December, 2009.   

12. The review petition was preferred by the Union of India  

which was decided on 12th March,  2010 by the High Court  

modifying para 61 of  the  impugned judgment.   Against  the  7

impugned judgment of the Division Bench of the High Court,  

two appeals were preferred by DIAL and three by AAI and one  

by  the  Indira  Gandhi  International  Airport  TDI  Karamchari  

Union.  In these appeals, two broad issues that arise are:

a) Who  is  the  appropriate  government  for  DIAL  under  the  CLRAA  and  ID  Act?   This  is  the  subject matter of SLP (C) No.369 of 2010 filed  by DIAL.

b) Whether the notification dated 26th July, 2004  is  applicable  to  DIAL  as  it  is  issued  by  the  Central  Government  which  is  not  the  appropriate government for DIAL and secondly  whether  the  notification  that  applies  to  the  ‘establishment of AAI’ will be applicable to the  ‘establishment  of  DIAL’  which  only  came  into  existence on 4th April, 2006?  This is the subject  matter of SLP (C) No.377 of 2010 filed by DIAL.

13.  We deem it appropriate to deal with the basic objects and  

reasons of passing the CLRAA.  This Act was enacted with a  

view  to  abolish  the  contract  labour  under  certain  

circumstances and to provide for better conditions of service to  

the  labour.   The  business  of  providing  contract  labour  is  

regulated as the contractor is required to obtain a licence and  

the principal employer is not entitled to engage a contractor  

without obtaining registration.  The rules also contain detailed  

provisions to carry out the purposes of the Act. It is significant  

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to note that the 1970 Act does not create any machinery or  

forum for the adjudication of any dispute arising between the  

contract labour and the principal employer of the contractor.   

14. The object of the Act was dealt with by this Court in the  

judgment of  Gammon India Ltd.  and Others v.  Union of  

India (UOI)  and Others (1974)  1 SCC 596 which reads as  

under:-

“The Act was passed to prevent the exploitation of  contract  labour  and  also  to  introduce  better  conditions of work. The Act provides for regulation  and  abolition  of  contract  labour.  The  underlying  policy  of  the  Act  is  to  abolish  contract  labour,  wherever  possible  and  practicable,  and  where  it  cannot be abolished altogether, the policy of the Act  is that the working conditions of the contract labour  should  be  so  regulated  as  to  ensure  payment  of  wages and provision of essential amenities. That is  why  the  Act  provides  for  regulated  conditions  of  work and contemplates progressive abolition to be  extent  contemplated  by  Section  10 of  the  Act.  Section 10 of the Act deals with abolition while the  rest  of  the  Act  deals  mainly  with  regulation.  The  dominant idea of the Section 10 of the Act is to find  out  whether  contract  labour  is  necessary  for  the  industry,  trade,  business,  manufacture  or  occupation  which  is  carried  on  in  the  establishment.”

15. The Central Government will be the appropriate government under  

CLRRA for any establishment for whom the Central Government is the  

appropriate government under the ID Act.  The main question arises for  

adjudication  is  whether  the  Central  Government  is  the  appropriate  

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prohibiting  the  employment  of  contract  labour  in  trolley  

retrieval  work  in  the  establishment  of   DIAL.  According  to  

DIAL, NCT Delhi is an “appropriate government” to issue the  

notification.  DIAL also disputed that it did not carry on the  

'air  transport  service'.  It  was  pointed  out  that  DIAL  is  not  

required to and in fact does not have a licence issued to it  

under Rule 134 of the Aircraft Rules. It is submitted that DIAL  

is  performing  its  functions  independently  in  its  own  

establishment which is not that of AAI's.  

19. The workers' union submitted that the notification dated  

26th July,  2004 clarified the position of DIAL.  According to  

them,  the  definition  of  the  term  under  CLRAA  does  not  

envisage  multiple  principal  employers  or  establishments.  It  

was submitted that the definition of an 'establishment' under  

CLRAA is materially different from the definition of that term  

under  the  ID  Act  which  envisages  separation  of  

establishments. For the purposes of CLRAA, it was submitted  

that  the prohibition on employment of the contract labour in  

a job is qua the establishment and operates irrespective of any  

change  in  the  principal  employer  as  long  as  the  process,  

operation  or  other  work  continues  in  that  establishment.  13

Alternatively, it was submitted that even if DIAL is taken to be  

the principal employer which has stepped into the shoes of AAI  

by  virtue  of  Operation,  Management,  Development  and  

Agreement (for short “OMDA”), the notification under Section  

10 (1) CLRAA would bind it and for  DIAL too the appropriate  

government would be the Central Government.  

20. It  was  also  submitted  that  DIAL  is  providing  an  “air  

transport  service”,  therefore,  the  appropriate  government  is  

the  Central  Government.  The  Central  Government  defended  

the  notification  of  26th July,  2004.  It  was  submitted  that  

adopting a contrary interpretation would defeat the objective  

and purpose of CLRAA.  The Central Government submitted  

that  DIAL  is  operating  under  the  authority  of  the  Central  

Government.  The industry that is carried on by DIAL by virtue  

of OMDA is relatable to the authority granted by Section 12A  

of  the Airport  Authority  of  India Act  1994 (55 of  1994)  (for  

short, the ‘AAI Act’). It was submitted that DIAL is rendering  

“air transport service” including emplaning and deplaning of  

passengers, handling of passengers' luggage, booking of cargo,  

and,  therefore,  the  Central  Government  is  the  appropriate  

government. 14

21. The Division Bench held that the notification dated 26th  

July, 2004 issued by the Central Government under Section  

10(1) CLRAA is valid and binding on it.  The Division Bench in  

the impugned judgment held that the recourse to the ID Act  

for the purposes of understanding what is an “establishment”  

is misconceived since the definition of 'establishment'  under  

CLRAA is unambiguous. It is futile to seek recourse to ID Act  

to understand what is an 'establishment' for the purposes of  

CLRAA.  The  Division  Bench  further  held  that  the  

establishment  is  one  and  it  cannot  be  divided  into  several  

small  establishments  where  for  one  part  the  appropriate  

government  would  be  the  Central  Government  and  for  the  

other  part  it  would  the  State  Government.   Such  an  

interpretation would run counter to the scheme of CLRAA and  

would defeat its object and purpose.

22. The Division Bench also held that it is inconceivable by  

virtue of Section 12A of the AAI Act, that only the functions  

and  powers  of  AAI  stand  transferred  and  not  the  

corresponding obligations. In fact, in terms of Clause 5.1 of  

OMDA, the statutory obligations under CLRAA which are that  

of AAI and its contractors also get transferred to CLRAA. This  

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transfers  all  powers  and  functions  and  correspondingly  the  

obligations under CLRAA by virtue of Section 12A of the AAI  

Act.  

23. The Division Bench held that:

“....In fact OMDA makes an express reference to the  AAI  Act.  Consequently,  consistent  with  the  observations of the Supreme Court in the SAIL case,  the exercise by DIAL of the functions and powers of  DIAL in relation to the Delhi airports is traceable to  Section 12A of the AAI Act and therefore in relation  to  the  Delhi  airports  the  Central  Government will  continue  to  remain  the  appropriate  government.  Further,  the  provisions  of  the  AAI  Act  show that  there is extensive control of the Central Government  over the functioning of  AAI.   The authority of  the  Central  Government  is  conferred  by  the  statute  itself.  Therefore,  it  is  not  correct  to  contend  that  consequent upon OMDA, the establishment of AAI  i.e. the Delhi airports ceased to be under the control  of the Central Government.   

Therefore,  the  inescapable  conclusion  is  that  consistent with the observations in the SAIL case,  the  statute  itself  contemplates  the  Central  Government  to  be  the  appropriate  government  notwithstanding that there has been a privatization  of the management of the Delhi airports.  By being  brought within the ambit of Section 12 A of the AAI  Act,  even  the  private  actor  i.e.  DIAL  has  been  brought  within  the  ambit  of  the  control  and  authority of the Central Government.  In fact, there  is an express reference to the AAI Act in the body of  the  OMDA  itself.   If  there  was  no  provision  like  Section 12 A in the AAI Act, there could not have  been an OMDA between AAI and DIAL.”

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24. After examining the settled legal principles, the Division  

Bench held  that  irrespective  of  whether  the  amendment  to  

Section 2(a) I.D. Act was later, the appropriate government for  

the  purposes  of  Section  10  CLRAA  in  the  instant  case  

continues to be the Central Government.  

25. The definition of “air transport service” is certainly wider  

than  “air  traffic  service”.  This  has  to  be  seen  also  in  the  

context of Section 2(i) which defines “civil enclave” to mean as  

under :

2(i) “civil enclave” means the area, if any, allotted at  an  airport  belonging  to  any  armed  force  of  the  Union,  for  use  by  persons  availing  of  any  air  transport  services  from  such  airport  or  for  the  handling of baggage or cargo by such service, and  includes  land  comprising  of  any  building  and  structure on such area.”

26. The Division Bench further observed that when the above  

definitions are read along with Section 1(3) of the AAI Act, it is  

plain that the AAI Act will apply to a civil enclave.  It is clear  

that  the  handling  of  baggage  or  cargo  by  an  air  transport  

service  would  form  part  of  the  services  provided  in  a  civil  

enclave.  The functions that have been excluded under Section  

12A(1)  of  the  AAI  Act  are  “air  traffic  services or  watch and  

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ward at airport and civil enclaves”.  In other words, air traffic  

services and provision of watch and ward at the airport and  

civil  enclaves  remain with  AAI,  notwithstanding  that  it  has  

entered into an agreement of OMDA with DIAL.  

27. The Division Bench further observed that the Air Traffic  

Rules  envisage  that  all  the  licences  for  air  and  air  traffic  

service would be issued separately. That by itself may not be  

determinative  of  whether  trolley  retrieval  forms  part  of  the  

services to be provided by DIAL in terms of OMDA.  Only 'air  

traffic services and provision of watch and ward' are, in terms  

of Section 12A of the AAI Act to be retained by AAI as part of  

its  functions.  The  Division  Bench  viewed  that  the  trolley  

retrieval  along  with  toilets  and  handling  of  baggage  or  car  

within the area of a 'civil enclave' are recognized as essential  

services by virtue of Schedule 16 to the OMDA.  This is what is  

relevant in determining whether trolley retrieval is also part of  

the  services  provided  in  the  establishment.   Therefore,  

notwithstanding whether DIAL is actually offering  other kinds  

of  air  transport  services,  it  is  certainly  meant  to  provide  

trolley retrieval services at the Delhi airports.

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28. The Division Bench also came to the categorical finding  

that for the purpose of establishment of Delhi airport, it is the  

Central  Government  that  continues  to  be  the  “appropriate  

government”.  The Division Bench also came to the conclusion  

that in view of Section 12A of AAI Act, the obligation flowing  

from the said notification under Section 10(1) of CLRAA will  

continue to bind every private player that steps into the shoes  

of AAI even for some of its functions. Otherwise, every time a  

fresh agreement is entered into, the entire process of getting a  

notification issued by the appropriate government in relation  

to  the  same  work  of  trolley  retrieval  and  with  the  same  

establishment vis-a-vis such private player has to be re-stated.  

That  was  never  the  intention  of  the  legislature  in  enacting  

CLRAA  and  in  particular  Section  10  CLRAA.   Such  

interpretation would defeat the rights of the workmen which  

are meant to be protected by the CLRAA.   

29. The  Division  Bench  of  the  High  Court  came  to  the  

following conclusions:

(i) That  in  relation  to  airport,  it  is  the  Central  Government  which  is  the  appropriate  government for the purpose of CLRAA;

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(ii) DIAL  is  equally  bound  by  the  Notification  dated  26th July,  2004 issued  by  the  Central  Government;

30. The most useful starting point of analysis is Section 10 of  

CLRAA. Sub-Section (1) reads as follows:

“Notwithstanding  anything  contained  in  this  Act,  the appropriate government may, after consultation  with the Central Board or, as the case may be, a  State Board, prohibit, by notification in the official  gazette,  employment  of  contract  labour  in  any  process,  operation  or  other  work  in  any  establishment.”  

31. Two critical issues are raised by DIAL to suggest that the  

Central Government's 26th July, 2004 notification directed at  

“AAI  establishment”  under  the  authority  of  Section 10(1)  of  

CLRAA is inapplicable to  DIAL. First,  DIAL claims that the  

Central  Government  is  not  the  appropriate  government  to  

issue such notices to it. Second,  DIAL claims that even if the  

Central Government was the appropriate government, its 26th  

July,  2004  notification  was  directed  at  “AAI  establishment”  

and  AAI and DIAL are separate establishments. For the terms  

of the notice to be made applicable to  DIAL establishment, a  

separate  notification  would  have  to  be  issued.   These  two  

issues will be addressed in its own turn.

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32.  WHETHER  THE  CENTRAL  GOVERNMENT  IS  THE  “APPROPRIATE GOVERNMENT”       

CLRAA Section 2(1) reads as follows:

(1)  In  this  Act,  unless  the  context  otherwise  requires,-

(a) “appropriate government” means,--

(i) in  relation to  an establishment in respect  of  which the  appropriate  government under the  Industrial Disputes Act, 1947 (14 of 1947), is  the Central Government;     

(ii) in  relation  to  any  other  establishment,  the  Government of  the State in which that other  establishment is situated.

33. In  the  definition  itself  given  in  Section  2(a),  specific  

reference  has  been  made  to  the  Airport  Authority  of  India  

constituted under the AAI Act and the air transport service.  

This provision makes it clear that the Central Government will  

be  the  “appropriate  government”  under  CLRAA  for  any  

establishment  for  whom  the  Central  Government  is  the  

“appropriate  government”  under  the  ID  Act.   The  question  

which  now  arises  for  adjudication  is  whether  the  Central  

Government is the “appropriate government” under the ID Act.  

According to  DIAL,  it  is not an “appropriate government”,  

therefore,  it  is  imperative  to  analyse  this  provision.  Section  21

2(a) of the ID Act indicates that the Central Government is the  

“appropriate authority” in three relevant situations:

(i) The  Central  Government  is  the  “appropriate  authority” in relation to any industrial dispute  concerning  any  industry  carried  on  by  or  under  the  authority  of  the  Central  Government.   

(ii) The  Central  Government  is  the  “appropriate  government”   in  relation  to  the  industrial  disputes concerning AAI.

(iii) The  Central  Government  is  the  “appropriate  government”  in  relation to  industrial  dispute  concerning air transport service.   

34. Both  AAI  and  the  air  transport  service  have  been  

specifically  incorporated in  the  Section  itself.  Thus,  if  DIAL  

industry  is  carried  on  under  the  authority  of  the  Central  

Government, the dispute in question can be said to concern  

AAI or if the dispute in question can be said to concern air  

transport  service,  then  the  Central  Government  is  the  

appropriate authority both for  ID Act  and CLRAA. It may be  

pertinent to properly comprehend the relevant statute.

35. The AAI Act was constituted for the better administration  

and  cohesive  management  of  airports  and  civil  enclaves  

whereat air transport services are operated or are intended to  22

be operated and of all aeronautical communication stations for  

the purpose of establishing or assisting in the establishment of  

airports  and  for  matters  connected  therewith  or  incidental  

thereto.   

36. In Section 2 of the AAI Act, air transport service has been  

defined in Section 2(e) of the Act which is set out as under:

“air  transport  service”  means  any  service,  or  any  kind of remuneration, whatsoever, for the transport  by air of persons, mail or any other things, animate  or  inanimate,  whether  such  service  relates  to  a  single flight or series of flights;   

37. Section 12A of the AAI Act, which was inserted with effect  

from 1.7.2004, reads as under:

“12A.  Lease  by  the  authority.- (1)  Notwithstanding anything contained in this Act, the  Authority  may,  in  the  public  interest  or  in  the  interest of better management or airports, make a  lease  of  the  premises  of  an  airport  (including  buildings and structures thereon and appertaining  thereto)  to  carry  out  some  of  its  functions  under  section 12 as the Authority may deem fit;

Provided that  such lease shall  not  affect  the  functions of the Authority under section 12 which  relates to air traffic service or watch and ward at  airports and civil enclaves.

(2)  No  lease  under  sub-section  (1)  shall  be  made without the previous approval of the Central  Government.

23

(3) Any money, payable by the lessee in terms  of the lease made under sub-section (1), shall form  part  of  the  fund  of  the  Authority  and  shall  be  credited thereto as if such money is the receipt of  the Authority for all purposes of section 24.

(4)  The  lessees,  who  has  been  assigned  any  function  of  the  Authority  under  sub-section  (1),  shall have all the powers of the Authority necessary  for the performance of such function in terms of the  lease.”  

38. It  is  clear  from Section  12A  that   AAI  may  in  public  

interest  or  in  the  interest  of  a  better  management  of  the  

airport, make a lease of the premises of the airport to carry out  

some of its functions under Section 12 as the Authority may  

deem  fit.  Detailed  functions  of  the  Authority  have  been  

enumerated  in  Section  12.  Out  of  those  functions  under  

Section 12A, some functions can be delegated on lease in the  

public  interest  or  in  the  interest  of  better  control  and  

management of  the  airports.  Consequently,  in pursuance of  

the agreement with DIAL, some functions of  AAI were leased  

out  to  DIAL.   DIAL argued that not only  its own industry is  

not carried on under the authority of the Central Government  

but further that not even AAI's authority is carried on under  

the authority of the Central Government.   

24

39. It is relevant to mention that DIAL derives its authority  

from  AAI and  AAI derives its authority from the powers given  

by  the  Central  Government.   The  question,  of  course,  is  

whether  DIAL  works  “under  the  authority”  of  the  Central  

Government and therefore, whether the Central Government is  

the “appropriate authority” for  DIAL?

40. In the impugned judgment, the Division Bench has clearly  

held  that  AAI  works  “under  the  authority”  of  the  Central  

Government.    

41.  It  would  be  relevant  to  recapitulate  the  Statement  of  

Objects and Reasons for passing the AAI Act.  The Statement  

of Objects and Reasons reads as under:

“STATEMENT OF OBJECTS AND REASONS

Until  1971,  the  Director  General  of  Civil  Aviation  was  entrusted  with  the  responsibility  not  only  of  regulatory  functions  relating  to  civil  aviation  but  also  of  construction  and management  of  airports,  air traffic control and air space management in the  country.

2. Considering the need for heavy investments and  operational flexibility required for construction and  management  of  large  airports,  the  International  Airports Authority of India (IAAI) was constituted as  an  autonomous  body  under  the  International  Airports  Authority  Act,  1971.   Four  international  airports,  namely,  Delhi,  Bombay,  Madras  and  25

Calcutta were transferred to IAAI  with effect  from  1.4.1972;  later,  Trivandrum  airport  was  also  transferred to IAAI.  In 1985, it was felt that similar  treatment  was  required for  domestic  airports  and  air  traffic  control  and  related  services.  Consequently, the National Airports Authority (NAA)  was  constituted  under  the  National  Airports  Authority Act, 1985.   

3. International airports are put to more intensive  use  and  generate  substantial  revenues  which  accrue to the IAAI.  Revenues of the NAA are much  less buoyant because a number of  its airports do  not  have  any  commercial  air  service  whatsoever  while many others have only infrequent operations.  The NAA has, therefore, not been able to generate  adequate  resources  to  meet  the  requirements  of  development and modernization.  To overcome this  handicap and provide for closer integration in the  management  of  airports  and  air  traffic  contract  services in the country, it has been found necessary  to merge the IAAI and the NAA, which the Bill seems  to achieve.  

4. The salient features of the Bill are:-

(a)  Constitution  of  a  single  unified  Airports  Authority of India to control and manage both the  national  and international  airports  in  the  country  and transfer and vesting of the undertakings of the  International  Airports  Authority  of  India  and  National  Airport  Authority  in  the  said  Airports  Authority of India.  

(b)  Repeal  of  the  International  Airports  Authority  of  India  Act,  1971  and  the  National  Airports Authority Act, 1985.

(c)  All  licences,  permits,  quotas  and  exemptions  granted  to  the  International  Airports  Authority of India or the National Airports Authority  

26

be  deemed  to  have  been  granted  to  the  Airports  Authority of India.  

(d)  Guarantees  given  for  or  in  favour  of  the  International  Airports  Authority  of  India  or  the  National  Airports  Authority  to  continue  to  be  operative  in  relation  to  the  Airports  Authority  of  India.

(e)  Every  officer  or  other  employee  of  the  International  Airports  Authority  of  India  and  the  National  Airports  Authority,  serving  in  its  employment immediately before the appointed day,  to become an officer or other employee, as the case  may  be,  of  the  Airports  Authority  of  India,  with  option to resign.

(f)  Power  of  the  Central  Government  to  give  directions to the Airports Authority of India.

5. The  Bill  seeks  to  achieve  the  aforesaid  objectives.”    

42. A close reading of the objects and reasons indicates that  

the Central Government under Section 12A of the AAI Act has  

retained the power to give directions in the public interest or  

in the interest of better management to lease the premises of  

the airport to carry out some of its functions under Section  

12A,  as  the  authority  may  deem  fit.   Some  of  its  (AAI's)  

functions have been leased out to DIAL.  This has been done  

under Section 12A(2) with the previous approval of the Central  

Government.  On proper scrutiny of the provisions of the AAI  

27

Act, it is abundantly clear that the Central Government has  

control over AAI and AAI has control over DIAL.   

43. DIAL claims that if AAI's industry was being carried out  

under the authority of the Central Government under Section  

2  of  the  ID  Act,  there  would  have  been  no  need  for  the  

legislature  to  separately  include  AAI  as  an  “enumerated  

industry”.  Such reasoning would be seen on a plain reading of  

the phrase: “under the authority of the Central Government”,  

as  DIAL  itself  has  admitted  that  all  these  industries,  on  a  

cursory look, seem to be by or under the control of the Central  

Government. Further, this line of thinking would imply that  

none of the many industries enumerated in ID Act can be held  

to act “under the authority of the Central Government”.  While  

this  is  conceivably the case, it  may be more likely that  the  

authors of  the ID Act,  in listing the enumerated industries,  

simply wanted to ensure that those industries were covered by  

the  Act,  without  meaning  to  affect  the  separate  issue  of  

whether those industries were also acting “under the authority  

of the Central Government.” Further, while it is fair to assume  

that the legislature attempts to avoid tautology, such canons  

are not necessarily dispositive.  It is well established canon of  28

statutory construction that the legislature is known to avoid  

tautology and redundancy.  

44. The crucial questions which need our adjudication are:  

whether  DIAL  works  under  the  Central  Government  and  

whether  the  Central  Government  is  the  'appropriate  

government' for DIAL?  

45. The AAI Act was passed by the Central Government “to  

provide for the constitution of the Airports Authority of India'  

which was in turn charged with the “better administration and  

cohesive management of airports.”  Preamble to Section 12A of  

the AAI Act allows AAI to contract with third parties to perform  

some of AAI's functions (in the public interest or in the interest  

of better management of airports).  It was this proviso which  

allowed AAI to assign some of its functions to  DIAL through  

OMDA,  responsibility  for  trolley  collection  services  at  the  

Indira Gandhi International Airport and the domestic airport.   

46. DIAL claims that if AAI's industry was being carried out  

under the authority of the Central Government under Section  

2 of the ID Act, then there would have been no need for the  

legislature  to  separately  include  AAI  as  an  “enumerated  29

industry”. On the one hand, this argument of DIAL is correct.  

On the other hand, however, such reasoning would seem to  

contradict a plain reading of the phrase “under the authority  

of the Central Government” as DIAL itself has admitted, “all  

these industries, on a cursory look seem to be by or under the  

control  of  the  Central  Government.”  Further,  this  line  of  

thinking  would  imply  that  none  of  the  many  industries  

enumerated under Section 2 of the ID Act can be held to act  

“under the authority of the Central Government”.  While this is  

conceivably the case, it may be more  likely that the framers of  

the ID Act, in listing the enumerated industries simply wanted  

to ensure that  these industries were also acting “under the  

authority of the Central Government.”   

47. The Constitution Bench of this Court in Steel Authority  

of  India  Limited  &  Others  etc.  etc. v. National  Union  

Water Front Workers and Others etc. etc., (2001) 7 SCC 1,  

popularly known as 'SAIL' case held:

“Where the authority, to carry on any industry for or  on behalf of the Central Government, is conferred  on  the  government  company/any  undertaking  by  the  statute  under  which  it  is  created,  no  further  question arises.”

30

48. AAI,  a  government  undertaking has been created by a  

statute, to carry out the air transport industry on behalf of the  

Central Government.  In the words of the AAI Act  itself, the  

Act was created :

“….for the transfer and vesting of the undertakings  of the International Airports Authority of India and  the  National  Airports  Authority  to  and  in  the  Airports  Authority  of  India  so  constituted  for  the  better administration and cohesive management of  airports and civil enclaves...” (Preamble)

49. If the passage from SAIL's case is to be taken at its face  

value, it would appear that AAI clearly functions “under the  

authority”  of  the  Central  Government,  and that  the  Central  

Government is, therefore, the “appropriate government” under  

the terms of CLRAA and ID Act.  

50. In the impugned judgment, the Division Bench correctly  

held that  “the  provisions of  the  AAI  Act  show that  there is  

extensive  control  of  the  Central  Government  over  the  

functioning of AAI.” Section 12A reveals control of the Central  

Government  on  AAI.   AAI  has  to  obtain  approval  from the  

Central Government before delegating any of its functions to  

third  parties,  such as  DIAL.  This  clearly  indicates  that  the  

Central Government has complete control over AAI. Sections 2,  31

6 and  10  of  the  AAI  are  further  examples  of  governmental  

reservations of authority. The Central Government retains its  

statutory  control  over  AAI.  In  the  impugned  judgment,  the  

High  Court  correctly  came  to  the  conclusion  that  “the  

authority  of  the  Central  Government  is  conferred  by  the  

statute itself.”

51. In fact, in these cases, we are merely concerned with very  

limited controversy whether DIAL works under the authority of  

the Central Government or not?  DIAL, of course, claims that  

it  does  not.  In  the  SAIL judgment,  the  Constitution  Bench  

held as under :

“the  phrase  “any  industry  carried  on  under  the  authority  of  the  Central  Government”  implies  an  industry which is carried on by virtue of, pursuant  to, conferment of, grant of, or delegation of power or  permission by the Central Government to a Central  Government  company  or  other  government  company/undertaking.  To put it differently, if there  is lack of conferment of power or permission by the  Central  Government to a government company or  undertaking,  it  would  disable  such  a  company/undertaking to carry  on the  industry in  question.”   

52. In  case  the  Central  Government  had  never  granted  

permission,  pursuant  to  Section 12A of  the  AAI  Act,   DIAL  

would not be able to carry out functions at the Delhi airports.  32

The entire functioning of  DIAL is fully dependent on the grant  

of  permission by the  Central  Government.  The Constitution  

Bench, in the SAIL judgment further observed as under :

“may be conferred, either by a statute or by virtue of  the relationship of principal and agent or delegation  of  power.   Where  the  authority,  to  carry  on  any  industry for or on behalf of the Central Government,  is  conferred  on  the  government  company/any  undertaking  by  the  statute  under  which  it  is  created, no further question arises.  But, if it is not  so, the question that arises is whether there is any  conferment  of  authority  on  the  government/any  undertaking by the Central Government to carry on  the industry in question. This is a question of fact  and has to be ascertained on the fact and in the  circumstances of each case.”

53. The undertakings need not be government undertakings  

to  have  had  authority  conferred  upon  them.  But  the  word  

“government” clearly modifies “company.” However, it cannot  

modify  “undertaking,”  for  the  phrase  “government/any  

undertaking”.  Thus,  it  would  seem that  any  “undertaking”-  

even private undertakings, like DIAL – may function “under  

the authority” of the Central Government. Whether or not they  

do  it,  as  the  Constitution  Bench noted,  “a  question of  fact  

which  has  to  be  ascertained  on  the  facts  and  in  the  

circumstances of each case.”

33

54. In  the  facts  and  circumstances  of  these  cases,  it  is  

abundantly  clear that  DIAL operates under the authority  of  

the Central Government.  

55. In  the  impugned  judgment,  it  was  noted  that  “the  

functions and powers of DIAL in relation to the Delhi airports  

are traceable to Section 12A of the AAI Act.” It is clear that  

without Central Government's permission, AAI could not have  

delegated any power to DIAL. In other words, the functioning  

of DIAL at the Delhi airports itself was fully dependent on the  

approval  of  the  Central  Government.   In other words,  DIAL  

could  not  have  received  its  contract  with  AAI  without  the  

Central  Government's  approval.  That  being  the  case,  by  a  

plain  reading  of  the  phrase  it  seems  that  “DIAL  functions  

under the authority of the Central Government”.

56. It was argued on behalf of DIAL that “if the intent of the  

Parliament was to make DIAL come under the authority of the  

Central Government then it would have militated against the  

basic objective of achieving privatization.” DIAL, however, does  

not  explain  how  having  the  State  Government  as  the  

appropriate government – the only alternative under CLRAA  

34

and ID Act – would be any more conducive to privatization. It  

is  now clear  that  the  Central  Government  does  not  impede  

privatization any more than the State Government; after all, it  

was  the  Central  Government  that  sought  to  encourage  

privatization  through the  AAI  Act   by  incorporating  Section  

12A in the Act.

57. In case AAI and DIAL act under the authority of different  

governments it would bring about absurd results :  AAI could  

simply  circumvent  potential  Central  Government  orders  by  

delegating various functions to third parties, such as  DIAL.  

Of  course,  AAI  would  need  to  obtain  Central  Government  

approval prior to making such a delegation under Section 12A  

of  the  AAI  Act,  but  it  nevertheless  seems unlikely  that  the  

Central Government would intend to maintain authority over  

AAI's  actions,  while  allowing  actions  performed  by  other  

entities on behalf of AAI, such as DIAL, to be carried out under  

the authority  of  the State Government.  DIAL has made no  

suggestions  as  to  why  the  Central  Government  might  have  

intended such a result while drafting the AAI Act and CLRAA,  

and there is, therefore, little justification for coming to such a  

conclusion. 35

58. DIAL  expressly  assumed  the  “rights  and  obligations  

associated with the operation and management of the airport”  

through OMDA.  While Section 12A of the AAI Act only notes  

that the “powers and functions” of AAI will be transferred to its  

lessors, it is “inconceivable that by virtue of Section 12A the  

powers and functions of AAI will stand transferred and not the  

corresponding obligations.” If it was the “obligation” of AAI to  

follow valid directions of the Central Government by virtue of  

its  status  as  an  enumerated  industry,  and  if  DIAL  has  

admittedly assumed those  same obligations through OMDA,  

then  DIAL  is  presumably  also  obligated  to  follow  such  

directions. Again, a contrary interpretation would allow AAI to  

circumvent  the  Central  Government's  exercise  of  authority  

over its work merely by contracting it out to third parties. It is  

abundantly  clear  that  the  Central  Government  is  the  

appropriate government  qua  DIAL and consequently the said  

Notification of 26th July, 2004 is equally applicable to DIAL.

59. Under  the  ID  Act  (and  therefore  CLRAA),  the  third  

situation in which the Central Government is the “appropriate  

36

Government” is “in relation to industrial disputes concerning  

air transport services.”   

60. The  question  for  the  purposes  of  this  case,  then,  is  

whether the trolley retrieval  services performed by DIAL are  

done “for the transport by air of persons, mail, or any other  

thing.”  Clearly, trolley retrievers themselves are not physically  

transporting anything by air.  However, it is entirely possible  

that the drafters of the AAI Act did not intend to restrict the  

coverage of this provision merely to pilots, stewardesses, and  

others engaged in the actual, physical transport of people and  

objects,  as  DIAL  would  have  liked  the  Court  to  believe.  

Clearly, trolleys at airports relate to air transportation- just as  

they relate to “a single flight or a series of flights.”         

  61. On behalf of DIAL, it was submitted that “air transport  

services” as enumerated industry under  ID Act  replaced an  

earlier  listing  of  “Indian  Airlines”  and  “Air  India”,  two  

corporations  clearly  engaged  in  the  actual,  physical  

transportation of individuals by air.

62. At the time of amendment when private airline operators  

had  started  functioning  and  as  “air  transport  service”  they  37

included all airline operators, private or public and the said  

industry  was  included  as  an  enumerated  industry.   This  

makes it abundantly clear that “air transport service” concerns  

airline operators only.  

63. Section 12(2) of the AAI Act reads as under:

“It shall be the duty of the Authority to provide air  traffic  service  and  air  transport  service  at  any  airport and civil enclaves.”

64. It may be relevant to mention that DIAL is not engaged in  

the business of  operating an airline for carrying passengers  

and  goods  by  air  through flights.   In  fact,  AAI  is  also  not  

involved in this activity and Section 12 of the AAI Act which  

lists out the functions of AAI does not include the function of  

carrying people and goods through air by flights operated by it.  

As such, when AAI does not perform such function then there  

is no question of transfer of such functions to DIAL.

65. It is the duty of the authority to provide all air transport  

services at the airport, and if it is not the duty of the authority  

to carry passengers and goods by air through flights, then by  

the  appellants  own  logic,  air  transport  service  must  mean  

more than the mere carriage of passengers and goods by air  38

through flights.  If it did not, then there would be no reason  

that “air transport service” would be listed as a “duty of the  

Authority” under Section 12(2).  This Section clearly indicates  

that it is the duty of the Authority to provide “air transport  

service”, such duty does not mean that the Authority provides  

such services itself.

66. AAI  is  responsible  under  the  AAI  Act  for  providing  air  

transport service would not necessarily mean that DIAL also  

does so.   

67. In the instant case under Section 12A of the AAI Act all  

functions  have  been given  to  DIAL except  watch  and  ward  

function,  air  traffic  service  and  civil  enclaves.   From  the  

provisions of OMDA, it is clear that all functions of AAI barring  

reserved  activities  and  all  land  except  certain  carved  out  

assets has been given to DIAL.  

68. DIAL  has  admitted  that  AAI  has  transferred  to  it  all  

functions except those related to watch and ward, air traffic  

service and civil enclaves, none of which can be considered as  

“air transport service”.  That being the case, AAI must have  

transferred its duty to provide “air transport service” to DIAL  

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and  the  Central  Government  must,  therefore,  be  the  

appropriate government for DIAL under the CLRAA and ID Act.

AAI and DIAL are not separate establishments, but even if  they were, the 26  th   July, 2004 notification applies to DIAL    anyway

69. Section  10(1)  of  the  CLRAA  permits  the  “appropriate  

government” to “prohibit employment of contract labour in any  

process, operation or other work in any establishment.  The  

Central  Government’s  26th July,  2004  notification  clearly  

forbade  the  “AAI  establishment”  from  employing  trolley  

retrievers as contract labour.  The question, then, is whether  

DIAL  is  part  of  “AAI  establishment”  for  purposes  of  the  

CLRAA?

70. DIAL contends that the establishment of AAI at the Indira  

Gandhi International Airport and Domestic Airport underwent  

a change and a new private entity in the form of the appellant  

DIAL established its establishment, after being granted a lease  

under Section 12A of the AAI Act.  In support of this claim,  

DIAL  contends  that  it  has  complete  overall  control  and  

supervision over the Airport to the exclusion of AAI, and is not  

an agent or delegate of AAI but is, rather, a separate and a  

new principal entity to whom the Central Government’s 26th  

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July, 2004 notification, even if otherwise valid, did not apply.  

The Single Bench apparently agreed, holding that  

“the notification itself has become irrelevant in view  of  the  privatization  of  the  airports  and  a  new  notification will have to be issued by the appropriate  government.

71. To address these claims, it is important to analyse the  

definition  of  “establishment”.   Section  2(1)(e)  of  the  CLRAA  

defines “establishment” as follows:

“ ‘establishment’ means –

c) any office or department of the Government or a  local authority, or

d) any place where any industry, trade, business,  manufacture or occupation is carried on.”

72. As  this  provision  makes  it  clear,  the  definition  of  

“establishment” focuses either on (1) Place; or (2)  Offices or  

departments of the Government or a local authority.  The 26th  

July, 2004 notification must, therefore, have been directed at  

one of these types of establishments.

73. On the  one  hand,  AAI  clearly  cannot  be  considered  a  

local  authority  as  it  is  charged  with  managing  airports  

throughout  India.   On the  other  hand,  AAI  also  cannot  be  

considered an “office or department of the Government”.  The  

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AAI Act makes clear that AAI must, in certain circumstances,  

obtain  approval  from  the  Central  Government,  thereby  

implying  that  AAI  is  not  itself  the  Central  Government.  

Therefore,  “establishment”  in  this  case cannot  refer  to  “any  

office or department of the Government or a local authority”, it  

must refer to a “place where any industry,  trade, business,  

manufacture  or  occupation  is  carried  on”.    The  Division  

Bench in the impugned judgment held that the establishment  

for the purposes of the CLRAA is a place where the industrial,  

trade  or  business  activity  is  carried  on  then  it  necessarily  

follows in the context of the present case that it is the Delhi  

Airports which constitute the establishment of AAI and in turn  

the establishment of DIAL.   

74. This Court in SAIL's case held as under:

“It  is  thus  evident  that  there  can  be  plurality  of  establishments in regard to the Government or local  authority and also in regard to any place where any  industry,  trade,  business,  manufacture  or  occupation is carried on.”

75. Accordingly,  there  could  be  multiple  establishments  at  

the  airport.   That  being  the  case,  the  Division  Bench’s  

assertion  that  the  establishment  of  AAI  is  in  turn  the  

establishment of DIAL must be justified. 42

76. It  would  be  pertinent  to  refer  to  the  definition  of  

“contractor” in Section 2(1)(c) of CLRAA, which reads as under:

“‘contractor’, in relation to an establishment, means  a person who undertakes to produce a given result  for the establishment, other than a mere supply of  goods  or  articles  of  manufacture  to  such  establishment,  through  contract  labour  or  who  supplies  contract  labour  for  any  work  of  the  establishment and includes a sub-contractor.”

77. DIAL  “undertakes  to  produce  a  given  result”  –  trolley  

retrieval services, among other things – for AAI establishment  

through  contract  labour.   To  prove,  otherwise,  DIAL  would  

need  to  be  able  to  assert  the  following,  adopted  from  the  

CLRAA definition of contractor excerpted above.

“DIAL does not undertake to produce any result for  AAI  establishment.   Instead,  DIAL  undertakes  to  produce result for its own establishment”

78. DIAL while performing work on behalf  of  AAI,  it  is not  

performing work on behalf of AAI establishment.  Instead, it is  

merely working on behalf of its own establishment.  

79. Further,  all  the independence DIAL does have, the AAI  

Act  and  OMDA  make  it  clear  that  AAI  maintains  ultimate  

responsibility for the airport.

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80. The question that has to be answered is who has control  

of the entire establishment?  Noticing that air traffic services  

and security are the heart of the airport and also noticing the  

clauses of OMDA providing for overall supervision of DIAL by  

AAI, checking of accounts, step in rights of AAI and so on, it  

must be concluded that AAI has overall control of the airport  

site.

81. Admittedly, DIAL has been leased out the portion of AAI’s  

work, which DIAL only has incomplete control over as well as  

the fact that DIAL meets the definition of a contractor under  

the CLRAA, further suggests that DIAL is nothing more than a  

contractor for AAI establishment.  DIAL is not, in other words,  

a principal  employer of  an independent establishment. That  

being the case, the 26th July, 2004 notification, declared at AAI  

establishment, must also apply to DIAL.   

82. The fact that DIAL is a private entity is of no assistance  

to it.  In  SAIL’s case, the Constitution Bench explicitly held  

that the definition of “establishment” in the CLRAA takes in its  

fold purely private undertakings.

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83. This issue is fully settled by the foregoing analysis.  From  

the  analysis,  DIAL  falls  under  AAI  establishment.   For  

example, Clause 5.1 of  OMDA, which notes that the “rights  

and  obligations  associated  with  the  operation  and  

management of the Airport would stand transferred to” DIAL,  

would seem to suggest that orders given to AAI establishment  

would also apply to DIAL establishment, even if the two were,  

as DIAL claims, separate establishments. If AAI establishment  

is obligated to abolish contract labour and DIAL establishment  

(even  if  it  is  somehow  separate)  has  assumed  AAI  

establishment’s obligations through the OMDA, then DIAL is  

presumably required to fulfil those obligations.  Critical to this  

inference is the fact that the Central Government’s 26th July,  

2004 notification was issued before OMDA was signed.  

84. The contention that DIAL would not also be bound by the  

obligations  of  AAI  establishment  would  once  again  lead  to  

absurd consequences. In the impugned judgment, the Division  

Bench correctly observed that “every time a fresh agreement is  

entered into, the entire process of getting a notification issued  

by the appropriate Government in relation to the same work of  

trolley  retrieval  and  with  the  same  establishment  vis-a-vis  45

such private  player”  must  be  repeated.   This  interpretation  

would defeat the rights of the workers, which are meant to be  

protected  by  CLRAA.  The  Division  Bench  has  correctly  

observed  that  the  obligation  flowing  from  the  notification  

under  Section  10(1)  CLRAA  shall  continue  to  bind  every  

private player that steps into the shoes of AAI.

85. We  have  carefully  heard  the  learned  counsel  for  the  

parties and perused the written submissions filed by them.  In  

our  considered  view,  the  Central  Government  is  the  

appropriate government for DIAL for the following reasons –  

(i) DIAL could  not  have  entered into  a contract  with  AAI  without  approval  of  the  Central  Government  according  to  the  mandate  of  Section 12A of the AAI Act.  In this view of the  matter,  it  is  abundantly  clear  that  DIAL  functions “under the authority” of the Central  Government;

(ii) AAI  clearly  acts  under  the  authority  of  the  Central Government and DIAL acts under the  authority  of  AAI  because of  its  contract with  DIAL.  Then it can be logically stated that DIAL  works   under  the  authority  of  the  Central  Government;

(iii) The  Central  Government  has  given  AAI  responsibility for overseeing the airports.   To  fulfil its obligations, AAI contracted with DIAL.  However,  it  is  clear  that  DIAL’s  work  “concerns”  AAI,  if  DIAL does not  perform its  work properly or adequately, then AAI will be  

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breaching  its  statutory  obligation  and  would  be responsible for the consequences.

(iv) AAI  is  under  an  obligation  to  follow  the  directions  of  the  Central  Government  and  if  DIAL  has  admittedly  assumed  those  obligations through the OMDA, then DIAL is  presumably  also  obligated  to  follow  such  directions.   Again,  a  contrary  interpretation  would  allow  AAI  to  circumvent  the  Central  Government’s  exercise  of  authority  over  its  work merely by contracting it out to third party  (DIAL).

(v) Clause 5.1 of the OMDA specifically notes that  the “rights and obligations associated with the  operation  and  management  of  the  Airport  would stand transferred” to DIAL.  If AAI was  admittedly  obligated  to  follow  the  26th July,  2004 notification and DIAL has assumed all of  AAI’s  obligations,  then  DIAL  must  also  be  obligated to  follow the  notification.   In other  words,  the notification issued by the Central  Government is equally binding on DIAL.  

(vi) Holding  the  26th July,  2004  notification  inapplicable  to  DIAL  would  mean  that  the  Government  would  have  to  issue  separate  notification  every  time  AAI  contracts  with  a  third  party.   This  would  clearly  violate  the  basic objects and reasons of CLRAA.

(vii) The security of contract labour working for AAI  envisaged, a law cannot be made to depend on  the private sector.  If the legislature had found  it  fit  to  specifically  include  AAI  as  an  enumerated industry  under  the  ID Act,  it  is  extremely unlikely that it would have intended  for  AAI to be able to circumvent the Central  Government orders by contracting with private  parties.

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(viii) The privatization of the airports does not mean  that  the  “appropriate  government”  cannot  be  the  Central  Government.   According  to  the  Constitution Bench judgment of this Court in  the  case  of  SAIL,  the  definition  of  ‘establishment’ in the CLRAA takes in its fold  purely private undertakings…”.Concerns about  privatization are, therefore, unfounded.   

(ix) Under  Section  12(2)  of  the  AAI  Act,  AAI  is  obliged  to  provide  air  traffic  service  and  air  transport service at the airport.  DIAL admits  that  AAI  has  transferred  all  of  its  responsibilities  at  the  airports  with  the  exception of certain reserved functions.  Since  industries  concerning  air  transport  service  function  under  the  authority  of  the  Central  Government, and since AAI has transferred its  “air transport service” responsibilities to DIAL,  the Central Government must be held to be the  appropriate Government for DIAL.

(x) The OMDA makes it clear that AAI maintains  ultimate  responsibility  for  the  airports.  The  fact that DIAL was transferred only a portion of  AAI’s  work  which  DIAL  only  has  incomplete  control over as well as the fact that DIAL meets  the definition of a contractor under the CLRA  Act further suggests that DIAL is nothing more  than a contractor for AAI establishment. That  being  the  case,  notification  dated  26th July,  2004 directed at AAI establishment must also  apply to DIAL.

(xi) The contention of  DIAL that  it  would not  be  bound by the obligation of AAI establishment  would  lead  to  absurd  consequences.   The  Division Bench in the impugned judgment has  rightly  pointed  out  that  every  time  a  fresh  agreement is entered into, the entire process of  getting a notification issued by the appropriate  government  in  relation  to  the  same  work  of  

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trolley  retrieval  and  with  the  same  establishment  via-a-vis such  private  player  must  be  repeated.  But  this  interpretation  would defeat the rights of the workmen which  are meant to be protected by the CLRAA.   

(xii) In the impugned judgment, the Division Bench  of the High Court has correctly held that the  obligation  flowing  from  the  said  notification  under Section 10(1) CLRAA should continue to  bind every private  player  that  steps  into  the  shoes of AAI.

86. For the foregoing reasons, it is clear that the notification  

dated 26th July, 2004 was equally binding on DIAL under the  

CLRAA and, therefore, DIAL must abolish all contract labour  

as per the terms of the notification.

87. We have no hesitation in coming to the conclusion that  

the Central Government notification dated 26th July, 2004 is  

clearly binding and applicable to DIAL.  DIAL’s obligation with  

regard to the contract labour in general is clear from the said  

notification.   They  are  liable  to  be  regularized  as  regular  

employees of DIAL.  DIAL has replaced many of the workers  

with  other  trolley  retrievers  and  it  would  be  unrealistic  to  

expect  DIAL  to  regularize  the  employment  of  their  current  

trolley retrievers and member of the workers’ union alike and  

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inequitable to leave the current workers jobless so as to make  

room for erstwhile workers of DIAL.

88. In view of the peculiar facts and circumstances of these  

cases directing DIAL to regularize services of trolley retrievers  

who worked with DIAL till 2003 would be harsh, unrealistic  

and not  a  pragmatic  approach,  therefore,  in  the  interest  of  

justice, we deem it proper to direct DIAL to pay Rupees five  

lacs to each of the erstwhile 136 workers of DIAL who were  

working for them as trolley retrievers till 2003 and in case any  

worker  has  expired,  then  his  or  her  legal  heirs  would  be  

entitled to the said amount. This compensation is paid to the  

workers in lieu of their permanent absorption/reinstatement  

with DIAL and their claim of back wages.   This is in full and  

final settlement of  entire claims of erstwhile 136 workers of  

DIAL.

89. We direct DIAL to pay the amount to these 136 erstwhile  

workers of DIAL within three months after proper verification.  

In  case  the  amount,  as  directed,  is  not  paid  within  the  

prescribed period, then it would carry interest at the rate of  

12% per month from that point till the amount is paid.  

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90. These  appeals  are  accordingly  disposed  of  in  the  

aforementioned  terms.   In  the  facts  and  circumstances  of  

these cases, we direct the parties to bear their own costs.

.….………………………..J.                                                (Dalveer Bhandari)

….………………………..J.                                               (Deepak Verma)

New Delhi; September 15,  2011

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