Bombay High Court
Sunflag Iron And Steel Company Ltd vs State Of Maharashtra on 20 October, 2008
Author: D.D.Sinha
Bench: D.D.Sinha, P.B. Varale
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH : NAGPUR
WRIT PETITION NO.3147 OF 2008
Sunflag Iron and Steel Company Ltd.,
33, Mount Road, Sadar, Nagpur, through
its Sr. Vice President (HRM). ... Petitioner
- Versus -
1) State of Maharashtra, through Secretary,
Department of Labour, Mantralaya,
Mumbai.
2) Assistant Registrar (Unions),
Bombay Industrial Relations Act, 1946,
O/o Additional Commissioner of Labour,
Bhonsale Chamber, Civil Lines, Nagpur-1.
3) Bhartiya Janta Kamgar Mahasangh,
Tilak Putla Karyalay, Mahal, Nagpur,
through its General Secretary.
::: Downloaded on - 09/06/2013 14:00:08 :::
2
4) Sunflag Iron and Steel Mazdoor Sabha,
At and Post Warthi, Taluka Mohadi,
District Bhandara, through its General
Secretary. ... Respondents
-----------------
Shri V.R. Manohar and Shri M.G. Bhangde, Senior Advocates
assisted by Shri R.B. Puranik, Advocate for the petitioner.
Mrs. B.H. Dangre, Additional Government Pleader for the
respondent nos. 1 and 2.
Shri A.M. Gordey, Advocate for the respondent no.3.
Shri D.S. Thakur, Advocate for the respondent no.4.
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Date of reserving the judgment : 18/09/2008
Date of pronouncing the judgment : 20 /10/2008
CORAM : D.D.SINHA AND P.B. VARALE, JJ.
DATED : OCTOBER 20, 2008
JUDGMENT (PER D.D.SINHA, J.) :
Rule returnable forthwith. Heard finally by consent of ::: Downloaded on - 09/06/2013 14:00:08 ::: 3 Shri Manohar and Shri Bhangde, learned Senior Counsel for the petitioner, Mrs. Dangre, learned Additional Government Pleader for the respondent nos.1 and 2, Shri Gordey, learned Counsel for the respondent no.3, and Shri Thakur, learned Counsel for the respondent no.4.
2) Shri Manohar, learned Senior Counsel for the petitioner, submitted that the petitioner is a limited Company incorporated under the Companies Act, 1956 and deals in manufacture and sale of steel alloys. The establishment of the petitioner is governed by the provisions of the Bombay Industrial Relations Act, 1946 (for brevity, hereinafter referred to as "the Act of 1946"). There are six hundred permanent employees in the employment of the petitioner. It is the case of the petitioner that it has outsourced some of its peripheral activities to various Contractors, who employ their own employees for the purpose of execution of work under contract undertaken by them. For this purpose, the petitioner has registered itself as a principal employer under Section 7 of the Contract Labour (Regulation and ::: Downloaded on - 09/06/2013 14:00:08 ::: 4 Abolition) Act, 1970 (for brevity, hereinafter referred to as "the Act of 1970"). Similarly, the contractors, who employ twenty or more employees, have also obtained licence under Section 13 of the Act of 1970.
3) Learned Senior Counsel Shri Manohar contended that till 18.3.1998, five employees elected under Section 28 of the Act of 1946, were acting as representatives of the employees.
However, with effect from 18.3.1998, the respondent no.4 Union was registered as a representative Union for establishment of the petitioner in the local area. The petitioner since then has entered into several agreements/settlements with the respondent no.4 Union. These agreements/settlements are applicable only to the employees of the petitioner.
4) It was further contended by learned Senior Counsel Shri Manohar that respondent no.3 Union made application to the respondent no.2 Assistant Registrar (Unions) under Section 16 of the Act of 1946 for registering itself as a representative Union ::: Downloaded on - 09/06/2013 14:00:08 ::: 5 in place of respondent no.4 Union. The respondent no.2 asked the petitioner vide communication dated 7.3.2008 to submit list of its own employees as well as employees engaged by various Contractors for execution of work under contract. The petitioner accordingly submitted the list vide communication dated 17.3.2008.
5) It was submitted by Shri Manohar, learned Senior Counsel for the petitioner, that petitioner vide letter dated 31.5.2008 brought to the notice of the respondent no.2 that it has registered itself as a principal employer under the Act of 1970 and the employees of the Contractor are not the employees of the petitioner. The respondent no.2 vide his letter dated 6.6.2008 informed the petitioner that the spot inspection and verification would be postponed only by ten days. The respondent no.2 further informed the petitioner that since employees of Contractor fall within the definition of "employee" under the Act of 1946, it would not be possible for him to confine the verification proceedings only to the employees of the petitioner. The ::: Downloaded on - 09/06/2013 14:00:08 ::: 6 petitioner vide communication dated 7.6.2008 reiterated its objection for inclusion of employees of the Contractor in spot inspection and verification procedure. The respondent no.2 informed the petitioner that the request made by the petitioner for exclusion of the employees of the Contractor is rejected. The respondent no.2 heard the parties and passed the impugned order dated 1.7.2008, which reads thus :
"1. The present application dated 1 July 2008 is hereby rejected as the contract labour working in the factory of the applicant are the employees as per the provisions of the BIR Act.
2. The verification of members of both Unions named above include the contract labour as they are employees."
Being aggrieved by the said order passed by the respondent no.2, the petitioner filed the present petition.
6) Shri Manohar, learned Senior Counsel for the ::: Downloaded on - 09/06/2013 14:00:08 ::: 7 petitioner, contended that as per Section 3(13)(a) and 3(14)(e) of the Act of 1946, a person employed by the Contractor is an employee of the principal employer. However, in the year 1970, the Parliament enacted the Act of 1970, which occupies the entire field relating to contract labour. The provisions of the Act of 1970 have been interpreted by the Apex Court in the case of Steel Authority of India Limited and others v. National Union Waterfront Workers and others {(2001) 7 SCC 1} and it has been held that the employees of the Contractor engaged by the principal employer to get the work done under the contract are the employees of the Contractor and not that of the principal employer.
7) Learned Senior Counsel Shri Manohar further contended that in the case of N.T.P.C. and others vs. Badri Singh Thakur and others (2008 (11) SCALE 275), the Apex Court has held that the provisions of the Act of 1970 shall prevail over the provisions of the M.P. Industrial Relations Act, 1960, which are pari materia with the provisions of Section 3(13)(a) and 3(14)(e) ::: Downloaded on - 09/06/2013 14:00:08 ::: 8 of the Act of 1946. It was submitted that the employees of the Contractor engaged by the principal employer for doing the work under the contract are not the employees of the principal employer and, therefore, could not be included while conducting verification of the employees of the principal employer.
8) Shri Manohar, learned Senior Counsel for the petitioner, further argued that the Apex Court in the case of U.P. State Electricity Board vs. Shiv Mohan Singh and another {(2004) 8 SCC 402} has approved the view expressed by the learned Single Judge of the Rajasthan High Court, whereby it was held that the provisions of the Apprentices Act, 1961 being subsequent law, shall prevail over the provisions of the Industrial Disputes Act, 1947, which is prior and general law. It was contended that in the said case, the controversy was that under the Apprentices Act, 1961, an apprentice was not a workman whereas under the Industrial Disputes Act, 1947, an apprentice is a workman. This conflict was resolved by the Apex Court by confirming the decision of the Rajasthan High Court where it has been held that ::: Downloaded on - 09/06/2013 14:00:08 ::: 9 the provisions of the Apprentices Act, 1961 shall prevail over the provisions of Industrial Disputes Act, 1947. It was, therefore, contended by learned Senior Counsel Shri Manohar that in the instant case, the provisions of the Act of 1970 shall prevail and in view of decisions of the Apex Court referred to hereinabove as well as other decisions, which were cited, the impugned order is not sustainable in law.
9) Mrs. Dangre, learned Additional Government Pleader for the respondent nos. 1 and 2, submitted that respondent no.3 Union had made an application under Section 16 of the Act of 1946 for registering itself as a representative Union in place of respondent no.4 Union and, therefore, respondent no.2 initiated spot enquiry and verification proceedings by directing to count employees in the petitioner establishment including employees of the Contractor. Being aggrieved by this action of the respondent no.2, the petitioner filed the present petition.
10) It was further contended by Mrs. Dangre, learned ::: Downloaded on - 09/06/2013 14:00:08 ::: 10 Additional Government Pleader for the respondent nos. 1 and 2, that the provisions of Act of 1946 and Act of 1970 operate in different areas and these provisions do not cover the field occupied by each other. It was submitted that both the statutes are enacted by taking recourse to Entry 24 of the Concurrent List (List III) and the contention of the learned Senior Counsel for the petitioner that both the statutes being enacted by taking recourse to the said Entry, subsequent enactment of the Parliament will override the provisions of the State enactment is misconceived.
The learned Additional Government Pleader submitted hat unless the State Legislature transgresses substantial field occupied by the statute enacted by the Parliament, there is no question of any repugnancy and, therefore, question of declaring the State legislation invalid to that extent does not arise.
11) The learned Additional Government Pleader further contended that Act of 1946 regulates the industrial relations in the establishment whereas the Act of 1970 deals with regulation and abolition of contract labour system existing in the industry.
::: Downloaded on - 09/06/2013 14:00:08 ::: 11There is no inconsistency between the provisions of these two enactments and, therefore, contention of the petitioner that provisions of Section 3(13) and 3(14) of the Act of 1946 create a legal fiction and cannot operate as against Section 10 of the Act of 1970 is merely hypothetical and cannot be accepted.
12) Mrs. Dangre, learned Additional Government Pleader for the respondent nos. 1 and 2, further submitted that the petitioner is comparing the definition of term "employee" given in the Act of 1946 by taking recourse to the provisions of Section 10 of the Act of 1970. Section 3(13)(a) of the Act of 1946 stipulates "employee" means any person employed to do any skilled or unskilled work for hire or reward in any industry and includes a person employed by a Contractor to do any work for him in the execution of a contract with an employer within the meaning of sub-clause (e) of clause (14). It was contended that unless definition of "employee" given in Section 3(13) of the Act of 1946 is struck down, same cannot be rendered nugatory by necessary implication in view of provisions of the Act of 1970. The ::: Downloaded on - 09/06/2013 14:00:08 ::: 12 learned Additional Government Pleader placed reliance on the decisions cited by the learned Counsel for the respondent no.3 in order to substantiate her contentions.
13) Shri Gordey, learned Counsel for the respondent no.3, submitted that provisions of Section 3(13) of the Act of 1946 create a legal fiction whereby an employee though employed through a Contractor, is an employee of the principal employer in spite of the fact that the Act of 1970 prohibits employment of contract labour. It was submitted that provisions of both the Acts operate in different areas and, therefore, it will be unjust to render the provisions of Section 3(13) and 3(14) of the Act of 1946 inoperative merely on the basis of provisions of subsequent Act of 1970 by necessary implication. It was contended that there is no conflict between the provisions of Section 3(13) and 3(14) of the Act of 1946 and Sections 2(i) and 10 of the Act of 1970.
On the other hand, all these provisions aim at achieving same objective, i.e. a person engaged by the establishment as well as contract labour for carrying out the work under the contract ::: Downloaded on - 09/06/2013 14:00:08 ::: 13 should be given the same status and should be treated as employees of the principal employer. Since there is no repugnancy between these provisions, which are supplementary to each other, the contention of the petitioner that the Act of 1970 being a subsequent legislation has overriding effect on the Act of 1946 in view of Article 254 of the Constitution of India is misconceived. Learned Counsel Shri Gordey submitted that the law laid down in the case of The State of Bombay vs. The Maharashtra Sugar Mills Ltd. (AIR 1951 Bombay 68), Tukaram Tanaji Mandhare and another vs. M/s. Raymond Woollen Mills Ltd. and others (2005 (4) Mh.L.J. 1045), and Sakhar Kamgar Union vs. Shri Chhatrapati Rajaram Sahakari Sakhar Karkhana Ltd. and another (1996 (1) Mh.L.J. 556) supports the case of the respondent no.3.
14) We have given anxious thought to the various contentions canvassed by the respective learned Counsel for the parties and perused the impugned order passed by the respondent no.2 as well as decisions of the Apex Court and High ::: Downloaded on - 09/06/2013 14:00:08 ::: 14 Court cited by the learned Counsel for the parties. In the instant case, the following facts have given rise to the controversy in question :
The respondent no.3 Union made an application under Section 16 of the Act of 1946 for registering itself as a representative Union in place of respondent no.4 Union. The respondent no.2 vide letter dated 6.6.2008 informed the petitioner that since employees of the Contractor fall within the definition of "employee" under the Act of 1946, it would not be possible for the respondent no.2 to confine spot inspection and verification proceedings only to the employees of petitioner establishment and it would include employees of the Contractor.
The petitioner vide communication dated 7.6.2008 objected for inclusion of employees of the Contractor in the spot inspection and verification proceedings initiated by the respondent no.2.
The respondent no.2 rejected the said objection by the impugned order dated 1/7/2008. Hence, the petitioner has filed the present petition.::: Downloaded on - 09/06/2013 14:00:08 ::: 15
15) In the instant case, it is not in dispute that the petitioner establishment is covered by the provisions of the Act of 1946. Section 3(13)(a) and 3(14) of the Act of 1946 respectively define expression "employee" and "employer" and combine reading of these provisions demonstrate that in an undertaking, which is covered by the Act of 1946, if any work, which is ordinarily part of the undertaking has been entrusted to a Contractor for execution by contract labour, in that case, the employees of the Contractor engaged for execution of work will be deemed to be employees of principal employer within the meaning of Section 3(13)(a) of the Act of 1946. The impugned order passed by the respondent no.2 demonstrates that respondent no.2 has held that persons employed through a Contractor by the petitioner establishment are employees of the petitioner establishment within the meaning of Section 3(13)(a) of the Act of 1946 and petitioner would be principal employer as per the provisions of Section 3(14)(e) of the Act of 1946, even after the Act of 1970 came into force.::: Downloaded on - 09/06/2013 14:00:08 ::: 16
16) Section 30 of the Act of 1970 deals with the effect of laws and agreements inconsistent with the provisions of the said Act. Section 30(1) contemplates that the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law or any terms of any agreement or contract of service or any Standing Orders applicable to the establishment whether made before or after commencement of this Act. (Sub-section (2) is not relevant for the controversy in issue). Section 10 of the Act of 1970 empowers the appropriate Government, after following due procedure mentioned in the said Section, to issue notification in the Official Gazette prohibiting employment of contract labour in any process or operation or other work in any establishment. It is evident that the Act of 1970 was enacted by the Parliament to get over the abuses resulting from the system of employment of contract labour. The intention of the Parliament in enacting the Act of 1970 is not to perpetuate system of contract labour. The provisions of Section 30 of the Act of 1970 has different facets. Sub-section (1) gives effect to the provisions of the Act of 1970 notwithstanding ::: Downloaded on - 09/06/2013 14:00:08 ::: 17 anything inconsistent therewith contained in any other law made before or after commencement of the Act of 1970. At the same time, proviso to sub-section (1) of Section 30 of the Act of 1970 does not take away the efficacy of any agreement, contract of service or Standing Order, which benefits the contract labour. It is, therefore, evident that the Act of 1970 was enacted by the Parliament in the year 1970 with the intention not to perpetuate system of contract labour and in view of provisions of Section 30(1) of the Act of 1970, the provisions of Act of 1970 are given effect, notwithstanding anything inconsistent therewith contained in any other law, which includes the Act of 1946. Though the employees of the Contractor engaged in execution of work under contract are doing the same thing as that of the regular employees of the establishment, but they cannot be treated to be the employees of the principal employer considering the object for which the Act of 1970 is enacted by the Parliament. At the same time, proviso to sub-section (1) of Section 30 of the Act of 1970 protects the benefits extended to the contract labour under any agreement, contract of service or the Standing Orders, if they are ::: Downloaded on - 09/06/2013 14:00:08 ::: 18 more favourable and beneficial to them than the benefits flowing from the relevant provisions of the Act of 1970.
17) The Apex Court in the case of N.T.P.C. and others (cited supra) considered the provisions of Section 2(13)(a) read with Clause (e) of Section 2(14) of the M.P. Industrial Relations Act, 1960 (which are pari materia with the provisions of Section 3(13)(a) and Section 3(14)(e) of the Act of 1946) as well as provisions of the Act of 1970, in great detail and from various dimensions. It will be appropriate to reproduce some of the relevant facts involved in the said case in nutshell. The controversy before the learned Single Judge of the Madhya Pradesh High Court, raised in the writ petitions was that the provisions of M. P. Industrial Relations Act, 1960 are applicable to the Corporation and vide notification dated 31.12.1960, the said Act was made applicable to the Electricity Generation and Distribution in which Corporation was engaged. Reliance was placed on Entries 22, 23 and 24 of the Concurrent List of Schedule VII of the Constitution of India and the contention canvassed ::: Downloaded on - 09/06/2013 14:00:08 ::: 19 before the learned Single Judge was that once legislation is passed by the Parliament in respect of any field covered under the Concurrent List, same would have preference over the State law.
The learned Single Judge held that the writ petitioners being the contract labours were not the employees of the Corporation within the meaning of Section 2(13)(a) read with Clause (e) of Section 2(14) of the Act of 1960 after coming into force of the Act of 1970. Similarly, the writ petitioners were also seeking direction against the Corporation to absorb them as its workmen as they were contract labours. The learned Single Judge held that since there was no notification issued by the appropriate Government abolishing the contract labour under Section 1 of the Act of 1970, there was no scope for granting any relief.
18) Before the Division Bench of the Madhya Pradesh, the stand of the petitioners, who were the appellants, was that the learned Single Judge was not justified in holding that 1960 Act had no application in the absence of issuance of notification under Section 10 of the Act of 1970. The conclusions recorded by the ::: Downloaded on - 09/06/2013 14:00:08 ::: 20 Division Bench of High Court of Madhya Pradesh are incorporated by the Supreme Court in para (9) of its judgment, which read thus :
"(9) The High Court held that the object of the Act was to regulate the employment of the contract labour in certain establishments and to provide for its abolition in certain circumstances and the matters connected therewith.
Reference was made to Sections 21 and 30 of the Act and it was held that though there was an over-riding effect yet the beneficial provision of the statute was not extinguished. It was further observed that once Notification is issued under Section 10 of the Act, the matter would be different and the decision rendered by this Court in Steel Authority's case (supra) would be applicable in full force. In the absence of Notification, the other general relevant law would be applicable. With reference to various provisions of 1960 Act it was held that there can be reconciliation of both the decisions rendered by Division Benches of the High Court. When there is a dispute with regard to wage structure qua class of employees, they have to move the Labour Court as per the provisions of Sections 51 and 52 of the 1960 Act and if it is an individual, he can move the High Court under ::: Downloaded on - 09/06/2013 14:00:08 ::: 21 Schedule II. Accordingly, it was held that the view of learned Single Judge was not correct."
19) The Apex Court while rendering the decision in the case of N.T.P.C. and others, considered the decision in the case of Municipal Corporation of Greater Mumbai vs. K.V. Shramik Sangh and others {2002 (4) SCC 609), particularly the findings recorded in paras (17) and (28), which are based on the conclusion recorded in para (125) by the Apex Court in the case of Steel Authority of India Ltd. and others (Constitution Bench judgment).
The finding recorded in para (17) reads thus :
"17. A Division Bench of the Bombay High Court following the judgment of this Court in Air India case had directed the appellant to absorb the contract labour but the Constitution Bench judgment in view of the overruling of Air India case set aside the judgment of the High Court leaving it open to the contract labour to seek appropriate relief in terms of the main judgment as stated in para 136 of the Constitution Bench judgment. Similar orders were passed as can be seen from paras 137, 140 and 146 of the same judgment dealing with ::: Downloaded on - 09/06/2013 14:00:08 ::: 22 other cases where orders were passed by the High Court relying on Air India case."
20) The Apex Court in para (28) of its decision has observed thus :
"28) As laid down in the Constitution Bench judgment, absorption of contract labourers cannot be automatic and it is not for the court to give such direction. Appropriate course to be adopted is as indicated in para 125 of the said judgment in this regard. Thus, having considered all aspects, we are of the view that the impugned judgment and order cannot be upheld."
21) The Apex Court in para (21) of the judgment in the case of N.T.P.C. and others (cited supra), after taking into consideration its decisions in the case of Municipal Corporation of Greater Mumbai as well as Steel Authority of India Ltd. and others (cited supra) has observed thus :
"21) In view of what has been stated above, the Division ::: Downloaded on - 09/06/2013 14:00:08 ::: 23 Bench was not justified in its conclusions and on the contrary, learned Single Judge had correctly analysed the position in law. That being so, Civil Appeals are allowed.
There will be no order as to costs."
22) The observations made by the Apex Court in the case of N.T.P.C. and others (cited supra) make it evident that neither Section 10 of the Act of 1970 nor any other provision in the Act of 1946 expressly or by necessary implication provides for automatic absorption of contract labour on issuing notification by the appropriate Government under sub-section (1) of Section 10 prohibiting employment of contract labour in any process, operation or other work in any establishment. Consequently, the principal employer is not required to order absorption of the contract labour working in the establishment concerned and, therefore, in the case of Municipal Corporation of Greater Mumbai (cited supra), the direction given by the Division Bench of Bombay High Court, in view of law laid down in the case of Air India to absorb contract labour, was set aside since the decision of the Apex Court in Air India case came to be overruled ::: Downloaded on - 09/06/2013 14:00:08 ::: 24 by the Constitution Bench decision in the case of Steel Authority of India Ltd. and others (cited supra) and since the Division Bench of Madhya Pradesh High Court relied on the law laid down by the Apex Court in Air India case, the said decision came to be set aside and the decision of the learned Single Judge of Madhya Pradesh High Court was affirmed.
23) The Apex Court in paras (57) and (61) of the judgment in the case of U.P. State Electricity Board (cited supra) has observed thus :
"(57) In this connection reference may be made to a decision of the Rajasthan High Court in the case of Hanuman Prasad Choudhary v. Rajasthan SEB wherein Justice S.C. Agrawal (as he then was) observed thus (Lab IC pp. 1014-15) :
"An apprentice governed by the Apprentices Act is not a workman for the purpose of the Industrial Disputes Act and the provisions of the Industrial Disputes Act would not be applicable to him.
There is apparent conflict between the provisions of ::: Downloaded on - 09/06/2013 14:00:08 ::: 25 Section 2(s) of the Industrial Disputes Act and Section 18 of the Apprentices Act inasmuch as Section 2(s) postulates that an apprentice is a workman to whom the provisions of Industrial Disputes Act would be applicable whereas Section 18 of the Apprentices Act declares that an apprentice governed by the Apprentices Act is not to be treated as a workman and the provisions of the Industrial Disputes Act would not be applicable to him.
The conflict between the two laws can be resolved by applying the principle of harmonious construction. The Apprentices Act is not an exhaustive Act to cover all types of apprentices because in view of the definition of term `apprentice' as contained in Section 2(aa) of the Apprentices Act, it is applicable only to persons who are undergoing apprenticeship training in pursuance of the contract of apprentices executed under Section 4 of the said Act. It is possible to visualise persons who may be engaged as apprentices but who are not covered by the Apprentices Act. In that view of the matter, it can be said that for the purpose of Section 2(s) of the Industrial Disputes Act, a person who is designated as apprentice but is not governed by the Apprentices Act would be a workman governed by the provisions of the Industrial Disputes Act. But an apprentice who is governed by the provisions of the Apprentices Act would not be a ::: Downloaded on - 09/06/2013 14:00:08 ::: 26 workman under Section 2(s) of the Industrial Disputes Act and would not be governed by the provisions of the Industrial Disputes Act.
Apart from the principle of harmonious construction, the Apprentices Act, 1961 being a subsequent particular law as compared to ID Act, 1947, which is prior and general, the provisions of the Apprentices Act, 1961 would prevail over those of ID Act."
"61. In view of the conflicting decisions of the various High Courts, we are of the opinion that the view taken by the Rajasthan, Kerala and Allahabad High Courts appears to be in consonance with the view taken by us and we do not agree with the view subscribed by the High Courts of Gujarat and Madhya Pradesh."
The observations made by the Apex Court in para (61) in the case of U.P. State Electricity Board make it evident that in case there are two different situations emerging from two different legislations in respect of the issue, which is not identical, but similar, the same can be resolved by applying the principle of harmonious construction, after taking into consideration the ::: Downloaded on - 09/06/2013 14:00:08 ::: 27 objectives to be achieved by the legislation, which is later in point of time.
24) Similarly, the Apex Court in para (87) of its decision in the case of Steel Authority of India Ltd. and others (cited supra) has observed thus :
"87. Now turning to the provisions of the Act, the scheme of the Act is to regulate conditions of workers in contract labour system and to provide for its abolition by the appropriate Government as provided in Section 10 of the CLRA Act. In regard to the regulatory measures, Section 7 requires the principal employer of an establishment to get itself registered under the Act. Section 12 of the Act obliges every contractor to obtain licence under the provisions of the Act. Section 9 of the Act places an embargo on the principal employer of an establishment, which is either not registered or registration of which has been revoked under Section 8, from employing contract labour in the establishment. Similarly, Section 12(1) bars a contractor from undertaking or executing any work through contract labour except under and in accordance ::: Downloaded on - 09/06/2013 14:00:08 ::: 28 with a licence. Sections 23, 24 and 25 of the Act make contravention of the provisions of the Act and other offences punishable thereunder. With regard to the welfare measures intended for the contract labour, Section 16 imposes an obligation on the appropriate Government to make rules to require the contractor to provide canteen for the use of the contract labour. The contractor is also under an obligation to provide restrooms as postulated under Section 17 of the Act. Section 18 imposes a duty on every contractor employing contract labour in connection with the work of an establishment to make arrangement for a sufficient supply of wholesome drinking water for the contract labour at convenient places, a sufficient number of latrines and urinals of the prescribed type at convenient and accessible places for the contract labour in the establishment, washing facilities, etc. Section 19 requires the contractor to provide and maintain a first-aid box equipped with prescribed contents at every place where contract labour is employed by him. Section 21 specifically says that a contractor shall be responsible for payment of wages to workers employed by him as contract labour and such wages have to be paid before the expiry of such period as may be prescribed. The principal employer is enjoined to have his representative present at the time of payment of wages. In the event of the contractor failing ::: Downloaded on - 09/06/2013 14:00:08 ::: 29 to provide amenities mentioned above, Section 20 imposes an obligation on the principal employer to provide such amenities and to recover the cost and expenses incurred therefor from the contractor either by deducting from any amount payable to the contractor or as a debt by the contractor. So also, sub-section (4) of Section 21 says that in the case of the contractor failing to make payment of wages as prescribed under Section 21, the principal employer shall be liable to make payment of wages to the contract labour employed by the contractor and will be entitled to recover the amount so paid from the contractor by deducting from any amount payable to the contractor or as a debt by the contractor. These provisions clearly bespeak treatment of contract labour as employees of the contractor and not of the principal employer."
The Apex Court after taking into consideration the scheme of the Act of 1970, particularly provisions of Sections 7, 8, 9, 10, 12, 16, 17, 18, 20 and 21, has concluded that these provisions clearly demonstrate that contract labour is an employee of the contractor and not of the principal employer.
::: Downloaded on - 09/06/2013 14:00:08 ::: 3025) Similarly, the Apex Court in para (89) of the judgment in Steel Authority of India Ltd. and others (cited supra) has observed thus :
"89. In the light of the above discussion, we are unable to perceive in Section 10 any implicit requirement of automatic absorption of contract labour by the principal employer in the establishment concerned on issuance of notification by the appropriate Government under Section 10(1) prohibiting employment of contract labour in a given establishment."
It is, therefore, evident that in view of law laid down by the Apex Court in the case of Municipal Corporation of Greater Mumbai, Steel Authority of India Ltd. and others and N.T.P.C. and others (cited supra), even after issuance of notification by the appropriate Government under Section 10 of the Act of 1970 prohibiting employment of contract labour in a given establishment, there is no automatic absorption of contract labour by the principal employer in the establishment concerned since ::: Downloaded on - 09/06/2013 14:00:08 ::: 31 the contract labour is an employee of the contractor and not of the principal employer.
26) The Act of 1970 has been enacted by the Parliament for regulating the conditions of workers in the contract labour system and to provide for its abolition by the appropriate Government as provided in Section 10 of the said Act. Similarly, the Apex Court has held in the decisions referred to hereinabove, that the contract labour is an employee of the contractor and not of the principal employer and there is no automatic absorption in the establishment after issuance of notification by the appropriate Government under Section 10(1) of the Act of 1970. The Contract Labour (Regulation and Abolition) Act, 1970 is a subsequent legislation than the Act of 1946 and since different legal situations are emerging in view of the provisions of these Acts, same can be resolved by applying the principle of harmonious construction to the provisions of both these Acts. At the same time, the Act of 1970 being a legislation, which is later in point of time, enacted by the Parliament, the provisions ::: Downloaded on - 09/06/2013 14:00:08 ::: 32 thereof, in view of law laid down by the Apex Court in the above referred decisions and in view of peculiar circumstances of the case in hand, need to be given effect without resorting to Article 254 of the Constitution and are required to be construed accordingly.
27) Similarly, Article 254(1) of the Constitution deals with inconsistency between laws made by the Parliament and laws made by the Legislature of the State and provides that if any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament, which Parliament is competent to enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then subject to the provisions of clause (2), the law made by Parliament, whether passed before or after the law made by the Legislature of such State, or, as the case may be, the existing law, shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void. Sub-article (2), which is an exception, provides that where a law made by the Legislature of a State with respect to one of the matters ::: Downloaded on - 09/06/2013 14:00:08 ::: 33 enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in that State.
28) The Apex Court in para (8) of its decision in the case of Zaverbhai Amaidas v. State of Bombay (AIR 1954 SC 752) has observed thus :
"8. In the present case, there was no express repeal of the Bombay Act by Act No. 52 of 1950 in terms of the proviso to Art. 254(2). Then the only question to be decided is whether the amendments made to the Essential Supplies (Temporary Powers) Act by the Central Legislature in 1948, 1949 and 1950 are "further legislation" falling within S. 107(2) of the Government of India Act or "law with respect to the same matter" falling within Art. 254(2). The important thing to consider with reference to this provision is whether the legislation is "in respect of ::: Downloaded on - 09/06/2013 14:00:08 ::: 34 the same matter". If the later legislation deals not with the matters which formed the subject of the earlier legislation, but with other and distinct matters though of a cognate and allied character, then Art. 254(2) will have no application. ..."
29) In the instant case, both the legislations are enacted -
one by the State and other by the Parliament - by taking recourse to Entry 24 of the Concurrent List (Schedule VII) of the Constitution. However, the Act of 1946 regulates the industrial relations in the establishment whereas the object of enacting the Act of 1970 by the Parliament is to get over the abuses resulting from system of employment of contract labour.
30) The Parliament adopted twin measures to curb abuses of employment of contract labour to regulate employment of contract labour suitably and to abolish the contract labour system in certain circumstances as observed by the Apex Court in the case of Steel Authority of India Ltd. Similarly, the subject matter of the 1970 legislation partly covers the matter, which forms the ::: Downloaded on - 09/06/2013 14:00:08 ::: 35 subject matter of earlier legislation, i.e. the Act of 1946 and takes into its ambit some other and distinct matters though of a cognate and allied character. Hence, in view of the decision of the Apex Court in the case of Zaverbhai Amaidas (cited supra), Article 254(2) of the Constitution will have no application and in view of law laid down by the Apex Court in the case of Municipal Corporation of Greater Mumbai, Steel Authority of India Ltd. and others and N.T.P.C. and others, the contract labour shall be the employee of the contractor and not of principal employer.
Therefore, in spite of issuing notification by the appropriate Government under Section 10(1) of the Act of 1970 prohibiting employment of contract labour in a given establishment, there is no automatic absorption of the contract labour by the principal employer in the establishment concerned and hence, the impugned order cannot be sustained.
31) Shri Gordey, learned Counsel for the respondent no.3, in order to substantiate the contentions, relied on the decisions of the Apex Court as well as this Court. So far as decision of this ::: Downloaded on - 09/06/2013 14:00:08 ::: 36 Court in the case of The State of Bombay (cited supra) is concerned, this Court was required to consider the scope and ambit of Section 3(13)(a) and 3(14)(e) of the Act of 1946 and there was no occasion for this Court to consider the issue regarding effect of notification issued by the appropriate Government under Section 10(1) as well as purport of Section 30 of the Act of 1970. Similarly, this Court was also not required to consider the effect of provisions of subsequent legislation enacted by the Parliament in the case of difference in regards to the provisions of earlier legislation enacted by the State by taking recourse to Entry 24 of the Concurrent List in Schedule VII of the Constitution and, therefore, the law laid down by this Court in the case of State of Bombay (cited supra) does not further the case of the respondents.
32) So far as other decisions of this Court cited by Shri Gordey, learned Counsel for the respondent no.3, in the case of Tukaram Tanaji Mandhare and another as well as in the case of Sakhar Kamgar Union are concerned, same do not address the ::: Downloaded on - 09/06/2013 14:00:08 ::: 37 issue involved in the present case and, therefore, they do not further the case of the respondents.
33) For the reasons stated hereinabove, the impugned order dated 1.7.2008 passed by the respondent no.2 is quashed and set aside. The rule is made absolute in the above terms. No order as to costs.
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