Malabar Cement Ltd vs The Kerala State Security Staff ... on 2 March, 2009

[Cites 26, Cited by 0]

Kerala High Court

Malabar Cement Ltd vs The Kerala State Security Staff ... on 2 March, 2009

Can the liability pursuant to fixation of the wage rate by the third respondent/Deputy Chief Labour Commissioner (Central) in terms of Rule 25(2)(v)(b)of the Contract Labour (Regulation and Abolition) Central Rules, 1971 ( for short 'rules') be shifted to the shoulders of the principal employer, that too, after the expiry of the agreement on contract labour, labelling it as a liability envisaged under Rule 21(4) of the said Rules, with liberty to have it set off from the amounts payable to the Contractor or be recovered from the contractor engaged by the principal employer? This is the crucial question to be answered in these appeals preferred by the principal employer - a "Government Company" coming within the purview of Section W.A.Nos.1687 & 1788 OF 2009 2 617 of the Companies Act, 1956.

2. The first respondent is a Union registered under the Trade Unions Act, representing 23 workers among the total of 52 contract labourers sought to be engaged by the principal employer through the Contractor. The second respondent is the Contractor, who deployed the contract labourers to work under the 'Principal employer', pursuant to the award of contract. The third respondent is a statutory authority in terms of the Rule 25 (5) of the Rules.

3. The appellant company is having two units namely:

(i) mining unit and (ii) Township unit. So as to meet the manpower requirement, particularly in relation to the 'security' and 'fire and service personnel', the appellant had floated a tender for awarding the contract; the appellant company having already obtained registration under Section 7 of the Contract Labour (Regulations and Abolition)Act, 1970 (for short, 'Act').

The second respondent turned to be the successful bidder, who in turn was awarded the contract to supply the man power requirement as above. It was accordingly, that about 52 contract W.A.Nos.1687 & 1788 OF 2009 3 labourers were made available, who were engaged by the appellant from 01.04.1997, initially for a period of six months. The tenure of the contract was subsequently extended at different points of time and finally, till 30.09.1999.

4. The appellant company took steps to disengage the contract labourers deployed by the second respondent/Contractor, by the expiry of the terms of the Contract. The first respondent/Union representing 23 contract workers sought to challenge the same by filing O.P.No.17664 of 1999. The main prayers in the above O.P. and other connected cases were to regularise the service of the contract workers ; to direct the respondents not to engage any one other than the writ petitioners; to direct the competent authority under the 'Act' to issue a notification under Section 10 of the 'Act' prohibiting contract labour and also to fix proper 'wage rate' payable to the contract workers. The matter was finally heard and by judgment dated 22.11.1999, a Division Bench of this Court dismissed the above O.P along with other connected matters.

5. Being aggrieved of the said verdict, the matter was W.A.Nos.1687 & 1788 OF 2009 4 taken up by the Union before the Apex Court. When the matter came up for consideration on 16.12.1999, an interim stay limiting the same to the extent that 'status quo' regarding the existing service conditions of the listed employees mentioned therein be maintained till further orders, was passed. The interim order passed by the Supreme Court was given effect to and the contract workers were permitted to continue. Later, the SLP preferred before the Supreme Court came to be dismissed on 03.11.2000, based on which, the service of the contract labourers who were permitted to continue based on the interim order passed by the Apex Court was terminated.

6. No industrial dispute was raised by the Union/workers. The first respondent Union preferred Ext.P1 complaint/representation before the third respondent, seeking to determine the 'wage rate' under rule 25(2)(v)(a) and(b) of the aforesaid rules and no other relief was sought for. It was conceded therein, that the appellant industry was a 'controlled industry'; that the 'appropriate Government' was the Central Government and further that, a clause was incorporated in the W.A.Nos.1687 & 1788 OF 2009 5 agreement between the 'Principal employer' (appellant company) and the Contractor to the effect that the Contractor had to indemnify the 'Principal employer' in respect of all statutory obligations under the various welfare legislations including the Contract Labour (Regulation and Abolition) Act and the Rules thereunder. The prayer sought for in the said representation was in the following terms:

'On the basis of the aforesaid facts it is humbly prayed that this Honourable Authority may be pleased to take expeditious steps to determine the wage rate applicable in the case of workmen engaged by the managements as Security Guards in the Mines and Township either separately or jointly as per the provisions of law invoking the powers vested with this Honourable Authority under Rules 25(2)(v)(a) and (b) of the Contract Labour (Regulation and Abolition) Central Rules 1971."

7. Detailed statement of objections was submitted by the appellant/'Principal employer', a copy of which has been produced as Ext.P2. The appellant filed supplementary objection as well, vide Ext.P3. The second respondent/Contractor denied the allegations and sought to declare that the contractor was not W.A.Nos.1687 & 1788 OF 2009 6 liable for any lapses on the part of the appellant company/ 'Principal employer'. After hearing both the sides, the third respondent/statutory authority passed Ext.P5 order on 30.06.2000, fixing the 'wage rates' as payable to the different categories of posts. The operative date of the order was stipulated as w.e.f. '01.09.1999'. The wage rates fixed as contained in the last paragraph of Ext P5 are in the following terms:

"On the basis of the above observations I hereby direct the Contractor Industrial Security Force and Management of Malabar Cements Ltd., to pay the following rates of wages to the security personnel employed in the mines and town ship of Malabar Cements Ltd., to meet the ends of justice

a) Security Guards Rs.2,300/-pm

b) Head Guards Rs.2,500/-pm

c) Security Supervisor Rs.2,700/-pm The parties are directed to pay the proportionate higher rates of wages as paid to the above three categories to the gunman. The above rates of wages paid to the security guards and other categories of security personnel should not be inclusive of service charges and other incidental expneses of the contractor or the principal employer as the case may be. Necessary clauses may be incorporated W.A.Nos.1687 & 1788 OF 2009 7 in the contract agreement made between the PE and the contractor. The hours of work are reasonable. As regards the holidays, the security personnel's employed by the contractor should be given holidays, leave etc., and other conditions of service should be provided on par with the regular employees employed by Malabar Cements Ltd., in mines and township and also as provided under the Contract Labour (Regulation & Abolition) Act 1970 and Rules made thereunder. "

By virtue of the above directions, the third respondent directed to incorporate necessary clauses in the contract agreement between the 'Principal employer' and the 'Contractor' and the liability was mulcted jointly upon the Contractor as well as on the 'Principal employer'.

8. Pointing out that no contract was subsisting after 30.09.1999 and further that no liability could have been fixed upon the shoulders of the 'Principal employer' and also questioning the authority of the third respondent to have passed Ext.P5 order dated 30.06.2000 in the form of an adjudicatory exercise to fix the liability, but for showing it only as a part of the condition in the licence issued to the contractor, the W.A.Nos.1687 & 1788 OF 2009 8 appellant/'Principal employer' approached this Court by filing O.P. No.23019 of 2000 seeking to set aside the same. The first respondent/Union had also approached this Court by filing O.P.No.19419 of 2000 seeking for a direction to have the order passed by the 3rd respondent implemented without delay. Both the matters were heard together by a learned Judge of this Court, who chose to sustain Ext.P4 order and the Original Petition filed by the appellant was dismissed, whereas the Original Petition filed by the Union was allowed. The learned single Judge also observed in paragraph 9 of the judgment, that the arrears cannot be paid either to the Contractor or the Union, because there was no guarantee that it would ultimately reach the real workmen and hence a duty was cast upon the appellant/'Principal employer' to trace the whereabouts of the workers and to effect payment of arrears based on the wage rate determined by the 3rd respondent, with liberty to the workmen to file a Contempt of Court case and also to move the Industrial Court under Section 33C(2) of the Industrial Disputes Act, in case the direction was not complied with. This made the appellant/'Principal employer' W.A.Nos.1687 & 1788 OF 2009 9 feel aggrieved and to challenge the proceedings by way of these two appeals (arising from the two different writ petitions.)

9. The first respondent Union has entered appearance; whereas notice to the second respondent could not be served, under which circumstance, as permitted by this Court, newspaper publication was effected. Copy of the publication has been produced before this Court, based on which, service of notice to the second respondent has been declared as complete.

10. Heard Mr.M.N.Radhakrishna Menon, the learned counsel appearing for the appellant Company and Mr. Thomas Abraham who entered appearance on behalf of the first respondent at length. The sum and substance of the arguments advanced by the learned counsel for the appellant is that; going by the scheme of the statute, no liability pursuant to determination of 'wage rate' under Rule 25(2)(v) can be fixed upon the 'Principal employer' and that it can only be incorporated as a 'condition of licence' at the time of issue or renewal, in turn to be satisfied by the Contractor. If there is any violation as to the non-satisfaction of the said condition by the W.A.Nos.1687 & 1788 OF 2009 10 Contractor, it is open for the statutory authority to suspend or revoke the licence and that's all. The duty cast upon the 'Principal employer' under Rule 21(4) of the Rules is only to see that the actual wage payable to the workers is ensured as paid by the Contractor and if at all there is any deficit, to satisfy the same and to have the same set off/recovered against the payments to be effected to the contractor. The learned counsel also referred to the various provisions of the statute, both in the 'Act' as well as in the Rules, right from the 'Preamble' and the specific grounds raised in the writ petition in support of the challenge were also adverted to. Reliance was sought to be placed on the decision rendered by the Apex Court in Hindustan Steel Works Construction Ltd. vs. Commissioner of Labour & others. (1997 (1) LLJ 46) to the effect that no liability can be mulcted upon the 'Principal employer' in terms of Rule 25(2)(v)(a); which is stated as equally applicable with regard to Rule 25(2) (v) (b) as well.

11. The learned counsel for the appellant pointed out that the second respondent/Contractor was the licencee under Section W.A.Nos.1687 & 1788 OF 2009 11 12 of the Act. In fact, the Contractor was having independent coverage of all the workers deployed by him under the EPF Act/Scheme and he was assigned with the code "K.R.13933"

by the EPF authorities. Similarly, the second respondent Contractor was having independent registration under the ESI Act as well, with the code assigned by the ESI authorities as '54/9661/101'. By virtue of the terms of the agreement between the appellant/'Principal employer' and the Contractor( a copy of which was placed for perusal of this Court), the liability of the appellant was only to pay the amount as stipulated in the contract agreement, however with liability to oversee the payments effected by the Contractor to the workers, in terms of Section 21. It is pointed out that there is no dispute that any default was made by the appellant in effecting the payment agreed to be paid to the 'Contractor' as per the agreement and as such, nothing more was payable by the appellant under any circumstances. It is further brought to the notice of this Court that there was no minimum wage notification under the Payment of Minimum Wages Act and that there is no violation of any W.A.Nos.1687 & 1788 OF 2009 12 provisions of the labour statutes at the hands of the appellant/'Principal employer'.

12. Mr. Thomas Abraham, the learned counsel appearing for the first respondent/ Union submits that the verdict passed by the learned single Judge fixing the liability upon the appellant/'Principal employer' is strictly in terms of Section 21 (4) of the Act; whereby there is a duty upon the 'Principal employer' to make the deficit, if any, in relation to the wages paid by the Contractor and that the 'Principal employer' could recover the same from the Contractor. The scheme of the statute is such that, the poor workers are not exploited at the hands of anybody; neither the Contractor nor the 'Principal employer' and as such, the liability now cast upon the 'Principal employer'/appellant is part of their statutory obligation. It is also pointed out by the learned counsel that the situation considered by the Apex Court in 1997(1)LLJ 46 (cited supra) was only in relation to the circumstance dealt with under Rule 25(2)(v)(a) and not in relation to Rule 25 (2)(v)(b), which is the provision involved herein.

W.A.Nos.1687 & 1788 OF 2009 13

13. To understand the scope of the rival submissions, a reference to the scheme of the statute is necessary. The 'Act' was introduced in the year 1970 to regulate the employment of contract labour in certain establishments and to provide for its abolition in certain circumstances and for matters connected therewith; as discernible from the 'Preamble'. There is no dispute with regard to the application of the Act to the appellant establishment, who is engaged in manufacturing and marketing cement, which is a 'controlled industry'. It is also not pointed out that, as per the Industries Development and Regulation Act, 1951, cement industry has been declared as a 'controlled industry'. Status of the appellant as the 'Principal employer' coming within the purview of Section 2(g) is also not disputed; and so also is the position with regard to the status of the second respondent, who is a contractor in terms of Section 2(c). After providing for constitution of Central Advisory Board and State Advisory Board (by way of Sections 3 and 4 respectively) the 'Act' provides for registration of certain establishments under Section 7; which stands satisfied in the case of the appellant. W.A.Nos.1687 & 1788 OF 2009 14 Section 10 provides for 'Prohibition' of employment of contract labour and Section 12 deals with licensing of Contractors. Licence under Section 12(1) has to be in in 'Form 6' and Annenxure to Form 6 contained the conditions to be incorporated in the licence. Rule 22 deals with the matters to be considered for granting/renewal of licence, while Rule 24 deals with the security to be furnished in terms of the rate of wage, etc.

14. The relevant rule under which Ext.P1 application was filed before the third respondent is Rule 25(2)(v)(a)&(b). Rule 25 deals with the forms and terms and conditions of the licence, which is reproduced below:

"25. Forms and terms and conditions of licence:(1) Every licence granted under sub-section (1) of Section 12 shall be in Form VI.

(2) Every licence granted under sub-rule (1) or renewed under rule 29 shall be subject to the following conditions, namely;

                  (i)    xxxx

                  (ii)   xxxxx

                  (iii)  xxxx

                  (iv)   xxxx

(v) (a) in cases where the workman employed by W.A.Nos.1687 & 1788 OF 2009 15 the contractor perform the same or similar kind of work as the workmen directly employed by the principal employer of the establishment, the wage rates, holidays, hours of work and other conditions of service of the workmen of the contractor shall be the same as applicable to the workmen directly employed by the principal employer of the establishment on the same or similar kind of work.

Provided that in the case of any disagreement with regard to the type of work the same shall be decided by the Deputy Chief Labour Commissioner (Central)

(b) In other cases the wage rates, holidays, hours of work and conditions of service of the workmen of the contractor shall be such as may be specified in this behalf by the Deputy Chief Labour Commissioner (Central) Explanation: While determining the wage rates, holidays, hours of work and other conditions of services under (b) above, the Deputy Chief Labour Commissioner (Central) shall have due regard to the wage rates, holidays, hours of work and other conditions of service obtaining in similar employments"

15. The constitutional validity of the above rule had come up for consideration before the Apex Court and the validity was upheld as per the decision in M/s.Gammon India Ltd and W.A.Nos.1687 & 1788 OF 2009 16 others. vs. Union of India & others, by a Constitution Bench of the Apex Court as reported in (1974 )1 SCC 596 . As such, the further question is whether the enabling provision under the said rule and determination of the wages by the competent authority/third respondent, would involve fixation of liability upon the 'Principal employer'/appellant. It is in this context, that Section 21 of the Act has to be referred to, which deals with the responsibility for payment of wages. The said provision is extracted below:

21. Responsibility for payment of wages (1) A contractor shall be responsible for payment of wages to each worker employed by him as contract labour and such wages shall be paid before the expiry of such period as may be prescribed.

(2) Every principal employer shall nominate a representative duly authorised by him to be present at the time of disbursement of wages by the contractor and it shall be the duty of such representative to certify the amounts paid as wages in such manner as may be prescribed.

(3) It shall be the duty of the contractor to ensure the disbursement of wages in the presence of the authorised representative of the principal employer.

(4) In case the contractor fails to make payment of wages within the prescribed period or makes short payment, then the principal employer shall be liable to make payment of wages in full or the unpaid balance due, as the case may be, to the contract labour employed by the W.A.Nos.1687 & 1788 OF 2009 17 contractor and recover the amount so paid from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor.

From sub-section (4) of Section 21, it is very clear that, if there is any non-payment or short payment by the Contractor, it will be for the 'Principal employer' to effect the payment in accordance with law, to the contract labourers and the principal employer can recover the same from the Contractor either by deduction from any amount payable to the Contractor under any contract or as a debt payable by the Contractor.

16. By virtue of Rule 25(2)(iv) of the Rules, one of the conditions for granting or renewal of the licence to the Contractor is that, the rate of wages payable to the workmen engaged by the Contractor shall not be less than the rate prescribed under the Minimum Wages Act, 1948 and where the rates have been fixed by agreement, settlement or award, not less than the rate so fixed. As per Rule 25(2)(v)(a), if the workmen employed by the Contractor performed the same or similar work, as performed by the similar workmen directly employed by the 'Principal W.A.Nos.1687 & 1788 OF 2009 18 employer', the rate of wages payable to the contract labour shall not be less than the rate of wages being paid by the 'Principal employer' to similar workmen engaged directly by the 'Principal employer' and if there is any dispute with regard to the type of work, it shall be resolved by the Competent authority/third respondent. Under Rule 25(2)(v)(b), in other cases, it has to be determined by the competent authority/third respondent and on such an event, as provided in the 'explanation' thereunder, it is open for the competent authority/third respondent to determine the wage rate considering the relevant aspects as prevailing in similar employments.

17. On going by the materials on record, it is seen that no instance is pointed out or established from the part of the Union that the appellant/management was engaging workers of similar nature, doing similar duties, as sought to be done by the workers made available by the second respondent/Contractor. As such, Rule 25(2)(v)(a) is not applicable to the case in hand, whereby it stand thrown into the realm of Rule 25(2)(v)(b), where a comparative analysis has to be made by the competent W.A.Nos.1687 & 1788 OF 2009 19 authority/third respondent to the conditions prevailing in similar employments for fixation of proper wage rate.

18. An issue had come up for consideration before the Apex Court, as to whether the 'Principal employer' was having any liability to satisfy the wage determined by the competent authority in terms of Rule 25(2)(v)(a) of the rules. After considering all the relevant facts, figures and relevant provisions of law including the mandate of Section 21 of the 'Act' , the Apex Court held in 1997 (I) LLJ 46 (cited supra) that the liability upon the 'Principal employer' in terms of Section 21(4) is very limited and that the actual responsibility for payment of wages for contract labour was upon the 'Contractor' engaged by the 'Principal employer'. The Apex Court made it clear in unequivocal terms, that the wage rate determined by the competent authority in terms of Rule 25(2)(v)(a) is to be a condition of the contract licence and that there is no provision under the Rules, by which the 'Principal employer' is made liable for payment, in the event of non-compliance by the Contractor with this condition. The Apex Court held that, if the Contractor commits breach of the W.A.Nos.1687 & 1788 OF 2009 20 conditions of his licence, he alone will take the consequence and the right of the workers to recover any additional wages which may be so determined, would be against the Contractor and that Section 21(4) of the 'Act' has no application to a situation where a contractor may have paid the wages but has not complied with the conditions imposed by Rule 25(2)(v)(a) of the relevant rules.

19. It is true that the Apex Court was considering the provisions of the Act and the relevant rules under the Andhra Pradesh Contract Labour (Regulation and Abolition)Rules, 1971. The said provision is in 'pari-materia' with the rule position as it appears under Rule 25(2)(v)(a)&(b) with the 'explanation' thereunder, as now being dealt with in these cases. In so far as the liability of the 'Principal employer' has been clearly defined, explaining the scope of determination of the wage by the competent authority/3rd respondent in terms of Rule 25(2)(v)

(a), to be incorporated as part of the conditions of the contract licence, it is applicable with equal force in respect of a situation involving determination of wage rate by the competent authority/third respondent in terms of Rule 25(2)(v)(b) as W.A.Nos.1687 & 1788 OF 2009 21 well. As it stands so, this Court finds that the issue is clearly covered by the verdict passed by the Apex Court in 1997 (1)LLJ 46 (cited supra); and as such, it was quite wrong on the part of the third respondent/competent authority to have mulcted the liability upon the appellant/'Principal employer' pursuant to Ext.P5 order, that too, after the expiry of the term of contract.

20. The issue requires to be considered in a different angle as well, the contract having not been extended after '30.09.1999' and was actually sought to be terminated by that date. The liability of the 'Principal employer' is separately stipulated under Section 20 of the Act, which reads as follows:

"20. Liability of principal employer in certain cases (1) If any amenity required to be provided under section 16, section 17, section 18 or section 19 for the benefit of the contract labour employed in an establishment is not provided by the contractor within the time prescribed therefor, such amenity shall be provided by the principal employer within such time as may be prescribed. (2) All expenses incurred by the principal employer in providing the amenity may be recovered by the principal employer from the contractor either by deduction from any amount payable to the contractor under any contract or as W.A.Nos.1687 & 1788 OF 2009 22 a debt payable by the contractor."

Obviously, this is in respect of the amenities to be provided in terms of Sections 16,17, 18 or 19 for the benefit of the contract labour employed in the establishment. If they are not provided by the Contractor within the prescribed time, it turns to be lookout of the 'Principal employer' and all expenses incurred by the 'Principal employer' in this regard can be recovered from the Contractor, by setting off against the amounts payable to him under the contract or as a debt payable by the Contractor; by virtue of the enabling provision under sub-section (2) of Section 20 of the Act.

21. Coming to the responsibility for payment of wages, it is separately dealt with under Section 21 of the Act. Sub-section (1) of Section 21 clearly stipulates that the Contractor shall be responsible for payment of wages to each worker employed by him as a contract labour. By virtue of sub-section (2) of Section 21, a duty is cast upon the 'Principal employer' to nominate a representative to be present at the time of disbursement of wages by the Contractor, who in turn has to certify the amount W.A.Nos.1687 & 1788 OF 2009 23 paid as wages. By virtue of sub-section (3) of Section 21, the obligation to ensure disbursement of wages in presence of the authorised representative of the 'Principal employer' is cast upon the Contractor. It is to meet the residual situation, that sub- section (4) has been incorporated under Section 21, to the effect that, if there is any failure on the part of the Contractor in effecting the wages as prescribed, it will turn to be the duty of the 'Principal employer' to have it satisfied; however with liberty to set off the same against the amounts payable to the Contractor or to be recovered as debt to be paid by the Contractor. The scope and object of the statute is very clear, that the liability of the 'Principal employer ' is during the currency of the contract; i.e., during which period the contract labourers are deployed for duty on the strength of the licence issued to the Contractor under Section 12 of the Act.

22. As mentioned above, it is open for the competent authority/third respondent to determine the 'wage rate' in terms of Rule 25(2)(v)(a)or 25(2) (v)(b) (as the case may be) and on effecting such determination, it has to be incorporated as part of W.A.Nos.1687 & 1788 OF 2009 24 the licence and this in turn will have to be given effect to, by the Contractor and the 'Principal employer'. In the instant case, the licence issued to the second respondent/Contractor by the competent authority did not contain any such stipulation/condition as given in Ext.P5 and as such, the appellant/'Principal employer' was totally left in the dark as to the higher extent of wages payable, as incorporated in Ext.P5, to be ensured as paid by the Contractor to the workers. Ext.P5 order itself was passed only on 30.06.2000; however giving it retrospective effect from '01.09.1999'. The statute does not contemplate any such retrospective liability to be enshouldered by the 'Principal employer', which is more so in view of declaration of law by the Apex Court in 1997(1)LLJ 46 (cited supra).

23. As mentioned already, the contract awarded by the appellant to the second respondent for deployment of contract labour was initially for a period of 'six months' from 01.04.1997. This was extended from time to time and lastly, upto 30.09.1999, beyond which there was no intention, desire or request from the part of the appellant/'Principal employer', to W.A.Nos.1687 & 1788 OF 2009 25 have it extended any further. When the contract service was sought to put an end to w.e.f. 01.10.1999, such attempt was sought to be resisted by the first respondent Union by filing W.P. (C)No.17664 of 1999, which came to be dismissed, declining interference. Though the 1st respondent Union had moved the Apex Court by filing SLP, it also came to be dismissed on 03.11.2000 and the engagement of workers came to be terminated accordingly. It was only by virtue of the interim orders passed by this Court, that the contract workers were continuing in service after 30.09.1999, on the basis of the proceedings filed by the first respondent Union representing the workers. Ultimately, since the case filed by the Union came to be dismissed as devoid of merit, no further benefit could have been ordered based on the interim orders passed by this Court, enabling the workers to continue. The purpose of any interim order is only to sub-serve the main relief and when the main relief is declined, the interim order by itself cannot have any legal or valid existence, except to the extent as desired or made clear by the Court. Here comes the principle of 'actus curiae W.A.Nos.1687 & 1788 OF 2009 26 neminem gravabit'( act of court shall prejudice no man). The engagement of contract workers after 30.09.1999 was never at the instance of the appellant/'Principal employer', but on the basis of the proceedings filed by the first respondent Union representing the workers and as such, the liability if at all any, after the said date, under no circumstance could be pushed up to the shoulders of the appellant/'Principal employer' where the third respondent has gone wrong .The impugned order is liable to be set aside on this ground as well .

24. There was a specific case for the appellant/'Principal employer' before the third respondent, as to the competency of the first respondent Union to represent the workers, which was not properly considered or dealt with by the third respondent. The issue was projected before the learned Single Judge as well, who however observed in paragraph '8' of the judgment that the learned Judge was not inclined to go into the disputed question as to whether the Unions involved in the original petitions were actually representing the contract workers engaged in the establishment of the 'Principal employer'. Quite strangely, in W.A.Nos.1687 & 1788 OF 2009 27 the next and last paragraph, it has been observed by the learned Judge that, the arrears cannot be paid either to the Contractor or the Union, because there is no guarantee that it would ultimately reach the real workmen, in turn fixing the responsibility upon the 'Principal employer' to trace out the workers and effect the payment or else to face the Contempt of Court proceedings or other steps for recovery under S.33C(2)of the Industrial Disputes Act, as if there existed any 'pious obligation' on the 'Principal employer'. Paragraph 9 of the verdict passed by the learned Single Judge is extracted below for easy reference:

"9. However, the arrears cannot be paid to either the contractor or the union because there is no guarantee that it would ultimately reach the real workmen who have worked in the establishment of the principal employer. But that does not absolve the principal employer from finding out the workers who were actually employed for the period for which the Deputy Chief Labour Commissioner has fixed wages as per the impugned order and to pay arrears to them. Of course, the principal employer cannot now say that they did not have any records relating to the employment of such persons. It is their statutory duty to maintain such records. Therefore, the principal employer shall, within three months from today, ascertain the W.A.Nos.1687 & 1788 OF 2009 28 persons who are eligible for payment of arrears of wages as per the impugned order in question and pay the same to the concerned workmen. For this purpose the principal employer shall issue appropriate public notices calling upon the workers to collect the arrears of wages due to them as per the order of the Deputy Chief Labour Commissioner (Central). If any workman has any claim for amounts which has not been paid, it would be open to him either to file contempt case in these original petitions and also to move application under Section 33C(2) of the Industrial Disputes Act as stipulated in Ext.P5."

This Court holds that the course pursued by the learned single Judge in casting the obligation upon the 'Principal employer' to trace out the workers and effect the payment ordered therein, to the exclusion of the Contractor/Union is not proper or sustainable, as there is no such duty or obligation for the 'Principal employer' under the statute.

25. In the light of the above discussion, this Court declares that fixation of 'wage rate' by the competent authority/third respondent in terms of Rule 25(2)(v)(b) is a condition to be incorporated in the licence to be given to the Contractor, which has to be given effect to by all concerned, so long as the licence W.A.Nos.1687 & 1788 OF 2009 29 is operative and governs the contract of engagement during the relevant period. If the given condition in the licence is not given effect to by the Contractor, it is open for the competent authority to suspend or cancel the licence and take appropriate steps against the Contractor. If any such condition is incorporated in the licence as to the wage rate determined in terms of Rule 25 (2) (v) (a) or Rule 25 (2) (v) (b), it will always be obligatory for the 'Principal employer' to give effect to the same; who has to ensure that such payment is effected by the Contractor, by sending a representative at the time of disbursement of wages in terms of Section 21(2) and (3) of the Act. If there is any lapse or short fall in payment of the said wage rate on the part of the Contractor, it will have to be satisfied by the 'Principal employer' in terms of sub-section (4) of Section 21 and on such an event, the 'Principal employer' will have the right and liberties to set off the said amount from the amount payable to the Contractor or the same could be recovered from the Contractor as a debt payable by the Contractor. Except for these circumstances and extent, no further liability could be mulcted W.A.Nos.1687 & 1788 OF 2009 30 upon the 'Principal employer under the Act or the Rules. In the above circumstances, this Court finds that Ext.P5 order passed by the third respondent and the verdict passed by the learned Single Judge are not correct or sustainable as against the appellant/'Principal employer' and they stand set aside accordingly.

Both the appeals are allowed. No cost.

P.R. RAMACHANDRA MENON, JUDGE ANIL K. NARENDRAN, JUDGE lk

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