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cases by the Supreme Court, the judiciary discussed at length, "the Consequential
effect" and ordered regularisation of service with the Principal employer with effect
from the date, the contract between the Principal employer and labour contractor
was declared camouflage or sham contract. This had happened both in public and
private sectors. The following are few case laws for the benefit of our readers.
1. Standard-Vacuum Refining Company of India v. Its workmen and others,
1960 (3) SCR 466
The Supreme Court declared that if the job is of perennial nature done by the
contract labours and if less salary is being given to the contract labours when
compared to regular workmen, then court can order regularization of service of the
contract workmen with the principal employer.
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2. Gammon India Limited and others Vs. Union of India and others, 1974
(1) SCC 596
The Supreme Court declared that intention of parliament was to regulate the
working conditions of contract labour to ensure payment of wages and other
essentials.
3. Hussain Bhai v. Alath Factory, Tezbilali Union, 1978 (2) LLJ 397
A workmen under CLRA Act is also a workman under Industrial Disputes Act.
The contractor would be the employer of such person. The principal employer
under the Act would be employer under I.D. act in certain circumstances.
4. Deenanath v. National fertilizers Ltd., 1992 AIR S2 457
Held: Neither the act nor the rules framed by the Central Government provide
that upon abolition of contract labour, the said labour would be directly absorbed by
the principal employer. Hence, automatic absorption is not possible.
5. R.K. Panda v. Steel Authority of India, 1994 LLR 634 (SC)
Held: The primary object of the Act is to prevent the exploitation of the Contract
labour by the contractor or the establishment. Supreme Court ordered absorption of
all the workmen, subject to few conditions.
6. Gujarat Electricity Board, Thermal Power Station, Ukai, Gujarat v. Hind
Mazdoor sabha, 1995 LLR 552
Held: Thermal power in Gujarat - 1500 workers under Contract - Hail from Adivasi.
- Contractors exploited the workers - Worked more than 20 years and more - Supreme
Court ordered absorption of most of the contract labourers by appointing a Committee.
7. Air India Statutory Corporation v.. United Labour Union, 1997 LLR 288
Held: The Writ Petitions filed by the workmen of the contractor to abolish
contract labour in sweeping, dusting, cleaning etc, was allowed by Single Judge of
the High court Bombay, which was upheld by the Supreme Court, by the Three
Judges Bench.
8. Food Corporation of India, Bombay and others v.. Transport and Dock
workers union and others, 1997 (7) SCC 59
Held: If contract labour is abolished by Courts, automatic absorption of contract
labour by the Principal employer.
9. International Airport Authority of India v. International Air Cargo
Workers' Unions, 2009 LLR 923 SC
Held: No automatic absorption.
to. Steel Authority of India Ltd, v. National Union Water Front Workers, 2001
LLN 135 : 2009 LLR 923 sc
Held:
(a) State can abolish any class of employment under contract labour
(b) State can do it only on the recommendation of the committee specially
constituted for their purpose.
(c) Air India judgment overruled
(d) No automatic absorption of contract labour on its prohibition or abolition.
(e) When the adjudicator has held that contract as camouflage, the contract
workers will be automatically absorbed with the Principal employer.
(f) The contract workers already absorbed will not be affected
(g) Neither SC nor HC can declare a contract sham or valid contract; only
Industrial Tribunal can declare as it is the adjudicator before whom both the
parties can prove their respective claim.
Reliefto the employer:
Beinga judgement of a Five Judge Bench (Constitutional), the employers
be very happy that
1. It puts a full-stop for automatic absorption, in case the State prohibits or
abolishes Contract Labour.
2. The Supreme Court or High Court cannot prohibit the employment of Contract
Labour.
3. The Supreme Court or High Court shall not go into the genuineness or
otherwise of a contract.
4. This judgment may hold good unless it is overruled by a Seven-Judge Bench,
which is a remote chance.
'Limitation of the right of the employer:
l'he judgment brought few limitations to the rights of the employer; now he is
-bound to conduct the case properly by submitting proper records to prove that
contract is genuine and valid. Now he stands before an Industrial Adjudicator,
o is at par with a District Judge to declare the validity of his contract; If he fails to
ve, the Adjudicator may order absorption of all the contract labour who were
. g immediately before the award; Appeal against the orders of Tribunal about
decisions before the Single Judge of the High Court, Division Bench of the High
and Supreme Court to get more and more time.is no more in practice. The
e Court has limited the writ jurisdiction both for High Court and Supreme
. Therefore, the employers can escape from the imminent danger if and only if
follow the provisions of the Act properly; the power to adjudicate and declare
contract has been entrusted with fairly a lower level judiciary which an employer
uld take conscious note of the procedure in CLRA Act, 1970.
How to make a Valid Contract:
The following are very simple procedures which, if followed, can save an
loyer from the Industrial tribunal.
ll Principal employer register his Company name with Inspector of Factories
'~ormI)