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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.
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4) Sunflag Iron and Steel Mazdoor Sabha,
At and Post Warthi, Taluka Mohadi,
District Bhandara, through its General
Secretary. ... Respondents
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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
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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
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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
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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
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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 theprovisions 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
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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)
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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
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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
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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.
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There 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
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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
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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
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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.
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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.
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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
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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
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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
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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
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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 certaincircumstances 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 thebeneficial 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 thedecision 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 beapplicable. 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 quaclass of employees, they have to move the Labour Court as
per the provisions of Sections 51 and 52 of the 1960 Act
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21Schedule 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 labourbut 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 asstated in para 136 of the Constitution Bench judgment.
Similar orders were passed as can be seen from paras
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22other 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
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23Bench 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
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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 whereinJustice 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
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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
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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
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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 contractlabour 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 7requires 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 theprovisions 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 contractlabour in the establishment. Similarly, Section 12(1) bars
a contractor from undertaking or executing any work
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28with 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 thewelfare measures intended for the contract labour, Section
16 imposes an obligation on the appropriate Government
to make rules to require the contractor to provide canteenfor the use of the contract labour. The contractor is also
under an obligation to provide restrooms as postulatedunder Section 17 of the Act. Section 18 imposes a duty on
every contractor employing contract labour in connectionwith 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 convenientand 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 wherecontract 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 contractlabour 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
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29to provide amenities mentioned above, Section 20 imposes
an obligation on the principal employer to provide such
amenities and to recover the cost and expenses incurredtherefor 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 thatin the case of the contractor failing to make payment of
wages as prescribed under Section 21, the principalemployer shall be liable to make payment of wages to the
contract labour employed by the contractor and will beentitled 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 thecontractor 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.
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30
25) 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 principalemployer in the establishment concerned on issuance of
notification by the appropriate Government under
Section 10(1) prohibiting employment of contractlabour 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
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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
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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
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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 theEssential 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 thesame 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 :::
34the same matter”. If the later legislation deals not
with the matters which formed the subject of the
earlier legislation, but with other and distinct mattersthough 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
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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
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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
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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.
_____________
khj
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