Contract Labour (Regulation and Abolition) Act, 1970: s. 10 – Absorption of contractual labour – Concept of – On facts, respondents nos. 1-6 were contractual labourers of the respondent no. 7-contractor engaged by the appellant in terms of the contract – On labour contract coming to an end, services of the respondents were dispensed with by the contractor – Respondents seeking reinstatement, on the ground that they were employees of the appellant and were orally terminated – Labour Court held that the contractor had obtained license under the CLRA Act and that the contesting respondents were the employees of the contractor and not of the appellant – Tribunal ordered reinstatement and held that a contract labourer automatically becomes an employee of the principal employer as per the MPIR Act which was upheld by the Single Judge of the High Court, however, set aside by the Division Bench – On appeal, held: No documentary evidence produced that the respondents were the employees of the appellant – Even the direct control and supervision of the contesting respondents was always with the contractor – No evidence on record that any of the respondents were given any benefits, uniform or punching cards by the appellant – Merely because sometimes the payment of salary was made and/or PF contribution was paid by the appellant, which was due to non-payment of the same by the contractor, the respondents shall not automatically become the employees of the appellant – No notification u/s. 10(1) issued prohibiting the contract labour, nor there are allegations and/or even findings that the contract is sham and bogus and/or camouflage, the direction to absorb or regularise the services of the contract labour cannot be made to the principal employer/appellant – Thus, both the tribunal as well as the High Court erred in reinstating the contesting respondents and directing the appellant-principal employer to absorb them as their employees – Judgment and order passed by the labour court is restored.
ORS.
Allowing the appeals, the Court
HELD 1.1 The contesting respondents were the contractual labourers of the respondent No. 7-contractor, who was a contractor engaged by the appellant in terms of the contract dated 22.04.1995, which was renewed from time to time. In the instant case, that no notification u/s. 10 of the Contract Labour (Regulation and Abolition) Act has been issued by the State Government/appropriate Government, prohibiting the contract labour. Upon entering into the contract, necessary compliance under the CLRA Act was also completed by the appellant and the respondent No. 7-contractor. On the labour contract coming to an end, the services of the contesting respondents were dispensed with by the contractor. [Para 4][336-B-C]
1.2 On going through the entire material on record, no documentary evidence was produced, by which it can be said that the contesting respondents were the employees of the appellant. There is no provision under Section 10 of the CLRA Act that the workers/employees employed by the contractor automatically become the employees of the appellant and/or the employees of the contractor shall be entitled for automatic absorption and/or they become the employees of the principal employer. Even the direct control and supervision of the contesting respondents was always with the contractor. There is no evidence on record that any of the respondents were given any benefits, uniform or punching cards by the appellant. [Para 4.1][336-D-F]
1.3 Under the contract and even under the provisions of the CLRA, a duty was cast upon the appellant to pay all statutory dues, including salary of the workmen, payment of PF contribution, and in case of non-payment of the same by the contractor, after making such payment, the same can be deducted from the contractor’s bill. Thus, merely because sometimes the payment of salary was made and/or PF contribution was paid by the appellant, which was due to non-payment of the same by the contractor, the contesting respondents shall not automatically become the employees of the principal employer-appellant. [Para 4.2][336-F-G]
1.4 In the absence of a notification under Section 10 of the CLRA Act unless there are allegations or findings with regard to a contract being sham, private respondents, who are as such the workmen/employee of the contractor, cannot be held to be employees of the appellant and not of the contractor. In the instant case, neither any notification under Section 10(1) of the CLRA Act has been issued prohibiting the contract labour, nor there are allegations and/or even findings that the contract is sham and bogus and/or camouflage. [Paras 4.3, 4.6][336-H; 337-A; 340-E]
1.5 In the absence of any notification under Section 10 of the CLRA Act and in the absence of any allegations and/or findings that the contract was sham and camouflage, both the Industrial Tribunal as well as the High Court have committed a serious error in reinstating the contesting respondents and directing the appellant – principal employer to absorb them as their employees. The parties shall be governed by the CLRA Act and relief, if any, could have been granted under the provisions of the CLRA Act and not under the MPIR Act. The judgment and order passed by the labour court is restored. [Paras 4.8, 5][341-G-H; 342-A-B] Steel Authority of India Ltd. and Ors. Vs. National Union Waterfront Workers and Ors. (2001) 7 SCC 1;
International Airport Authority of India Vs. International Air Cargo Workers’ Union and Anr. (2009) 13 SCC 374 – relied on.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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