Supreme Court of India
Steel Authority of India Ltd. v. National Union Water Front Workers
Whether, once the Government prohibits contract labour in an establishment, the principal employer must absorb the contract labour.
Decided under an earlier law
The Court decided this case under the Contract Labour (Regulation and Abolition) Act, 1970. Section 143 of the Occupational Safety, Health and Working Conditions Code, 2020 repeals the Contract Labour (Regulation and Abolition) Act, 1970. The Court's words are shown below beside the Code provision this library compares them with. This library does not say whether the decision holds good under the Code: compare the two texts.
What the Court decided
Each point is this library's summary, followed by the Court's own words, checked word for word against the Supreme Court's typed copy of the judgment (JUDIS file 17973). The pinpoint gives the page of the Supreme Court Reports and the margin letter (A to H) printed beside the line where the words begin.
Neither section 10 nor any other provision of the Act provides for automatic absorption of contract labour when its employment is prohibited, so the principal employer cannot be required to absorb them.
Neither Section 10 of the CLRA Act nor any other provision in the Act, whether expressly or by necessary implication, provides for automatic absorption of contract labour on issuing a notification by 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 cannot be required to order absorption of the contract labour working in the concerned establishment;
[2001] Supp. 2 S.C.R. 343, at 413 F · open the report at p. 413 Air India, which had held otherwise, was overruled for the future only: absorption directions already given effect and final stand.
We over-rule the judgment of this court in Air Indias case (supra) prospectively and declare that any direction issued by any industrial adjudicator/any court including High Court, for absorption of contract labour following the judgment in Air Indias case (supra), shall hold good and that the same shall not be set aside, altered or modified on the basis of this judgment in cases where such a direction has been given effect to and it has become final.
[2001] Supp. 2 S.C.R. 343, at 414 A · open the report at p. 414 If the contract is found to be a sham, the contract labour are treated as employees of the principal employer, who is directed to regularise their services.
If the contract is found to be not genuine but a mere camouflage, the so-called contract labour will have to be treated as employees of the principal employer who shall be directed to regularise the services of the contract labour in the concerned establishment
[2001] Supp. 2 S.C.R. 343, at 414 D · open the report at p. 414 If the contract is genuine and contract labour has been prohibited, a principal employer who intends to employ regular workmen in that work must give preference to the former contract labour, if otherwise suitable.
where in such process, operation or other work of the establishment the principal employer intends to employ regular workmen he shall give preference to the erstwhile contract labour, if otherwise found suitable
[2001] Supp. 2 S.C.R. 343, at 414 F · open the report at p. 414 A prohibition notification must be issued after consulting the Advisory Board, having regard to the conditions of work, the benefits provided for the contract labour and the other relevant factors.
A notification under Section 10(1) of the CLRA Act prohibiting employment of contract labour in any process, operation or other work in any establishment has to be issued by the appropriate Government : (1) after consulting with the Central Advisory Board or the State Advisory Board, as the case may be, and; (2) having regard to (i) conditions of work and benefits provided for the contract labour in the establishment in question; and (ii) other relevant factors including those mentioned in sub-section (2) of Section 10;
[2001] Supp. 2 S.C.R. 343, at 413 B · open the report at p. 413
The earlier provision and the Code
Contract Labour (Regulation and Abolition) Act, 1970, section 10
As quoted in the judgment: [2001] Supp. 2 S.C.R. 343, at 378 F · open the report at p. 378
(1) Notwithstanding anything contained in this Act, the appropriate Government may, after consultation with the Central Board or, as the case may be, a State Board, prohibit, by notification in the Official Gazette, employment of contract labour in any process, operation or other work in any establishment. (2) Before issuing any notification under sub-section (1) in relation to an establishment, the appropriate Government shall have regard to the conditions of work and benefits provided for the contract labour in that establishment and other relevant factors, such as -- (a) whether the process, operation or other work is incidental to, or necessary for the industry, trade, business, manufacture or occupation that is carried on in the establishment; (b) whether it is of perennial nature, that is to say, it is of sufficient duration having regard to the nature of industry, trade, business, manufacture or occupation carried on in that establishment; (c) whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto; (d) whether it is sufficient to employ considerable number of whole-time workmen. Explanation : If a question arises whether any process or operation or other work is of perennial nature, the decision of the appropriate Government thereon shall be final.
OSH Code, section 57
Prohibition of employment of contract labour In force
(1) Notwithstanding anything contained in this Part, employment of contract labour in core activities of any establishment is prohibited:
Provided that the principal employer may engage contract labour through a contractor to any core activity, if—
(a) the normal functioning of the establishment is such that the activity is ordinarily done through contractor; or
(b) the activities are such that they do not require full time workers for the major portion of the working hours in a day or for longer periods, as the case may be;
(c) any sudden increase of volume of work in the core activity which needs to be accomplished in a specified time.
(2) (a) The appropriate Government may, by notification, appoint a designated authority to advise that Government on the question whether any activity of an establishment is a core activity or otherwise;
(b) if a question arises as to whether any activity of an establishment is a core activity or otherwise, the aggrieved party may make an application in such form and manner as may be prescribed, to the appropriate Government for decision;
(c) the appropriate Government may refer any such question suo motu or refer the application to the designated authority, which on the basis of relevant material in its possession, or after making such an enquiry as it deems fit, shall report to the appropriate Government, within such period and thereafter the appropriate Government shall decide the question within such period as may be prescribed.
Wording in common: 23% of the words, in the same order.
Wording differs; the decision may not carry over. The Code provision is not worded like the provision the Court interpreted.