U.R. Lalit, J.@mdashThe petitioner is a public limited company and carries on business as engineers and constructors. It under-takes contracts for construction works like R. C. C. Bridges, foundations, cooling towers and some other works. The work undertaken by the petitioner is executed either departmentally or by employing sub-contractors. When sub-contractors are engaged, they are-asked to carry out certain items of work for an agreed price.
2. The Maharashtra Electricity Board (hereinafter called the ''Board'') is erecting a thermal power station at Koradi in the district of Nagpur. The Board has given a contract to the petitioner in respect of cooling towers and R. C. C. Chimneys. It is the case of the petitioner that as this work was to be carried out within a specified period, the petitioner engaged sub-contractors for the work of excavation, concreting, shuttering and steel reinforcement etc. According to the petitioner, these sub-contractors independently employed their own labour and supervised the work of the labourers engaged by them. The sub-contractors exclusively regulate the service conditions of the labour so employed and they alone are responsible for the wages of the labour. The petitioner alleges that there is no relationship of master and servant between it and the labour employed by the sub-contractors.
3. When the petitioner was executing the work of contract from the Board, the Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter referred to as the Act), was in force. Under the Act, every principal employer of an establishment has to get the establishment registered u/s 7 of the Act. The Board got itself registered under the provisions of the Act, u/s 12 of the Act, no contractor to whom this Act applies, can undertake or execute any work through contract labour except in accordance with the licence issued in that behalf. The petitioner has got a licence under this provision. That licence is dated December 24, 1974. That licence has been renewed and has been subsisting till December 31, 1975.
4. On December 28, 1974 the petitioner made an application to the first respondent seeking registration as a principal employer u/s 7 of the Act. By a letter dated January 27, 1975 the first respondent sent a communication to the petitioner intimating that the Board was the principal employer of the petitioner and the application for registration at the instance of the petitioner was not tenable. The petitioner filed an appeal u/s 15 of the Act challenging this decision of respondent No. 1. Respondent No. 2 by his order dated July 18, 1975 dismissed the appeal of the petitioner with a further direction that the petitioner should apply for the amendment of its licence u/s 12 (2) of the Act by reporting workmen and/or labour employed by the sub-contractors of the petitioner, The petitioner has filed the present petition seeking to challenge the decision of respondent No. 2.
5. It is argued by Mr. Manohar, the learned advocate appearing on behalf of the, petitioner, that under the provisions of the Act, the petitioner is the principal employer and, as such, is entitled to get registration u/s 7 of the Act. the challenges the decisions of respondents 1 and 2 as being contrary to the provisions of the Act. He has also submitted that respondent No. 2 was in error in giving a direction directing the petitioner to apply for the amendment of the licence.
6. In reply to the petition a return has been filed on behalf of respondents 1 and 2. The reply in substance is that only the Board is entitled to get registration as a principal employer and the petitioner is only a contractor who will get a licence under the provisions of section 12 of the Act. It is submitted that under the provisions of the Act there is only one principal employer and, as such, the petitioner is not entitled to get registration u/s 7 of the Act, This, in short, is the controversy between the parties.
7. Mr. Manohar has argued that when the petitioner was given a contract by the Board, it was running an establishment which was its own independent establishment. According to him, the petitioner was the principal employer qua this establishment and, therefore, it is entitled to a separate registration u/s 7 of the Act. For that he has invited our attention to the definition of an ''establishment'' u/s 2 (2) (e) of the Act. There the term ''establishment'' is defined thus:
establishment" means-- (i) any office or department of the Government or a local authority, or (ii) any place where any industry, trade, business, manufacture or occupation is carried on:
According to Mr. Manohar, the petitioner''s case falls under clause (ii) of this definition. The place where the petitioner is carrying on its activities, according to him, would be the separate establishment of the petitioner. It is not possible for us to accept this submission of Mr. Manohar. The establishment according to us, in the present case, is the place where the entire activity of erecting the thermal power station at Koradi is carried. That establishment in fact belongs to the Board and it is the Board which is carrying on the activity in this place. In fact, in respect of this larger establishment, the Board has already got a registration u/s 7 of the Act. It is not, therefore, possible for us to accept the submission of Mr. Manohar that there is a separate establishment of his clients where the contract work undertaken by the petitioner is being carried out.
8. Section 2 (2) (g) of the Act defined "principal employer". It means:
(i) in relation to any office or department of the Government or a local authority. the head of that office or department or such other officer as the Government or the local authority, as the case may be, may specify in tills behalf,
(ii) in a factory, the owner of occupier of the factory and where a person has been named as the manager of the factory under the Factories Act, 1948, the person so named,
(iii) in a mine, the owner or agent of the mine and where a person has been named as the manager of the mine, the person so named,
(iv) in any other establishment, any person responsible for the supervision and control of the establishment.
We are really concerned in the present case with sub clause (iv) of this definition. According to Mr. Manohar, the petitioner is responsible for the supervision and control of this establishment and, as such it is the principal employer. It appears to us that in the present case when the work is carried out by the petitioner as a contractor on behalf of the Board, the Board will be responsible for control and supervision of the establishment. By giving a contract to the petitioner, the Board is not deprived of its powers of supervision and control over the work made by the petitioner. For the purposes of the Act, it appears to us that it is the Board alone which is responsible for the control and supervision as contemplated in this sub-clause. It is difficult to see how the petitioner can be said to be the principal employer.
9. Apart from that, on a careful consideration of the scheme and various provisions of this Act, it appears to us that under the Act only one principal employer is contemplated. The Act was passed to prevent the exploitation of contract labour and to introduce better conditions of work. It provides for regulation of the service conditions of contract labour. The Act intends to abolish contract labour wherever possible and practicable and where it cannot be abolished altogether, the policy of the Act is that working conditions of the contract labour should be so regulated as to ensure payment of wages and provision of essential amenities. It is from this point of view that we have to consider the question whether there can be only one principal employer under this Act,
10. We may make a reference to some of the definitions in the Act. A ''workman'' is deemed to be employed as "contract labour" when he is hired in or in connection with the work of an establishment by or through a contractor, with or without the knowledge of the principal employer. A ''contractor'' is a person who undertakes to produce a given result for the establishment, through contract labour or supplies contract labour for any work of the establishment under the Act; a contractor includes a sub-contractor. This definition shows that though in conceivable circumstances the establishment of a sub-contractor may be permitted for the purposes of the Act, the sub-contractor is deemed to be a contractor.
11. u/s 7 of the Act, every principal employer of an establishment to which the Act applies has to make an application for registration of the establishment in the prescribed manner. Rule 17 (1) prescribes a form for such an application. Entry ''6'' in the form shows that the applicant has to give certain particulars of the contractors and contract labour. The applicant has to give the names and addresses of the contractors. He has to give the maximum number of the contract labour expected to be employed on any day through each contractor and he has also to give the estimated date of termination of employment of contract labour. Section 9 of the Act prohibits the principal employer from employing contract labour unless the establishment is registered u/s 7 of the Act within a specific time. Having so provided for the registration of an establishment employing the contract labour, the Act then provides for the licensing of the contractors to employ such contract labour. No contractor can undertake or execute any work through contract labour except in accordance with the licence issued in his favour. Section 12 (2) of the Act provides that, a licence may contain conditions with regard to the hours of work, fixation of wages and other essential amenities in respect of contract labour as the appropriate Government may deem fit. The contractor, when he makes an application, is also required to deposit a certain sum by way of security for the due performance of the conditions as may be prescribed. The principal employer has to get a registration u/s 7 of the Act, whereas all contractors working under him have to obtain licence under the provisions of section 12 of the Act.
12. These are the two distinct ways in which the Act seeks to regulate the contract labour. Section 7 deals with the ''principal Employer'', whereas section 12 deals with the ''contractor''. These two provisions and the methods of regulation show that a person cannot be a licensee u/s 12 of the Act as well as a principal employer u/s 7 of the Act. This is one reason why we feel that the petitioner, who is already given a licence u/s 12 of the Act, cannot be registered as a principal employer u/s 7 of the Act.
13. Chapter V of this Act deals with the ''Welfare and Health of Contract labour''. u/s 16, the Government can make rules that a canteen should be provided and maintained by the contractor for the use of the contract labour. Section 17 of the Act provides that when contract labour is required to halt at night in connection with the work of the establishment, the contractor shall provide and maintain for the use of the contract labour rest-rooms and other suitable alternative accommodation. Section 18 of the Act casts a duty on every contractor to supply drinking water, sufficient number of latrines, urinals and washing facilities. Section 19 requires the contractor to maintain a first-aid box at every place where the contract labour is employed. One of the basic objects of the Act is to improve the working condition of the contract labour and that is sought to be achieved by these provisions. u/s 20 of the Act, this is further ensured by making the principal employer liable to provide the amenities mentioned in sections 16, 17, 18 and 19 of the Act in case the contractor fails to provide them within the prescribed time. It is also further provided that if the principal employer is required to provide the amenities at his expenses, he can recover the amount from the contractor either by deduction from the amount payable to the latter, or it can also be recovered as a debt payable by the contractor to the principal employer. These provisions clearly show that though the liability to provide these amenities may be primarily on the contractor, the principal employer can also be required to provide for them. Such a thing, in our opinion, can be enforced when there is one distinct principal employer. The Act cannot be administered unless it is possible to fasten the liability on a specified employer. These provisions cannot be secured unless there is one principal employer for the purposes of this Act.
14. The other important object of the Act is to ensure the payment of wages to the contract labour. In our opinion, the most important provision in the Act in this behalf is made in section 21. That section provides that in the first instance the contractor is liable for the payment of wages to the worker employed by him as a contract labour. u/s 21 (2) of the Act, every principal employer has to nominate a representative duly authorised by him to be present at the time of disbursement of wages by the contractor and the said representative is under a duty to certify the amounts paid as wages by the contractor. Under sub-section (3) of section 21 of the Act, the contractor is under liability to disburse the wages in the presence of the authorised representative of the principal employer. Then we come to sub-section (4) which reads:
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 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.
This provision, in our opinion, further supports the view that for the effective administration of the Act there can be only one principal employer.
15. The argument of Mr. Manohar is that sub contracts are not prohibited in the Act and though the petitioner is a contractor qua the Board in relation to the employees engaged by the petitioner, directly or through their subcontractors, the petitioner is a principal employer. Such an argument assumes that there can be a series of principal employers as well as contractors and a person in a given case can both be a principal employer and the contractor. Such a thing, in our opinion, is contrary to the scheme of the entire Act because under sections 20 and 21, the liability to provide the amenities and wages ultimately falls on the principal employer, if the contractor fails to fulfil his obligations. Such a liability can be enforced only if there is one principal employer. The purpose of the Act would, otherwise, be defeated if there are series of principal employers some of whom may turn out to be men of straw. The solvency of some of such contractors, who may claim to be the principal employers, may be doubtful. They may not be in a position to provide the amenities provided by sections 16 to 19. The payment of wages to the workers may not also be enforced against them. Series of principal employers in such a case may go to defeat the very purpose and object of the Act.
16. We may refer to another aspect of this matter. Section 55 of the Maharashtra Contract Labour (Regulation and Abolition) Rules, 1971, provides that every principal employer shall maintain in respect of each registered establishment a register of contractors in Form No. VIII. Under Form VIII maximum number of workmen employed by the contractor have to be stated. The principal employer has also to give the names and addresses of contractors and has also to specify the nature of work given on contract. u/s 56 of the Rules, every contractor has to maintain in respect of each registered establishment a register in Form IX. This Form shows that the name and address of establishment under which the contract is carried on has to be given by the contractor. For the proper enforcement of the Act, there are further Forms prescribed which can be found from Forms Nos. X to XVIII. In all these Forms the names and the addresses of the establishments under which the contract is carried on and the name of the principal employer have to be given. Some of these Forms are to be filled in by the contractors. All these legal requirements go to show that under the Act there can be only one principal employer. Considering, therefore, the policy and scheme of the Act and the Rules made thereunder and also the Forms prescribed, we come to the conclusion that under the Act there is only one principal employer.
17. Mr. Manohar has, however, argued that the system of sub-contractors is not prohibited and if that system is not done away with under the Act, we must take into account the ordinary law of contract. He submits that under the ordinary law, the petitioner would be the principal employer qua the contract labour employed through his sub-contractors and, as such, he would be entitled to get the registration u/s 7 of the Act. Mr. Manohar has relied on the decision reported in Mangalore Ganesh Beedi Works v. Union of India1. He has particularly relied on the observation of the Supreme Court in paragraph 44, Jo the following effect :
''''The Act does not prevent an independent contractor from being the principal employer in relation to contract labour. It will be a question of fact in each case as to who is the person for whom or on whose behalf contract labour is engaged. If such a contractor who is referred to as an independent contractor employees labour for himself the liability will attach to him as the principal employer and not to the manufacturer or trade mark holder.
Mr. Manohar also invited our attention to the observation of the Supreme Court in the same decision to the following effect :
It is only when the contractor engages labour for or on his own behalf and supplies the finished product to the manufacturer that he will be the principal employer in relation to such labour and the manufacturer will not be responsible for implementing the provisions of the Act with regard to such labour employed by the contractor.
We do not see how the observations of the Supreme Court in this decision help Mr. Manohar. The Supreme Court was considering the provisions of another Act, i. e. the Beedi and Cigar Workers (Conditions of Employment) Act, 1966. In that Act there were two definitions of (i) ''employer'' and (ii) ''principal employer''. Though some of the provisions of that Act might be to some extent similar to the provisions of the Act in question, in the present case we cannot interpret the word ''Principal employer'' solely with reference to a comparison in the other Act. For a proper understanding of the words ''principal employer'' as understood in the present Act, the best guide would be the provisions in this Act itself. We have already indicated that under the scheme of this Act, there can be only one principal employer. We may also state that we do not find in the Beedi and Cigar Workers (Conditions of Employment) Act, 1966, a provision parallel to section 21 of the present Act. We, therefore, do not see how this decision can be relied upon by Mr. Manohar.
18. Mr. Manohar has then drawn our attention to a decision reported in Vegoils Private Ltd, v. The Workmen2. That decision deals with the present Act. Mr. Manohar has particularly relied on paragraph 31 of the decision. However, we do not see how in the present case the observations in that paragraph can come to the assistance of Mr. Manohar. Those observations deal with section 10 of the Act. We are not, in the present case directly concerned with the question of abolition of contract labour. The only question which falls for consideration in the present case is whether the petitioner is entitled to get registered u/s 7 of the Act or not. Mr. Manohar submits that this in effect amounts to abolition of contract labour and, such a thing can be
19. However, Mr. Manohar has made a grievance with regard to the direction given by respondent No. 2. Under that direction, the petitioner has been directed to apply for amendment of the licence under Rule 28 (2) by reporting the workmen employed by the sub-contractors. The petitioner is directed to pay an additional fee and security deposit. Mr. Manohar submits that in his appeal such an order cannot be made by respondent No. 2. As we see the direction, it is really to the advantage of the petitioner- It gives further time to get the licence amended. As such, we do not see how Mr. Manohar can make any grievance with regard to such a direction. Even otherwise, as on the principal question we bold against Mr. Manohar, we do not see any reason to interfere with the direction.
20. In the result, the petition fails. The rule is discharged. There will be no older as to costs.
