Air India Statutory Corporation Vs

United Labour Union and Ors

Case Analysis

Act : Contract Labour (Regulation & Abolition) Act 1970Date of Judgment: 06/12/1996Bench : K Ramaswamy, B L Hansaria, S B Majmudar

Major Issues Addressed

• Who will be considered as ‘Appropriate Government’ for Air India Statutory Corporation?

• Does contract labour system abolishment ensure that workmen shall have a right to be regularised?

• Is the principal employer indebted to absorb the employees working as contract labourers even though there is no express provision in the Act?

Case Facts• Air India Statutory Corporation – authority under

International Airport Authority of India Act 1971 • Later company registered under Company’s Act.• Contract Labourers engaged in sweeping, cleaning

dusting and watching of the building owned and occupied principal employer.

• Registration obtained from Labour Commissioner (Central) on 20 Sept 1971.

• On 9 Dec 1976, Central Advisory Board issued a notification in consultation with Central Advisory Board

Case Facts• The union filed a writ petition.• Writ Petition was allowed on 16 Nov 1989 by leaned

single judge• Mohile Committee formed recommended not to

abolish contract labour system but was later overruled.

• Three Judge bench of Supreme court specified legal parameters relating to ‘appropriate government’ and ‘automatic absorption’

• The Act did not intend to denude the contract labourers of their source of livelihood.

Case Facts• According to Notification under Section 10(1):

Contract Labourers would be entitled to be absorbed when the work performed by them is of a perennial nature.

• Appropriate Government occurring in Section 2(1)(a) of CLRA Act should be interpreted to ascertain: whether an establishment is an instrumentality or agency of the State not merely with reference to its constitution, pervasive control exercised by the State over it but with reference to the activities complying with the basic law requirements.

• The Act regulates the conditions of labourers employed through the contractor registered under the Act.

• The work in the industry should not be perennial for contract labourers.

• Principal employer is required to submit the number of workmen needed for employment

• Contractor, an intermediary, is a supplier• Principal employer is enjoined to compel the contractor

to pay wages.• Incase of failure, the principal employer should pay and

recover it from the contractor.• Principal employer has pervasive control.

Court Interpretation : How the ACT came into Force

Court Interpretation:Case References

• Sankar Mukherjee & Ors Vs Union of India & Ors : When all jobs are incidental to or allied to each other, they will be treated alike.

• National Federation of Railway Porters, Vendors & Bearers Vs Union of India & Ors. : incase the nature of job is permanent and perennial nature and other related aspects direction maybe given u/s 10(1) and 10 (2)

Supreme Court Decision

• The appropriate government is the Central Government.• Abolition of contract labour system ensures right for

regularization as employees based on Article 226 of Constitution.

• According to Notification u/s 10 (1) of the Act, the principal employer obliged to absorb the employees working as contract labourers even though there is no express provision in the Act

• Principal of ‘last come, first go’ to be followed incase of retrenchment due to excess staff subject to reappointment as and when vacancy arises.

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