Q.

3 What consequences may follow when the contractor who is responsible to obtain license and the
employer who is responsible for the registration of the establishment have failed to do? In such a
situation, can the workers of the contractor seek their regularization.

Ans.

I. Explain Registration and Licensing if you want (not adding here for brevity) – with provs
*actual answer from part II

II. Write down S. 9 and S. 12(Only that part which explain consequence of not having license)

Effect of Non-Registration (Section 9)

“No principal employer of an establishment, to which this Act applies, shall-

(a)        in the case of an establishment required to be registered under Section 7, but which has not been
registered within the time fixed for the purpose under that section,
(b)        in the case of an establishment the registration in respect of which has been revoked under
Section 8,  

employ contract labour in the establishment after the expiry of the period referred to in clause (a) or
after the revocation of registration referred to in clause (b), as the case may be.”

Licensing (Section 12)

 Obligation on Contractor to have valid license under Section 12, and can’t engage contract
labour unless Contractor obtains license.
 Form 4 is the relevant form.
 Minimum fee of Rs. 5 and maximum is Rs. 125 per contract labourer to be paid by Contractor.
Depending on what is prescribed by the State Government.
 Same procedure as that of Registration of Establishment by the principal employer, and details
to be filled in Form 4. (Just check out form 4)
 The license granted to contractor is non-transferable.
 License is granted for 12 months, after which it has to be renewed by the contractor.
 No contractor to whom this Act applies, shall undertake or execute any work through contract
labour except under and accordance with a licence issued in that behalf by the licensing officer.
Cannot be outside the scope of the license granted.
 Licensing officer may also prescribe certain conditions while granting license, in case they are
not satisfied by the details submitted by the Contractor.
“Licence may contain such conditions including, in particular, conditions as to hours or work,
fixation of wages and other essential amenities in respect of contract labour as the appropriate
 Government may deem fit to impose in accordance with the rules, if any, made under Section 35
and shall be issued on payment of such fees and on the deposit of such sum, If any, as security
for the due performance of the conditions as may be prescribed.”
 Again, no time limit provided within which license to be granted.
 Only Contractor has to obtain license, not the sub-contractor, even though definition of
Contractor includes sub-contractor. Since direct agreement with principal employer is only of
Contractor. Contractor further enters into agreement with sub-contractor.

Can such people be reguarised?

1. Food Corporation of India Worker’s Union v. Food Corporation of India (1990) (Supreme
Court)

Held: The certificate of registration is to be obtained by the principal employer under section 7. And
similar is the obligation on the part of the contractor under Section 12 of the Act (He has to obtain
license). The workmen cannot be employed as the contract labour when the license and the certificate
registration has not been obtained. Both have to be fulfilled. And if conditions are not fulfilled, then the
workers will be deemed to be employed by the principal employer and not the intermediary
(Contractor). Thus, interest of contract labourers should be protected, in case the principal employer or
contractor don’t fulfil their obligation.

2. Workmen of Pest and Crompton Engineering Ltd. v. Pest and Crompton Engineering Ltd.
(1992) (Supreme Court)

Held: After examining Sections 7 & 12, and made an observation that the combined effect of these two
provisions is that both conditions must be satisfied. The possession of license itself by contractor will not
be sufficient to treat the workmen as “contract labour”. He will be considered as workman employed by
the principal employer.

3. Dinanath v. National Fertilizer’s Ltd. (1992) (Supreme Court)

Held: The only consequence of violation of Sections 7 & 12, is the penal liability under Sections 23 & 25
of the Act. (Here no comment made on the protection of interests of the workmen)

Conclusion – Latest Position is of penal consequences as per notes. The earlier two cases
presumed that the worker gets employed by PE.
 You can also add S. 13 and 7 above. Check