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Case Analysis

Air India Statutory Corporation


Vs
United Labour Union and Ors

Act : Contract Labour (Regulation & Abolition) Act 1970


Date of Judgment: 06/12/1996
Bench : 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 Companys 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.

Court Interpretation :
How the ACT came into Force
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:
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

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.

Thankyou