REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 5494-5505 OF 2005

N.T.P.C. & Ors. …..Appellants

Versus

Badri Singh Thakur & Ors. ….Respondents

[With  C.A.  Nos.  2140/2006,  5506-5507/2005,  5649/2005 and Writ Petition No.529 of 2005)

 J U D G M E N T

Dr. ARIJIT PASAYAT, J.

1. Challenge in these appeals and writ petition are to the

order passed by a Division Bench of the Madhya Pradesh High

Court. By a common order several Letters Patent Appeals were

disposed of. The Letters Patent Appeals were filed by present

respondents on the ground  that they have been employed as

Electricians since 1987 as workmen under Appellant No.1 i.e.

National  Thermal  Power  Corporation  (in  short  the

‘Corporation’) for maintenance of Korba Super Thermal Power

Project colonies. Though the writ petitioners were not directly

employed  by  the  Corporation,  but  were  employed  through

contractor.  Prior  to  such  engagement  they  were  employed

through other contractors. It was the stand in the writ petition

that their work was supervised by competent officers of the

Corporation and the materials for their job were supplied by

the Corporation and they worked for the colonies owned and

controlled  by  the  Corporation  and  series  of  contracts  have

been entered into by the Corporation with the contractor. It

was  therefore  their  stand  that  they  have  to  be  treated  as

employees  of  the  Corporation.  It  was  stated  that  the

Corporation  wanted  to  avoid  absorption  of  contract  labour

despite their perennial nature of work. With a view to frustrate

mandate of this Court, they engaged them on job work basis

and the whole endeavour was to defeat the absorption of the

contract labours.  It  was claimed before  the learned Single

Judge  that the M.P. Industrial Relation Act, 1960 (in short

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‘1960 Act’)  governs the conditions of the employment between

the  Corporation  and  the  contract  labour  and  they  were

entitled to the same wages as  the workmen of the Corporation

and there can be abolition of the contract labour on regular

basis.

2. Returns  were  filed  by  the  Corporation.  Stand  of  the

Corporation was that it  is  a registered establishment under

Section 7 of the Contract  Labour (Regulation and Abolition)

Act,  1970  (in  short  the  ‘Act’).  The  contractor  who  was

impleaded  as  respondent  No.4  in  the  writ  petitions  was

awarded the contract  after  inviting tenders.   The contractor

employed  writ  petitioners  and  there  was  no  relationship  of

masters and servants between the Corporation and the writ

petitioners.  It  was  canvassed  that  the  writ  petitioners  had

initiated  conciliation  proceedings  under  the  1960  Act  and

once they have taken recourse to alternative remedy available

to  them  under  industrial  law  they  cannot  invoke  the

extraordinary  jurisdiction  of  the  Court.  The  contractor  who

was impleaded as respondent No.4 supported the stand of the

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Corporation and its  functionaries.  It  was stated that it  is  a

partnership firm and it had full control over the employees as

the salaries were  being paid by the firm. It  was also stated

that it had obtained a licence under Section 12 of the Act and

was entitled to engage 75 workmen as per the said licence. It

was pointed out that the writ petitioners were not permanent

employees  and their  services last during the continuance of

the contract and it had come to an end after the term of the

contract had expired.  

3. Before the learned Single Judge it was urged by the writ

petitioners that the provisions of 1960 Act are applicable to

the  Corporation  and  inasmuch  as  in  Item  No.10  of  the

Notification dated 31.12.1960, there is a mention that the said

Act is applicable to electricity generation and distribution in

which the Corporation was engaged and was thus covered by

all corners of the Statute.  

4. Reliance was placed by the present appellants on Entries

22, 23 and 24 of the concurrent list  of  Schedule  VII  of  the

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Constitution of India, 1950 (in short ‘Constitution’) to buttress

the  contention  that  once  legislation  is  passed  by  the

Parliament  in  respect  of  any  field  covered  under  the

Concurrent  List,  the  same  would  have  preference  over  the

State law.

5. It was also submitted that Act in essence obliterated the

definition  of  employer  and  employee  under  the  1960  Act.

Learned Single Judge held that there was hardly any doubt

that the relationship of employer and employee is established;

that the Act is applicable to the writ petitioners and, therefore,

they cannot rely on the provisions of 1960 Act for enforcing

their  claim.  It  was  also  held  that  they  being  the  contract

labours  are  not  employees  of  the  Corporation  within  the

meaning of Section 2(13)(a) read with sub-clause (e) of Section

2(14) of 1960 Act after coming into force of the Act.  

6. A prayer had been made by the writ petitioners to absorb

them as its workmen for the Corporation as they are contract

labours.  Learned  Single  Judge  held  that  there  was  no

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Notification issued by the appropriate government abolishing

the contract labour under Section 1 of the Act. There was no

scope for granting any relief. It was held that the decision in

Air India Statutory Corporation etc. v.  United Labour Union

and Ors. etc. (AIR 1997 SC 645) does not apply to the facts of

the case.  

7. Before the Division Bench, stand of the writ petitioners

who were the appellants was that learned Single Judge was

not  justified  in  holding  that  1960  Act  had  no  application

because  of  the  Act  inasmuch as no Notification was issued

under  Section  10  of  the  Act  and  in  the  absence  of  a

Notification the conclusion arrived at is bound to suffer.  

8. Stand  of  the  present  appellants  was  that  the  writ

petitioners  cannot  claim  to  be  employees  of  the  principal

employers and the question of  absorption does  not arise in

view of what has been stated by this Court in Steel Authority

of India Ltd. v.  National Union Waterfront Workers (2001 (7)

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SCC 1) which inter-alia over-ruled the earlier decision in Air

India’s case (supra).

9. The High Court  held that the object  of the Act was to

regulate  the  employment  of  the  contract  labour  in  certain

establishments  and  to  provide  for  its  abolition  in  certain

circumstances  and  the  matters  connected  therewith.

Reference was made to Sections 21 and 30 of the Act and it

was held that though there was an over-riding effect yet the

beneficial provision of the statute was not extinguished. It was

further observed that once Notification is issued under Section

10 of the Act the matter would be different and the decision

rendered by this Court in Steel Authority’s case (supra) would

be applicable in full force. In the absence of Notification the

other general relevant law would be applicable.  With reference

to various provisions of 1960 Act it was held that there can be

reconciliation  of  both  the  decisions  rendered  by  Division

Benches  of  the  High  Court.  When  there  is  a  dispute  with

regard to wage structure qua class of employees they have to

move the Labour Court as per the provisions of Sections 51

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and 52 of the 1960 Act and if it is an individual, he can move

the  High Court  under  Schedule  II.  Accordingly,  it  was held

that the view of learned Single Judge was not correct.  

10. In  support  of  the  appeals,  learned  counsel  for  the

appellants submitted that the ratio in Steel  Authority’s case

(supra) has not been appreciated. It was further pointed out

that  the  direction  was  for  absorption  and  further  that  the

contract labours should be abolished.  It was pointed out that

the  effect  of  registration  under  Section  7  and  the  licence

issued has not been considered. Similarly, the effect of Rule

25 has been lost sight of. It is pointed out that the effect of

Article  254  has  also  not  been  considered.   According  to

learned  Solicitor  General  repugnancy  is  irrelevant  for  Sub-

Article (2) of Article 254. It is pointed out that the Act refers to

regulation and abolition. Section 10 begins with non-obstante

clause.  Section 7 relates  to registration.  The employment of

contract  labour  is  not  prohibited.  Only  prohibition  can  be

imposed by issuing a Notification.   

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11. It  is  pointed  out  that  in  Article  254  the  question  of

Presidential  assent  is  also  there.  It  is,  therefore,  submitted

that the judgment of the Division Bench is unsustainable.  

12. In  response,  learned  counsel  for  the  respondents

submitted  that  the  High  Court’s  view  is  in  line  with  the

beneficial  legislation  which  intends  to  protect  the  contract

labour from exploitation.  

13. In  Steel  Authority’s case  (supra)  it  was  inter-alia

observed as follows:

“10. The CLRA Act was enacted by Parliament to deal with the abuses of the contract labour system.  It  appears  that  Parliament  adopted twin  measures  to  curb  the  abuses  of employment of contract labour - the first is to regulate  employment  of  contract  labour suitably  and  the  second  is  to  abolish  it  in certain  circumstances.  This  approach  is clearly  discernible  from the provisions of  the CLRA Act which came into force on 10-2-1971. A  perusal  of  the  Statement  of  Objects  and Reasons* shows  that  in  respect  of  such categories  as  may  be  notified  by  the appropriate  Government,  in  the  light  of  the prescribed criteria, the contract labour will be abolished  and  in  respect  of  the  other

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categories  the  service  conditions  of  the contract  labour  will  be  regulated.  Before concentrating on the relevant provisions of the CLRA Act, it may be useful to have a bird’s-eye view of  that Act.  It  contains seven Chapters. Chapter I has two sections; the first relates to the commencement and application of the Act and the second defines the terms used therein. Chapter II  which has three sections provides for  the  constitution  of  a  Central  Advisory Board by the Central Government and a State Advisory Board by the State Government and empowers  the  Boards  to  constitute  various committees.  Chapter  III  contains  regulatory provisions  for  registration  of  establishments which  employ  contract  labour.  Section  10 which  prohibits  the  employment  of  contract labour falls in this Chapter; we shall revert to it presently. Chapter IV contains provisions for purposes  of  licensing  of  contractors  to make sure that those who undertake or execute  any work through contract  labour,  adhere  to  the terms and conditions of licences issued in that behalf.  Power  is  reserved  for  revocation, suspension and amendment of licences by the Licensing Officer and a provision is also made for appeal  against the order of  the Licensing Officer.  Chapter  V  takes  care  of  the  welfare and  health  of  contract  labour  obliging  the appropriate  Government  to  make  rules  to ensure  that  the  requirements  of  canteen, restrooms  and  other  facilities  like  sufficient supply  of  wholesome  drinking  water  at convenient  places,  sufficient  number  of latrines and urinals accessible to the contract labour in the establishment, washing facilities and  first-aid  facilities,  are  complied  with  by the  contractor.  Where  the  contractor  fails  to provide these facilities the principal employer

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is enjoined to provide canteen, restrooms etc., mentioned  above,  for  the  benefit  of  the contract  labour.  Though  the  contractor  is made  responsible  for  payment  of  wages  to each  worker  employed  by  him  as  contract labour  before  the  prescribed  period  yet  for effective  implementation  of  this  requirement, care is taken to ensure presence of a nominee of  the  principal  employer  at  the  time  of  the disbursement  of  wages.  Here  again,  it  is prescribed  that  if  the  contractor  fails  to  pay the wages to the contract labour, the principal employer  shall  pay  the  full  wages  or  unpaid wages,  as  the  case  may  be,  to  the  contract labour  and  a  right  is  conferred  on  him  to recover the same from the amount payable to the  contractor;  if  however,  no  amount  is payable to him then such amount is treated as a debt due by the contractor to the principal employer.  Chapter  VI  deals  with  the contravention  of  the  provisions  of  the  Act, prescribes  offences  and  lays  down  the procedure  for  prosecution  of  the  offenders. Chapter  VII  is  titled  “Miscellaneous”  and  it contains  eight  sections  which  need  not  be elaborated here.”  

14. In  Gujarat  Electricity  Board,  Thermal  Power  Station,

UKAL Gujarat v. Hind Mazdoor Sabha and Ors. (1995 (5) SCC

27) it was inter alia observed by this Court as follows:       

  “53.  Our  conclusions  and  answers  to  the questions raised are, therefore, as follows:

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(i) In view of the provisions of Section 10 of the Act,  it  is  only  the  appropriate  Government which  has  the  authority  to  abolish  genuine labour  contract  in  accordance  with  the provisions  of  the  said  section.  No  court including  the  industrial  adjudicator  has jurisdiction to do so.

(ii) If the contract is a sham or not genuine, the workmen of the so-called contractor can raise an  industrial  dispute  for  declaring  that  they were  always  the  employees  of  the  principal employer  and  for  claiming  the  appropriate service  conditions.  When  such  dispute  is raised, it is not a dispute for abolition of the labour  contract  and  hence  the  provisions  of Section 10 of  the Act will  not bar either  the raising  or  the  adjudication  of  the  dispute. When  such  dispute  is  raised,  the  industrial adjudicator has to decide whether the contract is  a  sham  or  genuine.  It  is  only  if  the adjudicator comes to the conclusion that the contract  is  a  sham,  that  he  will  have jurisdiction  to  adjudicate  the  dispute.  If, however, he comes to the conclusion that the contract is genuine, he may refer the workmen to the appropriate Government for abolition of the  contract  labour  under  Section  10  of  the Act  and keep  the  dispute  pending.  However, he can do so if the dispute is espoused by the direct  workmen  of  the  principal  employer.  If the  workmen  of  the  principal  employer  have not  espoused  the  dispute,  the  adjudicator, after  coming  to  the  conclusion  that  the contract is genuine, has to reject the reference, the  dispute  being  not  an  industrial  dispute within the meaning of Section 2(k)  of  the ID Act. He will not be competent to give any relief

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to  the  workmen  of  the  erstwhile  contractor even if the labour contract is abolished by the appropriate  Government  under  Section 10 of the Act.

(iii)  If  the  labour  contract  is  genuine  a composite industrial dispute can still be raised for abolition of the contract labour and their absorption. However, the dispute will have to be raised invariably by the direct employees of the  principal  employer.  The  industrial adjudicator,  after  receipt  of  the  reference  of such  dispute  will  have  first  to  direct  the workmen  to  approach  the  appropriate Government  for  abolition  of  the  contract labour under Section 10 of the Act and keep the  reference  pending.  If  pursuant  to  such reference, the contract labour is abolished by the  appropriate  Government,  the  industrial adjudicator will have to give opportunity to the parties to place the necessary material before him  to  decide  whether  the  workmen  of  the erstwhile contractor should be directed to be absorbed by the principal employer, how many of them and on what terms.  If,  however,  the contract labour is not abolished, the industrial adjudicator has to reject the reference.

(iv)  Even after the contract labour system is abolished,  the  direct  employees  of  the principal  employer  can  raise  an  industrial dispute  for  absorption  of  the  ex-contractor’s workmen and the adjudicator on the material placed before  him can decide  as to who and how many of the workmen should be absorbed and on what terms.”

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15. Similarly, the view of this Court in Municipal Corporation

of Greater Mumbai v. K.V. Shramik Sangh and Ors. (2002 (4)

SCC  609)  is  relevant.  The  position  in  law  which  has

considerable  effect  on  the  present  dispute  was  noted  as

follows:

“16. In a recent Constitution Bench judgment of this Court in  Steel Authority of India Ltd. v. National  Union  Waterfront  Workers,  Air  India case1 is  specifically  overruled.  In  the  said judgment, after referring the various decisions of  this  Court  including  the  decisions  cited before us and on elaborate consideration and analysis, the Constitution Bench in para 125 of the said judgment, outlined the conclusions. To the extent they are relevant for the present purpose read: (SCC pp. 61-63)

“125.  The upshot of the above discussion is outlined thus:

(1)(a)-(2)(b) * * * (3) 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  the  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

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absorption  of  the contract  labour  working in the establishment concerned.

(4) We overrule the judgment of this Court in Air India case prospectively and declare that any  direction  issued  by  any  industrial adjudicator/any  court  including  the  High Court,  for  absorption  of  contract  labour following the judgment in  Air India case 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.

(5)  On issuance of prohibition notification under  Section  10(1)  of  the  CLRA  Act prohibiting employment of contract labour or otherwise,  in  an  industrial  dispute  brought before it  by any contract labour in regard to conditions  of  service,  the  industrial adjudicator will have to consider the question whether  the  contractor  has  been  interposed either on the ground of having undertaken to produce any given result for the establishment or for supply of contract labour for work of the establishment under a genuine contract or is a mere  ruse/camouflage  to  evade  compliance with  various  beneficial  legislations  so  as  to deprive the workers of the benefit thereunder. 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 regularize  the services of  the contract labour in the establishment concerned subject to the conditions as may be specified  by it  for that purpose in the light of para 6 hereunder.

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(6)  If  the contract is found to be genuine and prohibition notification under Section 10 (1)  of  the  CLRA  Act  in  respect  of  the establishment concerned has been issued by the  appropriate  Government,  prohibiting employment of contract labour in any process, operation or other work of any establishment and 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 and, if necessary, by relaxing the condition as to  maximum  age  appropriately,  taking  into consideration  the  age  of  the  workers  at  the time  of  their  initial  employment  by  the contractor and also relaxing the condition as to academic qualifications other than technical qualifications.”

Para 126 of  the  same judgment  reads:  (SCC p.63)

“126.  We  have  used  the expression  ‘industrial  adjudication’ by  design  as  determination  of  the questions  aforementioned  requires enquiry  into  disputes  questions  of facts  which  cannot  conveniently  be made  by High Courts  in exercise  of jurisdiction under Article  226 of the Constitution.  Therefore,  in  such cases the appropriate authority to go into  those  issues  will  be  the Industrial  Tribunal/Court  whose determination  will  be  amenable  to judicial review.”

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 19. Now, we proceed to consider the validity

and  correctness  of  the  impugned  judgment and  order  in  the  light  of  judgment  of  the Constitution  Bench  in  SAIL  case.  The  High Court  held  that  the  work  entrusted  to  the members  of  the  Union  continued  to  be basically the work of the Corporation itself of perennial nature; the Corporation has chosen to  carry  out  the  work  under  the  so-called system of  labour  contract  without  complying with  the  provisions  of  the  CLRA Act  and  as such  the  labour  contract  was  a  camouflage. We must state here itself that the Union in the writ  petition alleged that  the labour contract was a sham and the Corporation specifically denied it in its counter-affidavit but the High Court did not go into this question and did not record a finding that the labour contract in the present  case  was  a  sham  or  a  camouflage considering  the  material  on  record;  even otherwise,  this being a serious and disputed fact  in  terms  of  the  Constitution  Bench judgment  aforementioned,  the  High  Court could  not  have  appropriately  adjudicated  on the issue exercising jurisdiction under Article 226 of the Constitution. It appears to us that the High Court proceeded to conclude that the labour  contract  was  not  genuine  and  the workers  of  the  Union were  employees  of  the Corporation because the Corporation and the contractors did not comply with the provisions of the CLRA Act. Conclusion that the contract was  a  sham  or  it  was  only  a  camouflage cannot  be  arrived  at  as  a  matter  of  law  for non-compliance  with  the  provisions  of  the CLRA  Act  but  a  finding  must  be  recorded

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based on evidence, particularly when disputed by an industrial  adjudicator  as laid down in various decisions of  this Court  including the Constitution  Bench  judgment  in  SAIL.  The cases on which the High Court placed reliance were  the  cases  where  finding  of  fact  was recorded by the Labour Courts on evidence. In para  34  of  the  impugned  judgment,  it  is stated:

“This Court  is hardly competent  to record  evidence  or  appreciate  it  in exercise  of  its  powers  under  Article 226 of the Constitution. This Court as well  as  the  Supreme  Court  have always  taken  the  view  that  writ jurisdiction should not be permitted to be  invoked  if  disputed  questions  of facts are involved, is the submission of the learned counsel. The submissions are wholly unexceptionable. If the facts were not clear, we would have hardly allowed  our  writ  jurisdiction  to  be invoked.  The material  which we have referred  to  at  several  places hereinbefore,  is  more  than  adequate, in our view, to come to the conclusion we have arrived at.”

 20. The material  referred  to relates  to the

complaints of the Union, recommendations of the  Labour  Commissioner,  Labour  Minister and  the  Labour  Contract  Advisory  Board  in regard  to  abolition  of  contract  labour  under Section 10 of the CLRA Act, but that material could not be a foundation or basis to say that the labour contract was a sham, a camouflage

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or a devise* to deny the statutory benefits to the  workers.  From  the  judgment  under challenge,  it  is  clear  that  Air  India  case weighed with the High Court, which judgment now stands overruled as already stated above. The  High  Court  rejected  the  contention  that jurisdiction  to  abolish  the  contract  labour system  vested  with  the  appropriate government under Section 10 of the CLRA Act and  that  power  could  be  exercised  after obtaining  advice  of  the  Contract  Labour Advisory Board which in turn had to keep in mind several factors enumerated in clauses (a) to (d) of Section 10(2) of the CLRA Act stating that in the present  case  in almost  15 years, there  was  no  registration  of  the  principal employer; none of the contractors ever held a licence under the Act; the work that was being carried on fell within the parameters of clauses (a) to (d) of Section 10(2) of the Act and having regard  to  what  was  said  by  the  Chairman, Standing  Committee  of  the  Corporation  and the  contractors  and  the  recommendation  of the  Labour  Commissioner  to  abolish  the contract labour system. Further, the Minister for Labour of the Government of Maharashtra went  on  to  record  in  clear  terms  that  the Government  had taken a decision  to abolish the  system  of  contract  labour  in  the  Solid Waste  Management  Department  of  the Corporation,  the  High  Court  thought  that there was sufficient material for abolishing the contract labour system. The High Court drew an inference that the State  admitted  that all the  requirements  were  satisfied  for  acting under  Section  10(2)  but  because  of  the election code of conduct it was unable to act and  passed  order  for  absorption  of  workers

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saying that it had no impediment to do so in view of its conclusions. Referring to  Air India case the  High  Court  observed  that  the  said judgment  suggested  that  a  contract  labour system can be said to be genuine only if it is carried  in  compliance  with  the  provisions  of the  CLRA Act  and anything  contrary  thereto would  lead  to  the  presumption  that  the purported contract labour system was merely a  device  and  a  sham.  In  our  view,  the conclusion of the High Court that the contract labour system in the present case was a sham, cannot  be  sustained  in  the  light  of  what  is stated  above  and  particularly  when  the disputed  questions  of  fact  arose  for consideration  in  the  light  of  rival  contention raised by the parties. We have detailed them above to say so.  

28. As laid down in the Constitution Bench judgment,  absorption  of  contract  labourers cannot be automatic and it is not for the court to  give  such direction.  Appropriate  course  to be adopted is as indicated in para 125 of the said  judgment  in  this  regard.  Thus  having considered all aspects, we are of the view that the impugned judgment and order cannot be upheld.”

16. Article 254 of the Constitution is also relevant. It reads

as follows:

“254.  Inconsistency  between  laws  made  by Parliament and laws made by the Legislatures of

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States.-(1)  If  any provision  of  a law made  by the Legislature of a State is repugnant to any provision of  a law made by Parliament  which Parliament  is competent  to  enact,  or  to  any  provision  of  an existing  law  with  respect  to  one  of  the  matters enumerated in the Concurrent List, then, subject to the  provisions  of  clause  (2),  the  law  made  by Parliament, whether passed before or after the law made by the Legislature  of such State,  or,  as the case may be, the existing law, shall prevail and the law made by the Legislature of the State shall,  to the extent of the repugnancy, be void.

(2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the  Concurrent  List  contains  any  provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of Such  State  shall,  if  it  has  been  reserved  for  the consideration of the President and has received his assent, prevail in that State:

Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending, varying or repealing the law so made by the Legislature of the State.”

17.    In  Sub-Article  (1)  of  Article  254  it  has  been  clearly

indicated that the competing legislations must be in respect of

one of the matters enumerated in the concurrent list. It lays

down the general rule and clause (2) is an exception thereto.

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The proviso qualifies the exception. In Deep Chand  v. State of

Uttar  Pradesh  and  Ors. (AIR  1959  SC  648)  the  following

principles  were  laid  down  to  ascertain  whether  there  is

repugnancy or not.  The test was (1) whether there is direct

conflict  between  two  provisions;  (ii)  whether  the  legislature

intended to lay down an existing code in respect of the subject

matter  replacing  the  earlier  law;  and (iii)  whether  two laws

occupy  the  same  field.  In  Zaverbhai  Amaidas v.  State  of

Bombay (AIR  1954  SC  752)  it  was  pointed  out  that  the

important thing to consider with reference to this provision is

whether the legislation is “in respect of the same matter”. If

the  latter  legislation  deals  not  only  with the matters  which

formed  the  subject  of  the  earlier  legislation  but  with  other

distinct matters though of a cognate and allied character, then

Article 254(2) will have no application.   

18. A  Constitution  Bench  in  M.  Karunanidhi v.  Union  of

India (AIR 1979 SC 898 at para 8) observed as follows:

“It would be seen that so far as clause (1) of Article  254 is  concerned it  clearly  lays down that

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where there is a direct collision between a provision of  law  made  by  State  and  that  made  by  the Parliament  with  respect  to  one  of  the  matters enumerated in the Concurrent List, then subject to the provisions of Clause (2) the State law would be void  to  the  extent  of  repugnancy.  This  naturally means  that  where  both  the  State  and  the Parliament  occupy  the  field  contemplated  by Concurrent List then the Act passed by Parliament being  prior  in  point  of  time  will  prevail  and consequently the State Act will have to yield to the Central Act. In fact, the Scheme of the Constitution is  a  scientific  and  equitable  distribution  of legislative powers between Parliament and the State Legislatures.  First, regarding the matters contained in List I, i.e. the Union List to be Seventh Schedule, Parliament alone is empowered to legislate and the State Legislatures  have no authority  to make  any law in  respect  of  the  Entries  contained  in  List  I. Secondly,  so far as Concurrent  List  is  concerned, both  Parliament  and  the  State  Legislatures  are entitled to legislate in regard to any of the entries appearing  therein,  but  this  is  subject  to  the condition  laid  down  by  Article  254(1)  discussed above. Thirdly, so far as the matters in List II, i.e., the State List are concerned, the State Legislature alone  is  competent  to  legislate  on them and only under certain conditions Parliament  can do so. It is,  therefore,  obvious  that  in  such  matters repugnancy  may  result  from  the  following circumstances:

1. Where  the  provisions  of  a  Central  Act and a State  Act  in the Concurrent  List  are fully  inconsistent  and  are  absolutely irreconcilable, the Central Act will prevail and the State Act will become void in view of the repugnancy.  

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2. Where, however, the law passed by the State  comes into collision with a law passed by  the  Parliament  on  an  entry  in  the Concurrent List, the State Act shall prevail to the  extent  of  the  repugnancy  and  the provisions of the Central  Act would become void provided the State Act has been passed in accordance with Clause (2) of Article 254.

3.   Where  a  law  passed  by  the  State Legislature  while  being  substantially  within the  scope  of  the  entries  in  the  State  List entrenches  upon  any  of  the  Entries  in  the Central List the  constitutionality of the law may  be  upheld  by  invoking  the  doctrine  of pith and substance if  on an analysis of the provisions of the Act it appears that by the large the law falls within the four corners of the  State  List,  and  entrenchment  if  any  is purely incidental or inconsequential.

4. Where,  however,  a  law  made  by  the State  Legislature  on the  subject  covered  by the Concurrent List is inconsistent with and repugnant  to  a  previous  law  made  by Parliament, then such a law can be protected by  obtaining  the  assent  of  the  President under Article 254(2) of the Constitution. The result of obtaining the assent of the President would  be  that  so  far  as  the  State  Act  is concerned,  it  will  prevail  in  the  State  and overrule the provisions of the Central Act in its  applicability  to  the  State  only.  Such  a state  of  affairs  exist  only  until  Parliament may at  any time make  a  law adding to,  or amending, varying or repealing the law made by the State Legislature under the proviso to Article 254.”  

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19. Clause (1) of Article 254 speaks about over-riding effect

of  a  law  made  by  Parliament  which  the  Parliament  is

competent  to  enact.   Same  is  the  position  in  respect  of  a

provision of  existing law with respect  of  one  of  the  matters

enumerated in concurrent list which is subject to operation of

Clause (2). So far as Clause (2) is concerned when a law is

made by the legislature of the State with respect to one of the

matters enumerated in the concurrent list and it contains any

provision repugnant to earlier law made by Parliament or

in the existing law with respect of that matter then the law so

made by legislature of the State shall if it has been reserved

for  the  consideration  of  the  President  and has received  the

assent  prevail in that State.  In that case, the assent of the

President becomes the determinative  factor.   The proviso to

Clause (2) curtails the ambit of Clause (2) by providing that

Parliament can enact a law with respect to the same matter in

which the State Legislature has made the law and by such law

the  Parliament  can  add  to,  amend,  vary  or  repeal  the  law

made by the legislature of the State. In other words, in terms

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of  the  proviso  in  Article  254  the  legislative  power  of  the

Parliament has been enlarged in the sense that it can add to,

amend, vary or repeal the law made by the legislature of the

State.  

20. Sections 7, 10 and 12 of the Act have also relevance. The

read as follows:

“7.Registration of certain establishments.- (1)  Every  principal  employer  of  an establishment  to  which this  Act  applies  shall, within  such  period  as  the  appropriate Government may, by notification in the Official Gazette,  fix  in  this  behalf  with  respect  to establishments generally or with respect to any class  of  them,  make  an  application  to  the registering officer in the prescribed manner for registration of the establishment:

Provided  that  the  registering  officer  may entertain any such application for registration after expiry of the period fixed in this behalf, if the  registering  officer  is  satisfied  that  the applicant  was  prevented  by  sufficient  cause from making the application in time.

(2)  If  the  application  for  registration  is complete in all respects, the registering officer shall  register  the establishment and issue to the principal employer of the establishment a certificate  of  registration  containing  such particulars as may be prescribed.

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10. Prohibition of employment of contract labour-(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

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perennial  nature,  the  decision  of  the appropriate Government thereon shall be final.

12.  Licensing  of  contractors.--(1)  With effect  from  such  date  as  the  appropriate Government may, by notification in the Official Gazette,  appoint  no contractor  to  whom this Act  applies,  shall  undertake  or  execute  any work  through  contract  labour  except  under and in accordance with a licence issued in that behalf by the licensing officer.  

(2)  Subject  to the provisions of this Act, a licence  under  sub-section  (1)  may  contain such  conditions  including,  in  particular, conditions  as  to  hours  of  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.”

.

21. In  view  of  what  has  been  stated  above,  the  Division

Bench was not justified in its conclusions and on the contrary,

learned Single  Judge  had correctly  analysed the position in

law. That being so, Civil Appeals are allowed.  There will be no

order as to costs.  

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22. In view of the order passed in Civil Appeals no order is

necessary to be passed in Writ Petition 529 of 2005.        

…………..…………………J. (Dr. ARIJIT PASAYAT)

………………………….….J. (P. SATHASIVAM)

New Delhi, August 11, 2008

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