Holding

The central Contract Labour (Regulation and Abolition) Act, 1970 prevails over the state law, and the petitioners are not employees of NTPC; no absorption order can be made absent a valid notification under Section 10.

Summary

The petitioners, electricians employed through a contractor for the National Thermal Power Corporation (NTPC), sought to be absorbed as workmen of the corporation, arguing that the Madhya Pradesh Industrial Relations Act, 1960 applied to them and that contract labour should be abolished. NTPC contended that it was a registered establishment under the Contract Labour (Regulation and Abolition) Act, 1970, that there was no master‑servant relationship, and that the central Act prevailed over the state law. The High Court Single Judge held that the 1970 Act applied, the petitioners were not employees of NTPC, and no notification under Section 10 existed, so no relief could be granted; the Division Bench reversed this view. The Supreme Court examined the constitutional provision Article 254, held that the central Act overrides the state law and that the Division Bench was not justified in its conclusions, affirming the Single Judge’s analysis. Consequently, the appeals were allowed and the petitioners’ claim for absorption was rejected.

Issues considered

The applicability of the Contract Labour (Regulation and Abolition) Act, 1970 versus the Madhya Pradesh Industrial Relations Act, 1960 to the petitioners.
Whether the petitioners, employed through a contractor, can be deemed employees of NTPC for the purpose of absorption.
The effect of Article 254 of the Constitution on the conflict between the central and state legislation.

Legislation cited

Constitution of Indias. Article 254
Contract Labour (Regulation and Abolition) Act, 1970s. 10, s. 12, s. 7
Madhya Pradesh Industrial Relations Act, 1960s. 21, s. 2(13)(a), s. 2(14)(e), s. 30, s. 51, s. 52

Subjects

contract labourabsorption of workmenArticle 254central vs state legislationregistration under CLRA Actnotification under Section 10master‑servant relationshipindustrial relations

Judgment

[2008] 11S.C.R.1179

N.T.P.C. & ORS. A
v.
SADRI SINGH THAKUR & ORS.
(Civil Appeal Nos. 5494-5505 of 2005)
AUGUST 11, 2008
B
~
[DR. ARIJIT PASAYAT AND P. SATHASIVAM, JJ.]

Contract Labour (Regulation and Abolition) Act, 1970 -
Constitution of India, 1950 - Article 254 - Abolition of contract
labour - Absorption of workmen - Respondents employed
through contractor as workman under the Corporation - Writ
c
petition by respondents claiming absorption - Case of respon-
dents that the 1960 Act applicable to Corporation, thus, en-
titled to same wages as workman of Corporation and contract
labour to be abolished on regular basis - Set aside by High
D
Court holding that the 1970 Act was applicable; that they be-
ing the contract labours were not employees of Corporation;
"" and that no Notification was issued to abolish thf;J contract
_labour - However, order of Single Judge of High Court set
aside by Division Bench- On appeal, held: Order of Division
Bench of High Court not sustainable - Single Judge correctly E
analysed the position in law - In terms of proviso to Article
254, legislative power of Parliament has been enlarged in the
sense that it can add to, amend, vary or repeal the law made
by legislature of State - MP Industrial Relation Act, 1960.
F
It is the case of the respondents that they were em-
ployed through the contractor and were working as elec-
tricians under the appellant No.1-Corporation. Respon-
dents filed writ petition seeking their absorption as work-
men of the Corporation as they are contract labours. They
G
contended that they worked for the colonies owned and
controlled by the Corporation and officers of the Corpo-
-), ration supervised their work; that the Corporation entered
into series of contracts with the contractor; that the Cor-
1179 H
1180 SUPREME COURT REPORTS [2008] 11 S.C.R.

A poration engaged the respondents on job work basis to
avoid absorption of contract labour; and that the provi-
sions of M.P. Industrial Relation Act, 1960 are applicable
to the Corporation and as such were entitled to the same
wages as the workmen of the Corporation and there could
B . be abolition of contract labour on regular basis. Appel-
lant-Corporation contended that it is a registered estab-
lishment u/s 7 of the Contract Labour (Regulation and
Abolition) Act, 1970; that the contractor employed the re-
spondents; that there was no relationship of master and
c servant between the Corporation and the respondents;
that once legislation is passed by the Parliament in re-
spect of any field covered under the Concurrent List, the
same would have preference over the Sta.te law; and that
the 1970 Act was applicable. The Single Judge of High
Court held that relationship of employer and employee is
0
not established; that the 1970 Act is applicable to the writ
petitioners, thus, respondents could not rely on the pro-
visions of 1960 Act for enforcing their claim; that they
being the contract labours are not employees of the Cor-
poration; that there was no Notification issued by the ap-
E propriate· government abolishing the contract labour; that
there was no scope for granting any relief; and that the
decision in Air India Statutory Corporation case did riot ap-
ply to the facts of the case.
F Respondents filed Letters Patent Appeal. Appellants
contended that the respondents could not claim to· be
employees of the principal employers and their absorp-
tion did not arise in view of Steel Authority of India Ltd. case
which inter-alia over-ruled the earlier decision in Air India's
G case. The Division Bench of High Court held that the ob-
ject of the Act was to regulate the employment of the con-
tract labour in certain establishments and to provide for
its abolition in certain circumstances and the ·matters con-
nected therewith; that though there was an over-riding
H effect yet the beneficial provision of the statute was not
N.T.P.C. & ORS. v. SADRI SINGH 1181
THAKUR & ORS.

extinguished; that once Notification is issued u/s. 10 of A
the Act the matter would be different and the decision ren-
dered by this Court in Steel Authority's case would be ap-
plicable in full force; that in the absence of Notification
the other general relevant law would be applicable; that
., with reference to various provisions of 1960 Act, the view B
of Single Judge of High Court was not correct. Hence,
the present appeal.
Allowing the appeals, the Court
HELD: 1. Clause (1) of Article 254 of the Constitution c
speaks about over-riding effect of a law made by Parlia-
ment 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 concur-
rent list which is subject to operation of Clause (2). So far
0
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 pro- ·
vision 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 re- E
served for the consideration of the President and has re-
ceived the assent prevail in that State. In that case, the
assent of the President becomes the determinative fac-
tor. The proviso to <?lause (2) curtails the ambit of Clause
(2) by providing that Parliament can enact a law with re- F
~pect 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 legisla-
ture of the State. In other words, in terms of the proviso in
Article 254 the legislative power of the Parliament has G
been e·nlarged in the sense that it can add to, amend, vary
or repeal the law made by the legislature of the State. fPara
19] [1198-C-G]
2: The Division Bench of High Court was not justi- H
1182 SUPREME COURT REPORTS [2008] 11 S.C.R.

A tied in its conclusions and on the contrary, Single Judge had
correctly analysed the position in law. [Para 21] [1200-G]
Air India Statutory Corporation Steel Authority of India
Ltd. v. NC1tional Union Waterfront Workers 2001 (7) SCC 1;
Gujarat Electricity Board, Thermal Power Station, UKAL
B Gujarat v. Hind Mazdoor Sabha and Ors. 1995 (5) SCC 27;
Municipal Corporation of Greater Mumbai v. K. V Shramik
Sangh and Ors. 2002 (4) SCC 609; Deep Chand v. State of
Uttar Pradesh and Ors. AIR 1959 SC 648; Zaverbhai Amaidas
v. State of Bombay AIR 1954 SC 752; M. Karunanidhi v. Union
C of India AIR 1979 SC 898 - referred to.
Case Law Reference
2001 (7) sec 1) Referred to. 8
1995 (5) sec 21 Referred to. 14
D )...
2002 (4) sec 609 Referred to. 15
AIR 1959 SC 648 Referred to. 17
AIR 1954 SC 752 Referred to. 17
E AIR 1979 SC 898 Referred to. 18
CIVIL APPELLATE JURISDICTION.: Civil Appeal Nos.
5494-5505 of 2005 ·
From the final Judgment and Order dated 5.12.2003 of
F the High Court of Madhya Pradesh at Jabalpur in l.P.A. Nos.
89, 90, 91, 92, 93, 95, 6 97, 98, 99, 100 and 101 of 1998
G.E. Vahanvati, S.G. Ranjit Kumar, Bharat Sangal, P. Das,
Guru Krishna Kumar, Girish Patwardhan, S. Sukumaran, Rajesh,
G Alok Rai, R.D. Upadhyay, Urmila Sirur, T.V. George, Vikas
Upadhyay, B.S. Banthia, Rajesh, V.N. Raghupathy and K. Rajeev
for the Appearing Parties.
The Judgment of the Court was delivered by
Dr. ARIJIT PASAYAT, J. 1.Challenge in these appeals and
H
<
N.T.P.C. & ORS. v. SADRI SINGH· 1183
_J, THAKUR & ORS. [DR. ARIJIT PASAYAT, J.]

writ petition are to the order passed by a Division Bench of the A
Madhya Pradesh High Court. By a common order several Let-
ters Patent Appeals were disposed of. The Letters Patent Ap-
peals 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 B
(in short the 'Corporation') for maintenance of Korba Super Ther-
mal 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 c
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
D
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 Ii
Judge that the M.P. Industrial Relation Act, 1960 (in short '1960
Act') governs the conditions of the employment between the Car-
poration and the contract labour and they were entitled to the same
wages as the workmen of the Corporation and there can be abo-
lition of the contract labour on regular basis. F
2. Returns were filed by the Corporation. Stand of the Car-
poration was that it is a registered establishment under Sec-
tion 7 of the Contract Labour (Regulation and Abolition) Act,
1970 (in short the 'Act'). The contractor who was impleaded as
G
respondent No.4 in the writ petitions was awarded the contract
after inviting tenders. The contractor employed writ petitioners
•1 and there was no rel~tionship of masters and servants between
the Corporation and the writ petitioners. It was canvassed that
the writ petitioners had initiated conciliation proceedings under
H
>
1184 SUPREME COURT REPORTS [2008] 11 S.C.R.
)._

A 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 Cor-
poration and its functionaries. It was stated that it is a partnership
B 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 ob-
tained 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
c 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
D 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 En-
tries 22, 23 and 24 of the concurrent list of Schedule VII of the
E 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.

F 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.
G
It was also held that they -being th~ 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.

H 6. A prayer had been made by the writ petitioners to ab-
N.T.P.C. & ORS. v. BADRI SINGH 1185
THAKUR & ORS. [DR. ARIJIT PASAYAT, J.]

sorb them as its workmen for the Corporation as they are con- A
tract labours. Learned Single Judge held that there was no No-
tification 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 .. - B
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 Sec- C
tion 10 of the Act and in the absence of a Notification the con-
clusion arrived at is bound to suffer.
8. Stand of the present appellants was that the writ petition-
ers cannot claim to be employees of the principal employers and
0
the question of absorption does not arise in view of what has
been stated by this Court in Steel Authority of India Ltd. v. Na-
tional Union Waterfront Workers (2001 (7) 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 E
regulate the employment of the contract labour in certain estab-
lishments and to provide for its abolition in certain circumstances
and the matters connected therewith. Reference was made to
Sections 21and30 of the Act and it was held that though there
was an over-riding effect yet the beneficial provision of the stat- F
ute was not extinguished. It was further observed that once No-
tification 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 G
lllllli.. 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 H
1186 SUPREME COURT REPORTS [2008] 11 S.C.R.

A Sections 51 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 ap-
pellants submitted that the ratio in Steel Authority's case (su-
B pra) has not been appre<?iated. 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
C of. It is pointed out that the effect of Article 254 has also not
been considered. According to learned Solicitor General re-
pugnancy is irrelevant for Sub-Article (2) of Article 254. It is
pointed out that the Act refers to regulation and abolition. Sec-
tion 10 begins with non-obstante clause. Section 7 relates to
D registration. The employment of contract labour is not prohib-
ited. Only prohibition can be imposed by issuing a Notification.
11. It is pointed out that in Article 254 the question of Presi-
dential assent is also there. It is, therefore, submitted that the
judgment of the Division Bench is unsustainab.le.
E
12. In response, learned counsel for the respondents submit-
ted that the High Court's view is in line with the beneficial legisla-
tion which intends _to protect the contract labour from exploitation.
13. In Steel Authority's case (supra) it was inter-alia ob-
F served 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
G
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
H
N.T.P.C. & ORS. v. BADRI SINGH 1187
.;J,
THAKUR & ORS. [DR ARIJIT PASAYAT, J.]

of such categories as may be notified by the appropriate A
Government, in the light of the prescribed criteria, the
contract labour will be abolished and in respect of the
other 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 B
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 c
Advisory Board by the Central Government and a State
Advisory Board by the State Government and empowers
the Boards to constitute various committees. Chapter Ill
contains regulatory provisions for registration of
establishments which employ contract labour. Section 10
D
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 E
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 F
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 G
complied with by the contractor. Where the contractor fails
~ to provide these facilities the principal employer 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 H
1188 SUPREME COURT REPORTS [2008] 11 S.C.R.
,.._

A 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
B 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
c then such amount is treated as a debt due by the contractor
to the principal employer. Chapte~ 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."
D
14. In Gujarat Electricity Boarc:j, 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
E are, therefore, as follows:
(1) 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.
F
.. 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
G 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
H Section 10 of the Act will not bar either the raising or
N.T.P.C. & ORS. v. SADRI SINGH 1189
•j
THAKUR & ORS. [DR. ARIJIT PASAYAT, J.]

the adjudication of the dispute. When s·uch dispute is A
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 B
r 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
c
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 to the D
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
E
dispute can still be raised for abolition of the contract
labour and their absorption. However, the dispute
will have to be raised invariably by tl'le 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 F
approach the appropriate Government for abolition
of the contract labour under Section 10 of the Act
and keep the reference pending. If pursuant fo such
reference, the contract labour is abolished by the
appropriate Government, the industrial adjudicator G
will have to give opportunity to the parties to place
the necessary material before him to decide whether
-1 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, H
1190 SUPREME COURT REPORTS [2008] 11 S.C.R.

A the contract labour is not abolished, the industrial
adjudicator has to reject u;~ 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
B 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."
15. Similarly, the view of this Court in Municipal Corpora-
C tion of Greater Mumbai v. K. V Shramik Sangh and Ors. (2002
(4) SCC 609) is relevant. The position in law which has consid-
erable 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
D Workers, Air India case 1 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
E
purpose read: (SCC pp. 61-63)
"12§. The upshot of the above discussion is outlined thus:
( 1)(a)-(2)(b) * * *
F (3) Neither Section 10 of the CLRAAct 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
G contract labour, in any process, operation or other work in
any establishment. Consequently the principal employer
cannot be required to order absorption of the contract labour
working in the establishment
,
concerned.

(4) We overrule the judgment of this Court in Air India
H case prospectively and declare that any direction issued
..
'

N.T.P.C. & ORS. v. BADRI SINGH 1191
THAKUR & ORS. [DR. ARIJIT PASAYAT, J.]
,,J.

by any industrial adjudicator/any court including the High A
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. B
r-
(5) On issuance of prohibition notification under Section
10(1) of the CLRAAct 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 c
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 D
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 E
contract labour in t~e establishment concerned subject to
the conditions as may be specified by it for that purpose
in the light of para 6 hereu!"Jder.
(6) If the contract is found to be genuine and prohibition
notification under Section 10(1) of the CLRAAct in respect F
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 G
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 H

~I
"'
1192 SUPREME COURT REPORTS. [2008) 11 S.C.R.

A 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 .
B adjudication' by design as determination of the
questions aforementioned requires enquiry into
disputes questions of facts which Gan not conveniently
be made by High Courts in exercise of jurisdiction
under Article 226 of the Constitution. Therefore, in
c such cases the appropriate authority to go into those
issues will be the Industrial Tribunal/Court whose
determination will be amenable to judicial review." ~
19. Now, we proceed to consider the validity and
correctness of the impugned judgment and order in the
D 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
E 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-thatthe labour contract was a sham
and the Corporation specifically denied it in its counter-
F 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
G
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
H
N.T.P.C. & ORS. v. SADRI SINGH 1193
THAKUR & ORS. [DR. ARIJIT PASAYAT, J.]
~
Corporation and the contractors did not comply with the A
provisions of the CLRAAct. 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
(- CLRAAct but a finding must be recorded ba.sed on evidence,
particularly when disputed by an industrial adjudicator as laid B
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: c
"This Court is hardly competent to record evidence or
appreciate it in exercise of its powers under Article 226
1 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 D
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 E
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 F
in regard to abolition of contract labour under Section 10
... of the CLRAAct, but that material could not be a foundatio~
or basis -to say that the labour contract was a sham, a
camouflage or a devise· to deny the statutory benefits to
the workers. From the judgment under challenge, it is clear G
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
-1
abolish the contract labour system vested with the
/
appropriate· government under Section 10 of the CLRA H
1194 SUPREME COURT REPORTS, [2008] 11 S.C.R.

A 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 CLRAAct stating
that in the present case in almost 15 years, there was no
8 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
c 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
D 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
E of the election code of conduct it was unable to act and
passed order for absorption of workers saying that it had
no impediment to do so in view of it~ conclusions. Referring
to Air India case the High Court observed that the said
judgment suggested that a contract labour system can be
F 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, tlhe conclusion of the High Court that the contract labour
system in the present case was a sham, cannot be sustained
G
in the light of what is stated above and particularly when the
di~puted questions of fact arose for consideration in the
·light of. rival contention raised by the parties. We have
detailedi, them above to say so.

H 28. As laia down in the Constitution Bench judgment,
N.T.P.C. & ORS. v. BADRI SINGH 1195
THAKUR & ORS. [DR. ARIJIT PASAYAT, J.]

absorption of contract labourers cannot be automatic and A
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." B
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 States.-(1) If any c
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
0
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. E
(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 F
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 G
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 indi- H
1196 SUPREME COURT REPORTS [2008] 11 S.C.R.
)I.

A cated that the competing legislations must b~ in respect of one
of the matters enumerated in the concurr~nt list. It lays down the
general rule and clause (2) is an exception thereto. The proviso
qualifies the exception. In Deep Chand v. State of Uttar Pradesh
and Ors. (AIR 1959 SC 648) the following principles were laid
B 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
c 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
D
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
E concerned it clearly lays down that 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 ~he
matters enumerated in the Concurrent List, then subject to
the provisions of Clause (2) the State law would be void
F 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
G 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 7
Seventh Schedule, Parliament alone is empowered to
H legislate and the State Legislatures have no authority to
N.T.P.C. & ORS. v. BADRI SINGH 1197
THAKUR & ORS. [DR. ARIJIT PASAYA"t, J.]

make any law .in respect of the Entries contained in List I. A
Secondly, so fat 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
25_4(1) discussed above. Thirdly, so far as the matters in B
)'
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: c
1. Where the provision$ 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.
D
2. Where, hovitev~r. 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 St.ate Act has been passed in E
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 F
.. the Central List the constitutionality of the 1aYJ may
be upheld by invoking the doctrine of pith and
substance if on an analysis of the provisjons of the
Act it appears that by the large the law falls within the
four corners of the State List, and entrenchment· if
G
any is purely incidental or inconsequential.
4. Where, however, a law made by the State Legislature
-1
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 H
1198 SUPREME COURT REPORTS [2008] 11 S.C.R.

A 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
B 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."
C 19. Clause (1) of Article 254 speaks about over-riding ef-
fect of a law made by Parliament which the Parliament is com-
petent to enact. Same is the position in respect of a provision
of existing law with respect of one of the matters enumerated ir.
concurrent list which is subject to operation of Clause (2). So
D far as Clause (2) is concerned when a law is made by the legis-
lature of the State with respect to one of the matters enumer- ~.

ated in the concurrent list and it contains any provision repug-
nant to earlier law made by Parliament or in the existing law
with respect of that matter then the law so made by legislature
E 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 determi-
native factor. The proviso to Clause (2) curtails the ambit of
- Clause (2) by providing that Parliament can enact a law with
F 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 of the proviso in Article 254 the legislative
power of the Parliament has been enlarged in the sense that it
G can add to, amend, vary or repeal the law made by the legisla-
ture of the State.
20. Sections 7, 10 and 12 of the Act have also relevance.
The read as follows:
'?.Registration of certain establishments.-(!) Every
H
N.T.P.C. & ORS. v. SADRI SINGH 1199
A. THAKUR & ORS. [DR. ARIJIT PASAYAT, J.]

principal employer of an establishment to which this Act A
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
y the registering officer in the prescribed manner for B
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 c
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
D
establishment a certificate of registration containing such
...(
' particulars as may be prescribed.
10. Prohibition of employment of contract /abour-(1)
Notwithstanding anything contained in this Act, the
appropriate Government may, after Consultation with the E
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 F
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-
G
(a) whether the process, operation or other work is
incidental to, or necessary for the industry, trade,
~
1 business, manufacture or occupation that is carded
on in the establishment ;

(b) whether it is of perennial nature, that is to say, it is of H
1200 SUPREME COURT REPORTS · [2008] 11 S.C.R.

A 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;
B
(d) whether it is sufficient to employ considerable number
of whole-time workmen.
Explanation.-lf a question arises whether any process or
operation 'or other work is of perennial nature, the decision
c of the appropriate Government thereon shall be final.
12. Licen~ing ·of contractor$.-(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
D
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
E 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 qn ·
F 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.
G That being so, Civil Appeals are allowed. There will be no order
as to costs.
22. In view of the order passed in Civil Appeals no order is
necessary to be passed in Writ Petition 529 of 2005.
H N.J. Appeals allowed.