Question

"Contravention of contract labour Act would not create employment relationship between contract labour and principal establishment." It was so held in which case

• A. SAIL vs. National Union Water front Workers
• B. Air India Statutory Corporation vs. United Labour Union & Ors
• C. Bangalore Water Supply and Sewerage Board vs. A.Rajappa
• D. State of U.P vs. Jai Bir Singh

Hint:

Remember this major shift in labour law jurisprudence: \textbf{Air India case = Automatic Absorption}. \textbf{SAIL case = No Automatic Absorption}. The SAIL case is the current prevailing law on this subject.

Answer 1

The Correct Option is A

Step 1: Understanding the Concept:
The question relates to a very important principle in Indian Industrial Law concerning the consequences of illegal or prohibited contract labour. For a long time, the legal position was that if a principal employer engaged contract labour in violation of the Contract Labour (Regulation and Abolition) Act, 1970, such labour would be deemed to be the direct employees of the principal employer (automatic absorption). This position was later reversed by a larger bench of the Supreme Court.
Step 2: Detailed Explanation:
\begin{itemize} \item In Air India Statutory Corporation vs. United Labour Union & Ors (1997), the Supreme Court held that on abolition of contract labour system, the contract labourers were entitled to be absorbed as regular employees of the principal employer. This was the "automatic absorption" doctrine. \item This decision was later reconsidered by a larger Constitutional Bench of the Supreme Court in Steel Authority of India Ltd. (SAIL) vs. National Union Waterfront Workers (2001). In this landmark judgment, the Supreme Court overruled the \textit{Air India} case. \item The Court in the \textit{SAIL} case held that the Contract Labour Act is a complete code in itself and does not provide for automatic absorption of contract labour upon a notification abolishing contract labour in an establishment. The Court concluded that contravention of the Act's provisions would lead to penal consequences prescribed in the Act but would not result in the automatic creation of an employer-employee relationship between the contract labour and the principal establishment. \end{itemize} The statement in the question directly reflects the legal principle laid down in the \textit{SAIL} case.
Step 3: Final Answer:
It was so held in the case of SAIL vs. National Union Water front Workers.