DENANATH Vs. NATIONAL FERTILISERS LIMITED

JUDGEMENT

(1.) These appeals raise a question of the scope and effect of failure of compliance with S. 7 and/ or S. 12 of the Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter referred to as 'the Act).

(2.) The question involved is that if the principal employer does not get registration under S.7 of the Act and/ or the Contractor does not get a licence under S.12 of the Act whether the persons so appointed by the principal employer through the contract would be deemed to be the direct employees of the principal employer or not.

(3.) There is a direct conflict between the decisions of the High Courts of Punjab, Kerala on the one hand and the decisions of Madras, Bombay, Gujarat and Karnataka High Courts on the other. The view of the Punjab and Kerala High Courts is that the only consequence of non-compliance either by the principal employer of S.7 of the Act or by the contractor in complying with S.12 of the Act is that they are liable for prosecution under the Act; whereas the view of the High Courts of Madras, Bombay, Gujarat and Karnataka is that in such a situation the contract labour becomes directly the employee of the principal employer.