IN THE HIGH COURT AT CALCUTTA

Constitutional Writ Jurisdiction

APPELLATE SIDE

Present:

The Hon‟ble Justice Shampa Dutt (Paul)

WPA 5494 of 2022

MECON Limited

Vs

Union of India & Ors.

For the Petitioner : Mr. Soumya Majumder, Sr. Adv.

Mr. Barnamoy Basak.

For the Respondent Nos. 1 to 3 : Mr. Indrajeet Dasgupta.

Judgment reserved on : 28.11.2025

Judgment delivered on : 20.01.2026

Shampa Dutt (Paul), J.:

1. The writ petition has been preferred praying for direction upon the

respondent nos. 3 and 4 authorities to revoke and withdraw the

communication dated 10

th

February, 2022 and 16

th

March, 2022 and

further directions to issue licence to such sub-contractors engaged by

the petitioner, who employ or will employ 20 or more workmen/contract

labour in the premises of the establishment in relation to Steel Authority

of India Limited, Durgapur Steel Plant and permit Durgapur Steel Plant

to engage contract labour of such contractors/sub-contractors.

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2. The petitioner‟s case is that the petitioner company entered into a

contract with Steel Authority of India Limited (hereinafter referred to as

“SAIL”) for work of installation of 4

th

Stove of Blast Furnace No. 04 at

the Durgapur Steel Plant. The contract expressly permits the petitioner

to engage sub-contractors with the knowledge and consent of the

respondent no. 4. The nature of work entails several types of civil work,

mechanical, erection and electrical work. The petitioner company being

an engineering consultancy establishment can only supervise such work

which will be actually carried out by the sub-contractors engaged at the

establishment of SAIL.

3. Thus the petitioner in turn had awarded contract to other contractors

for execution of the project and such sub-contractors may be employing

20 or more workmen, or some of them may employ even less than 20

workmen.

4. The petitioner company as a contractor has not employed even a single

workman in the establishment of SAIL at Durgapur Steel Plant.

Therefore, it is stated that the petitioner company, even though a

contractor in relation to the establishment of SAIL, is not entitled and

does not qualify to obtain a licence under Section 12 of the Contract

Labour (Regulation and Abolition) Act, 1970 (hereinafter referred to as

“the said Act of 1970”).

5. Petitioner further states that the respondent no. 4 has forwarded to the

petitioner a copy of a letter dated 10

th

February, 2022 issued by the

respondent no. 3 to the respondent no. 4 wherefrom, it appears that the

respondent no. 3 had informed the respondent no. 4 that the petitioner

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herein should obtain labour licence covering the manpower of all

sub-contractors and the sub-contractor should also obtain labour

licence accordingly.

6. The petitioner had made representation to the respondent no. 4 on 19

th

February, 2022 in respect of the aforesaid letter dated 10

th

February,

2022 enclosing copies of clarification issued by the Ministry of Steel and

Mines on 22

nd

July, 1983, whereby it was specifically clarified that the

petitioner was not required to be registered as contractor under the said

Act of 1970. The respondent No. 4 has responded to such letter dated

19

th

February, 2022 by an email dated 25.02.2022.

7. The petitioner had made another communication dated 10

th

March,

2022 to the respondent no. 4 clarifying the issue.

8. On 16

th

March, 2022, the respondent no. 2 had issued a communication

to the petitioner rejecting the contention of the petitioner and

purportedly clarifying that unless the main contractor is licensed, the

existence of sub-contractors cannot be legally established, and that the

sub-contractors are not liable to the principal employer.

9. In view of the stand taken by the authority under the Act of 1970, the

petitioner has applied for certificate from principal employer by letter

dated 18

th

March, 2022 and on 19.03.2022, a certificate has been

issued by the principal employer. The petitioner has however, not

applied for issuance of licence before the licensing authority since the

petitioner is not eligible to be licensed under the Act.

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10. The petitioner states that SAIL is the principal employer in relation to

the establishment and it has obtained C ertificate of Registration in

terms of Section 7 of the said Act of 1970 from the Registering Officer.

11. The petitioner further states that application for licence by a contractor

has to be made in terms of Rule 21 of the Contract Labour (Regulation

and Abolition) Central Rules, 1971 read with Form No. II (earlier form

IV) whereunder, amongst others, particulars of establishment where

contract labour is to be employed, and the particulars of contract labour

are to be mentioned.

12. Such application for grant of licence is to be accompanied by a

certificate of a principal employer in Form No. III (earlier form V) to the

effect that the applicant contractor has been employed by the principal

employer as a contractor in relation to the establishment of the principal

employer and that the principal employer undertakes to be bound by all

the provisions of the Act and the Rules made thereunder insofar as the

provisions are applicable to the principal employer in respect of the

employment of contract labour by the applicant contractor.

13. It is further stated that the licensing authority of the jurisdictional area

has already issued contract licence to one sub contractor in relation to

the establishment. The sub contractor for whom licence has been

withheld by the concerned authority is M/s. Mahalakshmi Udyog. The

licensing authority has already issued licence in favour of M/s. Edifice

Engineering. The other sub-contractors have been told that they will not

be issued certificates by the principal employer in view of the notices

dated 10

th

February 2022 and 16

th

March 2022.

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14. The petitioner states that by reason of the communication dated 10

th

February, 2022 and 16

th

March, 2022, the respondent no. 4 will not be

in a position to issue gate passes to the employees of the sub

contractors and in fact no licence will be granted to any sub contractor

intending to execute the work of the project at the establishment of the

respondent no. 4. A project of national importance is therefore likely to

suffer.

15. It is further stated that the petitioner has not employed any contract

labour at the establishment of the respondent no. 4. It is therefore not a

contractor which is required to obtain licence under the said Act of

1970. Within the meaning of the said Act of 1970, a sub-contractor is

also a contractor and such contractors/sub -contractors, which

expression has been interchangeably used in the statute are required to

obtain labour licence, if they employ 20 or more workmen in the

establishment of the respondent no. 4.

16. The respondents in the ir affidavit-in-opposition have stated as

follows:-

The respondents deny the statement that the contract expressly permits

the petitioner to engage sub-contractors. In fact, Article 7 of the

Contract restricts the use of Sub-contractors without the approval of

the Employer (Respondent No. 4). The said Article specifically states

that such approval shall not relieve the Contractor from any of its

obligations, the duties or responsibilities under the contract. The

respondents deny the statement that the petitioner company being an

engineering consultancy establishment can only supervise the work

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which will actually be carried out by the sub-contractors. It is further

stated that from the Contract as well as the Work Order it will be

evident that the obligation to carry out the work of installation of 4th

Stove of Blast Furnace No. 04 at Durgapur Steel Plant and t he

contractual obligations as per the agreement are not supervisory in

nature.

17. The respondents further state that the petitioner has engaged sub-

contractors to execute the contract work in the establishment of the

principal employer. The sub-contractors engage contract labour who are

working in the establishment of the principal employer. But there is no

contractual obligation between the principal emplo yer and the sub-

contractor of the petitioner /contractor. Therefore, the

petitioner/contractor is required to obtain licence in respect of all the

contract labour engaged by them as well as engaged by their sub -

contractors to establish relationship between principal employer and

contract labour for enforcement of labour laws in respect of these poor

unorganized contract labour. That engagement of subcontractors by the

contractor resulting in distribution of the number of contract workers

across several subcontractors does not and cannot extricate the

contractor from the application of the Act.

18. The respondents further state that the petitioner has decided to apply

for licence vide their letter no. 11.51.kp027U/11/03 dated 31.03.2022,

which has already been issued to the contractor (Petitioner).

19. Licence in respect of sub-contractor namely M/s Mahalaxmi Udyog has

also been granted on 18.04.2022.

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20. That proper licensing of the contractor of sub-contractors is mandatory

as per statute, and as the petitioner as contractor as per contract

document engaged the contractor labour through sub-contractors, they

have to obtain licence if the total number of contract labour is more

than 20.

21. The respondents rely upon the judgment in Gammon India Ltd. v.

Union of India (1974) 1 SCC 596, wherein the Supreme Court held as

follows:-

“17. A contractor under the Act in relation to an

establishment is a person who undertakes to produce a

given result for the establishment through contract labour.

A contractor is a person who supplies contract labour for

any work of the establishment. The entire context shows

that the work of the establishment is the work site. The

work site is an establishment and belongs to the principal

employer who has a right of supervision and control, who is

the owner of the premises and the end product and from

whom the contract labour receives its payment either

directly or through a contractor. It is the place where the

establishment intends to carry on its business, trade,

industry, manufacture, occupation after the construction is

complete.

18. According to the petitioners, the contract labour

employed by their sub-contractors will be within the

provision of the Act but when the petitioners will be

engaged by a trade, or industry, with the petitioners will

not be a contractor and the workmen directly employed by

the petitioners will not be contract labour. This is a strange

and anomalous submission. The Act must be construed as

a whole. The Act must apply to contract labour in

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connection with the work of an establishment when the

contract labour is hired by the contractor or by the sub-

contractor of the contractor."

22. As such it is submitted that s ince the petitioner is engaged as

“contractor” by the respondent no. 4, the petitioner has to obtain licence

if the total number of contract labour engaged by them directly and/or

through sub-contractor is 20 or more.

23. The respondent relies upon Section 1 (4) of the said Act, which clearly

states that, “It applies to:-

a) to every establishment in which twenty or more workmen

are employed or were employed on any day of the preceding

twelve months as contract labour,

(b) to every contractor who employs or who employed on any

day of the preceding twelve months twenty or more workmen.”

24. It is stated that Clause (a) clearly makes it applicable to an

establishment in which twenty or more workmen are employed on any

day of the preceding twelve months as contract labour. The petitioner is

trying to make out a case that clause (b) above is an exemption in its

favour since the petitioner as a contractor has not engaged more than

20 workmen in the said establishment. Such interpretation of the

petitioner is obviously incorrect since the petitioner would come within

the scope of clause 4 if it has on any day of the preceding twelve months

employed twenty or more workmen.

25. The respondents further state that the interpretation of applicability of

the act, as contended by the petitioner, by looking only at Clause (b)

Sub-section (4) of the said Act and ignoring all other provisions of the

9

said Act cannot be accepted in as much as, such narrow

interpretation would allow all contractors to engage less than 20

workers and engage sub -contractors, who would in turn again

engage less than 20 workers without obtaining licence, thereby

frustrating the whole purpose of the act. The rejection of the writ

petition is prayed for.

26. Notes of argument have been filed by both sides.

27. The petitioner‟s argument in this case is :

i. The contract between SAIL and Mecon Limited permits the

contractor to engage sub-contractors.

ii. The office of the Labour Commissioner instructed Mecon Limited

to obtain labour licence under the Contract Labour (Regulation &

Abolition) Act, 1970.

iii. Simultaneously the Government had granted licen ce to another

sub-contractor.

iv. Objection of the petitioner is founded on the Ministry's

clarification of 1983 wherein the Ministry has clarified in similar

circumstances at hand that sub-contractors are to be licensed

and not the contractor.

v. As a contractor, the petitioner cannot obtain licence unless it

employs 20 or more persons in the establishment, where the work

is being executed (Section 1(4)(b) of the Contract Labour

(Regulation & Abolition) Act, 1970).

vi. Section 2(1)(c) of the Act of 1970, while defining "contractor”

includes sub-contractor, therefore, for the purpose of the Contract

10

Labour (Regulation & Abolition) Act, 1970, a sub-contractor is

also to be reckoned as a contractor, and therefore, required to

have a licence under Section 7 thereof.

vii. The liability of the contractor to pay wages for contract labour

employed by it and the statutory duties of the contractor to

provide facilities and conditions of work for the contract labourers

cannot be split into two tiers, namely, the contractor and the sub-

contractor. The object of the statute is to bind the licensee

contractor into statutory obligations as regards the conditions of

work and benefits of the contract labourers. This is possible only

in a direct master servant relationship. In this case, the

relationship exists between the sub -contractors and the

contract labourers.

viii. The object of the Contract Labour (Regulation & Abolition) Act,

1970 is inter-alia, to regulate the employment of contract labour

in certain establishments. The employment of contract labour is

done by the sub-contractors in the instant case. Therefore, all

statutory duties and responsibilities dischargeable by the

contractor, in the given case would mean, that of the sub-

contractors.

ix. The Act does not envisage three different tiers (a) principal

employer, (b) contractor and (c) sub-contractor, for the

purpose of certain conditions of work and facilities of

contract labourers.

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x. To eradicate such doubt, the legislators thought it fit that the

definition of "contractor" would include a sub-contractor. Thus,

there is no concept of a contractor and a sub-contractor existing

simultaneously in the premises of the principal employer, for the

purpose of licensing. The condition for renewal of licence by the

contractor under Rule 25 of the Contract Labour (Regulation and

Abolition) Central Rules, 1971 gives support to the mandate of the

principal Act in this respect.

xi. When the principal employer takes registration under Section 12

of the Contract Labour (Regulation & Abolition) Act, 1970, it only

mentions about the deployment of contractors (w hich includes

sub-contractors).

xii. In the given case, the Government had issued labour licence to

the sub-contractor as well.

xiii. Petitioner cannot be reckoned as a „contractor‟ since it does

not employ 20 employees in relation to the establishment of

the project work.

xiv. It is argued that the judgment in Gammon India Ltd. (Supra)

(Para 10 & 11) relied upon by the respondents is not applicable in

the present case. Wherein the respondents also relying upon the

same judgment have stressed on Para 17 and 18 therein:-

“…………..This is a strange and anomalous submission.

The Act must be construed as a whole. The Act must apply

to contract labour in connection with the work of an

establishment when the contract labour is hired by the

contractor or by the sub-contractor of the contractor.”

12

28. The respondents in their written notes have reiterated their

statements in their affidavit-in-opposition.

29. On hearing the parties and considering the pleadings on record the

following is evident:-

a) Article 7.1 in the „contract agreement‟ between the respondent

no. 4 and the petitioner provides as follows:-

“7.1. Sub-contracting

The Contractor shall not sub-contract the work either in full or

in part without prior approval of Employer and shall engage

only those Sub-Contractors who are appro ved by the

Employer. Such approval by the Employer for any of the

Sub-Contractors/Vendors shall not relieve the

Contractor from any of its obligations, duties or

responsibilities under the Contract.”

b) Vide the letter under challenge dated 10.02.2022 the As sistant

Labour Commissioner (Central) Raniganj at Durgapur advised the

respondent no. 4 as follows :-

“it is very clear that M/s. Mecon Ltd. is the contractor

and M/s Edifice Engineering Enterprise Pvt. Ltd. is the

sub-contractor who are working in your establishment.

The provision of the act and rule are much applicable on

them. The Mecon Ltd. should obtain labour licence

covering the manpower of all sub-contractors engaged by

them. The sub-contractor should also obtain labour

licence accordingly.”

c) The petitioner herein relies upon the document at page 104 wherein

the petitioner had been informed by the D epartment of Labour,

Govt. of India about the clarification regarding the definitions of the

13

term “Contractor” under the provisions of the Contract Labour (R &

A) Act, 1970. The relevant extract is as follows :-

“1. MECON would not be a contractor as the entire work

has been sub-let and no worker is stated to have been

employed by it.

2. Accordingly, no licence is required to be taken by

MECON.”

30. It has also been clarified therein that the Steel Plant is the “Principal

Employer”.

31. The petitioner‟s contention is that it does not employ 20 or more persons

in the establishment and as the Sub-contractors engaged by them have

employed the contractual workers herein, the petitioner claims that the

relationship of Employer-Employee is between the Sub-Contractor and

its‟ contract workers and, as such, the petitioner does not require to

take any licence.

32. The relevant provisions in the present case under the Contract Labour

(Regulation and Abolition) Act 1970 are as follows :-

Section 2(b) of the Contract Labour (Regulation and Abolition) Act ,

1970, lays down:-

“Section 2(b) a workman shall be deemed to be

employed as "contract labour" in or in connection

with the work of an establishment when he is hired in or

in connection with such work by or through a contractor,

with or without the knowledge of the principal

employer.”

Section 2(c) of the Contract Labour (Regulation and Abolition) Act ,

1970, lays down:-

“Section 2(c) "contractor", in relation to an

establishment, means a person who undertakes to

produce a given result for the establishment, other than

14

a mere supply of goods or articles of manufacture to

such establishment, through contract labour or who

supplies contract labour for any work of the

establishment and includes a sub-contractor.”

33. Thus it is clear that a “Sub-Contractor” is included in the definition

of “Contractor”.

34. Provision for Sub-Contracting has also been provided for Article 7 of the

Agreement.

“7.1. Sub-contracting

The Contractor shall not sub-contract the work either in full or in

part without prior approval of Employer and shall engage only

those Sub-Contractors who are approved by the Employer. Such

approval by the Employer for any of t he Sub-

Contractors/Vendors shall not relieve the Contractor from

any of its obligations, duties or responsibilities under the

Contract.”

35. It appears that the terms and conditions in the contract , between

the respondent no. 4 and the petitioner herein, puts no

responsibility upon the sub contractors who are engaged by the

contractor/petitioner, herein to provide contract workers, who are

employed to carry out the work for the principal Employer , who

engaged the contractor/petitioner as per the agreement to provide

the same.

36. The sub-Contractors in this case have been engaged by the

petitioner/contractor for carrying out different work/projects for the

principal Employer.

37. It is the contention of the petitioner that as he does not employ more

than 20 workers, he is not liable to take licence under the Act of 1970.

15

38. The contention of the petitioner is that the Sub-Contractors herein being

included in the definition of the word “Contractor”, are responsible and

liable for the Contract workers, having engaged them and the petitioner

even though a contractor as per the agreement has no responsibility,

even though the agreement between the petitioner and the respondent

no. 4 makes it clear that the petitioner is the Contractor and the

respondent no. 4 is the principal Employer.

39. Thus from the said facts it is apparent that the principal Employer

recognizes only the “contractor” with whom he has an agreement and

none else and as such the responsibility of the Sub-Contractors along

with their contract workers becomes the responsibility of the

Contractor/petitioner herein, because the said contract workers were

engaged for the sole purpose of doing the work of the principal

employer through a contractor/petitioner via a Sub-Contractor.

40. Herein, the petitioner/contractor includes its Sub-Contractors and

their responsibility becomes a joint responsibility, but finally the

liability rests with the principal employer herein, who is bound by

an agreement of contract with the petitioner/contractor under

Section 21(4) of the Central Labour (R & A) Act, 1970.

41. The petitioner herein claims exemption relying upon the letter dated

22

nd

July, 1983, wherein the petitioner was held to be “not a Contractor”

as the entire work was „sublet‟ and no worker was engaged by it and as

such no licence was required to be taken by the petitioner.

42. Here the contents of the letter under challenge dated 16.03.2022

becomes relevant and is as follows:-

16

“After going through the above letter, it is observed

that Mecon Limited is the main contractor of Durgapur Steel

Plant, SAIL who in turn intended to offload the work to their

sub-contractors. Being the main contractor, the Mecon

Limited has to obtain labour licence and thereafter sub-

contractors engaged by the main contractor have to be

licensed under the C.L (R&A) Act, 1970.

It is also to clarify that unless the main

contractor is licensed, the existence of sub-contractors

cannot be legally established. The sub-contractors are

not liable to response their legal obligation to the

Principal Employer since they are not directly engaged

by the Principal Employer. In case, the sub-contractors

violate any provision of C.L. (R&A) ACT, 1970 and

other labour laws, the enforcement agency cannot

force the Principal Employer to insist the sub -

contractors to comply with th e provisions laid down

under various labour laws.

In this connection, it is pertinent to mention here that as per

the Departmental Manual of Chief Labour Commissioner

(Central), New Delhi wherein at point No. 47, it is clearly

stated that “the contractor and sub-contractors are

contractors in relation to the Principal Employer’s

establishment. The main contractor as well as sub-contractor

have to be licenced separately when both the above are

contractually obliged with the Principal Employer to produce

given results separately as per CLC’s instruction 12/77

dated 28.03.1977. The decision of Bombay High Court

(Nagpur) in the case of M/s. Gammon India Ltd. vrs.

Assistant Labour Commissioner, Nagpur (1976 Labour IC

245) supports the above elaboration.

The matter of obtaining license by the main

contractor has also been discussed with the Chief Labour

17

Commissioner (Central), New Delhi who has opined that the

main contractor has to obtain license for entire work under a

single tender of contract and for entire work force to be

engaged by its sub-contractors. Main contractor cannot

get away with their legal obligation by subletting the

work to the sub-contractor(s).

In view of the above circumstances, it is hereby

advised to obtain labour license in respect of Mecon Limited

as main contractor and ensure that no contractor should be

engaged without obtaining the labour license to avoid any

legal complicacy.

Yours faithfully,

(M.K. Dhurua)

Dy. Chief Labour Commissioner (Central), Asansol”

43. In the present case there is admittedly a Contract Agreement between

the petitioner and the respondent no. 4, wherein the petitioner is

referred to as the “Contractor” and the respondent no. 4 is referred to

as “Employer”.

44. As such the clarification by the Department of Labour is prima facie not

in accordance with law. Clarification at no. 2 being based on

clarification no. 1 is also thus not in accordance with law.

45. Thus, in this case:-

(i) The petitioner is the “Contractor” as per the agreement between

the principal employer and the contractor/petitioner.

(ii) The contractor includes the sub-contractors and are to be treated

as one, under the same contract as per Section 2(i)(c) of the

Contract Labour Act, 1970.

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(iii) The number of contract workers/employees through the sub-

contractors are to be treated as the workers of the contractor

and when/as in this case, exceeds 20 (twenty) in number, the

contractor along with its sub -contractors are to obtain

licence under the Act, 1970.

(iv) As per Section 1(4) of the Act, the petitioner/contractor

cannot avoid its liability by engaging sub-contractors to shift

its‟ liability, as the agreement is between the principal

employer and the contractor (petitioner herein) and not the

sub-contractors, who are only amenable to the contractor ,

who in turn is bound by the agreement with the principal

employer.

46. Thus, the letters dated 10

th

February, 2022 issued by the Respondent

no. 3, Assistant Labour Commissioner (Central), Raniganj, Durgapur

and 16

th

March, 2022 issued by the Respondent no. 2, Deputy Chief

Labour Commissioner (Central), Asansol, being in accordance with law,

require no interference.

47. The writ petition is thus dismissed.

48. Connected application, if any, stands disposed of.

49. Interim order, if any, stands vacated.

50. Urgent Photostat certified copy of this judgment, if applied for, be

supplied to the parties expeditiously after due compliance.

(Shampa Dutt (Paul), J.)