Steel Authority of India Limited v. National Union Waterfront Workers, AIR 2001, Appeal (civil) 6009-6010 of  2001


Since its inception, the objective of the Contract Labor (Regulation and Abolition) Act, 1970 (CLRA) has been to prevent exploitation of contract workers and provide better and safer working conditions . According to this law, the term contract labor refers to a person when that person participates in the work of an organization through a contractor and is an indirect employee. The main differences between contract work and direct work are working conditions, relationship with the facility, and  payment method. Generally, contract work is not included in payroll and is not paid directly because it is contracted, supervised, and paid for by the subcontractor.

The CLRA applies to all establishments that employ or have employed twenty or more workers on any day during the preceding 12 months under a contract of employment; and to any business person who employs or has employed twenty or more workers on any day during the preceding 12 months.


 • This law on industrial disputes was introduced as a sensitive measure  to reduce industrial tensions, ensure the need for conflict resolution and provide  the necessary infrastructure for day-to-day production work be free, whether there is that  climate of goodwill and industry or not. justice is served at the highest levels of the economy.

• Pursuant to Articles 15, 16 and 23 of Part III of the Indian Constitution and Articles 38, 39, 43 and 43A of the Directive Principles, the CLRA Act was enacted by the Parliament to combat abuse of system contracts labor. Parliament passed two measures to combat abuses related to the use of contract workers: the first measure was to properly regulate the use of contract workers and the second measure was to abolish the measure this method in certain cases. This approach is clearly expressed in the provisions of the CLRA law that took effect on February 10, 1971.


The Steel Authority of India is a central government agency responsible for the production of  steel materials in various parts of India. The company’s workers are hired as contract workers for the company.

The Government of West Bengal had issued a notification on July 15, 1989, under the Contract Labor (Regulation and Abolition) Act, prohibiting the recruitment of contract labor at four specified tank farms of the company. . The workers’ union  demanded that  contract workers be included in the company as regular employees. The company filed a  petition in the Calcutta High Court and challenged the prohibition notice. The high court dismissed the petition and held that the state government was the competent authority in the matter.

However, at that time, the Supreme Court passed judgment in  Air India Statutory Corporation v. United Labor Confederation that in the case of Central Government Undertakings, the appropriate government is the Central Government. and maintain the validity of the dated notice. December 9, 1976, issued by the Central Government under the CLRA Act, prohibited the employment of contract labor in all establishments covered by the Central Government Undertaking.


The SAIL case has now come before the Supreme Court, which identified three issues that need to be decided in this case:

What is the true and precise meaning of the term “appropriate government” as defined in the CLRA?

Is the notification dated  December 9 issued by the Central Government valid and does it apply to all the undertakings of the Central Government?

Are contract workers working at a facility automatically considered full-time employees upon proper notice under the CLRA?


The Supreme Court reiterated that as per the new definition of appropriate government in the Industrial Disputes Act, in respect of any company or enterprise carried on by or under the authority of the Central Government, the appropriate government The case will be the Central Government.

The Supreme Court was of the view that since the CLRA Act is a beneficial law, it must be liberally construed  in favor of the class  whose interests it aims to viz. Contract workers.

The Court held that Section 10, under which the notifications were passed, did not mention or imply that  contract workers would be automatically accommodated. However, the agency found that  the recruitment of contract workers was just a disguise and that workers were in fact employees of the main employer, so they were attracted.


The Supreme Court’s decision in this case marks an important difference in the jurisprudence of labor law in India. It clarifies that contract workers will not be entitled to automatic participation in the event of termination of contract and will only be entitled to employment incentives if permanent workers are recruited to fill vacancies caused by temporary workers. Redundant contracts created when fired. Similar provisions were also made in this judgment, which effectively closed the loopholes in the country’s labor laws and also removed any ambiguity as to who the appropriate government was, thereby making India’s labor rights more effective and transparent.

Written by:

Advocate Muskan Chauhan

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