Amendment to Rule 126 of GFR

Inclusion of Branded Wooden/Steel Furnitures in the list of specialized works/items.

Posting of details on award of tenders/contracts on websites., CVC OM Dt 14/07/2009

Enhancing the ceiling on furnishing etc, to be provided in the office & office portion of the residence of ministers, GoI OM dt 16/07/2009

Revision of cost index for Delhi w.e.f 01/04/2009

CPWD clarification regarding contractor's profit and overheads , dt 9/6/2009

Modification in eligibility criteria and procedure for call of tender for specialised works- CPWD

Composite tender- Modidification CPWD

Amendment in GCC 2008 dt 28.01.2009

Rites Signs MoU for Integrity Pact (PIB)

RITES Ltd, a Government of India Enterprise under the Ministry of Railways entered into a Memorandum of Understanding (MOU) with Transparency International India (TII) to maintain complete transparency in major contracts and procurements. The MOU was signed by Mr.V.K.Agarwal, Managing Director (RITES) and Admiral (Retd) R.H.Tahiliani, Chairman Transparency International India in the presence of Mrs. Ranjana Kumar, Vigilance Commissioner, Central Vigilance Commission (CVC).

Integrity Pact model is being followed by the Corporates worldwide as it binds a company and its suppliers to ethical conduct in contracts and implementation of projects. CVC has recommended adoption of this pact in respect of all major procurements. The pact will be monitored by the Independent External Monitors (IEM) who will provide an in-process integrity audit and conflict resolution mechanism to address to timely confusions, complaints and communication gaps.

For RITES, business ethics is the foremost among the set of its core values which form a component of the employee evaluation and promotion criterion.

Contract Law

The Law of Contracts is the basis of business law because the bulk of transactions of the people engaged in trade, commerce and industry is based on contracts. In India, the Law of Contracts is contained in the Indian Contract Act,1872. The Act lays down the general principles relating to formation, performance and enforceability of contracts and the rules relating to certain special types of contracts like, Indemnity and Guarantee; Bailment and Pledge, and Agency. The Partnership Act; the Sale of Goods Act; the Negotiable Instruments Act; the Companies Act, though technically belonging to the Law of Contracts, have been covered by separate enactments. However, the general principles of the Contract Law are the basis for all such contracts as well.

The principal features of the Law of Contract are:-

• The parties to the contract make the law for themselves.


• The Act is not exhaustive since it does not take into its purview all the relevant legislations.


• It does not override customs or usages.


• The Law of Contracts is not the whole law of agreements.

As per the Indian Contract Act,1872, a "contract" is an agreement enforceable by law. The agreements not enforceable by law are not contracts. An "agreement" means 'a promise or a set of promises' forming consideration for each other. And a promise arises when a proposal is accepted. By implication, an agreement is an accepted proposal. In other words, an agreement consists of an 'offer' and its 'acceptance'.

An "offer" is the starting point in the process of making an agreement. Every agreement begins with one party making an offer to sell something or to provide a service, etc. When one person who desires to create a legal obligation, communicates to another his willingness to do or not to do a thing, with a view to obtaining the consent of that other person towards such an act or abstinence, the person is said to be making a proposal or offer.

An agreement emerges from the acceptance of the offer. "Acceptance" is thus, the second stage of completing a contract. An acceptance is the act of manifestation by the offeree of his assent to the terms of the offer. It signifies the offeree's willingness to be bound by the terms of the proposal communicated to him. To be valid an acceptance must correspond exactly with the terms of the offer, it must be unconditional and absolute and it must be communicated to the offeror.

An "agreement" is a contract if 'it is made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and is not expressly declared to be void'. The contract must be definite and its purpose should be to create a legal relationship. The parties to a contract must have the legal capacity to make it. According to the Contract Act, " Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of a sound mind, and is not disqualified from contracting by any law to which he is subject". Thus, minors; persons of unsound mind and Persons disqualified from contracting by any law are incompetent to contract.

Essential Elements of a Contract

Minimum two parties :- Atleast two parties are needed to enter into a contact. One party has to make an offer and other must accept it. The person who makes the 'proposal' or 'offer' is called the 'promisor' or 'offeror'. While, the person to whom the offer is made is called the 'offeree' and the person who accepts the offer is called the 'acceptor'.

Offer and acceptance :- There must be an 'offer' and an 'acceptance' to the offer, resulting into an agreement. Both offer and acceptance should be lawful.

Legal obligations :- The parties must intend to create a legal obligation.The agreement sought to be enforced should contemplate legal relations between the parties to it.

Lawful consideration:- A contract is basically a bargain between two parties, each receiving 'something' of value or benefit to them. This 'something' is described in law as 'consideration'. Consideration is an essential element of a valid contract. It is the price for which the promise of the other is bought. A contract without consideration is void. The consideration may be in the form of money, services rendered, goods exchanged or a sacrifice which is of value to the other party. This consideration may be past, present or future, but it must be lawful.

Competent parties:- The parties making the contract must be legally competent in the sense that each must be of the age of majority, of a sound mind, and not expressly disqualified from contracting. An agreement by incompetent parties shall be a legal nullity.

Free consent:- The contracting parties must give their consent freely. 'Consent' means that the parties must agree about the subject matter of the agreement in the same sense and at the same time. Consent is said to be free if it is not induced by coercion, undue influence, fraud,misrepresentation or mistake. The absence of free consent would affect the legal enforceability of a contract.

Lawful object:- The object of the agreement must be lawful. An agreement is unlawful, if it is:- (i) illegal (ii) immoral (iii) fraudulent (iv) of a nature that, if permitted, it would defeat the provisions of any law (v) causes injury to the person or property of another (vi) opposed to public policy.

Not expressly declared void:- An agreement expressly declared to be void under the Contract Act or under any other law, is not enforceable and is, thus, not a contract. The Contract Act declares void certain types of agreements such as those in restraint of marriage, or trade, or legal proceedings as well as wagering agreements.

Certainity and possibility of performance:- The terms of a contract must not be vague or uncertain. If an agreement is vague and its meaning cannot be ascertained, it cannot be enforced. Also,the terms of a contract must be such as are capable of performance. An agreement to do an impossible act is void and is not enforceable by law.

Legal formalities:- Generally, a contract may be oral or in writing. However, certain contracts are required to be in writing and may even require registration. Therefore, where law requires an agreement to be put in writing or be registered, the same must be complied with. For instance, the Indian Trusts Act requires the creation of a trust to be reduced to writing.

Breach of Contract

The remedies available to the aggrieved party, in case of breach of contract by the other party are:-

• Suit for rescission of the contract :- Rescission is the revocation of a contract. When a contract is broken by one party, the other party may sue for rescission and refuse further performance. In such a case, the aggrieved party is absolved of all its obligations under the contract.


• Suit for damages:- the party who is injured by the breach of a contract may bring an action for damages. Damage is the monetary compensation allowed by the court to the aggrieved party for the loss or injury suffered by him as the result of breach by the other party.


• Suit for injunction:- An injunction is an order of the court requiring a person to refrain from doing some act which has been the subject matter of contract. The power to grant injunction is discretionary and it may be granted temporarily or for an indefinite period.


• Suit upon 'Quantum Meruit' :- The term "quantum meruit" means, 'as much as is merited' or 'as much as earned'. A suit of quantum meruit is a claim for the value of the material used or supplied under a contract that has become void on account of breach by the other party. When a contract becomes void, any person who has received any advantages under such contract is bound to restore it, to the person from whom he received it.


• Suit for specific performance:- When the loss suffered by breach of contract cannot be compensated by damages or where there are no standards to ascertain the quantum of damages, the aggrieved party may approach the Court for the grant of a decree for specific performance of the contract. Specific performance is granted when:-
  
  
  • Money is an adequate remedy
  
  
  • It will be inequitable to either party
  
  
  • The contract is of a personal nature
  
  
  • the court cannot supervise its execution

Building cost index w.e.f 1/10/2008

Bidding not an end in itself: Allow single bid projects

Government is considering a proposal to permit single-bid road projects to go through. Earlier, the railways had thought of seeking Central

Vigilance Commission (CVC) protection before awarding diesel and electric engine manufacturing projects to sole bidders, but eventually decided to do it in-house.

Clearly, these instances indicate the process of awarding projects seems to have become more important than getting the project started quickly. The basic idea behind competitive bidding for any project is to give an opportunity to everyone and, through a market mechanism, obtain the least cost solution.

Clearly, to the extent there is an open bidding the first purpose of giving an opportunity to everyone has been served. If only one bidder chooses to participate in such a bidding, then so be it. The second issue is more important. In a single-bidder situation, the lack of competition would mean the quoted price may not be the best from the perspective of the one inviting the bids or awarding the project.

In such an event, there are two choices, both entailing some costs. One, the entire process can be aborted and bids called again. There is direct calculable costs of this action, escalation in project cost through delay and the loss of opportunity; there is a also the lesser cost of the bid process itself. As opposed to this, if the project is awarded to the sole bidder, the only cost is the possibility of a better price discovery, if there were more bidders. However, there is no way of knowing if in a multiple bid situation the price discovered would have been lower.

Therefore, it makes sense to award a project even if there is only a single bidder. However, the government must make an internal assessment of costs or tariff, depending on the nature of the project, and set a sort of reserve price. If the single bid betters the reserve price then the projects should be awarded.

In the current environment when investment sentiment is extremely poor, the priority should be to facilitate projects and not get too caught up in procedures. The bid documents should provide for the possibility of projects going to a single bidder and the CVC would do well to ensure that such awards do not become controversial.
Courtesy: Economic Times

Private Security Agencies Regulations Act, 2005

Laws relating to Arbitration & Conciliation (both Domestic & International)

The Arbitration and Conciliation Act, 1996 is the prime legislation relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards and also to define the law relating to conciliation and for matters connected therewith or incidental thereto. It repealed the three statutory provisions for arbitration:- (i) the Arbitration Act, 1940; (ii) the Arbitration (Protocol and Convention) Act, 1937; and (iii) the Foreign Awards (Recognition and Enforcement) Act, 1961.

Domestic Arbitration is defined as an alternative dispute resolution mechanism in which the parties get their disputes settled through the intervention of a third person and without having recourse to the court of law. It is a mode in which the dispute is referred to a nominated person who decides the issue in a quasi-judicial manner after hearing both sides. Generally, the disputing parties refer their case to an arbitral tribunal and the decision arrived at by the tribunal is known as an 'award'.

While, the term 'international commercial arbitration' means "an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in India and where at least one of the parties is:- (i) an individual who is a national of, or habitually resident in, any country other than India; or (ii) a body corporate which is incorporated in any country other than India; or (iii) a company or an association or a body of individuals whose central management and control is exercised in any country other than India; or (iv) the Government of a foreign country".

The major provisions relating to Arbitration in the Act are:-

* The parties to a present dispute may make an agreement called as the 'arbitration agreement' that instead of going to the court, they shall refer the dispute to arbitration. The parties to the agreement may refer to arbitration, a dispute:-

o Which has arisen or which may arise between them,
o In respect of a defined legal relationship, whether contractual or not.

Thus, all matters of civil nature whether they relate to present or future disputes may form the subject matter of reference. Even disputes such as infringement of intellectual property rights shall also be covered.
* Although no formal document is prescribed, an arbitration agreement/clause must be in writing. If the arbitration agreement/clause is contained in a document, the document must be signed by the concerned parties. Besides, the agreement may be established by:- (i) an exchange of letters, telex, telegram or other means of telecommunications; or (ii) an exchange of statements of claims and defence in which the agreement is alleged by one party and is not denied by the other.
* The disputes that cannot be referred to arbitration are:-
o Insolvency proceedings.
o Lunancy proceedings.
o Proceedings for appointment of a guardian to a minor.
o Question of genuineness or otherwise of a will or matter relating to issue of a probate.
o Matter of criminal nature.
o Matters concerning public charitable trusts.
o Disputes arising from and founded on an illegal contract.
* The agreement mandatorily requires the appointment of an arbitrator. An arbitrator is a person appointed, with or without mutual consent of the contending parties, for the purpose of investigation and settlement of a difference or dispute referred to him. The arbitral tribunal may be constituted by one or more arbitrators. The parties are free to fix the number of arbitrators by agreement. Accordingly, the reference may be made either to a single arbitrator or a panel of odd number (i.e. 3,5,7 etc) of arbitrators. If there is no agreement, the reference shall be made to a sole arbitrator.
* Unless otherwise agreed by the parties, an arbitrator may be of any nationality. In case of an international commercial arbitration, where the parties belong to different nationalities, the Chief Justice of india may appoint an arbitrator of a nationality other than that of the parties.
* The parties are free to agree on a procedure for appointing the arbitrator or arbitrators. If there is such an agreement, the appointment has to be made in accordance with it. The agreement may provide for the number of arbitrators, qualifications of arbitrator, procedure of appointment, procedure of challenging the appointment, termination of appointment, procedure to be followed by arbitrators, place of arbitration, language, etc.
* The duties of the Arbitral Tribunal are:- (i) to act independently and impartially and treat the parties equally; (ii) to give each party full opportunity to present his case.
* The parties may agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings. In the absence of such agreement, the arbitral tribunal may conduct the proceedings in the manner it considers appropriate and shall be empowered to determine the admissibility, relevance, materiality and weight of any evidence. The tribunal shall decide whether to hold oral hearings for presentation of evidence or for oral argument, or whether to conduct the proceedings on the basis of documents and other materials.
* An arbitral award shall be made in writing and shall be signed by the members of the arbitral tribunal. The award shall state its date and place of arbitration. The arbitral award shall state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or in case of award on a settlement between the parties. A signed copy of the award shall be delivered to each party.
* An arbitral award is itself enforceable as a decree of the court, normally after three months from the date on which it was received by the parties, provided no application for setting aside the award is made or if it is made the same has been rejected. The arbitral award shall be final and binding on the parties and persons claiming under them respectively.
* The arbitral proceedings shall be terminated when:-
o The final arbitral award is made,
o The claimant withdraws his claim, and the respondent does not object to it,
o The parties agree on the termination,
o The continuation of proceedings has for any other reason become unnecessary or impossible.

The Arbitration and Conciliation Act provides statutory recognition to conciliation as a distinct mode of dispute settlement. Conciliation is defined as the process of amicable settlement of disputes by the parties with the assistance of a conciliator. It differs from arbitration in the sense that in arbitration the award is the decision of the third party or the arbitral tribunal, while in the case of conciliation the decision is of the parties which is arrived at with the mediation of the conciliator.

The major provisions relating to Conciliation in the Act are:-

* A party initiating the conciliation shall send a written notice to the other party, briefly identifying the subject of the dispute and inviting it for conciliation. The conciliation proceedings shall commence on acceptance of invitation by the other party. If the party initiating conciliation does not receive a reply within 30 days from the date the invitation was sent or within the specified period, it may opt to treat this as a rejection and inform the same to the other party. If it rejects the invitation, there can be no conciliation proceeding.
* Unless otherwise agreed there shall be one conciliator. The parties may however, agree that there shall be two or three conciliators, who shall act jointly. The sole conciliator shall be appointed by mutual consent of the parties. In case of two conciliators, each party may appoint one conciliator. In case of three conciliators, each party may appoint one conciliator and the third conciliator may be appointed by mutual agreement of the parties who shall act as the presiding conciliator. However, the parties may agree that a conciliator shall be appointed or recommended by an institution or a person.
* Each party shall submit to the conciliator a brief written statement describing the general nature of the dispute and the points at issue. A copy of the same shall be sent to the other party. The conciliator may require of each party to send a detailed statement supported by documents and other evidence, a copy whereof shall be sent to the other party also. Any factual information concerning the dispute received by the conciliator from a party, shall be disclosed to the other party to allow it an opportunity to present any explanation, except however, when a party gives any information subject to a condition that should be kept confidential.
* The parties involved shall co-operate with the conciliator in good faith, comply with requests for submitting written materials, providing evidence and attending meetings. A party may submit to the conciliator suggestions for the settlement of the dispute.
* The functions of a Conciliator are:-
o To assist the parties in an independent and impartial manner, to reach an amicable settlement of their dispute.
o To be guided by principles of objectivity, fairness and justice.
o To give consideration to rights and obligations of the parties, trade usages, circumstances surrounding the dispute and any previous business practice between the parties.
o To conduct the conciliation proceedings in an appropriate manner, taking into account the circumstances of the case and wishes of the parties.
o To make proposals for a settlement of the dispute.
o Not to act as an arbitrator or as a representative of a party in any arbitral or judicial proceeding in respect of the same dispute, unless otherwise agreed by the parties.
o Not to act as a witness in any arbitral or judicial proceedings.
* If it appears to the conciliator that a settlement is possible, he shall formulate the terms of a possible settlement and submit them to the parties for their observations. The conciliator shall then reformulate the possible settlement in the light of observations received from the parties. If the parties reach on a settlement, they may draw up and sign a written settlement agreement with the assistance of the conciliator. The conciliator shall authenticate the settlement agreement and furnish a copy thereof to each of the parties. The settlement agreement shall be final and binding on the parties and shall have the same effect as of an arbitral award.
* The conciliation proceedings shall be terminated when:-
o A settlement agreement is signed by the parties,
o A written declaration is made by the conciliators after consultation with the parties, that further efforts at conciliation are no longer justified,
o A written declaration is made by the conciliator, after the deposits required in relation to costs of the proceedings are not received from the parties, that the proceedings are terminated,
o A written declaration is made by the parties to the conciliator, that the conciliation proceedings are terminated,
o A written declaration is sent by a party to the other party and the conciliator, that the conciliation proceedings are terminated.

'Foreign Award' has been defined to mean "an award on differences between persons arising out of legal relationships, whether contractual or not and considered as commercial under the law in force in India, and made in pursuance of an agreement in writing for arbitration to be governed either by the New York Convention or by the Geneva Convention, in the territory of a notified foreign State". Some of the provisions of the Act relating to foreign award are:-

* Where a commercial dispute covered by an arbitration agreement to which either of the Convention apply, arises before a judicial authority in India, it shall at the request of the party be referred to arbitration.
* The party applying for the enforcement of a foreign award shall produce the original award or a duly authenticated copy thereof, the original arbitration agreement or a certified copy thereof, and evidence to prove that the award is a foreign award.
* If the court is satisfied that the foreign award is enforceable, the award shall be deemed to be a decree of the court. An appeal shall lie against the order of the court refusing to refer the parties to arbitration or refusing to enforce a foreign award.
* Any foreign award which is enforceable under the Act, shall be binding and may be relied upon by the parties by way of defence, set off or otherwise in any legal proceedings in India.

Payment of Bonus Act, 1965

The key provisions of the Act are:-

• According to the Act, the term 'employee' means "any person employed on a salary or wage not exceeding three thousand and five hundred rupees per mensem in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work for hire or reward, whether the terms of employment be express or implied".
• An employee is entitled to be paid by his employer a bonus in an accounting year subjected to the condition that he/she has worked for not less than 30 working days of that year.
• An employer shall pay minimum bonus at the rate of 8.33% of the salary or wages earned by an employee in an year or one hundred rupees,whichever is higher. Here it is not required that the employer has any allocable surplus in the accounting year. However, where an employee has not completed fifteen years of age at the beginning of the accounting year, the minimum bonus payable is 8.33% or sixty rupees, whichever is higher.
• In any accounting year, if the allocable surplus exceeds the amount of minimum bonus payable to the employees, the employer shall in lieu of such minimum bonus, be bound to pay bonus (maximum bonus) equivalent to the amount which shall not exceed 20% of the salary or wages earned by employees.
• In computing the allocable surplus, the amount set on or the amount set off shall be taken into account. In other words:- (i) If, in any accounting year, the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment, then the excess surplus is carried forward for being set on in the succeeding accounting year and so on up to and inclusive of the fourth accounting year for the purpose of payment of bonus; or (ii) If there is no or less allocable surplus in respect of that year, then such a shortfall is carried forward for being set off in the succeeding accounting year and so on up to and inclusive of the fourth accounting year.
• Where in any accounting year, any amount has been carried forward and set on or set off, then in calculating bonus for the succeeding accounting year, the amount of set on or set off carried forward from the earliest accounting year shall first be taken into account.
• All amounts payable to an employee by way of bonus under this Act shall be paid in cash by his employer within a month from the date on which the award become enforceable or the settlement comes into operation, in respect of any dispute regarding payment of bonus. But, in any other case, it shall be paid within a period of eight months from the close of the accounting year.

  However, the Government may order, upon receiving application made to it by the employer and for sufficient reasons, to extend the said period of eight months to such further period or periods as it thinks fit, such that that the total period so extended shall not, in any case, exceed two years.

• An employee shall be disqualified from receiving bonus if he/ she is dismissed from service for:- (i) fraud; or (ii) riotous or violent behavior while on the premises of the establishment; or (iii) theft, misappropriation or sabotage of any property of the establishment.

Wages of Workers under Labour contract

As per the 'Committee on Fair wages', there are three distinct levels of wages:-

(i) Living wage represents a standard of living which provides not merely for a bare physical subsistence, but for the maintenance of health and decency, a measure of frugal comfort including education for children, protection against ill-health, requirements of essential social needs and some insurance against the more important misfortunes;

(ii) Minimum wage ensures not merely the bare sustenance of life, but the preservation of the efficiency of the worker by providing some measure of education, medical requirements and amenities. Thus, the minimum wage prescribes the lower limit while the upper limit is set by the capacity of the industry to pay;

(iii) Fair wage is the wage which is above the minimum wage but below the living wage.

Guidelines for the Principal Employer in respect of Labour contract.

1 An employee of the Lab should not be made as a contractor (Sham/ False contract). Go for an independent contractor. As far as possible, the preference should be given to a contractor, who has got the contract in similar concern of the same type.
2 If the contractor has similar type of contract in different concerns, then he should try to transfer the employees from one establishment to another establishment. Hence the contract employees can be transferable. This is a with a view that the contractor should not employ the contract workmen in the same establishment for not more than a certain stipulated period.
3 The contractor shall select and appoint the workmen without any interference of the Lab. The supervision and control on the workmen of contractor will be solely by the Contractor. Hence the Lab will not have supervision and control over the contractor’s workmen.
4 The contractor shall determine the mode, method and manner of working. The Lab shall not interfere in regard to the same.
5 The Contractor shall employ the workforce according to his requirement but he shall not in any case exceed the number of workmen shown in the licence or do any other work what is not given in the licence.
6.1 Similarly Employer shall register itself under the Contract Labour (Regulation & Abolition) Act, 1970.
6.2 The Contractor shall submit monthly printed bill to the Lab for payment of the work done by him by 1st day of following month and the printed bill should be signed under the Rubber Stamp.
6.3 The Employer has to ensure that the Contractor is paying the workmen minimum wages and the payment to them is made on or before 7th of every month in presence of the representatives of the Lab who shall also sign on the muster/register.
6.4 The Contractor shall deduct the income tax as per income tax act or any other law applicable from time to time from the payment made to his workmen.
6.5 The Contractor shall pay his own taxes as per provisions of statutory acts.
6.6 The Contract shall be given for the job to be done and rates of job shall be paid to contractor as per mutual agreed basis.
6.7 The Lab shall ensure while making payment to the contractor that the contractor has paid the employees’ provident fund and ESI contributions deductions both of employees and of contractor on time (along with copy of challan paid).
7 The Lab shall check up that the Contractor renews his licence from time to time.
8 The Contractor shall decide about the disciplinary action to be taken against his employees in case of any acts of misconducts committed by his employees.
9 The Lab shall see that if possible the Contractor has obtained separate code numbers of Employees State Insurance and Employees Provident Fund under the respective Acts.
10 The Contractor shall maintain necessary records such as identical card. Attendance register and/or card and other statutory registers through his staff and not by the staff of the Lab.
11 The contract workmen shall do the specific work of the contract and not any other work of the Lab.
12 Contract Labourers are not to be employed for doing perennial and permanent nature of jobs of the Lab.
13 Contract Labourers should not be employed for doing any main activity of the Lab.
14 Do not pay from the regular fund of Lab
15 If possible insert following clause in NIT/ Contract w.r.t LIABILITIES, CONTROL ETC. OF THE PERSONS DEPLOYED
(a) The Contractor shall depute a co-odinator who would be responsible for immediate interaction with the Lab so that optimal services of the persons deployed by the agency could be availed without any disruption.
(b) It will be the responsibilities of the Contractor to meet transportation, food, medical and any other requirements in respect of the persons deployed by it (Agency) in this Lab and this Lab will have no liabilities in this regard.
©. For all intents and purposes, the Contractor shall be the “Employer” within the meaning of different Labour Legislations in respect of Persons so employed and deployed in this Lab. The persons deployed by the Contractor in the Lab shall not have claims of any Master and Servant relationship nor have any principal and agent relationship not have any principal and agent relationship with or against Lab.
(d).The Contractor shall be solely responsible for the redressal of grievances / resolution of disputes relating to person deployed. This Lab shall, in no way, be responsible for settlement of such issues whatsoever.
(e) This Lab shall not be responsible for any damages, losses, claims, financial or other injury to any person deployed by service providing agency in the course of their performing the functions/duties, or for payment towards any compensation.
(f) The persons deployed by the Contractor shall not claim nor shall be entitled to pay, perks and other facilities admissible to casual, ad hoc, regular / confirmed employees of this Lab during the currency or after expiry of the contract.
(g) In case of termination of this contract on its expiry or otherwise, the persons deployed by the Contractor shall not be entitled to and will have no claim for any absorption nor for any relaxation for absorption in the regular / otherwise capacity in this Lab

CONTRACT LABOUR IN INDIA

The system of employing contract labour is prevalent in most industries in different occupations including skilled and semi skilled jobs. It is also prevalent in agricultural and allied operations and to some extent in the services sector. A workman is deemed to be employed as Contract Labour when he is hired in connection with the work of an establishment by or through a contractor. Contract workmen are indirect employees; persons who are hired, supervised and remunerated by a contractor who, in turn, is compensated by the establishment. Contract labour has to be employed for work which is specific and for definite duration. Inferior labour status, casual nature of employment, lack of job security and poor economic conditions are the major characteristics of contract labour. While economic factors like cost effectiveness may justify system of contract labour, considerations of social justice call for its abolition or regulation.

The condition of contract labour in India was studied by various Commissions, Committees, and also Labour Bureau, Ministry of Labour, before independence and after independence. All these have found their condition to be appalling and exploitative in nature. The Supreme Court of India in the case of Standard Vacuum Refinery Company Vs. their workmen (1960-II-ILJ page 233) observed that contract labour should not be employed where:

(a) The work is perennial and must go on from day to day;

(b) The work is incidental to and necessary for the work of the factory;

(c) The work is sufficient to employ considerable number of whole time workmen; and

(d) The work is being done in most concerns through regular workmen.

THE CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970

The concern for providing legislative protection to this category of workers, whose conditions have been found to be abysmal, resulted in the enactment of the Contract Labour (Regulation and Abolition) Act, 1970.

OBJECTS AND PURPOSES OF THE ACT

The Contract Labour (Regulation and Abolition) Act, 1970 was brought on the Statute Book to regulate the employment of Contract Labour in certain establishments and to provide for its abolition in certain circumstances and for matters connected therewith.

APPLICATION

The Contract Labour (Regulation and Abolition) Act, 1970 and the Contract Labour (Regulation and Abolition) Central Rules, 1971 came into force on 10.2.71.The constitutional validity of the Act and the Central rules were challenged before the Supreme Court in Gammon India Ltd. Vs. Union of India 1974-ILLJ-480. The Supreme Court upheld the constitutional validity of the Act & Rules and held that there is no unreasonableness in the measure. The Act & Rules were enforced w.e.f. 21.03.1974.

The Act applies to every establishment in which 20 or more workmen are employed or were employed on any day on the preceding 12 months as contract labour and to every contractor who employs or who employed on any day of the preceding 12 months 20 or more workmen. It does not apply to establishments where the work performed is of intermittent or seasonal nature. An establishment wherein work is of intermittent and seasonal nature will be covered by the Act if the work performed is more than 120 days and 60 days in a year respectively. The Act also applies to establishments of the Government and local authorities as well.

APPROPRIATE GOVERNMENT

The jurisdiction of the Central and State Government has been laid down by the definition of the ‘Appropriate Government’ in Section 2(1)(a) of the Act, as amended in 1986. The Appropriate Government, in respect of an establishment under the Contract Labour (Regulation and Abolition) Act, 1970 is the same as that in the Industrial Disputes Act, 1947.

As per the interpretation given by the Supreme Court, through its judgement dated 30.08.2000, in Steel Authority of India Limited and Ors Vs. National Union Water Front Workers & Ors., the ‘appropriate government’ in relation to an establishment would be the Central Government if (i) the concerned Central Government company/ undertaking or any undertaking is included by name in clause (a) of Section 2 of the Industrial Disputes Act, or (ii) any industry carried on by or under the authority of Central Government or by a railway company, or (iii) any such controlled industry as may be specified in this behalf by the Central Government, otherwise in relation to any other establishment, the Government of the State in which that other establishment is situated, will be the appropriate government.

REGISTRATION OF ESTABLISHMENT AND LICENSING OF CONTRACTORS

The establishments covered under the Act are required to be registered as principal employers with the appropriate authorities. Every contractor is required to obtain a licence and not to undertake or execute any work through contract labour except under and in accordance with the licence issued in that behalf by the licensing officer. The licence granted is subject to such conditions as to hours of work, fixation of wages and other essential amenities in respect of contract labour as laid down in the rules.

WELFARE AND HEALTH OF CONTRACT LABOUR

The Act has laid down certain amenities to be provided by the contractor to the contract labour for establishment of Canteens and rest rooms ; and arrangements for sufficient supply of wholesome drinking water, latrines and urinals, washing facilities and first aid facilities and have been made obligatory. In cases of failure on the part of the contractor to provide these facilities, the Principal Employer is liable to provide the same.

PAYMENT OF WAGES

The contractor is required to pay wages and a duty is cast on him to ensure disbursement of wages in the presence of the authorised representative of the Principal Employer. In case of failure on the part of the contractor to pay wages either in part or in full, the Principal Employer is liable to pay the same. The contract labour who performs same or similar kind of work as regular workmen, will be entitled to the same wages and service conditions as regular workmen as per the Contract Labour (Regulation and Abolition) Central Rules, 1971.

PENAL PROVISIONS

For contravention of the provisions of the Act or any rules made there under, the punishment is imprisonment for a maximum term upto 3 months and a fine upto a maximum of Rs.1000/-.

OTHER PROVISIONS

The Act makes provision for the appointment of Inspecting staff, for maintenance of registers and records and for making Rules for carrying out the purpose of the Act. In the central sphere, officers of the CIRM have been appointed as Inspectors.

PROHIBITION

Apart from the regulatory measures provided under the Act for the benefit of the contract labour, the ‘appropriate government’ under section 10(1) of the Act is authorised, after consultation with the Central Board or

State Board, as the case may be, to prohibit, by notification in the official gazette, employment of contract labour in any establishment in any process, operation or other work. Sub-section (2) of Section 10 lays down sufficient guidelines for deciding upon the abolition of contract labour in any process, operation or other work in any establishment.

The guidelines are mandatory in nature and are:-Conditions of work and benefits provided to the contract labour.

• Whether the work is of Perennial nature.

• Whether the work is incidental or necessary for the work of an establishment.

• Whether the work is sufficient to employ a considerable number of whole-time workmen.

• Whether the work is being done ordinarily through regular workman in that establishment or a similar establishment.

The Central Government on the recommendations of the Central Advisory Contract Labour Board, have prohibited employment of contract labour in various operations/ category of jobs in various establishments. So far 48 notifications have been issued since inception of the Act.

EXEMPTION

The ‘appropriate government’ is empowered to grant exemption to any establishment or class of establishments or any class of contractors from applicability of the provisions of the Act or the rules made thereunder on such conditions and restrictions as may be prescribed. Nine notifications granting exemption to establishments in exercise of this power in the Central sphere have been issued.

ENFORCEMENT

In the Central sphere, the Central Industrial Relations Machinery (CIRM) have been entrusted with the responsibility of enforcing the provisions of the Act and the rules made thereunder, through Inspectors, Licensing Officers, Registering Officers and Appellate Authorities appointed under the Act.

Regular inspections are being conducted by the Field Officers of the CIRM and prosecutions are launched against the establishments, whenever violations of the Act/Rules/notifications prohibiting employment of contract labour are detected. From time to time, instructions/directions have been issued to the field officers of CIRM and State Government for proper implementation of the Act.

IMPORTANT JUDGEMENTS OF THE SUPREME COURT.

Three judgements delivered by the Supreme Court in the cases of Gujarat State Electricity Board Vs Union of India, Air India Statutory Corporation Ltd. & Ors Vs United Labour Union & Others, and Steel Authority of India Ltd. & Others Vs National Union of Waterfront Workers and others on 09.05.1995, 06.12.1996 and 30.08.2001 respectively, are landmark judgements.

In Gujarat State Electricity Board case, inter-alia, the Supreme Court recommended that the Central Government should amend the Act by incorporating a suitable provision to refer to industrial adjudicator the question of the direct employment of the workers of the ex-contractor in the principal establishments, when the appropriate Government abolishes the contract labour.

In Air India Statutory Corporation case, the Supreme Court held that though there exists no express provision in the Act for absorption of employees in establishments where contract labour system is abolished by publication of the notification under section 10 (1) of the Act, the principal Employer is under statutory obligation to absorb the contract labour. The linkage between the contractor and employee stood snapped and direct relationship stood restored between principal employer and contract labour as its employees.

The Supreme Court in the case of Steel Authority of India Ltd. Vs National Union of Waterfront Workers & Others and others have held that neither Section 10 of the Act 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 contract labour in any process or operation or other work in any establishment. Consequently the Principal Employer cannot be required to order absorption of the contract labour working in the concerned establishment. The judgement in Air India’s case was over-ruled prospectively.