LABOR LAW PROJECT

PROJECT ON:

 GAMMON INDIA LTD VS NIRANJAN DAS 1984 (1) SCC 509

SUBMITTED TO:

MRS. ARUNA SRILAKSHMI (PROFESSOR OF LAW)

DR. SOHINI MAHAPATRA MAM (ASSISTANT PROFESSOR)

SUBMITTED BY:

HEMANT PRAJAPATI

2014(R)/ BA.LLB./017

SEMESTER – VII

FOURTH (IV) YEAR

 TABLE OF CONTENTS

Introduction......................................................................................................................................3

Delegated Legislation:..................................................................................................................4

Excessive Delegation:...................................................................................................................5

Delegated Legislation in Tax Laws...............................................................................................6

Distinction between Fees and Tax...............................................................................................7

Brief Background of the case:.........................................................................................................9

Issues before the Supreme Court:..................................................................................................10

Contentions of the Petitioners:.......................................................................................................11

Provisions of law in question:....................................................................................................12

Judgement and analysis of Reasoning given by the Court:...........................................................16

Issue 1........................................................................................................................................16

Issue 2........................................................................................................................................17

Issue 3........................................................................................................................................18

Issue 4........................................................................................................................................19

Issue 5........................................................................................................................................21

Conclusion.....................................................................................................................................23

Summary of the case......................................................................................................................25

Bibliography..................................................................................................................................26
 INTRODUCTION

Will of the people is expressed in a nation through government’s three distinct activities. These
are the legislative, executive and judicial functions of the government. Corresponding to these
three activities are three organs of the government, namely the legislature, the executive and the
judiciary.
The legislative organ of the state makes laws, the executive enforces them and the judiciary
applies them to the specific cases arising out of the breach of law. Each organ while performing
its activities tends to interfere in the sphere of working of another functionary because a strict
demarcation of functions is not possible in their dealings with the general public.
Thus, even when acting in ambit of their own power, overlapping functions tend to appear
amongst these organs.
It is widely accepted that for a political system to be stable, the holders of power need to be
balanced off against each other. The principle of separation of powers deals with the mutual
relations among the three organs of the government, namely legislature, executive and judiciary.
This doctrine tries to bring exclusiveness in the functioning of the three organs and hence a strict
demarcation of power is the aim sought to be achieved by this principle. This doctrine signifies
the fact that one person or body of persons should not exercise all the three powers of the
government.1
But it is observed that due to several reasons such as overload on the limited Parliamentary time,
lack of expertise, to maintain confidentiality, to tackle emergency, et al, certain legislative
functions are exercised by bodies other than Legislature, which is referred to as Delegated
Legislation.
This paper analyses the Supreme Court ruling in the case of Gammon India Ltd. v. Union of
India in which validity of Contract Labour (Regulation and Abolition) Act, 1970 and Rules
thereunder was challenged on various constitutional and administrative law parameters. For the
purpose of this paper, the concept of Delegated legislation and Excessive Delegation has been
emphasized by the author.

1
Separation Of Powers: Its Scope And Changing Equations, http://www.legalserviceindia.com/article/l16-
Separagraphtion-Of-Powers.html
DELEGATED LEGISLATION:

‘Delegated Legislation’ means the exercise of legislative power by an agency which is

subordinate to the legislature. Delegated legislation is, at times, referred to as “Ancillary”,
“Subordinate”, Administrative Legislation or as Quasi-Legislation”

In Halsbury’s Laws of England it has been said that when an instrument of a legislative nature is
made by an authority in exercise of power delegated or conferred by the legislature, it is called
subordinate legislation.

Most significant milestone with regards to adoption of delegated legislation in India is the first
Presidential reference, In Re Delhi Laws Act, 19512. This ruling of the Supreme Court is
considered to be the backbone of delegated legislation regime in India. It dealt with various
aspect associated with delegated legislation from defining the term to the restriction of essential
legislative function.

In words of J. Mukherjee, it is “it (delegated legislation) is an expression which covers multitude

confusion. It is an excuse for the legislators, a shield for the administrators and a provocation to
the constitutional jurists”3

Simply, when the functions of legislation is entrusted to organs other than the legislature by the
legislature itself, the legislation made by such organs is called delegated legislation.

In India, Rules, Regulations, Orders, Notified Orders, Notifications, Bye-laws denote Delegated
Legislation. Also, the same statute may employ or use different expressions to denote the
exercise of the subordinate law-making power by an administrative body or agency. E.g.
‘Orders’, ‘Notified Orders’, ‘Notification’ under the Essential Commodities Act, 1958.
2
AIR 1951 SC 332
3
Ibid.
However, Excessive Delegation of legislative powers is not permissible and Supreme Court has
time to time reiterated that there should not be excessive encroachment of executive on the
legislature as that would be opposed to doctrine of separation of powers which is a part of basic
structure of our Constitution.

EXCESSIVE DELEGATION:

In Gwalior Rayon Co v. Asst. Commissioner of Sales Tax4, KHANNA, J., said: “The rule
against excessive delegation of the legislative authority flows from and is a necessary postulate
of the sovereignty of the people.” The Apex Court in Registrar Cooperative Societies v. K.
Kanjabmu5 observed: “delegation unlimited may invite despotism uninhibited.” There is no
abdication of legislative functions so long as the legislature has expressed its will on a particular
subject matter, indicated its policy and left the effectuation of the policy to subordinate
legislation provided the legislature has retained the control in its hand with reference to it so that
it can act as a check or a standard and prevent the mischief by subordinate legislation when it
chooses to or thinks fit.

While it is recognized that the doctrine of excessive delegation ought not to be applied in a
pedantic manner because in the modern complex world, it may be difficult for the legislature to
state policies or formulate standards very articulately and power has to be given to the
Administration in broad terms to make rules according to the needs of the situation. But still the
courts must ensure that the doctrine does not become just an incantation or an empty formality.
The statement of policies in the statutes enable the courts later to apply the doctrine of ultra vires
to delegated legislation in a more meaningful and effective manner. 

In the present case analysis, the author will deal with the aspects of labour law and delegated
legislation to trace judicial reasoning while interpreting the Contract Labour (Regulation and
Abolition) Act, 1970 and Rules thereunder, which were passed by the parliament to improve the
conditions of Contract Labourers and abolition of the same, wherever possible.

4
AIR 1974 SC 1660
5
AIR 1980 SC 350
Temporary nature of the job exposes these labours to varied risks of being exploited by their
hirers. Hence, it was imperative for the legislature to step in, in order to safeguard the rights of
these class of workmen and to protect their dignity as a human.

DELEGATED LEGISLATION IN TAX LAWS

The extent to which delegation in tax laws is permissible has changed over time. While the
Supreme Court’s position has always been that the power to tax is a legislative function and only
matters that incidentally arise in the exercise of that function can be delegated to the executive,
its own interpretation of this position has broadened to allow more substantial functions to be
exercised by the executive.

The Supreme Court stated in Rajnarain v. Chairman, Patna Administration 6 that the power
to tax is essentially a legislative function. Quoting Article 265 of the Constitution of India, it held
that the constitutional mandate is on the legislature for imposing taxes. Subsequently, the Court
held that some elements of the power to tax might devolve onto the executive after the legislature
enacts a law. However, even in that case, it mentioned that broad powers are not and cannot be
delegated to the executive. In other words the power to delegate is for the purpose of ‘matters of
details’ concerning the working of the tax law in question. 

Despite advocating broad principles that seemingly suggested minimal executive powers, the
Supreme Court’s interpretation of the rule that essential legislative functions may not be
delegated actually permitted substantial intervention by the executive. More specifically, the
power to exempt goods or persons, the power to bring additional transactions, commodities or
persons within the purview of a tax and the power to fix the rate of tax itself were held to be
delegable.

The Supreme Court, in Devi Das v. State of Punjab 7 held that it was permissible to confer a
‘reasonable area of discretion on the Government by a fiscal statute, but a large statutory
discretion by means of a wide gap between the maximum and minimum rates and thus enabling
the government to fix an arbitrary rate is not sustainable’.
6
AIR 1954 SC 569
7
AIR 1967 SC 1895
Just two years earlier, another five judge bench had decided in Corp. of Calcutta v. Liberty
Cinema8 that the power to fix rates and tax a certain group was allowed to be delegated. To
clarify the apparent inconsistency between Devi Das and Liberty Cinema, the Supreme Court
constituted a 7 judge bench to hear Municipal Corporate of Delhi v. Birla Spinning and
Weaving Mills Ltd.9, in which it attempted to resolve the matter. In this case, the respondents
contested the validity of section 150(1) of the Delhi Municipal Corporate Act, 1957. The
provision provided the maximum rate of tax that could be levied, and allowed the Central
Government to decide what the rate would be. The provision was upheld by a majority of 5:2
wherein Wanchoo, CJ wrote in his judgment that such provisions are perfectly valid as essential
legislative function was retained by the legislature in its own hands.

DISTINCTION BETWEEN FEES AND TAX

It is imperative for the analysis of this case that distinction between fees and tax is properly
understood. Executive can’t impose taxes by way delegated legislation but they have the
authority to prescribe ‘fee’ for the service they provide like licensing, registration, etc.

In Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha

Swamiar of Sri Shirur Mutt10, the Supreme Court considered the question as to what are the
indicia or special characteristics that distinguish a fee from a tax proper. B.K. Mukherjea, J. (as
he then was), who spoke for the seven-Judge Bench of this Court in the case, opined that 'tax'
defined as "a compulsory exaction of money by public authority for public purposes enforceable
by law and not payment 'for services rendered' " by Latham, C.J. of the High Court of Australia
in Mathews v. Chicory Marketing Board11.

Later, the learned Judge, adverting to features which distinguish 'fee' from 'tax', opined, “The
'fee', according to the learned Judge, if had to be regarded as a sort of service or consideration for
services rendered, on the face of the legislative provision, it (fee) must be co-related to the
expenses incurred by Government in rendering the services.”
8
AIR 1965 SC 1107
9
AIR 1968 SC 1232
10
AIR 1954 SC 282
11
(1938) 60 CLR 263
 Gammon India Ltd. v. Union of India12

Petitioner: Gammon India Ltd. Etc. Etc.

Respondent: Union of India and Ors. Etc.

Bench:

 A. N. Ray, J. (CJI)
 P. Jaganmohan Reddy, J.
 S. N. Dwivedi, J.
 P. K. Goswami, J.
 Ranjit Singh Sarkaria, J.

Act/Statutes/Rules:

 The Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter referred to as
“the Act”)
 Constitution of India
 Contract Labour (Regulation and Abolition) Central Rules, 1971.

BRIEF BACKGROUND OF THE CASE:

12
AIR 1974 SC 960
Rights and interests of Contract Labourers were gaining the attention of people in the 1960s.
There was immense pressure on the government to do something for the regulation of Contract
Labour regime and to improve the standards of workers deployed as contract labour by ensuring
suitable working conditions and wages, et al. Hence, to meet this objective, the Contract Labour
(Regulation and Abolition) Act, 1970 was passed by the parliament and was made applicable to
all establishments wherein Contract Labours are deployed. On being hit adversely by the
provisions of the Act, petitioners who were engaged in construction business approached the
Court challenging the validity of the Act on various grounds.
 ISSUES BEFORE THE SUPREME COURT:

Following issues came before the court to determine and adjudicate upon:

1. Whether the petitioners come within the definition of “contractors” as mentioned under
section 2 (c) of the Act?
2. Whether the application of the Act to the pending contract imposes unreasonable
restrictions violating article 19 (1) (g) of the Constitution?
3. Whether the fees prescribed for registration, licences, or renewal of licences amount to
levy of a tax which are, therefore, beyond the rule-making powers of the Central and
State Government?
4. Whether the provisions (those contended by the petitioners) of Act are unconstitutional
and unreasonable?
5. Whether section 34 of the Act empowering the Central government to make any
provisions for removal of difficulty is excessive delegation thereby making it
unconstitutional?
 CONTENTIONS OF THE PETITIONERS:

1. Petitioners contended that establishment means any place where any industry, trade,
business, manufacture or occupation is carried on and, therefore, the workmen employed
by the petitioners are not contract labour because they are not employed in connection
with the work of the establishment. The work of the establishment is, according to the
petitioners, not only at the place where the business, trade, industry of the establishment
is carried on but also the actual business or trade or industry of the establishment. The
entire emphasis is placed by the petitioners on the words "work of any establishment." By
way of illustration it is said that if a banking company which is an establishment which
carries on its business at Delhi employs the petitioners to construct a building at
Allahabad the building to be constructed is not the work of the bank. It is said that the
only work of the bank as an establishment is banking work and, therefore, the work of
construction is not the banking work of the establishment. Therefore, the petitioners
contend that the workmen employed by the petitioners are not workmen in connection
with the work of the establishment and petitioners are not “contractors” as defined in the
Act.

2. The application of the Act to pending contracts amounts to unreasonable restrictions on

the right of contractors under article 19 (1) (g) of the constitution and is therefore,
unconstitutional.

3. The fees prescribed for registration, licenses and renewal of licenses amount to levy of
taxes which is essential legislative and cannot be delegated. Hence, such a delegation
goes beyond the rule making power of the Central and State government.

4. Following provisions were contended to be unconstitutional:

 Provisions in regard to canteens, rest rooms, latrines and urinals as contemplated by
sections 16 to 18 of the Act read with Central Rules 40 to 56 and rule 25(2) (vi) are
 incapable of implementation and enormously expensive as to amount to unreasonable
restrictions within the meaning of Article 19 (1) (g).
 Central Rule 25 (2) (v) (b) were challenged to be unreasonable as it confers a
discretionary power on the Chief Labour Commissioner and there is no provision of
appeal regarding his decision.
 Provisions in section 14 with regard to forfeiture of security are unconstitutional.
 The validity of rule 24 which requires deposit of Rs. 30/- per workmen is challenged
as void under Articles 14 and 19 (1) (f) both on the ground that the same is arbitrary
and also because there is no obligation on the Government to pay to the workmen or
to utilise for the workmen any part of the security deposit so forfeited.

5. It was also contended that section 34 of the Act which empowers the Central Government
to make any provision not inconsistent with the provisions of the Act for removal of
difficulty is unconstitutional on the ground of excessive delegation.

PROVISIONS OF LAW IN QUESTION:

1. Section 2 (c) which defines a "contractor" in relation to an establishment to mean “a

person who undertakes to produce a given result for the establishment, other than 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.”
2. Section 2 (e) defines "Establishment" as “(i) any office or department of the Government
or a local authority, or (ii) any place where any industry, trade, business, manufacture or
occupation is carried on.”
3. Section 2 (g) defines "Principal employer" as “(i) in relation to any office or department
of the Government or a local authority, the head of that office or department or such other
 officer as the Government or the local authority, as the case may be, may specify in this
behalf, (ii) in a factory, the owner or occupier of the factory and where a person has been
named as the manager of the factory under the Factories Act, 1948, the person so named,
(iii) in a mine, the owner or agent of the mine and where a person has been named as the
manager of the mine, the person so named, and (iv) in any other establishment, any
person responsible for the supervision and control of the establishment.”
4. Section 2 (i) defines “Workman" to mean, any person employed in or in connection with
the work of any establishment to do any skilled, semi-skilled or unskilled manual,
supervisory, technical or clerical work for hire or reward, whether the terms of
employment be express or implied.
5. Section 2 (b) of the Act states that 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.
6. Section 16 Canteens.-
(1) The appropriate Government may make rules requiring that in every establishment--
(a) to which this Act applies, (b) wherein work requiring employment of contract labour
is likely to continue for such period as may be prescribed, and (c) wherein contract labour
numbering one hundred or more is ordinarily employed by a contractor, one or more
canteens shall be provided and maintained by the contractor for the use of such contract
labour.
(2) Without prejudice to the generality of the foregoing power, such rules may provide
for—
(a) the date by which the canteens shall be provided;
(b) the number of canteens that shall be provided, and the standards in respect of
construction, accommodation, furniture and other equipment of the canteens; and
(c) the foodstuffs which may be served therein and the charges which may be made
thereof.
7. Section 17 Rest-rooms.-
(1) In every place wherein contract labour is required to halt at night in connection with
the work of an establishment—
 (a) to which this Act applies, and
(b) in which work requiring employment of contract labour is likely to continue for such
period as may be prescribed, there shall be provided and maintained by the contractor for
the use of the contract labour such number of rest-rooms or such other suitable alternative
accommodation within such time as may be prescribed.
(2) The rest rooms or the alternative accommodation to be provided under subsection (1)
shall be sufficiently lighted and ventilated and shall be maintained in a clean and
comfortable condition.
8. Section 18 Other facilities- It shall be the duty of every contractor employing contract
labour in connection with the work of an establishment to which this Act applies, to
provide and maintain—
(a) a sufficient supply of wholesome drinking water for the contract labour at convenient
places;
(b) a sufficient number of latrines and urinals of the prescribed types so situated as to be
convenient and accessible to the contract labour in the establishment; and
(c) washing facilities.
9. Rule 25 (2) (v) (a) In cases where the workmen employed by the contractor perform the
same or similar kind of work as the workmen directly employed by the principal
employer of the establishment, the wage rates, holidays, hours of work and other
conditions of service of the workmen of the contractor shall be the same as applicable to
the workman directly employed by the principal employer of the establishment on the
same or similar kind of work
Pleaded that in the case of any disagreement with regard to the type of work the same
shall be decided by the Chief Labour Commissioner (Central)
10. Rule 25 (2) (v) (b) in other cases the wage rates, holidays, hours of work and conditions
of service of the workmen of the contractor shall be such as may be specified in this
behalf by Chief Commissioner (Central).
11. Section 14 Revocation, suspension and amendment of licences.-
(1) If the licensing officer is satisfied, either on a reference made to him in this behalf or
otherwise, that—
 (a) a licence granted under section 12 has been obtained by misrepresentation or
suppression of any material fact, or
(b) the holder of a licence has, without reasonable cause, failed to comply with the
conditions subject to which the licence has been granted or has contravened any of the
provisions of this Act or the rules made thereunder, then, without prejudice to any other
penalty to which the holder of the licence may be liable under this Act, the licensing
officer may, after giving the holder of the licence an opportunity of showing cause,
revoke or suspend the licence or forfeit the sum, if any, or any portion thereof deposited
as security for the due performance of the conditions subject to which the licence has
been granted.
(2) Subject to any rules that may be made in this behalf, the licensing officer may vary or
amend a licence granted under section 12.

12. Rule 24 of the Central Rules provides that the security amount of Rs. 30/- for each of the
workmen is to be deposited as security for the due performance of the conditions of
licence and compliance with the provisions of the Act or the rules made thereunder.
13. Section 34 Power to remove difficulties-
If any difficulty arises in giving effect to the provisions of this Act, the Central
Government may, by order published in the Official Gazette, make such provisions not
inconsistent with the provisions of this Act, as appears to it to be necessary or expedient
for removing the difficulty.
 JUDGEMENT AND ANALYSIS OF REASONING GIVEN BY
THE COURT:

ISSUE 1

The court rejected the contention of the petitioner with respect to them not been covered in the
definition of “contractors” as given in the Act. Petitioners gave two reasons for their exclusion,
first, the work of the petitioners is not any part of the work of the principal employer nor is it the
work "in connection with the work of the establishment", namely, principal employer and
second, the work of the petitioners is normally not done in the premises of the "establishment" of
the principal employer.

While relying upon the definitions provided in the Act the petitioner placed a great reliance on
the words “work of the establishment” and suggested that since the workmen employed by the
petitioners are not employed in connection with the work of establishment, they are not contract
labours.

The work of the establishment is, according to the petitioners, not only at the place where the
business, trade, industry of the establishment is carried on but also the actual business or trade or
industry of the establishment.

The contention of the petitioner was held to be unsound. The court held that when the banking
company employs the petitioners to construct a building, the petitioners are in relation to the
establishment, contractors who undertake to produce a given result for the bank. The petitioners
are also persons who undertake to produce the result through contract labour. The petitioners
may appoint sub-contractors to do the work. Hence, all the requirements of section 2 (c) are
fulfilled.

The court looked at the context and object of the words given the definition clauses of the Act to
interpret it in such a way as to include the work done on a work site away from the existing
premises of the business for the benefit of business or its expansion, as “work of the
establishment”.
The harmonious meaning that arose out of the definitions of contractors, workman, contract
labour, establishment, principal employer all implied that the “work of the establishment”
includes the work site of the establishment where a building is constructed. The work of
construction was held to be the work of establishment.

The expression "employed in or in connection with the work of the establishment" does not
mean that the operation assigned to the workmen must be a part or incidental to the work
performed by the principal employer. According to the Act, the contractor is employed to
produce the given result for the benefit of the principal employer in fulfilment of the undertaking
given to him. Therefore, the employment of the contract labour, namely, the workmen by the
contractor was held to be in connection with the work of the establishment. The petitioners were
declared contractors within the meaning of the Act and their contentions were rejected.

ISSUE 2

With regard to second issue, the court observed that there is no unreasonableness in application
of the provisions contained in the impugned Act to pending contracts. In fact, pendency of
contract was held to be an irrelevant consideration by the court as the subject matter of the Act is
not the contract but the contract labourers.

Hence, there is no question of retrospective operation.

Further, since the petitioners did not produce sufficient evidence to show that they will be
adversely affected by the provisions of the Act. Interest of the workmen were given the utmost
eminence and since they are remedied by the objects of Act, the court held that it should be
applied to all contract labourers with any prejudice of pendency contention. The protection of
labourers’ interests are minimum labour welfare and there is no unreasonableness in its
application.
ISSUE 3

While dealing with the third issue, the court looked into the merits of petitioner’s contention and
the object of the Act.
Power to impose tax is considered an essential legislative function and is recognized as inherent
power of State. Under Article 265 of the Constitution no tax can be levied or collected save by
authority of law, and here ‘law’ means law enacted by the competent legislature and not made by
the executive.
The Supreme Court has held in its various judgment that though the power to levy tax is an
essential legislative function and as such cannot be delegated. However, some of it can still be
delegated subject to limitation that the essential legislative functions are performed by the
legislative itself, which is to lay down the policy and the guidelines for the imposition of taxes.

The court held that, the fees prescribed for registration, licence and renewal of licences do not
amount to a levy of tax. The Government has to bear expenses for the scheme of registration,
licence. The Government gives service in regard to licences and registration and the fees charged
for that service cannot be considered as imposition of tax.

Further it was held that there is no arbitrary power or excessive delegation of legislative
authority with regard to grant of licence. The Act and the Rules provide ample guideline as to the
grant and terms and conditions of licence.

Section 15 of the Act confers a right of appeal on any person who is aggrieved by any order
refusing a licence or if there is revocation or suspension of licence. Similarly, when there is
revocation of registration of an establishment or there is refusal to grant registration, there is a
right of appeal.

Hence, petitioners’ contentions with regard to this issue were also refuted by the apex court.
ISSUE 4

Various provisions of the Act were challenged by the petitioners on different grounds thereunder,
which were dealt by the court one by one.

Firstly, the provisions of section 16 to 18 read with Central Rules 40 to 56 were challenged on
the grounds that implementation of these provisions in impossible and impracticable. These
provisions mandates the contractor to provide reasonable working conditions to protect the
dignity of Contract Labourer.

The court held that, condition of contract labour has been engaging the attention of various
committees for a long time. The benefits conferred by the Act and the Rules are social welfare
legislative measures.
The various measures which are challenged as unreasonable namely, the provisions for canteens,
rest rooms, and facilities for supply of drinking water, laterines, urinals, first aid facilities are
amenities for the dignity of human labour.
The measure is in the interest of the public. There is a rational relation between the impugned
Act and the object to be achieved and the provision is not in excess of that object. There is no
violation of Article 14. The classification is not arbitrary. The legislature has made uniform laws
for all contractors.
These facilities are necessary to protect the labourer from exploitation and were held to be
reasonable.

Secondly, the provisions contained in Central Rule 25 (2) (v) (b) were challenged as
unreasonable. The contention against this Rule was that there is no provision of appeal and the
decision of Labour Commissioner is final. The court observed in this regard that it is not difficult
to determine and decide cases of this type.
The Commissioner of Labour has special knowledge. Further explaining, it was held that it will
be a question from statute to statute, from fact to fact as to whether absence of a provision for
appeal makes the statute bad.
The provisions contained in Rule 25 (2) (v) (b) refer to wages, hours of work and conditions of
service in similar employment.
Since the issue involved in these cases is simple, a long drawn procedure may, as the court held,
exceed the duration of employment of the workmen, thereby prejudicing the parties involved.

A proper standard is laid down in the explanation to Rule 25 (2) (v) (b). The absence of a
provision for appeal is not unreasonable in the context of provisions here. The Commissioner can
reasonably expected to have due regard to the wages of workmen in similar employment.
The parties are heard and the Commissioner of Labour who is specifically acquainted with the
conditions, applies the proper standards. Hence, it was held that there is no unreasonableness in
the Rules.

Thirdly, constitutional validity of section 14 was challenged by the petitioners. The court held
that section 14 of the impugned Act is constitutionally valid as it provides for forfeiture in the
case of non-compliance without any reasonable cause. Further, provision of giving an
opportunity of showing cause in contained the provisions of the section and hence there is no
arbitrary conferment of powers. Such forfeiture provision act as deterrent for compliance and is
constitutionally valid.
Finally, Rule 24 mandating deposition of Rs.30 per worker as a security was contented to be
unconstitutional as it offends article 14 and article 19 (1) (f).

The court rejected this contention citing reason that the classification is not arbitrary as it is
relatable to big and small contractors according to the number of workers employed by them.
Further, the argument that government is not under obligation to use this security for the benefit
of labourers makes it violative of the constitutional provisions is incorrect as the forfeiture of this
sum is an “administrative penalty” which is to ensure the compliance of the conditions upon
which the license was given.
Hence, the said rule was held to be reasonable and constitutionally valid.
ISSUE 5

Section 34 of the impugned Act relates to provision which is known as Henry VIII clause in
legal terminology. Henry VIII clause is basically delegation of power to remove difficulties to
the executive for smooth implementation of the Act. Section 34 empowers the Central Executive
to make rules, which are not inconsistent to the provisions of the Act for removal of difficulty.

Petitioner challenged Section 34 of the impugned Act as unconstitutional on ground of excessive

delegation. Reliance was placed by the petitioner on the Supreme Court ruling, Jalan Trading
Co. v Mazdoor Union13, whereby the Supreme Court was called upon to decide the legality of
such a clause.

Section 37 (1) of the payment of Bonus Act 1965 empowered the central government to make
such orders, not inconsistent with the purpose of the act, is might be necessary or expedient for
the removal of any doubts or difficulties.

Section 37 (2) made the order passed by the central government under sub section (1) final. The
court by a majority of 3:2 held section 37 ultra vires on the ground of excessive delegation in as
much as the government was made the sole judge of whether any difficulty or doubt had arisen,
whether it was necessary to remove such doubt or difficulties and whether the order made was
consistent with the provisions of the act. Again, the order passed by the central government was
'final'.

Thus, in substance, legislative power was delegated to executive authority, which was not
permissible.

13
AIR 1967 SC 691
The minority, however, took a liberal view and held that the functions to be exercised by the
central government was not legislative functions at all but were intended to advance the purpose
which the legislature had in mind.

In the words of Hidayatullah, J. "Parliament has not attempted to set up legislation.

I have stated all that it wished in the subject of bonus in the act. Apprehending, however, that in
the application of the new act doubts and difficulty might arrive and not leaving there solutions
to the court with the attendant delays and expense, parliament have chosen to give power to the
central government to remove doubt and difference by a suitable order."

It is submitted that the minority view is correct and after Jalan trading company 14, the Supreme
Court adopted the liberal approach in the present case where it held section 34 as provision for
giving effect to the Act. The refused to accept that such delegation amounts to excessive
delegation by interpreting it to be the provision for internal functioning of the administrative
machinery. It was held that difficulties can only arise in implementing the rules and hence,
section 34 does not amount to excessive delegation.

14
Ibid.
 CONCLUSION

Contract labour is a significant and growing form of employment. It exists in almost every
sphere of the employment, industries, allied operations and also prevalent in the service sector. It
generally refers to workers engaged by a contractor for other organisation. The exploitation of
contract labour in employment is one the biggest concern of the government as the contract
labour have little bargaining power,  social security and often engaged in the hazardous
industries with lesser facilities and security. To regulate this system the government enacted
the Contract Labour (Regulation & Prohibition) Act, 1970 to secure the status of contract
labourers and to abolish them from certain establishment.

In the case which is elaborately discussed and analysed in this paper, constitutional validity of
the abovementioned Contract Labour statute was challenged and the same was upheld by the
apex court.

Welfare of Public is most important job which is entrusted to the parliament and there is no
unreasonableness in setting up standards to protect dignity of the individuals. In the present case,
the provisions of the Act were a piece of welfare legislation enacted to improve the appalling
conditions of the Contract labourers. Hence, the obligations imposed by this Act was held to be
constitutionally valid and reasonable.

Doctrine of Permissible Limits under Delegated Legislation was invoked by the petitioners with
respect to prescription of fees for registration, grant of license, etc. and it was argued that this
amounts to levy of tax which is an “essential legislative function” which cannot be delegated.

However, since the object of such imposition of fees was to charge for the service provided and
compensate the cost incurred by the legislature in arranging the mechanisms for registration and
other such purposes, it was not held as imposition of tax and hence, was within the permissible
limits of delegated legislation.

Further, with respect to grant of licenses, detailed regulatory guidelines and policies were laid
down in the Act to delegate this power of granting license to the executive.
Provision of appeal in a case where a party feels aggrieved by any order refusing him/her the
license is very strong regulatory tool to keep a check on the executive power. Since, all these
provisions were present in the Parent Act, such delegation does not amount to excessive
delegation as contended by the petitioners in this case.

Power to remove difficulties which is also known as Henry VIII clause, with a restriction that
provisions made to remove difficulty must not be inconsistent with the provisions of the Act,
contained in section 34 of the impugned Act was held constitutionally valid and not amounting
to excessive delegation by the Court. Henry VIII clause is empowering clause in any legislation
to remove difficulties and facilitate effective implementation of the Parent Act.

However, in my opinion, such liberal approach towards Henry VIII clause haunts with the
possibility of misuse of power by the executive.

Even according to Donoghue More Committee, this power is a very wide power whereby the
executive can change the character or the basic intention of the legislature and thus it should be
avoided.
 SUMMARY OF THE CASE

By the award dated February 25, 1969, the Industrial Tribunal held that the retrenchment of the
respondent was illegal and unjustified and gave a declaration that he continues to be in service of
the appellant company is entitles to his wages till he is lawfully retrenched.

The learned judge set aside the award and remitted the matter to the Tribunal to decide what
directions, if any, are necessary in respect of retrenchment of respondent in the light of the
discussion in the judgment.

The question is Whether the Learned Single Judge, who interfered with the award of the Tribunal
was justified in coming to the conclusion that the case was of closure covered by section 25-FFF
or the Industrial Tribunal was right in holding that it is a case of retrenchment covered by
Section 25-F of Industrial Disputed Act.

The Division Bench of the High Court has set aside the order of the learned single Judge and
restored the award for reasons of its own.

In the course of hearing of this appeal, it was stated that the respondent has reached the age of
superannuation physical re-instatement in service is not possible.
 BIBLIOGRAPHY

Books referred
 H.W.R. Wade & C.F. Forsynth Administrative Law: ( New Delhi: Oxford University
Press, 2004)
 I.P Massey, Administrative Law: (Lucknow: Eastern Book Company, 2008)
 M.P Jain, Treatise on Administrative Law: (Nagpur: Wadhwa and Company, 1996)

Cases Referred
 Jalan Trading Co. v Mazdoor Union, AIR 1967 SC 691
 In Re Delhi Laws Act, AIR 1951 SC 332
 Gwalior Rayon Co v. Asst. Commissioner of Sales Tax, AIR 1974 SC 1660
 Registrar Cooperative Societies v. K. Kanjabmu, AIR 1980 SC 350
 Rajnarain v. Chairman, Patna Administration, AIR 1954 SC 569
 Devi Das v. State of Punjab, AIR 1967 SC 1895
 Corp. of Calcutta v. Liberty Cinema, AIR 1965 SC 1107
 Municipal Corporate of Delhi v. Birla Spinning and Weaving Mills Ltd., AIR 1968 SC
1232
 Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha
Swamiar of Sri Shirur Mutt, AIR 1954 SC 282
 Mathews v. Chicory Marketing Board, (1938) 60 CLR 263

Statutes/Rules Referred
 Constitution of India
 The Contract Labour (Regulation and Abolition) Act, 1970
 Contract Labour (Regulation and Abolition) Central Rules, 1971.

Website Referred
1. http://www.manupatrafast.in/

2. http://indiankanoon.org
3. http://www.legalserviceindia.com/