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FINAL RESEARCH PROJECT OF LABOUR LAW-1 ON THE

TOPIC:LICENSING A CONRACTOR
PRESENTED BY: - KUMAR MANGALAM
B.A.LLB, 4TH SEMESTER, 2nd YEAR
ROLL NO.:- 936
SUBMITTED TO: - SUBHASH CHANDRA ROY SIR
Date:1|Page

ACKNOWLEDGEMENT
I am feeling highly elated to work on the topic GIFT UNDER Hindu LAW under
the guidance of my FAMILY LAW-2 faculty. I am very grateful to her for her
exemplary guidance. I would like to enlighten my readers regarding this topic and I
hope I have tried my best to pave the way for bringing more luminosity to this
topic.

I also want to thank all of my friends, without whose cooperation this project
was not possible. Apart from all these, I want to give special thanks to the
librarian of my university who made every relevant materials regarding to my
topic available to me at the time of my busy research work and gave me
assistance. And at last I am very much obliged to the God who provided me the
potential for the rigorous research work.

Thanking you
Kumar Mangalam
936
C.N.L.U.

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TABLE OF CONTENTS

SL.NO.

CONTENTS

PAGE NO.

1.

ACKNOWLEDGEMENT

2.

RESEARCH METHODOLOGY, OBJECTIVE and 4


CHAPTERISATION

3.

INTRODUCTION

4.

TYPES OF CONTRACTOR

5-8
8-9

10-12
5.

LICENSING OF CONTRACTOR
13-15

6.

CASE STUDY
16-18

7.

ANALYSIS AND CONCLUSION


BIBLIOGRAPHY

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OBJECTIVE OF THE RESEARCH


The main objective of this research work to:1. To know about different types of contractor,
2. Licensing of contractor,
3. Penalties and procedure.

Hypothesis
The hypothesis of the researcher is as follows:1. There is no special procedure for licensing the contractor.
2. All types contractors are the same and have same work to do.

Research methodology
The researcher has used doctrinal method to do this research. The researcher has
relied upon books, documents, and online databases.
Primary sources: - Labour and Industrial laws, S.N.Mishra, 27th edition, Central Law
Agency.
Secondary sources: - journals, documents and online databases.

Chapterisation
1.
2.
3.
4.
5.

Introduction
Types of contractor
Licensing a contractor
Case laws
Analysis and conclusion

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1 Introduction
Contractor is a person who is hired to perform work or to provide goods at certain
price or within certain time. Contractor is an independent entity that agrees to
furnish certain number and quantity of goods, material, and equipment, personnel
services that meet or exceed stated requirements or specifications at a mutually
agreed price within specified time to another independent entity called as contractee
or principal. Contractor means, A person who undertakes to produce a given result
for the establishment, other than a mere supply of goods and articles of manufacture
to such establishment, through contract labour or who supplies contract labour for
any work of the establishment and includes sub contractor.1
Licensing is permission granted by competent authority to exercise a certain privilege
that without such authorization would constitute an illegal act. The certificate or the
document itself confers the permission to engage in otherwise prescribed conduct.
The granting of permission to use intellectual property rights such as trademarks,
patents or technology under certain conditions.
There are some legislations under The Contract Labour (Regulation and Abolition)
Act, 1970:1. Central Advisory Board
The Central Government shall, as soon as may be, constitute a board to be called the
Central Advisory Contract Labour Board to advise the Central Government on such
matters arising out of administration of this act as may be referred to it and to carry
out other functions assigned to it under this act.
The Central Board shall consist of:-2
a. A chairman to be appointed by the central government.
b. The Chief Labour commissioner(Central)
c. Such number of members, not exceeding seventeen but not less than eleven,
as the Central Government may nominate to represent that government, the
railways and any other interests which, in the opinion of the Central
Government, ought to be represented on the Central Board.

1
2

Section 2(c), The contract labour(Regulation and Abolition) Act, 1970


Section 3 of The contract labour(Regulation and Abolition) Act, 1970

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2. State Advisory Board3


This board could be constituted by State Government. The State Board shall consist
of:a. A chairman to be appointed by the State Government
b. The labour commissioner
c. Such number of members, not exceeding eleven but not less than nine.
Power to constitute committees4
1. The central Board or the State Board as the case may be may constitute such
committees and for such purpose or purposes as it may think fit.
2. The committee constituted shall meet at such times and places and shall
observe such rules of procedure in regard to the transaction of business at its
meetings as may be prescribed.
3. The members of a committee shall be paid such fees and allowances for
attending its meetings as may be prescribed:
Provided that no fees shall, be payable to a member who is an officer of Government
or of any corporation established by any law for the time being in force.
REGISTRATION OF ESTABLISHMENTS EMPLOYING CONTRACT LABOUR
Appointment of registering officers:- 5

The appropriate Government may, by an order notified in the Official Gazette


(a) Appoint such persons, being Gazetted Officers of Government.
(b) Define the limits, within which a registering officer shall exercise the powers
conferred on him by or under this Act.
Registration of certain establishments.- 6
1. Every principal employer of an establishment to which this Act applies shall,
within such period as the appropriate
Government may, by notification in the Official Gazette, fix in this behalf with respect
to establishments generally or with respect to any class of them, make an application
3

Section 4 of The contract labour(Regulation and Abolition) Act, 1970


Section 5 of The contract labour(Regulation and Abolition) Act, 1970
5
Section 6 of The contract labour(Regulation and Abolition) Act, 1970
6
Section 7 of The contract labour(Regulation and Abolition) Act, 1970
4

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to the registering officer in the prescribed manner for registration of the


establishment.
2. If the application for registration is complete in all respects, the registering
officer shall register the establishment and issue to the principal employer of
the establishment a certificate of registration containing such particulars as
may be prescribed.
Revocation of registration in certain cases:-7
If the registering officer is satisfied, either on a reference made to him in this behalf
or otherwise, that the registration of any establishment has been obtained by
misrepresentation or suppression of any material fact, or that for any other reason
the registration has become useless or ineffective and, therefore, requires to be
revoked, the registering officer may, after giving an opportunity to the principal
employer of the establishment to be heard and with the previous approval of the
appropriate Government, revoke the registration.

Prohibition of employment of contract labour.- 8


(1) Notwithstanding anything contained in this Act, the appropriate Government
may, after consultation with the Central Board or, as the case may be, a State
Board, prohibit, by notification in the Official Gazette, employment of
contract labour in any process, operation or other work in any establishment.
(2) Before issuing any notification under sub-section (1) in relation to an
establishment, the appropriate Government shall have regard to the
conditions of work and benefits provided for the contract labour in that
establishment and other relevant factors.

7
8

Section 8 of The contract labour(Regulation and Abolition) Act, 1970


Section 10 of The contract labour(Regulation and Abolition) Act, 1970

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2 Types of contractor
There are different types of contractors and contracting services, and if I had to
categorize them, I would define three major categories. The differences in these
three categories of contractor largely account for the differences in price, and have a
very large impact on the amount of work the investor will be required to exert
himself. As you might suspect, as you move from the more expensive to the less
expensive contractor solutions, the amount of effort that the investor must exert
increases quickly.
1. GENERAL CONTRACTOR
The term general contractor is used in two ways, in my experience. From now on, I
am going to differentiate general contractor from General Contractor. A general
contractor is someone who has the ability to tackle a lot of different aspects of a
rehab project; most general contractors are good at carpentry, sheet-rock, basic
electrical, basic plumbing, basic HVAC, and other general areas of home renovation
and rehab. This type of general contractor might be referred to as a handyman,
though if he is licensed and highly experienced, hes likely a lot more than just that.
The term General Contractor refers to someone who has all the skills of a general
contractor, but also manages all the aspects of the renovation that he doesnt
actually execute himself. A General Contractor will often hire sub-contractors
(contractors with specific skill-sets) to come in to handle the work that he is either
not skilled enough to complete or too busy to complete. Not only does a General
Contractor hire the necessary sub-contractors, but he will often manage the
schedule, the project budget, and all the payments as well. For big projects, the
General Contractor might spend all his time managing schedules, budgets, and subcontractors, and therefore might not have time to do any of the work himself. The
General Contractor is also responsible for ensuring that his subs are properly licensed
and insured, to protect you and your investment (as well as to protect himself).

2. TURN-KEY (SPECIALTY) SERVICES


Most specialty contractors, they include those popular businesses such as Terminex
(pest/termite) and plumbing; of course, there are likely thousands of these kinds of
companies in your area that youve never heard of, but are just as reliable and hold
the necessary credentials license, insurance, Better Business Bureau Rating, etc.
These contractors may not be the cheapest contractors as they spent a lot of time
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and effort getting the experience necessary to get their licenses and credentials, and
want to get paid for their efforts, they will likely get the job done without you having
to keep an eye on them or watch their every move.
3. FREELANCE WORKERS
The cheapest, but most time intensive for you avenue for getting a rehab done is to
hire what I call freelance workers. These are guys who might have some
experience in some aspects of rehab (they might even be general contractors), but
dont have enough expertise and experience to trust them to complete even
individual parts of a project without management. Whereas a turn-key dry-waller can
be trusted to finish up a room while you head to lunch, you probably would want to
stick around to manage and instruct a freelance worker who was doing the same
thing. Freelance workers are often called unskilled contractors, because while they
work very hard, they dont have the expertise to know how to solve tough problems
themselves. Theyll look to you to do that, so its required that you would have the
knowledge and expertise to solve those problems. Freelance workers are by-far the
cheapest contractor costs for a rehab, but will require the most time, effort,
expertise and patience from you.

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3 LICENSING OF CONTRACTOR
Who may apply for contractor?
The basic requirements for becoming a contractor:-9

At least 18 years old with a high school diploma or the equivalent.


Proof of Indian citizenship or legal residency.
Documentation on any other occupational license you hold in the state.
Two passport-size photos.
Explanation of citations, violations or liens resulting from construction work.
Corporations doing business in any state must be registered with the
Secretary of State.
Bidding for work on state projects usually requires prequalification.

THE PROCEDURE FOR LICENSING A CONTRACTOR IS AS FOLLOWS:1. APPOINTMENT OF LICENSING OFICERS10


The appropriate Government may, by an order notified in the Official Gazette:A. Appoint such persons, being Gazetted Officers of Government, as it thinks
fit to be licensing officers for the purposes of licensing a contractor,
B. Define the limits, within which a licensing officer shall exercise the powers
conferred on licensing officers in accordance of this act.

2. LICENSING OF CONTRACTORS11
1. The appropriate Government may, by notification in the Official Gazette,
appoint, no contractor to whom this Act applies, shall undertake or
execute any work through contract labour except under and in accordance
with a licence issued in that behalf by the licensing officer.
2. License may contain such conditions including, in particular, conditions as
to hours of work, fixation of wages and other essential amenities in respect of
9

http://www.contractors-license.org/cna03.htm
Section 11 of The contract labour(Regulation and Abolition) Act, 1970
11
Section 12 of The contract labour(Regulation and Abolition) Act, 1970
10

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contract labour as the appropriate Government may deem fit to impose in


accordance with the rules, if any, made under section 35 and shall be
issued on payment of such fees and on the deposit of such sum.

3. GRANT OF LICENSE12
1. Every application for the grant of a licence in accordance of Section 12 shall
be made in the prescribed form and shall contain the particulars
regarding the location of the establishment, the nature of process,
operation or work for which contract labour is to be employed and such
other particulars as prescribed in the application. 13
2. The licensing officer may make such investigation in respect of the application
received under sub-section (1) and in making any such investigation the
licensing officer shall follow such procedure as may be prescribed by this act.14
3. A licence granted under this Chapter shall be valid for the period specified
therein and may be renewed from time to time for such period and on
payment of such fees and on such conditions as may be prescribed. 15

4. REVOCATION, SUSPENSION AND AMENDMENT OF LICENSES 16

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 there
under, 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 show cause, revoke or suspend
the licence or forfeit the sum, if any, or any portion thereof deposited as
12

Section 13 of The contract labour(Regulation and Abolition) Act, 1970


Section 13(1) of The contract labour(Regulation and Abolition) Act, 1970
14
Section 13(2) of The contract labour(Regulation and Abolition) Act, 1970
15
Section 13 (3) of The contract labour(Regulation and Abolition) Act, 1970
16
SECTION 14 of The contract labour(Regulation and Abolition) Act, 1970
13

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security for the due performance of the conditions subject to which the
licence has been granted.17
C. The licensing officer may vary or amend a licence granted under section 12. 18

5. APPEAL19
A. Any person aggrieved by an order made under section 7, section 8, section
12 or section 14 may, within thirty days from the date on which the order is
communicated to him, prefer an appeal to an appellate officer who shall be a
person nominated in this behalf by the appropriate Government. Provided
that the appellate officer may entertain the Appeal after the expiry of the said
period of thirty days, if he is satisfied that the appellant was prevented by
sufficient cause from filing the appeal in time.20
B. On receipt of an appeal under SECTION 15(1), the appellate officer shall, after
giving the appellant an opportunity of being heard dispose of the appeal as
expeditiously as possible.21

17

Section 14 (1) of The contract labour(Regulation and Abolition) Act, 1970


Section 14(2) of The contract labour(Regulation and Abolition) Act, 1970
19
Section 15 of The contract labour(Regulation and Abolition) Act, 1970
20
Section 15(1) of The contract labour(Regulation and Abolition) Act, 1970
21
Section 15(2) of The contract labour(Regulation and Abolition) Act, 1970
18

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4. Case laws

1. G.M., O.N.G.C., Silchar v. O.N.G.C. Contractual Workers Union22


FACTS: The O.N.G.C. workers union demanded regularisation of services of

labourers of contractors. A reference for the same was given to the government
and government referred it to the Industrial Tribunal.
HELD:- The Industrial Tribunal gave an award that the labourers are the workmen
of the O.N.G.C., Silchar, and not the contractors and were entitled for regularisation.
This award was challenged in the high court (single judge bench), and the decision of
the tribunal was reversed. The division bench of high court reversed the decision of
the single bench high court.
An appeal was made in the Supreme Court. Supreme Court held that since industrial
tribunal has reached to the conclusion that there is presence of master-servant
relationship and no contractor is appointed then the workmen were the only
employees and was entitled for the regularisation.

2. Food Corporation of India Workers Union v. Food Corporation of


India and others23
In this case, Gujarat High Court held that under Section 7 of the Act, the principal
employer is required to obtain a certificate of registration issued by the appropriate
Government and under section 12, the contractor is required to obtain license. The
workman could be employed as contract labour only through licensed contractor. In
the situation wherein either of these two conditions are not satisfied a workman
employed by an intermediary would be deemed to have been employed by the
principal employer.

22
23

2008, Law Library Journal, 1071 (S.C.)


1992, I L.L.J 257 (Guj.)

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3. Philips Workers Union v. State of Maharashtra and another 24


In this case it was HELD that where this act applies to an establishment, it is for
the appropriate government under section 10 to prohibit the employment of
contract labour and no reference under section 10 of industrial dispute act, 1947 can
be sought for absorption of contract labour by principal employer and for payment
of all benefits available to permanent employees of principal employer.

4. H.D. CHOWDA v. STATE OF ANDHRA PRADESH25


In this case a notification was issued under section 10(1) of this act, 1970 by the State
Government prohibiting contract labour in the following process of operations:

Watch and Ward personnel


Routine sweeping and scavenging
Boiler house workers
Workers of routine maintenance of plants and machinery
Persons engaged in automobile garages and workshops.

5. GENERAL LABOUR UNION(Red Flag) v. K.M.DESAI AND


OTHERS26
In this case it was held that there is no provision in this act whereby it can be
constructed even by remote possible way that in the case of failure on part of
contractor to register his contract under section 12 of the act, the employees
employed in the factory through contractor will become the employees of the
company. But the contractor will be legally penalised for such failure.

24

(1987) II L.L.J. 91 (Bom.)


(2003) II L.L.J. 814 (A.P.)
26
(1990) II L.L.J. 259 (Bom.)
25

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6. UNITED LABOU UNION AND OTHERS v. UNION OF INDIA


AND OTHERS27
In this case it was held that mere existence of penal provisions does not detract from
the positions that there can be no deemed contract labour if the two conditions
related to registration of principal employer and obtaining a valid license by the
contractor are not satisfied.

27

(1991) I L.L.J. 89 (Bom.)

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5 Analysis and conclusion


After doing the research work, the researcher has made the analysis, is as follows:
There are several pros and cons of the contract labours as well as
contractors(licensed).
PROS:2. Freedom

As a contractor, an individual have the freedom of picking which jobs you want to
work on and setting your own schedule. If you need time off to handle personal
matters, you can adjust your schedule without seeking permission from your clients.
You can work for as many clients as you see fit, work from your home in whatever
clothing you want and travel to your clients premises only as required. The
limitations on how successful you can be are up to you, as you control your
professional destiny.
3. Higher Pay

Along with paying employees wages and salaries, employers often provide
competitive benefits to retain quality workers. They must also pay Social Security,
Medicare and unemployment taxes plus carry workers compensation and disability
insurance when applicable. Contract labourers can often command a higher hourly
rate than employees, because for the employer, they cost less than employees.
4. Tax benefits
Employers must withhold taxes from their employees pay checks, but independent
contractors generally pay their own taxes quarterly. This allows you to hold onto
your full pay longer. You might be able to deduct business-related expenses on your
tax return that employees cannot deduct. This includes deductions for home office,
meals, entertainment, travel, equipment and insurance expenses.

DEMERITS OF CONTRACTORS
1. Job security
A contractor you have less job security than a premise. As employment law has
lessened this may not be as true as it was. Many contracts include one month
get out clauses in which case both you and the permit that sits next to you
could be gone in 4 weeks.

2. LESS SAY IN THE AFFAIRS


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3. CONTRACTORS HAVE TO PROVE THEM AGAIN AND AGAIN


4. LOSS OF KEY SKILLS

CONCLUSION
After completing the research work, the researcher has came to the following
conclusion:
Contractor means, A person who undertakes to produce a given result for the
establishment, other than a mere supply of goods and articles of manufacture to
such establishment, through contract labour or who supplies contract labour for any
work of the establishment and includes sub contractor Licensing is permission
granted by competent authority to exercise a certain privilege that without such
authorization would constitute an illegal act. The certificate or the document itself
confers the permission to engage in otherwise prescribed conduct. There are several
legislations in The Contract Labour (Regulation and Abolition) Act, 1970 that have
been discussed earlier.
The licensing of the contractor includes some basic requirement that a contractor
has to fulfill to convince employer that he is a contractor.

The basic requirements for becoming a contractor:

At least 18 years old with a high school diploma or the equivalent.


Proof of Indian citizenship or legal residency.
Documentation on any other occupational license you hold in the state.
Two passport-size photos.
Explanation of citations, violations or liens resulting from construction work.
Corporations doing business in any state must be registered with the
Secretary of State.

There is a particular procedure to provide license to a contractor


1. Appointment of licensing officer
2. Licensing application by the contractor has to be submitted to licensing
officer.
3. Grant of license.
4. Revocation, suspension, and amendment in the license
5. Appeal

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At last, the hypothesis of the researcher has been proved wrong. There is a
particular procedure for licensing a contractor. There are also different liabilities
and duties of the licensed contractor and non-licensed contractor.

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BIBLIOGRAPGHY
1. S.N.MISHRA, LABOUR AND INDUSTRIAL LAWS, 27TH EDITION, CENTRAL
LAW PUBLICATIONS, PAGE NO.- 1063-1092
2. http://www.contractors-license.org/cna03.htm
3. http://www.ehow.com/info_8233943_pros-cons-contract-labor.html
4. http://www.firstpointgroup.com/pros-and-cons-of-using-contractors

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