Dena Nath v National Fertilizers Ltd.

• Workers were engaged through a contractor in the principal employer's establishment.
• The principal employer was not registered under S.7, and the contractor was not licensed under S.12.
• The High Court held that such defaults expose the principal employer and the contractor to prosecution, but do not make the workers employees of the principal employer. The workers appealed.

1. Whether workers engaged through an unlicensed contractor by an unregistered principal employer are deemed to be direct employees of the principal employer.

• The Act regulates the employment of contract labour and provides for its abolition by the appropriate Government in notified processes under S.10.
• Neither the Act nor the Rules provide that, on abolition, contract labour is absorbed by the principal employer.
• Non-registration or non-licensing attracts the penal provisions of the Act. It does not make the contract labour employees of the principal employer.
• Whether contract labour should be abolished is for the appropriate Government under S.10, not for the High Court under Art.226. The appeals were dismissed.

Default in registration or licensing under the Contract Labour Act has penal consequences only. It does not create an employment relationship between the contract labour and the principal employer, and courts cannot order absorption in place of the Government's decision under S.10.