Dear Reddy,
Your doubt about pack house facility of a floriculture production unit is quite genuine, as floriculture, horticulture and agriculture are of the same nature. No doubt these articles or substances are not manufactured in a factory, but, particularly the act of packing of the substance with a view to its use, sale, transport, delivery or disposal comes within the purview of the Factories Act 1948. You may like to see the definition of manufacturing process under Section 2 (k)(i) of the Act, as follows for your satisfaction:

"Manufacturing process" means any process for-
(i) Making altering, repairing, ornamenting, finishing, PACKING, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal, or …………………………

The reason can be the requirement of working environment, health and cleanliness, safety measures, sanitation, lighting, ventilation and temporature, age conditions for employment, etc., of the workers, disposal of wastes and effluents, dust and fume, adequacy of working space, laterines and urinals for workers, etc.

So, irrespective of the fact that the pack house facility pertains to the floriculture produciton units, it falls within the purview of the Factories Act and the requirements of the Act are a must to comply.

P S Dhingra
Vigilance & Change Management Consultant

From India, Delhi
I totally agree with Mr. P.S. Dhingra (regarding F-V to be issued to sub-contractor). Actually issuing F-V is not the only question, the real question is, has the PE signed any agreement with sub-contractor, if yes, then the sub-contractor himself becomes the contractor (so no question of being a sub-contractor), if no, then has the PE signed any agreement with contractor in which this is mentioned that contractor can further give the contract to some sub-contractor.

Anyhow, my quarry to Mr. Dhingra is that we are a contractor and providing manpower to some PE. We got the F-V from PE.. licence taken... all compliances done.... (all done), and now the PE himself (without our/contractor's) knowledge appointed some another contractor for same job and wants him to become our/contractor's contractor/subcontractor. Means PE wants us/contractor to become PE for that (sub)contractor. And the original PE has also made that (sub)contractor to issue us Form-V (no agreement.... nothing)...... is this allowed... is this legal.... are we bound for CLRA compliances for that (sub)contractor.

From India, Rohtak
Dear Shri Sehgal,
Thanks for supplementing my reply.
About your query, it is clear that the PE wants to favour some one else at your cost, who otherwise would not have qualified for contratorship and not have earned any experience and has been made to enter in to the contractorship through the backdoor entry. It is also clear that the PE desires to make the other person ready to compete you and that too by training him through you only.

I can understand your concern. Although legally the PE cannot force you to accept the nominated person as your sub-contractor unless there is any such clause in your written and signed agreement with the PE. If you have already given a free consent to that effect in the agreement, then you will have to abide by the provisions of the agreement and would be liable to accept the sub-contractor appointed by the PE. The agreement, as per the provisions of Indian Contract Act provides as follows:

AGREEMENT as CONTRACT: All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.

If, however, in the absence of the requirement of sub-contract in the agreement, the PE tries to enforce his will upon you by coercion or undue influence the agreement/contract becomes void.

According to Section 14 of the Indian Contracts Act 1872, the consent is said to be FREE CONSENT when it is not caused by –
1) coercion, as defined in section 15, or
2) undue influence, as defined in section 16, or
3) fraud, as defined in section 17, or
4) misrepresentation, as defined in section 18, or
5) mistake, subject to the provisions of sections 20, 21 and 22.
Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation or mistake.

So, this is the legal poition. But, since you are dependent upon the PE for your business and on your refusal to agree with the proposal of the PE your business can be affected by your refusal. In that case the PE may try to cancel your contract by hook or crook on several lame excuses. So, you need to handle the situation very tactfully and calmly. You therefore have two options:

(1) you can reject the proposal of the PE if your business is not substantially affected and you can afford to lose business from that PE. In that situation the PE would definitely not like to give you more business in future. Of course the PE cannot apply coercion or undue influence to act against the provisions of the agreement. On any attempt of the PE to harm your interest, as you may be knowing fully well as a contrator, you can refer your case to the arbitration under the provisions of the Arbitration Act, as per the provisions of the Agreement.

(2) If your business is substantially effected by not getting any contract in this particular organisation of the PE, you will surely have to avoid any conflict with the PE. But you can ask for written provision by amendment of the agreement. You will however need to remain vigilant about the sub-contractor's moves and deeds and will have see carefully that the provisions of the CL(R&A) Act and Rules thereunder are complied scrupulously by the sub-contractor, otherwise the PE will be free to cancel your contract for not following the provisions of the agreement, Act and the Rules. on the other hand your sub-contractor would already have been successful to obtain the licence and fully ready to compete with you in any organisation.

So, that depends upon your own discretion which option you would prefer to make.


P S Dhingra
Vigilance & Change Management Consultant
New Delhi

From India, Delhi
Thank you very much to all of you especially Mr. Dhingra for valuable views and suggestions. It has sorted out the problem for us right now. we have issued Form V to sub-contractor on request of the contractor. And we have taken a bond from the contractor indemnifying us for any liability arising out of the engagement of contract workers by the sub-contractor for the his work just to protect the interest of my organisation.

However, I still have some doubts and will need some insights from you all for upgrading my knowledge base. PE has a registeration and the sub-contractor has a labour licence but the contractor has neither the registeration nor the licence. And it is the contractor who requires the unskilled / skilled contract workers for the said job and it is the Contractor who is hiring them but through another contractor.

My question now is whether a Contractor can engage workers directly or indirectly without having a licence or registeration?

Would appreciate your views on the same.

Thanks & regards,

Arvind Tiwari

From India, Delhi
Dear Arvind,

Indeed, a very wise decision to indemnify your organization!

About your supplementary question, firstly, you should have laid down the condition for the contractor, being a licensed contractor, before hiring him. Of course had he been willing to directly control the labour force he could be granted Form V. But, here it seems, the contractor desired to get Form V for license for himself, but also had the intention to oblige another person to be introduced as a sub-contractor to train him as a would be contractor for the time to come due to his own personal interests.

However, if at all your organization has awarded the contract to the fellow, you need not worry about that. Let him hire the contract workers directly or indirectly. The only thing is that the interests of the organization are served and the organization is indemnified properly. The contractor and sub-contractor, both, are liable for fulfilling the conditions of the CL (R&A) Act and Rules. You only have to fulfill the liability of the PE as provided in the Act and the Rules.

P S Dhingra

Vigilance & Management Consultant

Dhingra Consultancy Group

New Delhi

From India, Delhi
Dear All,
Could you all please suggest for the license that needs to be taken in this sort of agreement where PE has hired a contractor and the contractor hires 4-5 Subcontractors for his use, then form 5 has to be issued on whos's name.
Also the contractor only or the subcontractors as well will go for taking license to there name please advise on this, & please advise on the process of taking the license from labor office if contractor has taken license in past for all 1 + 4 contractors + subcontractors.
Please advice on this

From India, Mumbai
Dear all , Need to ask .. If company had agreement with contractor only, then why company would be give form 5 to sub-contractor.
From India, Delhi
Dear All,
Is there any legal obligation or necessary check list for prior appointing a labour contractor except EPF, ESIC, P.TAX, Service Tax & Contract Labour registration.
Please provide me details of requirements.
Thanks & regards,

From India, Calcutta

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