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When a contractor has got an independent code number, his or her liabilities get increased vis-à-vis the employees. On allotment of code number, the Provident Fund Authorities recognize the contractor as ‘establishment’ since it has complied with all the prescribed conditions. A principal employer cannot be held responsible for the omissions and commissions of the contractor’s employees. The Scheme of the Contract Labour (Regulation & Abolition) Act stipulates that the principal employer will not be supervising the workers of the contractor otherwise the contract labour system will be rendered as sham, ruse and camouflage as held in in Steel Authority of India Ltd. vs National Union Water Front Workers, 2001 LLR 961 (SC).