Madhu-ji,
I will disagree.
The wording is "under an agreement or other arrangement for employment in an establishment in another State"
There are many cases where contractors recruit in a state because they can easily get people there and then deploy them elsewhere.
For example, 5 of the top security agencies in the country have offices in Bihar, only for the purpose of recruiting and training security guards who are then deployed all over the country. Their employment is in Bihar and not in Gujarat or Mumbai. Similarly, in the construction line, entire gangs of specialised teams are recruited from West Bengal, bihar, Orissa and Western UP, for construction projects in Delhi, Maharashtra, Andhra (must be more places, I am not personally aware). These are very efficient masonry gangs who are good and fast because they have been working together for a long time. They are used for bricklaying, boundary walls, even main walls of factory buildings. The act is basically meant to cover those type of cases,
If he has come to the work state on his own, and he is recruited there, he is not covered under the act because, he is not recruited by or through a contractor in one State (meaning his home state)...
The reason I talked about where the contractor is based, is because if he has a permanent establishment in the home state (as I have said in the examples above), the labour offices tend to assume that the person was recruited in that state. In that case, it would be necessary to have proof that the worker came on his own to the work state.
Hope I clarified my point.