Principal employer liability for unpaid contract labour wages extends to arrears when the contractor defaults in payment.

Section 21 places the primary duty to pay wages to contract labour on the contractor, but if the contractor makes short payment or defaults, the principal employer becomes statutorily liable to pay the full wages or unpaid balance. The principal employer may then recover the amount from the contractor by deduction from sums due under the contract or as a debt. In this context, "wages" includes arrears and other unpaid amounts due to the workmen. The principal employer was therefore held liable for the arrears of wages payable to contract labour, and the challenge to that liability failed.

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Issues: Whether the principal employer is liable to pay the unpaid balance of wages to contract labour when the contractor makes short payment or defaults in payment.

Analysis: Section 21 places primary responsibility on the contractor to pay wages to contract labour, but where the contractor fails to pay in full or makes short payment, the principal employer becomes statutorily liable to pay the full wages or unpaid balance. The principal employer may thereafter recover the amount from the contractor by deduction from amounts payable under the contract or as a debt. The term wages in this context includes arrears and unpaid balance due to the workmen.

Conclusion: The principal employer is liable to pay the arrears of wages to contract labour, and the challenge to that liability fails.

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