The Delhi High Court allowed Indraprastha Gas Limited’s (IGL’s) writ petition and quashed the 2011 Labour Court award that had ordered reinstatement of the workman with continuity of service and full back wages.
IGL filed the writ petition challenging the Labour Court’s award dated 5 February 2011, which had held that the operating agreement with contractor M/s Pratap Enterprises was a sham and had directed reinstatement with full back wages. The workman had directly approached the Labour Court under Section 10(4A) of the Industrial Disputes Act, 1947.
He claimed that he was IGL’s Driveway Salesman (DSM) since 26 July 2001 at a salary of Rs. 3,980 per month and that his salary was later reduced mala fide, basic benefits like leave and overtime were denied, and his services were abruptly terminated on 27 September 2005 without notice, enquiry, or retrenchment compensation.
IGL’s key defence was that there was no employer-employee relationship since the workman was employed by the contractor under a valid contract labour arrangement governed by the Contract Labour (Regulation and Abolition) Act, 1970.
The Labour Court, relying mainly on some IGL documents such as an identity card, Diwali gift list and ex-gratia payment note, held that the contractor agreement was a camouflage and ordered reinstatement with full back wages.
IGL argued that the burden to prove employer-employee relationship lay on the workman and that he had neither produced any appointment letter, wage slips or muster rolls from IGL nor impleaded the contractor, while IGL had led documentary and departmental evidence proving engagement through the contractor.
The workman invoked the beneficial nature of labour law and contended that his identity card, ex-gratia and gift records showed IGL as the real employer, and that the High Court in writ jurisdiction should not re-appreciate evidence of the Labour Court except where findings are perverse.
The High Court Bench comprising Justice Renu Bhatnagar accepted IGL’s submissions, and held that the Labour Court had travelled beyond pleadings in branding the contract a sham, and that its findings were based on insufficient and unreliable material, warranting interference even in writ.
The Court reaffirmed that the initial burden to prove an employer-employee relationship lies on the person asserting it and cited Workmen of Nilgiri Coop. Mkt. Society Ltd. v. State of Tamil Nadu[1], which held that the workman must first establish the relationship before the onus shifts. It held that the workman’s documents (identity card, Diwali gift sheet, ex-gratia note) lacked seal, signatures or probative value and could not, in the absence of an appointment letter or proof of recruitment process, establish that he was IGL’s direct employee, especially since IGL is a government undertaking that must follow formal recruitment procedures.
The Court noted that IGL had, by contrast, produced the contractor agreement, principal employer registration, contractor licence, wage and attendance records, and PF/ESI records from statutory authorities (EPFO and ESIC) showing the workman as contractor’s employee.
The Court criticized the Labour Court for branding the operating agreement as a sham without any pleading to that effect and for ignoring binding precedent in Vinay Sharma[2], where the coordinate Bench had held DSMs to be contract labour and applied the “triple test” (who pays, who controls, who can dismiss).
The Court clarified that although the Industrial Disputes Act is beneficial and must be interpreted liberally, such liberal interpretation cannot substitute for the workman’s failure to prove foundational facts like employer-employee relationship and 240 days’ continuous service.
In result, the High Court allowed the writ petition and set aside the Labour Court’s award dated 5 February 2011, thereby nullifying the directions for reinstatement with continuity of service and full back wages, and held that the workman was not a direct employee of IGL but of the contractor. The Court further recorded that any wages already received by the workman under Section 17B of the ID Act would be treated as compensation and need not be refunded, relying on the approach earlier taken in Gopal v. BSNL[3].
Appearances:
For the Petitioner: Mr Raj Birabl, Sr. Advocate along with Ms. Raavi Birbal, Adv.
For the Respondent: Mr. Durgesh Kr. Pandey & Ms. Ritika Davis Franklin, Advs.
[1] Workmen of Nilgiri Coop. Mkt. Society Ltd. v. State of Tamil Nadu (2004) 3 SCC 514
[2] Vinay Sharma & Ors v. Indraprastha Gas Ltd & Anr., 2014 SCC OnLine Delhi 383
[3] Gopal v. BSNL, (2014) SCC OnLine Del 3456
