Contractors can be held liable for compensation even if no direct contract exists, based on their control over employment practices under the Industrial Disputes Act.

JUDGMENT :

M.K. THAKKER, J.

1. Rule, returnable forthwith. Learned advocates for the respective respondents waive service of notice of Rule.

2. Since the issue raised in the these petitions are similar, they are being decided by a common judgment. The facts of Special Civil Application No. 7870 of 2025 are taken for the purpose of adjudication.

3. This petition is filed challenging the award dated 04.10.2024 passed by the learned Labour Court, Valsad, whereby the termination of the petitioner was held to be illegal and a lumpsum compensation of Rs.1,00,000/- was awarded in lieu of reinstatement and backwages.

4. As per the case of the petitioner before this Court, the dispute was raised by the workman under Section 2A of the Industrial Disputes Act, 1947 (hereinafter referred to as ‘the I.D. Act’) seeking reinstatement with backwages from the date of termination i.e. 22.03.2020, which came to be referred to the learned Labour Court, Valsad by the Assistant Labour Commissioner on 23.03.2021. Initially, the proceedings were instituted against the principal employer and the contractor, namely Kaushal Agency; subsequently, Yashraj Agency was also impleaded under Section 10(1) of the I.D. Act. It appears that six different workmen approached the learned Labour Court by filing separate References against the contractors, namely Kaushal Agency, Yashraj Agency, and R.M. Enterprise. In the present case, the petitioner appeared before the Reference Court and adduced evidence through one Vipulbhai Subhashbhai Mistry, proprietor of Yashraj Agency, who was also cross-examined by the concerned workman. Upon consideration of the evidence on record, the learned Labour Court passed the award in favour of the respondent, directing the present petitioner-contractor to pay lumpsum compensation in lieu of reinstatement and backwages, which award is under challenge before this Court.

5. Heard the learned advocate Ms.Mita Panchal for the petitioners and learned advocate Mr.Divyang Ramani for the respondent No.2 and learned advocate Mr.Sunil Agarkar for the respondent No.3.

6. Learned advocate Ms. Mita Panchal for the petitioner submitted that the contract with the petitioner– Kaushal Agency was executed for supplying manpower during the period between 2012 to 2016. It is submitted by the learned advocate Ms. Panchal that after 2016 the said contract was not extended any further; however, as per the claim of the workman, the termination is alleged to have taken place on 22.03.2020. Thus, instead of granting relief against the principal employer, the learned Labour Court has erroneously saddled the petitioner– contractor with the liability to pay lumpsum compensation.

6.1 Learned advocate Ms. Panchal further submitted that as per the averments made in the statement of claim, the workman himself alleged that he was working under the principal employer, namely J.K. Files (India) Limited. The record reflects that the contractors were engaged by the principal employer, and under different contractors, wages were being disbursed. It is contended by the learned advocate Ms. Panchal that the alleged termination was claimed against the principal employer; however, the impugned award has wrongly fastened the liability upon the contractor. It is further submitted that during the cross- examination of the concerned workman, it was admitted that no documentary evidence was adduced to establish any claim against the petitioner–contractor, and therefore also impugned award deserves interference.

6.2 It is submitted by the learned advocate Ms. Panchal that as per the agreement forming part of the record, no fresh contract was executed after 2016. The licence produced before the Labour Court at Exh. 18/2 also corroborates that the