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2025 Supreme(Online)(Del) 9940
IN THE HIGH COURT OF DELHI AT NEW DELHI
Renu Bhatnagar, J
M/S INDRAPRASTHA GAS LIMITED – Appellant
Versus
AMBRISH KUMAR – Respondent
W.P.(C)-3743/2013
For the Appellants/Petitioners: Raj Birabl, Raavi Birbal
For the Respondents: Durgesh Kr. Pandey, Ritika Davis Franklin
Burden of proving employer-employee relationship lies on workman; failure to produce primary employment documents and absence of pleading of sham contract renders Labour Court's finding perverse.
Headnote:(A) Industrial Disputes Act, 1947 - Sections 2(oo), 25F, 10(4A) - Contract Labour (Regulation and Abolition) Act, 1970 - Burden of proof of employer-employee relationship lies on the workman - Initial burden must be discharged by producing cogent and credible evidence such as appointment letter, salary slips, statutory deductions (PF/ESI) - Government undertakings cannot make appointments without following prescribed recruitment procedures - Finding of sham contract cannot be recorded without specific pleading - A coordinate bench decision on identical issue is binding and attains finality - Labour Court's findings based on insufficient or irrelevant evidence are perverse and liable to be set aside in writ jurisdiction. (Paras 31-35, 38-42, 46-49)
(B) Industrial Disputes Act, 1947 - Section 17B - Wages paid under Section 17B during pendency of proceedings treated as compensation and need not be refunded when award is set aside. (Para 53)
Facts of the case:
The petitioner (management) challenged an Award dated 05.02.2011 passed by the Labour Court which reinstated the respondent (workman) with continuity of service and full back wages. The workman claimed he was employed as a Driveway Sales Man since 2001 and was illegally terminated in 2005. The management denied any employer-employee relationship, asserting that the workman was employed by a third-party contractor. The Labour Court held the operating agreement between the management and the contractor to be a sham and bogus agreement and found that the workman was an employee of the management. The management filed the present writ petition.
Findings of Court:
The High Court held that the workman failed to discharge the initial burden of proving employer-employee relationship. He admitted not having any appointment letter, salary slips, or evidence of statutory deductions and stated he received salary in cash. The documents he relied upon (identity card, Diwali gift list, ex-gratia payment) did not bear the official seal or authorized signatures and were insufficient. The management, on the other hand, produced the contract agreement, wage registers, PF and ESI records of the contractor showing the workman's name, and summoned witnesses from PF and ESI departments to confirm that the contractor paid wages and statutory benefits. The Labour Court erred in holding the contract sham without any pleading by the workman. A coordinate bench had already decided a similar claim of the same workmen against the management, holding that they were contract labour, and that decision was binding. Accordingly, the impugned award was set aside.
Issues: 1. Whether the workman proved the existence of an employer-employee relationship with the management? 2. Whether the Labour Court could hold the contract as sham and bogus despite no such pleading by the workman? 3. Whether the earlier coordinate bench decision in the regularization claim operated as a binding precedent on the same issue?
Ratio Decidendi: The initial burden to prove an employer-employee relationship rests on the workman. Without primary employment documents (appointment letter, pay slips, statutory deduction records), the claim fails. A government undertaking cannot appoint employees informally. The Labour Court cannot go beyond pleadings to make a finding of sham contract. A prior binding decision on the identical issue between substantially the same parties settles the matter and must be followed. Result : The petition is allowed. The impugned Award dated 05.02.2011 is set aside. The workman is not liable to return the wages received under Section 17B of the ID Act, which are treated as compensation.
JUDGMENT
RENU BHATNAGAR, J.
1. The challenge in the present writ petition is to the Award dated 05.02.2011 passed by the learned Labour Court, Karkardooma Court , New Delhi (hereinafter referred to as, ‘Labour Court’) in the Industrial Dispute (‘ID’) No. 107/2006 titledSh. Ambrish Kumar versusIndraprastha Gas Ltd,whereby the learned Labour Court granted relief to the respondent reinstating him with continuity of service and full back wages from the date of termination till reinstatement, along with all consequential benefits. The learned Labour Court, on basis of the finding that the operating agreement between the Principal employer/ Indraprastha Gas Ltd (hereinafter referred to as, ‘IGL’)/petitioner and M/S Pratap Enterprises (hereinafter referred to as, ‘Contractor’) was a sham and bogus agreement, just to camouflage/deny the claimant the benefits of a regular employment, has held that the respondent was illegally terminated by the petitioner.
2. The impugned Award has been passed in a direct Claim filed by the respondent/workman under Section 10(4A) of the Industrial Dispute Act, 1947 (hereinafter referred to as ‘ID Act’) before the learned Labour Court whereby the respondent had claimed that he was employed with the petitioner/IGL as Driveway Sales Man (‘DSM’) since 26.07.2001 on a salary of Rs. 3980/- per month and his services were terminated by the petitioner on 27.09.2005 illegally. That the petitioner/IGL had failed to pay the salary of September 2005, bonus and other basic service benefits such as leave, overtime despite demands. It was further stated that the Respondent along with other workmen had raised an Industrial Dispute being ID No. 99/2003 for regularising of his services with the management/petitioner and another dispute being ID No. 66/2003 regarding the general demand which are pending before the Industrial Tribunal. It was further stated that the respondent was terminated illegally by the petitioner/management on 27.09.2005 under Section 2(oo) read with Section 25F of the ID Act.
3. On the other hand, the petitioner/Management, in its written statement filed before the Labour Court, denied the existence of any employer-employee relationship between IGL/petitioner and the respondent alleging that the respondent was employed by M/S Pratap Enterprises, a third party contractor, engaged by the IGL under a valid contract. The petitioner further claimed to have obtained registration as a principal employer under the provisions of the Contract Labour (Regulation and Abolition) Act, 1970, and stated that the Contractor had a valid licence in accordance with the said Act. It is stated that the respondent was engaged and working under the direct supervision and control of the Contractor and the respondent used to receive his salary from the Contractor who used to provide statutory benefits to the respondent such as leave, attendance etc. and the respondent was under the Contractor’s disciplinary control and supervision. It was further contended that all statutory benefits such as provident fund and ESI contributions, were provided by the contractor who used to deduct the same and deposit in its own account with the respective department. As per the information received from the Contractor, the respondent was duly paid his salary until the month he worked for the contractor along with bonus. It is stated that the contractor is not made a party to this dispute, for the reasons best known to the respondent/workman.
4. In rejoinder filed by the respondent before the learned Labour Court, the respondent reaffirmed his submissions and denied any knowledge regarding the Contractor.
5. After considering the pleadings of the parties, the learned Labour Court framed the following issues:
(i) “Whether there is relationship of employer and employee between the parties?
(ii) Whether the workman is entitled to reinstatement with consequential benefits including full back wages?
(iii) Relief.”
6. Thereafter, the respondent was examined
