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High Court: Must Bear Ultimate Liability for Wages Despite Contractor Paying
The has delivered a significant ruling affirming that a cannot shield itself from statutory wage obligations toward merely by assigning wage disbursement duties to a contractor. Justice Sanjay Parihar, presiding over two connected writ petitions, held that the immediate responsibility to pay wages and the are , and that contractual arrangements must yield to labour welfare statutes.
The Dispute Over Security Personnel Wages
The cases arose from the engagement of (the agency) by (AFCON) to provide security guards at AFCON's Jammu–Udhampur National Highway project. Following an inspection, the found that the security personnel had not been paid wages according to revised statutory rates, had not received wages for , and had not been compensated for overtime work beyond the prescribed eight-hour shift.
Proceedings under the resulted in two separate awards. The first, dated , directed the agency to pay and compensation of ₹15,42,532 to 336 workmen, along with ₹3,19,261 for . The agency challenged this award, arguing that the ultimate financial burden should fall on AFCON as the . The second award, dated , fastened liability for and compensation jointly on both the agency and AFCON. AFCON challenged this award, relying on contractual clauses that placed full responsibility for wage payment and labour law compliance on the agency.
Contractual Terms vs.
The court noted that the core controversy was not the entitlement of the workmen to minimum wages and overtime—which was undisputed—but rather the inter se liability between the contractor and the . While the agency argued that AFCON, as the , must ultimately bear the financial burden, AFCON contended that the contractual terms were clear and binding.
Justice Parihar observed that the security personnel were deployed exclusively at AFCON's project site, and their attendance, shifts, and operational utilization were substantially under AFCON's control. The work order of prescribed an eight-hour duty, yet overtime was extracted. The court emphasized that where the controls the deployment and working hours, it cannot disassociate itself from the financial consequences of overtime work.
Crucially, the court pointed to , which, while placing initial wage disbursement on the contractor, also provides for the 's and imposes a to make payment in case of default by the contractor. This statutory scheme, the court held, does not permit the to remain detached from wage payments.
AFCON's Inconsistent Conduct
A significant factor was AFCON's own conduct. In the dispute that led to the
award, AFCON had settled the claims of 91 out of 100 similarly situated workmen. The court found it inconsistent for AFCON to then resist the claims of the remaining nine workmen merely because they pursued adjudication rather than settlement.
"The source and character of the claims remain the same,"
the court observed, rejecting any distinction based on the mode of dispute resolution.
Key Observations
In his judgment, Justice Parihar made several pivotal observations:
"The
to disburse wages and the ultimate
to bear the financial burden are
."
"The statutory scheme does not permit the
to remain altogether detached from the payment of wages merely because the
of disbursement has contractually been entrusted to the contractor."
"Where the personnel are deployed at the project site and their working hours and operational requirements are governed by the exigencies of the
's project, the
cannot altogether disassociate itself from the financial consequences flowing from work extracted beyond the statutorily prescribed hours."
The Final Ruling
The court disposed of both petitions with distinct outcomes. In OWP No. 698/2014, the award of was set aside because the authority below had passed it without impleading AFCON, which was a . The matter was remanded to the competent authority with a direction to implead AFCON and reconsider the claims afresh. The amount deposited with the Registry was ordered to be transferred to the authority below and kept in fixed deposit pending fresh adjudication.
In OWP No. 2126/2017, the court upheld the award of to the extent that it directed payment of and compensation. However, the court modified the award to hold AFCON solely responsible for satisfying the entire amount, noting that the authority below had erred in fastening liability on the agency. The petition was partly allowed accordingly.
This judgment reinforces the principle that contractual allocations of responsibility cannot override statutory protections for workers, and that principal employers who exercise operational control over must bear the for wages, including overtime, when the contractor fails to meet .
