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PEPSU Road Transport Corporation Wins Appeal: No for Outsourced Staff Without
In a significant ruling that clarifies the boundaries of employment rights for outsourced workers, the has held that employees engaged through a private cannot claim merely by virtue of long service with a government corporation. The Division Bench of Justice Harsimran Singh Sethi and Justice Minderjeet Yadav allowed a batch of appeals filed by the , setting aside a Single Judge order that had directed the of such employees.
The Dispute: Outsourced Workers Seeking
The case involved employees who had been working as Drivers, Conductors, and in other roles for PRTC, but through an , . The appointments were made by the private agency, and the employees were then deployed with PRTC under a . After working continuously for over a decade, the employees filed a seeking , relying on judgments in and , which held that long-serving temporary employees may be entitled to .
The Single Judge had accepted their plea, treating PRTC as the
"
"
and directing
along with benefits like the Old Pension Scheme. PRTC challenged this order, arguing that there was no
between the corporation and the workers.
PRTC's Argument: No Employer-Employee Relationship
Senior counsel for PRTC contended that not a single document existed to show that the corporation had ever appointed the respondents.
"The advertisement was issued by the private agency,
were issued by the private agency, and even today, there is no document conferring any status—
—upon the respondents by the PRTC,"
the court noted. The corporation argued that the Division Bench's earlier decision in
Nishan Singh vs.
() squarely covered the issue, holding that cannot claim .
Employees' Stand: Work and Control Determine Employment
Representing the workers, senior counsel argued that the nature of duties performed, the exercised by PRTC, and the provisions of the , justified . They also relied on , which permits hiring manpower from outsourcing agencies, arguing that such workers should be treated as PRTC employees.
Legal Analysis: Documentary Proof of Employment Is Essential
The Division Bench meticulously examined the law on master-servant relationships. Citing the 's recent decision in
The Joint Secretary, vs. Raj Kumar Mishra
(
), the Bench held that
"a
has to be established on paper."
Merely performing duties or being under
does not create an employment relationship.
The court further relied on vs. K. Jayaram (), where the categorically held that cannot claim or even after long service. The Bench distinguished the Jaggo case, noting that it applied only where employees were initially appointed by the state and later transferred to an to deny them benefits. In the present case, the workers were recruited by the agency from day one.
The court also examined the
Act and the
Regulations. Section 6 of the Act allows taking
on contract only if the entity is financially capable, and no such finding was recorded by the Single Judge. The Regulations define "
" as one appointed by the PRTC, not through an agency.
"An appointment through a private contractor under an outsourcing arrangement cannot be termed as a temporary appointment by the PRTC,"
the Bench observed.
Key Observations from the Judgment
"For a person to claim employment under any organization, a has to be established on paper. In the present case, admittedly, the only document, which the private respondents have in their favour, is showing that they were posted at various places doing different nature of work. This clearly would not establish ."(Para 20, quoting Raj Kumar Mishra )
"The test which would actually throw light... is whether the relationship, which is direct between two parties in whatever manner, can be differentiated with a relationship which had no direct connection... but rather the relationship is through a third-party which in the present case is the contractor."(Para 23, quoting K. Jayaram )
"There has to be a clear distinction between a appointed by the Corporation and an outsourced employee provided by an ."(Para 46)
"Not even a single observation has been made by the Hon’ble of India to the effect that an outsourced employee, who was recruited through an at the first instance, would also be treated as an employee of the State... to claim the benefit of regularisation."(Para 53)
The Verdict: Appeals Allowed, Denied
The Division Bench concluded that the Single Judge's order was
"not supported by the facts and the law"
and set it aside. The writ petitions filed by the employees were dismissed. The court emphasized that granting
in the absence of a
would impose an unjustified financial burden on PRTC and undermine
.
This judgment reaffirms that in the context of public employment, the path to is paved by of appointment, not merely by the length of service or the nature of duties performed through a third party. The decision provides clarity for government corporations relying on outsourcing models, making it clear that they are not automatically liable to absorb agency workers into their permanent rolls.
