Introduction:
In a significant judgment reaffirming settled principles of labour jurisprudence, the Delhi High Court has held that a workman engaged through a contractor cannot be treated as an employee of the principal employer unless a clear and direct employer–employee relationship is established through credible and reliable evidence. The Court cautioned that while labour laws are beneficial in nature, they cannot be stretched to grant relief where foundational facts remain unproven. The ruling reiterates that the burden of proof squarely lies on the claimant-workman to establish such a relationship and that mere production of doubtful or unauthenticated documents is insufficient.
The judgment was delivered by Justice Renu Bhatnagar in Indraprastha Gas Limited v. Ambrish Kumar, W.P.(C) 3743/2013. The dispute arose when Ambrish Kumar, who claimed to be working as a Driveway Sales Man (DSM) with Indraprastha Gas Limited (IGL) since 2001, alleged that his services were illegally terminated in 2005 in violation of the Industrial Disputes Act, 1947. He approached the Labour Court claiming reinstatement with full back wages, asserting that he was a direct employee of IGL.
The Labour Court accepted the workman’s claim, holding that the contract between IGL and the contractor was a sham and that IGL exercised complete control and supervision over the workman. Consequently, the Labour Court directed reinstatement with full back wages. Aggrieved by this award, IGL approached the Delhi High Court by way of a writ petition, contending that the Labour Court had erred in law and on facts by ignoring crucial evidence and settled legal principles governing contract labour.
Arguments of the Management (Indraprastha Gas Limited):
IGL strongly contested the Labour Court’s award, arguing that the workman was never a direct employee of the company and was, at all material times, engaged through an independent contractor. It was submitted that the workman failed to discharge the initial burden of proving an employer–employee relationship, which is a sine qua non for claiming protection under the Industrial Disputes Act.
The management pointed out that the workman could not produce any appointment letter, service record, salary slips, muster rolls, or PF/ESI documents to show his employment with IGL. It was emphasized that IGL, being a government undertaking, follows a strict and transparent recruitment procedure, and no appointment can be made without issuance of an appointment letter or adherence to statutory recruitment norms. None of these procedures were followed in the present case, clearly indicating that the workman was not directly employed by IGL.
IGL further argued that the workman was under the direct supervision and control of the contractor, not IGL. Salary was paid in cash by the contractor, without any statutory deductions, which itself indicated a contract labour arrangement. The management placed reliance on documentary evidence such as the contract agreement between IGL and the contractor, wage registers, attendance records, and PF and ESI documentation, all of which reflected the workman’s name as an employee of the contractor.
It was also highlighted that the workman had earlier sought regularisation, which was denied precisely because he was a contract labourer and not a regular employee. This finding had attained finality. Additionally, IGL argued that the workman failed to prove that he had completed 240 days of continuous service in the year preceding his alleged termination, a statutory requirement under Section 25F of the Industrial Disputes Act for claiming illegal retrenchment.
Relying on precedents such as Gopal v. Bharat Sanchar Nigam Limited and Vinay Sharma & Ors. v. IGL, the management contended that courts have consistently held that contract labour cannot be treated as direct employees merely on the basis of control at the workplace, and that sham contracts must be proved through cogent evidence, not presumptions.
Arguments of the Workman (Ambrish Kumar):
On the other hand, the workman asserted that he was directly employed by IGL as a Driveway Sales Man since 2001 and was continuously working at IGL’s CNG stations under its control and supervision. He argued that the so-called contractor arrangement was merely a camouflage to deny him statutory benefits and security of tenure.
The workman contended that his termination in 2005 was illegal and arbitrary, as it was carried out without issuing any notice, conducting any domestic enquiry, or complying with the mandatory provisions of Section 25F of the Industrial Disputes Act. According to him, the management exercised full control over his duties, deployment, and working conditions, which established a direct employer–employee relationship.
To substantiate his claim, the workman relied upon documents such as an identity card, salary sheets, a Diwali gift record of 2001 bearing his name, and an ex-gratia payment record allegedly issued to IGL employees and contingent staff. He argued that these documents demonstrated his association with IGL and showed that he was treated at par with regular employees.
It was further argued that IGL failed to produce any convincing evidence to show how and when the workman’s employment was transferred to a contractor, and that the Labour Court had rightly drawn an adverse inference against the management for withholding relevant records. The workman maintained that the Industrial Disputes Act being a welfare legislation must be interpreted liberally in favour of workmen and that technicalities should not defeat substantive justice.
Court’s Judgment:
After examining the pleadings, evidence, and rival submissions, the Delhi High Court allowed the writ petition filed by IGL and set aside the Labour Court’s award. Justice Renu Bhatnagar held that the Labour Court had committed a serious error in law by shifting the burden of proof onto the management and by treating unverified documents as conclusive proof of employment.
The Court reiterated the well-settled principle that the burden of proving the existence of an employer–employee relationship lies squarely on the claimant-workman. In the present case, the workman failed to discharge this burden. The documents relied upon by him—such as the identity card, Diwali gift record, and ex-gratia payment list—were found to lack authenticity, as they did not bear the seal or stamp of IGL or the signatures of any authorised officer. The Court held that such documents, in the absence of corroboration, cannot establish a legal relationship of employment.
The Court noted that the workman had no appointment letter, was unaware of the recruitment process, and admittedly received wages in cash without PF or ESI deductions—factors which strongly militated against his claim of being a direct employee of a government undertaking. In contrast, the documents produced by IGL—including the contractor agreement, wage registers, attendance records, and statutory compliance documents—clearly showed that the workman was on the rolls of the contractor.
Relying on Gopal v. Bharat Sanchar Nigam Limited, the Court held that a government organisation cannot make appointments dehors prescribed recruitment rules, and in the absence of an appointment letter, a claim of direct employment is inherently suspect. The Court also relied on Vinay Sharma & Ors. v. IGL, where similar claims by workmen seeking regularisation were rejected on the ground that they were engaged through contractors.
The Court emphasized that although the Industrial Disputes Act is a beneficial legislation, it cannot be interpreted to grant relief in the absence of foundational facts. Sympathy or equity cannot substitute proof. The finding of the Labour Court that the contract was a sham was held to be unsupported by evidence and based on conjecture.
Accordingly, the award directing reinstatement with full back wages was set aside. However, the Court clarified that the wages received by the workman under Section 17B of the Industrial Disputes Act during the pendency of proceedings would be treated as compensation and need not be refunded.