Liberal Interpretation Of ID Act Can’t Justify Relief In Cases Where Workman Has Failed To Establish Employee-Employer Relationship: Delhi High Court

The Court also reiterated that a workman is not the direct employee of the principal employer if engaged through a contractor.

​The Bench of Justice Renu Bhatnagar, while relying on the judgment of the Delhi High Court in Vinay Sharma & Ors v. Indraprastha Gas Ltd & Anr., 2014, held, “Accordingly, in view of the findings of the co-ordinate bench of this court in the case of Vinay Sharma(supra), the issue has attained finality that the workman is not the direct employee of the management and is an employee of the contractor and submission of the counsel for petitioner-management to this effect finds force with me… Although the Industrial Disputes Act is a beneficial legislation and must be interpreted liberally to advance the welfare of the class for which it is enacted, such liberal interpretation cannot justify the grant of relief in cases where the claimant has failed to establish the essential foundational facts through credible evidence. The benevolent object of the statute cannot be invoked to overlook the absence of proof or to confer relief unsupported by the record.”

Senior Advocate Raj Birbal appeared on behalf of the Petitioner, whereas Advocate Durgesh Kr. Pandey appeared for the Respondents.

Factual Background

A claim was filed by the Respondent-Workman under Section 10(4A) of the ID Act before the Labour Court, whereby the Respondent had claimed that he was employed with the petitioner/IGL as a Driveway Sales Man (‘DSM’) on a salary of Rs. 3980/- per month and his services were terminated by the Petitioner illegally.

It was the case of the Petitioner that there is no 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.

A writ petition was filed challenging an Award passed by the Labour Court in the Industrial Disputes case, where the 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.

Contention of the parties

The core submission advanced by the Petitioner was that the very foundation of the respondent/workman’s claim, namely the assertion that he was employed by the Petitioner, was never established. The Petitioner said that the Respondent was not its employee, but rather an employee of M/s Pratap Enterprises, a contractor duly engaged by IGL. It was argued that the Respondent neither impleaded the contractor as a party, nor produced any appointment letter, salary slip or muster roll. In cross- examination, the respondent admitted that he did not possess any such documents.

The Respondent-workman submitted that he was employed by the Petitioner as a DSM from 2001, and he duly performed his duties diligently under the management’s direct supervision. However, the management allegedly reduced his salary to ₹3,029 without notice and denied him basic facilities like leave and overtime. In 2005, his services were terminated after he refused to sign blank papers at the head office. He argued that this termination was illegal and constitutes retrenchment, as it was carried out without a formal inquiry, notice, or compliance with Section 25F of the ID Act.

Observations of the Court

The Court placed heavy reliance on Vinay Sharma (supra), which also laid down a triple test, the triple test, i.e. (i) who pays the salary; (ii) who has power to remove/dismiss from service or initiate disciplinary action against the workman concerned; (iii) who has discretion and control over the employees.

The Court said, “It is a well-settled principle of law that the initial burden of proving the existence of an employer–employee relationship lies upon the person who asserts such a relationship. When a claimant alleges that he is an employee of a particular establishment and the management denies this assertion, the obligation to produce cogent, credible, and convincing evidence to substantiate the claim rests squarely on the claimant. Only upon discharge of this initial burden, does the onus shift to the management to rebut the evidence and disprove the claim.”

The Court, agreed with the argument advanced by the Petitioner, and said that the existence of documents such as an appointment letter, monthly pay slips, or evidence of statutory deductions, like PF or ESI, are the best indicators of an employment relationship, and in their absence, the claimed relationship cannot be presumed.

“In the said case of Vinay Sharma (supra), the coordinate bench court had considered all the documents as put forth by the respondent herein before the learned labour court to claim the relationship. The said documents were also considered in the aforementioned case by the Learned Industrial Tribunal, which rejected those documents And did not find them sufficient to prove the employer-employee relationship between the workman and IGL/management. The said decision of learned Industrial Tribunal was upheld by the co-ordinate bench of this court in Vinay Sharma (supra).”, the Court said.

Conclusion

Accordingly, the Court set aside the order passed by the Labour Court. 

Cause Title: M/S Indraprastha Gas Limited v. Ambrish Kumar [Neutral Citation: 2025:DHC:10933]

Appearances:

Petitioner: Senior Advocate Raj Birbal with Advocate Raavi Birbal

Respondent: Advocates Durgesh Kr. Pandey and Ritika Davis Franklin