Bombay HC Dismisses IIT Bombay's Appeal Against Payment Of Gratuity To Contract Workers

On 4th October, a Single Bench of the Bombay High Court comprising of Justice Sandeep V. Marne heard a petition filed by Indian Institute of Technology, Bombay (“IIT Bombay”) challenging the order passed by Assistant Labour Commissioner (“Central”) acting as Controlling Authority under the Payment of Gratuity Act 1972, (“PG Act”), later then upheld by the Appellate Authority. The orders had allowed applications filed by Respondent i.e., the employees of the petitioner and directed payment of gratuity to them. Background facts Petitioner, IIT-Bombay, is a premier educational institute in technology and engineering disciplines and established under the provisions of the Institute of Technology Act, 1961. Petitioner has employed regular staff for conducting various study and academic programs. Various projects undertaken by Petitioner are implemented by itself or through collaboration of private or government organisations. To maintain the infrastructure and execution of various projects, Petitioner needs manpower of skilled, semi- skilled and unskilled in nature. For provision of such manpower, Petitioner engages various contractors for supply of required labour force. According to Petitioner, the Respondents were few such contract labourers provided by various contractors engaged by it for execution of various work at the campus as well as on projects undertaken by IIT, Bombay. The Respondents complained before the Controlling Authority about the non-payment of gratuity by the Petitioner. The Controlling Authority issued notices, and the Petitioner filed its reply denying existence of any employer-employee relationship as well as responsibility to pay gratuity to the Respondents. The Controlling Authority, however, held that Petitioner was liable to pay gratuity to Respondents and further directed Petitioner to pay simple interest @10% per annum on the amounts w.e.f. the dates of retirement of each of the Respondents, till the date of actual payment. The Petitioner filed Appeal before the Appellate Authority challenging the orders passed by the Controlling Authority and deposited the principal amount of gratuity with the Appellate Authority. Appellate Authority, however, dismissed Petitioner's Appeal causing them to file the present Petitions challenging the orders passed by the Controlling and the Appellate Authority. The Petitioners argued that Respondents are employees of the Contractor, who alone is responsible for payment of gratuity as per the terms and conditions of the work orders. They further highlighted that they did not control or supervise the Respondents. They relied upon judgment of Bombay HC in Cummins (I) Ltd. V/s. Industrial Cleaning Services and Others, 2017 (3) Mh.L.J. 294 to support of their contention that obligations under the Contract Labour (Regulation and Abolition) Act 1970 cannot be superimposed under the PG Act. In Cummins (I) Ltd. it was held that in case of workmen of a contractor, the responsibility of payment of gratuity is of the contractor and not of the principal employer. The Petitioners claimed that the Competent Authority has misinterpreted Section 2(f)(i) of the PG Act to erroneously hold that they are the employer just because the Director of IIT was seen to have ultimate control over the affairs of the establishment. Further, they submitted that the Appellate Authority erroneously hold the same. Under the Work Orde r executed with contractors also, the contractor alone was responsible for payment of gratuity. The Respondents, on the other hand, submitted that there have been different contractors, under whom they have worked; moreover, the definition of the term 'employer' under the PG Act is broad while the Cummins (I) Ltd was delivered taking into consideration the narrow definition in the unamended Act. Thus, the ratio of the judgement has no application in the present case. Further, the Respondents themselves relied on the judgment of the Apex Court in State of Punjab Vs. Labour Court, Jullundur and Ors. 1979 AIR 1981, claiming that the Controlling Authority can determine the issue of existence of employer-employee relationship as PG Act is a complete code. Work Orders where no condition had been imposed on the contractor for payment of gratuity were referred to. Further Respondents argued that filing multiple claims against several contractors is not feasible. Moreover, they cannot be punished for non-impleadment of contractors IIT, Bombay failed to provide such list of contractors even after a specific application was filed asking for same. They contended that considering officials of IIT gave instructions for performance of work, the Authorities have rightly inferred that Petitioner is the real employer. Findings of the Court Justice Sandeep V. Marne considered it not necessary to delve into the exact authority who appointed the Respondent but found it necessary to...

Bombay HC Dismisses IIT Bombay's Appeal Against Payment Of Gratuity To Contract Workers

Shreya Shekhar

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