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by sayum
01 August 2026 2:00 PM
Liability under Employee’s Compensation Act Does Not Confer Employment Rights under Industrial Disputes Act - Punjab & Haryana High Court dismissed a writ petition filed by a workman seeking reinstatement under Section 25-F of the Industrial Disputes Act, 1947 (ID Act). The petitioner, Rajpal, challenged the Labour Court's award rejecting his claim for reinstatement against M/s Hafed Oil Mills on the ground that he was employed through a contractor and not directly by the principal employer.
The High Court upheld the Labour Court’s findings that Rajpal had failed to establish a direct employer-employee relationship with the principal employer, relying on evidence, including a contract between the principal employer and the contractor, and prior findings under the Employee’s Compensation Act, 1923 (1923 Act).
Rajpal, the petitioner, worked as a helper at M/s Hafed Oil Mills for two months before suffering a workplace accident that resulted in his left hand being crushed. He received compensation under Section 12 of the 1923 Act based on the Commissioner’s finding that M/s Hafed Oil Mills was the "principal employer."
Subsequently, Rajpal approached the Labour Court under the ID Act, alleging termination without compliance with Section 25-F and seeking reinstatement. The Labour Court rejected his claim, holding that he was engaged through a contractor and was not a direct employee of M/s Hafed Oil Mills.
Rajpal filed a writ petition before the High Court, arguing that the Labour Court erred in its findings and that the principal employer’s liability under the 1923 Act should entitle him to reinstatement under the ID Act.
Key Legal Issues
1. Was there an employer-employee relationship between the petitioner and the principal employer, M/s Hafed Oil Mills?
2. Does liability under Section 12 of the 1923 Act imply direct employment under the ID Act?
3. What is the burden of proof in establishing an employer-employee relationship in disputes under the ID Act?
The High Court reaffirmed that the burden of proving an employer-employee relationship lies on the workman. The Court noted that Rajpal failed to produce evidence, such as an appointment letter or salary records, showing that he was directly employed by M/s Hafed Oil Mills.
The Court relied on G.M. Tanda Terminal Power Project v. Jai Prakash Srivastava (2008), which held: “A person who alleges the existence of an employer-employee relationship must prove it. Mere assertions are insufficient without documentary or corroborative evidence.”
The Labour Court had already examined the evidence, including a contract (Exhibit M-4) between the principal employer and the contractor, which established that Rajpal was engaged by the contractor. The Court found no reason to interfere with these factual findings.
The petitioner argued that since the Commissioner under the 1923 Act held M/s Hafed Oil Mills liable as the principal employer for compensation, this should imply a direct employment relationship under the ID Act. The High Court rejected this argument, clarifying that the two statutes serve different purposes.
The Court observed: “Liability under Section 12 of the 1923 Act imposes a statutory obligation on the principal employer to pay compensation for injuries sustained by workmen engaged through a contractor. However, this does not establish a direct employer-employee relationship under the ID Act.”
The Labour Court and the High Court relied on the contract (Exhibit M-4) executed between M/s Hafed Oil Mills and the contractor, which confirmed that Rajpal was employed by the contractor and not the principal employer.
The Court further noted that the petitioner himself admitted during proceedings under the 1923 Act that he was engaged through the contractor. This admission undermined his claim of direct employment with M/s Hafed Oil Mills.
The High Court emphasized the limited scope of judicial review in cases involving factual findings by the Labour Court. It found no jurisdictional error or factual infirmity in the Labour Court’s award, which was based on evidence and supported by legal precedents.
The Court held: “The Labour Court rightly concluded that there was no employer-employee relationship between the petitioner and the principal employer. The findings were based on evidence and require no interference.”
1. International Airport Authority of India v. International Air Cargo Workers’ Union (2009)
o Affirmed the principle that the burden of proving an employer-employee relationship lies on the workman.
2. G.M. Tanda Terminal Power Project v. Jai Prakash Srivastava (2008)
o Held that a workman must prove the employer-employee relationship, and mere assertions are insufficient.
3. Koki Mansukh Rana v. Patel Natha Ramji (Gujarat High Court, 1983)
o Discussed the scope of principal employer liability under Section 12 of the 1923 Act.
The High Court dismissed the writ petition, upholding the Labour Court’s award that rejected Rajpal’s claim for reinstatement. The Court found that Rajpal failed to prove a direct employment relationship with M/s Hafed Oil Mills and that liability under the 1923 Act did not confer employment rights under the ID Act.
The judgment concluded: “The Labour Court rightly relied on evidence, including the contract between the respondent and the contractor, and the petitioner’s admission under the 1923 Act. There is no jurisdictional error or factual infirmity warranting interference. The petition is bereft of merit and is accordingly dismissed.”
This ruling underscores the distinction between liabilities under the Employee’s Compensation Act, 1923, and employment rights under the Industrial Disputes Act, 1947. It clarifies that statutory obligations under the 1923 Act do not automatically translate into employment relationships under the ID Act.
The judgment also reaffirms that the burden of proving an employer-employee relationship lies squarely on the workman, and mere assertions without evidence are insufficient to establish such a relationship.
Date of Decision: December 20, 2024
