High Court Directs Mumbai's Renaissance Hotel To Pay ₹25 Lakhs To Driver Fired Without Disciplinary Inquiry & Retrenchment Compensation

The Bombay High Court recently directed Mumbai's Renaissance Hotel and Convention Centre to pay Rs. 25 lakhs as lumpsum compensation to a former driver terminated without disciplinary inquiry and retrenchment compensation.

Justice Sandeep V Marne held that an employer-employee relationship existed between the hotel and the driver despite payment of his salary by the contractor providing transport services to the hotel, as his initial appointment was with the hotel, and the hotel had control over his work due to the authority to dismiss and take disciplinary action.

“It is clear that except the test of actual payment of salary, all other tests prescribed by the Apex Court in Balwant Rai Saluja are satisfied in the present case. In my view, therefore no serious error can be traced in the finding recorded by the Labour Court that there existed employer-employee relationship between the Hotel and the workman”, the court observed.

The court relied on six tests for determining the employer-employee relationship laid out in Balwant Rai Saluja v. Air India Ltd. (2014). The relevant factors include initial appointment, salary payment, authority to dismiss, disciplinary action, continuity of service, and extent of control, it said.

Chalet Hotels Ltd. operates the 'Renaissance Mumbai Hotel & Convention Centre.' It engages third-party vendors for transportation services for its patrons. The workman, Bhikan Laxman Deokar, served as a driver for these transportation services.

Deokar claimed that he was initially recruited directly by the hotel, worked as its direct employee until February 3, 2003, and then worked through various contractors. It was submitted that the termination of his services by contractor M/s. Orix Auto Infrastructure Services Ltd. led to the present dispute.

The Deputy Labour Commissioner, Conciliation, Mumbai, referred Deokar's case for reinstatement with continuity and back wages to the Labour Court. The Labour Court, at the time of delivering the judgment, reframed the issues and included the issue of the existence of an employer-employee relationship with the hotel. The Labour Court in an Award dated January 29, 2019, set aside the termination order dated December 28, 2010, and directed the employer to reinstate Deokar with continuity and 50 percent back wages.

Chalet Hotels Ltd. challenged the Award through the present writ petition, arguing that Deokar was never employed directly by the hotel. It contended that the scope of the reference was limited to Orix, the contractor who terminated the workman. Deokar filed another writ petition seeking full back wages.

Chalet Hotels argued that the Labour Court went beyond the scope of reference by delving into the employer-employee relationship issue. The court opined that the Labour Court appropriately framed the issue of an employer-employee relationship between Chalet Hotels and Deokar based on the denial of such a relationship by the hotel in its written statement.

The Reference was directed against both the Hotel as well as Orix and was not restricted only to Contractor-Orix, the court said. It noted that Deokar claimed that his services were terminated by the Hotel and that he was in service of the Hotel. Thus, the court held that the Labour Court did not exceed the scope of the reference.

The court noted that Deokar continued in service of the hotel without a break despite changes in contractors, satisfying the continuity of service test. Deokar's initial appointment was by the hotel, not the contractor, it held.

Warning letters by the hotel during contractual employment indicate disciplinary action, supervision, and control over the Workman's activities, the court held. Thus, except for the test of actual payment of salary, all other tests prescribed by the Apex Court are satisfied, it said.

The court also considered non-registration of the agreement with the contractor and non-issuance of a license as additional factors, but not the sole basis, for establishing an employer-employee relationship between Deokar and the hotel.

The court clarified here that this finding is based on the facts of the present case and does not imply that every employee of various contractors would become a direct employee of the hotel.

However, the court held that 100 percent back wages were not warranted, considering Deokar's admission of earning wages as a Badli Driver. Considering the unsavoury relationship between the parties and the lapse of thirteen years, the court awarded lumpsum compensation of Rs. 25,00,000 to Deokar as a full and final settlement.

Case no. – Writ Petition No. 10436 of 2019

Case Title – M/s. Chalet Hotels Ltd. v. Bhikan Laxman Deokar and Anr.