Determination Of Employment Status Is A Mixed Question Of Law And Fact; Requires Adjudication By Industrial Tribunal: Calcutta HC

Background

IIMC is a statutory body under the Indian Institutes of Management Act, 2017. It filed a writ petition against a reference made by the Regional Labour Commissioner to the Industrial Tribunal.
The dispute arose in 2022; IIMC students alleged that the mess contractor was serving stale and contaminated food. This led to protests, and the contractor was replaced by a new vendor. However, the mess workers claimed they were retrenched without following due process. Aggrieved, they approached the authorities, which led to a reference under the Industrial Disputes Act, 1947. IIMC argued that the mess contractor was an independent entity engaged by the Students Council and that IIMC had no employment relationship with the workers.
Thus, the reference questioned whether IIMC had an employer-employee relationship with the former mess workers, and what relief they were entitled to (if any) for their alleged retrenchment.Arguments

Representing IIMC, Senior Advocate Soumya Majumder argued that the reference was not sustainable as IIMC was not the principal employer. He relied on the minutes of the conciliation proceedings, where it was recorded that IIMC had no employer-employee relationship with the workers. He argued that only a genuine industrial dispute can be referred to the Tribunal. Citing National Engineering Industries Ltd. v. State of Rajasthan (Civil Appeal No. 16832 of 1996), and Cipla Ltd. v. Maharashtra General Kamgar Union (2001 INSC 100), he argued that a reference can only be made if a prima facie industrial dispute exists.

Representing the Union of India, Advocate Kumaresh Dalal argued that the dispute involved questions regarding the nature of the employment relationship. He submitted that they could only be determined by the Industrial Tribunal. Relying on Balwant Rai Saluja v. Air India Ltd. (2014 INSC 561) he argued that the determination of whether an employment relationship exists, is within the Tribunal's domain.

Court's Findings

Firstly, the court held that the Industrial Tribunal was the appropriate forum to determine whether IIMC was the principal employer. It noted that a mere denial by IIMC was insufficient to preclude a reference under the Industrial Disputes Act. Relying on Cipla Ltd. (2001 INSC 100), the court reaffirmed that the issue of employer-employee relationship is a mixed question of law and fact, and must be adjudicated by a specialized forum.

Secondly, the court ruled that IIMC had failed to establish that the reference was entirely baseless. It observed that while the students' council engaged the mess contractor, the workers were providing services on IIMC's premises, thereby raising a legitimate question of indirect employment. Citing Vividh Kamgar Sabha v. Kalyani Steels Ltd. (2001 INSC 12), the court ruled that disputes regarding employment status must be decided by the Tribunal.

Thirdly, the court rejected IIMC's argument that the reference was beyond the jurisdiction of the Industrial Tribunal. It noted that the Supreme Court in Balwant Rai Saluja had affirmed the tribunal's power to pierce the corporate veil, where employment arrangements involve multiple entities. Thus, the court held that the Tribunal holds jurisdiction even in cases of complicated corporate arrangements.

Lastly, the court emphasized that the Industrial Disputes Act was designed to protect workers from unfair employment practices. Thus, summary dismissal of claims without factual examination would be contrary to its purpose. Accordingly, the court dismissed IIMC's writ petition. It held that the reference was valid and required no interference.

Decided on: 17-02-2025

Case No.: WPA 28424 of 2024

Counsel for the Petitioner: Mr. Soumya Majumder, Ms. Sanjukta Dutta

Counsel for the Respondents: Mr. Kumaresh Dalal, Mrs. P. Saha Das