MP HC Clarifies Burden Of Proof In Employment Cases: Employer Must Disprove Worker's Continuous Service Claim

Madhya Pradesh High Court: A Single bench consisting Justice Sanjay Dwivedi overturned a Labour Court order and ruled that once a workman claims continuous employment, the burden of proof shifts to the employer to disprove the claim with documentary evidence. The Court held that oral termination without notice and retrenchment compensation violates Section 25(f) of the Industrial Disputes Act, 1947. Finding that the employer failed to produce records disproving the worker's continuous employment claim, the Court ordered reinstatement with 50% back wages.

Background

Goverdhan, a daily wage laborer employed by the respondent from October 1, 2011, was orally terminated on February 1, 2019, without written notice or retrenchment compensation. His claim was based on the fact that no approval from the State was obtained for his termination, which he argued was a violation of the ID Act. He approached the Labour Court under Section 10(1) of the ID Act, seeking relief for wrongful termination.

The Labour Court denied his claim, stating that Goverdhan had failed to provide documentary evidence proving his continuous employment for 240 days in the preceding calendar year. The Labour Court ruled that without such proof, there was no question of the respondent violating Section 25(f) of the Act. Consequently, the reference was decided against Goverdhan.

Arguments

Counsel for Goverdhan argued that the Labour Court had wrongly placed the burden of proof on the petitioner to demonstrate that he had worked for 240 days in a calendar year. He cited the settled legal position that once a workman claims continuous employment, the burden shifts to the employer to refute the claim with documentary evidence, such as attendance records and wage slips.

The respondent, represented by the CMO, denied ever formally employing Goverdhan, stating that his services were taken on an as-needed basis. The CMO contended that Goverdhan's employment was neither formal nor continuous, and his termination was not unlawful under the Act.

Court's Reasoning

Firstly, the court noted that the Labour Court had erred by placing the burden of proof entirely on the petitioner. The judge highlighted that once a workman deposes that he has completed 240 days of service, the burden shifts to the employer to disprove this claim with cogent documentary evidence. This principle was affirmed in Director, Fisheries Terminal Department v. Bhikubhai Meghajibhai Chavda (AIR 2010 SC 1236) and Manager, Reserve Bank of India, Bangalore v. S. Mani (2005) 5 SCC 100, both of which hold that failure by the employer to produce such records results in an adverse inference.

Secondly, the court found that Goverdhan had discharged his initial burden by asserting his continuous employment since 2011 and that the respondent failed to produce records to rebut his claim. The oral testimony of the respondent's Chief Executive Officer, who stated that no records of Goverdhan's employment were available, was insufficient to rebut the petitioner's evidence. The court emphasized that the absence of documentation from the employer violated the principle of fairness required under the ID Act.

Thirdly, the court also rejected the respondent's argument that Goverdhan's engagement was ad-hoc and not formal. It ruled that continuous engagement in any form qualifies as “employment” for the purpose of the Act, and the respondent's failure to comply with Section 25(f) rendered the termination illegal. Thus, the court set aside the Labour Court's award, declaring the oral termination of Goverdhan as unlawful. It directed the respondent to reinstate Goverdhan in his previous position with 50% back wages and consequential benefits.

Citation: M.P. No.6329 of 2022 (Goverdhan v. Chief Municipal Officer)

Date: October 17, 2024

Counsel for the Petitioner: Mr. Rajesh Kumar Soni

Counsel for the Respondent: Mr. J.L. Soni

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