To Claim Employment In Any Organization, Direct Master-Servant Relationship Must Be Established On Paper : Supreme Court

The Supreme Court recently observed that for a person to claim employment in an organization, a direct master-servant relationship must be established on paper.

“For a person to claim employment under any organization, a direct master-servant relationship has to be established on paper. In the present case(s), admittedly, the only document, which the private respondents have in their favour, is showing that they were posted at various places doing different nature of work. This clearly in the considered opinion of the Court would not establish master-servant relationship”, the Court observed.

A bench comprising Justice Ahsanuddin Amanullah and Justice Prashant Kumar Mishra rejected the workman's argument that that the supervisory control of appellant on the workman establishes a master-servant relationship.

“Whatever material has been placed and even the best point which was argued by the learned Senior Counsel for the private respondents before this Court was that since there was supervisory and jurisdictional control over the private respondents by the appellants, ipso facto, they would become employees of the appellants is noted only to be rejected.”

The dispute originated when one Raj Kumar Mishra, a Junior Assistant at CBSE, alleged that his services were illegally terminated through an oral order in 1999. After the failure of conciliation proceedings, the matter was referred to the Central Industrial Tribunal, Kanpur. The tribunal returned a finding that he was engaged with CBSE and worked as an employee, awarding him Rs. 1 lakh in compensation.

However, the tribunal did not order his reinstatement, which Raj Kumar challenged in the Allahabad High Court, arguing that reinstatement was mandatory since his termination was found to be in violation of Section 25(F) of the Industrial Disputes Act, 1947.

The High Court found that the tribunal's award was arbitrary, and remanded the case back to the Labour Court for a fresh hearing. It observed that the tribunal failed to determine whether the termination was legal under the provisions of the Industrial Disputes Act.

CBSE challenged the High Court's decision maintaining that Raj Kumar was never its direct employee. It argued that he was engaged through a contractor, M/s Manpower Security Services, under a labour supply contract. CBSE presented evidence, including bills submitted by the contractor, which listed Raj Kumar as one of the workers. CBSE emphasized that the payment for his services was made to the contractor and not directly to him.

On the other hand, Raj Kumar claimed that CBSE exercised supervisory and jurisdictional control over his work, implying an employer-employee relationship. His counsel pointed out that he was assigned various responsibilities and transferred to different locations under CBSE's instructions. Based on this, it was argued that the Labour Court's compensation award was justified.

The Supreme Court rejected this argument, holding that a master-servant relationship must be substantiated through clear documentation.

The Supreme Court stated that if there had been any substantial evidence supporting the respondents' claim of being employees of the appellants, it would have refrained from interfering with the High Court's orders and allowed the Labour Court to reconsider the matter.

However, since the respondents primary defence was rejected, the Court concluded that a remand to the Labour Court would be pointless. Consequently, the Court allowed the appeals, and set aside the High Court's orders for remanding the case to the Labour Court, noting that no further orders required since the awards had already been quashed.

Case No: SPECIAL LEAVE PETITION(CIVIL)NO. 19648 OF 2023

Citation : 2025 LiveLaw (SC) 343

Case Title: Joint Secretary, Central Board Of Secondary Education vs Raj Kumar Mishra

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