In the case of Bhikan Laxman Deokar v. Chalet Hotels Ltd., two cross-petitions were filed before the Bombay High Court by the employer, Chalet Hotels Ltd., and the workman, Bhikan Laxman Deokar, challenging an award passed by the 7th Labour Court, Mumbai, in 2019. The Labour Court had set aside the workman's termination order, directed reinstatement with continuity of service, and granted 50% back wages. Both parties sought to modify the Labour Court's decision— the employer challenging the award on the grounds of improper framing of issues and the workman contesting the partial denial of back wages.
Background of the Case:
Chalet Hotels Ltd. operates the prestigious Renaissance Mumbai Hotel & Convention Centre, and the workman, Bhikan Laxman Deokar, worked as a driver providing transportation services to the hotel’s patrons. Over the years, the hotel had engaged several contractors to manage these transportation services, including M/s. Orix Auto Infrastructure Services Ltd., the contractor at the time of Deokar’s termination in December 2010. The workman was terminated by Orix without a formal enquiry, leading him to file a claim before the Labour Court.
Deokar contended that he had been directly employed by the hotel initially, and later through various contractors, but his services had always been tied to the hotel. In his statement of claim, Deokar sought reinstatement, full back wages, and a declaration that the contract between the hotel and Orix was bogus. The Labour Court, after evaluating the evidence, ruled that the termination was unjustified and ordered reinstatement with 50% back wages.
Legal Contentions:
The employer, Chalet Hotels Ltd., raised several points in its appeal. It argued that the workman had never been directly employed by the hotel and that his services had always been contracted through Orix. The hotel contended that the Labour Court had exceeded its jurisdiction by determining an employer-employee relationship between Deokar and the hotel, given that the reference was solely about his termination by Orix.
On the other hand, Deokar argued that the Labour Court's decision to award only 50% back wages was unjust, particularly since his termination was without due process. He further sought a revision of the back wages decision to include full compensation for the period of unemployment.
Employer-Employee Relationship and Continuity of Service:
A central issue in the case was whether there existed an employer-employee relationship between the hotel and the workman, particularly in light of the changing contractors over the years. The Labour Court considered the factors outlined by the Supreme Court in the case of Balwant Rai Saluja v. Air India Ltd., which set out six tests to establish an employer-employee relationship: who appoints the worker, who pays the salary, who has the authority to dismiss, who can take disciplinary action, whether there is continuity of service, and the extent of control and supervision.
In this case, the Labour Court found that although Deokar’s services were contracted through different agencies, there was clear continuity of service. His initial appointment was by the hotel, and he continued to work as a driver through successive contractors, showing that the hotel retained significant control over his work, including disciplinary actions. Additionally, the hotel had issued show cause notices to Deokar during his contractual employment, further suggesting an ongoing employer-employee relationship.
Decision and Modification of the Award:
While the hotel contended that it was not responsible for the termination and that it was the contractor's responsibility, the Labour Court’s finding of an employer-employee relationship led to the conclusion that the termination was wrongful. The court reasoned that the hotel had significant involvement in the workman's employment and could not distance itself from the consequences of his termination.
However, the court also recognized that reinstating Deokar to his previous position in the hotel might not be practical given the passage of time, his age, and the strained relationship between the parties. The court thus modified the Labour Court’s order by awarding a lumpsum compensation of Rs. 25,00,000 in lieu of reinstatement and back wages. This amount was intended as a final settlement, and the workman was not entitled to further monetary benefits.
Conclusion:
This case highlights important principles related to employer-employee relationships in the context of outsourced employment. It also underscores the importance of following proper termination procedures, including conducting a fair enquiry. The court’s modification of the Labour Court’s award reflects a balanced approach, considering both the legal rights of the workman and the practical realities of reinstating him in the workplace after many years. In the end, a lumpsum compensation was deemed to be an adequate remedy, providing financial justice without reintroducing the workman into a potentially unsuitable employment scenario.
This case serves as a reminder to employers to be diligent in adhering to employment laws and to ensure that all terminations are backed by proper processes. For employees, it demonstrates the importance of asserting their rights when facing wrongful termination and the potential for compensation even in the absence of reinstatement.
