The Delhi High Court on Tuesday set aside a 2005 order of an industrial tribunal regularising over 20 workers of Delhi’s The Ashok Hotel.

A Division Bench of Justices Yashwant Varma and Ravinder Dudeja also set aside the judgment of a single-judge from 2013 upholding the tribunal’s order.

The appeal challenged the tribunal's award from October 5, 2005, which directed the Ashok Hotel to create a policy for the regularisation of certain workers. Both the tribunal and the single-judge concluded that the contractor's engagement of these workers was a way to evade the responsibilities that would apply if the Ashok Hotel were recognised as the principal employer of these employees. 

It was the claim of the workers that they had been continuously employed since 1995, despite changes in contractors. They argued that their roles were essential to the Hotel’s operations. They asserted that they had worked over 240 days each year and deserved permanent status as per law. 

The case ultimately reached the industrial tribunal, which held that the workers continued to work under changing contractors without any real contracts in place, indicating an ongoing employer-employee relationship with the Ashok Hotel. The Delhi High Court upheld this finding in 2013.

Before the Division Bench, counsel for The Ashok argued that the workers had not claimed before the tribunal that the contract was a sham. The Division Bench ruled,

"We at the outset note that a perusal of the Statement of Claim as submitted before the Tribunal leads us to the inescapable conclusion that the workmen had at no stage averred or alleged that the contract between the appellant and the contractor was merely a ruse designed to deprive them of legitimate benefits of continuity in service or for payment of wages at par with the regular employees of the appellant.”

The Court found that the tribunal had no basis to either question the engagement of the contractor or adjudicate on the issue of whether the contractor had been deliberately hired with mala fide intentions.

“It is these facts which fortifies our view that the Tribunal acted in excess of jurisdiction while framing issue no.1 for consideration. Once it is admitted that the reference stood confined to an issue of regularization, we fail to appreciate how the Tribunal could have legitimately framed issue no.1 as being one which the order of reference could be said to have contemplated,” the judgment said. 

The second issue involved the question of automatic absorption of contractual employees into the workforce of a principal employer following a notification under Section 10(1) of the Contract Labour (Regulation and Abolition) Act (CLRA). Such notifications are issued by the government to individual establishments to prohibit employment of contractual labour.

While the single-judge and the tribunal upheld the right of a contract labourer to be absorbed into an organisation once the government issued the notification under CLRA, the Division Bench deferred on the same. Referring to multiple judgments, it said,

“As is manifest from the aforenoted decisions and the legal position as enunciated therein, the mere issuance of a notification under Section 10 of the CLRA would not lead to the workmen being absorbed in the establishment of the principal employer.”

The Court thus set aside the orders passed by the single-judge and the tribunal.

The Ashok was represented by Senior Advocate Ravi Sikri and Advocate Arun Sanwal.

The respondents were represented by Advocates Barun Kumar Sinha, Pratibha Sinha and Sneh Vardhan.

Advocates AP Dhamija, JP Singh and Tanya Sharma appeared for the interveners.

[Read order]