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Kirloskar Brothers Limited vs. Ramcharan and Ors.

Civil Appeal · 2022 INSC 1255Decided 5 Dec 2022
Civil Appeal Nos. 8446-8447 of 2022
M.R. Shah · Hima Kohli

Background

Kirloskar Brothers Limited, a principal employer, had engaged a contractor under the Contract Labour (Regulation and Abolition) Act, 1970 to supply labour. Six contract workmen, after the labour contract ended and their services were dispensed with, approached the Labour Court claiming they were actually employees of Kirloskar (the principal employer), not the contractor. The Labour Court rejected their claim, but the Industrial Tribunal reversed this, ordering their reinstatement as Kirloskar's employees, and both the Single Judge and Division Bench of the Madhya Pradesh High Court upheld the Tribunal's order. Kirloskar then appealed to the Supreme Court.

Decision Breakdown

The Supreme Court allowed the appeal and restored the original Labour Court judgment favouring the employer. It held that neither Section 10 of the CLRA Act nor any other provision automatically converts contract labour into employees of the principal employer, even after a government notification prohibiting contract labour. Such absorption can be ordered only if the contract labour arrangement is proven to be "sham," "nominal," or a mere "camouflage" to deny employment benefits, and no such finding or even allegation existed here. Since no prohibition notification under Section 10 had been issued and there was no evidence the contract was fake, the workmen remained employees of the contractor, not Kirloskar.

Lesson Learnt

Merely working under a contractor's arrangement with a company does not automatically make a worker a direct employee of that company; to claim direct employment, a contract labourer must specifically prove the contracting arrangement was a sham designed to deny them benefits. Courts will not presume this.

Official source (sci.gov.in)View Judgment (PDF)

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