Three writ petitions filed by the Indian Institute of Technology, Bombay (IIT Bombay), challenging orders passed by the Assistant Labour Commissioner (Central), Mumbai, under the Payment of Gratuity Act, 1972 (PG Act). The primary issue involved was whether the IIT Bombay, as the principal employer, was liable to pay gratuity to three contract employees, who had been working through different contractors for a prolonged period at the IIT's campus. The court held IIT Bombay liable for the gratuity, despite the employees being hired through contractors.

Acts and Sections Discussed:

1. Payment of Gratuity Act, 1972
   • Section 2(e): Definition of "Employee."
   • Section 2(f): Definition of "Employer."
   • Section 7: Payment of Gratuity and authority to settle disputes regarding gratuity.
2. Contract Labour (Regulation and Abolition) Act, 1970
   • Discussed in the context of the responsibility of the contractor versus the principal employer for gratuity.

Ratio Decidendi:

The court ruled that the IIT Bombay had control over the work performed by the contract employees, despite the fact that they were hired through multiple contractors. These employees worked exclusively at the IIT for decades, and the continuity of their employment established a de facto employer-employee relationship with IIT Bombay for the purpose of gratuity. The court held that the IIT's contractors were merely conduits for salary payments, and IIT Bombay was ultimately responsible for the gratuity under the Payment of Gratuity Act.

The court dismissed the petitions, holding that the controlling and appellate authorities were right in their determination. The court reasoned that chasing multiple contractors for gratuity would have been an unfair burden on the employees, who had rendered continuous service at IIT Bombay.

1. Para 1-2: Introduction
   • IIT Bombay challenged orders passed by the Assistant Labour Commissioner and the Appellate Authority under the PG Act, which directed IIT to pay gratuity to three contract workers.
2. Para 3-4: IIT's Argument on Non-Employer Relationship
   • IIT Bombay claimed that the workers were employees of the contractors and not of IIT, and thus IIT was not responsible for paying gratuity.
3. Para 5-6: Orders from Controlling Authority
   • The Controlling Authority directed IIT to pay specific amounts of gratuity to the employees along with interest. IIT had appealed these decisions to the Appellate Authority, which upheld the orders.
4. Para 7-8: IIT’s Legal Stand
   • The petitioner argued that there was no employer-employee relationship between IIT and the workers and cited earlier case law to support their claim.
5. Para 9-11: Employees' Defense
   • The workers’ counsel argued that they had worked for IIT for long durations, through different contractors, and hence IIT should be considered their employer for gratuity purposes.
6. Para 12-13: Court’s Consideration of Employment Nature
   • The court took into account the continuity of service at IIT, noting that the workers had remained on IIT’s campus for decades, despite changing contractors.
7. Para 14-16: Service Details and Gratuity Liability
   • The court noted that the workers had not worked for other contractors or institutions, establishing a continuous employment with IIT, which made IIT liable for their gratuity.
8. Para 17-19: Legal Interpretation of “Employer” Under PG Act
   • The court analyzed the definition of "employer" under the PG Act and held that IIT, which had ultimate control over the employees' work, was indeed their employer.
9. Para 20-24: Jurisdiction of the Controlling Authority
   • The court affirmed that the Controlling Authority under the PG Act had the jurisdiction to determine employer-employee relationships in gratuity matters.
10. Para 25-28: Rejection of IIT’s Argument
    • The court rejected IIT’s argument that only the contractors were responsible for gratuity, citing the long association of the employees with IIT.
11. Para 29-31: Contractors' Role and Work Orders
    • Work orders to the contractors did not specifically mention gratuity obligations, and the court noted this as a failure on IIT's part to clarify liability for gratuity.
12. Para 32-34: Judgment and Directions
    • The court dismissed IIT’s petitions and directed IIT to pay the balance gratuity and interest. Two employees had already received their gratuity, while the heirs of the third (deceased) employee were allowed to withdraw the gratuity amount.

Subjects:

Liability of IIT Bombay for payment of gratuity to contract workers under the Payment of Gratuity Act, despite them being hired through contractors.

• Contractual Workers
• Payment of Gratuity
• Principal Employer
• Labour Law
• Gratuity Act