The Bombay High Court has upheld the Labour Court's finding of an employer-employee relationship between Johnson & Johnson Ltd. and the deceased workman Mahadev Badadal, despite the company's contention that he was employed through Adecco India Pvt. Ltd. The Court rejected the petitioner's challenge to the Labour Court's Award, affirming that the workman was under the control and supervision of the petitioner and not merely a consultant or employee of the staffing agency. The High Court modified the Award to grant lump-sum compensation of Rs.15,00,000 to the workman's legal heir, in lieu of reinstatement and backwages, considering the prolonged litigation and the workman's death.
Background & Facts
The Genesis of the Dispute
The petitioner, Johnson & Johnson Ltd. (J&J), a multinational pharmaceutical company, challenged the Award dated 7 February 2024 passed by the 7th Labour Court, Mumbai in Reference (IDA) No.174 of 2015. The Labour Court had held the termination of the respondent's husband, Mahadev Y. Badadal (the workman), as illegal and directed payment of full backwages till his death on 21 November 2016, continuity of service, and statutory benefits including gratuity with 10% interest from the date of death. The Labour Court also directed payment of leave encashment and other permissible benefits.
Key Facts
- The workman was engaged by J&J from 16.07.1985 to 27.02.1987 on temporary appointments, and thereafter intermittently for tax-related work until 2015.
- The petitioner admitted utilising the workman's services as a professional consultant for Sales Tax/Service Tax matters between 1985 and 1987.
- The workman was issued appointment letters by Adecco India Pvt. Ltd. on 11.03.2011, and his services were terminated by Adecco on 26.02.2015 w.e.f. 31.03.2015.
- The workman filed a Statement of Claim before the Labour Court seeking reinstatement and backwages, which was resisted by J&J.
- During the Reference proceedings, the workman passed away on 21.11.2016, and the respondent (his wife) continued the proceedings as his legal heir.
- The Labour Court recorded detailed findings on documentary and oral evidence, holding that the workman was under the control and supervision of J&J and not Adecco, despite being on Adecco's payroll from April 2011.
Procedural History
- 174 of 2015: Reference (IDA) filed before the 7th Labour Court, Mumbai by the workman against J&J.
- 07.02.2024: Labour Court passed the impugned Award, holding termination illegal and granting full backwages, continuity of service, and statutory benefits.
- 2025: J&J filed the present Writ Petition (WP No.560 of 2025) before the Bombay High Court challenging the Award.
- 03.07.2026: Arguments reserved.
- 16.07.2026: Judgment pronounced by the High Court.
Relief Sought
The petitioner sought setting aside of the Labour Court's Award dated 07.02.2024, contending that the Labour Court erred in holding an employer-employee relationship between J&J and the workman. The petitioner also challenged the grant of backwages, statutory benefits, and interest, and prayed for dismissal of the Reference.
The Legal Issue
The central question was whether the Labour Court erred in holding that an employer-employee relationship existed between J&J and the workman, despite the workman being on the payroll of Adecco India Pvt. Ltd. from April 2011, and whether the termination was illegal under the Industrial Disputes Act, 1947.
Arguments Presented
For the Petitioner
The petitioner contended that the Labour Court grossly erred in assuming an employer-employee relationship, as the workman was employed by Adecco India Pvt. Ltd. and terminated by Adecco. The petitioner relied on voluminous documentary evidence, including appointment letters, salary slips, Form-16, ESI/PF nomination forms, muster rolls, bank statements, and a termination letter issued by Adecco, to demonstrate that the workman was not an employee of J&J. The petitioner also led evidence of its witness Rakesh Jayantilal Chauhan, who deposed that there was no employee by the name Mahadev Badadal in J&J's employees' muster data file, and of Mr. Umesh Gosawi, an employee of Adecco, who deposed that the workman was employed by Adecco.
The petitioner argued that the Labour Court ignored the documentary evidence and recorded perverse findings. It also contended that the Labour Court travelled beyond the Reference by directing payment of retirement benefits, which were never part of the Statement of Claim. The petitioner prayed for setting aside the impugned Award.
For the Respondent
The respondent opposed the petition, contending that Adecco was merely an agency utilised by J&J for hiring manpower. The respondent relied on admissions given by J&J's witness Rakesh Chauhan, who admitted that J&J appointed employees through Adecco. The respondent also relied on documentary evidence, including emails exchanged between J&J and the workman, appointment letters, invoices, Form 16A, bank statements, and letters issued by third parties addressed to the workman on J&J's letterhead, to demonstrate that the workman was under the control and supervision of J&J.
The respondent argued that the Labour Court had correctly appreciated the entire material on record and that the findings did not warrant interference. The respondent prayed for dismissal of the petition.
The Court's Analysis
The Court examined the documentary and oral evidence on record, including appointment letters, salary slips, Form-16, ESI/PF nomination forms, muster rolls, bank statements, emails, invoices, and letters issued by third parties. The Court noted that the Labour Court had discussed the evidence in detail in paragraphs 44 to 50 of the Award and reproduced the findings.
The Court observed that the Labour Court had correctly held that the workman was under the control and supervision of J&J and not merely a consultant or employee of Adecco. The Court noted that the Labour Court had relied on the following evidence to arrive at this conclusion:
- The workman was engaged by J&J from 1985 to 1987 on temporary appointments and thereafter intermittently for tax-related work until 2015.
- The workman was issued appointment letters by Adecco from April 2011, but the Labour Court found that there was no evidence to show that Adecco was involved in the work performed by the workman for J&J.
- The workman was performing manual and clerical work for J&J, including collection of 'C' Forms, updating 'C' Form status, follow-ups with dealers, and assessment work for sales tax.
- The workman was authorised by J&J to receive demand drafts from banks and to issue letters to third parties on J&J's letterhead.
- The workman was paid amounts by J&J, as evidenced by invoices, emails, and bank statements, and tax was deducted at source.
- The workman was provided training by J&J and was treated as an employee of J&J.
- J&J's witness Rakesh Chauhan admitted that J&J appointed employees through Adecco.
The Court held that the Labour Court's findings were based on evidence on record and could not be termed as perverse. The Court also noted that the Labour Court had correctly held that the termination was illegal as provisions of Section 25-F of the Industrial Disputes Act, 1947 were not followed.
The Court rejected the petitioner's contention that the Labour Court had travelled beyond the Reference by directing payment of retirement benefits, as the workman had prayed for reinstatement and backwages, and the Labour Court had modified the relief to grant lump-sum compensation in lieu of reinstatement.
"Taking into consideration the totality of circumstances, in my view, ends of justice would meet if the Petitioner is directed to pay to the Respondent lumpsum compensation of Rs.15,00,000/- to the Respondent towards full and final settlement. The amount of compensation is determined considering the liability to pay interest @ 10% per annum on the amount of gratuity."
The Verdict
The High Court partly allowed the writ petition. The Court upheld the Labour Court's finding of an employer-employee relationship between J&J and the workman and held that the termination was illegal. The Court modified the Award to direct the petitioner to pay lump-sum compensation of Rs.15,00,000 to the respondent within four weeks. The Court clarified that the lump-sum compensation would include all statutory benefits payable in respect of the services rendered by the workman. In the event of failure to pay the awarded compensation within the stipulated time, interest at 8% per annum would accrue from the date of expiry of the four-week period. The Court rejected the petitioner's request for stay of the order.
What This Means For Similar Cases
Control and Supervision Override Payroll Arrangements
- The judgment reaffirms that the predominant nature of work and control and supervision are decisive factors in determining employer-employee relationships, even where the workman is on the payroll of a staffing agency.
- Documentary evidence demonstrating direct control, such as emails, invoices, letters on company letterhead, and training records, will be critical in establishing such relationships.
Lump-Sum Compensation as an Alternative to Reinstatement
- Courts may grant lump-sum compensation in lieu of reinstatement and backwages, particularly where the workman has passed away and the litigation has been prolonged.
- The quantum of compensation will be determined considering the liability to pay interest on statutory benefits and the circumstances of the case.
Admissions by Witnesses Can Seal the Employer's Fate
- Admissions by a company's witness that employees were appointed through a staffing agency can significantly weaken the company's defence in labour disputes.
- Such admissions, coupled with documentary evidence, can lead to a finding of employer-employee relationship despite the presence of a staffing agency arrangement.
