Himachal Pradesh High Court
Decided On: 23Rd February vs The Partners on 23 February, 2026
Author: Jyotsna Rewal Dua
Bench: Jyotsna Rewal Dua
2026:HHC:3523
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
CWP No.1177 of 2026
Decided on: 23rd February, 2026
-------------------------------------------------------------------------------------
Kamal Singh .....Petitioner
.
Versus
The Partners, M/s Universal Electric
Engineers and another .....Respondents
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Coram
of
Ms. Justice Jyotsna Rewal Dua
Whether approved for reporting? 1
For the Petitioner:
rt Mr. Rahul Mahajan, Advocate.
For the Respondents: Mr. Y.P.S. Dhaulta, Additional Advocate
General, for respondent No.2.
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Jyotsna Rewal Dua, Judge
Reference of the petitioner moved under Section
10(1) of the Industrial Disputes Act, 1947 has been decided
against him by the learned Presiding Judge, Labour Court-
cum-Industrial Tribunal, Kangra at Dharamshala on
15.01.2025 primarily on the ground that the petitioner
failed to discharge burden of proving employer-employee
relationship between him and respondent No.2, against
whom the case was set up. Feeling aggrieved, petitioner has
laid challenge to the aforesaid award in this writ petition.
1
Whether reporters of print and electronic media may be allowed to see the order? Yes.
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2. Heard and considered the case file.
3. The case:-
3(i). Following reference was sent by the Appropriate
Government for adjudication by the learned Labour Court:-
.
“Whether termination of services of Shri Kamal
Singh S/O Shri Hari Singh, R/O Village Jadour, P.O.
Tarsuh, Tehsil Shri Naina Deviji, District Bilaspur, H.P.w.e.f. 01-07-2012 by (i) the Partners, M/S Universal
Electric Engineers, Dalhousie Road Pathankot, Punjab
(Contractor) and (ii) the Executive Engineer, Changer
Area Lift Irrigation Project Division Bassi, Districtof
Bilaspur, H.P. (Principal Employer), without complying
with the provisions of the Industrial Disputes Act, 1947,
is legal and justified? If not, what amount of back
wages, seniority, past service benefits and
compensation the above worker is entitled to from the
rt
above employers?”
3(ii). The claim set up by the petitioner (Annexure
P-2) was that he had worked as Daily Waged Beldar in
Changer Area, Medium Lift Irrigation Scheme w.e.f.
01.11.2011 continuously till 30.06.2012. His services were
terminated orally on 01.07.2012. Oral termination of
petitioner’s services was without assigning any reason. No
notice was issued to him. Such termination of petitioner’s
services was alleged to be an act of unfair labour practice
and in violation of Sections 25B, 25-F, 25-G and 25-H of
the Industrial Disputes Act, 1947 as also the principle of
‘Last come first go’. Petitioner had also asserted that he had
put in 240 days in the calendar year before oral termination
of his services. Relief prayed for was with respect to
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petitioner’s reinstatement in service alongwith seniority,continuity of service and other consequential benefits
including back wages.
3(iii). Respondent No.1-the Contractor in its reply
.
(Annexure P-3) raised several preliminary objections
including there being no relation of employer-employee
between petitioner and respondent No.1. Respondent No.1
denied petitioner having continuously worked for 240 days
of
w.e.f. 01.11.2011 to 30.06.2012. However, as per
respondent No.1, petitioner was a daily rated casual
labourer
rt
engaged for operating pumping machines;
Respondent No.1’s contract with respondent No.2 ended in
May, 2013 and as such, services of the petitioner were not
required by respondent No.1; Before completion of contract,
one month notice was issued by respondent No.1 to the
petitioner and his due payments were also cleared by
respondent No.1. Further, according to respondent No.1,
after completion of its contract, a new contract qua
operation & maintenance of pumping machinery was
awarded by respondent No.2 to a different contractor and
the labour continued to work under the said new
contractor.
3(iv). Respondent No.2 in its reply (Annexure P-4)
denied employer-employee relationship with the petitioner.
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Respondent No.2 also denied terminating petitioner’s
services. As per this respondent, Changer Area, Medium
Lift Irrigation Project was constructed through various
contractors; After its completion, the project was awarded
.
to different contractors for its operation and maintenance,
who outsourced the labour; Petitioner was neither engaged
nor his services were terminated by respondent No.2; There
was no relationship of employer and employee between the
of
petitioner and respondent No.2.
3(v). In support of his claim, petitioner furnished his
rt
affidavit, Ext. PW1/A (Annexure P-6). Respondent No.1 did
not lead any evidence. Respondent No.2 examined one
Sh. Satish Kumar Sharma-Executive Engineer, Jal Shakti
Division, Bilaspur. The said witness, besides his affidavit
(Ext. RW1/A-Annexure P/7), also placed on record several
documents. Learned Labour Court after appreciating the
evidence and material on record, dismissed the claim
petition.
4. Consideration:-
4(i). Hon’ble Apex Court in General Manager, U.P.
Cooperative Bank Ltd. Versus Achchey Lal & Anr. 2,
while allowing the appeal against the impugned decision,
2
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where respondents were held to be appellant’s employees,laid down following tests through which relationship
between employer and employee can be determined in case
of an industrial dispute:-
.
1. Control Test, where the hirer has control over the
work assigned and the manner in which it is to bedone. The control test is derived from common law
application in vicarious liability claims.
2. Organization/Integration Test, which looks at the
of
degree of integration in the work committed in the
hirer’s primary business with the understanding that
the higher the level of integration, the more likely the
rt
worker is to be an employee. A combination of control
and integration test allows the professional workersto be classified as employees, notwithstanding lack of
control over the manner of work.
3. Multiple Factor Test, which includes control,
ownership of the tools, integration/organization,chance of profit, risk of loss, master’s power of
selecting his servant, payment of wages or otherremuneration, master’s right to control the method of
doing the work and master’s right of suspension ordismissal. Where the question arises regarding sham
arrangement, Court has to examine following factors:-
a) Who is the appointing authority?
b) Who is the paymaster?
c) Who can dismiss?
d) Duration of an “alternative service”.
e) Extent of control and supervision.
f) Nature of the job, e.g. whether professional or
skilled work;
g) Nature of establishment.
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h) Right to reject.
4. Refinement of the multifactor test, which includes
consisting of following factors:-
a) Control over the work and manner in which it is
.
conducted.
b) Level of integration into employers’ business.
c) Manner in which remuneration is disbursed to
workers.
d) Economic control over workers.
e) Whether work being conducted is for oneself or
of
a third party.
Relevant paras of the decision in Achchey Lal2
read as under:-
rt
“75. As held in Parimal Chandra Raha (supra), if there is amere obligation to provide facilities to run a canteen, the
canteen would not form part of the establishment. If the
Bank is discharging the same as a mere obligation, it
permits to run a canteen and at the same time, it is not
having any control or right of supervision over the staff,the canteen will not form part of the establishment.
Likewise, the nature and character of management, and
the interest shown by the Management in having control
and supervision over the running of the canteen also
has to be taken into consideration. The material on
record would indicate that the Bank had nothing to do
with the working of the canteen. The only contribution
made by the Management was to provide infrastructure
and subsidy to the Society. If there is total lack of
evidence on this point and what the Bank discharged
was only an obligation to provide a facility, under no
stretch of imagination can it be said that the canteen
staff is also part of the establishment, i.e., the Bank.
FEW TESTS TO DETERMINE EMPLOYER EMPLOYEE
RELATIONSHIP TO BE KEPT IN MIND WHILE DECIDING
MATTERS ARISING FROM LEGISLATIONS LIKE
INDUSTRIAL DISPUTES ACT, 1947, THE FACTORIES
ACT, 1948 ETC:
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1. Control Test
(i) The control test postulates that when the hirer
has control over the work assigned and the manner in
which it is to be done, an employer-employee
relationship is established. The control test is derived
from common law application in vicarious liability
claims.
.
(ii) The earliest instance of applying the control test
in India is in Shivanandan Sharma v. Punjab National
Bank Ltd. reported in AIR 1955 SC 404. Here, a claim
under the Industrial Disputes Act arose as to whether a
head cashier was the bank’s employee. The bank had
an agreement with a contracted treasurer who
nominated people to work for discharging function of the
bank under the agreement, including the cashier in
of
question. The court held that although the treasurer
chose the nominees who discharged the functions, yet
the bank had complete control over the nominee’s
disciplinary matters, leave of absence, how the
rt
nominees discharged their functions, and, importantly,
their salaries were paid by the treasurer from the funds
provided by the bank. It was held that the bank
manager had the same degree of control over the
nominees as he did over numerous other employees,
and thus an employer-employee relationship existed.
The bank also had the right to select bank personnel
who would have the authority to supervise how the
cash department conducted its work. The court
concluded that the cashier was an employee of the
bank. The scope of indirect employment was expounded
as under:
“If a master employs a servant and authorises
him to employ a number of persons to do a particular
job and to guarantee their fidelity and efficiency for
a cash consideration, the employees thus appointed
by the servant would be equally with the employer,servants of the master.”
(emphasis supplied)
(iii) While Shivanandan Sharma (supra) was the first
instance of the control test being applied, an important
step in the test’s evolution was in Dharangadhara
Chemical Works Ltd. v. State of Saurashtra reported in
(1957) 1 LLJ 477. The dispute was whether agarias
(salt workers) were employees and whether the claim
under the Industrial Disputes Act 1947 was
maintainable. To establish that the hirer had control
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over the hired person, it was ruled that control must
exist in two aspects. First, control over the nature of the
work performed and, secondly, the manner in which the
work is conducted. It was argued that since agarias
assisted several persons in performing work, they were
independent contractors.
.
(iv) For the court, the true difference between the
workers and independent contractors was whether the
work was being committed for oneself or a third party.
The existence of external help would not rule out an
employer-employee relationship. The court opined that
the greater the degree of control, the more likely the
hired person would be an employee. Accordingly, the
agarias were held as employees and eligible for
benefits under the Industrial Disputes Act 1947.
of
(v) The court enunciates the manner to make this
distinction as under:
“The correct method of approach, therefore,
would be to consider whether having regard to the
rt
nature of the work there was due control and
supervision by the employer.”
(emphasis added)
(vi) Thus, the control test was expanded to mean due
control and supervision. In numerous cases, the control
test adopted in Dharangadhara (supra) remained the
sole factor determining employer-employee relationship.
The degree and level of control required would depend
on the facts and circumstances of each case.
2. Organisation/Integration Test
(i) The first instance of the shift from the control test
as a sole determinative factor was in Silver Jubilee
Tailoring House v. Chief Inspector of Shops and
Establishments reported in (1974) 3 SCC 498. This
Court observed that the earlier reliance on the control
test was attributed to the agrarian economy, where
masters often exercised control over workers. This
occurred due to masters having more knowledge, skill
and experience. The shift to a multifactor test is due to
modern work being conducted by professionals where
masters lack the technical expertise to direct the
manner in which the work is undertaken. The court
arrived at these conclusions relying on judgements in
the Market Investigations Ltd. v Minister of Social
Security reported in (1969) 2 WLR 1, Cassidy v Ministry
of Health reported in (1951) 2KB 343, Montreal v
Montreal Locomotive Works Ltd reported in 1947 1 DLR
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161 (Privy council). In Silver Jubilee (supra) reliance
was placed on a combination of the organisation test
(also known as the integration test) as interpreted in the
Market Investigations Ltd. (supra), Cassidy (supra),
Montreal Locomotive Works (supra) and the control test
used in India.
.
(ii) The organisation test looks at the degree of
integration in the work committed in the hirer’s primary
business with the understanding that the higher the
level of integration, the more likely the worker is to be
an employee. A combination of control and integration
tests allows the professional workers to be classified as
employees, notwithstanding a lack of control over the
manner of work. Furthermore, the existence and
potential use of factors beyond the control and
of
integration in future cases was also recognised. This
opened the path for the multifactor test.
3. Multiple Factor test
(i)rt The multifactor test includes:
a) Control
b) Ownership of the tools
c) Integration/Organisation
d) Chance of profit
e) Risk of loss
f) The master’s power of selecting his servant g) the
payment of wages or other remuneration
h) The master’s right to control the method of doing
the work, and
i) The master’s right of suspension or dismissal.
(ii) In Steel Authority of India Limited v. National
Union Waterfront Workers, reported in 2017 NLS Bus L.
Rev. 20, it was opined that where sham arrangementsexist, the Contract Labour (Regulation and Abolition)
Act, 1970 would not apply, and workers would be
deemed employees and have the right to raise anindustrial dispute in the same manner as an employee.
(iii) To identify whether sham arrangements exist,
this Court in Workmen of Nilgiri Coop. Mktg. Society Ltd.
v. State of T.N. reported in (2004) 5 SCC 514 ruled that
piercing the veil was necessary. Whether the
arrangement was a sham was not considered as a
question of law. Such a determination must be
adjudicated based on the evidence adduced in the court
by either party and not merely by referring to the
provisions. The relevance of factors other than the
control and integration to determine whether the
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workers are employees or independent contractors was
brought out. The court examined the following factors:
a) who is the appointing authority?
b) who is the paymaster?
c) who can dismiss?
d) the duration of an "alternative service";
.
e) the extent of control and supervision;
f) the nature of the job, e.g. whether it is professional
or skilled work;
g) nature of establishment;
h) the right to reject.
(iv) This Court in Bengal Nagpur Cotton Mills v.
Bharat Lal reported in (2011) 1 SCC 635 laid down two
factors to be considered to determine the true nature of
the hiring entity, i.e., whether it is the principal
of
employer or contractor:
(i) Whether the principal employer pays the salary
instead of the contractor; and
(ii)
rt Whether the principal employer controls and
supervises the work of the employee?
4. Refinement of the multifactor test
(i) The courts, over the years, have refined the
scope of the multifactor test by adding various factors
based on the facts and circumstances. This Court, in
many cases, has applied the refinement of the
multifactor test.
(ii) In Sushilaben Indravadan Gandhi v The New
India Assurance Company Limited, reported in (2021) 7
SCC 151, this Court revisited the distinction between a
contract of service and a contract for service. After
analysing Market Investigations Ltd. (supra), Cassidy
(supra) and Montreal Locomotive Works (supra), the
multifactor test was reiterated, consisting of the
following factors:
a) Control over the work and manner in which it is
conducted
b) Level of integration into employers’ business
c) Manner in which remuneration is disbursed to
workers
d) Economic control over workers
e) Whether work being conducted is for oneself or a
third party
(iii) In Sushilaben (supra) priority was given to
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these would ordinarily suffice to identify the true nature
of the relationship unless other contractual terms
indicated otherwise.
(iv) In Sushilaben (supra) the articulation of the
control test has been given importance as it varies from
that in Balwant Rai Saluja v Air India Ltd. reported in.
2014 9 SCC 407. This was elucidated as under:
“The three-tier test laid down by some of
the English judgments, namely, whether wage or
other remuneration is paid by the employer;
whether there is a sufficient degree of control bythe employer and other factors would be a test
elastic enough to apply to a large variety of
cases.”
of
(emphasis added)
(v) The use of the term “sufficient degree of control”
is in stark contrast to the “effective and absolute
control” ruling in Balwant Rai Saluja (supra). However,
rt
no reference to Balwant Rai Saluja (supra) was made
while discussing the evolution of the various tests.
(Referral: IIMA, Working Paper by M.P. Ram Mohan andSai Muralidhar K.)
76. In the overall view of the matter, we are convinced that
the Labour Court as well as the High Court committed
an egregious error in taking the view that therespondents could be termed as employees of the Bank
and since their services came to be terminated with the
closure of the Canteen, they are entitled to be reinstated
with full back wages in accordance with the provisionsof the Industrial Disputes Act.
77. We need not say anything further.
78. In the result, these appeals succeed and are hereby
allowed.
79. The impugned judgments and orders passed by the
High Court are set aside. Consequently, the Award
passed by the Labour Court also stands set aside.”
4(ii). Petitioner in his affidavit (Ext. PW1/A) has
claimed to have been engaged only by respondent No.2. The
said affidavit has been placed on record as Annexure P-6.
Petitioner has unequivocally sworn therein that his services
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were engaged by respondent No.2/Department, i.e.
Executive Engineer, Changer Area Lift Irrigation Project,
Division Bassi, District Bilaspur on muster roll as Beldar
on daily wage basis w.e.f. 01.11.2011; He continued to
.
work in the said capacity till 30.06.2012; His services were
unlawfully terminated by respondent No.2 w.e.f.
01.07.2012. That for the period in question, he had never
worked under respondent No.1 (Contractor). Petitioner has
of
specifically denied having worked under respondent No.1 or
that he was engaged by respondent No.1. His entire
rt
emphasis in the claim is to establish himself as an
employee of respondent No.2 and having been terminated
unlawfully by respondent No.2. However, but for his self-
serving statement, no other evidence in support of the claim
has been placed on record by the petitioner.
As against the claim of the petitioner, Sh. Satish
Kumar Sharma appearing as RW1 on behalf of respondent
No.2 has categorically reiterated the stand of respondent
No.2 about petitioner being neither engaged nor his services
having been terminated by respondent No.2. According to
RW1, petitioner was under the direct control and
supervision of respondent No.1; It was the prerogative of
respondent No.1 to engage, disengage or terminate any
worker employed by it. That payments for operation and
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maintenance were made directly to respondent No.1. No
payments were made by respondent No.2 to the petitioner.
This witness has also placed on record Ext. RW1/F (notice
inviting tender) and Letters (Ext. RW1/E, Ext. RW1/G, Ext.
.
RW1/H, Ext. RW1/J, Ext. RW1/K, Ext. RW1/L, Ext.
RW1/M & Ext. RW1/N), reflecting award of works of several
schemes to private contractors. Even during the course of
cross-examination, RW1 maintained that control &
of
supervision over the workers engaged in different schemes
was not with the department and that respondent No.2 only
rt
made payment to the Contractors. The stand taken by
respondent No.2 has been endorsed by respondent No.1 in
its reply that it had engaged the services of the petitioner
for the period of the contract, which was assigned to it by
respondent No.2. Respondent No.1 has also admitted
issuing notice to the petitioner on completion of the
project/agreement and releasing his all admissible
payments.
In the given facts & circumstances, the evidence
led by the parties and the law laid down, learned Labour
Court has correctly concluded that claim set up by the
petitioner, the relief claimed by him, was only against
respondent No.2, but the petitioner failed to establish
employer-employee relationship between him and
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respondent No.2. Petitioner having failed to discharge this
burden, his claim was justly dismissed by the learned
Labour Court.
5. For the foregoing reasons, no interference is
.
called for with the impugned award. This writ petition,
therefore, lacks merit and is accordingly dismissed. Pending
miscellaneous application(s), if any, also stand disposed of.
of
Jyotsna Rewal Dua
February 23, 2026 Judge
Mukesh
rt
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