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( 2026:HHC:9621 )

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

CWP No. 3661 of 2026

Decided on: 31.03.2026

Gurbachan Singh …..Petitioner

Versus

The Executive Engineer, Changer

Area Lift Irrigation Project, Bassi,

.....Respondent

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Coram

Ms. Justice Jyotsna Rewal Dua

Whether approved for reporting?

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For the Petitioner: Mr. Rahul Mahajan, advocate.

For the Respondent: Mr. Y.P.S. Dhaulta, Additional

Advocate General.

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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 31.12.2024 primarily on the ground that

the petitioner failed to discharge burden of proving

employer-employee relationship between him and the

respondent. Feeling aggrieved, petitioner has laid

challenge to the aforesaid award in this writ petition.

2. Heard and considered the case file.

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Whether reporters of print and electronic media may be allowed to see the order? Yes.

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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

Gurbachan Singh S/o Shri Chuhara Ram, R/o V.P.O

Bassi, Tehsil Shri Naina Deviji, District Bilaspur,

H.P. w.e.f. 01-07-2012 (as alleged by workman) by

the Executive Engineer, Changer Area Lift Irrigation

Project Division Bassi, District Bilaspur, H.P.,

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 above employer?”

3(ii). The claim set up by the petitioner (Annexure P-

2) was that on the basis of result of an interview process

conducted by the respondent on 01.05.2011 he was

employed by the respondent as Daily Waged Helper on

01.05.2011 in Changer Area Medium Lift Irrigation Project,

Division Bassi, District Bilaspur, H.P. He continued to work

till 30.06.2012. With effect from 01.07.2012, the

respondent awarded entire work to contractor.

Consequently, services of the petitioner alongwith 12

other workers were terminated. It was the case set up by

the petitioner that his daily waged services were

terminated under a verbal order of the respondent on

01.07.2012 without any notice. That before awarding

work to the contractor, notice was not even issued to the

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petitioner. Petitioner alleged concealment of his muster

roll, attendance register and demand register by the

respondent. According to the petitioner, despite making

repeated requests, he was not reinstated in service.

Petitioner asserted violation of provisions of Sections 25-

F(a), 25-F(b), 25-G and 25-H of the Industrial Disputes Act,

1947 as also the principle of ‘Last come first go’.

Petitioner prayed for reinstatement in service alongwith

seniority, continuity of service and other consequential

benefits including back wages.

3(iii). Respondent in its reply (Annexure P-3) raised

several preliminary objections including there being no

relation of employer-employee between petitioner and

respondent. Respondent denied petitioner having worked

under it upto 30.06.2012 and awarding the work to

contractor on 01.07.2012. Respondent denied terminating

services of the petitioner alongwith 12 workers. According

to the respondent, Changer Area Medium Lift Irrigation

Project was constructed through different contractors.

Upon completion of the project, the same was again

awarded to several contractors for purpose of operation

and maintenance of project by outsourcing labour;

Respondent neither engaged nor terminated services of

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the petitioner. There was no relationship of employer and

employee between them.

3(iv). In support of his claim, petitioner furnished his

affidavit, Ext. PW1/A (Annexure P-5) reiterating the facts

alleged in the claim petition. Petitioner also produced on

record list of workers employed in the project and termed

it as seniority list maintained by the respondent.

Respondent examined one Shri S.K. Patial, Executive

Engineer, Changer Area Medium Lift Irrigation Project. The

said witness besides his affidavit Ex. RW1/A (Annexure P-

6) also placed on record several documents. Learned

Labour Court after considering the entire case, dismissed

the claim petition.

4. Consideration:-

4(i). Hon’ble Apex Court in General Manager,

U.P. Cooperative Bank Ltd. Versus Achchey Lal &

Anr.

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, while allowing the appeal against the impugned

decision, where respondents were held to be appellant’s

employees, laid down following tests through which

relationship between employer and employee could be

determined in case of an industrial dispute:-

“1.Control Test, where the hirer has control over

the work assigned and the Control manner in

which it is to be done. The control test is

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Civil Appeal No.2974/2016, decided on 11.09.2025.

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derived from common law application in

vicarious liability claims.

2.Organization/Integration Test, which 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 test allows the professional

workers to 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 other remuneration,

master’s right to control the method of doing

the work and master’s right of suspension or

dismissal. 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.

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 a third party.”

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Relevant paras of the decision in Achchey

Lal

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read as under:-

“75. As held in Parimal Chandra Raha

(supra), if there is a mere 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:

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.

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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

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 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

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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

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.

(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 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

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(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 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

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beyond the control and integration in

future cases was also recognised. This

opened the path for the multifactor

test.

3. Multiple Factor test

(i) 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

arrangements exist, the Contract

Labour (Regulation and Abolition) Act,

1970 would not apply, and workers

would be deemed employees and have

the right to raise an industrial 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 workers are employees or

independent contractors was brought

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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 employer or

contractor:

(i) Whether the principal employer

pays the salary instead of the

contractor; and

(ii) 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

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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 factors of control and mode of

remuneration, noting 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 by the

employer and other factors would

be a test elastic enough to apply to

a large variety of cases.”

(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,

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 and Sai 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

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egregious error in taking the view that

the respondents 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

provisions of 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 claim petition had asserted

having been employed by the respondent pursuant to an

interview conducted on 01.05.2011. However, during

course of his cross-examination, he admitted of having

not been interviewed by anyone. The stand of the

respondent had been that work of Changer Area Medium

Lift Irrigation Project had been carried out by the

contractors; On completion of work, it was again awarded

for operation and maintenance to contractors by

outsourcing of labour. Learned Labour Court has properly

appreciated the evidence adduced by the parties and

drew conclusion that Ex. PW1/B produced by the

petitioner as seniority list was actually only a list of

employees working in the project. Though according to

the petitioner, he had not worked under the contractor

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but there was no oral or documentary evidence produced

by the petitioner to prove that he was being paid wages

directly by the respondent. There was no documentary or

oral evidence on record to establish that petitioner had

been working under the control or supervision of the

respondent. This factor assumes significance in view of

the stand taken by the respondent that work under the

project was being executed by them all throughout by

different contractors on outsource labour basis. The

documents produced by the respondent Exts. RW1/B,

RW1/C and RW1/D were pointer to the fact that work of

project had been awarded to contractors on prescribed

terms of agreement. Learned Labour Court drew

justiciable conclusions from the evidence on record that

the petitioner while raising his dispute before the Labour-

cum-Conciliation Officer did not mention his employment

under the contractor. Respondent in its reply filed before

Labour-cum-Conciliation Officer (Ex. RW1/I) had

mentioned existence of neither any attendance register

nor muster roll in favour of the petitioner. That there was

no appointment letter issued by it in favour of the

petitioner. So called seniority list Ex. PW1/B was not a

seniority list maintained by the respondent but list of

workers in the project. In view of above, learned Labour

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Court correctly held that work had been awarded by the

respondent to the independent contractors for different

purposes. The contractor had not even been impleaded by

the respondent. The petitioner failed to demonstrate his

employment under the respondent or that his services

were terminated by the respondent.

In the given facts & circumstances, the

evidence led by the parties and the law laid down, learned

Labour Court had correctly concluded that the petitioner

failed to establish employer-employee relationship

between him and the respondent. Petitioner having failed

to discharge this burden cast upon him, 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.

Jyotsna Rewal Dua

March 31, 2026 Judge

yogesh