Delhi High Court Upholds Bank Peon’s Illegal Termination After Direct Employment Proven; Replaces Reinstatement With ₹3-Lakh Compensation After 33-Year Delay and Section 17B Payments Already Made
Delhi High Court Says Bank’s Identity Card, Certificates and Direct Payment Vouchers Supported Peon’s Employer-Employee Relationship
Facts
The State Bank of Patiala challenged an award dated 16 April 2007 passed by the Central Government Industrial Tribunal-cum-Labour Court-II in I.D. No. 199/1997. The CGIT had held the termination of Anil Kumar illegal and directed his reinstatement from 22 December 1992 with 10% back wages.
Anil Kumar claimed that the Bank had directly engaged him as a Peon at its Meerut City Branch on 16 April 1990, where he continued working until 21 December 1992. He alleged that despite completing more than 240 days of service, his employment was abruptly terminated without notice or retrenchment compensation under the Industrial Disputes Act, 1947.
The Bank denied any employer-employee relationship. Its case was that Anil Kumar had been deployed as a security guard through an outside agency and that the identity card and curfew pass relied upon by him were merely issued to facilitate movement during curfew.
The CGIT nevertheless found that Anil Kumar was directly engaged as a daily-wage Peon. It relied upon, among other material:
- an identity card describing him as a “Peon”;
- a character certificate issued by the Branch Manager;
- a curfew pass describing him as a Government servant;
- a Bank certificate recording that he worked from 16 April 1990 to 21 December 1992; and
- payment vouchers showing direct payments to him.
The CGIT also found that the Bank had failed to substantiate its claim that he had been deployed by an outside contractor.
It therefore held that his termination without Section 25F compliance was illegal and awarded reinstatement with 10% back wages.
Issues
The principal issues before the Delhi High Court were:
- Whether an employer-employee relationship existed directly between Anil Kumar and the Bank.
- Whether the Bank had proved that he was actually an employee of an outside service agency.
- Whether the documentary evidence relied upon by the workman was sufficient to establish a prima facie case of direct employment and continuous service.
- Whether the earlier civil and Section 33C(2) proceedings operated as res judicata against the industrial dispute.
- Whether Anil Kumar had established completion of the requisite 240 days of service so as to attract Section 25F.
- Whether reinstatement with back wages should continue nearly 34 years after termination, particularly where he was a daily-wage worker nearing superannuation.
Bank’s Arguments
The Bank contended that Anil Kumar was never its employee.
Before the High Court, it relied upon an alleged arrangement with M/s Industrial Services Agency, under which the agency offered the services of a Watchman-cum-Peon and allegedly deputed Anil Kumar to the Bank.
The Bank attempted to explain that its earlier reference to M/s Secure Well Services as the contractor was an inadvertent error and that the actual agency was M/s Industrial Services Agency.
It further argued that:
- no appointment letter had been issued;
- no salary was directly paid as regular wages;
- the identity card and curfew pass did not establish employment;
- the payment vouchers merely reimbursed miscellaneous expenses; and
- the workman had not independently proved 240 days of service.
The Bank also relied upon earlier proceedings in which the workman’s employment claim had not succeeded and invoked the principle of res judicata.
Alternatively, it argued that even if termination violated Section 25F, reinstatement and back wages were not automatic, particularly for a daily-wage employee.
Workman’s Arguments
Anil Kumar argued that the CGIT was the fact-finding authority and had reached a plausible conclusion after appreciating both oral and documentary evidence. The High Court, exercising supervisory jurisdiction, could not reassess the evidence as an appellate court.
He disputed any relationship with an external service provider.
Significantly, he pointed out that the Bank’s contractor defence itself had changed:
- before the CGIT, the alleged service provider was M/s Secure Well Services;
- before the High Court, the Bank relied on M/s Industrial Services Agency.
He argued that the documents concerning the latter had never even been produced before the CGIT.
Analysis of the Law
1. Scope of writ review over CGIT findings is limited
The High Court reiterated that Articles 226 and 227 do not convert it into an appellate court over Labour Court or Tribunal findings.
Interference is warranted only where a finding suffers from patent perversity, rests on no evidence or is such that no reasonable adjudicator could have reached it.
The mere possibility of another view does not permit reassessment of the evidence.
2. Workman established a prima facie case of direct employment
The CGIT had relied on contemporaneous documents originating from or associated with the Bank, including the identity card, character and experience certificates, curfew pass and direct payment vouchers.
Even the Bank’s witness admitted that Anil Kumar had worked at the Bank approximately from 1990 to 1992.
Once his actual work at the Bank was admitted and the Bank specifically alleged that he had been supplied through an independent contractor, the evidentiary burden shifted to the Bank to produce the best evidence supporting that defence.
Burden of Proof in Employer-Employee Relationship
Bank of Baroda v. Ghemarbhai Harjibhai Rabari
The High Court relied significantly upon Bank of Baroda v. Ghemarbhai Harjibhai Rabari, (2005) 10 SCC 792.
The principle drawn was that while the initial burden of establishing employment ordinarily lies on the workman, the degree of proof varies according to the facts of each case.
A formal appointment letter is not indispensable where the worker establishes a prima facie relationship through materials such as payment vouchers and actual performance of duties, especially when the employer fails to rebut that evidence despite possessing the relevant records.
This principle was directly applicable because Anil Kumar had produced documentary material connecting him to the Bank, while the Bank failed to establish its supposed contractor arrangement.
Bank’s Contractor Defence Rejected
This became one of the strongest factual features of the judgment.
The High Court held that if Anil Kumar had truly been deployed by an independent contractor, the Bank could readily have produced:
- the contractor agreement;
- invoices;
- payment records;
- correspondence;
- deployment records;
- accounts showing payments to the agency; or
- evidence of the contractor’s representative.
None of this primary material was produced either before the CGIT or before the High Court.
More seriously, the identity of the supposed contractor itself changed.
The Bank relied upon Secure Well Services before the CGIT, but sought to attribute the workman’s deployment to Industrial Services Agency before the High Court.
The Court found no satisfactory explanation for this inconsistency. Nor was there a complete commercial trail supporting any outsourcing arrangement.
Accordingly, the CGIT’s conclusion that the Bank was the real employer was a plausible finding based upon cumulative evidence and could not be described as perverse.
Earlier Proceedings and Res Judicata
The Bank relied upon a prior civil suit and proceedings under Section 33C(2) to contend that the workman’s employment claim had already failed.
The High Court rejected this argument.
It noted that proceedings under Section 33C(2) are essentially for computation of an existing right and cannot be used to adjudicate for the first time whether an employer-employee relationship exists.
As regards the earlier civil suit, although the Civil Court had recorded an observation concerning absence of an employer-employee relationship, the suit itself was dismissed because the dispute was an industrial dispute outside the Civil Court’s jurisdiction.
The High Court therefore held that such a finding could not be elevated into a final industrial adjudication binding on the CGIT.
It expressly observed that where jurisdiction itself was lacking, a finding by that court could not operate as a conclusive determination of the industrial relationship.
Section 25F and 240 Days
The High Court acknowledged that the workman carries the initial burden of establishing completion of 240 days.
However, it emphasized the practical reality that daily-wage workers ordinarily do not possess formal employment records. Where the employer controls those records and fails to produce them, an adverse inference may arise depending upon the circumstances.
Here, Anil Kumar had worked from 1990 to 1992, as even the Bank’s witness acknowledged, and the CGIT’s finding regarding continuous service rested upon documentary and oral evidence.
The Bank produced no coherent attendance or payment record establishing intermittent employment or third-party engagement.
The Court therefore upheld the CGIT’s finding that termination without Section 25F compliance was illegal.
It also clarified that a workman does not have to prove employment only through a formal appointment letter, particularly in daily-wage cases where such records ordinarily remain with the employer.
Precedent Analysis
International Airport Authority of India v. International Air Cargo Workers Union
Applied to restrict the High Court from reappreciating factual findings of the Labour Tribunal where the conclusion is supported by relevant material.
Bank of Baroda v. Ghemarbhai Harjibhai Rabari
Applied to hold that the degree of proof required from the workman varies according to circumstances, and once a prima facie employment case is established, the employer must rebut it through evidence in its possession.
Municipal Corporation, Faridabad v. Siri Niwas
The Court accepted the proposition that the initial burden of proving 240 days falls upon the workman, but clarified that the burden can be discharged through evidence other than formal appointment records.
Allahabad Bank v. Krishan Pal Singh
Relied upon for the principle that illegal termination does not mechanically require reinstatement with full back wages; relief must be moulded according to the factual circumstances.
Jagbir Singh v. Haryana State Agriculture Marketing Board
The Supreme Court recognized the shift away from automatic reinstatement in cases involving daily wagers and Section 25F violations.
Relevant factors include:
- manner of appointment;
- nature of employment;
- length of service; and
- surrounding circumstances.
Compensation may therefore replace reinstatement even though termination itself remains illegal.
BSNL v. Bhurumal
This precedent was particularly important at the relief stage.
The Supreme Court held that where a daily-wage worker is terminated for non-compliance with Section 25F, reinstatement is ordinarily not automatic. Monetary compensation may instead appropriately serve the ends of justice, particularly where employment lasted only two or three years and a substantial period has elapsed.
Court’s Reasoning on Relief
Although Anil Kumar succeeded on the merits of illegal termination, the High Court found that the original remedy of reinstatement was no longer appropriate.
The relevant circumstances were:
- his engagement had lasted less than three years;
- employment ended in 1992;
- more than 33 years had elapsed;
- the workman was approaching the applicable age of superannuation; and
- pursuant to an earlier Section 17B order, the Bank had already paid approximately ₹11 lakh up to 2022.
The Court noted that although Section 17B payments are in the nature of subsistence allowance, Anil Kumar had received them for a long period without rendering services to the Bank.
Balancing all these circumstances, reinstatement with back wages was considered inappropriate.
Conclusion
The Delhi High Court upheld the CGIT’s finding that Anil Kumar had been directly employed by State Bank of Patiala and that his termination in violation of Section 25F was illegal.
The Bank’s outsourcing defence failed because it:
- produced no contractor agreement or commercial/payment trail;
- failed to examine the supposed contractor;
- changed the identity of the alleged service provider; and
- could not rebut the contemporaneous evidence supporting direct employment.
However, the Court modified the remedy.
Instead of reinstatement with 10% back wages, the Court awarded ₹3,00,000 as lump-sum compensation, payable within eight weeks.
Crucially, the ₹3 lakh was directed to be paid over and above all amounts validly paid under Section 17B, and the Bank remained liable for any unpaid Section 17B amount accruing up to the date of judgment.
Case Details
Case: State Bank of Patiala v. Anil Kumar & Anr.
Court: Delhi High Court
Case Number: W.P.(C) 6756/2007
CNR: DLHC011153872007
Judge: Justice Amit Mahajan
Reserved On: 28 July 2026
Pronounced On: 8 September 2026
Impugned Award: CGIT-cum-Labour Court-II Award dated 16 April 2007 in I.D. No. 199/1997
Original Relief: Reinstatement from 22 December 1992 with 10% back wages
Final Relief: ₹3 lakh lump-sum compensation in lieu of reinstatement/back wages, over and above Section 17B payments; outstanding Section 17B dues, if any, also payable
Result: Illegal-termination finding upheld; reinstatement and back-wages component modified to monetary compensation.
