Bombay High Court in Indian Institute of Technology, Bombay vs. Tanaji Babaji Lad, W.P. 12746 OF 2024, upheld the order of the controlling authority under the Payment of Gratuity Act, 1972 (“Gratuity Act“), directing the principal employer to pay gratuity to contract labourers. The Court noted that the principal employer continuously employed several contract labourers through multiple contractors over an extended period. The labourers worked consistently on the principal employer’s premises, and the Court found a continuous connection between their services and the principal employer. The Court rejected the argument that the terms and conditions of service were solely determined by the contractors, noting that in this case, one of the labourers had rendered 39 years of service. It further emphasized that this arrangement appeared to be one where the salaries were merely routed through contractors, and that the principal employer had a degree of control over the labourers. The Court, therefore, ruled that these labourers were entitled to gratuity under the Gratuity Act.
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