Case Study: Principal Employer Liable to Pay Gratuity for Contract Employees.

⚖️ Case

WPA No. 3503/2025 – Shibaparsad Sutradhar vs. State of West Bengal & Ors.

🏛 Court and Date

Calcutta High Court
Hon’ble Justice: Ms. Shampa Dutt (Paul)
Date of Judgment: 30.06.2025The principal employer is liabl…

📜 Relevant Law

Payment of Gratuity Act, 1972

• Contract Labour (Regulation and Abolition) Act, 1970 (CLRA)
• Payment of Wages Act, 1936The principal employer is liabl…

📁 Background

• The petitioner worked as a security guard at Mother Dairy, Calcutta from 01.01.1997 to 01.08.2019, continuously through several contractors.
• On retirement, he was denied gratuity on the ground that he had not completed five years with the last contractor.
• The Controlling Authority (16.11.2022) and the Appellate Authority (28.02.2024) rejected his claim.
• He then filed this writ petition before the Calcutta High CourtThe principal employer is liabl….

⚖️ Legal Issue

Whether the principal employer (Mother Dairy) is liable to pay gratuity to a contract employee who served continuously for over 22 years through multiple contractors.

📑 Key Legal Findings

• The principle of “real employer” applies: continuous service through multiple contractors does not break employment.
• PF records named Mother Dairy as employer, showing an enduring employment link.
• Changing contractors does not break continuity; the worker remained in service of the principal employer.
• Gratuity qualifies as ‘wages’ under CLRA; hence principal employer liable if contractor defaults.
• Relied on landmark judgments:
  • SAIL vs. Workmen of SAIL
  • IIT Bombay case
  • ONGC contract workmen case
  • Balwant Rai Saluja vs. Air India
  • Hussainbhai vs. Alath Factory Thezhilali UnionThe principal employer is liabl…The principal employer is liabl…

⚖️ Judgment

• The High Court set aside orders of the Controlling & Appellate Authorities.
• Declared that Mother Dairy is the principal employer and is liable to pay gratuity despite multiple contractors.
• Directed payment of gratuity with statutory interest within 30 days, allowing recovery from contractors proportionatelyThe principal employer is liabl….

📌 Conclusion

• Long, continuous service through different contractors is treated as uninterrupted service to the principal employer.
• Denial of gratuity solely because the last contractor engagement was less than five years is illegal.

💡 Key Learning

• Changing contractors does not dilute the liability of the principal employer under the Payment of Gratuity Act.
• Gratuity is part of ‘wages’ under CLRA, and the principal employer must ensure its payment if contractors default.
• Establishing continuity of service and real employer doctrine is crucial for contract employees claiming statutory benefits.

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