NIMHANS Contract Workers’ Firings: Karnataka HC Leaves Sham-Contract And Employer-Status Dispute To Labour Court

NIMHANS engaged Sree Vinayaka Enterprises and Facility Management Private Limited as a contractor.

Three workmen engaged through the contractor were removed from service after allegations of misconduct.

The workers’ union raised industrial disputes, asserting that the contract was sham and that NIMHANS controlled and supervised the workmen.

NIMHANS denied an employment relationship and challenged the Central Government’s references to the Labour Court under Article 226, contending that the contractor employed and terminated the workmen.

The reference concerning one workman expressly raised whether an employer–employee relationship existed; the references concerning the other two did not.

Section 10 of the Industrial Disputes Act, 1947 (ID Act) empowers the appropriate Government to refer industrial disputes for adjudication; under Section 10(4), the Labour Court’s adjudication is confined to the points specified in the reference and matters incidental to them.

A writ petition may challenge a reference where jurisdiction is in question, but disputed factual questions—such as whether a contract is genuine or sham and whether an employment relationship exists—ordinarily require determination by the Labour Court on evidence.

The Court relied on National Engineering Industries Ltd. v. State of Rajasthan, 2001 LLJ 247, concerning the High Court’s jurisdiction to examine a challenge to a reference.

Balwant Rai Saluja v. Air India Ltd., (2014) 9 SCC 407, identifying relevant employment-status factors, including appointment, payment, dismissal, disciplinary authority, continuity, and control and supervision.

Premium Transmission Private Limited v. State of Maharashtra, 2026 SCC OnLine SC 113, on the distinction between genuine and sham contracts and the Labour Court’s role in deciding that factual dispute.

The parties disputed who employed and controlled the workmen and whether the contractor arrangement was genuine.

Resolving those matters required evidence concerning, among other things, appointment, wages, disciplinary authority, termination, and supervision; they could not be conclusively decided in the writ proceedings or merely at the reference stage.

The Labour Court was therefore the appropriate forum to determine the relationship and the contract’s genuineness.

However, because Section 10(4) limits adjudication to the points referred and incidental matters, the Court directed that the references concerning Ms. Rekha and Ms. Thenmozhi expressly include the disputed employment relationship.

It directed the Labour Court to frame an additional issue on whether an employer–employee relationship existed between NIMHANS and Ms. Rekha and Ms. Thenmozhi, and to decide that issue with the other issues in accordance with law.

The writ petitions were disposed of with that direction.