Liability of Principal Employers for Minimum Wages of Outsourced Personnel

OFFICE OF THE CHIEF LABOUR COMMISSIONER(CENTRAL), NEW DELHI

SECTION-LS SECTION

COMPENDIUM OF RELEVANT COURT CASES FOR REFERENCE OF OUR OFFICERS

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*HON’BLE SRI JUSTICE HARINATH.N

+WRIT PETITION No.6084 OF 2011

%07.01.2025

#State Bank of India, rep. by its Assistant General Manager, (Adm.) Sri S.Eswaran s/o.Shanmugam, Aged:56 years, Administrative Unit, SBI, Suryaraopet, Vijayawada, Krishna District. …Petitioner

AND

$1. The Authority under Minimum Wages Act, 1948 and the Regional Labour Commissioner (Central) Vidyanagar, Shivam road, Hyderabad and nine others. ….Respondents.

WRIT PETITION No.28027 OF 2011

State Bank of India, rep. by its Chief Manager Sri I.Thyagaraju, S/o.Krishna Swamy Rao, aged 54 years, SBI Tenali, Guntur District. …Petitioner

AND

The Authority under Minimum Wages Act, 1948 and the Regional Labour Commissioner (Central) Vidyanagar, Shivam road, Hyderabad and four others. …Respondents

!Counsel for the petitioner : Sri S.Satyanarayana Moorthy ^Counsel for the respondents : Ld. Govt. Pleader for Labour <Gist:

Head Note: ? Cases referred:

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HIGH COURT OF ANDHRA PRADESH

WRIT PETITION No.6084 OF 2011

%07.01.2025

#State Bank of India, rep. by its Assistant General Manager, (Adm.) Sri S.Eswaran s/o.Shanmugam, Aged:56 years, Administrative Unit, SBI, Suryaraopet, Vijayawada, Krishna District. …Petitioner

AND

$1. The Authority under Minimum Wages Act, 1948 and the Regional Labour Commissioner (Central) Vidyanagar, Shivam road, Hyderabad and nine others. ….Respondents.

WRIT PETITION No.28027 OF 2011

State Bank of India, rep. by its Chief Manager Sri I.Thyagaraju, S/o.Krishna Swamy Rao, aged 54 years, SBI Tenali, Guntur District. …Petitioner

AND

The Authority under Minimum Wages Act, 1948 and the Regional Labour Commissioner (Central) Vidyanagar, Shivam road, Hyderabad and four others. …Respondents

DATE OF JUDGMENT PRONOUNCED: 07.01.2025.

SUBMITTED FOR APPROVAL:

THE HON’BLE SRI JUSTICE HARINATH.N

1. Whether Reporters of Local newspapers may Yes/No be allowed to see the Judgments?
2. Whether the copies of judgment may be marked to Law Reporters/Journals? Yes/No
3. Whether Your Lordships wish to see the fair Copy of the Judgment? Yes/No

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JUSTICE HARINATH. N

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APHC010067122011

IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3457]

TUESDAY, THE SEVENTH DAY OF JANUARY TWO THOUSAND AND TWENTY FIVE

PRESENT THE HON’BLE SRI JUSTICE HARINATH.N

WRIT PETITION NO: 6084 OF 2011

Between: The State Bank of India …Petitioner

AND

The Authority under Minimum Wages Act, 1948 And the Regional Labour Commissioner (Central) Vidyanagar, Shivam Road, Hyderabad and 9 others …Respondents

WRIT PETITION No.28027 OF 2011

Between: The State Bank of India …Petitioner

AND

The Authority under Minimum Wages Act, 1948 And The Regional Labour Commissioner (Central) Vidyanagar, Shivam Road, Hyderabad and 4 others. …Respondents

Counsel for the petitioner: Sri S.Satyanarayana Moorthy Counsel for the respondents: Ld. Govt. Pleader for Labour

The Court made the following common order:

1. The challenge in both the writ petitions is against the respective orders of the competent Authority under the Minimum Wages Act,

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directing the State Bank of India-respondent No.3 therein to deposit the principal amount towards the minimum wages due payable to the employees and directing the Security Management Services Private Limited - respondents 1 and 2 therein to deposit compensation equal to two times of the principal amount.

2. The petitioner herein was arrayed as respondent No.3 and the respondents 7 and 8 herein were arrayed as respondents No.1 and 2 before the Authority under Minimum Wages Act, 1948, Hyderabad.

3. In W.P. No.6084 of 2011, the competent Authority under the Minimum Wages Act directed respondent No.3 therein to deposit the principal amount Rs.1,72,336/- and further directed respondents 1 and 2 therein to deposit compensation equal to two times the principal amount i.e. Rs.3,44,672/-.

4. In W.P. No.28027 of 2011, the competent Authority under the Minimum Wages Act directed respondent No.3 therein to deposit the principal amount of the claim Rs.62,374/- and further directed respondents 1 and 2 to deposit compensation equal to two times the principal amount i.e. Rs.1,24,748/-.

5. The learned standing counsel for the petitioner submits that the service of the Security Management Services was engaged for manning the A.T.M. Kiosks operated by the Bank and that the Bank had outsourced the job for manning A.T.M. Kiosks to agencies, to provide manpower. It is submitted that though the man posted at the

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A.T.M. Kiosks to serve the Bank, the Bank did not directly appoint them and there is no existence of an employee-employer relationship, the Bank would pay the consolidated amount to the security service agency, and it is their lookout to engage and deploy the man as required by the Bank. It is also the responsibility of the said security agency to disburse the payments by complying with the applicable labour laws for the employees working in the said security agency.

6. In both these writ petitions, the security guards have approached the competent Authority challenging the in-action of the security agency in the disbursement of minimum wages under the Minimum Wages Act. The petitioner is also arrayed as a party respondent in the said proceedings. The competent Authority in the order has fixed the responsibility on the petitioner insofar as payment of minimum wages is concerned. It was observed that it is the responsibility of the petitioner to ensure all their vendors, sub-contractors, consultants, and outsourced agency to comply with the relevant Labour Laws and all other laws applicable for conducting the said business. Though the petitioner was not a principal employer, the responsibility of ensuring compliance of the laws applicable to its vendors is on the petitioner. As such the competent Authority directed the petitioner herein to deposit the principal amount of

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Rs.1,72,336/- in W.P. No.6804 of 2011 and an amount of Rs.62,374/- in W.P. No.28027 of 2011.

7. In W.P. No.6084 of 2011, this Court stayed the operation of the order impugned in the writ petition and the petitioner was directed to deposit an amount of Rs.50,000/- with the first respondent herein. It was further directed that on such deposit, the amount to be proportionately disbursed to respondents 2 to 6, who were the security guards, and this Court also observed that the amount of Rs.50,000/- which the petitioner deposits can be adjusted from any payment liable to be paid to the 9th respondent in the writ petition.

8. In W.P. No.28027 of 2011, this Court directed the petitioner to deposit an amount of Rs.20,000/- and the second respondent was permitted to withdraw the same without furnishing any security.

9. It is not in dispute that the compliance of the labour laws and other applicable laws by the vendors is the lookout of the Bank. The Bank has required the agency for deployment of men for manning the A.T.M. Kiosks instead of recruiting the staff on the rolls of the Bank, the Bank thought it appropriate to outsource the same through a contractor, the same cannot be found fault as it is prerogative of the petitioner the way it intends to conduct its business. However, the responsibility of the petitioner to ensure that the petitioner and their vendors duly comply with the appropriate and applicable laws. To deal with the contention of the learned standing counsel for the