The Supreme Court also found substance in ONGC’s submissions concerning the Payment of Wages Act, 1936 and the Contract Labour (Regulation and Abolition) Act, 1970.
ONGC had argued that Section 21(4) of the Contract Labour Act dealt with responsibility relating to wages and did not, by itself, make the principal employer liable for gratuity. It also relied upon the statutory distinction between wages and gratuity under the Payment of Wages Act.
The Court noted that ONGC had also relied upon its earlier decision in Municipal Council, represented by its Commissioner, Nandyal Municipality, Kurnool District, A.P. v. K. Jayaram & Ors., decided on December 16, 2025, in support of the proposition concerning workers engaged through contractors. However, the Bench said it was unnecessary to rely further on that judgment in view of the order it was passing on the jurisdictional issue.
Bombay HC order set aside
On the “short point” that the Controlling Authority was not competent to adjudicate the dispute raised by workers who had worked through contractors, the Supreme Court allowed ONGC’s appeals.
Also read – Principal Employer Not Liable To Pay Gratuity To Contractor Workers: SC
It set aside the Bombay High Court’s order and revived the order of the Appellate Authority.
Importantly, however, the Court protected the workers from having to return money they had already received.
The judgment records that the gratuity amounts claimed by the workers had already been paid by ONGC pursuant to an earlier Supreme Court order dated December 15, 2023. The Bench therefore directed that no recovery should be made from the workers.
What the judgment establishes
The ruling primarily concerns the jurisdiction of the Controlling Authority under the gratuity law and the absence of an established employer-employee relationship between ONGC and the workers concerned.
The decision therefore sets aside the particular finding fastening gratuity liability on ONGC through proceedings before the Controlling Authority. It also restores the Appellate Authority’s order in favour of ONGC, while protecting the workers from recovery of gratuity already paid.
The judgment is significant for disputes involving contract labour because it underscores the distinction between a principal employer and the workers’ actual employer under a contractual arrangement, as well as the limits of the Controlling Authority’s statutory jurisdiction.
