Chandigarh, September 24, 2026: The Punjab and Haryana High Court has held that employees recruited and appointed by a private outsourcing agency cannot claim regularisation from the Pepsu Road Transport Corporation (PRTC) merely because they have worked for the Corporation for a long period.
A Division Bench comprising Justice Harsimran Singh Sethi and Justice Minderjeet Yadav, in a common judgment in the case of Pepsu Road Transport Corporation v. Daljeet Singh and Others( LPA No.1549,1410,1556 and 1529 of 2026) dated August 31, 2026, allowed a batch of four appeals filed by PRTC and set aside the order of a Single Judge which had directed regularisation of the outsourced employees.
The Bench held that a direct master-servant or employer-employee relationship between the Corporation and the workers must be established through documentary evidence, including an appointment order. Mere deployment with PRTC, performance of duties under its supervision, or long and continuous service does not, by itself, establish such a relationship.
Facts of the case
The respondents were working with PRTC as drivers, conductors and other personnel. However, according to the Court record, they had been recruited from the outset through a private outsourcing agency, M/s S.S. Service Providers.
The private agency had advertised the posts and issued the appointment orders. The workers were subsequently deployed at PRTC to perform their assigned duties. There was no appointment order issued by PRTC conferring upon them the status of regular, temporary, ad hoc or officiating employees of the Corporation.
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The employees nevertheless approached the High Court seeking regularisation. They relied, among other things, upon judgments concerning long-serving contractual employees and contended that their continuous service with PRTC, coupled with the nature of their duties and the control exercised by the Corporation, demonstrated that PRTC was their real employer.
On April 22, 2026, a Single Judge accepted their claim and directed regularisation, treating PRTC as the employer for the relevant purposes. The order also contemplated consequential service benefits, including the Old Pension Scheme in cases where the applicable conditions were satisfied. PRTC challenged that decision before the Division Bench.
The contract workers contention was that their continuous service with PRTC, the duties performed by them and the supervisory control exercised by the Corporation were relevant factors in determining the true nature of their employment.
Court held that such a relationship has to be established on the basis of written documentary evidence, including the appointment order. In the present case, the advertisement had been issued by the private agency, and the appointment orders had also been issued by that agency.
The Court noted that the workers’ deployment with PRTC was pursuant to the manpower-supply arrangement between PRTC and the outsourcing agency. There was no appointment order issued by PRTC at any stage of their service.
The Bench relied upon the Supreme Court’s decision in The Joint Secretary, Central Board of Secondary Education &Anr. v. Raj Kumar Mishra, where the Supreme Court had emphasised that a direct master-servant relationship must be established on paper and that supervisory or jurisdictional control, by itself, does not establish such a relationship.
Mere supervision and long service not sufficient
The High Court specifically rejected the proposition that merely because the workers performed their duties at PRTC and were subject to its operational supervision, they automatically became employees of the Corporation.
The Bench observed that continuous working with PRTC could not, by itself, be sufficient to treat the respondents as PRTC employees for the purpose of regularisation.
The Court also considered the contractual arrangement between PRTC and the outsourcing agency. It noted that the agreement did not confer upon PRTC the ordinary disciplinary authority over the outsourced workers in the manner applicable to its own employees.
Further, the Court noted that the respondents’ salaries were being paid by the contractor and their provident fund was being managed by the outsourcing agency, which the Bench considered significant in determining the actual employment relationship..
The Bench distinguished between a worker directly appointed by a corporation on a temporary or contractual basis and a worker who is supplied by an independent outsourcing agency.
According to the Court, an appointment by a private contractor cannot simply be treated as a temporary appointment by PRTC.
The Bench observed that a temporary employee contemplated under the PRTC service regulations would have been appointed by the Corporation itself. In contrast, the respondents had never been appointed by PRTC in any capacity.
Therefore, according to the Court, an appointment made by a private contractor under an outsourcing arrangement could not be converted into a temporary appointment of PRTC merely because the workers had performed their duties at the Corporation for several years.
The Division Bench concluded that the Single Judge had erred in treating the respondents as PRTC employees merely because they had been continuously deployed with the Corporation and set aside the single judge order.
