Badli Workers’ Entitlement to Gratuity: Continuous Service and Adverse Inference for Non‑Maintenance of Records

Introduction

The case of Hooghly Infrastructure Pvt. Ltd. v. Sk. Alam Ismail & Anr. (WPA 28770 of 2024) was decided by the Calcutta High Court on 18 March 2025 under Justice Shampa Dutt (Paul). The writ petition challenged two statutory orders under the Payment of Gratuity Act, 1972—one by the Controlling Authority (21 November 2023) and another by the Appellate Authority (18 September 2024)—which directed the petitioner‐employer to pay gratuity and interest to a “badli” (substitute) worker who had served the company from 24 May 1978 to 1 July 2015. The key issues were (a) whether a long‑serving badli worker qualifies as an “employee” entitled to gratuity under Section 2(e) and Section 4 of the Act, and (b) the consequences of the employer’s failure to produce service records mandated by law.

Summary of the Judgment

The High Court dismissed the writ petition, holding that:

Under Section 2(e) of the Gratuity Act a “badli worker” is an “employee” if he has rendered at least 240 days’ service in a year.
The respondent had produced his ESI Card and final wage slip; the petitioner failed to produce muster‑rolls or attendance records despite the statutory duty under Section 25D of the Industrial Disputes Act.
In view of adverse inferences drawn from non‐production of records, the Respondent was deemed to have completed 34 years of continuous service (from PF membership in 1981 to superannuation in 2015) and thus became eligible for gratuity under Section 4 of the Act.
The amounts awarded by the Controlling and Appellate Authorities (₹2,15,520 principal plus ₹1,79,600 interest) were confirmed; balance interest was directed to be paid.

Analysis

Precedents Cited

The Court relied heavily on several landmark decisions concerning burden of proof, adverse inference, and employers’ record‑keeping duties:

Union Of India v. Ibrahim Uddin, (2012 (8) SCC 148): Affirmed that withholding best evidence permits drawing adverse inferences under Section 114(g) of the Evidence Act, even if onus of proof technically lies elsewhere.
Sriram Industrial Enterprises Ltd. v. Mahak Singh, AIR 2007 SC 1370: Reiterated that an employer’s failure to produce attendance registers (the best evidence) entitles the court to presume continuous service.
R.M. Yellatty v. Assistant Executive Engineer, (2006 (1) SCC 106): Clarified the extent of high‑courts’ reliance on adverse inference when best evidence is not forthcoming from the party obliged to produce it.
Mahant Shri Srinivas Ramanuj Das v. Surjanarayan Das, AIR 1967 SC 256: Emphasized that statutory duty‑holders must preserve records; non‐production justifies an adverse presumption.
Ranbir Singh v. S.K. Roy, (Supreme Court, 27 April 2022): Under Section 25D of the Industrial Disputes Act, held that employers must maintain muster‑rolls; failure invites adverse inferences against them in disputes over service and seniority.
State Of Haryana v. Piara Singh, (JT 1992 (5) SC 179): Laid down that adhoc or temporary employees filling permanent posts must be regularized if selected and have rights unless lawfully superseded.
Calcutta Jute Manufacturing Co. v. State of West Bengal & similar Calcutta High Court decisions (2018–2024): Affirmed the duty on writ petitioners (employers) to produce continuous‑service documents to rebut a workman’s claim.

Legal Reasoning

Justice Dutt’s reasoning proceeded in two streams:

Definition and Eligibility: Section 2(e) defines “employee” to include a badli worker who works not less than 240 days in a year. The respondent’s PF membership from 12 August 1981 and continuous work till 30 June 2015 satisfied the qualifying service under Section 4.
Adverse Inference for Non‑Production: The petitioner, statutorily bound to keep muster‑rolls (Section 25D, ID Act) and service records, produced none. Under the principles laid down in the precedents above, the Court drew an adverse presumption that the respondent did indeed work continuously for the required period. This filled evidentiary gaps against the employer.

Impact

This judgment solidifies two important rules:

Broadening Employee Status: Those engaged as badli or substitute workers who meet the 240‑day threshold cannot be denied gratuity on a formalistic view of permanence; they rank as “employees” under the Act.
Strict Document Discipline: Employers must diligently maintain and produce attendance registers, muster‑rolls and service records. Failure will often lead to adverse inferences favoring employees in entitlement disputes.

Future litigants will invoke this decision to press gratuity claims and challenge record‑keeping deficiencies. Employers, especially in manufacturing and seasonal industries, must tighten HR compliance or risk statutory liabilities.

Complex Concepts Simplified

Badli Worker: A substitute or temporary worker filling in for an absent permanent employee.
Adverse Inference: A presumption drawn against a party for failing to produce evidence they were obliged to maintain.
Controlling/Appellate Authority: Statutory tribunals under the Payment of Gratuity Act empowered to adjudicate gratuity disputes.
Muster‑Roll: Official attendance register recording daily presence of workmen.
Continuous Service: Uninterrupted service for the period required (minimum 240 days per year for 5 years under the Act).
Section 25D, ID Act: Imposes on employers the duty to maintain muster‑rolls for all workers, including those laid‑off.

Conclusion

The Calcutta High Court in Hooghly Infrastructure Pvt. Ltd. v. Sk. Alam Ismail & Anr. has firmly established that long‑serving badli workers qualify as “employees” for gratuity under the Payment of Gratuity Act, 1972, provided they meet the 240‑day service criterion. Equally, employers must preserve and produce service records—a failure to do so will trigger adverse inferences, effectively strengthening the protective ambit of social security legislation. This landmark ruling thus upholds the salutary purpose of the Act, ensuring that vulnerable substitute workers receive retirement benefits commensurate with their years of service.