BSNL's Writ Petition Against Wage Recovery Order Disposed of by Calcutta High Court: Principal Employer Cannot Escape Liability

Background and Context

The Calcutta High Court recently dealt with a significant question concerning the liability of a principal employer under the Payment of Wages Act, 1936, when a contractor defaults on wage disbursements to workers. The matter arose out of a challenge filed by Bharat Sanchar Nigam Limited against directions issued by the Authority under the Payment of Wages Act, 1936 and the Regional Labour Commissioner (Central), Asansol.

The Court's ruling reaffirms a well-established legal position — that a principal employer cannot entirely absolve itself of responsibility towards workers merely by demonstrating that payments were released to the contractor at the contractual level. The order in WPA 13892 of 2026 was disposed of without any order as to costs.

The Impugned Direction: What Did the Authority Order?

The order dated 27 October 2025, passed by the Authority under the Payment of Wages Act, 1936 and the Regional Labour Commissioner (C), Asansol, contained the following operative directions:

"In case contractor M/S General Security Information Service failed to make the payment/deposit within 60(sixty) days then Principal Employer, BSNL will pay the actual deducted amount of Rs.8,51,508/(Rupees eight lakhs fifty-one thousand five hundred and eight only) plus one and a half times of the principal amount as compensation to the workers. The total amount of Rs.21,28,770/- (Rupees twenty-one lakhs twenty eight thousand seven hundred and seventy only) can be deposited within another 60(sixty) days by way of A/C Payee Demand Draft in favour of the "Regional Labour Commissioner (Central), Asansol" payable at Asansol for disbursement to the same to concerned workers. The amount so paid can be recovered from the Contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor. The Action Taken Report on this order must be submitted by all the parties to the undersigned within four months from the issue of this order."

In essence, this direction created a two-stage liability structure:

  1. Primary obligation — The contractor, M/S General Security Information Service, was required to deposit the dues within 60 days.
  2. Contingent obligation — If the contractor defaulted, BSNL as principal employer would become liable to deposit the total amount of ₹21,28,770 within a further 60-day window.

The total liability of ₹21,28,770 comprised the actual deducted amount of ₹8,51,508 together with one and a half times that principal amount as compensation payable to the workers.

BSNL's Contentions Before the High Court

BSNL, appearing as the petitioner, challenged the impugned order primarily on the ground that it had already discharged its payment obligations to the contractor in full, leaving no outstanding dues. According to BSNL, requiring further payment from it would amount to double recovery and was therefore legally untenable.

Financial Disclosures Through Supplementary Affidavit

Since BSNL initially produced only a statement of accounts without documentary corroboration, the Court directed it to place substantive material on record. In compliance, BSNL filed a supplementary affidavit containing the following disclosures:

"The Respondent No. 2 has raised total 208 invoices on various dates from 06/03/2023 to 18/03/2023 of total amounting to Rs. 3,32,02,602/- (Three Crores Thirty-Two Lacs Two Thousand Six Hundred Two Only) including GST amount of Rs. 50,64,803/- (Fifty Lacs Sixty-Four Thousand Eight Hundred Three Only). The Petitioner further states that against the aforementioned invoices the Petitioner released payments to the Respondent No. 2 on 03.05.2023, 09.06.2023 and 19.04.2024 amounting to Rs.12,13,488.76/-, Rs.1,24,10,683.33/- and Rs.1,21,02,546.44/- respectively. Thus, an aggregate amount of Rs.2,57,26,718.53/- (Rupees Two Crores Fifty-Seven Lakhs Twenty-Six Thousand Seven Hundred Eighteen and Paise Fifty-Three only) has already been paid to the Respondent No.2. Out of this Rs 2,21,78,400.98 was paid towards the 208 invoices pertaining to Asansol BA. The remaining amount of Rs 35,48,317.55 relates to other units. The GST amount is withheld by the Petitioner because as per GST Portal, it is found that the Respondent No. 2 had not filed GSTR-1 and GSTR-3B and the same is not being reflected in the GSTR-2A of BSNL till date. Due to the non-filing of GSTR-1 and GSTR-3B by the Respondent No. 2, the Petitioner is unable to take Input Credit of GST for FY 2022-23 which is lapsed & leading to a loss of Rs 50,64,803/- to petitioner."