The National Insurance Company Ltd vs N Balaiah
2026 Latest Caselaw 127 Tel

Telangana High Court

The National Insurance Company Ltd vs N Balaiah on 30 March, 2026

         IN THE HIGH COURT FOR THE STATE OF TELANGANA
                         AT HYDERABAD
     THE HON'BLE THE CHIEF JUSTICE SRI APARESH KUMAR SINGH
                              AND
            THE HON'BLE SRI JUSTICE G.M.MOHIUDDIN

                   WRIT APPEAL No.980 of 2025

                          DATE: 30.03.2026

Between:

The National Insurance Company Limited
Represented by its Chairman-cum-Managing Director,
West Bengal and 6 others
                                                          ....Appellants
                                  And

N.Balaiah
                                                         ....Respondent

                              JUDGMENT

Heard Sri D.Rama Krishna Reddy, learned counsel for the

appellants and Sri G.Allabakash, learned counsel for the respondent

and perused the record.

2. This writ appeal, preferred under Clause 15 of the Letters

Patent, assails the order dated 17.12.2024 passed by the learned

Single Judge in W.P.No.4986 of 2019. By the said order, the learned

Single Judge allowed the writ petition filed by the respondent (writ

petitioner) and directed the appellants to regularize the services of the

respondent as sub-staff or in any such post carrying the same scale of

pay as prevalent in 2003, with all attendant benefits.

Factual matrix (in brief)

3. As per the respondent, in the year 2003, the appellants issued a

newspaper notification inviting applications for the posts of Caretaker

and Helpers, pursuant to which the respondent participated in the

selection process comprising an interview and a practical test, and

was declared successful. It is respondent's specific case that

notwithstanding such selection, no formal order of appointment was

issued; instead, the appellants caused an agreement dated

13.10.2003 to be executed, which arrangement was periodically

renewed from time to time.

4. The record discloses that the relationship between the parties

was governed by a series of written agreements executed at different

points of time. The particulars of such agreements brought on record

are tabulated hereinbelow for ready reference:

     S.No. Date of Agreement               Period of Contract
     1.       01.02.2011                   13.10.2010 to 12.10.2011
     2.       01.02.2012                   13.10.2011 to 12.10.2012
     3.       06.02.2013                   13.10.2012 to 12.10.2013
     4.       06.06.2014                   01.04.2014 to 31.03.2015
     5.       21.02.2018                   01.11.2017 to 31.10.2018

5. A perusal of the aforesaid agreements reveals that the

arrangement between the parties was expressly characterized as one

pertaining to "housekeeping and maintenance" of a transit flat/guest

house belonging to the appellants. The respondent was designated as

"Caretaker" and was entrusted with duties inter alia including

maintenance and cleaning of the premises, attending to the needs of

occupants/guests, collection of lodging charges, and maintenance of a

register of guests.

6. Significantly, the terms and conditions embodied in the said

agreements, in clear and unambiguous language, indicate the nature

of the arrangement and may be summarized as follows:

a. The respondent was permitted to run ancillary services such as a canteen and laundry for the benefit of guests, with the stipulation that the profits accruing therefrom would be retained exclusively by him.

b. The arrangement was terminable at the instance of either party by giving one month's prior notice, thereby indicating its contractual and non-permanent character.

c. The agreements did not prescribe any pay scale, increments, working hours, maintenance of attendance, or disciplinary framework, as would ordinarily be applicable to regular employees.

d. There was no provision for deduction or contribution towards Provident Fund or other statutory benefits, which are ordinarily mandatory in the case of regular employment. e. The agreements did not contemplate or prescribe any age of superannuation.

7. The appellants, on 01.03.2019, issued a notification inviting

applications from outsourcing agencies for supply of manpower,

including for engagement to the position of Guest House Caretaker.

Aggrieved by the said notification, the respondent approached this

Court by filing the underlying writ petition seeking regularization of

his services.

8. The learned Single Judge, placing reliance upon the order

rendered in W.P.No.20009 of 2006, allowed the writ petition and

issued a direction to the appellants to regularize the services of the

respondent in the cadre of sub-staff or in an equivalent post with

effect from the year 2003. Aggrieved by the said order, the appellants

have preferred the present writ appeal.

Submissions on behalf of the appellants

9. Learned counsel for the appellants, assailed the impugned order

and has advanced submissions as under:

i) That the agreements entered into between the parties are in the

nature of commercial contract for housekeeping and

maintenance of the guest house, and do not give rise to any

relationship of employer and employee. The respondent was

not appointed pursuant to any regular recruitment process in

accordance with law, but was merely engaged on a contract for

managing the guest house.

ii) That the respondent's assertion that he was selected through

an interview and practical test in the year 2003 is wholly

unsubstantiated by any documentary evidence. There is neither

an appointment order nor a selection list, nor any material

evidencing issuance of a notification or advertisement in the

year 2003. On the contrary, the only documents placed on

record are the agreements executed between the parties, which

unequivocally recorded that the respondent had "offered to take

up the work of housekeeping and maintenance."

iii) That the terms of the agreements explicitly permitted the

respondent to run ancillary services such as a canteen and

laundry for the benefit of the occupants of the guest house and

to retain the profits arising therefrom. This is a clear indicator

of the commercial and contractual nature of the arrangement,

as opposed to a contract of employment. Thus, the respondent

was deriving income not only from the fixed monthly

consideration but also from such independent commercial

activities.

iv) That the agreements do not prescribe any of the attributes

ordinarily associated with regular employment, such as pay

scales, annual increments, fixed working hours, maintenance of

attendance registers, or disciplinary control. No deductions

towards Provident Fund or other statutory benefits were made,

and no age of superannuation was stipulated. These factors,

taken cumulatively, negate the existence of an employer-

employee relationship.

v) That the respondent had specifically sought regularization in

the capacity of "Caretaker" of the guest house. However, the

learned Single Judge has directed regularization as "sub-staff or

in any such post carrying the same scale in 2003," which

amounts to granting relief beyond the pleadings and in respect

of a post entirely distinct in nature, without any finding that the

respondent was ever appointed or eligible for such a post.

vi) That the respondent continued under successive contractual

arrangements from 2003 till 2018 without raising any

grievance. The challenge to the notification dated 01.03.2019

was mounted only after an inordinate lapse of more than 15

years. Such unexplained delay and acquiescence disentitle the

respondent to any discretionary or equitable relief under Article

226 of the Constitution of India.

vii) That the dispute, being essentially contractual in nature,

involves seriously disputed questions of fact, particularly with

regard to the existence or otherwise of an employer-employee

relationship. Such questions would require adjudication on

evidence and are not amenable to writ jurisdiction under Article

226 of the Constitution of India.

10. In support of the aforesaid submissions, reliance is placed on

the following judgments:

i. Secretary, State of Karnataka v. Umadevi 1 ii. Hindustan Aeronautics Ltd. v. Dan Bahadur Singh 2 iii. Basant Kumar Mohanty v. State of Orissa 3.

1 (2006) 4 SCC 1 2 (2007) 6 SCC 207 3 (1992) IILLJ 190 ORI

Submissions on behalf of the respondent

11. Learned counsel for the respondent has supported the

impugned order and has advanced his submissions as under:

i) That the respondent has been discharging duties as a caretaker

continuously for a period exceeding 15 years, with the

arrangement being periodically renewed and a fixed monthly

consideration being paid. Such long and uninterrupted service

gives rise to a legitimate expectation of regularization.

ii) That the respondent was functioning under the direct control

and supervision of the officers of the appellants, and was even

provided with a uniform, which is indicative of an employment

relationship.

iii) That tax was deducted at source from the amounts paid to the

petitioner, and the TDS certificates (Form 16A) reflected such

deduction under the head "Salary", thereby suggesting that the

payments were treated as salary and not as contractual

consideration.

iv) The respondent asserts that his case falls within the ambit of

the said exception in respect of cases where employees have

continued for more than ten years without the intervention of

Courts, laid down in Umadevi's case (supra 1) and thus

warrants regularization.

12. We have taken note of the respective contentions urged and

perused the material on record.

Consideration by this Court

13. A perusal of the record reveals that the parties entered into a

series of written agreements spanning the period from 2011 to 2018.

Each of these documents is expressly styled as an "Agreement" and

describes the petitioner as the "Caretaker" or the "Second Party".

The agreements are bilateral in character, duly executed by both

parties and embody the essential elements of a valid contract, namely

offer, acceptance, consideration and reciprocal obligations.

14. The respondent's contention that he was selected through an

interview and practical test in the year 2003 is wholly

unsubstantiated. There is no material placed on record in the nature

of any advertisement, selection list, offer of appointment, or any other

document evidencing a selection process. The only basis for such

assertion is the averment made in the writ petition. In the absence of

any corroborative evidence, such bald assertions cannot be accepted

as proof of a valid or regular selection.

15. It is also pertinent to note that the agreements themselves do

not record that the respondent was "selected" or "appointed." On the

contrary, they explicitly state that the respondent had "offered to take

up the work of housekeeping and maintenance." Such language, in

our considered view, is clearly indicative of a contractual engagement

and militates against the existence of a regular appointment to a post.

16. Further, one of the most significant features emerging from the

agreements is Clause 19 of the agreement dated 21.02.2018, which

permits the respondent to provide tea, coffee, breakfast, lunch and

dinner to the occupants of the guesthouse at rates fixed by the

appellants and to retain the charges so collected. In addition thereto,

the respondent was permitted to run ancillary services such as a

canteen and laundry within the guest house premises and to

appropriate the profits arising therefrom.

17. It is to be noted that the said aspect envisaged under Clause 19

assumes considerable importance in determining the true nature of

the relationship between the parties. Ordinarily, a person holding a

regular post under an employer would not be permitted to carry on

independent commercial activities within the employer's premises,

much less retain the income generated therefrom during the course of

such engagement. The express authorization granted under the

agreements to undertake and profit from such commercial activities,

in our considered view, is wholly inconsistent with the existence of a

relationship of an employer and employee. On the contrary, it strongly

indicates that the respondent was operating in the capacity of an

independent contractor under a contract for service, rather than as an

employee.

18. It is to be noted that a regular employee is ordinarily subject to

the disciplinary control of the employer, is required to adhere to

prescribed working hours, maintain attendance, receive periodic

increments, and is entitled to statutory benefits, such as, Provident

Fund, besides being governed by a fixed age of superannuation. None

of these essential attributes of a contract of service are discernible in

the case of the petitioner.

19. At this juncture, it is appropriate to state the factors to

demonstrate the absence of the essential indicia of an employer-

employee relationship and on the contrary, reinforce the conclusion

that the engagement of the respondent was purely contractual in

nature, which are as under:

i. The respondent has himself admitted, in his affidavit, that no

attendance register was maintained. Though he asserts that he

remained present "throughout the day," there exists no

contemporaneous record or mechanism to verify such presence.

ii. The agreements do not stipulate any fixed working hours. The

nature of the respondent's engagement appears to be contingent

upon the arrival and departure of guests, and in the absence of

guests, no specific duties are shown to have been assigned.

iii. The respondent was not governed by the National Insurance

Company (Conduct, Discipline & Appeal) Rules, which are

applicable to regular employees, thereby indicating the absence

of disciplinary control characteristic of an employer-employee

relationship.

iv. It is not in dispute that no deductions towards Provident Fund

were made from the amounts paid to the respondent. Such non-

compliance with statutory requirements, which are ordinarily

mandatory in the case of regular employment, is a significant

indicator militating against the existence of such a relationship.

v. The agreements do not prescribe any age of superannuation.

The continuation of the respondent's engagement was

dependent solely upon renewal of the contractual arrangement,

even beyond the age of 60 years, which is clearly inconsistent

with the concept of regular employment.

20. The respondent has placed reliance upon Form 16A (TDS

certificate) to contend that the payments made to him were treated as

"salary." However, it is to be noted that deduction of tax at source is

not confined to payments arising out of a contract of employment

alone. Under the provisions of Section 194C of the Income Tax Act,

1961, tax is liable to be deducted at source even in respect of

payments made to contractors. The mere deduction of tax at source

cannot, by itself, be determinative of the existence of an employer-

employee relationship. Thus, the TDS certificates cannot be accorded

undue significance so as to override the clear and unambiguous

stipulations contained in the written agreements between the parties.

21. It is apposite to note that the learned Single Judge has allowed

the writ petition primarily on the premise that the facts of the present

case are analogous to those obtaining in W.P.No.20009 of 2006. In the

said case, it was specifically noted as under:

"It is undisputed that the petitioner has not signed the document which is in the nature of an agreement or contract."

This, in our considered view, constitutes a material and

distinguishing feature, as in the instant case, the respondent does not

dispute the execution of multiple agreements governing the terms of

his engagement. On the contrary, the respondent's own affidavit in

the writ petition in para 2 categorically states as under:

"The respondents instead of issuing appointment letter and prepared one agreement dated 13-10-2003 between me and the respondents upto 2014 thereafter no agreement between us and as of now no agreement between us."

The existence of such duly executed agreements fundamentally

alters the factual matrix. A person who has voluntarily entered into a

written contractual arrangement, received consideration thereunder,

and simultaneously carried on ancillary commercial activities such as

running a canteen and laundry, cannot subsequently be permitted to

contend that the contract was illusory or a mere camouflage and that

he was, in substance, an employee.

22. It is also brought to the notice of this Court that the appellants

have preferred an appeal against the order in W.P.No.20009 of 2006,

and that the said judgment has not attained finality. Be that as it

may, it is trite that each case must turn on its own facts. In view of

the material distinctions noticed hereinabove, the said judgment

cannot be pressed into service as a binding precedent in the present

case.

23. It is relevant to note that the law governing regularization of

irregular or contractual engagements is no longer res integra and

stands authoritatively settled by the Constitution Bench of the

Hon'ble Supreme Court in Umadevi's case (supra 1), wherein it has

held as under:

36. While directing that appointments, temporary or casual, be regularized or made permanent, courts are swayed by the fact that the concerned person has worked for some time and in some cases for a considerable length of time. It is not as if the person who accepts an engagement either temporary or casual in nature, is not aware of the nature of his employment. He accepts the employment with eyes open.

It may be true that he is not in a position to bargain -- not at arms length

-- since he might have been searching for some employment so as to eke out his livelihood and accepts whatever he gets. But on that ground alone, it would not be appropriate to jettison the constitutional scheme of appointment and to take the view that a person who has temporarily or casually got employed should be directed to be continued permanently. By doing so, it will be creating another mode of public appointment which is not permissible.

(emphasis supplied)

24. In the case on hand, the respondent has failed to establish that

his engagement was preceded by any lawful or regular selection

process. The assertion that the respondent was selected through an

interview and practical test in the year 2003 remains wholly

unsubstantiated. There is no material placed on record in the form of

any advertisement, selection list, or appointment order. In the

absence of proof of a valid appointment, the claim for regularization

cannot be sustained in law.

25. It is also to be noted that the respondent, in the writ petition,

sought for regularization in the capacity of "Caretaker" of the guest

house; however, the learned Single Judge has proceeded to direct the

appellants to regularize the respondent "as sub-staff or in any such

post carrying the same scale in 2003." We are constrained to observe

that such a direction travels beyond the scope of the relief sought and

is unsupported by any factual foundation on record, inasmuch as the

respondent was neither appointed to, nor did he discharge the

functions of, a member of the sub-staff cadre, the duties and

responsibilities of which are distinct and governed by specific

recruitment rules. A direction to absorb the respondent into a cadre

for which he was neither selected nor found eligible amounts to

conferring a benefit dehors the applicable recruitment framework and

is legally unsustainable.

26. Further, the dispute arises out of a contractual arrangement,

and the respondent's claim of an employer-employee relationship,

being seriously disputed, involves questions of fact requiring evidence,

which are not amenable to adjudication under Article 226 of the

Constitution of India. The appropriate remedy would have been to

approach the competent civil Court or the forum under the Industrial

Disputes Act, 1947.

Conclusion

27. In view of the foregoing reasons, this Court is of the considered

view that the engagement of the respondent was purely contractual in

nature and did not give rise to any employer-employee relationship.

The respondent has failed to establish that his engagement was

preceded by any regular selection process, and the material on record,

including the terms of the agreements, clearly militates against any

claim of regular employment.

28. Accordingly, this Writ Appeal is allowed. The impugned order

dated 17.12.2024 passed by the learned Single Judge in W.P.No.4986

of 2019 is hereby set aside.

As a sequel, miscellaneous petitions, pending if any, stand

closed. No costs.

_______________________________ APARESH KUMAR SINGH, CJ

______________________________ G.M.MOHIUDDIN,J Date:30.03.2026 ssp