CASE NO.: Appeal (civil) 4573 of 2005 PETITIONER: Electronics Corporation of India Ltd. RESPONDENT: Electronics Corporation of India Service Engineers Union DATE OF JUDGMENT: 21/08/2006 BENCH: ARIJIT PASASYAT & LOKESHWAR SINGH PANTA JUDGMENT:
J U D G M E N T
ARIJIT PASAYAT, J.
Challenge in this appeal is to the order passed by a
learned Single Judge of the Bombay High Court allowing a
Writ Petition filed by the respondent.
The respondent filed a Writ Petition before the High Court
challenging the award dated 18th August, 1995 passed by the
Industrial Tribunal, Bombay (in short the ‘Tribunal’) rejecting
the reference made to it by the Government of Maharashtra
under the Industrial Disputes Act, 1947 (in short the ‘Act’) on
the ground that the respondent-Union was not able to
establish master and servant relationship between the alleged
workmen represented by the Union and the present appellant
(hereinafter referred to as the ‘Company’). The entire dispute
arose on account of the services of the alleged workmen
represented by the Union, being terminated.
Stand of the Union in a nutshell is as follows:
The Reference was in respect of about 30 workmen
involved in the dispute. The Union represents the employees
who are called “Retainers” by the Company. These employees
sought permanent absorption and other reliefs from the
Company. The Company is engaged in the business of
manufacturing, selling and servicing of electronic items,
mainly Televisions. Between the years 1972 and 1978, the
Company engaged these 30 persons as Technicians initially on
a contract basis for a period of four years. Some of these
Technicians were then made permanent as either Tradesmen
or Scientific Assistants or Assistant Technical Officers. These
30 employees obtained employment after responding to an
advertisement issued by the Company for engaging Service
Engineers on retainer basis. The employees were selected
pursuant to a written test and oral interview. After selection,
they were required to undergo practical training which was
imparted by the Company for a period of three months. After
the training period was completed, contracts were entered into
between the Company and each of these 30 employees.
According to them, the contract which labels each of them as
“Retainer” was nothing but a paper arrangement between
themselves and the Company who did not want to implement
certain labour laws. Although the service contracts were
treated as individual contracts, the Union has averred that the
workmen were under the supervision of the Company and no
independent decision could be taken by these employees. The
employees raised a demand for permanent absorption in
employment and for all other service conditions which were
applicable to other employees. As this was not granted by the
Company, the Union approached the High Court under Article
226 of the Constitution of India, 1950 (in short the
‘Constitution’) by filing Writ Petition No.2689 of 1983. This
petition was dismissed as the petitioner had an alternate
remedy by approaching the machinery provided under the Act.
Accordingly, the Union raised a dispute against the Company
which was referred for adjudication by the Tribunal. The
dispute pertained to the claim of regularization as well as
certain other demands including wage revision made by the
Union on behalf of the employees.
The Union filed their Statement of Claim justifying the
demands made by them for regularization of the employees
and absorption and permanency, wage rise, etc. The Union
demonstrated that in fact these employees were always the
workmen of the company and had wrongly been treated as
retainers. It was emphasized in the Statement of Claim that
the Company had direct control and supervision over these
employees who were not able to take any independent
decisions in respect of their work. The Company in its Written
Statement contended that there was no contract of service
between them and the retainers claiming to be employees
since they were independent persons with whom the Company
had entered into a contract for servicing of Television sets sold
by them to the customers. It was contended that the industrial
dispute referred was not maintainable as there could be no
dispute between the Company and the Retainers. Evidence of
one of the employee was led on behalf of all the 30 employees
before the Tribunal. No evidence, oral or documentary, was led
by the Company. On a consideration of the documents as well
as oral evidence, the Tribunal by an Award rejected the
Reference as not maintainable. It decided as a preliminary
issue as to whether employee-employer relationship was
established. The Tribunal came to the conclusion that the
Retainers had individually entered into contracts with the
Company for service of repairing the Television sets sold by
the Company and that there was no master and servant
relationship between the company and the 30 persons who
claimed to be employees. According to the Tribunal, the
evidence clearly indicated that these 30 persons were merely
contractors and there was no direct nexus of master and
servant relationship between them. The Tribunal’s decision
was assailed before the High Court by a writ petition filed by
the Union. The primary stand of the Union-writ petitioner
was that the evidence adduced clearly established that a paper
arrangement was erroneously accepted by the Tribunal as the
reality. Master and servant relationship was clearly
established.
Per contra, the Company supported the reasonings given
by the Tribunal.
Considering the rival submissions, High Court by the
impugned judgment held that it was for the appellant to
establish that there was no master and servant relationship
between the parties and the members of the Union were not
workmen within the meaning of the expression “workman”
under Section 2(s) of the Act. The High Court was of the
further view that the Company had not established either
that the members of the Union were not workmen or that the
employer employee relationship does not exist. Accordingly,
the writ petition was allowed and the parties were directed to
appear before the Tribunal for further hearing of the reference.
In support of the appeal, it was inter alia submitted as
follows:
The Corporation was entering into individual contracts
with the Service Engineers/Licencees and, there was no
compulsion of whatsoever nature on them to enter into the
contracts year after year. Some of the workmen also opted for
working with the Company in terms of those individual
contracts, as they found the same to be such more lucrative
and paying rather then being regular employees of the
Company.
There are no regular posts like Service Engineers or the
Licencees or Retainers in the company and such contracts are
entered into by the Company to attend the additional work as
and when required in accordance with terms and conditions of
the contracts. The regular employees are governed by the
Service condition as applicable to the Company, whereas the
Service Engineers/Licencees are governed by the individual
contracts signed by them with the Company. It is quite
evident that service conditions under which the regular
employees of the Company function are totally different and
incomparable and, therefore, there cannot be similar wages for
different kind of work under different conditions applicable to
different categories of persons. So the demand of
regularization of the employment of the Service Engineers is
not maintainable. They were only required to attend the
complaints received in respect of T.V. sets allotted to them and
they were not doing any other work in connection with the
said sets, whereas the regular employees of the company are
required to do other work in addition to the servicing of the
T.V. sets manufactured by the Company. The terms of the
employment of the regular employees of the company are
governed by the standing orders of the Company under the
Industrial Employment (Standing Orders) Act as well as the
provisions of the Act whereas the terms of the employment of
the Service Engineers/Licencees are governed in terms of
individual contracts entered into by the Company with them.
Assuming without admitting that the Service Engineers are
required to be absorbed by the Company, then the same also
is practically impossible for the Company to implement, as the
Company is the Central Government Undertaking, and it is
governed by the directions of the Government. Regular
employees are required to work for fixed and regular hours.
The Service Engineers/Licensees were not required to adhere
to follow any specific schedule or routine. The Service
Engineers cannot claim any regularization or absorption in the
Company and, hence they are not entitled to parity of wage
scales and other benefits which are provided to the regular
employees of the Company. The Service Engineers are required
to work as per their convenience without any interference of
whatsoever nature from the Company. It is quite evident that
the nature of duties performed by the regular employees of the
Company and Service Engineers are quite different and
distinct and, the same cannot be compared. It is submitted
that regular employees were totally at the disposal of the
Company during their duty hours and they were under its
direct supervision, control and management, whereas the
Service Engineers/Licencees were not under any such
supervision, control or management and, so also they were
required to work as per their convenience and, their services
were not available to the Company during any fixed or
particular hours or as per its convenience.
In response, learned counsel for the respondent
submitted that the High Court’s view was correct. It took note
of the relevant factors. Hence, no interference is called for.
We find that the High Court accepted that the onus was
on the persons claiming to be workmen to prove that they are
workmen as defined in the Act. It came to a peculiar
conclusion that since preliminary issue was raised by the
employer the onus shifts to it.
It is not in dispute that the claimants were retained for a
very long period of time by the appellant on the basis of a
contract entered into between them and the company. Dispute
was raised in respect of permanency, absorption,
regularization and pay scale only in 1992 and, therefore,
appeared to be an afterthought and a highly belated claim. No
reason was set out as to why such belated demand was raised.
That itself was indicative of the fact that the concerned
persons were of the view that they were retainers and did not
have any master and servant relationship with the company.
The agreements indicate that they were entered into for a
period of few months. A minimum 250 sets in a year was
allotted to each retainer. The agreement to appoint as Service
Engineers/Licensees as retainer contains some clauses which
throw considerable light.
“1. .On successful completion of the
training, the retainer will be allotted ECTV sets
to be maintained by him. This agreement
expires 12 months from the date of allotment
of TV sets.
xxx
5..the Licensor shall pay to the Retainer at
Rs.90/- per set year for ECTV sets allotted to
him out of those covered by warranty and
Annual Service Contract with
ECTVHowever the allotment will be so
arranged that any point of time, a minimum of
250 ECTV sets will be maintained by the
retainer.
xxx
9. The retainer should nominate alternative
retainer authority by ECIL to attend
complaints pertaining to the TV sets allotted to
him and inform the ECIL office in writing of
such an arrangement before absenting himself
from work. In the absence of such
arrangement, the Licensor will arrange to
attend such pending complaints and charge
the Retainer at Rs.10/- per complaint plus the
value of spares used.
xxx
15..During the subsistence of this contract
in regard to the construction or interpretation
of the terms and provisions hereof or otherwise
howsoever in relation thereto or in any way
touching on this agreement, such dispute or
difference shall be referred to the decision of
two arbitrators one each to be named by either
party and thereupon all the provisions of the
Indian Arbitration Act (Act X of 1940) or any
other statutory modification thereof for the
time being in force shall be applicable.”
It is to be noted that this Court had occasion to deal with
a similar issue. By order dated 16.8.1989 in SLP (Civil)
5169/1989, it was observed as follows:
“After hearing the learned counsel for
both the parties and on a consideration of the
facts and the circumstances of this case we
direct that the contracts which have been
terminated already should be renewed on the
same terms and the petitioners will be
permitted to work on the basis of this contract.
As regards other whose contracts are yet to
and their contracts will be renewed as soon as
the present terms ends and they will also be
permitted to work on the basis of the same
terms of the contract. We do not find any basis
for the contention that the Agreement-in-
question are contracts of service.
If there is any shortage of work then the
available work will be equally distributed
amongst the service engineers. Fresh
appointments may be considered if the
quantum of work justifies.
The writ petition pending before the High
Court are disposed off.
The special leave petition is disposed of
accordingly.”
Though clarification was later on sought for and this
Court clarified that where the contracts are different and
contain clauses which exclude the application of the decision
in the earlier batch, they should not be held to be bound by
the original decision. It is accepted that against the decision
in writ petitions filed by almost similarly situated persons
before the Delhi High Court, which dismissed the claim by
order dated 15.3.1989 in C.W.No.2855/88 this Court was
moved and order dated 16.8.1989 was passed. Though the
High Court in the present judgment referred to a decision of
the learned Single Judge of the Calcutta High Court to hold
that employer employee relationship existed, the Division
Bench of the said High Court set aside the order of the learned
Single Judge by its order dated 26.4.2004 in M.A.T.No.1427 of
1998. It is fairly accepted by learned counsel for the
respondent that there has been no further challenge to the
orders passed by the Division Bench of the Calcutta High
Court. The Tribunal rightly noted the relevant features and
observed after making a comparison of the duties of claimants
and the regular employees that employer employee
relationship did not exist.
A very important conclusion of the Tribunal was that
there are no regular posts like Service Engineers or Licencees
or retainer in the company and such contracts are entered
into by the Company to attend to additional work as and when
required. It was further noted that there is a definite
procedure for appointment of personnel of the appellant-
Company. It was pointed out that the question of designating
the claimants as Tradesmen or Technical Officer on
permanent basis in the Company does not arise as they have
neither requisite qualifications for holding any of the above
posts nor were they employees of the Company and they have
not been employed after following the procedure required for
appointment of the personnel of the Company. Further,
technical officers cannot claim to be workmen under the Act
as they did mainly supervisory duties and drew wages
exceeding Rs.1600/-p.m. The Company was entering into
individual contracts with its retainers and there was no
compulsion whatsoever to enter into the contract year after
year. As a matter of fact, it was note that some of the workmen
of the Corporation opted for working in terms of those
individual contracts as they found the same to be more
lucrative and paying rather than being regular employees.
There is no denial of this position by learned counsel for the
respondent
With reference to the evidence of the witness examined
by the claimants it is clear that even he (Mr. Kasbekar) agreed
that the service engineers and the licencees were independent
contractors. The agreement signed by them makes the position
clear. He accepted that no appointment letter was ever given
by the company. They have not enrolled their names with the
Employment Exchange. The first agreement was signed in
1978. He joined the company along with others in view of the
advertisement regarding retainership. He also accepted that
seven persons as noted above were previously working in the
company, but left the service and joined as retainers. They
were aware at the time of signing the agreement about the
service conditions, salary, benefits given to regular workers.
It was fairly accepted and admitted that taking into
consideration that retainership was more beneficial than the
regular service employees, all the seven employees left the
service of the company and accepted the retainership. It was
also accepted that there were several retainers who were
working in several places like Delhi, Calcutta, Lucknow. One
significant admission was that complaints of T.V. sets were
made by the customers to the appellant company. The
retainers used to visit the company for collecting complaints,
collecting components, for receiving payments and for
repairing the calledback sets. Except for these reasons, they
were not required to go to the company.
A further significant admission was that there were
several types of employees working in the company whose
work cannot be compared with that of the retainers. Whenever
the retainers went on leave they used to provide a substitute
to the company. The Tribunal also noted that the witness has
admitted that the scheme was for retainership and there was
no question of his asking for absorption as regular employees.
Till 1989-90 they were getting more income than the regular
employees and, therefore, had not sought for regularization.
But since 1989-90 they found the regular employees were
getting more salary than their income, and, therefore, they
claimed regularization. Further 2.24% deduction towards
Income tax was made from the bills of the retainers in view of
the contract and that was not applicable to the case of salaries
of the regular employees. He accepted that he did not know
about the nature of work and working hours of the regular
employees. Factually, it was found that the retainers were
getting Rs.90/- per set. The agreement was on job contract
basis. In Clause 15 of the agreement, there was a provision for
arbitration under the Indian Arbitration Act, 1940.
In view of what has been stated, the Tribunal was right in
its view that no employer employee relationship existed.
Observations of the High Court to the contrary are clearly
untenable because the findings and the reasons given by the
Tribunal have not been discussed. No reason has been given
by the High Court as to how these conclusions were erroneous
and perverse. The inevitable conclusion is that the impugned
judgment of the High Court deserves to be set aside and that
of the Tribunal to be restored and we direct accordingly.
The appeal is allowed. No costs.
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