SUPREME COURT OF INDIA
Electronics Corporation of India Limited
Vs
Electronics Corporation of India Service Engineers Union
Appeal (Civil) 4573 of 2005
(Arijit Pasayat and L. S. Panta, JJ)
21.08.2006
ARIJIT PASASYAT, 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.
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 ECTV However the allotment will be so arranged that any point of time, a
minimum of 250 ECTV sets will be maintained by the retainer
.
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.
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.