Holding

The Tribunal erred; the employees are not automatically Central Government employees and may be absorbed by either the Central or the respective State Governments as per their choice, with continuation of the scheme subject to State participation.

Summary

The Union Government launched a rehabilitation scheme for disabled persons, establishing District Rehabilitation Centres in several states and employing workers on state pay scales. The workers filed petitions before the Central Administrative Tribunal (CAT) claiming they were Central Government employees and sought the application of Central service rules. The CAT and the Calcutta High Court held they were Central employees, but the Supreme Court found the Tribunal had not provided reasons or applied the proper employer‑employee tests. The Court held that the scheme’s implementation is primarily a State responsibility and that employees are not automatically Central employees merely because the scheme was conceived by the Centre. Invoking Article 142, the Court directed that employees who wish to continue may be absorbed by the Central Government, while those preferring State service may be absorbed by the respective State Governments on the same terms, pending continuation or winding up of the projects. The appeals were disposed of with these directions.

Issues considered

Whether the workers in District Rehabilitation Centres are employees of the Central Government or the State Governments.
Whether the Central Administrative Tribunal correctly applied the employer‑employee test and had jurisdiction to entertain the petitions.
Whether the Persons with Disabilities Act, 1995, obliges continuation of the rehabilitation scheme and dictates the status of the employees.
Whether the Supreme Court may invoke Article 142 to provide remedial directions for absorption of the employees.

Legislation cited

Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995

Subjects

Persons with Disabilities ActEmployer‑employee relationshipCentral Administrative TribunalArticle 142Absorption of employeesRehabilitation schemeState vs Central jurisdictionControl test

Judgment

DISTRICT REHABILITATION OFFICER AND ORS. A
v.
JAY KISHORE MAITY AND ORS.

NOVEMBER I0, 2006

[S.B. SINHA AND DALVEER BHANDARI, JJ.] B

Constitution of India-Article I 42-Scheme for rehabilitation of
disabled people introduced by Central Government providing financial
assistance-District Rehabilitation centres set up in the State-Workers C
employed in the Centres with pay scales of State Government employees-
Petitions before Central Administrative Tribunal by workers for directions to
hold that they are Central Government employees-Tribunal and High Court
holding that the workers are Central Government employees-Correctness
of-Held, on facts, Tribunal did not assign reasons or/and made analysis of
available 'materials before holding that they are Central Government D
employees-However, due to discontinuation of the Scheme, invoking
jurisdiction under Article I 42 of the Constitution, appropriate directions
given for absorption of the workers by Central and State Governments-
Persons with Disabilities (Equal Opportunities, Protection of Rights and
Full Participation) Act, 1995.
E
A scheme for rehabilitation of disabled people was introduced by Central
Government providing financial assistance. Several District Rehabilitation
centers were established in the States to carry out various pilot projects
started under the Scheme. Officers of State Governments were drawn and
appointed as Project Coordinators and several workers were employed in the F
Centres with pay scales of State Government employees.

The respondents-workers filed petitions before Central Administrative
Tribunal contending that they are Central Government employees and hence
the terms and conditions of services of Central Government employees should
be made applicable to them. The appellants raised a preliminary objection of G
jurisdiction of the Tribunal to entertain the petitions contending that they
were State Government employees. The Tribunal allowed the applications of
the respondents holding that they are Central Government employees since
the Rehabilitation Centres are under direct control and funded by the Central

lOll H
1012 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A Government. Write Petitions filed by the appellant before High Court were
dismissed.

In appeal to this Court, the appellants contended the respondents were
employees of the States; that wrong tests were applied to determine employer-
employee relationship; and that the effective control over the employees was
B with the State Government. The appellants informed the Court that the projects
have since been wound up and no budgetary provisions for payment of salaries
are made with effect from 1st April 2006.

The respondents contended that they are Central Government employees.
The respondents appealed to the Court that having regard to the number of
C years they had served in the projects, the Scheme should either be directed
to be continued or they may be directed to be absorbed by Central Government
or by State Governments.

Disposing of the appeals with directions, the Court
D HELD: 1.1. The Parliament enacted the Perso_ns with Disabilities (Equal
Opportunities, Protection of Rights and Full Participation) Act, 1995. The
Act was enacted to give effect to the proclamation on the full participation
and equality of people with disabilities on both Central and State Government.
Implementation of its provisions is the primary responsibility of the State
E Governments. The employees do not become the employees of the Central
Government only because the project was conceived by it or it used to give
directions from time to time. For determination of relationship of the employer
and the employees, separate tests may have to be applied having regard to the
factual matrix involved in each case. The parties did not adduce any oral
evidence before the Central Administrative Tribunal The Tribunal opined that
F the respondents are the employees of the Central Government without
assigning any reasons and analysis of available materials. (1018-D, F, G]

Nilgiri Coop. Mkt. Society v. State of TN. & Ors., (2004) 3 SCC 514;
Haldia Refinery Canteen Employees Union & Ors. v. Indian Oil Corporation
G Ltd. & Ors., [2005) 5 SCC 51; State of Karnataka & Ors. v. KGSD Canteen
Employees' Welfare Assn. & Ors., (2006) 1 SCC 567 referred to.

1.3. Invoking jurisdiction under Article 142 of the Constitution oflndia,
the respondents who are inclined to serve any project under the Central
Government, may be absorbed by the Central Government. Those respondents
H who opted for their employment with the States would be absorbed by the
DISTRICT REHABILITATION OFFICER v. JAY KISHORE MAITY [S.B. SINHA, J.] 1Q13

States on the same terms and conditions. (1019-G, H; 1010-A-CJ A
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7999 of2002.

From the Judgment and Order dated 5.2.2002 of the High Court of
Judicature at Calcutta in W.P.C.T. No. 280/2001.
B
WITH

C.A. Nos. 4313-4319 of2003.

T.S. Doabia, Varuna Bhandari Gugnani, Shilpa Singh, D.S. Mahra and
Shreekant N. Terdal for the Appellant. C
Jaideep Gupta, Tapesh Ray, P. Vishwanatha Shetty, D. Bharat Kumar,
Azim H. Laskar, Abhijit Sengupta, Satish Vig. Vikas Rojipura, E.C. Vidya Sagar
and. Sanjay R. Hegde for the Respondents.

The Judgment of the Court was delivered by D
S.B. SINHA, J. Union of India filed a Scheme for Rehabilitation of the
disabled people. The project started with financial assistance of Central
Government/Union of India. The full financial assistance was extended till
1993, whereafter only 50% of financial assistance was provided for by the
Central Government. The Union of India, however, took up the entire financial E
burden for the project with effect from 3 l. l. l 998.

Pilot projects were started under which centres were established in
several States of the country with a view to identify the services required by
the disabled population, to assist the man power required for delivering those
services to them or to work out the modalities for the types of man power F
etc. One of such centres was established in Kharagpur in the State of West
Bengal and another in the district of Mysore in the State of Kamataka. For
the purpose of execution of the said projects, a Project Coordination Committee
was constituted. A set of detailed guidelines were circulated. The Project
Coordinator would be the main agency to implement the Project and would G
function through Member Secretary of the State Level Advisory Committee.
The Scheme dated 3.1.1983 was circulated with the concerned State
Governments by the Joint Secretary of the Union of India. The total package
of services for the disabled starting with awareness in the community and
ending with their economic rehabilitation was to contain with the following
H
1014 SUPREME COURT REPORTS (2006] SUPP. 8 S.C.R.
"
A elements:-

"(l) Creation of community awareness about the disabled population
in order to seek community participation in the measures for the
welfare of the disabled.

(2) parent counselling about the home care and management of the
B disabled child.
(3) promote dissemination of information on prevention, early
detection and possibilities of treatment of the disabled.
(4) arrangements for screening of disabilities and early referrals.
c (5) arrangements for physical rehabilitation including medical or
surgical intervention.
(6) integration of disabled children in normal schools schedule and
.,
establishment or special schools wherever necessary.

D (7) provision of vocational training for the disabled.
(8) employment guidance and placement services both in integrated
as well as sheltered conditions of the disabled."

The category of employees found suitable for recruitment for the project
were: (i) Community Health Workers; and (2) Anganwari Workers. The Scheme
E envisaged that the Pilot Scheme with the infrastructure provided should be
utilized by the State Governments with an intent to continue the project. The
infrastructures created for these pilot projects was expected to prove to be
useful for training the required manpower for future pilot projects and similar
centres which the State Governments may like to establish. The Project
p Coordinators of the Rehabilitation Centres were the officers of the State
Governments of States of West Bengal and Karnataka. They selected the
employees for the said Rehabilitation Centres. The employees were offered
a salary of Rs. 660/- in the scale ofRs.660-60-1100~50-5600. Indisputably they
have been wo.rking for a long time. Initially as noticed hereinbefore, although
funds were provided by an outside agency, the same have been taken over
G by the Central Government. Terms and conditions of service of the employees
appointed were governed by the rules applicable to the employees of the
State Governments. The pay-scales applicable to employees of the State
Government were also applied to their case. The employees, however, filed
Original Applications before the Central Administrative Tribunal, Calcutta as
H also Karnataka at Bangalore, inter alia, contending that they being the
DISTRICT REHABILITATION OFFICER v. JAY Kl SHORE MAITY [S.B. SINHA, J .] {Q15

employees of the Central Government, the terms and conditions of services A
applicable to the Central Government should apply in their case also. A
preliminary objection was taken as regards of the jurisdiction of the Tribunal
on the premise that the applicants were the employees of the State
Governments. By a judgment and order dated 14.7.2000, the Tribunal held:-

"12 ... So we are, therefore, of the clear opinion that applicants were B
appointed by the Project Officer for and on behalf of the Central
Government and the Central Government had direct control over the
DRC and fund is being provided by Central Government and we are
satisfied from facts that the prima facie it is for determination of the
relationship between the employer and the employee which is in C
existence in this case; Central Government is employer of the applicants
and the employees are entitled to claim to be employees of the CentPal
Government. In view of the aforesaid circumstances, we find that
there cannot be any dispute in this case that the Tribunal has no
jurisdiction to adjudicate the grievance of the applicants who were
directly appointed and being controlled by the Central Government. D
It is true that the aforesaid applicants are getting the pay and
allowances as per rate prescribed by the Govt. of West Bengal. It is
found that the scale prescribed by the Government of West Bengal
has been adopted by the concerneu authorities under the scheme. So,
were adoption of the scale of the State Government does not disentitle E
the applicants the right of status of the Central Government employees
under the scheme.

13 .... ln view of the aforesaid circumstances we are of the view that the
applicants are.the employees of the Central Government though their
salayry is being paid as per scale of the State Government. Under the F
circumstances stated above, we allow the application with a direction
upon the respondents to treat the aforesaid applicants as employees
of the Central Government and to grant the relief's to the applicants
in accordance with the rules in respect of salary, provident fund etc.
with immediate effect. No cost."
G
A writ petition filed thereagainst by Appellants herein has been dismissed
by a Division Bench of the Calcutta High Court by reason of the impugned
order. The Division Bench although noticed the pleadings of the parties as
also the submissions made at the bar at great details, but merely held:-

"We have carefully considered the submissions made on behalf of the H
1016 SUPREME COURT REPORTS [2006) SUPP. 8 S.C.R.

A respective parties and we are inclined to agree with the findings of the
learned Tribunal regarding the status of the private respondents herein.
The Scheme for setting up the Pilot Projects for the District
Rehabilitation Centres amply demonstrate that the same was a Scheme
of the Ministry of Social Welfare, Government of India, and the State
Government was merely the implementing agency through its officers
B of the Social Welfare Directorate. The entire funding and recruitment
process and the manner of functioning, as provided for in the Scheme,
is under the direct control of the Central Government, and even the
State Level Advisory Committee, which was to be chaired by the
Secretary of the Social Welfare Department, was required to send
C periodical reports of the functioning of the District Rehabilitation
Centre to the Central Government."

Mr. Doabia, the learned Senior Counsel appearing on behalf of Appellant,
inter alia, contended that keeping in view the scheme floated by the Central
Government, the manner in which the funds were secured and implementation
D of the scheme that took place, it is evident that Respondents were the
employees of the State of West Bengal and State of Karnataka respectively.
lt was submitted that in any event as the project has been wound up from
lst April, 2006 and no budgetary provisions therefor having been made for
payment of salaries to the employees, this Court should pass an appropriate
E order. It was urged that the Central Administrative Tribunal as also the High
Court applied wrong tests in determining the relationship of 'Employer and
Employee and failed to consider that effective control over the employees was
with the State Governments and not the Central Government. Mr. Doabia has
also pointed out that some of the State Governments e.g. State ofChhattisgarh,
Rajasthan and Tamil Nadu have taken similar projects on their own. ·
F
Mr. Jaideep Gupta and Mr. P. Vishwanath Shetty, learned Senior Counsel
appearing on behalf of the State of West Bengal and State of Kamataka, on
the other hand, supported the impugned judgments.

They, moreover, appealed that having regard to the number of years
G Respondents had served in the projects, the Scheme should either be directed
to be continued or the employees be directed to be absorbed either by the
Central Government or by the State Governments of West Bengal Kamataka,
as the case may be.

By an order dated 13.9.2006, we recorded as under:-
H
DISTRICT REHABILITATION OFFICER v. JAY KISHORE MAITY [S.B. SINHA, J.J 1017

"A statement has been made by Mr. T.S. Doabia, learned senior A
counsel appearing on behalf of the Union that the Central Government
has stopped releasing any fund from l.4.2006. On a query made by
us in that behalf it was stated at the Bar that so far as the employees
of the State of West Bengal are concerned, they have been paid salary
up to July 2006 and so far as the employees working in the State of B
Karnataka are concerned, they have been paid their salary up to
August 2006. We have been given to understand that the salary to
the respondents herein could be disbursed by the Council only from
the excess fund available with it from the last years' budget and the
amount now stands exhausted in view of stoppage of the grant by the
Central Government. C
We direct the State of Karnataka as also the State of West Bengal
to state on oath as to whether they would like to continue with the
projects in lieu of the scheme as has been done by the States of
Chhattisgarh, Rajasthan and Tamil Nadu. Learned counsel for the
Central Government shall hand over a copy of the project adopted by D
the State of Tamil Nadu, Rajasthan or Chhattisgarh, as the case may
be, to Mr. Tapash Ray, learned senior counsel appearing on behalf of
the State of West Bengal and Mr. Sanjay Hegde, learned counsel
appearing on behalf of the State of Kamataka so as to enable them
to seek instructions as to whether their States are prepared to continue E
with the said projects on the terms adopted by the said States.

We would also direct the Government of India to file an affidavit
as to what steps, if any, are feasible to be taken by it for continuation
of the project at least for some time more so that solution of the
problem may be found out by this Court in the meanwhile in the event F
the States express their inability to continue with the existing project.
We also direct the respondents to file affidavit(s) stating as to whether
they are ready and willing to serve other projects run by the Central
Government, in the event the Government of West Bengal and
Government on the other are not ready and willing to continue with
the projects. G
The directors of Social Welfare Department of the State of West
Bengal as also the State of Karnataka would also file a status report
as regards the project by 26.9.2006."

Pursuant to the said direction, the Director of Social Welfare as also the H
1018 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A Secretaries of the Social Welfare Departments of the States of West Bengal
and Karnataka have filed their respective status reports. According to the
respective State Governments, they are not in a position to take over the
project. It was urged that the State Governments run other projects and also
provide adequate funds to Non-Governmental Organisations which have been
B working in the field and the projects should, thus, be directed to be continued
by the Central Government only.

In its counter-affidavit, the State of West Bengal, inter alia, contended
that the Central Government has been running four other projects in the
District of Midnapore. The State Governments has other projects for which
C budgetary provisions to the extent of Rs. 6 crores per annum have been made
and thus in view of the acute financial constraints, continuation of the
projects like the present one would not serve any purpose. An affidavit has
also been filed by the State of Karnataka almost to the same effect.

The Parliament enacted the Persons with Disabilities (Equal
D Opportunities, Protection of Rights and Full Participation) Act, 1995. The Act
was enacted to give effect to the proclamation on the full participation and
equality of people with disabilities on both Central and State Governments.
Implementation of its provisions is the primary responsibility of the State
Governments. The projects were started at different centres in different States
by the Central Governments by way of a Scheme. The funds for the said
E projects initially came from the Central Government. The purpose of a pilot
project has been noticed by us hereinbefore. The control of the Rehabilitation
Centres for the benefit of the people for whom the same were started was with
the concerned State Governments.

F The employees do not become the employees of the Central Government
only because the project was conceived by it or it used to give directions
from time to time. The tests which are determinative for asce1taining the
relationship of 'Employer and Employee' are well known viz. functional test
or control test or organisational test etc. For detennination of relationship of
the employer and the employees, separate tests may have to be applied
G having regard to the factual matrix involved in each case. The parties did not
adduce any oral evidence before the Central Administrative Tribunal. The
Central Administrative Tribunal although referred to some of the decisions of
this Court, but without applying them, opined that Respondents are the
employees of the Central Government. No reason has been assigned therefor.
H No analysis of the available materials was made.
DISTRICT REHABILITATION OFFICER 1·. JAY KISHORE MAITY [S.B. SINHA, J.] )019

The question has been considered by this Court in Workmen of Nilgiri A
Coop. Mkt. Society v. State of TN. and Ors., (2004] 3 SCC 514, wherein it has
been held:-

"Determination of the vexed questions as to whether a contract is a
contract of service or contract for service and whether the employees
concerned are employees of the contractors has never been an easy B
task. No decision of this Court has laid down any hard and fast rule
nor is it possible to do so. The question in each case has to be
answered having regard to the fact involved therein. No single test
- be it control test, be it organization or any other test - has been held
to be the determinative factor for jetermining the jural relationship of C
employer and employee."

(See also Haldia Refinery Canteen Employees Union and Ors. v. Indian
Oil Corporation Ltd. and Ors., (2005] 5 SCC 51 ].

In State of Karnataka and Ors. v. KGSD Canteen Empoyees' Welfare D
Assn. and Ors., (2006] l SCC 567, this Court held:-

"We, however, intend to point out that in a case of this nature even
an industrial adjudicator may have some difficulty in coming to the
conclusion that employees of a canteen for all intent and purport are
employees of the principal employer." E
We, therefore, with respect, are unable to agree with the findings of the
Central Administrative Tribunal as also the Division Bench of the High Court.

A question has arisen as to whether the employees are .the employees
of the State of West Bengal or the District Rehabilitation Centres. In view F
of the order proposed to be passed by us, it may not be adverted to at this
state as we are of the opinion that the projects should be continued by the
State of West Bengal and the State of Karnataka as the case may be. Even
ifthe States think it fit to close down the project, the services of the employees
working in the rehabilitation centres should be continued. G
In a case of this nature, however, we think it expedient to invoke our
jurisdiction under Article 142 of the Constitution oL India. The Central
Government has categorically stated that those employees who would opt for
employment under the Central Government may be accommodated in its
ongoing projects. Pursuant thereto or in furtherance thereof, the concerned H
employees who have affirmed affidavits showing inclination to serve any
.;.

1020 SUPREME COUR! REPORTS [2006] SUPP. 8 S.C.R.

. A project under the Central Government, may be absorbed by it. Services of
those employees may be utilized by the Central Government in any of its
project. They would, however, be continued to be paid salaries on the same
scale of pay. Their experience may also be considered for the purpose of
determination of their seniority, subject of course to any rule which is in
B operation in the field. All other financial benefits including those of
superannuatory benefits should be protected. It is, however, clarified that
such employment under the Central Government would be temporary and
personal posts which would come to an end with the retirement of the
concerned employees.

C Similarly those Respondents who have opted for their employment with
the State of West Bengal or the State of Karnataka, as the case may be would
be absorbed by the States of West Bengal and Karnataka, as the case may
be, on the same terms and conditions as ,·eferred to hereinbefore.

Keeping in view the nature of order passed by us, it is clarified that the
D same shall not be treated as a precedent. We also make it clear that these
orders have been passed by us keeping the stand taken by the parties. These
appeals are disposed of with the aforementioned directions. There shall be
no order as· to costs.

B.S. Appeals disposed of.