ELECTRONICS CORPORATION OF INDIA LTD.versusELECTRONICS CORPORATION OF INDIA SERVICE ENGINEERS UNION

A                 ELECTRONICS CORPORATION OF !NOIA LTD.
                                           11.

     ELECTRONICS CORPORATION OF !NOIA SERVICE ENGINEERS UNION

                                  AUGUST 21, 2006

B           [ARIJITPASAYAT ANDLOKESHWARSJNGHPANTA,JJ.)


          labour laws:
                                                                                       ..
          Regularisation--Retainer on individual contract with TV Company--
C Claimed permanent absorption and pay scales applicable to regular
    employees--Entitlement-Held: Not entitled as they were merely contractors--
    There existed no relationship of master and servant between them and the
    Company and their nature of duties and work conditions were different from
    those of regular employees
D         The appellant-Company is engaged in the business of manufacturing,
    selling and servicing of Televisions. Between the years 1972 and 1978, the
    Company engaged 30 persons (claimants) represented by respondent-Union,
    as Technicians on a contract basis. They raised a demand for permanent
    absorption in employment and for all other service conditions, which were
E   applicable to other employees. As the Company did not grant this, the Union
    raised industrial dispute. The Industrial Tribunal rejected reference as not
    maintainable on the ground that there was no master and servant relationship
    between the company and the claimants and they were merely contractors.
    The respondent-Union successfully filed Writ Petition before the High Court.
    Hence the present appeal.
F
          Allowing the appeal, the Court

           HELD: t. 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
G   not been discussed. No reason has been given by the High Court as to how
    these conclusions were erroneous and perverse. 1859-E-F]

         2.1. A very important conclusion of the Tribunal was that there are no
    regular posts like Service Engineers or Licencees or retainer in the company

H                                         850
       ELECT. CORPN. OF INDIA LTD. 1·. ELECT. CORPN. OF INDIA SERVICE ENG. UNION   851

and such contracts are entered into by the Company to attend to additional A
work as and when required. It was further noted that there is a definite
procedure for appointment of personnel of the appellant-Company and 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 B
required for appointment of the personnel of the Company. Further, the
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 C
of fact, some of the workmen of the Corporation had 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. (858-B-E)

       2.2. With reference to the evidence of the witness examined by the
claimants it is clear that the service engineers and the licencees were D
independent contractors. He accepted that no appointment letter was ever given
by the company. They have not enrolled their names with the Employment
Exchange. One significant admission was that complaints ofT.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 E
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 F
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 clai!'ed regularization. (858-E-F; 859-A-C]                    G
      3. 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.
The dispute was raised in respect of permanency, absorption, regularization
and pay scale only in 1992 and, therefore, is an afterthought and a highly
belated claim. No reason was set out as to why such belated demand was raised. H
     852                     SUPREME COURT REPORTS [2006] SUPP. 4 S.C.R.
                                                                                        y
A 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. 1856-B-q

           CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4573 of2005.

B         From the Judgment and Order dated 2.4.2004 of the High Court of
    Judicature at Bombay in W.P. No. 1341 of 1996.

         V. Shekhar, S. Ganesh, Pradeep Dubey and Sudhir Sajwan for the
    Appellant.

c          Prasenjit Keswani and Aniruddha P. Mayee for the Respondent.

           The Judgment of the Court was delivered by

         ARIJIT PASA YAT, 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
D 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')
E 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.
F          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,
G
  selling and servicing of electronic items, mainly Televisions. Between the
  years 1972 and 1978, the Company engaged these 30 persons as Technicians                  -+;o-

  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
H responding to an advertisement issued by the Company for engaging Service                 "'=--
ELECT.CORPN.OFINDIALTD.1" ELECT.CORPN. OF INDIA SERVICE ENG. UNION [PASAYAT,J.J 853


Engineers on retainer basis. The employees were selected pursuant to a 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 tlie Company and each of these 30 employees. According to them,
the contract which labels each of them as "Retainer" was nothing but a paper B
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 absorptfon
in employment and for all other service conditions which were applicable to C
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 D
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 E
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 F
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 reforred was not maintainable as there could be no dispute between G
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 H
     854                    SUPREME COURT REPORTS [2006) SUPP. 4 S.C.R.

A 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.
B   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.
c          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 the.re was no master and
D 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
E 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
F   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.

G        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
H Company. It is quite evident that service conditions under which the regular
    ELECT.CORPN.OFINDIALTD. v. ELECT.CORPN. OF INDIA SERVICE ENG. UNION [PASAYAT.J.1855


    employees of the Company function are totally different and incomparable A
    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 B
    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 C
    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 D
    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 E
    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 regul:>.r 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, F
    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 G
    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. H
    856                      SUPREME COURT REPORTS (2006) SUPP. 4 S.C.R.

A 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,
B 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
                                                                                                ...
C 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.

            "I ...................On successful completion of the training, the retainer will
D           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 allotteo to him out of those covered by warranty and
E
           A!lnual Service Contract with ECTV ........ However the allotment will be
           so arranged that any point of time, a minimum of250 ECTV sets will
           be maintained by the retainer.


F          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
G          the Retainer at Rs. I0/- per complaint plus the v;ilue of spares used.



           15 ......... During the subsistence of this contract in regard to the
           construction or interpretation of the terms and provisions hereof or
H          otherwise howsoever in relation thereto or in any way touching on
         ELECT.CORPN.OFINDIA LTD.1•. ELECT.CORPN. OF INDIA SERVICE ENG. UNION [PASAYAT,J.J 857


   "'·           this agreement, such dispute or difference shall be referred to the A
                 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 B
         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                 c
                 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
                                                                                         D
                 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.               E

                     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 F
         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 decisio1 of the learned Single
                                                                                            G
         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.1427of1998.
         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
Ii ..
         Calcutta High Court. The Tribunal rightly noted the relevant features and H
     858                   SUPREME COURT REPORTS (2006] SUPP. 4 S.C.R.

A 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
B 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
C 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
D 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

E         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
F 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.
G
        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
H several places like Delhi, Calcutta, Lucknow. One significant admission was         _
                                                                                    ...
     ELECT. CORPN. OF INDIA LTD. 1•. ELECT. CORPN. OF INDIA SERVICE ENG. UNION [PASAYA I, J.J 859


    that complaints of T.V. sets were made by the customers to the appellant A
    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 B
    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 C
    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. D
    Factually, it was fou~d 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                       E
    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                  F
    accordingly.

           The appeal is allowed. No costs.

    D.G.                                                                     Appeal allowed.
                                                                                                    G




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