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CASE NO.: Appeal (civil)  2195 of 2007

PETITIONER: Hindustan Aeronautics Ltd

RESPONDENT: Dan  Bahadur Singh & Ors

DATE OF JUDGMENT: 27/04/2007

BENCH: G.P. Mathur & A.K. Mathur

JUDGMENT: J U D G M E N T

CIVIL APPEAL NOs.     2195                    OF 2007 (@ Special Leave Petition (Civil) Nos.10478-10479 of 2005)

G. P. MATHUR, J.

1.      Leave granted.

2.      These appeals, by special leave, have been preferred against the   judgment and order dated 7.3.2005 of Allahabad High Court  (Lucknow Bench), by which the special appeals preferred by the  appellant herein were dismissed and the judgment and order dated  31.8.1999 passed by a learned Single Judge by which two writ  petitions were disposed of was affirmed.   

3.      Hindustan Aeronautics Ltd. Muster Roll Trade Union Congress,  Korwa, Sultanpur, filed Writ Petition No.10513 of 1990 against the  appellant Hindustan Aeronautics Ltd., Korwa Division, Sultanpur  (hereinafter referred to as ’the Company’) & Ors., wherein the main  relief claimed was as under :- "Issue a writ, order or direction in the nature of  mandamus commanding the opposite parties to regularize  the services of the members of the petitioner union fully  described in Annexure No.1 and place them in the pay  scale of the post of Mali and allow them and treat them  as continuing in service with all benefits without any  break."                                  

       It was averred in the writ petition that the petitioner union is a  registered trade union under the provisions of the Trade Unions Act,  1926 with the Registrar, Trade Unions U.P., Kanpur, of daily rated  Malies i.e. Muster Roll employees (workmen within the meaning of  the Industrial Disputes Act) working in the establishment of the  appellant herein.  The petitioner union was seeking regularization of  services of its members and their continuance in service without any  break as well as equal pay for equal work.   The members of the  petitioner union whose names figure at serial nos.1 to 77 in Annexure  1, are land losers as their land was acquired for establishment of  appellant and the remaining persons are non land losers. The members  of the petitioner union were continuing as daily rated Malies for the  last about 5 to 7 years with 2-3 days break on 2 or 3 occasions in each  month although the work and post continue to be available.  There  was a policy of the State Government to provide employment to at  least one member of the family whose land had been acquired and  several Government orders had been issued in this regard.   The daily

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rated Malies were getting much less amount as wages than those  Malies who were in a regular scale of pay though there was no  difference in work.  In spite of work and posts being available,   artificial break in service was created with a view to deprive them of  their continuity in service. The members of the petitioner union had  put in more than 240 days of continuous service in each calendar year,  yet their services had not been regularized.  They were entitled to not  only regularization of their services but also the pay scale of the post  of Mali as there was no difference in the nature of work and duties  being performed by them from those who were in the regular pay  scale.    

4.      The appellant herein filed a counter affidavit on the ground,  inter alia, that the list of members contained in Annexure 1 to the writ  petition was not within the knowledge of the appellant company.   The  writ petitioners were being engaged as casual labourers in the  appellant Company as per the settlement arrived at on 6.3.1989  between the writ petitioners and the management of the Company  with the intervention of Deputy Labour Commissioner, Faizabad.   It  was further averred that after acquisition of land by the State  Government for the purpose of setting up of Korwa Division of the  Hindustan Aeronautics Ltd., factory premises were established in  1983.  Since a new area had to be developed and the work had to be  started from scratch, initially a large number of workmen including  Malies were engaged for horticulture and land scape development  work.  However, at the present juncture, the horticulture work was  limited for maintenance of land and garden and thus the requirement  of the labourers for this work had considerably decreased and there  was no continuous and full time work.  The land losers whose land  had been acquired were given preference for this type of work.  In the  settlement arrived at on 6.3.1989 it was agreed that the land losers  would be engaged for 20 days in a month and non land losers would  be engaged for 15 days in a month on daily basis as casual unskilled  labourers.  The writ petitioners were paid daily wages which was  much higher than the minimum wages prescribed under the Minimum  Wages Act but they could not be paid wages like Malies employed in  regular pay scale.  The writ petitioners cannot be given appointment  on regular post as there is no continuous and full time work of that  nature in the company. It was further averred that the company is  already having surplus labour and, therefore, a ban has been imposed  on recruitment.  The writ petitioners were being engaged essentially to  fulfil the terms of  the settlement arrived at on 6.3.1989.   Lastly, it  was submitted that the basic object of the company was to produce  state of art avionics equipment for aircrafts which was being  manufactured for use by the Indian Air Force. The horticulture  activities are in no way connected with the production activities of the  company.  It was purely seasonal and intermittent in nature and there  was not enough continuous and full time workload to justify the  employment of a large work force on permanent basis. A  supplementary counter affidavit was also filed wherein it was averred  that at the initial stage manpower was required for levelling of the  land for gardening purposes and for purposes related to horticulture  development in factory premises as well as in residential area of the  establishment.   In the establishment there was no post for gardeners  (Malies) and the sanction for horticulture work is being given by the  General Manager of the establishment on the basis of man days  required for work every month. After assessing the requirement of the  establishment 2106 man days had been sanctioned in the  establishment for different categories of casual workmen.   The  sanction given for the month of December 1998 would show that  there are 78 man days for skilled grade and 2024 man days for  unskilled casual workmen.   The number of man days of individual  workman differ in every month.  The excess (balance) number of man  days from land losers/skilled category was distributed every month  amongst the unskilled casual workmen.  A settlement in this regard

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was arrived at on 26.7.1995 before the Assistant Labour  Commissioner, Faizabad.  After the settlement, a cogent scheme had  been framed by the establishment based on reasonable classification  for engagement of the casual labour for the purpose of meeting the  requirement of horticulture work in the establishment.   It was further  averred in the counter affidavit that a policy decision had been taken  by the Board of Directors on 19.5.1987 by which the induction of  manpower in the establishment has been frozen as on  30.5.1987.    Therefore, in view of the policy decision and absence of any post, the  writ petitioners could not be engaged on regular basis nor could they  be regularized on any post in the establishment.   The said policy  decision had been taken at the apex level looking to the financial  stringency and surplus manpower and also lean supply of orders and  the fact that the activity for which the writ petitioners are being  engaged is only incidental.   

5.      Writ Petition No.10524 of 1990  was filed by few individuals  claiming the same relief as in Writ Petition No.10513 of 1990 and was  based on same grounds.  

6.      The learned Single Judge, relying upon some decisions of this  Court and also of the High Court, disposed of both the writ petitions  by a common order and the operative part of the order is being  reproduced below :-         "Admittedly, petitioners are engaged as daily rated  workers in the factory and the factory is giving them  work for 18-20 days and is taking work for these days  from the petitioners.   Therefore, it cannot be believed  that there is not work and the respondents are only  engaging the petitioners in order to provide them  livelihood.  If there is no work, the respondents company  could  request the Labour Commissioner to stop the  engagement.  No employer can pay his workmen without  work.   It shows that the work is there.

       In this background the contention of the petitioners  that the artificial break in service is being created by the  respondents in order to deny the regularization of  petitioners who having completed 240 days and having  rendered more than 8 years of services satisfactorily are  entitled for their regularization, and the artificial break is  liable to be ignored.  

       In view of the aforesaid facts these petitions are  disposed of with a direction to the respondents to absorb  the petitioners as regular employees or such of them as  may be required to do the quantum of work which may  be available on perennial basis may be absorbed if they  are otherwise found fit and they will be paid wages of  regular employees. This shall be done within three  months from the production of certified copy of this  order.  

       However, the rest of the petitioners shall not be  disengaged and shall be allowed to continue as per  settlement dated 26.7.1995 and shall be regularized as  and when the perennial work is available. The question  as to whether the work of perennial nature is available or  not shall be decided by the Deputy Labour Commissioner  who shall decide the same every year in order to facilitate  the absorption of the petitioners.  No order as to costs."

7.      Feeling aggrieved by the directions issued by the learned Single  Judge, the appellant herein preferred special appeals but the same

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were dismissed by the impugned order dated 7.3.2005 on the finding  that there was no illegality or infirmity in the judgment and order of  the learned Single Judge by which the writ petitions were disposed of.  

8.      Before considering the contentions raised by learned counsel  for the parties, it is necessary to set out the terms of the settlement  which was entered into by the parties before the Deputy Labour  Commissioner, Faizabad.  Paras 1 to 3 of the settlement dated  6.3.1989 which are relevant for the controversy in hand are being  reproduced below :- "1.     The land losers shall be given preference in  engaging for the work in Horticulture Department  and they will be given the job for 20 days a month  as required.  

2.      Other casual workers (other than land losers) who  have completed 240 days in a calendar year, shall  be given the job for 15 days a month as required.   

3.      Case of other casual labourers of Horticulture  Department who are not covered under above  paras (1) or (2), efforts will be made to engage  them through other departments.   As regards their  work and condition of duty, H.A.L. Management  will have no responsibility."

       Para 2 of the settlement dated 26.7.1995 which was arrived at  by the parties before the Assistant Labour Commissioner, Faizabad,  which is relevant, is being reproduced below :- "2.     Demand No.9 which is related to distribution of  working days, both parties agreed that Employer  will distribute all the available and approved man  days among all the labourers.   67 land losers and  two skilled labourers will be given work every  month from available working days.   In this way  remaining man days after utilization form 2106   man days will be equally distributed among the  other 20 non land loser labourers.  Balance part or  fraction of the day will not be taken into account  for this purpose."                   

9.      Shri R.N. Trivedi, learned counsel for the appellant, has  submitted that Hindustan Aeronautics Ltd. is a Government Company  within the meaning of Section 617 of the Companies Act and the  persons employed in the factory of the appellant Company at Korwa  are not government servants but are mainly governed by the  provisions of Industrial Disputes Act and other allied enactments.   A  government servant enjoys a status on account of constitutional  provisions and rules framed under Article 309 of the Constitution,  which is not the case with the members of the respondent union.   Learned counsel has submitted that the respondent union having  entered into settlements with the appellant on 6.3.1989 and 26.7.1995  can claim rights only on the basis of the said settlements and no claim  for regularization or permanency in service or grant of pay scale at par  with those who are in the regular establishment of the appellant is  maintainable.  Learned counsel for the respondents has, on the other  hand, submitted that the members of the respondent union had worked  for more than 240 days in a year for more than 6-7 years before the  filing of the writ petition.  An artificial break of 2-3 days was  deliberately created twice or thrice in a month in their service just to  deprive them of continuity in service.  He has further submitted that  the concerned workmen having worked for a very long period and  work being available, they should be given permanent status and also

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the same pay scale which is being given to those who are in the  regular establishment of the appellant.   

10.     We have considered the submissions made by learned counsel  for the parties.  The position of a government servant is entirely  different from that of a workman who is working in an industrial  establishment like the appellant Company.  A government servant  enjoys a status and a security of tenure on account of certain  constitutional provisions.   In Union Public Service Commission v.  Girish Jayanti Lal Veghela & Ors. (2006) 2 SCC 482 it was held as  under :- "\005\005\005\005\005In the case of a regular government  servant there is undoubtedly a relationship of  master and servant but on account of constitutional  provisions like Articles 16, 309 and 311 his  position is quite different from a private employee.    Thus, employment under the Government is a  matter of status and not a contract even though the  acquisition of such a status may be preceded by a  contract, namely, an offer of appointment is  accepted by the employee.  The rights and  obligations are not determined by the contract of  the two parties but by statutory rules framed by the  Government in exercise of power conferred by  Article 309 of the Constitution and the service  rules can be unilaterally altered by it."

11.     An appointment in government may be on probation or in  temporary capacity or permanent in nature.   A permanent government  servant has a right to hold the post and he cannot be dismissed or  removed or reduced in rank unless the requirements of Article 311 of  the Constitution or the Rules governing his service are complied with.    

12.     The appellant, Hindustan Aeronautics Ltd., is a government  company within the meaning of Section 617 of the Companies Act.   What will be the legal position of a Government Company and  whether its employees can be treated to be government servants was  examined in Heavy Engineering Mazdoor Union v. State of Bihar and  Ors. (1969) 1 SCC 765 and it was held as under in para 4 of the  reports: ".....It is an undisputed fact that the company was  incorporated under the Companies Act and it is the  company so incorporated which carries on the  undertaking. The undertaking, therefore, is not one  carried on directly by the Central Government or by any  one of its departments as in the case of posts and  telegraphs or the railways....."

       In A.K. Bindal v. Union of India (2003) 5 SCC 163 the  difference between an employee of a government and an employee of  a Government Company was pointed out and it was held : "17. The legal position is that identity of the Government  Company remains distinct from the government. The  Government Company is not identified with the Union  but has been placed under a special system of control and  conferred certain privileges by virtue of the provisions  contained in Sections 619 and 620 of the Companies Act.  Merely because the entire share holding is owned by the  Central Government will not make the incorporated  company as Central Government. It is also equally well  settled that the employees of the Government Company  are not civil servants and so are not entitled to the  protection afforded by Article 311 of the Constitution  (See Pyare Lal Sharma v. Managing Director (1989) 3

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SCC 448)."

An employee working in an industrial establishment enjoys a  limited kind of protection.   He may lose his employment in various  contingencies which are provided under the Industrial Disputes Act  such as lay off as provided in Section 25-C, retrenchment as provided  in Section 25-F, transfer of industrial establishment or management of  an undertaking as provided in Section 25-FF, closure of undertaking  as provided in Section 25-FFF.  He may be entitled to notice or wages  in lieu of notice and monetary compensation depending upon the  length of service put in by him.  But the type of tenure of service  normally enjoyed by a permanent employee in Government Service,  namely, to continue in service till the age of superannuation, may not  be available to an employee or workman working in an industrial  establishment on account of various provisions in the Industrial  Disputes Act where his tenure may be cut short not on account of any  disciplinary action taken against him, but on account of a unilateral  act of the employer. Therefore, the claim for permanency in an  industrial establishment has to be judged from a different angle and  would have different meaning.

13.     In B.N. Nagarajan & Ors. v. State of Karnataka & Ors. (1979) 4  SCC 507, it was held that the words "regular" or "regularization" do  not connote permanence and cannot be construed so as to convey an  idea of the nature of tenure of appointments. They are terms  calculated to condone any procedural irregularities and are meant to  cure only such defects as are attributable to methodology followed in  making the appointments.   Further, when rules framed under Article  309 of the Constitution of India are in force, no regularization is  permissible in exercise of the executive powers of the Government  under Article 162 thereof in contravention of the rules.  This view has  been approved by a Constitution Bench in Secretary, State of  Karnataka v. Uma Devi (2006) 4 SCC 1 (para 16).  It was emphasized  here that only something that is irregular for want of compliance with  one of the elements in the process of selection which does not go to  the root of the process, can be regularized and that it alone can be  regularized and granting permanence of employment is a totally  different concept and cannot be equated with regularization.      

14.     The next question which requires consideration is whether  completion of 240 days in a year confers any right on an employee or  workman to claim regularization in service.  In Madhyamik Shiksha  Parishad v. Anil Kumar Mishra & Ors. (2005) 5 SCC 122 it was held  that the completion of 240 days’ work does not confer the right to  regularization under the Industrial Disputes Act.   It merely imposes  certain obligations on the employer at the time of termination of the  services.   In M.P. Housing Board & Anr. v. Manoj Shrivastava  (2006) 2 SCC 702 (paragraph 17) after referring to several earlier  decisions it has been reiterated that it is well settled that only because  a person had been working for more than 240 days, he does not derive  any legal right to be regularized in service.  This view has been  reiterated in Gangadhar Pillai v. Siemens Ltd. (2007) 1 SCC 533. The  same question has been examined in considerable detail with  reference to an employee working in a Government Company in  Indian Drugs and Pharmaceuticals Ltd. v. Workman, Indian Drugs &  Pharmaceuticals Ltd. 2007(1) SCC 408 and paragraphs 34 and 35 of  the reports are being reproduced below:- 34.   Thus, it is well settled that there is no right vested in  any daily wager to seek regularization. Regularization  can only be done in accordance with the rules and not de  hors the rules. In the case of E. Ramakrishnan and Ors.  v. State of Kerala and Ors. (1996) 10 SCC 565 this  Court held that there can be no regularization de hors the  rules. The same view was taken in Dr. Kishore v. State

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of Maharashtra (1997) 3 SCC 209 and Union of India  and Ors. v. Bishambar Dutt (1996) 11 SCC 341. The  direction issued by the Services Tribunal for regularizing  the services of persons who had not been appointed on  regular basis in accordance with the rules was set aside  although the petitioner had been working regularly for a  long time.  35.   In Dr. Surinder Singh Jamwal and Anr. v. State of  Jammu & Kashmir and Ors. AIR 1996 SC 2775, it was  held that ad hoc appointment does not give any right for  regularization as regularization is governed by the  statutory rules.                  15.     In the judgment under challenge the High Court has issued a  direction to absorb the members of the respondent union as regular  employees or such of them as may be required to do the quantum of  work which may be available on perennial basis and has issued a  further direction that they will be paid the wages of regular  employees.   It has also been directed that such of the members of the  respondent union who are not absorbed as regular employees shall not  be disengaged and shall be allowed to continue as per settlement dated  26.7.1995 and shall be regularized as and when the perennial work is  available.   The direction issued by the High Court in effect has two  components i.e. creation of posts and also payment of regular salary  as in absence of a post being available a daily wager cannot be  absorbed as a regular employee of the establishment.  This very  question has been considered in Indian Drugs & Pharmaceuticals Ltd.  (supra) and, therefore, we do not consider it necessary to refer to the  various reasons given and decisions cited therein.  Paras 37, 38 and 47  of the reports, wherein the Bench recorded its conclusions read as  under :- "37.   Creation and abolition of posts and regularization  are a purely executive function vide P.U. Joshi v.  Accountant General, Ahmedabad and Ors. (2003) 2 SCC  632.  Hence, the court cannot create a post where none  exists. Also, we cannot issue any direction to absorb the  respondents or continue them in service, or pay them  salaries of regular employees, as these are purely  executive functions. This Court cannot arrogate to itself  the powers of the executive or legislature. There is broad  separation of powers under the Constitution, and the  judiciary, too, must know its limits.  38.     The respondents have not been able to point out  any statutory rule on the basis of which their claim of  continuation in service or payment of regular salary can  be granted. It is well settled that unless there exists some  rule no direction can be issued by the court for  continuation in service or payment of regular salary to a  casual, ad hoc, or daily rate employee. Such directions  are executive functions, and it is not appropriate for the  court to encroach into the functions of another organ of  the State. The courts must exercise judicial restraint in  this connection. The tendency in some courts/tribunals to  legislate or perform executive functions cannot be  appreciated. Judicial activism in some extreme and  exceptional situation can be justified, but resorting to it  readily and frequently, as has lately been happening, is  not only unconstitutional, it is also fraught with grave  peril for the judiciary. 47.     We are of the opinion that if the court/tribunal  directs that a daily rate or ad hoc or casual employee  should be continued in service till the date of  superannuation, it is impliedly regularizing such an  employee, which cannot be done as held by this Court in  Secretary, State of Karnataka v. Umadevi (2006) 4

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SCC 1, and other decisions of this Court."

16.     In view of the discussion made above, the impugned judgment  of the learned Single Judge which was affirmed in appeal by the  Division Bench cannot be sustained and has to be set aside.  The  respondents are not entitled to the relief claimed by them.

17.     The appeals are accordingly allowed.  The judgment and order  dated 31.8.1999 of the learned Single Judge and judgment and order  dated 7.3.2005 of the Division Bench are set aside and the writ  petitions filed by the respondents herein are dismissed.   It is,  however, made clear that in case there is any violation of the terms of  the settlements on the part of the appellant herein, the respondents will  be entitled to enforce their rights in accordance with law.   No order as  to costs.