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CASE NO.: Appeal (civil)  3251 of 2005

PETITIONER: M.D., Karnataka Handloom Dev. Corpn. Ltd.

RESPONDENT: Sri Mahadeva Laxman Raval

DATE OF JUDGMENT: 16/11/2006

BENCH: Dr. AR. Lakshmanan & Altamas Kabir

JUDGMENT: J U D G M E N T

Dr. AR. Lakshmanan, J.

Karnataka Handloom Development Corporation Limited  is the appellant in this appeal.  The appellant-Corporation is a  Public Sector Enterprise established by the Karnataka State  Government to promote and assist the growth and  development of the Handloom Industry outside the  Cooperative sector in the State.   The respondent was appointed for various spells of fixed  periods on a fixed honorarium as an expert weaver to train the  weavers in the unorganized sector.  The respondent was  appointed on contract basis for a period of 200 days only, on a  fixed pay of Rs.400 per month with a stipulation that the  contract of appointment automatically expires on the 201st  day.   The State Government introduced "VISHWA" programme  to train and TO rehabilitate the weavers.  The respondent was  appointed specifically under the scheme on contract basis in  February, 1993 for a period of 3 months on different terms of  pay of Rs.1,000/- per month.  He was again appointed on  contract basis for a period of 9 months as per the terms set  out in the letter of appointment.  After the expiry of the  contract of appointment, on 31.08.1994, he was not appointed  again.  Being aggrieved, the respondent raised an Industrial  Dispute.  The Labour Department referred the dispute under  Section 10(1)(c) of the Industrial Disputes Act, 1947  (hereinafter called "the I.D. Act") for adjudication, inter alia, on  the question (a) whether the Project Administrator Handloom,  Banhatti is justified in refusing employment to the workman. The appellant-Corporation, inter alia, contended that: 1)  the I.D. Act does not apply to the respondent and 2) the  respondent, his father and his wife have been doing business  with the appellant at the relevant time and that the  respondent was independently doing the weaving business  and 3) the respondent was engaged on contract basis for fixed  periods only and later under a specific scheme/Vishwa  programme introduced by the State and that the scheme has  already been closed and as such there are no funds for  continuing with the said scheme.   The Labour Court allowed the reference, in part, directing  reinstatement without back wages.  Aggrieved by the award,  the Corporation preferred a writ petition, which was dismissed  by a Single Judge.  The writ appeal filed by the appellant- Corporation was also dismissed by the Division Bench of the  High Court.  Aggrieved by the dismissal of their writ appeal,  the Corporation preferred the above appeal in this Court.

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We have heard Mr. P. Vishwanatha Shetty, learned senior  counsel for the appellant-Corporation and Mrs. Rajani K.  Prasad, learned counsel for the respondent.   Mr. P. Vishwanatha Shetty, learned senior counsel  submitted that the High Court has failed to appreciate that the  respondent was not a workman in the employment of the  appellant-Corporation and that the respondent was a weaver  in the area as any other independent weaver in the area and  was getting certain concession from the Corporation which  was in the interest of development of Handloom Industry.  It  was further submitted that there is no finding of the Labour  Court that the workman was working for 240 days  continuously in a calender year under the employer with  wages and, therefore, the findings of the Labour Court and the  confirmation by the High Court are erroneous.  It was further                 contended that the respondent has worked as master weaver  for certain periods with aims and objectives of the scheme of  the Corporation which is purely temporary in nature and the  respondent had been an independent weaver before and after  the temporary period of training.  It was further argued that  the appellant has no control over the respondent or over his  work and that they are given only assistance in the form of  raw materials, yarn etc. to convert the yarn into fabric and to  again sell the finished products to the Corporation.  There is  no relationship of employee and employer between the  Corporation and the weavers and when such is the case under  the scheme, the master weavers who are engaged by the  Corporation to give training to the weavers in the matter of  weaving of cloth cannot be considered as a workman.  Learned senior counsel would further submit that the  inference drawn by the High Court on the appointment orders  issued to the respondent from time to time that the  respondent has worked for 240 days is not correct and that  the respondent was engaged for different periods which should  not be combined to say that he had worked for 240 days.   Learned senior counsel also submitted that there is no  question of violation of Section 25 (b) and Section (f) of the I.D.  Act and that the findings that the workman has continuously  worked for a period of 240 days was contrary to the facts and  circumstances and that the respondent was given honorarium  of one week and not regular salary as required under the I.D.  Act and that he was only encouraged to support or share his  master skills to the other weavers while doing his own weaving  work for the maintenance of his family.  Concluding his  arguments learned senior counsel submitted that the High  Court is not justified in ordering reinstatement of the worker  who is not a worker but employed on contract basis, time  bound specific scheme assigned as weaving trainer and who  has not been dismissed or terminated by the management.  Per contra, Mrs. Rajani K. Prasad, learned counsel for the  respondent submitted that the respondent had worked with  the appellant-Corporation from 1987 to 1994 i.e. more than  240 days as contemplated under Section 25B of the I.D. Act  and, hence, his dismissal amounted to retrenchment within  the meaning of Section 2(oo) of the I.D. Act and since the  termination of his service was without the compliance of the  provisions of Section 25F of the I.D. Act, the respondent raised  a dispute before the Labour Court with a prayer to set aside  the termination and to pass an award for reinstatement, full  back wages and with all other benefits.  The Labour Court  allowed the respondent’s reference and directed the  Corporation to reinstate the respondent into service without  back wages.  When the judgment of the Labour Court was  challenged before the High Court, the High Court dismissed  the writ petition and the writ appeal filed by the management

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on the ground that as the respondent had served for a period  of 240 days in a year immediately preceding the termination,  the termination amounted to retrenchment and, hence, the  Labour Court has rightly directed reinstatement.   Learned counsel for the respondent submitted that the  civil appeal has no merits and, therefore, it is liable to be  dismissed in the interest of justice and fair play. We have carefully perused the pleadings, the award of  the Labour Court, judgment passed by the learned Single  Judge and also of the learned Judges of the Division Bench  and other annexures filed by both parties in the civil appeal.   Before proceeding to consider the rival submissions, it is  beneficial to notice the nature of work entrusted to the  respondent under the project in question undertaken by the  Karnataka Handloom Development Corporation.  The nature of work entrusted to the respondent is to  carry out the usual business of selling the cotton yarn or  polyster to weavers who are covered under the scheme of the  Corporation.  The said weavers who purchased the yarn, after  converting into a finished product in the form of cloth, sell the  same to the respondent, the sale value of the finished product  is credited to the account of each such weaver.  If the weavers  execute a targeted business in the stipulated period,  incentives are also given to such weavers.  These weavers are  also provided loans by the banks, KFFC and such banking or  financial institutions and the same is kept as a security with  the respondent towards raw material provided to the weavers  and also looms and accessories.  It is also the objective of the  Corporation to enhance and develop handloom cloth and  promote such employment through the scheme provided by  the Corporation.  The Corporation more or less provides a sure  mode of sale of the products of these weavers.  To increase the  employment opportunities and to get the unskilled persons  trained into weavers, the Corporation has entrusted the  respondent the responsibility through a scheme sponsored by  the Government under the Vishwa programme.  For getting  trained new persons as weavers, expert weavers are being  engaged by the respondent.  This training programme is not  perennial in nature of work of the respondent.  As and when  such schemes are sanctioned for the limited period  (sanctioned period), expert weavers on stipend/honorarium of  Rs.1000/- for a specific period of 9 months are appointed.  In  this case 9 months period will commence from the date of his  appointment i.e. 30.11.1993 under No.  KHDC/IHDP/BNT/ADM/93-94:1301. It is thus clear from the above that the respondent  claimant is aware that his appointment was purely contractual  and for a specified period.  He is also aware that he is not  eligible to any other benefits as a regular employee of the  Corporation and could be liable for termination without any  notice and without payment of compensation.  The claimant is  also aware that his appointment stood automatically  terminated on the completion of the stipulated period.  The  case of the claimant, therefore, in our view, does not become  an industrial dispute.  We shall now as a sample reproduce one appointment  order dated 30.11.1993.   "THE KARNATAKA HANDLOOM DEVELOPMENT  CORPORATION LIMITED, BANGALORE \026 560 046.

Intensive Handloom Development Project, Banhatti \026 587  311.

No.KHDC: INDP: BNT: ADM/93-94/1301  Date: 30.11.1993    

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To Sri Mahadev L. Raval, Expert Weaver, Near Sadashiv Temple, Forest Area, Post: Banahatti \026 587 311, Taluk: Jamkhandi,  District Bijapur.

The Corporation has been tasked with implementation of the  Vishwa Programme by State Government.  One of the objects  of the Scheme is to train the persons/ weavers covered  under the scheme in the field of weaving different varieties of  fabric.  Keeping in view this need, the management is  pleased to consider your candidature for the post of Expert  Weaver and appoint you as EXPERT WEAVER on a stipend  of Rs.1,000 per month for a period of 9 months (Nine months  only) on the Terms and Conditions hereinafter mentioned  and post you to SCP Training Centre, Muleganvi Building,  IHDP, Banhatti, Taluk,   Jamkhandi, District Bijapur.

1)      Your appointment will be purely contractual  2)      Your term of contract will be for Nine months from the  date you report for duty in the Corporation.

3)      You will not be eligible for any benefits like DA, HRA  and CCA or privileges as are admissible to the regular  employees of the Corporation except to the extent provided in  this Order.

4)      You will be governed by KHDC (Disciplinary & Appeal)  Rules, applicable to other employees of the Corporation.

5)      During the period of contract, if you intend to resign or  leave the services of the Corporation, you shall be liable to  give one month’s notice or pay one month’s stipend in lieu of  such notice to the Corporation.

6)      Your duties shall be as allocated by the Management  from time to time.

7)      You will be liable for termination without any notice  and without payment of any compensation and without  assigning any reasons therefore at any time during the  period of contract.

8)      The contract of your appointment stands automatically  terminated on the expiry of nine months from the date of  your reporting for duty in the Corporation.

If you are agreeable to the above terms and conditions, you  are requested to sign the duplicate copy hereof and send it to  us in token of having accepted the appointment and report  for duty to the Project Administrator, intensive Handloom  Development Project, Banhatti, after communicating your  acceptance.  If you fail to convey your acceptance and report  for duty as advised above, it will be presumed that you are  not interested to accept the appointment order and the  appointment order will be revoked without further reference  to you.

                               For KARNATAKA HANDLOOM                     DEVELOPMENT CORPORATION LTD.

                                                       Sd/-                                           Project Administrator,

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                               Intensive Handloom Development                                 Project, BANHATTI-587 311."

A careful perusal of the terms and conditions of  appointment would go to show that the respondent is not a  worker but employed on contract basis on a time bound  specific scheme assigned as weaving trainer.  However, the  learned Judges of the Division Bench committed a factual  error in holding that the above letter of appointment does not  show that employment was not a contract which stipulated  that it comes to an end with the expiry of project or scheme  nor is it the case of the Corporation that the respondent was  made aware of any such stipulation even at the  commencement of the employment.  The High Court has failed  to notice that the respondent was engaged on contract basis  and had been assigned to train weavers who were lagging in  weaving skills in the weaving potential development area  working on time specific short term scheme sponsored by the  Corporation.  We are, therefore, of the opinion that the  respondent is not a worker for the purposes of Section 25F of  the I.D. Act but employed on contract basis only.  The High  Court also has not properly appreciated the judgment relied  on - S.M. Nilajkar & Ors. vs. Telecom District Manager,  Karnataka, (2003) 4 SCC 27.  As the respondent was  engaged as trainer for a specific period under the scheme and  was paid a stipend of Rs.1,000/- p.m. from the date of his  appointment and, therefore, Section 2(oo) of the Act is not  attracted soon after the expiry of the specific period the  respondent’s service was discontinued and so it is not a  retrenchment as defined under Section 2(oo) of the I.D. Act.  On the other hand, the case of the Corporation before the  learned Single Judge and also before the Division Bench was  that the respondent was not a workman in the employment of  the appellant and that he was a weaver in the area as another  weaver in the area and was getting certain concessions from  the Corporation.  We have perused all the appointment letters dated  14.01.1991, 24.02.1992, 10.02.1993, 03.03.1993 and  30.11.1993 produced by the respondent as annexures which  consistently and categorically state that the respondent’s  appointment with the Corporation was purely contractual for a  fixed period.  The respondent was engaged only under the  Vishwa programme scheme which is not in existence.  Now the  scheme came to an end during August, 1994 the respondent  was also not governed by any service rules of the Corporation.   The Corporation put an end to the contract w.e.f. 31.08.1993  which, in our opinion, cannot be termed as dismissal from  service.  Even assuming that the respondent had worked 240  days continuously he, in our opinion, cannot claim that his  services should be continued because the number of 240 days  does not apply to the respondent inasmuch as his services  were purely contractual.  The termination of his contract, in  our view, does not amount to retrenchment and, therefore, it  does not attract compliance of Section 25F of the I.D. Act at  all.  The view taken by the High Court, in our opinion, is  contrary to the judgment of this Court in Kishore Chandra  Samal vs. Orissa State Cashew Development Corporation  Limited Dhenkanal reported in 2006 (1) SCC 253 (Arijit  Pasayat and R.V. Raveendran, JJ).  The above is also a case of  employment for specific period/fixed term and that the  workman was engaged for various spells of fixed periods from  July, 1982 to August, 1986.  The workman was retrenched at  the end of each period.  The Labour Court held that the  appellant served continuously for many years covering the

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requisite period of continuous service in a calendar year and  that the provisions of Section 25F of the I.D. Act had not been  complied with, termination of his service is illegal and  unjustified.  On the basis of the said finding, the Labour Court  directed the workman to be reinstated to his former post.  The  High Court accepted the stand of the respondent Corporation  that the appointment of the workman was on NMR basis for a  fixed period of time on the basis of payment at different rates  and since the engagement was for a fixed period, the High  Court held that the award of the Labour Court was to be set  aside.  In support of the appeal, learned counsel for the  workman submitted that the High Court failed to notice that  the period fixed was a camouflage to avoid regularization.   Reliance was placed on a decision of this Court in S.M.  Nilajkar & Ors. vs. Telecom District Manager Karnataka  (supra) where it was held that mere mention about the  engagement being temporary without indication of any period  attracts Section 25-F of the Act if it is proved that the  workman concerned had worked continuously for more than  240 days. Arijit Pasayat, J speaking for the Bench, after referring to  the position of law relating to fixed appointments and the  scope and ambit of Section 2(oo)(bb) of Section 25-F which  were examined by this Court in several cases and also in  Morinda Coop. Sugar Mills Ltd. vs. Ram Kishan & Ors.,  (1995) 5 SCC 653 and which view was reiterated by a three- Judge Bench of this Court in Anil Bapurao Kanase vs.  Krishna Sahakari Sakhar Karkhana Ltd. & Anr. reported  in (1997) 10 SCC 599 noticed and reproduced para 3 as  under:-  "3. The learned counsel for the appellant contends that the  judgment of the High Court of Bombay relied on in the  impugned order dated 28-3-1995 in Writ Petition No. 488 of  1994 is perhaps not applicable.  Since the appellant has  worked for more than 180 days, he is to be treated as  retrenched employee and if the procedure contemplated  under Section 25-F of the Industrial Disputes Act, 1947 is  applied, his retrenchment is illegal.  We find no force in this  contention.  In Morinda Coop. Sugar Mills Ltd. v. Ram Kishan  in para 3, this Court has dealt with engagement of the  seasonal workman in sugarcane crushing; in para 4 it is  stated that it was not a case of retrenchment of the  workman, but of closure of the factory after the crushing  season was over.  Accordingly, in para 5, it was held that it  is not ’retrenchment’ within the meaning of Section 2(oo) of  the Act.  As a consequence the appellant is not entitled to  retrenchment as per sub-clause (bb) of Section 2(oo) of the  Act.  Since the present work is seasonal business, the  principles of the Act have no application.  However, this  Court has directed that the respondent management should  maintain a register and engage the workmen when the  season starts in the succeeding years in the order of  seniority.  Until all the employees whose names appear in  the list are engaged in addition to the employees who are  already working, the management should not go in for fresh  engagement of new workmen.  It would be incumbent upon  the respondent management to adopt such procedure as is  enumerated above."

The Division Bench of the High Court in the instant case  relied upon the decision in S.M.Nilajkar’s case, which, in our  opinion, has no application because in that case no period was  indicated and the only indication was the temporary nature of  engagement.  We have already reproduced the terms and  conditions of appointment in the case on hand, in all the

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orders of engagement specific periods and the amount of  honorarium also been mentioned.  Therefore, in our view, the  High Court’s order does suffer from infirmity.  Learned senior counsel appearing for the Corporation  placed reliance on the decision of this Court in Secretary,  State of Karnataka and Others vs. Umadevi (3) and  Others, (2006) 4 SCC 1 (Constitution Bench) paras 45 and 47  of the judgment.  P.K. Balasubramanian, J. speaking for the  Bench has observed as follows:- "45.  While directing that appointments, temporary or  casual, be regularized or made permanent, the courts are  swayed by the fact that the person concerned has worked for  some time and in some cases for a considerable length of  time. It is not as if the person who accepts an engagement  either temporary or casual in nature, is not aware of the  nature of his employment. He accepts the employment with  open eyes. It may be true that he is not in a position to  bargain -- not at arms length -- since he might have been  searching for some employment so as to eke out his  livelihood and accepts whatever he gets. But on that ground  alone, it would not be appropriate to jettison the  constitutional scheme of appointment and to take the view  that a person who has temporarily or casually got employed  should be directed to be continued permanently. By doing  so, it will be creating another mode of public appointment  which is not permissible. If the court were to void a  contractual employment of this nature on the ground that  the parties were not having equal bargaining power, that too  would not enable the court to grant any relief to that  employee. A total embargo on such casual or temporary  employment is not possible, given the exigencies of  administration and if imposed, would only mean that some  people who at least get employment temporarily,  contractually or casually, would not be getting even that  employment when securing of such employment brings at  least some succor to them. After all, innumerable citizens of  our vast country are in search of employment and one is not  compelled to accept a casual or temporary employment if one  is not inclined to go in for such an employment. It is in that  context that one has to proceed on the basis that the  employment was accepted fully knowing the nature of it and  the consequences flowing from it. In other words, even while  accepting the employment, the person concerned knows the  nature of his employment. It is not an appointment to a post  in the real sense of the term. The claim acquired by him in  the post in which he is temporarily employed or the interest  in that post cannot be considered to be of such a magnitude  as to enable the giving up of the procedure established, for  making regular appointments to available posts in the  services of the State. The argument that since one has been  working for some time in the post, it will not be just to  discontinue him, even though he was aware of the nature of  the employment when he first took it up, is not (sic) one that  would enable the jettisoning of the procedure established by  law for public employment and would have to fail when  tested on the touchstone of constitutionality and equality of  opportunity enshrined in Article 14 of the Constitution of  India.

47. When a person enters a temporary employment or gets  engagement as a contractual or casual worker and the  engagement is not based on a proper selection as recognized  by the relevant rules or procedure, he is aware of the  consequences of the appointment being temporary, casual or  contractual in nature. Such a person cannot invoke the

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theory of legitimate expectation for being confirmed in the  post when an appointment to the post could be made only by  following a proper procedure for selection and in cases  concerned, in consultation with the Public Service  Commission. Therefore, the theory of legitimate expectation  cannot be successfully advanced by temporary, contractual  or casual employees. It cannot also be held that the State  has held out any promise while engaging these persons  either to continue them where they are or to make them  permanent.  The State cannot constitutionally make such a  promise. It is also obvious that the theory cannot be invoked  to seek a positive relief of being made permanent in the  post."

Batala Coop. Sugar Mills Ltd. vs. Sowaran Singh,  (2005) 8 SCC 481 [Arijit Pasayat and Dr. AR. Lakshmanan, JJ]  was also relied on.  In this case, the legality of the judgment  rendered by the Division Bench of the Punjab & Haryana High  Court dismissing the writ petition filed by the management  and upholding the award made by the Presiding Officer,  Labour Court was called in question.  The workman, in this  case, made a grievance before the State Government that his  services were illegally terminated by the management.   Reference was made by the State Government under Section  10(1) of the I.D. Act for adjudication.  The Labour Court was of  the view that though the stand of the employer was that the  respondent workman was employed on casual basis on daily  wages for specific work and for a specified period yet evasive  reply was given in respect of the workman’s stand that he was  appointed in April, 1986.  The Labour Court held that there  was violation of Section 25-F of the Act.  Direction was given to  reinstate the workman with 50% back wages.  The employer  filed a writ petition which was dismissed by the High Court.  It  was held that there was no legal or factual infirmity in the  award.  In support of the appeal, counsel for the management  submitted that both the Labour Court and the High Court fell  in grave error by acting factually and legally erroneous  premises and that the stand of the appellant was that the  workman was engaged on casual basis on daily wages for  specific work and for a specific period and that the details in  that regard were undisputably filed.  Therefore, the provisions  of Section 2(oo) (bb) of the Act are clearly applicable.  In  addition the onus was wrongly placed on the employer to  prove that the workman had not worked for 240 days in 12  calendar months preceding the alleged date of termination and  no material was placed on record by the workman to establish  that the workman had offered himself for a job after  12.02.1994.  This Court, after referring to Morinda  Cooperative Sugar Mills Ltd. case (supra) and Anil  Bapurao’s case (supra) held that the relief granted to the  workman by the Labour Court and the High Court cannot be  maintained.  This Court also held that so far as the question of  onus regarding working for more than 240 days is concerned,  as observed by this Court in Range Forest Officer vs. S.T.  Hadimani (2002) 3 SCC 25 the onus is on the workman.  The  appeal filed by the management was, therefore, allowed.  As pointed out earlier, the respondent was engaged only  on contract basis.  It is only a seasonal work and, therefore,  the respondent cannot be said to have been retrenched in view  of what is stated in clause (bb) of Section 2(oo) of the Act.   Under these circumstances, we are of the opinion that the  view taken by the Labour Court and the High Court is not  correct and is illegal.  The appeal is accordingly allowed but in  the circumstances without costs.