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CASE NO.: Appeal (civil)  4551 of 2006

PETITIONER: State of Rajasthan

RESPONDENT: Sarjeet Singh & Anr

DATE OF JUDGMENT: 19/10/2006

BENCH: S.B. Sinha & Dalveer Bhandari

JUDGMENT: J U D G M E N T (Arising out of SLP(C) No. 23840 of 2005)

S.B. Sinha, J.

       Leave granted.                  The State of Rajasthan made a Scheme for supply of water in the  villages known as "Jal Pradyot Yojna".  The State was to contribute 50% of  the total costs whereas the rest 50% was to be borne by the Gram Panchayat.   Pursuant to or in furtherance of the Scheme, the Gram Panchayat of  Indragarh employed several persons including Respondent No. 1 herein as a  pump driver.  He was initially appointed for a period of six months.  The  term of his appointment was extended from time to time.  The total period  during which Respondent No.1 remained employed was from 19.9.1996 to  7.11.1997.  The Scheme was to be completed upto 7.11.1997.  As the  Scheme came to an end, the services of Respondent No. 1 were terminated.   He filed an application for his regularization of his services as a pump driver  before the Labour Welfare and Conciliation Officer, Hanumagarh.  In reply  to the notice issued by the said authority, the Public Health & Engineering  Department of the State inter alia contended that Respondent No. 1 had  never been appointed by it and in fact was appointed by the Sarpanch of the  Gram Panchayat, Indragarh.   

An industrial dispute was raised by Respondent No. 1 herein by filing  an application before the Industrial Court.  By an award dated 9.5.2002, it  was held that while terminating the services of Respondent No. 1 herein, the  mandatory requirements of Section 25-G and 25-H of the Industrial Disputes  Act were not complied with and consequently an award of reinstatement  with continuity of service was passed by the Labour Court.  Respondent No.  1 herein, however, was declared to be entitled to only 30% of the back  wages.  The Labour Court while making the aforementioned award arrived  at the following findings: (i)     Respondent No. 1 herein had worked for a period of 13 months and 18  days and the Gram Panchayat as well as the Department made  payment of his wages. (ii)    He had worked for more than 240 days.  As his services had been  terminated by a written notice, statutory provisions of Sections 25-G  and 25-H of the Industrial Disputes Act had not been complied with.

       A writ petition filed by Appellant herein was dismissed by a learned  Single Judge of the High Court opining :

"It is not in dispute that the workman had worked for  more than 240 days, as he had worked from 19.9.1996 to  7.11.1997.  Learned counsel argued that the workman

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was appointed for a fixed term, and,  therefore, his  removal does not amount to retrenchment in view of the  provisions of Section 2(oo)(bb) of the Industrial Disputes  Act.  However, learned counsel for the Petitioner could  not point out any document whereby the requirements of  Section 2(oo)(bb) may be established."

       A Division Bench of the High Court in an intra-court appeal affirmed  the said finding.

       The Scheme for supplying water in the villages was a joint Scheme of  the State of Rajasthan through Public Health and Engineering Department  and the Gram Panchayat.  There is nothing on records to show that  Respondent No. 1 was appointed by the State.  It is not in dispute that he  was initially appointed for a period of six months and that too by the  Sarpanch Gram Panchayat.  Pursuant to or in furtherance of the Scheme, the  Public Health and Engineering Department might have released payments of  his salary but the same would not lead to the conclusion that the relationship  of an employer and employee came into being.

       Furthermore, Respondent No. 1 was appointed for a fixed period.  His  services might have continued but it appears that the same was to remain in  force till the Scheme was completed.   

We may in the aforementioned backdrop notice the definition of  ’retrenchment’ as contained in Section 2(oo)(bb) of the Industrial Disputes  Act, which is in the following terms:

2(oo) "Retrenchment" means termination by the  employer of the service of a workman for any reason  whatsoever, otherwise than as a punishment inflicted by  way of disciplinary action, but does not include  -

***                     ***                     ***

"(bb) termination of the service of the workman as  a result of the non-renewal of the contract of employment  between the employer and the workman concerned on its  expiry or of such contract being terminated under a  stipulation in that behalf contained therein;.."

       It is a case which attracts clause (bb) of Section 2(oo) of the Industrial  Disputes Act.    

                In Municipal Council, Samrala vs. Raj Kumar [(2006) 3 SCC 81], it  was held : "The appellant is a Municipal Council.  It is  governed by the provisions of a statute.  The matter  relating to the appointment of employees as also the  terms and conditions of their services indisputably are  governed by the provisions of the relevant Municipal Act  and/or the rules framed thereunder.  Furthermore, there is  no doubt that the matter relating to the employment in the  Municipal Council should be governed by the statutory  provisions and thus such offer of appointment must be  made by a person authorised therefor.  The agenda in  question was placed before the Executive Council with a  view to obtain requisite direction from it wherefor the  said letter was written.  The reason for such appointment  on contract basis has explicitly been stated therein,  namely, that one post was vacant and two employees  were on leave and in that view of the matter, services of a  person were immediately required in the Council.  Thus,  keeping in view the exigency of the situation, the

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respondent came to be appointed on the terms and  conditions approved by the Municipal Council.

We have noticed hereinbefore that the respondent  understood that his appointment would be short-lived.   He furthermore understood that his services could be  terminated at any point of time as it was on a contract  basis.  It is only in that view of the matter, as noticed  hereinbefore, that he affirmed an affidavit stating that the  Municipal Council of Samrala could dispense with his  services and that they have a right to do so."

       The said decision has been followed by this Court in Municipal  Council, Samrala v. Sukhwinder Kaur, [2006 (7) SCALE 614] wherein the  offer of appointment to Respondent therein was in the following terms:        "Office of the Nagar Council, Samrala (Ludhiana)

No.588                                    Dated : 06.11.1995

Office Order No.

On dated 6.11.1995 vide order dated 6.11.1995  you are appointed as clerk on the contract basis at the  fixed rate of Rs.1000/- per month as per the directions of  the Government, it is purely temporary appointment.  No  one will force against this post.  Executive Officer has  the powers to dismiss you without issuing any notice.   All the terms and conditions issued by the office will be  accepted by you.   

                                   Sd/- Executive Officer                                    Nagar Council, Samrala"

       Such an offer of appointment was held to attract Section 2(oo)(bb) of  the Act.

       The learned counsel appearing on behalf of Respondent No. 1 placed  strong reliance on S.M. Nilajkar & Ors. v. Telecom District Manager,  Karnataka [(2003) 4 SCC 27].  The said decision was explained and held to  have been applied in the fact situation obtaining therein by this Court in Raj  Kumar (supra) stating:

"In the decision of this Court in S.M. Nilajkar v.  Telecom Distt. Manager whereupon the learned counsel  for the respondent placed strong reliance, this Court was  concerned with a different fact situation obtaining  therein.  In that case, a scheme for absorption of the  employees who were appointed for digging, laying  cables, erecting poles, drawing lines and other connected  works was made which came into force with effect from  1-10-1989, and only those whose names were not  included for regularisation under the said scheme, raised  disputes before the Assistant Labor Commissioner,  Mangalore.  The termination of the services of casual  mazdoors by the management of Telecom District  Manager, Belgaum, thus came to be questioned in the  reference made by the appropriate Government in  exercise of its power conferred upon it under Section 10  of the Industrial Disputes Act.  This Court, having regard  to the contentions raised by the respondents that the  appellant therein was engaged in a particular type of  work, namely, digging, laying cables, erecting poles,  drawing lines and other connected works in the project  and expansion of the Telecom Office in the district of  Belgaum was of the opinion : (SCC p.37, para 13)

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"13. The termination of service of a workman  engaged in a scheme or project may not amount to  retrenchment within the meaning of sub-clause (bb)  subject to the following conditions being satisfied :

(i) that the workman was engaged in a project or  scheme of temporary duration;

(ii) the employment was on a contract, and not as a  daily-wager simpliciter, which provided inter alia that the  employment shall come to an end on the expiry of the  scheme or project;

(iii) the employment came to an end  simultaneously with the termination of the scheme or  project and consistently with the terms of the contract;  and (iv)the workman ought to have been apprised or  made aware of the abovesaid terms by the employer at  the commencement of employment."   

Raj Kumar (supra) has also been followed by this Court in The  Haryana State Agricultural Marketing Board v. Subhash Chand & Anr.  [2006 (2) SCALE 614] stating : "It is the contention of the appellant that the  respondent was appointed during the ’wheat season’ or  ’paddy season’.  It is also not in dispute that the appellant  is a statutory body constituted under the Punjab and  Haryana Agriculture Produce Marketing Board Act.  In  terms of the provisions of the said Act, indisputably,  regulations are framed by the Board laying down terms  and conditions of services of the employees working in  the Market Committees.  A bare perusal of the offer of  appointment clearly goes to show that the appointments  were made on contract basis.  It was not a case where a  workman was continuously appointed with artificial gap  of 1 day only.  Indisputably, the respondent had been re- employed after termination of his services on contract  basis after a considerable period(s).

The question as to whether Chapter VA of the Act  will apply or not would dependent on the issue as to  whether an order of retrenchment comes within the  purview of Section 2(oo)(bb) of the Act or not.  If the  termination of service in view of the exception contained  in clauses (bb) of Section 2(oo) of the Act is not a  ’retrenchment’, the question of applicability of Chapter  VA thereof would not arise."

       It is now well settled that although the Labour Court possesses  discretionary jurisdiction in moulding the relief in terms of Section 11-A o  the Industrial Disputes Act, the power thereunder must be judicially  exercised.  Respondent No. 1 herein was appointed under a Scheme.  He was  appointed for a specific purpose.  The fact that his initial appointment was  for a period of six months is not disputed.  The concept of there being ’dual  employer’ although may not be unknown in industrial jurisprudence but the  Labour Court, in our opinion, misdirected itself in holding that the  termination of his services by Appellant was illegal being in violation of  Sections 25-G and 25-H of the Industrial Disputes Act.  If the Gram  Panchayat was in management of the Scheme, the employer would be the  Panchayat and not the State.  In fact, Respondent No. 1 herein impleaded  both of them as parties.  The learned Labour Court and consequently the  High Court failed to consider this vital aspect of the matter.

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       In State of M..P. and Ors. v. Arjunlal Rajak [2006 (2) SCALE 610],  this Court opined: "\005It is, however, true that while terminating the services  of the respondent the appellants had not complied with  the mandatory requirements of Section 25F of the  Industrial Disputes Act and, thus, ordinarily, the  workman could have been directed to be reinstated with  or without back wages, but it is also well settled that a  project or a Scheme or an office itself is abolished, relief  by way of reinstatement is not granted."

       In terminating the services of Respondent No. 1, we would assume  that violation of Sections 25-G or 25-H occurred (although there is no  factual basis therefor), but in any event, the same would not mean that the  Labour Court should have automatically passed an award of reinstatement in  service with back wages.  We, however, although ordinarily would have set  aside the impugned award and consequently the judgment of the High Court;  in exercise of our jurisdiction under Article 142 of the Constitution of India,  we direct the State to pay a sum of Rs. 30,000/- to Respondent No. 1.  Such  payment should be made within eight weeks from date failing which the  same shall carry interest at the rate of 9% per annum.  The appeal is allowed  with the aforesaid directions.  The parties shall pay and bear their own costs.