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CASE NO.: Appeal (civil)  4573 of 2005

PETITIONER: Electronics Corporation of India Ltd.                    

RESPONDENT: Electronics Corporation of India Service Engineers Union                                              

DATE OF JUDGMENT: 21/08/2006

BENCH: ARIJIT PASASYAT & LOKESHWAR SINGH PANTA

JUDGMENT: J U D G M E N T

ARIJIT PASAYAT, 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 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’) 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.  

       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, selling and servicing of electronic items,  mainly Televisions. Between the years 1972 and 1978, the  Company engaged these 30 persons as Technicians 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 responding to an  advertisement issued by the Company for engaging Service  Engineers on retainer basis. The employees were selected  pursuant to 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 the Company and each of these 30 employees.  According to them, the contract which labels each of them as  "Retainer" was nothing but a paper 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

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independent decision could be taken by these employees. The  employees raised a demand for permanent absorption in  employment and for all other service conditions which were  applicable to 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 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 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  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 referred was not maintainable as there could be no  dispute between 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 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. 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.

       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 there was no master and 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,

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the writ petition was allowed and the parties were directed to  appear before the 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 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.

       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 Company.  It is quite  evident that service conditions under which the regular  employees of the Company function are totally different and  incomparable 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 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 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 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 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 regular 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, 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

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particular hours or as per its convenience.

       In response, learned counsel for the respondent  submitted that the 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. 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, 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 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.  

"1. \005\005\005\005.On successful completion of the  training, the retainer will be allotted ECTV sets  to be maintained by him. This agreement  expires 12 months from the date of allotment  of TV sets.   xxx

5\005..the Licensor shall pay to the Retainer at  Rs.90/- per set year for ECTV sets allotted to  him out of those covered by warranty and  Annual Service Contract with  ECTV\005\005However the allotment will be so  arranged that any point of time, a minimum of  250 ECTV sets will be maintained by the  retainer.

xxx

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  the Retainer at Rs.10/- per complaint plus the  value of spares used.  

xxx

15\005..During the subsistence of this contract  in regard to the construction or interpretation  of the terms and provisions hereof or otherwise  howsoever in relation thereto or in any way  touching on this agreement, such dispute or

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difference shall be referred to the 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 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 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 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.

       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 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 decision of  the learned Single 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.1427 of  1998. 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 Calcutta High  Court. The Tribunal rightly noted the relevant features and  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

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into by the Company to attend to additional 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 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  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  

       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 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.  

       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 several places like Delhi, Calcutta, Lucknow. One  significant admission was that complaints of T.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 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 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  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

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employees. Factually, it was found 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 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 accordingly.  

The appeal is allowed. No costs.  27956