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CASE NO.: Appeal (civil)  6195-6198 of 2004

PETITIONER: LAL MOHAMMAD & ORS

RESPONDENT: INDIAN RAILWAY CONSTRUCTION CO.LTD. & ORS

DATE OF JUDGMENT: 11/01/2007

BENCH: A.K.MATHUR & ALTAMAS KABIR

JUDGMENT: J U D G M E N T  With Civil Appeal No. 5685 of 2006 (Ravindra Nath Mishra Vs. Indian Railway Construction  Co. Ltd. & Anr.)

A.K. MATHUR, J.

               These appeals are directed against the order  passed by the Allahabad High Court dated May 21, 2004  whereby the Full Bench of the High Court has disposed  of all the writ petitions filed by the workmen against  Indian Railway Construction Co. Ltd.(hereinafter  referred to as Company)  and the Regional Manager,  IRCON, Rihand Nagar, Sonbhadra. The Full Bench held  that the petitioners are not entitled to benefit of  continuation of service or regularization as the project  stood closed on 6.2.1998. It was held that project   stood completed in all respect except necessary electric  or other odd works left over. It was also held that  petitioners did not apply for recruitment in service of  the Company as per the Service Rules and those who  appeared and were found suitable were selected and  appointed under the service rules of the Company but  others who could not appear, their services were  terminated in accordance with law. Hence, in total  analysis, it was held that sentiments must yield to the  cold logic of law, however, hard the case may be.  Hence all writ petitions were dismissed.  

               It would be necessary to recapitulate the  facts giving rise to these appeals because this is second  and third innings of the matter, which has come up  before this Court. Earlier the matter came up before  this Court wherein the question arose was whether  Section 25-N of the Industrial Disputes Act, 1947  (hereinafter referred to as the Act) was complied with  or not, this Court held that Section 25-N was not  complied with. Hence, this Court disposed of the  petitions holding that Section 25-N was not complied,  therefore, termination of all workmen was bad and  remitted the matter [Mohammad vs. Indian Railway  Construction Co. Ltd. reported in (1999) 1 SCC  599]  back to the High Court with following directions:-

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"28. In view of the aforesaid  discussion and in the light of our  finding that Chapter V-B applies to  the respondents’ Anpara-Rihand  Project, in the remanded proceedings  in the restored writ petitions of the  present 25 appellants, the following  questions would squarely arise for  consideration of the High Court:-

(i) Whether the Anpara-Rihand  Nagar Project is subjected to a  factual closure as mentioned in  the impugned notices of March  1998 or whether the Project is  not still completed;

(ii) in the light of the answer to  the aforesaid question, a further  question would arise whether the  impugned notices of March 1998  were in fact and in law closure  notices as per Section 25-O read  with Section 25-FFF of the Act or  whether they still remain  retrenchment notices and hence  would be violative of Section 25- N of the Act;

(iii) even if it is held that  Anpara-Rihand Nagar Project is in  fact closed down, whether the 25  appellants were employed in the  Project or they were employees  of the respondent-Company  entitling them to be absorbed in  any other project of the Company  and consequently whether the  impugned notices have not  effected any snapping of the  employer-employee relationship  between the appellants on the  one hand and the respondent- Company on the other;  

(iv) even apart from the  aforesaid questions, whether the  impugned notices were violative  of the guarantee of Articles 14,  16 and 21 of the Constitution of  India on the ground that the  termination of services of the 25  appellants was arbitrary and  discriminatory, the respondent- Company being a "State" within  the meaning of Article 12 of the  Constitution of India."

Salient facts, which are necessary for disposal of these  appeals are :-

               Twenty five petitioners filed writ petition against  the respondent Company, which is a construction  company wholly owned by the Government of India. It

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carries out various construction projects throughout the  country and abroad. These writ petitioner workmen  were employed by respondent Company and respondent  No.2 is its Regional Manager who was monitoring  project of construction of a railway line of 54 Kms  known as Rihand Nagar Project in State of Uttar  Pradesh (hereinafter referred to as the Project). These  25 petitioners were employed in this project on  different dates during the period spread over from  26.12.1983 up to 24.12.1985. They were assigned  different jobs of work at the Rihand Nagar Project.  Some were appointed as clerks, account-clerks, store  clerks, store cashiers, non-technical supervisors, site  supervisors etc. Initially these workmen were required  to undertake training and were, therefore, treated as  appointed on ad hoc basis. They were not appointed on  regular basis. They were  supposed to be given pay  scale after successful completion of the training. They  were placed in regular timescale. They were subject to  be transferred to any other project of the Company in  India. They were not required to undertake any other  job or business without permission of competent  authority. After completion of project they were served  with the notices of retrenchment in August/September,  1993. They were rendered surplus and hence  retrenchment benefit under Section 25-F(b) of the Act  was offered and they were advised to collect their other  dues, namely; provident fund, gratuity, leave salary  etc. in accordance with the rules of the Company in  force at the time of the Project. These retrenchment  notices were challenged by the writ petitioners by filing  number of writ petitions under Article 226 of the  Constitution of India, against respondent Company. In  those writ petitions among other arguments, which  were sought to be raised like retrenchment is bad as  they are recruiting fresh people and their  retrenchments were illegal and also violative of Articles  14, 16 & 21 of the Constitution of India, an additional  ground was taken that the respondents had illegally  invoked the provisions of Chapter V-A of the Industrial  Disputes Act, 1947 but in fact Chapter V-B of the said  Act applies as more than hundred workmen were being  employed by the respondent Company and therefore,  retrenchment of the petitioners was required to be  complied with the provisions of Section 25-N of the Act,  which were not followed and termination is illegal and  void on that ground.  

               The petition was opposed by the respondent  Company. It was submitted that the writ petitioners  were only ad hoc employees. They were not regularly  appointed after following due procedure of recruitment  rules and were employed only at the Rihand Nagar  Project. It was submitted that no regular recruitment  can be made without following procedure of the  recruitment rules and it was also contended that the  project has come to an end, therefore petitioners were  liable to be retrenched. It was also alleged that the  procedure for closure of the project has been complied  with as envisaged under Section 25-F of the Act. It was  contended that Section 25-N does not apply to the facts  of the present case. It was also contended that the  Project is not an industrial establishment as defined by  Section 25-L of the Act read with Section 2(m) of the  Factories Act, 1948 as it is not a factory. It was

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submitted that they were not employees of the  Company but they were recruited solely for the purpose  of Rihand Nagar Project and their services were  terminated after the said Project was closed and they  have no right to be absorbed in any other project. It  was submitted that the retrenchment orders were not  arbitrary or illegal or violative of Articles 14, 16 & 21 of  the Constitution of India.  

               The matter was heard by the learned Single Judge.  The learned Single Judge held that the petitioners have  put in long service nearly of 9 years and in some cases  even more than that and they are permanent employees  and they should have been engaged in any other  project as their services were transferable throughout  the country. It was also held that termination of  workmen is amenable to writ jurisdiction under Article  226 of the Constitution of India as it is a State within  the meaning of Article 12 of the Constitution of India.  Learned Single Judge further held that Section 25-N of  the Act was not complied with as it was a Factory within  the meaning of Section 2(m) of the Factories Act read  with Section 25-L of the Act. Hence the retrenchment  notices are illegal and void being in violation of Section  25-N of the Act and accordingly the learned Single  Judge allowed the writ petitions, quashed retrenchment  notices and directed to allow workmen to continue in  service and pay them their dues.

               Against this order passed by the learned Single  Judge dated 7.12.1993 special appeals were filed before  the Division Bench of the Allahabad High Court. The  Division Bench, however, allowed the appeals of the  Company holding that Section 25-N of the Act does not  apply on two grounds (i) that for a construction  company like the respondent Company, the procedure  of Section 25-O of the Act is not required to be  followed, service of incumbent comes to end ipso facto  after completion of project, there is also no question of  following the procedure of Section 25-N even on the  basis that the workmen at the Project were more than  hundred in number. (ii) It was also held that in any  case, Section 25-N of the Act would not apply as  respondent Company was not a Factory  as it was not  an industrial establishment as contemplated by Section  25-L of the Act read with Section 2(m) of the Factories  Act and accordingly it was held that the petitioners are  not the workmen and therefore, they are not entitled to  any protection under the Industrial Disputes Act. It was  also held that since they were employees of the Project  and the project has come to an end, therefore, their  services were validly terminated and they have no right  to be absorbed after completion of the Project. The writ  petitions were dismissed and order of learned Single  Judge was set aside. All the 25 petitioners approached  this Court by filing the Special Leave Petitions. The  leave was granted and appeals were heard. This Court  after reviewing all case laws on the subject held that  Section 25-N of the Act is attracted in the present case.  

It was observed,  "However, as we have seen above, the  establishment of the respondent-

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Company squarely falls within the  definition of the term "factory" for the  purpose of applicability of Section 25-N  of the Act. The first point for  consideration, therefore, has to be  decided in the affirmative in favour of  the appellants and against the  respondent."

                As a result of aforesaid finding there was non- compliance of Section 25-N, this Court took the view  that the retrenchment notices were null and void and  the relationship between employer and employee was  not snapped. It was further held that at the time  notices were issued the Project had not been  completed. However, the question with regard to   whether the petitioners were employees of the Project  or of the Company was left open. It was also brought to  the notice of this Court subsequent development that  the respondent Company served on the appellants with  fresh notices on 24 March, 1998 of termination by way  of Office Order No.3/1/98 and in those notices it was  mentioned that on completion of the project, the  services of the employees were dispensed with w.e.f. 4  September, 1993 on tendering of salary in lieu of notice  and retrenchment compensation as admissible under  the provisions of the Industrial Disputes Act. These  notices were served during pendency of the special  leave petitions. Therefore, they were not challenged by  the appellants before the High Court. However, it was  clearly mentioned in the notices that Rihand Project  was finally closed down w.e.f. 6.2.1998 and accordingly  the services of the workmen stood dispensed with from  the date of issue of notice i.e. 24 March, 1998. It was  also pointed out before this Court that work of all  railway lines is over and only small maintenance work  pursuant to the agreement with the Railway Authorities  is being undertaken. But in substance the whole work is  complete. This Court observed that since provisions of  Chapter V-B of the Act are applicable and the procedure   of Section 25-O would get attracted subject to the  proviso to Section 25-O(1), therefore, the Court left all  these factual questions open i.e. whether the project is  completed or not, whether the employees are of the  Project or of the company. This Court observed that  whether the Company is a State within the meaning of  Article 12 of the Constitution of India, whether  termination of these employees is arbitrary and  discriminatory and violative of Articles 14, 16 & 21 of  the Constitution of India are all questions of fact, they  cannot be answered in the present proceedings and the  fact that fresh notices were issued on 24 March, 1998  which has a fresh cause of action to the employees and  were not subject matter of the writ petition and the  appellants had no opportunity to put forward their  contentions for challenging these notices. Similarly, the  respondents also did not get an opportunity to put  forward their contentions in defence. Therefore, this  Court left all the questions open and gave an  opportunity to the petitioners as well as the  respondents to amend their pleadings and to file fresh  reply and produce relevant supporting material before  the High Court and accordingly the four questions were  framed by this Court and the matter was remitted  back

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to the High Court for consideration. In the result this  Court allowed the appeals of the appellants and set  aside order of the Division Bench and affirmed the  order of the learned Single Judge and remitted the  matter back to the High Court for being disposed of by  a Division Bench in the light of the observations made  by this Court.  

               Hence the matter came up before the Division  Bench of the High Court of Allahabad and in the  Division Bench there was difference of opinion between  two learned Judges. One of Hon’ble Judges constituting  the Division Bench allowed the writ petition and  quashed the notices vide order dated 17 May, 2002.   The other Hon’ble Judge of the Division Bench  dismissed the writ petition. Therefore, the matter was  referred to a third Judge. Since both the learned Judges  have passed the judgment constituting Division Bench,  therefore, the reference to third Judge was not found to  be proper and this was challenged by the employer  before this  Court and this  Court vide its order dated  17.10.2003 directed  that the matter be heard and  disposed of on merits in accordance with law by the Full  Bench of the High Court and remitted this matter to the  Full Bench. Accordingly, the Hon’ble Chief Justice  of  the High Court constituted the Full Bench by order  dated 12.11.2003 and referred the matter to the Full  Bench. The Full Bench after considering the matter  came to the conclusion that the petitioners are not  entitled to any benefit as aforesaid. Hence the present  Special Leave Petitions against the order passed by the  Full Bench dated May 21, 2004.  

               The pleadings were amended by the parties  and they exchanged affidavits. So far as the first legal  question as to  whether Section 25-N of the Act is  applicable to dispute of such nature is concerned that  no more remains to be res integra as it has been  conclusively held by this Court in aforesaid judgment  that Section 25-N is applicable that means Chapter V-B  of the Act is applicable to this dispute.  

               Now, the question before us at present is   whether the findings given by the Full Bench on the  questions framed by this Court were correctly answered  or not? The first question as framed by this Court was  whether factually the closure was effected in  February/March 1998 or not? So far this question is  concerned the Full Bench answered with reference to  various communications that the closure was effected   in 1998 and an intimation was sent to all the respective  contracting parties i.e. NTPC, NCL, PCL and UPSEB. In  this connection reference has been made to the  completion certificate issued by the National Thermal  Power Corporation Ltd. on 29 March, 2000 certifying  that the projects referred to had been completed prior  to March 1998 and handed over to NTPC. Another  certificate was issued by the National thermal Power  corporation Ltd. dated 30.3.2000 certifying that the  work stands completed. The said Corporation issued  certificate on 13 January, 1999 that the projects stood  completed much before the date of issue of the notice  in question. Another certificate was issued by the

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Superintending Engineer, U.P. State Electricity Board  on 29 March, 2000 and 2.9.1999 about the completion  of the work. Similar certificate was issued by the  Northern Coal Field Ltd. Jayant Project on 29 March,  2000 certifying the same thing. The entire project  conglomeration as a whole was closed down w.e.f.  6.2.1998 after issuance of the notification through  newspaper and notice board. The concerned Labour  Commissioner and Regional Labour Commissioner were  duly informed about the closure. They were informed  vide communication dated 4.2.1998. A notice of the  closure was also published in the daily newspapers  Dainik Jagran and Rashtriya Sahara. It is also pointed  out that a small fraction of work remained to be  completed, as it was abandoned due to non-availability  of site on account of encroachments by members of  public which was certified by the UPSEB that it was  beyond their control and for that work some 20 Head of  Telecom Engineering and Supervisory Staff was  retained and they were agreed to reimburse the cost  towards supervisory staff of Telecom and Engineering  discipline, that the work was undertaken after 14  months of the date of closure of Rihand Nagar Project  as separate work and this work was completed on  September 2, 1999 and a certificate to this effect was  also produced. It is also made clear that for completion  of this left over work only people from the Telecom and  Engineering discipline were engaged and the petitioners   do not fall in any of that category. Therefore, on this  question the Full Bench concluded that the closure was  effected much before the issuance of the notices of  1998. We are satisfied on the basis of finding given by  the Full Bench that the work stood completed in 1998  and a perusal of all these certificates leaves no manner  of doubt that work was completed much before the  notices were issued in March, 1998.  

               So far as the second and third questions are  concerned, the crucial question to be decided is  whether they were employees of the Project or of the  Company. In this connection   the  finding was given by  

the Full Bench that they were employees of the Project  and not of the Company. Learned counsel for appellants  laid much stress on appointment orders of appellants  that they are employees of the Company and not of the  Project. He has taken us through various appointment  orders issued from time to time and some of the  samples, are reproduced as under:-

"INDIAN RAILWAY CONSTRUCTION COMPANY LIMITED (A Government of India Undertaking)

GRAM : RAILCONST                              RATTAN JYOTI                                                   18,RAJENDRA PLACE                                                   NEW DELHI-110008(INDIA)

No.IRCON/ESTT./35                               DATED: 25/8/84

Shri Lalmohammad S/o Ajimuddin Vill:Dallumandaltola, Dt.Malda.

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               You are hereby offered appointment in Anpara Project  Project on a Casual adhoc basis on a consolidated monthly emoluments  of Rs.400/- (Rupees four hundred). You are directed to report to  Project Manager IRCON at Anpara.

               In this connection, the following instructions are issued.

1.      Your training period will be for a period of 12 months after you  report for duty.

2.      On satisfactory completion of the training you will be required  to pass a written and oral examination.  

3.      On passing your above examination, you will be brought in  grade Rs.260-400/-.  

4.      During your training period you will be entitled to an  additional monthly emolument of Rs.50/- if you are posted in  Delhi, Bombay or Calcutta.  

5.      The above appointment is subject to verification of your age,  qualifications for which you should produce original documents  while reporting.  

                                                       Sd/-                                          

                                       (N.SWAMINATHAN)                                 COMPANY SECRETARY, IRCON"

"INDIAN RAILWAY CONSTRUCTION COMPANY LIMITED (A Government of India Undertaking)

GRAM : RAILCONST                              RATTAN JYOTI                                                   18,RAJENDRA PLACE                                                   NEW DELHI-110008(INDEA)

No.IRCON/PP/35A                                 DATED: 22-10-83

Md.Intas Hussain S/o Md.Yahim Ali,  Village , Chandigachil, P.O.Singhia, Dt.Malda.

               You are hereby offered appointment in Anpara Project  Project on a Casual adhoc basis on a consolidated monthly emoluments  of Rs.400/- (Rupees four hundred). You are directed to report to  Project Manager V.S.T.V.P. IRCON at Anpara.

               In this connection, the following instructions are issued.

1.      Your training period will be for a period of 12 months after  you report for duty.

2.      On satisfactory completion of the training you will be required  to pass a written and oral examination.  

3.      On passing your above examination, you will be brought in  grade Rs.260-400/-. You will also be eligible for payment of all  allowances as per the rules of the company;

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4.      Your regular appointment in the Company will be governed by  the Recruitment Rules of the Company.  

5.      You are liable to be posted any where in India.  

6.      During your training period you will be entitled to an  additional monthly emolument of Rs.50/- if you are posted in  Delhi, Bombay or Calcutta.

                                                       Sd/-                                          

                                               (N.SWAMINATHAN)                                         COMPANY SECRETARY,  IRCON"

"INDIAN RAILWAY CONSTRUCTION COMPANY LIMITED A GOVERNMENT OF INDIA UNDERTAKING  

                                       Office of the Regional Manager P.O.Anpara, District  Mirzapur(UP)                                         Dated: 19.5.1988

No.IRCON/ANP/ESTT/15/AL

To

               Shri Meghu Seikh                 Artisun,                 IRCON, Baijpur.  

Dear Sir,

1.              On completion of your training you are hereby brought on  scale of pay in the grade of Rs.260-600(Rs.) in the initial pay of  Rs.260/- p.m. with effect from 11.10.1984.

               You have been brought on the scale of pay in the grade of Rs.  In the initial pay of Rs. Pm with effect from.

2.              You will be eligible for all the allowances and benefits as per  Rules/Orders issued by the Company from time to time.  

3.              You should produce the following documents at your own  expense.

(a)     A medical certificate of health and physical fitness of  prescribed proforma from a qualified Registered Medical  Practitioner.

(b)     Original certificates in support of your educational and  other professional qualification, documentary proof, in  respect of date of birth etc. together two copies thereof.

(c)     Attestation form in triplicate (enclosed) after filling.

(d)     In case you belong to Schedule Caste/Schedule Tribe, one  of the following certificates in original should be

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produced.  

       Matriculation or School Leaving Certificates or birth  certificate giving your caste/community and place or  residence.  

                                                             Or

       A certificate in the prescribed form issued by the  Competent Authority.

4.              You should take an Oath of allegiance to the Constitution of  India in the appropriate form.

5.              You will be liable for transfer to any of the Office Project  site under the control of the company in India.  

6.              You will not save with the prior permission of the Competent  Authority, apply for any appointment outside the company. You will  have to withdraw your application for appointment elsewhere made  prior to the date of issue of these orders and will not appear for  interview or accept any employment it offered.  

7.              You will not save with the express permission from the  company, engage in any trade or business or undertake any other work  or any employment elsewhere full time or part time while in the  service of the company.

8.              In regard to any matters not specifically covered in the  foregoing paragraphs, you will be governed by the rules and orders  applicable to the employees of the company.  

9.              If any declaration given or information furnished by you  proves to be false, or it is found that you have willfully suppressed any  material information you will be liable to removal from services  forthwith without any notice and without assigning any reason  therefore, notwithstanding any action taken against you as the  Company may deem necessary.  

                                               For & on behalf of  

                                       Indian Railway Construction Co.Ltd.

                                                       -sd/-

                                               Regional Manager                                                 IRCON-ANPARA

Copy of information & necessary action to:

1.      Group General Manager(T), IRCON, New Delhi."

               Other appointment letters are on the same  pattern. Therefore, no useful purpose will be served by  reproducing all of them. On the basis of these letters  learned counsel submitted that a perusal of these  appointment orders clearly shows that appointments  were made by the Company and they were directed to  report to the Project Officer of the Company. It was  submitted that after the necessary training and passing  required examination the incumbents were entitled to  regular pay scale of Rs.260-400/- along with all  allowances as per the rules of the company, that  incumbent can be posted at any where in India on any

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project, no employment could be taken up by incumbent  without prior permission of the company, that  incumbent is not required to engage in a trade or  business, that they will be governed by the rules of the  company, that group insurance was also taken out by  the company, that they were required to take oath of  allegiance to the constitution. On the basis of these  salient features the learned counsel submitted that it  leads to only and only inference that the petitioners  were employees of the Company and not of the Project.  It was submitted that since each incumbent has to work  on the Project and that they were directed to report to  the project officer, that does not mean that they were  employees of the project and not of the Company.

                As against this, learned counsel Mr.Rao submitted  that the petitioners were never employed by the  Company and they were employees of the Project and  they were only serving in the project and after  completion of the project they could not be regularized  in the company. They were essentially employees of the  Project and after completion of the Project, their  services automatically came to end and they were  accordingly given notice and compensation as per the  Act. It was also submitted that Company’s regular  appointment is governed by the rules known as IRCON  Recruitment Rules, 1979 (hereinafter referred to as the  Rules of 1979). Learned counsel submitted that as per  the provisions of the Rules of 1979 regular recruitment  in the company takes place as per these rules and in  this connection learned counsel especially invited our  attention to Rules  4.1, 6.4, 6.4.1, 6.2.1, 7.1, 8.1, 8.5,  8.7 12.1 and 12.2. which read as under:  "Rule 4.1 -     These Rules shall apply to  appointments by Direct recruitment or  deputation from Government or Public  Sector Companies or by departmental  promotion to all posts in the Company  except those which are to be filled in by the  Central Government.  These rules do not  apply to daily rates staff.  

Rule 6.2.1 \026 Direct recruitment should  ordinarily be resorted to in cases where it is  not possible to obtain the staff from  Government Department/Bodies and Public  Sector on usual deputation terms.  A list of  categories  in  which direct recruitment can  be made is placed at Annexure ’A’.  For this  purpose, the staff employed against short  term vacancies or specific  projects on daily  rated basis may also be considered.

Rule 6.4 -      Short term appointment.  

Rule 6.4.1 -    For short term requirements,  viz. requirements not covered by regular  posts, if these cannot be managed by the  regular staff employed by the Company, or  by staff on deputation from Government  Departmental/Bodies and public sectors,  daily rated staff may be engaged at the  rates and conditions to be decided by the  Managing Director, keeping in view the  directives issued by the Government from

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time to time, unless the powers are  delegated.  

Rule 7.1 -      Pay scale qualifications,  experience, age limit for each category of  post shall be as indicated in Annexure ’B’,   forming part of these Rules.

Rule 8.1 -      Appointment on direct basis  shall be made though the Employment  Exchange or in the manner as permitted by  provisions of the Employment Exchange  (Compulsory Notification of Vacancies) Act,  1959.  

Rule 8.5 -      All applications received  against a specific notification/advertisement  will be subjected to a careful scrutiny  by  the Department concerned in the Corporate  Office for the specific purpose of checking   the eligibility  of each candidate.  In the  case of Scheduled Castes/Tribes, ex- servicemen, etc. applications must be  accompanied by a certificate to that effect  from the competent authority.  

Rule 8.7 -      Selection will be subject to  written test and interview or written test or  interview only depending upon the demands  of the post.  Decision on this aspect shall be  taken by the competent authority  conforming to the general practice in vogue   with suitable modification wherever called  for, before the notification is issued for the  recruitment to the posts.

Rule 12.1-      Absorption of Deputationists:  

Rule 12.1.1-    Deputationists working in the  Company shall have the option to seek  permanent absorption in the services of the  company in accordance with the instructions  issued by the BPE from time to time.  For  absorption of such personnel, suitable  selection  Committee will be constituted on  each occasion and their recommendations  are to be considered by the Managing  Director or Board of Directors, as the case  may be.  

Rule 12.2-      Confirmation/Absorption of  others.  

Rule 12.2.1-    Staff directly recruited or  working at present on daily rates basis may  also be considered for  confirmation/absorption against regular  posts subject to their being screened by the  Selection Committee set up for this purpose,  keeping in view such instructions of the  Company as may have been issued from  time to time, and subject to vacancies being  available."

12.2.1.(i)-     Regularisation of persons

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appointed on short term basis.  

The Selection shall comprise of written  examination and/or interview.  In case the  selection is held on the basis of written  examination and interview, the following  norms shall be followed:  

Written  Exam.  Interview (PASR)  Aggregate Professional

Ability

Service  Record  

15 10 Max. Marks  57 25  100 Qualifying  Marks  Gen.40% 30 marks  40% 10 marks  50%

SC/ST 30% 22.5 Marks  30% 7.5 Marks 40%

(ii)-Generally the regularization of persons  appointed in any grade on short term or  contract basis may be considered after the  incumbent has put in a minimum period of  satisfactory service specified from time to  time for each category depending on  vacancies subject to minimum eligibility  criteria, indicated in the table below.  

               Eligibility Criteria for Regularization

Category Grade  Qualification  1.JE/JFO 1400- 2300/CDA Diploma (3 years

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Course) 1400-2300/IDA of relevant discipline or equivalent

2.Site Engineer  

1600- 2660/CDA

Degree in  Engineering of  relevant discipline 1900-3040/IDA     Equivalent,  Diploma ( 3 years course) of relevant discipline with 9  years experience.

3.Section Officer

1640- 2900/CDA

B.Com. &  Intermediate  /CA/ICWA 1900-3050/IDA or equivalent or Appendix-II  Examination  

4.Asstt.  Manager/A/C or  equivalent IDA  scale  

2000- 3500/CDA or  equivalent  

B.Com. and  CA/ICWA(Final)

5.Asstt.  Manager/Pers.  & Admn., or  equivalent IDA  scale  

2000- 3500/CDA

i) Graduate.  

ii) PG Diploma in  Personnel/Business  Management or  equivalent from a  recognized institution  or Post Graduate  degree in Social  Sciences From  recognized  universities/institutions .  

iii) In other cases, if  any, the Managing  Director may decide the  grade to which

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contract, short term  employee may be  considered for  regularization, subject  to vacancies being  available.  Such  regulations, if any, may  be considered after two  years of contract/short  term service if  requirement continues.  

iv) 50% of the service  put in on short term  basis/contract basis  before  the date actual  regularization will be  reckoned for weightage  for the purpose of  seniority.  However, the  Committee may  recommend less than  50% service, for  reasons to be recorded.   Under no  circumstances, the  weightage for the  seniority will be more  than 50% or maximum  of 3 years.  This will be  reckoned on the basis  of half year for each  completed year of  service, fraction of an  year being ignored.  

     In the case of persons who are not found fit  for regularization in the grade of initial  appointment but are found fit for regularization in  the lower grade, the seniority may be assigned in  the lower grade by giving 50% credit for the  service in the initial grade of appointment subject  to maximum of 3 years.  This would be subject to  his acceptance of regularization in lower grade in  writing.  

12.2.2- If the posts, against which  deputationists and other staff are  working are still being operated on  temporary basis but are evidently  justified to be retained on permanent  basis, their conversion in permanent  posts may first be decided before the  question of absorption of staff working  is considered against them."  

Learned counsel further submitted that in fact the  company has made short term advertisement and asked  these project employees to apply for their regular  recruitment under these rules and in pursuance of that  large number of people applied. Some of the adhoc

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employees of the Projects  were absorbed on their  successful selection. In this connection learned counsel  made a reference of Shri Prabir Basak who was one of  the persons like the appellants and who after going  through the process of selection as per the rules was  selected and appointed but the appellants did not  appear in any of the recruitment test. Therefore, they  could not be appointed or regularized on that basis.  Learned counsel also submitted that in the writ petition  one of the prayers was to treat these petitioners as  permanent employees. In this connection learned  counsel has read out clause 7 in the writ petition.  Learned counsel submitted that since the recruitment  under the Company is governed by the Rules of 1979  and these persons were given an opportunity to appear  in the test  and on their selection they could have been  appointed as some of them were appointed. This factual  aspect has not been disputed by the learned counsel for  the appellants.  

               We have bestowed our best of consideration to the  rival contentions of the parties. We regret to say that  we have failed to be persuaded by the submissions of  the learned counsel for the appellants to infer that the  appellants were the employees of the Company and not  of Project. In the appointment orders it was mentioned  that appointment was adhoc and they were directed to  join the Project. Therefore, these conditions, which  have been stressed by the learned counsel does not  lead us to the inference that incumbents were  employees of the company. Employment to the company  is regulated by the service rules and none of the posts  which has been mentioned against these persons is in  the list annexed to the Schedule appended to the Rules.  That apart an opportunity was given to the petitioners  to appear for regular selection in the company and they  failed to avail that opportunity. Therefore, from these  facts, it is more than apparent that the petitioners were  not employees of the company but they were employees  of the Project. Since it is a public sector company and it  is governed by its own rules and those rules clearly  contemplate a method for recruitment into service and  that opportunity was given to the incumbents for being  regularly recruited in the company but they failed to  avail the same. Simply because the company had said  that these persons will not be permitted to take any  other employment or business without prior permission,  their group insurance was made and were placed in the  pay scale of the company that does not mean that they  will be deemed to be employees of the Company.  Simply because they adopted the basis for giving them  the benefit of the Company as was being given to other  employees who have been duly recruited in accordance  with the rules,  by such conferment of benefit will not  be deemed to be employees of the Company. The  regular recruitment Rules have been framed with the  approval of the Government, as the company  is a  public sector undertaking. These rules may not be given  a status of statutory rules but those rules are binding  on the company and company cannot take departure  from acting under the rules, for all purposes, they are  almost analogous to the statutory rules. These rules  have a legal sanctity as they have been framed in terms  of memorandum and articles of association with the  approval of the Government. Therefore, they have a

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binding force for the company and company cannot  make a departure for recruitment except than following  these rules. As per the provisions pointed out above,  there is methodology provided under the rules and that  was not followed in the present case. They were  appointed being the local hand as workmen were  required for completion of the project and therefore  they were appointed for the  project and as soon as the  project was over they cannot claim as a matter of right  to be permanent employees or to be regularized in the  company. A distinction has to be borne in mind who is  employee of the company and who is employee of the  Project. The services of project employees  come to an  end as soon as the project is over and they cannot be  given permanent status. Since they were employees of  the project their services have to be terminated after  completion of the project. In this connection the Full  Bench has considered the necessary provisions of the  rules and after a detailed discussion on the matter has  rightly come to the conclusion that they are employees  of the project and they are not the employees of the  company. There is no question of violation of Articles  14,16 & 21 of the Constitution of India in the matter as  they were employees of the project and at the end of  the project they have taken their benefits as are  admissible in accordance with the Industrial Disputes  Act. Therefore, there is no violation of Articles 14, 16 &  21 of the Constitution of India. So far as question with  regard to Article 12 is concerned, the same is not  relevant in this matter because the whole service  conditions of the employees are governed by the  Industrial Disputes Act. Therefore, it is purely an  academic question whether company is a State within  the meaning of Article 12 or not.  

               Now question arises what benefit could be given to  the petitioners, in this connection reference may be  made to Section 25-O read with Section 25-FFF of the  Act as it has been held by this Court that Chapter V-B  is applicable to these proceedings. Section 25-O lays  down procedure for closing down an undertaking and  proviso to sub-section (1) of Section 25-O clearly lays  down that nothing in this sub-section shall apply to an  undertaking set up for construction of buildings,  bridges, roads, canals, dams, or for other construction  work. Section 25-O is reproduced as under:- "25-O. Procedure for closing down  an undertaking:-

(1) An employer who intends to  close down an undertaking of an  industrial establishment to which  this Chapter applies shall, in the  prescribed manner, apply, for prior  permission at least ninety days  before the date on which the  intended closure is to become  effective, to the appropriate  government, stating clearly the  reasons for the intended closure of  the undertaking and copy of such  application shall also be served  simultaneously on the  representatives of the workmen in  the prescribed manner;

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PROVIDED that nothing in this sub- section shall apply to an  undertaking set up for the  construction of buildings, bridges,  roads, canals, dams, or for other  construction work.  

(2) Where an application for  permission has been made under  sub-section (1), the appropriate  government, after making such  enquiry as it thinks fit and after  giving a reasonable opportunity of  being heard to the employer, the  workmen and the persons interested  in such closure may, having regards  to the genuineness and adequacy of  the reasons stated by the employer,  the interests of the general public  and all other relevant factors, by  order and for reasons to be  recorded in writing, grant or  refused to grant such permission  and a copy of such order shall be  communicated to the employer and  the workmen.

(3) Where an application has been  made under sub-section (1) and the  appropriate government does not  communicate the order granting or  refusing to grant permission to the  employer within a period of sixty  days from the date on which such  application is made, the permission  applied for shall be deemed to have  been granted on the expiration of  the said period of sixty days.  

(4) An order of the appropriate  government granting or refusing to  grant permission shall, subject to  the provisions of sub-section (5), be  final and binding on all the parties  and shall remain in force for one  year from the date of such order.

(5) The appropriate government  may, either on its own motion or on  the application made by the  employer or any workman, review  its order granting or refusing to  grant permission under sub-section  (2) or refer the matter to a Tribunal  for adjudication:  

PROVIDED that where a reference  has been made to a Tribunal under  this sub-section, it shall pass an  award within a period of thirty days  from the date of such reference.  

(6) Where no application for  permission under sub-section (1) is

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made within the period specified  therein, or where the permission for  closure has been refused, the  closure of the undertaking shall be  deemed to be illegal from the date  of closure and the workmen shall be  entitled to all the benefits under  any law for the time being in force  as if the undertaking had not been  closed down.  

(7) Notwithstanding anything  contained in the foregoing  provisions of this section, the  appropriate government may, if it is  satisfied that owing to such  exceptional circumstances as  accident in the undertaking or death  of the employer or the like it is  necessary so to do, by order, direct  that the provisions of sub-section  (1) shall not apply in relation to  such undertaking for such period as  may be specified in the order.  

(8) Where an undertaking is  permitted to be closed down under  sub-section (2) or where permission  for closure is deemed to be granted  under sub-section (3) every  workman who is employed in that  undertaking immediately before the  date of application for permission  under this section, shall be entitled  to receive compensation which shall  be equivalent to fifteen days’  average pay for every completed  year of continuous service or any  part thereof in excess of six  months."

               Since this was a project for construction of  some railway lines, therefore, the rigour of sub-section  (1) for seeking a permission of Government is not  required in the present case. Once the project is  completed the service of the incumbent comes to an  end. But the legislature in its wisdom has provided  relief for such class of workmen on completion of  project under section 25-FFF. Sub-section (2) of  Section 25-FFF provides compensation for such class of  workmen. Sub-section (2) of Section 25-FFF reads as  under:- "(2) Where any undertaking set up for  the construction of buildings, bridges,  roads, canals, dams, or other  construction work is closed down on  account of the completion of the work  within two years from the date on  which the undertaking had been set  up, no workman employed therein  shall be entitled to any compensation  under clause (b) of Section 25F, but if  the construction work is not so  completed within two years, he shall  be entitled to notice and

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compensation under that section for  every completed year of continuous  service or any part thereof in excess  of six months."  

               According to sub-section (2) when such  construction work is closed down and on completion of  work within two years from the date on which the  undertaking had been set up, the workman employed  therein shall not be entitled to compensation under  clause (b) of Section 25F, but if the construction work  is not completed within two years he shall be entitled  to notice and compensation under that section for every  completed year of continuous service or any part  thereof in excess of six months.  

               Mr.Rao learned counsel for the Company  submitted that the position of the company vis-a-vis  these workmen should not be worse when their  undertaking is closed with the permission. He submitted  that in fact sub-section (8) of Section 25-O clearly lays  down that if the permission had been granted for  closure then every workman employed therein shall be  entitled to receive compensation, which will be  equivalent to 15 days’ average pay for every completed  year of continuous service or any part thereof in excess  of six months. Learned counsel submitted that position  of the company where the project is completed cannot  be said to be worse than the undertaking, which is  closed with the permission where the compensation is  only awarded as mentioned in sub-section (8) of  Section 25-O. We regret to say that we cannot agree  with the submission of the learned counsel for the  respondent company. The legislature in its wisdom has  especially provided on closure of such projects, a  special benefit to such workers under sub-section (2) of  Section 25-FFF in the event the company has completed  construction after more than two years, the workman  will be entitled to notice and compensation under that  section 25-F for every completed year of continuous  service or any part thereof in excess of six months.  This is the legislative mandate and the intention of the  legislature is more than apparent. Since this is  legislative mandate and we cannot sit over the matter  to decide that whether the position of the company,  which closed down the undertaking with the permission  and company which is closed down because of the  completion of the project should not be worse. Since it  is a legislative mandate the company has to comply  with those provisions. Therefore, these incumbents  have already been given notice and if the compensation  has not been determined in terms of Section 25-F then  that should be calculated and paid to the workers if not  paid so far. They have been directed to collect their  dues from the office. If that amount has not been  collected by them then it will be open to them to collect  same or any shortfall that will be made good by the  company. So far as the termination of the incumbents  is concerned after completion of the project they have  no right to continue. They are only entitled to notice  and compensation to be determined under Section 25-F.  Shortfall of period of notice or compensation will not  render termination bad on that count.  

               In this connection learned counsel has also

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invited our attention to a decision of this Court in  Punjab Land Development & Reclamation  Corporation Ltd., Chandigarh vs. Presiding Officer,  Labour Court, Chandigarh & Ors. reported in (1990)  3 SCC 682 where the similar question was considered  by the Constitution Bench of this Court and it was  observed, "Thus, by this Amendment Act the  Parliament clearly provided that  though such termination may not  have been retrenchment technically  so-called, as decided by this Court,  nevertheless the employees in  question whose services were  terminated by the transfer or closure  of the undertaking would be entitled  to compensation, as if the said  termination was retrenchment. As it  has been observed, the words "as if"  brought out the legal distinction  between retrenchment defined by  Section 2(OO) as it was interpreted  by this Court and termination of  services consequent upon transfer of  the undertaking. In other words, the  provision was that though termination  of services on transfer or closure of  the undertaking may not be  retrenchment, the workmen  concerned were entitled to  compensation as if the said  termination was retrenchment."

               This view has been further reaffirmed by this  Court in S.M.Nilajkar & Ors. vs. Telcom District  Manager, Karnataka reported in (2003)4 SCC  27. It  was observed,  "It is pertinent to note that in  Hariprasad Shivshanker Shukla v.  A.D. Divelkar \026 AIR 1957 SC 121 the  Supreme Court held that  "retrenchment" as defined in Section  2(oo) and as used in Section 25-F has  no wider meaning than the ordinary  accepted connotation of the word,  that is, discharge of surplus labour or  staff by the employer for any reason  whatsoever otherwise than by way of  punishment inflicted in disciplinary  action. Retrenchment was held to  have no application where the  services of all workmen were  terminated by the employer on a real  and bona fide closure of business or  on the business or undertaking being  taken over by another employer. The  abovesaid view of the law taken by  the Supreme Court resulted in  promulgation of the Industrial  Disputes (Amendment) Ordinance,  1957 with effect from 27-4-1957,  later on replaced by an Act of  Parliament (Act 18 of 1957) with  effect from 6-6-1957 whereby Section  25-FF and Section 25-FFF were

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introduced in the body of the  Industrial Disputes Act, 1957. Section  25-FF deals with the case of transfer  of undertakings. The term  "undertaking" is not defined in the  Act. The relevant provisions use the  term "industry". Undertaking is a  concept narrower than industry. An  undertaking may be a part of the  whole, that is, the industry. It carries  a restricted meaning. (See Bangalore  Water Supply & Sewerage Board v. A.  Rajappa \026 (1978) 2 SCC 213 and  Hindustan Steel Ltd. v. Workmen \026  (1973) 3 SCC 564) With this  amendment it is clear that closure of  a project or scheme by the State  Government would be covered by  closing down of an undertaking within  the meaning of Section 25-FFF. The  workman would therefore be entitled  to notice and compensation in  accordance with the provisions of  Section 25-F though the right of the  employer to close the undertaking for  any reason whatsoever cannot be  question. Compliance with Section 25- F shall be subject to such relaxations  as are provided by Section 25-FFF.  The undertaking having been closed  on account of unavoidable  circumstances beyond the control of  the employer i.e. by its own force as  it was designed and destined to have  a limited life only, the compensation  payable to the workman under clause  (b) of Section 25-F shall not exceed  his average pay for three months.  This is so because of failure on the  part of the respondent employer to  allege and prove that the termination  of employment fell within sub-clause  (bb) of clause (oo) of Section 2 of the  Act."

               Therefore, in view of the legislative history as  mentioned above, it clearly stipulates that Section 25- FFF was in fact incorporated in order to give benefit to  the workers, where an undertaking is closed because of  completion of the project or on account of transfer.  Therefore, the contention of Mr.Rao learned counsel  cannot be accepted. In this connection our attention  was also invited to a decision of this Court in A.  Umarani vs. Registrar, Cooperative Societies & Ors.  reported in (2004) 7 SCC  112 wherein it was held  that illegal appointment cannot be regularized.  

               Learned counsel has invited our attention to a  decision of this Court in Hindustan Steel Works  Construction Ltd. & Ors. vs. Hindustan Steel Works  Construction Ltd. Employees’ Union, Hyderabad &  Anr. reported in (1995) 3 SCC  474 wherein when one  of the unit of the Hindustan Steel Works Construction  Ltd. was closed down and similar relief was sought by  the employees of the Hindustan undertaking and in that

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context this Court observed that on closure of unit at  Hyderabad the workmen were not entitled as a matter  of right to be absorbed, and it was held:  "The question whether the units at  Hyderabad are independent  establishments or parts of a larger  establishment is not a pure question  of fact. The tests laid down in this  behalf in the decisions of the  Supreme Court need not all be  satisfied in every case. One has also  to look to the nature and character of  the undertaking while deciding the  question. The tests evolved are  merely to serve as guidelines. The  appellant is a government company  wholly owned and controlled by the  Government of India. Its job is to  undertake construction works both in  India and abroad. The construction  works are not permanent works in  the sense that as soon as the  construction work is over, the  establishment comes to an end at  that place. In such a case, functional  integrality assumes significance. The  nature of the construction work may  also differ from work to work or place  to place, as the case may be. It is  not      even      suggested     by  the  

respondent-Union that there is any  functional integrality between the  several units or several construction  works undertaken by the appellant. It  is not suggested that closure of one  leads to the closure of others. There  is no proximity between the several  units/works undertaken by the  appellant; they are spread all over  India, indeed all over the world. It  would thus appear that each of the  works or construction projects  undertaken by the appellant  represent distinct establishments and  did not constitute units of a single  establishment. The mere fact that  Management reserved to itself the  liberty of transferring the employees  from one place to another did not  mean that all the units of the  appellant constituted one single  establishment. In the case of a  construction company like the  appellant which undertakes  construction works wherever  awarded, does that work and winds  up its establishment there and  particularly where a number of local  persons have to be and are appointed  for the purpose of a particular work,  mere unity of ownership,  management and control are not of  much significance. Having regard to

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the facts and circumstances of this  case and the material on record, the  conclusion is inevitable that the units  at Hyderabad were distinct  establishments. Once this is so,  workmen of the said units had no  right to demand absorption in other  units on the Hyderabad units  completing their job."

                Therefore, this case is nearer to our case in hand  that once this project is completed then it is not  incumbent on the company to necessarily employ these  persons at other projects in any other part of the  country.  

       Our attention was also invited to a decision of this  Court in MD. U.P. Land Development Corporation &  Anr. vs. Amar Singh & ors. reported in (2003) 5 SCC   388 wherein it has been held that employees working  under a scheme/project have no vested right so as to  claim regularisation of their services with regular pay  scales. It was observed that when the scheme/project  comes to an end, the services of the employees working  the project also come to an end.  

       Learned counsel has invited our attention to a  decision of this Court in Mahendra L.Jain and Ors.  vs. Indore Development Authority & Ors. reported  in (2005) 1 SCC 639. This was a case of regularization  of illegal appointments. This has no relevance so far as  our case in hand is concerned.  

       Before parting with the case, we may clarify that if  any compensation amount has not been paid to the  workers then that should be determined and be paid to  them forthwith, if not paid so far.  

       Therefore, in the light of discussion made above,  we are of the opinion that the view taken by the Full  Bench is correct. The petitioners are not entitled to be  regularise their services in the Company and they are  not employees of Company. They are only entitled to  compensation as indicated above. The above appeals  and writ petitions filed by workers are dismissed. No  order as to cost.