Hindustan Aeronautics Ltd Vs. Dan Bahadur Singh & Ors [2007] Insc 472 (27 April
2007)
G.P. Mathur & A.K. Mathur
(Arising out of Special Leave Petition (Civil) Nos.10478-10479 of 2005) G.
P. MATHUR, J.
1. Leave granted.
2. These appeals, by special leave, have been preferred against the judgment
and order dated 7.3.2005 of Allahabad High Court (Lucknow Bench), by which the
special appeals preferred by the appellant herein were dismissed and the
judgment and order dated 31.8.1999 passed by a learned Single Judge by which
two writ petitions were disposed of was affirmed.
3. Hindustan Aeronautics Ltd. Muster Roll Trade Union Congress, Korwa,
Sultanpur, filed Writ Petition No.10513 of 1990 against the appellant Hindustan
Aeronautics Ltd., Korwa Division, Sultanpur (hereinafter referred to as 'the
Company') & Ors., wherein the main relief claimed was as under :-
"Issue a writ, order or direction in the nature of mandamus commanding the
opposite parties to regularize the services of the members of the petitioner
union fully described in Annexure No.1 and place them in the pay scale of the
post of Mali and allow them and treat them as continuing in service with all
benefits without any break."
It was averred in the writ petition that the petitioner union is a registered
trade union under the provisions of the Trade Unions Act, 1926 with
the Registrar, Trade Unions U.P., Kanpur, of daily rated Malies i.e. Muster
Roll employees (workmen within the meaning of the Industrial Disputes Act)
working in the establishment of the appellant herein. The petitioner union was
seeking regularization of services of its members and their continuance in
service without any break as well as equal pay for equal work. The members of
the petitioner union whose names figure at serial nos.1 to 77 in Annexure 1,
are land losers as their land was acquired for establishment of appellant and
the remaining persons are non land losers. The members of the petitioner union
were continuing as daily rated Malies for the last about 5 to 7 years with 2-3
days break on 2 or 3 occasions in each month although the work and post
continue to be available. There was a policy of the State Government to provide
employment to at least one member of the family whose land had been acquired
and several Government orders had been issued in this regard. The daily rated
Malies were getting much less amount as wages than those Malies who were in a
regular scale of pay though there was no difference in work. In spite of work
and posts being available, artificial break in service was created with a view
to deprive them of their continuity in service. The members of the petitioner
union had put in more than 240 days of continuous service in each calendar
year, yet their services had not been regularized. They were entitled to not
only regularization of their services but also the pay scale of the post of
Mali as there was no difference in the nature of work and duties being
performed by them from those who were in the regular pay scale.
4. The appellant herein filed a counter affidavit on the ground, inter alia,
that the list of members contained in Annexure 1 to the writ petition was not
within the knowledge of the appellant company. The writ petitioners were being
engaged as casual labourers in the appellant Company as per the settlement
arrived at on 6.3.1989 between the writ petitioners and the management of the
Company with the intervention of Deputy Labour Commissioner, Faizabad. It was
further averred that after acquisition of land by the State Government for the
purpose of setting up of Korwa Division of the Hindustan Aeronautics Ltd.,
factory premises were established in 1983. Since a new area had to be developed
and the work had to be started from scratch, initially a large number of
workmen including Malies were engaged for horticulture and land scape
development work. However, at the present juncture, the horticulture work was limited
for maintenance of land and garden and thus the requirement of the labourers
for this work had considerably decreased and there was no continuous and full
time work. The land losers whose land had been acquired were given preference
for this type of work. In the settlement arrived at on 6.3.1989 it was agreed
that the land losers would be engaged for 20 days in a month and non land
losers would be engaged for 15 days in a month on daily basis as casual
unskilled labourers. The writ petitioners were paid daily wages which was much
higher than the minimum wages prescribed under the Minimum Wages Act but they
could not be paid wages like Malies employed in regular pay scale. The writ
petitioners cannot be given appointment on regular post as there is no
continuous and full time work of that nature in the company. It was further
averred that the company is already having surplus labour and, therefore, a ban
has been imposed on recruitment. The writ petitioners were being engaged
essentially to fulfil the terms of the settlement arrived at on 6.3.1989.
Lastly, it was submitted that the basic object of the company was to produce
state of art avionics equipment for aircrafts which was being manufactured for
use by the Indian Air Force. The horticulture activities are in no way
connected with the production activities of the company. It was purely seasonal
and intermittent in nature and there was not enough continuous and full time
workload to justify the employment of a large work force on permanent basis. A
supplementary counter affidavit was also filed wherein it was averred that at
the initial stage manpower was required for levelling of the land for gardening
purposes and for purposes related to horticulture development in factory
premises as well as in residential area of the establishment. In the
establishment there was no post for gardeners (Malies) and the sanction for
horticulture work is being given by the General Manager of the establishment on
the basis of man days required for work every month. After assessing the
requirement of the establishment 2106 man days had been sanctioned in the
establishment for different categories of casual workmen. The sanction given
for the month of December 1998 would show that there are 78 man days for
skilled grade and 2024 man days for unskilled casual workmen. The number of man
days of individual workman differ in every month. The excess (balance) number
of man days from land losers/skilled category was distributed every month
amongst the unskilled casual workmen. A settlement in this regard was arrived
at on 26.7.1995 before the Assistant Labour Commissioner, Faizabad. After the
settlement, a cogent scheme had been framed by the establishment based on
reasonable classification for engagement of the casual labour for the purpose
of meeting the requirement of horticulture work in the establishment. It was
further averred in the counter affidavit that a policy decision had been taken
by the Board of Directors on 19.5.1987 by which the induction of manpower in
the establishment has been frozen as on 30.5.1987.
Therefore, in view of the policy decision and absence of any post, the writ
petitioners could not be engaged on regular basis nor could they be regularized
on any post in the establishment. The said policy decision had been taken at
the apex level looking to the financial stringency and surplus manpower and
also lean supply of orders and the fact that the activity for which the writ
petitioners are being engaged is only incidental.
5. Writ Petition No.10524 of 1990 was filed by few individuals claiming the
same relief as in Writ Petition No.10513 of 1990 and was based on same grounds.
6. The learned Single Judge, relying upon some decisions of this Court and
also of the High Court, disposed of both the writ petitions by a common order
and the operative part of the order is being reproduced below :-
"Admittedly, petitioners are engaged as daily rated workers in the factory
and the factory is giving them work for 18-20 days and is taking work for these
days from the petitioners. Therefore, it cannot be believed that there is not
work and the respondents are only engaging the petitioners in order to provide
them livelihood. If there is no work, the respondents company could request the
Labour Commissioner to stop the engagement. No employer can pay his workmen
without work. It shows that the work is there.
In this background the contention of the petitioners that the artificial
break in service is being created by the respondents in order to deny the
regularization of petitioners who having completed 240 days and having rendered
more than 8 years of services satisfactorily are entitled for their
regularization, and the artificial break is liable to be ignored.
In view of the aforesaid facts these petitions are disposed of with a
direction to the respondents to absorb the petitioners as regular employees or
such of them as may be required to do the quantum of work which may be
available on perennial basis may be absorbed if they are otherwise found fit
and they will be paid wages of regular employees. This shall be done within
three months from the production of certified copy of this order.
However, the rest of the petitioners shall not be disengaged and shall be
allowed to continue as per settlement dated 26.7.1995 and shall be regularized
as and when the perennial work is available. The question as to whether the
work of perennial nature is available or not shall be decided by the Deputy
Labour Commissioner who shall decide the same every year in order to facilitate
the absorption of the petitioners. No order as to costs."
7. Feeling aggrieved by the directions issued by the learned Single Judge,
the appellant herein preferred special appeals but the same were dismissed by
the impugned order dated 7.3.2005 on the finding that there was no illegality
or infirmity in the judgment and order of the learned Single Judge by which the
writ petitions were disposed of.
8. Before considering the contentions raised by learned counsel for the
parties, it is necessary to set out the terms of the settlement which was
entered into by the parties before the Deputy Labour Commissioner, Faizabad.
Paras 1 to 3 of the settlement dated 6.3.1989 which are relevant for the
controversy in hand are being reproduced below :- "1. The land losers shall
be given preference in engaging for the work in Horticulture Department and
they will be given the job for 20 days a month as required.
2. Other casual workers (other than land losers) who have completed 240 days
in a calendar year, shall be given the job for 15 days a month as required.
3. Case of other casual labourers of Horticulture Department who are not
covered under above paras (1) or (2), efforts will be made to engage them
through other departments. As regards their work and condition of duty, H.A.L.
Management will have no responsibility."
Para 2 of the settlement dated 26.7.1995 which was arrived at by the parties
before the Assistant Labour Commissioner, Faizabad, which is relevant, is being
reproduced below :- "2. Demand No.9 which is related to distribution of
working days, both parties agreed that Employer will distribute all the
available and approved man days among all the labourers. 67 land losers and two
skilled labourers will be given work every month from available working days. In
this way remaining man days after utilization form 2106 man days will be
equally distributed among the other 20 non land loser labourers. Balance part
or fraction of the day will not be taken into account for this purpose."
9. Shri R.N. Trivedi, learned counsel for the appellant, has submitted that
Hindustan Aeronautics Ltd. is a Government Company within the meaning of
Section 617 of the Companies Act and the persons employed in the factory of the
appellant Company at Korwa are not government servants but are mainly governed
by the provisions of Industrial Disputes Act and other allied enactments. A
government servant enjoys a status on account of constitutional provisions and
rules framed under Article 309 of the Constitution, which is not the case with the
members of the respondent union.
Learned counsel has submitted that the respondent union having entered into
settlements with the appellant on 6.3.1989 and 26.7.1995 can claim rights only
on the basis of the said settlements and no claim for regularization or
permanency in service or grant of pay scale at par with those who are in the
regular establishment of the appellant is maintainable. Learned counsel for the
respondents has, on the other hand, submitted that the members of the
respondent union had worked for more than 240 days in a year for more than 6-7
years before the filing of the writ petition. An artificial break of 2-3 days
was deliberately created twice or thrice in a month in their service just to
deprive them of continuity in service. He has further submitted that the
concerned workmen having worked for a very long period and work being
available, they should be given permanent status and also the same pay scale
which is being given to those who are in the regular establishment of the appellant.
10. We have considered the submissions made by learned counsel for the
parties. The position of a government servant is entirely different from that
of a workman who is working in an industrial establishment like the appellant
Company. A government servant enjoys a status and a security of tenure on
account of certain constitutional provisions. In Union Public Service
Commission v.
Girish Jayanti Lal Veghela & Ors. (2006) 2 SCC 482 it was held as under
:- "In the case of a regular government servant there is undoubtedly a
relationship of master and servant but on account of constitutional provisions
like Articles 16, 309 and 311 his position is quite different from a private
employee.
Thus, employment under the Government is a matter of status and not a
contract even though the acquisition of such a status may be preceded by a
contract, namely, an offer of appointment is accepted by the employee. The
rights and obligations are not determined by the contract of the two parties
but by statutory rules framed by the Government in exercise of power conferred
by Article 309 of the Constitution and the service rules can be unilaterally
altered by it."
11. An appointment in government may be on probation or in temporary
capacity or permanent in nature. A permanent government servant has a right to
hold the post and he cannot be dismissed or removed or reduced in rank unless
the requirements of Article 311 of the Constitution or the Rules governing his
service are complied with.
12. The appellant, Hindustan Aeronautics Ltd., is a government company
within the meaning of Section 617 of the Companies Act.
What will be the legal position of a Government Company and whether its
employees can be treated to be government servants was examined in Heavy
Engineering Mazdoor Union v. State of Bihar and Ors. (1969) 1 SCC 765 and it
was held as under in para 4 of the reports:
".....It is an undisputed fact that the company was incorporated under
the Companies Act and it is the company so incorporated which carries on the
undertaking. The undertaking, therefore, is not one carried on directly by the
Central Government or by any one of its departments as in the case of posts and
telegraphs or the railways....."
In A.K. Bindal v. Union of India (2003) 5 SCC 163 the difference between an
employee of a government and an employee of a Government Company was pointed
out and it was held :
"17. The legal position is that identity of the Government Company
remains distinct from the government. The Government Company is not identified
with the Union but has been placed under a special system of control and
conferred certain privileges by virtue of the provisions contained in Sections
619 and 620 of the Companies Act.
Merely because the entire share holding is owned by the Central Government
will not make the incorporated company as Central Government. It is also
equally well settled that the employees of the Government Company are not civil
servants and so are not entitled to the protection afforded by Article 311 of
the Constitution (See Pyare Lal Sharma v. Managing Director (1989) 3 SCC
448)."
An employee working in an industrial establishment enjoys a limited kind of
protection. He may lose his employment in various contingencies which are
provided under the Industrial Disputes Act such as lay off as provided in
Section 25-C, retrenchment as provided in Section 25-F, transfer of industrial
establishment or management of an undertaking as provided in Section 25-FF,
closure of undertaking as provided in Section 25-FFF. He may be entitled to
notice or wages in lieu of notice and monetary compensation depending upon the
length of service put in by him. But the type of tenure of service normally
enjoyed by a permanent employee in Government Service, namely, to continue in
service till the age of superannuation, may not be available to an employee or
workman working in an industrial establishment on account of various provisions
in the Industrial Disputes Act where his tenure may be cut short not on account
of any disciplinary action taken against him, but on account of a unilateral
act of the employer. Therefore, the claim for permanency in an industrial
establishment has to be judged from a different angle and would have different
meaning.
13. In B.N. Nagarajan & Ors. v. State of Karnataka & Ors. (1979) 4
SCC 507, it was held that the words "regular" or
"regularization" do not connote permanence and cannot be construed so
as to convey an idea of the nature of tenure of appointments. They are terms
calculated to condone any procedural irregularities and are meant to cure only
such defects as are attributable to methodology followed in making the
appointments. Further, when rules framed under Article 309 of the Constitution
of India are in force, no regularization is permissible in exercise of the
executive powers of the Government under Article 162 thereof in contravention
of the rules. This view has been approved by a Constitution Bench in Secretary,
State of Karnataka v. Uma Devi (2006) 4 SCC 1 (para 16). It was emphasized here
that only something that is irregular for want of compliance with one of the
elements in the process of selection which does not go to the root of the
process, can be regularized and that it alone can be regularized and granting
permanence of employment is a totally different concept and cannot be equated
with regularization.
14. The next question which requires consideration is whether completion of
240 days in a year confers any right on an employee or workman to claim
regularization in service. In Madhyamik Shiksha Parishad v. Anil Kumar Mishra
& Ors. (2005) 5 SCC 122 it was held that the completion of 240 days' work
does not confer the right to regularization under the Industrial Disputes Act.
It merely imposes certain obligations on the employer at the time of
termination of the services. In M.P. Housing Board & Anr. v. Manoj
Shrivastava (2006) 2 SCC 702 (paragraph 17) after referring to several earlier
decisions it has been reiterated that it is well settled that only because a
person had been working for more than 240 days, he does not derive any legal
right to be regularized in service. This view has been reiterated in Gangadhar
Pillai v. Siemens Ltd. (2007) 1 SCC 533. The same question has been examined in
considerable detail with reference to an employee working in a Government
Company in Indian Drugs and Pharmaceuticals Ltd. v. Workman, Indian Drugs &
Pharmaceuticals Ltd. 2007(1) SCC 408 and paragraphs 34 and 35 of the reports
are being reproduced below:-
34. Thus, it is well settled that there is no right vested in any daily
wager to seek regularization. Regularization can only be done in accordance
with the rules and not de hors the rules. In the case of E. Ramakrishnan and
Ors.
v. State of Kerala and Ors. (1996) 10 SCC 565 this Court held that there can
be no regularization de hors the rules. The same view was taken in Dr. Kishore
v. State of Maharashtra (1997) 3 SCC 209 and Union of India and Ors. v.
Bishambar Dutt (1996) 11 SCC 341. The direction issued by the Services Tribunal
for regularizing the services of persons who had not been appointed on regular
basis in accordance with the rules was set aside although the petitioner had
been working regularly for a long time.
35. In Dr. Surinder Singh Jamwal and Anr. v. State of Jammu & Kashmir
and Ors. AIR 1996 SC 2775, it was held that ad hoc appointment does not give
any right for regularization as regularization is governed by the statutory
rules.
15. In the judgment under challenge the High Court has issued a direction to
absorb the members of the respondent union as regular employees or such of them
as may be required to do the quantum of work which may be available on
perennial basis and has issued a further direction that they will be paid the
wages of regular employees. It has also been directed that such of the members
of the respondent union who are not absorbed as regular employees shall not be
disengaged and shall be allowed to continue as per settlement dated 26.7.1995
and shall be regularized as and when the perennial work is available. The
direction issued by the High Court in effect has two components i.e. creation
of posts and also payment of regular salary as in absence of a post being
available a daily wager cannot be absorbed as a regular employee of the
establishment. This very question has been considered in Indian Drugs &
Pharmaceuticals Ltd.
(supra) and, therefore, we do not consider it necessary to refer to the
various reasons given and decisions cited therein. Paras 37, 38 and 47 of the
reports, wherein the Bench recorded its conclusions read as under :- "37.
Creation and abolition of posts and regularization are a purely executive
function vide P.U. Joshi v.
Accountant General, Ahmedabad and Ors. (2003) 2 SCC 632. Hence, the court
cannot create a post where none exists. Also, we cannot issue any direction to
absorb the respondents or continue them in service, or pay them salaries of
regular employees, as these are purely executive functions. This Court cannot
arrogate to itself the powers of the executive or legislature. There is broad
separation of powers under the Constitution, and the judiciary, too, must know
its limits.
38. The respondents have not been able to point out any statutory rule on
the basis of which their claim of continuation in service or payment of regular
salary can be granted. It is well settled that unless there exists some rule no
direction can be issued by the court for continuation in service or payment of
regular salary to a casual, ad hoc, or daily rate employee. Such directions are
executive functions, and it is not appropriate for the court to encroach into
the functions of another organ of the State. The courts must exercise judicial
restraint in this connection. The tendency in some courts/tribunals to
legislate or perform executive functions cannot be appreciated. Judicial
activism in some extreme and exceptional situation can be justified, but
resorting to it readily and frequently, as has lately been happening, is not
only unconstitutional, it is also fraught with grave peril for the judiciary.
47. We are of the opinion that if the court/tribunal directs that a daily
rate or ad hoc or casual employee should be continued in service till the date
of superannuation, it is impliedly regularizing such an employee, which cannot
be done as held by this Court in Secretary, State of Karnataka v. Umadevi
(2006) 4 SCC 1, and other decisions of this Court."
16. In view of the discussion made above, the impugned judgment of the
learned Single Judge which was affirmed in appeal by the Division Bench cannot
be sustained and has to be set aside. The respondents are not entitled to the
relief claimed by them.
17. The appeals are accordingly allowed. The judgment and order dated
31.8.1999 of the learned Single Judge and judgment and order dated 7.3.2005 of
the Division Bench are set aside and the writ petitions filed by the
respondents herein are dismissed. It is, however, made clear that in case there
is any violation of the terms of the settlements on the part of the appellant
herein, the respondents will be entitled to enforce their rights in accordance
with law. No order as to costs.
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