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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.