The case was originally filed as writ petitions in the Orissa High Court, where the teachers and staff won recognition as NALCO employees. NALCO appealed to the Supreme Court, challenging ...
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Page 1 Civil Appeal No.5989 of 2008
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 5989 of 2008
National Aluminium Co. Ltd. & Ors. ….Appellant(s)
Vs.
Ananta Kishore Rout & Ors. ….Respondent(s)
With
Civil Appeal No.5992 of 2008
Civil Appeal No.5993 of 2008
J U D G M E N T
A.K. SIKRI, J.
1.The Appellant herein, National Aluminium Company
Limited (NALCO) has established two schools for the
benefit of the wards of its-employees. These schools are
known as Saraswati Vidaya Mandir (SVM) and located at
NALCO Nagar in Angul district and at Damandjodi in
Koraput district, Orissa. Management of these schools is
presently in the hand of Saraswati Vidya Mandir (SVS)
which is affiliated to Vidya Bharati Akhila Bharatiya Sikhya
Sansthan.
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2.Two Writ Petitions were filed by the employees of each of
school in the Orissa High Court, Cuttack for a declaration
that they are the employees of NALCO and be treated as
such, with consequential prayer that these employees be
also accorded suitable pay scales as admissible to the
employees of NALCO. Having regard to the commonality
of fact, situation under which these writ petitions were
filed, as well as singularity of the issue involved, both these
writ petitions were heard together by the High Court, the
outcome of which is the judgment dated 21
st
December,
2006. The High Court has accepted the case of these
employees of SVM holding them to be the employees of
the NALCO. As a sequittor, direction is issued to the
NALCO to make available the benefits, which are enjoyed
by other employees of the NALCO. Present appeals, filed
by NALCO, question the validity of the aforesaid judgment
of the High Court.
3.We may first take note of those facts which are not in
dispute. These are as follows:
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NALCO is a Public Sector Enterprise under
the Government of India. It is Company incorporated under
the Indian Companies Act, 1956 with its registered office at
Bhubaneswar, Orissa. NALCO is engaged in manufacture and
production of Alumina and Aluminium. It has its
manufacturing units: one at NALCO Nagar, Angul and at
Damanjodi in Koraput district.
4. In the year 1984, NALCO established two
schools in the townships set up by it for its employees
working in its manufacturing units at NALCO Nagar, Angul and
at Damanjodi, with a view to provide educational facility
mainly to the children of its employees from primary to +2
level though the children from neighbouring area are also
given admissions. It also provided necessary infrastructure,
such as land, building, furniture, library, laboratory
equipments and other assets. The said schools admittedly
are unaided private schools. On 15
th
May, 1985, NALCO
entered into two separate but identical agreements for the
aforesaid schools with the Central Chinmoy Mission Trust,
Bombay (in short, CCMT) whereunder the NALCO entrusted
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the management of the schools on contract basis to CCMT
and the schools were called Chinmay Vidyalayas. According
to the these agreements, NALCO agreed to pay an amount of
Rs.10,000/- per annum to CCMT as donation towards the
supervision charges for each school.
5. These Agreements acknowledged the fact
that the two schools have been established by the NALCO and
to start and run those schools, it had approached CCMT. The
Agreements further stipulated terms and conditions on which
CCMT was to run and manage these schools. It is a common
case of the parties that the schools have been recognized by
the State Government (Education Department) and also
affiliated to the Orissa Board of Secondary Education. As per
the requirements of the Statute governing school education,
every school is required to constitute a Managing Committee.
Accordingly, these Agreements also provided that the powers
to establish, maintain and manage the schools shall vest in
the Managing Committee consisting of seven members. Out
of these seven members, four were the nominees of CCMT
and three persons were nominated by the NALCO. Chairman,
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Vice-Chairman and Secretary-cum-correspondent were to be
the nominees of CCMT. Though the admission in the schools
is open to all children irrespective of caste, creed and
community, preference is to be given to the children of the
employees of the NALCO. Apart from constructing the
building and providing requisite furniture and fittings, NALCO
was also to provide quarters at its own cost for teachers and
staff members of the schools. NALCO also agreed to provide
residential accommodation to every employee in due course.
Significantly, the employees of the schools were to be treated
at par with NALCO employees so far as the medical,
consumer co-operative, club and similar facilities are
concerned. NALCO also agreed to meet the revenue deficit
as per Clause 15 of the said Agreement which reads as under:
“15. That NALCO shall meet the revenue defit of
Chinmaya Vidyalaya, Damanjodi on the actual
basis. Since NALCO shall be meeting the capital
expenditure and the revenue deficit, NALCO shall
have the right to fix the tuition fees and other
charges from time to time for children of NALCO
employees and others.”
6. These agreements were terminable at the
instance of the parties by giving six months prior notice in
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writing to the other party. In the event of termination the
agreements, the services of the staff employed by the school
were liable to be terminated in accordance with the terms of
their appointment in these schools.
7. These agreements came to an end by
efflux of time in the year 1990. It appears that CCMT was not
interested in continuing with the aforesaid arrangement. This
led NALCO to find another organization for running and
managing the schools. It is how SVS came into the picture
which agreed to manage both the schools. Accordingly
Agreement dated 18
th
May, 1990 was entered into by NALCO
with SVS. As per the Agreement, name of the school was
changed from Chinmaya Vidyalaya Damanjodi to Saraswati
Vidya Mandiar (SVM). As per this agreement NALCO agreed
to pay Rs.2,000/- per month to the SVS towards its
supervision charges which was enhanced from time to time
and this figure was Rs.50,000/- per annum at the time of the
filing of the writ petitions in the High Court. Even as per this
Agreement, the Executive Authority of these two schools
vests in the Managing Committee to be constituted
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separately for each of the schools. This Managing Committee
is constituted with the following members:
“a) The respective unit heads of
Damanjodi/Angul or its nominee shall be the ex-
officio president;
b) A nominee of the Finance department of
the respective units of NALCO;
c) A nominee of the Personnel Admn. Department
of the respective units of NALCO;
d)A representative of the parents/guardians who
hsall be an employee of NALCO to be co-opted by
the Managing Committee respectively for each
school at the units;
e)4 members to be nominated by the Samiti;
f)The headmaster of the school;
g)A representative of the teachers;
h)A part-time representative of the Samiti who
shall act as the ex-officio member-secretary of
the Managing Committees.”
The aforesaid clause in the Agreement is
with a proviso that the relevant provisions of the Orissa
Education Act and Rules shall be kept in view while making
aforesaid nominations.
8. Accordingly, two Managing Committees
were constituted; one for each school and both have been
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registered under the Societies Registration Act, 1860. As per
the provision contained in clause 4 of the aforesaid
Agreement, other clauses relating to placing at the exclusive
disposal of the SVS, the two school premises along with
requisite furniture/fittings, library, laboratory games
equipments, audio-visual, etc. remain as it is. Likewise
provision for providing deficit funds, after accounting for the
fee and other amounts received from the students, by NALCO
is also maintained. Other functions which are specifically
assigned to the Managing Committee, as per this Agreement,
are as follow:
“(a) Audit of the schools accounts by the Auditors
appointed by the Managing Committee.
(b) Managing Committee to raise funds by way of
donation and voluntary contribution including
power to borrow funds or raise loans for the
purpose of the schools after getting prior approval
of the Samiti, without any liability to NALCO.”
9. It is also significant to note that apart
from providing usual termination clause, as per this
Agreement, the Samiti agreed to retain the services of the
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existing teachers and staff in both the schools as provided in
clause 25 thereof, which is to the following effect:
“25. It has been agreed by the Samiti to retain
the services of the existing teachers and staffs in
both the schools on their existing terms and
conditions of service and the Managing
Committee in due course may review the
position.”
10. Since the teaching and non-teaching staff
working in the aforesaid schools had no service conditions,
there was discontentment among the employees. Therefore,
it was thought proper to frame rules regulating conditions of
service for such employees. A joint meeting was convened
for this purpose wherein certain modalities were worked out
to frame rules regarding recruitment and conditions of
services of the employees of the schools and a committee for
this purpose was constituted comprising of the authorities of
both the schools at Angul and Damanjodi, the Manager
(Personnel) of NALCO and the Secretary of SVS. A set of draft
rules was framed under the name and style ‘Saraswati
Vidyamandir Employees’ Recruitment and Conditions of
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Service Rules, 1995’ (Rules’ hereinafter). The Rules so
framed were approved by the Corporate office of NALCO.
11. These Rules provide for the scales of pay
of different categories of employees, the modalities for
recruitment of Principal, teachers and other non-teaching
staff and determination of seniority of the employees besides
fixing the age of superannuation etc.
12. It cannot be disputed that as per these
Rules, it is the Managing Committee’s of the schools, which
are registered as societies under the Societies Registration
Act, undertake the recruitment of the teaching and other
staff, issue appointment letters and take all other decisions in
respect of the services of teaching and other staff including
promotion, pay fixation, seniority, grant of leave, disciplinary
action, retirement, termination etc. This has been so
demonstrated by NALCO by producing copies of the orders
issued by the MCs relating to each of the aforesaid aspects.
Not only this, it has been so provided under the Rules as well.
Rule 4 prescribes the method of recruitment; Rule 2(a)
defines the appointing as MC; Rule 4(11) deals with the cadre
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Page 11 Civil Appeal No.5989 of 2008
of posts; Rule 20 touches the aspect of termination of service;
and Rule 24 deals with the discipline and disciplinary action.
13. From these facts, narrated above, one
can easily find out as to what are the respective cases of both
the parties. The employees of both schools filed the writ
petitions to lay the claim that they are the employees of the
NALCO on the ground that real control and supervision of the
schools, including the staff is that of NALCO which has the
final say in all vital matters. It was their argument that
though the appointments are made by the Managing
Committees of the schools, it is on the recommendation of
the Selection Committee of which the authorities of NALCO
are the members. Further, since inception of the school, an
officer in the rank of General Manager of NALCO has been
functioning as the President of the Managing Committee, and
an officer in the rank of Chief Manager/DGM (Personal
Admn.), and the DGM (Finance) are the other two members.
That apart, the building furniture/fittings and all necessary
paraphernalia for running of the schools is provided by and is
the responsibility of NALCO. Even the finances are provided
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by NALCO the financial budget is approved by the Board of
Director of the NALCO. NALCO even fixes the tuition fee. No
transaction of the schools can be made without the approval
of DGM (Finance), NALCO which includes the expenditure with
regard to the salary component, provident fund, medical
reimbursement, leave travel concession, festival advance,
increments, etc. Teaching and non-teaching staff of the
schools are allotted with residential quarters by the NALCO. It
was thus argued that NALCO plays a decisive role in the
matter of appointment of the employees as well as in the
management of the schools.
14. On the other hand, the case of the NALCO
was that Managing Committees are the societies registered
under Societies Registration Act having independent legal
status; it is these MCs which are not only the appointing
authorities but disciplinary authorities with all controlling
power over these employees and therefore NALCO cannot be
treated as the employer of the staff of the schools.
15. The High Court after considering the
respective submissions and perusing the material on record
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came to the conclusion that real control and supervision over
these employees and even over the schools, was that of
NALCO. Some of the relevant discussion in the impugned
judgment is extracted below:
“A bare look at the basic document, i.e. agreement
dated 15
th
May, 1985 entered into between the
NALCO and CCMT, Clause 20 of it, as indicated
above, would show that on termination of the
agreement, only the name of the Chinmaya
Vidyalaya cannot be used by NALCO and
subsequently, the place of CCMT has been taken
over by SVS. From the voluminous documents as
referred to above, there can be no second opinion in
regard to the fact that the schools were established
by the NALCO, funded by NALCO authorities and it
has deep and pervasive control over the schools. It
is the NALCO, which pays the salary, Provident fund,
and makes the medical reimbursement, the SVS as
stated in its affidavit, only looked to the discipline,
curriculum and management of the schools. In this
regard, we may refer to a decision rendered by this
Court in OJC No.4581985 (Duryodhan Swain & Ors.
vs. Fertiliser Corporation of India and others) on
22.11.1990, wherein a similar question arose.
Twenty-one petitioners serving in the Fertilizer
Higher Secondary school in different capacities had
filed the said writ petition. The said school was
imparting teaching in + 2 course and on account of
the welfare need of its employees, the school was
given grant and was converted into a Higher
Secondary School. Even though a managing
committee was constituted for the said school,
representatives of trade unions and of guardians
and parents as well as the officials of the corporation
were also included. The financial control of the
school rested in a larger measure with the
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Page 14 Civil Appeal No.5989 of 2008
corporation and it was fully financed by the
corporation. In those prevailing facts and
circumstances, this court held that the corporation
had deep and pervasive control over the working of
the school and ultimately, directed the corporation
to accept the petitioners to be its employees.
Now in the instant case, at the cost of repetition,
we may say that the agreement dated 18.05.1990
entered into between the NALCO and the SVS
(Annexure 1) and the agreement dated 15.05.1985
entered into between the NALCO and CCMT
(Annexure 19) as indicated above, would amply
prove the control of NALCO over the schools in
finance, payment, discipline and administration.
This fact is further corroborated and strengthened
by the submission of the learned counsel for the SVS
that it only carries on the activities of providing
better educational aid and that it is not an
educational agency.
It is a peculiar case, where there is no denial that all
the employees are getting much higher scale of pay
than that of the employees of the aided and unaided
schools under the state and their pay structure is
totally different and even much better than the
employees of all the Government educational
institutions functioning of the state. It has become
possible only due to the reason that the entire
finance is being paid by NALCO and if NALCO
withdraws itself from the schools, neither SVS and
SVM would be able to meet the expenses of the
schools.
The agreement dated 15.05.1985 as well as the
conduct of the parties and the transactions that are
carried on from 1985 till today, would indicate that
NALCO has deep and pervasive control over the
management of the schools and it is NALCO, which
is the educational agency in establishing the
schools. The argument advanced by Mr. R.K. Rath,
learned counsel for NALCO, and Mr. B.N. Rath,
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Page 15 Civil Appeal No.5989 of 2008
learned counsel appearing for SVS in both the Writ
Petitions do not detract from the position that the
schools are being managed and financed by the
NALCO and from the documents. It is crystal clear
that the ownership and overall management of the
schools are retained by the NALCO while CCMT and
SVM or SVS as the case may be, have taken up the
responsibility of running the schools at different
point of time because they have expertise and
experience in the field of teaching.”
16. Before us arguments of both the parties
remain the same. Mr. P.P. Rao, learned Senior Counsel
appearing for the Appellant in one appeal and Mr. Ashok
Gupta, Senior Advocate appearing in the other appeal of
NALCO challenged the aforesaid line of thinking of the High
Court. It was argued by Mr. Rao that the High Court took into
consideration those facts which were irrelevant and not
germane to decide the controversy viz. over the whether
NALCO had any deep and comprehensive control and
supervision over the teaching and other staff of the school.
His submission was that establishment of the school with
necessary infrastructure was not at all relevant factor. The
schools were set up by NALCO acknowledging its
responsibility as a model employer which can be termed as a
step towards “Corporate Social Responsibility”. As a welfare
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measure, NALCO wanted to provide this facility in the two
NALCO campuses. However, by providing land, building and
infrastructure and setting up of the school, all of it has been
handed over to the outside agency to run these schools. For
running these schools, it is that outside agency which had to
employ the staff and settle their service conditions. In so far
as provision of providing financial assistance is concerned, it
was only to the extent of meeting shortfall, again, keeping in
mind good corporate governance. He argued that the real
test in such a case was to examine as to which authority was
the appointing authority of the employees, and was fixing
terms and conditions of the employment, including fixing
their service conditions like pay fixation, seniority, grant of
leave, promotion etc. When all these powers were with the
Managing Committee or the SVS which was so specifically
provided in the service rules as well, duly approved by the
Director of Education, by no stretch of imagination these
employees could be called as the employees of NALCO.
17. Another submission of Mr. Rao was that
even the High Court has accepted, in the impugned
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judgment, that the employees of these schools are enjoying
much higher scales of pay than that of the employees of
aided and unaided schools under the State of Orissa and their
pay structure is much better than the employees of even the
Government educational institutions functioning in the State.
He, thus, argued that when it is established as an admitted
fact that the salaries and services conditions of the
employees of these schools are far superior than their
counter parts in working in aided, unaided and government
schools, there was no reason for these employees to file
these petitions. Elaborating this proposition, the submission
of Mr. Rao was that even if it is assumed that they are the
employees of NALCO, no direction could have been given to
give them the pay scales which are enjoyed by the
employees of NALCO, in the absence of any parity inasmuch
as principle of equal pay for equal work has no application in
a case like this as the duties, functions, job requirements and
even the eligibility conditions for appointment of such staff
were materially different from the employees of the NALCO.
Therefore, the High Court could not give any direction to
NALCO to make available the benefits which are being
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Page 18 Civil Appeal No.5989 of 2008
enjoyed by other employees of NALCO to the employees of
these schools. To buttress this argument he referred to the
following judgments:
(i)A.K. Bindal & Anr. v. Union of India & Ors.;
(2003) 5 SCC 163; (ii)State of West
Bengal & Anr. v. West Bengal Registration
Copywriters Association and Anr.; (2009) 14
SCC 132,
(iii) Nihal Singh & Ors. v. State of Punjab & Ors;
(2013) 10 Scale 162
18. Mr. Ashok Gupta, in addition, argued that
the impugned direction to treat the employees of the school
as that of NALCO, amended to giving them the status of
public employment which was impermissible inasmuch as the
procedure for recruitment by NALCO for its own staff was
entirely different. Further, whether the agreement entered
into with SVS is a camouflage an aspect which could not have
been gone into in writ proceedings under Article 226 of the
Constitution. He also argued that impugned direction of the
High Court would discourage the corporate sector, private or
public, to take up welfare measures for its employees and
would be counter productive to the principle of corporate
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Page 19 Civil Appeal No.5989 of 2008
good governance, which is now mandatorily provided under
new Companies Act, enacted by the Parliament in the year
2013.
19. Mr. Venugopal, the learned Senior
Counsel appearing for the employees of the schools defended
the judgment of the High Court and the directions contained
therein. He referred to all those documents and provisions as
per which NALCO had been exercising effective control in
functioning of these schools. These features have already
been mentioned above. Thrust of his submission was that
even when there was cloak of Managing Committee,
apparently running the show, it was only a subterfuge, when
examined in the light of the aforesaid documents reflecting
that the real control was that of NALCO which was pulling the
strings. Apart from highlighting that the schools were
established by NALCO which remain the property of NALCO, it
is even providing entire infrastructure as well as full financial
support on continuous basis. Further the schools were
established for the benefit of the children of NALCO’s
employees. He also referred to various documents, which are
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Page 20 Civil Appeal No.5989 of 2008
taken note of by the High Court as well, to buttress his
submission that the actual decision making authority from the
stage of recruitment process to that of termination of these
employees, is NALCO. From these documents, he drew the
attention of the Court to the following aspects:
“(i) Though the appointments are made by the
Managing Committees of the School, selection
process of appointment is controlled by NALCO
which has financial say in the matter.
(ii) Appointments are made on the
recommendation of the Selection Committee of
which authorities of NALCO are the members.
(iii) President of the Managing Committee is
the General Manager of NALCO. Likewise Chief
Manager/DGM (Personnel Administration) is
member of the Managing Committee who takes
care of personnel managing of the Managing
Committee. Financial affairs of the Schools are
controlled by DGM (Finance) of NALCO as a
member of the Managing Committees. In this
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Page 21 Civil Appeal No.5989 of 2008
way administrative and financial control is
exercised by NALCO.
(iv) Entire expenses incurred for running of the
school are borne by NALCO and no transaction
can be made without the approval of DGM
(Finance), NALCO including the expenses with
regard to the salary, Provident Fund, medical
reimbursement, Leave Travel Concession, festival
advance, increments etc.
(v) Teaching and non-teaching staff of the
schools also enjoyed the facilities of Consumer
Cooperative Society by NALCO as well as NALCO
Hospital, like any other employees of NALCO.
(vi) Budgetary provisions for the school are
made by the NALCO authorities every year.
NALCO appoints auditors to audit the accounts of
the schools. NALCO has provided residential
quarters to the teaching and non-teaching staff of
the school in the NALCO Township at par of the
employees of the NALCO.
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(vii)Documents show that day to day
grievances of the staff of different schools and
other issues are addressed by NALCO
Authorities.”
20. Mr. Venugopal submitted that in a matter
like this, where one has to examine as to who may be the
employer of the employees of the school, there were three
possibilities namely NALCO, Siksha Samiti or Managing
Committee. He argued that so far as the Managing
Committee is concerned, it is not having any legal entity of its
own. Moreover as soon as the agreement between NALCO
and SVS comes to an end, these Managing Committees would
disappear. Therefore, such a body cannot be the employer.
Likewise, in so far as the SVS is concerned, it was only an
agency for running the school and would go away after the
expiry or termination of the agreement. Therefore, it would
follow that NALCO is the real employer which fact stands
established from the manner in which NALCO is exercising
deep and pervasive control.
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Page 23 Civil Appeal No.5989 of 2008
21. We have considered the aforesaid
submissions with reference to the record of this case. No
doubt, the school is established by NALCO. NALCO is also
providing necessary infrastructure. It has also given adequate
financial support inasmuch as deficit, after meeting the
expenses from the tuition fee and other incomes received by
the schools, is met by NALCO. NALCO has also placed staff
quarters at the disposal of the schools which are allotted to
the employees of the schools. Employees of the school are
also accorded some other benefits like recreation club
facilities etc. However, the poser is as to whether these
features are sufficient to make the staff of the schools as
employees of NALCO.
22. In order to determine the existence of
employer - employee relationship, the correct approach would
be to consider as to whether there is complete control and
supervision of the NALCO. It was so held by this Court in
Chemical Works Limited (supra) way back in the year 1957.
The court emphasised that the relationship of master and
servant is a question of fact and that depends upon the
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Page 24 Civil Appeal No.5989 of 2008
existence of power in the employer, not only to direct what
work the servant is to do but also the manner in which the
work is to be done. This was so explained by formulating the
following principle:-
“The principle which emerges from these
authorities is that the prima facie test for the
determination of the relationship between master
and servant is the existence of the right in the
master to supervise and control the work done by
the servant not only in the matter of directing
what work the servant is to do but also the
manner in which he shall do his work, or to
borrow the words of Lord Uthwatt at Page 23 in
Mersey Docks and Harbour Board v. Coggins &
Griffith (Liverpool) Ltd., and Another, “The proper
test is whether or not the hirer had authority to
control the manner of execution of the act in
question.”
23. It has been established from the
documents on record that both the schools have their own
independent Managing Committees. These Managing
Committees are registered under the Societies Registration
Act. It is these Managing Committees who not only recruit
teaching and other staff and appoint them, but all other
decisions in respect of their service conditions are also taken
by the Managing Committees. These range from pay fixation,
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Page 25 Civil Appeal No.5989 of 2008
seniority, grant of leave, promotion, disciplinary action,
retirement, termination etc. In fact, even Service Rules, 1995
have been framed which contain the provisions; delineating
all necessary service conditions. Various documents are
produced to show that appointment letters are issued by the
Managing Committees, disciplinary action is taken by the
Managing Committees, pay fixation and promotion orders are
passed by the Managing Committees and even orders of
superannuation and termination of the staff are issued by the
Managing Committees. It, thus, becomes clear that day to
day control over the staff is that of the Managing
Committees. These Managing Committees are having
statutory status as they are registered under the Societies
Registration Act. Therefore, Mr. Venugopal is not right in his
submission that Managing Committees do not have their own
independent legal entities.
24. Merely because the schools are set up by
NALCO or they have agreed to take care of the financial
deficits for the running of the schools, according to us, are not
the conclusive factors. Such aspects have been considered by
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Page 26 Civil Appeal No.5989 of 2008
this Court in various cases. In the case of RBI (Supra),
question was as to whether workers of the canteens which
were established and even financed by the RBI, were the
workers of RBI. Various canteens were set up by the RBI
which were being run through a Cooperative Society. They
were established in the Bank's premises for the benefit of its
employees. The Bank was reimbursing the charges incurred
in getting various statutory licenses. Even prior permission of
the RBI was required to increase the strength of the
employees. Holding that these canteen workers were not the
employees of RBI, the court observed:
“10. The Bank does not supervise or control the
working of the canteens or the supply of
eatables to employees. The employees are not
under an obligation to purchase eatables from
the canteen. There is no relationship of master
and servant between the Bank and the various
persons employed in the canteens aforesaid.
The Bank does not carry any trade or business in
the canteens. The staff canteens are established
only as a welfare measure. Similar demands
made by the staff canteen employees and the
request made to the Central Government to
refer the dispute for adjudication was rejected
by the Central Government and the challenge
against the same before the Calcutta High Court
was unsuccessful. According to the Bank, it has
no statutory or other obligation to run the
canteens and it has no direct control or
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Page 27 Civil Appeal No.5989 of 2008
supervision over the employees engaged in the
canteens. It has not right to take any disciplinary
action or to direct any canteen employee to do a
particular work. The disciplinary control over the
persons employed in the canteens does not vest
in the Bank nor has the Bank any say or control
regarding the allocation or work or the way in
which the work is carried out by the said
employees. Sanctioning of leave, distribution of
work, maintenance of the Attendance Register
are all done either by the Implementation
Committee (Canteen Committtee) or by the
Cooperative Society or by the contractor.”
25. The court noticed that the
Implementation Committee (Canteen Committee) which was
running the canteen consisted of certain members, three out
of which were nominated by the Bank. This was held to be a
non-determinative factor. Following discussion on this aspect
is also material and, therefore we extract the same
hereunder:
“Moreover, there is no right in the Bank to
supervise and control the work done by the
persons employed in the Committee nor has the
Bank any right to direct the manner in which the
work shall be done by various persons. The Bank
has absolutely no right to take any disciplinary
action or to direct any canteen employee to do a
particular work. Even according to the Tribunal,
the Bank exercises only a 'remote control'.”
27
Page 28 Civil Appeal No.5989 of 2008
26. In the present case, as pointed out above,
the day to day supervision and control vests with the
Managing Committee, from the appointment till
cessation/termination. The exercise which is undertaken by
the High Court is in the nature of piercing the veil and
commenting that real control vests with NALCO. Though we
would come to this aspect a little later, it is necessary to
point out at this stage that whether the arrangement/
contract is sham or camouflage is a disputed question of fact.
In the present case writ petitions were filed and it is not a
case where industrial disputes were raised by these
employees.
27. In the case of Workmen of Nilgiri
Cooperative Marketing Societies Ltd. (Supra) the entire law
was re-visited. The Court emphasised that no hard and fast
rule can be laid down nor it is possible to do so. Likewise no
single test – be it control test, be it organisational or any
other test – has been held to be the determinative factor for
determining the jural relationship of employer and employee.
The Court enumerated the relevant factors, which are to be
28
Page 29 Civil Appeal No.5989 of 2008
examined in such cases, in Paras 37 and 38 which reads as
under:-
“37.The control test and the organisation test,
therefore, are not the only factors which can be
said to be decisive. With a view to elicit the
answer, the court is required to consider several
factors which would have a bearing on the result:
(a) who is the appointing authority; (b) who is the
paymaster; (c) who can dismiss (d) how long
alternative service lasts; (e) the extent of control
and supervision; (f) the nature of the job e.g.
whether it is professional or skilled work; (g)
nature of establishment; (h) the right to reject.
38. With a view to find out reasonable
solution in a problematic case of this nature,
what is needed is an integrated approach
meaning thereby integration of the relevant
tests wherefor it may be necessary to examine
as to whether the workman concerned was
fully integrated into the employer's concern
meaning thereby independent of the concern
although attached therewith to some extent.”
In the facts of that case, where the court found
that the portress and gridders who were claiming
themselves to be the employees of Nilgiri
Cooperative Marketing Society, were not its
employees as the said society was neither
maintaining any attendance register or wage
register or fixing working hours or had issued
appointment letters to them.”
28. More significant case, having close
proximity with the present one is the judgment in SC Chandra
29
Page 30 Civil Appeal No.5989 of 2008
& Ors. v. State of Jharkhand and Ors. 2007 (8) SCC 279 . In
that case Hindustan Copper Limited (HCL), the Government of
India enterprise, had established a school. Employees of that
school claimed that their real employer was HCL. Admitted
facts were that school was established by the HCL with the
object of benefiting children of the workers of the HCL. Even
the financial assistance was provided to the schools. The
Court however, came to the conclusion that only by giving
financial assistance the HCL did not become the employer of
teachers and staff working in the school. They were held to be
the employees of the Managing Committee of the school.
That apart of the discussion which has direct bearing on the
present case runs as follows:-
“8. We have heard learned counsel for the
parties and perused the records. The basic
question before us is whether a writ of mandamus
could be issued against the management of HCL.
The learned Single Judge relying on the Division
Bench in an identical matter pertaining to Bharat
Cooking Coal Limited dismissed the writ petition
of the appellants. This issue was examined in an
analogous writ petition and in the aforesaid case,
this issue was extensively considered as to
whether the management of the school is the
direct responsibility of HCL or not. After
considering the matter in detail, the learned
Single Judge relying on the aforesaid judgment
30
Page 31 Civil Appeal No.5989 of 2008
found that there is no relationship of master and
servant with that of the teachers and other staff
of the school with HCL as the management of the
school was done by the Managing Committee
though liberal financial grant was being made by
the Corporation. By that there was no direct
connection of the management of HCL with that
of the management of the school. Though
through various communication an impression
was sought to be given that the school is being
run by HCL but in substance HCL only used to
provide financial assistance to the school but the
management of the school was entirely different
than the management of HCL. Giving financial
assistance does not necessarily mean that all the
teachers and staff who are working in the school
have become the employees of HCL. Therefore,
we are of the view that the view taken by the
learned Single Judge appears to be correct that
there was no relationship of the management of
HCL with that of the management of the school
though most of the employees of HCL were in the
Managing Committee of the school. But by that
no inference can be drawn that the school had
bee n established by HCL. The children of workers
of HCL were being benefited by the education
imparted by this school. Therefore the
management of HCL was giving financial aid but
by that it cannot be construed that the school was
run by the management of HCL. Therefore, under
these circumstances, we are of opinion that the
view taken by the learned Single Judge appears to
be correct.”
29. From the reading of Para 20 in that
judgment it can be discerned that the Managing Committee
which was managing the school was treated as an
31
Page 32 Civil Appeal No.5989 of 2008
independent body. This case is relevant on the second aspect
as well viz. the claim of school employees predicate upon the
financial burden that is assured by NALCO. To that aspect we
shall advert to little later in some detail.
30. No doubt, there may be some element of control of
NALCO because of the reason that its officials are nominated
to the Managing Committees of the schools. Such provisions
are made to ensure that schools runs smoothly and properly
by the society. It also becomes necessary to ensure that the
money is appropriately spent. However, this kind of 'remote
control' would not make NALCO as the employer of these
workers. This only shows that since NALCO is shouldering and
meeting the financial deficits, it wants to ensure that money
is spent for rightful purposes.
31. It was argued that the Managing
Committee cannot be the employer as it would lose its
identity on the termination of agreement between NALCO and
SVS. However, even that by itself cannot be the
determinative factor. When the agreement was earlier
entered into between NALCO and CCMT, and staff was
32
Page 33 Civil Appeal No.5989 of 2008
appointed in the school by CCMT, NALCO ensured that such
staff is taken over by SVS. For this purpose a specific clause is
provided in agreement between NALCO and SVS which reads
as under:
“That if any of the parties hereto at any time
wishes to terminate this arrangement, it may do
so on giving of least six months prior notice in
writing to the other party, of such an intention,
provided that such termination shall be effective
only at the close of the academic session.
Provided further that in the event of such
termination, the services of the staff employed by
the school shall, subject to any agreement to the
contrary between the two parties hereto, be
terminated in accordance with the terms of their
appointment in the Chinmaya Vidyalaya,
Damanjodi.”
32.Only because SVS agreed to take over the employees,
would not mean that NALCO becomes the employer. On the
contrary, this clause suggests that but for the intervention of
NALCO, the school staff that was engaged by CCMT would
have been dealt with by CCMT. It is a matter of record that
CCMT runs other schools as well. In that eventuality it would
have taken these employees with themselves or retrench
these employees in accordance with law. Same is the position
of SVS who have other schools also. However, this kind of
33
Page 34 Civil Appeal No.5989 of 2008
situation is not going to arise in the present case. We place
on record the assurance given by the learned Senior Counsels
appearing for NALCO that the teaching and other staff of the
two schools would not lose their jobs even if present
agreement of NALCO with SVS comes to an end and the
management is taken over by some other agency for running
the schools. We direct that NALCO shall stand committed by
this assurance and would adhere to the same for all times to
come. The position which emerges, in view of the aforesaid
assurance, is that the service tenure of these employees is
protected.
33. In so far as their service conditions are concerned, as
already conceded by even the respondents themselves, their
salaries and other perks which they are getting are better
than their counter parts in Government schools or aided/ un-
aided recognised schools in the State of Orissa. In a situation
like this even if, for the sake of argument, it is presumed that
NALCO is the employer of these employees, they would not
be entitled to the pay scales which are given to other
employees of NALCO as there cannot be any comparison
34
Page 35 Civil Appeal No.5989 of 2008
between the two. The principle of ‘equal pay for equal work’
is not attracted at all. Those employees directly employed by
NALCO are discharging altogether different kinds of duties.
Main activity of NALCO is the manufacture and production of
alumina and aluminium for which it has its manufacturing
units. The process and method of recruitment of those
employees, their eligibility conditions for appointment, nature
of job done by those employees etc. is entirely different from
the employees of these schools. This aspect is squarely dealt
with in the case of SC Chandra & Ors. (supra) where the plea
for parity in employment was rejected thereby refusing to
give parity in salary claim by school teachers with class
working under Government of Jharkhand and BCCL. The
discussion which ensued, while rejecting such a claim, is
recapitulated hereunder in the majority opinion authored by
A.K. Mathur, J.:
“20.After going through the order of the
Division Bench we are of opinion that the view
taken by the Division Bench of the High Court is
correct. Firstly, the school is not being managed
by BCCL as from the facts it is more than clear
that BCCL was only extending financial assistance
from time to time. By that it cannot be saddled
with the liability to pay these teachers of the
35
Page 36 Civil Appeal No.5989 of 2008
school as being paid to the clerks working with
BCCL or in the Government of Jharkhand. It is
essentially a school managed by a body
independent of the management of BCCL.
Therefore, BCCL cannot be saddled with the
responsibilities of granting the teachers the
salaries equated to that of the clerks working in
BCCL.
21. Learned counsel for the appellants
have relied on Article 39(d) of the Constitution.
Article 39(d) does not mean that all the
teachers working in the school should be
equated with the clerks in BCCL or the
Government of Jharkhand for application of the
principle of equal pay for equal work. There
should be total identity between both groups
i.e. the teachers of the school on the one hand
and the clerks in BCCL, and as such the
teachers cannot be educated with the clerks of
the State Government or of BCCL. The question
of application of Article 39(d) of the
Constitution has recently been interpreted by
this Court in State of Haryana v. Charanjit
Singh wherein Their Lordships have put the
entire controversy to rest and held that the
principle, 'equal pay for equal work' must
satisfy the test that the incumbents are
performing equal and identical work as
discharged by employees against whom the
equal pay is claimed. Their Lordships have
reviewed all the cases bearing on the subject
and after a detailed discussion have finally put
the controversy to rest that the persons who
claimed the parity should satisfy the court that
the conditions are identical and equal and
same duties are being discharged by them.
Though a number of cases were cited for our
consideration but no useful purpose will be
served as in Charanjit Singh all these cases
have been reviewed by this Court. More so,
36
Page 37 Civil Appeal No.5989 of 2008
when we have already held that the appellants
are not the employees of BCCL, there is no
question seeking any parity of the pay with
that of the clerks of BCCL.”
Markandey Katju, J in his concurring and supplementing
judgment dwelt on this very aspect in the following manner:-
“24.The principle of equal pay for equal work
was propounded by this Court in certain decisions
in the 1980s e.g. Dhirendra Chamoli v. State of
U.P., Surinder Singh v. Engineer-in-Chief, CPWD,
Randhir Singh v. Union of India, etc. This was
done by applying Articles 14 and 39(d) of the
Constitution. Thus, in Dhirendra Chamoli case this
Court granted to the casual, daily rated
employees the same pay scale as regular
employees.
25. It appears that subsequently it was
realised that the application of the principle of
equal pay for equal work was creating havoc. All
over India different groups were claiming parity in
pay with other groups e.g. Government
employees of one State were claiming parity with
Government employees of another State.
26. Fixation of pay scale is a delicate
mechanism which requires various
considerations including financial capacity,
responsibility, educational qualification, mode
of appointment, etc. and it has a cascading
effect. Hence, in subsequent decisions of this
Court the principle of equal pay for equal work
has been considerably watered down, and it
has hardly ever been applied by this court in
recent years.
27. Thus, in State of Haryanan v. Tilak
37
Page 38 Civil Appeal No.5989 of 2008
Raj it was held that the principle can only apply
if there is complete and wholesale identity
between the two groups. Even if the employees
in the two groups are doing identical work they
cannot be granted equal pay if there is no
complete and wholesale identity e.g. a daily
rated employee may be doing the same work
as a regular employee, yet he cannot be
granted the same pay scale. Similarly, two
groups of employees may be doing the same
work, yet they may be given different pay
scales if the educational qualifications are
different. Also, pay scale can be different if the
nature of jobs, responsibilities, experience,
method of recruitment, etc. are different.
28. In State of Haryana v. Charanjit
Singh discussing a large number of earlier
decisions it was held by a three Judge Bench of
this Court that the principle of equal pay for
equal work cannot apply unless there is
complete and wholesale identity between the
two groups. Moreover, even for finding out
whether there is complete and wholesale
identity, the proper forum is an expert body
and not the writ court, as this requires
extensive evidence. A mechanical
interpretation of the principle of equal pay for
equal work creates great practical difficulties.
Hence in recent decisions the Supreme Court
has considerably watered down the principle of
equal pay for equal work and this principle has
hardly been ever applied in recent decisions.”
34. We say at the cost of repetition that there
is no parity in the nature of work, mode of appointment,
experience, educational qualifications between the NALCO
38
Page 39 Civil Appeal No.5989 of 2008
employees and the employees of the two schools. In fact,
such a comparison can be made with their counter parts in
the Government schools and/or aided or unaided schools. On
that parameter, there cannot be any grievance of the staff
which is getting better emoluments and enjoying far superior
service conditions.
35. We thus, are of the opinion that the
impugned judgment of the High Court is un-sustainable.
Allowing these appeals, the judgment of the High Court is
hereby set aside. There shall, however, be no order as to
costs.
…..................................J.
[Surinder Singh Nijjar]
…..................................J.
[A.K. Sikri]
New Delhi
May 8, 2014
39
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