Full Judgment Text
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CASE NO.:
Appeal (civil) 3251 of 2005
PETITIONER:
M.D., Karnataka Handloom Dev. Corpn. Ltd.
RESPONDENT:
Sri Mahadeva Laxman Raval
DATE OF JUDGMENT: 16/11/2006
BENCH:
Dr. AR. Lakshmanan & Altamas Kabir
JUDGMENT:
J U D G M E N T
Dr. AR. Lakshmanan, J.
Karnataka Handloom Development Corporation Limited
is the appellant in this appeal. The appellant-Corporation is a
Public Sector Enterprise established by the Karnataka State
Government to promote and assist the growth and
development of the Handloom Industry outside the
Cooperative sector in the State.
The respondent was appointed for various spells of fixed
periods on a fixed honorarium as an expert weaver to train the
weavers in the unorganized sector. The respondent was
appointed on contract basis for a period of 200 days only, on a
fixed pay of Rs.400 per month with a stipulation that the
contract of appointment automatically expires on the 201st
day.
The State Government introduced "VISHWA" programme
to train and TO rehabilitate the weavers. The respondent was
appointed specifically under the scheme on contract basis in
February, 1993 for a period of 3 months on different terms of
pay of Rs.1,000/- per month. He was again appointed on
contract basis for a period of 9 months as per the terms set
out in the letter of appointment. After the expiry of the
contract of appointment, on 31.08.1994, he was not appointed
again. Being aggrieved, the respondent raised an Industrial
Dispute. The Labour Department referred the dispute under
Section 10(1)(c) of the Industrial Disputes Act, 1947
(hereinafter called "the I.D. Act") for adjudication, inter alia, on
the question (a) whether the Project Administrator Handloom,
Banhatti is justified in refusing employment to the workman.
The appellant-Corporation, inter alia, contended that: 1)
the I.D. Act does not apply to the respondent and 2) the
respondent, his father and his wife have been doing business
with the appellant at the relevant time and that the
respondent was independently doing the weaving business
and 3) the respondent was engaged on contract basis for fixed
periods only and later under a specific scheme/Vishwa
programme introduced by the State and that the scheme has
already been closed and as such there are no funds for
continuing with the said scheme.
The Labour Court allowed the reference, in part, directing
reinstatement without back wages. Aggrieved by the award,
the Corporation preferred a writ petition, which was dismissed
by a Single Judge. The writ appeal filed by the appellant-
Corporation was also dismissed by the Division Bench of the
High Court. Aggrieved by the dismissal of their writ appeal,
the Corporation preferred the above appeal in this Court.
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We have heard Mr. P. Vishwanatha Shetty, learned senior
counsel for the appellant-Corporation and Mrs. Rajani K.
Prasad, learned counsel for the respondent.
Mr. P. Vishwanatha Shetty, learned senior counsel
submitted that the High Court has failed to appreciate that the
respondent was not a workman in the employment of the
appellant-Corporation and that the respondent was a weaver
in the area as any other independent weaver in the area and
was getting certain concession from the Corporation which
was in the interest of development of Handloom Industry. It
was further submitted that there is no finding of the Labour
Court that the workman was working for 240 days
continuously in a calender year under the employer with
wages and, therefore, the findings of the Labour Court and the
confirmation by the High Court are erroneous. It was further
contended that the respondent has worked as master weaver
for certain periods with aims and objectives of the scheme of
the Corporation which is purely temporary in nature and the
respondent had been an independent weaver before and after
the temporary period of training. It was further argued that
the appellant has no control over the respondent or over his
work and that they are given only assistance in the form of
raw materials, yarn etc. to convert the yarn into fabric and to
again sell the finished products to the Corporation. There is
no relationship of employee and employer between the
Corporation and the weavers and when such is the case under
the scheme, the master weavers who are engaged by the
Corporation to give training to the weavers in the matter of
weaving of cloth cannot be considered as a workman.
Learned senior counsel would further submit that the
inference drawn by the High Court on the appointment orders
issued to the respondent from time to time that the
respondent has worked for 240 days is not correct and that
the respondent was engaged for different periods which should
not be combined to say that he had worked for 240 days.
Learned senior counsel also submitted that there is no
question of violation of Section 25 (b) and Section (f) of the I.D.
Act and that the findings that the workman has continuously
worked for a period of 240 days was contrary to the facts and
circumstances and that the respondent was given honorarium
of one week and not regular salary as required under the I.D.
Act and that he was only encouraged to support or share his
master skills to the other weavers while doing his own weaving
work for the maintenance of his family. Concluding his
arguments learned senior counsel submitted that the High
Court is not justified in ordering reinstatement of the worker
who is not a worker but employed on contract basis, time
bound specific scheme assigned as weaving trainer and who
has not been dismissed or terminated by the management.
Per contra, Mrs. Rajani K. Prasad, learned counsel for the
respondent submitted that the respondent had worked with
the appellant-Corporation from 1987 to 1994 i.e. more than
240 days as contemplated under Section 25B of the I.D. Act
and, hence, his dismissal amounted to retrenchment within
the meaning of Section 2(oo) of the I.D. Act and since the
termination of his service was without the compliance of the
provisions of Section 25F of the I.D. Act, the respondent raised
a dispute before the Labour Court with a prayer to set aside
the termination and to pass an award for reinstatement, full
back wages and with all other benefits. The Labour Court
allowed the respondent’s reference and directed the
Corporation to reinstate the respondent into service without
back wages. When the judgment of the Labour Court was
challenged before the High Court, the High Court dismissed
the writ petition and the writ appeal filed by the management
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on the ground that as the respondent had served for a period
of 240 days in a year immediately preceding the termination,
the termination amounted to retrenchment and, hence, the
Labour Court has rightly directed reinstatement.
Learned counsel for the respondent submitted that the
civil appeal has no merits and, therefore, it is liable to be
dismissed in the interest of justice and fair play.
We have carefully perused the pleadings, the award of
the Labour Court, judgment passed by the learned Single
Judge and also of the learned Judges of the Division Bench
and other annexures filed by both parties in the civil appeal.
Before proceeding to consider the rival submissions, it is
beneficial to notice the nature of work entrusted to the
respondent under the project in question undertaken by the
Karnataka Handloom Development Corporation.
The nature of work entrusted to the respondent is to
carry out the usual business of selling the cotton yarn or
polyster to weavers who are covered under the scheme of the
Corporation. The said weavers who purchased the yarn, after
converting into a finished product in the form of cloth, sell the
same to the respondent, the sale value of the finished product
is credited to the account of each such weaver. If the weavers
execute a targeted business in the stipulated period,
incentives are also given to such weavers. These weavers are
also provided loans by the banks, KFFC and such banking or
financial institutions and the same is kept as a security with
the respondent towards raw material provided to the weavers
and also looms and accessories. It is also the objective of the
Corporation to enhance and develop handloom cloth and
promote such employment through the scheme provided by
the Corporation. The Corporation more or less provides a sure
mode of sale of the products of these weavers. To increase the
employment opportunities and to get the unskilled persons
trained into weavers, the Corporation has entrusted the
respondent the responsibility through a scheme sponsored by
the Government under the Vishwa programme. For getting
trained new persons as weavers, expert weavers are being
engaged by the respondent. This training programme is not
perennial in nature of work of the respondent. As and when
such schemes are sanctioned for the limited period
(sanctioned period), expert weavers on stipend/honorarium of
Rs.1000/- for a specific period of 9 months are appointed. In
this case 9 months period will commence from the date of his
appointment i.e. 30.11.1993 under No.
KHDC/IHDP/BNT/ADM/93-94:1301.
It is thus clear from the above that the respondent
claimant is aware that his appointment was purely contractual
and for a specified period. He is also aware that he is not
eligible to any other benefits as a regular employee of the
Corporation and could be liable for termination without any
notice and without payment of compensation. The claimant is
also aware that his appointment stood automatically
terminated on the completion of the stipulated period. The
case of the claimant, therefore, in our view, does not become
an industrial dispute.
We shall now as a sample reproduce one appointment
order dated 30.11.1993.
"THE KARNATAKA HANDLOOM DEVELOPMENT
CORPORATION LIMITED, BANGALORE \026 560 046.
Intensive Handloom Development Project, Banhatti \026 587
311.
No.KHDC: INDP: BNT: ADM/93-94/1301 Date: 30.11.1993
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To
Sri Mahadev L. Raval,
Expert Weaver,
Near Sadashiv Temple, Forest Area,
Post: Banahatti \026 587 311,
Taluk: Jamkhandi,
District Bijapur.
The Corporation has been tasked with implementation of the
Vishwa Programme by State Government. One of the objects
of the Scheme is to train the persons/ weavers covered
under the scheme in the field of weaving different varieties of
fabric. Keeping in view this need, the management is
pleased to consider your candidature for the post of Expert
Weaver and appoint you as EXPERT WEAVER on a stipend
of Rs.1,000 per month for a period of 9 months (Nine months
only) on the Terms and Conditions hereinafter mentioned
and post you to SCP Training Centre, Muleganvi Building,
IHDP, Banhatti, Taluk, Jamkhandi, District Bijapur.
1) Your appointment will be purely contractual
2) Your term of contract will be for Nine months from the
date you report for duty in the Corporation.
3) You will not be eligible for any benefits like DA, HRA
and CCA or privileges as are admissible to the regular
employees of the Corporation except to the extent provided in
this Order.
4) You will be governed by KHDC (Disciplinary & Appeal)
Rules, applicable to other employees of the Corporation.
5) During the period of contract, if you intend to resign or
leave the services of the Corporation, you shall be liable to
give one month’s notice or pay one month’s stipend in lieu of
such notice to the Corporation.
6) Your duties shall be as allocated by the Management
from time to time.
7) You will be liable for termination without any notice
and without payment of any compensation and without
assigning any reasons therefore at any time during the
period of contract.
8) The contract of your appointment stands automatically
terminated on the expiry of nine months from the date of
your reporting for duty in the Corporation.
If you are agreeable to the above terms and conditions, you
are requested to sign the duplicate copy hereof and send it to
us in token of having accepted the appointment and report
for duty to the Project Administrator, intensive Handloom
Development Project, Banhatti, after communicating your
acceptance. If you fail to convey your acceptance and report
for duty as advised above, it will be presumed that you are
not interested to accept the appointment order and the
appointment order will be revoked without further reference
to you.
For KARNATAKA HANDLOOM
DEVELOPMENT CORPORATION LTD.
Sd/-
Project Administrator,
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Intensive Handloom Development
Project, BANHATTI-587 311."
A careful perusal of the terms and conditions of
appointment would go to show that the respondent is not a
worker but employed on contract basis on a time bound
specific scheme assigned as weaving trainer. However, the
learned Judges of the Division Bench committed a factual
error in holding that the above letter of appointment does not
show that employment was not a contract which stipulated
that it comes to an end with the expiry of project or scheme
nor is it the case of the Corporation that the respondent was
made aware of any such stipulation even at the
commencement of the employment. The High Court has failed
to notice that the respondent was engaged on contract basis
and had been assigned to train weavers who were lagging in
weaving skills in the weaving potential development area
working on time specific short term scheme sponsored by the
Corporation. We are, therefore, of the opinion that the
respondent is not a worker for the purposes of Section 25F of
the I.D. Act but employed on contract basis only. The High
Court also has not properly appreciated the judgment relied
on - S.M. Nilajkar & Ors. vs. Telecom District Manager,
Karnataka, (2003) 4 SCC 27. As the respondent was
engaged as trainer for a specific period under the scheme and
was paid a stipend of Rs.1,000/- p.m. from the date of his
appointment and, therefore, Section 2(oo) of the Act is not
attracted soon after the expiry of the specific period the
respondent’s service was discontinued and so it is not a
retrenchment as defined under Section 2(oo) of the I.D. Act.
On the other hand, the case of the Corporation before the
learned Single Judge and also before the Division Bench was
that the respondent was not a workman in the employment of
the appellant and that he was a weaver in the area as another
weaver in the area and was getting certain concessions from
the Corporation.
We have perused all the appointment letters dated
14.01.1991, 24.02.1992, 10.02.1993, 03.03.1993 and
30.11.1993 produced by the respondent as annexures which
consistently and categorically state that the respondent’s
appointment with the Corporation was purely contractual for a
fixed period. The respondent was engaged only under the
Vishwa programme scheme which is not in existence. Now the
scheme came to an end during August, 1994 the respondent
was also not governed by any service rules of the Corporation.
The Corporation put an end to the contract w.e.f. 31.08.1993
which, in our opinion, cannot be termed as dismissal from
service. Even assuming that the respondent had worked 240
days continuously he, in our opinion, cannot claim that his
services should be continued because the number of 240 days
does not apply to the respondent inasmuch as his services
were purely contractual. The termination of his contract, in
our view, does not amount to retrenchment and, therefore, it
does not attract compliance of Section 25F of the I.D. Act at
all.
The view taken by the High Court, in our opinion, is
contrary to the judgment of this Court in Kishore Chandra
Samal vs. Orissa State Cashew Development Corporation
Limited Dhenkanal reported in 2006 (1) SCC 253 (Arijit
Pasayat and R.V. Raveendran, JJ). The above is also a case of
employment for specific period/fixed term and that the
workman was engaged for various spells of fixed periods from
July, 1982 to August, 1986. The workman was retrenched at
the end of each period. The Labour Court held that the
appellant served continuously for many years covering the
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requisite period of continuous service in a calendar year and
that the provisions of Section 25F of the I.D. Act had not been
complied with, termination of his service is illegal and
unjustified. On the basis of the said finding, the Labour Court
directed the workman to be reinstated to his former post. The
High Court accepted the stand of the respondent Corporation
that the appointment of the workman was on NMR basis for a
fixed period of time on the basis of payment at different rates
and since the engagement was for a fixed period, the High
Court held that the award of the Labour Court was to be set
aside. In support of the appeal, learned counsel for the
workman submitted that the High Court failed to notice that
the period fixed was a camouflage to avoid regularization.
Reliance was placed on a decision of this Court in S.M.
Nilajkar & Ors. vs. Telecom District Manager Karnataka
(supra) where it was held that mere mention about the
engagement being temporary without indication of any period
attracts Section 25-F of the Act if it is proved that the
workman concerned had worked continuously for more than
240 days.
Arijit Pasayat, J speaking for the Bench, after referring to
the position of law relating to fixed appointments and the
scope and ambit of Section 2(oo)(bb) of Section 25-F which
were examined by this Court in several cases and also in
Morinda Coop. Sugar Mills Ltd. vs. Ram Kishan & Ors.,
(1995) 5 SCC 653 and which view was reiterated by a three-
Judge Bench of this Court in Anil Bapurao Kanase vs.
Krishna Sahakari Sakhar Karkhana Ltd. & Anr. reported
in (1997) 10 SCC 599 noticed and reproduced para 3 as
under:-
"3. The learned counsel for the appellant contends that the
judgment of the High Court of Bombay relied on in the
impugned order dated 28-3-1995 in Writ Petition No. 488 of
1994 is perhaps not applicable. Since the appellant has
worked for more than 180 days, he is to be treated as
retrenched employee and if the procedure contemplated
under Section 25-F of the Industrial Disputes Act, 1947 is
applied, his retrenchment is illegal. We find no force in this
contention. In Morinda Coop. Sugar Mills Ltd. v. Ram Kishan
in para 3, this Court has dealt with engagement of the
seasonal workman in sugarcane crushing; in para 4 it is
stated that it was not a case of retrenchment of the
workman, but of closure of the factory after the crushing
season was over. Accordingly, in para 5, it was held that it
is not ’retrenchment’ within the meaning of Section 2(oo) of
the Act. As a consequence the appellant is not entitled to
retrenchment as per sub-clause (bb) of Section 2(oo) of the
Act. Since the present work is seasonal business, the
principles of the Act have no application. However, this
Court has directed that the respondent management should
maintain a register and engage the workmen when the
season starts in the succeeding years in the order of
seniority. Until all the employees whose names appear in
the list are engaged in addition to the employees who are
already working, the management should not go in for fresh
engagement of new workmen. It would be incumbent upon
the respondent management to adopt such procedure as is
enumerated above."
The Division Bench of the High Court in the instant case
relied upon the decision in S.M.Nilajkar’s case, which, in our
opinion, has no application because in that case no period was
indicated and the only indication was the temporary nature of
engagement. We have already reproduced the terms and
conditions of appointment in the case on hand, in all the
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orders of engagement specific periods and the amount of
honorarium also been mentioned. Therefore, in our view, the
High Court’s order does suffer from infirmity.
Learned senior counsel appearing for the Corporation
placed reliance on the decision of this Court in Secretary,
State of Karnataka and Others vs. Umadevi (3) and
Others, (2006) 4 SCC 1 (Constitution Bench) paras 45 and 47
of the judgment. P.K. Balasubramanian, J. speaking for the
Bench has observed as follows:-
"45. While directing that appointments, temporary or
casual, be regularized or made permanent, the courts are
swayed by the fact that the person concerned has worked for
some time and in some cases for a considerable length of
time. It is not as if the person who accepts an engagement
either temporary or casual in nature, is not aware of the
nature of his employment. He accepts the employment with
open eyes. It may be true that he is not in a position to
bargain -- not at arms length -- since he might have been
searching for some employment so as to eke out his
livelihood and accepts whatever he gets. But on that ground
alone, it would not be appropriate to jettison the
constitutional scheme of appointment and to take the view
that a person who has temporarily or casually got employed
should be directed to be continued permanently. By doing
so, it will be creating another mode of public appointment
which is not permissible. If the court were to void a
contractual employment of this nature on the ground that
the parties were not having equal bargaining power, that too
would not enable the court to grant any relief to that
employee. A total embargo on such casual or temporary
employment is not possible, given the exigencies of
administration and if imposed, would only mean that some
people who at least get employment temporarily,
contractually or casually, would not be getting even that
employment when securing of such employment brings at
least some succor to them. After all, innumerable citizens of
our vast country are in search of employment and one is not
compelled to accept a casual or temporary employment if one
is not inclined to go in for such an employment. It is in that
context that one has to proceed on the basis that the
employment was accepted fully knowing the nature of it and
the consequences flowing from it. In other words, even while
accepting the employment, the person concerned knows the
nature of his employment. It is not an appointment to a post
in the real sense of the term. The claim acquired by him in
the post in which he is temporarily employed or the interest
in that post cannot be considered to be of such a magnitude
as to enable the giving up of the procedure established, for
making regular appointments to available posts in the
services of the State. The argument that since one has been
working for some time in the post, it will not be just to
discontinue him, even though he was aware of the nature of
the employment when he first took it up, is not (sic) one that
would enable the jettisoning of the procedure established by
law for public employment and would have to fail when
tested on the touchstone of constitutionality and equality of
opportunity enshrined in Article 14 of the Constitution of
India.
47. When a person enters a temporary employment or gets
engagement as a contractual or casual worker and the
engagement is not based on a proper selection as recognized
by the relevant rules or procedure, he is aware of the
consequences of the appointment being temporary, casual or
contractual in nature. Such a person cannot invoke the
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theory of legitimate expectation for being confirmed in the
post when an appointment to the post could be made only by
following a proper procedure for selection and in cases
concerned, in consultation with the Public Service
Commission. Therefore, the theory of legitimate expectation
cannot be successfully advanced by temporary, contractual
or casual employees. It cannot also be held that the State
has held out any promise while engaging these persons
either to continue them where they are or to make them
permanent. The State cannot constitutionally make such a
promise. It is also obvious that the theory cannot be invoked
to seek a positive relief of being made permanent in the
post."
Batala Coop. Sugar Mills Ltd. vs. Sowaran Singh,
(2005) 8 SCC 481 [Arijit Pasayat and Dr. AR. Lakshmanan, JJ]
was also relied on. In this case, the legality of the judgment
rendered by the Division Bench of the Punjab & Haryana High
Court dismissing the writ petition filed by the management
and upholding the award made by the Presiding Officer,
Labour Court was called in question. The workman, in this
case, made a grievance before the State Government that his
services were illegally terminated by the management.
Reference was made by the State Government under Section
10(1) of the I.D. Act for adjudication. The Labour Court was of
the view that though the stand of the employer was that the
respondent workman was employed on casual basis on daily
wages for specific work and for a specified period yet evasive
reply was given in respect of the workman’s stand that he was
appointed in April, 1986. The Labour Court held that there
was violation of Section 25-F of the Act. Direction was given to
reinstate the workman with 50% back wages. The employer
filed a writ petition which was dismissed by the High Court. It
was held that there was no legal or factual infirmity in the
award. In support of the appeal, counsel for the management
submitted that both the Labour Court and the High Court fell
in grave error by acting factually and legally erroneous
premises and that the stand of the appellant was that the
workman was engaged on casual basis on daily wages for
specific work and for a specific period and that the details in
that regard were undisputably filed. Therefore, the provisions
of Section 2(oo) (bb) of the Act are clearly applicable. In
addition the onus was wrongly placed on the employer to
prove that the workman had not worked for 240 days in 12
calendar months preceding the alleged date of termination and
no material was placed on record by the workman to establish
that the workman had offered himself for a job after
12.02.1994. This Court, after referring to Morinda
Cooperative Sugar Mills Ltd. case (supra) and Anil
Bapurao’s case (supra) held that the relief granted to the
workman by the Labour Court and the High Court cannot be
maintained. This Court also held that so far as the question of
onus regarding working for more than 240 days is concerned,
as observed by this Court in Range Forest Officer vs. S.T.
Hadimani (2002) 3 SCC 25 the onus is on the workman. The
appeal filed by the management was, therefore, allowed.
As pointed out earlier, the respondent was engaged only
on contract basis. It is only a seasonal work and, therefore,
the respondent cannot be said to have been retrenched in view
of what is stated in clause (bb) of Section 2(oo) of the Act.
Under these circumstances, we are of the opinion that the
view taken by the Labour Court and the High Court is not
correct and is illegal. The appeal is accordingly allowed but in
the circumstances without costs.