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Service Matter – NALCO – established two schools – Management was given to Saraswarti Vidaya Mandir – Two employees filed writ for declaration that they may be declared as employees of NALCO and entitled for pay scale as per it’s employees – High court allowed the writ – Apex court held that 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 as the SVS and it’s committees are looking after the management of the school – as the employees are already getting good salary than the Govt. School employees , they are not entitled for equal pay along with Nalco workers as they are not workers of Nalco = National Aluminium Co. Ltd. & Ors. ….Appellant(s) Vs. Ananta Kishore Rout & Ors. ….Respondent(s) = 2014(May. Part) http://judis.nic.in/supremecourt/filename=41518

    Service Matter – NALCO – established two schools – Management was given to Saraswarti Vidaya Mandir – Two employees filed writ for declaration that they may be declared as employees of NALCO and entitled for pay scale as per it’s employees – High court allowed the writ – Apex court held that 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 as the SVS and it’s committees are looking after the management of the school – as the employees are already getting good salary than the Govt. School employees , they are not entitled for equal pay along with Nalco workers as they are not workers of Nalco =

 

 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.

 

       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. =

 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.=

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

       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,  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.=

 

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 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.

2014(May. Part)

http://judis.nic.in/supremecourt/filename

=41518

SURINDER SINGH NIJJAR, A.K. SIKRI

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.

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 21st 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:

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 15th 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 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, 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 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 18th 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 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 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 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 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 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 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 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 15th
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 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, 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 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 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 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 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 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 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.
(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.

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
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, 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 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 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’.”

 
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 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 & 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 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 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 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
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
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 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, 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 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 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

 

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