NATIONAL ALUMINIUM CO. LTD & Ors. v. ANANTA KISHORE ROUT & Ors.

Judgment

7 S.C.R. 406 A B NATIONAL ALUMINIUM CO. LTD. & ORS. v. ANANTA KISHORE ROUT & ORS. (Civil Appeal No. 5989 of 2008) MAY 8, 2014 [SURINDER SINGH NIJJAR AND A.K. SIKRI, JJ.] SERVICE LAW: c 0 Employer-employee relationship - In order to determine the existence of employer-employee relationship, the determining factor is whether there is complete control and supervision by the employer - In the instant case, claim was made by the employees of the schools that they be treated at par with the employees of appellant company as the schools were established by the appellant for the wards of its employees - Records proved that the schools have their own independent Managing Committees and the day to day control over the staff was with the Managing Committees - Mere fact that schools were set up by the appellant or they had agreed to take care of financial deficits for the running of schools is not conclusive factor - Moreover, the employees of appellant were discharging altogether different kinds of duties - Therefore, principles of 'equal pay for equal work' is ·not attracted at all - There was no parity in the nature of work, F mode of appointment, experience, education qualification between the appellant employees and employees of schools - Moreover, the salaries and other perks which school employees were getting were better than their counter parts in Government Schools or aided/unaided recognized schools in State of Orissa. E G The appellant is a public sector undertaking. In the year 1984, it established two schools for the benefit of the wards of its employees. The appellant provided 406 H NATIONAL ALUMINIUM CO. LTD. v. ANANTA KISHORE ROUT & ORS. 407 B necessary infrastructure, such as land, building, furniture, A library and other assets. In/ 1985, the appellar)t entered into agreements with CCM Trust (CCMT) whereunder the appellant entrusted the management of the schools on a contract basis to CCMT. In terms of these agreements, the appellant agreed to pay Rs. 10,000 p.a. to CCMT as donation towards supervision charges for each school. These agreements also provided that the powers to establish, maintain and manage the schools would veEt in the Managing Committee consisting of seven members. Out of these seven members, four were the c nominees of CCMT and three persons were nominated by the appellant. The Chairman, Vice-Chairman and Secretary-cum-correspondent were to be the nominees of CCMT. Apart from constructing the building and providing requisite furniture and fittings, the appellant was .also to provide quarters at its own cost for teachers and staff members of the schools. The employees of the schools were treated at par with the appellant company employees so far as the medical, consumer co-operative, club and similar facilities were concerned. These agreements came to an end by efflux of time in the year E 1990. Thereafter, SVS agreed to manage both the schools. Accordingly agreement was entered into by the appellant with SVS. As per this agreement, the appellant agreed to pay to SVS certain amount towards its supervision charges. Even as per this Agreement, the Executive Authority of these two schools vested in the Managing Committee to be constituted separately for each of the schools. The employees of both schools filed writ petitions for claiming parity of pay with the employees of the appellant on the ground that real G control and supervision of the schools, including the staff was that of the appellant which has the final say in all vital matters. The High Court allowed the writ petitions. The instant appeals were filed challenging the decision of the High court. F 0 H 408 SUPREME COURT REPORTS [2014] 7 S.C.R. A Allowing the appeals, the Court 8 HELD: 1. No doubt, th~ school was established by the appellant. The appellant was providing necessary infrastructure and adequate financial support inasmuch as deficit, after meeting the expenses from the tuition fee and other incomes received by the schools, was met by the appellant. The appellant has also placed staff quarters at the disposal of the schools which were allotted to the employees of the schools. Employees of the school were also accorded some other benefits like recreation club C facilities etc. [Para 21] [425-E-F] E

#2. In order to determine the existence of employer employee relationship, the correct approach would be to consider as to whether there was complete control and D supervision of the appellant. 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. It has been established from the documents on record that both the schools have their own independent Managing Committees. These Managing Committees were registered under the Societies Registration Act. It was these Managing Committees who not only recruited teaching and other F staff and appointed them, but all other decisions in respect of their service conditions were also taken by the Managing Committees. These ranged from pay fixation, seniority, grant of leave, promotion, disciplinary action, retirement, termination etc. In fact, even Service Rules G were framed which contained the provisions; d.elineating all necessary service conditions. Various documents were produced to show that appointment letters were issued by the Managing Committees, disciplinary action was taken by the Managing Committees, pay fixation and promotion orders were passed by the Managing H NATIONAL ALUMINIUM CO. LTD. v. ANANTA KISHORE ROUT & ORS. 409 Committees and even orders of superannuation and A · termination of the staff were issued by the Managing Committees. It, thus, became clear that day to day control over the staff was that of the Managing Committees. These Managing Committees were having statutory status as they were registered under the Societies B Registration Act. Managing Committees thus had their own independent legal entities. However, merely because the schools were set up by the appellant or they had agreed to take care of the financial deficits for the running of the schools were not the conclusive factors. [Paras 22 c to 24] [425-G, H; 426-A-B, E-F; 427-A, B] 0

#3. In the instant case, the day to day supervision and control vested with the Managing Committee, from the appointment till cessation/termination. The exercise . which was undertaken by the High Court was in the nature of piercing the veil and commenting that real . control vested with the appellant. Whether the arrangement/contract was sham or camouflage is a disputed question of fact. No doubt, there may be some element of control of the appellant because of the reason E that its officials were nominated to the Managing Committees of the schools. Such provisions were made to ensure that schools ran smoothly and properly by the society. It also became necessary to ensure that the money was appropriately spent. However, this kind of F 'remote control' would not make the appella'nt as the employer of these workers. This only showed that since the appellant was shouldering and meeting the financial deficits, it wanted to ,ensure that money was spent for rightful purposes. [Paras 26 and 30] [428-F-H; 431-F, G] G

#4. The argument was raised that the Managing Committee cannot be the employer as it would lose its identity on the termination of agreement between the appellant and SVS. However, even that by itself cannot H 410 SUPREME COURT REPORTS [2014] 7 S.C.R. A be the determinative factor. When the agreement was earlier entered into between the appellant and CCMT, and staff was appointed in the school by CCMT, appellant ensured that such staff is taken over by SVS. For this purpose a specific clause was provided in agreement B between the appellant and SVS. Only because SVS agreed to take over the employees, would not mean that the appellant becomes the employer. On the contrary, this clause suggested that but for the intervention of the appellant, the school staff that was engaged by CCMT c would have been dealt with by CCMT. It is a matter of record that CCMT ran other schools as well. In that -eventuality, it would have taken these employees with themselves or retrenched these employees in accordance with law. Same was the position of SVS who have other schools also. However, this kind of situation would not arise in the instant case as assurance was ·given by the appellant that the teaching and other staff of the two schools would not lose their jobs even if present agreement of the appellant with SVS comes to an end E and the management is taken over by some other agency for running the· schools. The appellant shall stand committed by this assurance and would adhere to the same for all times to come. The position which emerged, in view of the assurance, is. that the service tenure of these employees is protected. [Paras 31 and 32) [431-H; 0 F 432-A, B, D, HJ

#5. The salaries and other perks which the respondents were getting were better than their counter parts in Government schools or aided un-aided G recognised schools in the State of Orissa. In a situation like this even if, it is presumed that the appellant is the employer of these employees, they would not be entitled to the pay scales which were given to other employees of the appellant as there cannot be any comparison 1-1 between the two. The principle of 'equal pay for equal NATIONAL ALUMINIUM CO. LTD. v. ANANTA KISHORE ROUT & ORS. 411 work' is not attracted at all. Those employees directly A employed by the appellant were discharging altogether different kinds of duties. Main activity of the appellant was the manufacture and production of alumina and aluminium for which it had its manufacturing units. The process and method of recruitment of those employees, B their eligibility conditions for appointment, nature of job done by those employees etc. was entirely different from the employees of these schools. There was no parity in the nature of work, mode of appointment, experience, educational qualifications between the appellant c 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 0 and enjoying far superior service conditions. [Paras 33 and 34] [433-A-D; 436-D-E] SC Chandra & Ors. v. State of Jharkhand and Ors. 2007 (8) SCC 279: 2007 (9) SCR 130 - relied on.