M/S Ircon International Ltd. vs Union Of India & Ors.
2011 Latest Caselaw 3305 Del

           *IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                Date of decision: 13th July, 2011

+                         W.P.(C) No.10941/2004

%      M/S IRCON INTERNATIONAL LTD.             ..... Petitioner
                    Through: Mr. Chetan Sharma, Sr. Adv. with
                             Mr. Saurabh Mishra & Mr. A.P.
                             Nagrath, Advocates

                                    Versus

       UNION OF INDIA & ORS.                             ..... Respondents
                    Through:            Mr. M.P. Raju & Mr. E.J. Varghese,
                                        Advocates
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1.     Whether reporters of Local papers may                        No
       be allowed to see the judgment?

2.     To be referred to the reporter or not?                No

3.     Whether the judgment should be reported               No
       in the Digest?

RAJIV SAHAI ENDLAW, J.

1. The writ petition impugns the award dated 27th April, 2004 of the

Industrial Adjudicator on the following reference:

"Whether the demand of the Rashtriya Mazdoor Congress, U.P. Shakha for reinstatement and regularization of 37 workmen (As per list) in the management of M/s Ircon International Ltd. is legal and justified? If so, to what relief the said workmen are entitled?"

and holding the termination by the petitioner of the 37 workmen arrayed as

respondent no.s 2 to 38 to be illegal and unjustified and directing the

petitioner to reinstate the said respondent workmen with 50% of the back

wages, continuity in service and all other consequential benefits to them.

2. Notice of the petition was issued and vide ex parte order dated 14th

July, 2004, the operation of the award stayed subject to the petitioner

depositing a sum of ` 1,00,000/- in this Court. The said order has continued

in force. The respondent workmen applied under Section 17B of the

Industrial Disputes Act, 1947. The said applications were allowed vide order

dated 26th April, 2006. The petitioner preferred intra court appeal being LPA

No.1049/2006. During the pendency of the said appeal, the amount due

under Section 17B of the Act was directed to be deposited in the Court and

subsequently ordered to be released to the respondent workmen. It was the

contention of the petitioner in appeal that the Industrial Adjudicator while

dealing with a claim for regularization could not have directed reinstatement

and solely because the word "reinstatement" had been used in the award

would not make Section 17B applicable. The Division Bench disposed of

the said appeal vide order dated 28th October, 2010 without expressing any

opinion on the merits of the case and without interfering with the order under

Section 17B and only with a direction for expeditious disposal of the writ

petition and with a further direction that the payments so made by the

petitioner under Section 17B of the Act will be subject to the final decision

of the writ petition. The counsels have been heard and the records including

of the Industrial Adjudicator perused.

3. The respondent workmen in their statement of claim before the

Industrial Adjudicator pleaded that they were under the employment of the

petitioner at Mathura, for four to five years without any break, till the

termination of their services on 3rd June, 1998; that the petitioner had closed

the work of the Mathura Project on 3rd June, 1998 and illegally retrenched

the respondent workmen; that the retrenchment compensation was not paid

as per the law at the time of retrenchment; that the petitioner has several

Projects in different States of the country as well as in Uttar Pradesh and

even abroad and the nature of work in which the petitioner is engaged is

perennial in nature and the respondent workmen engaged in any Project of

construction can be engaged in another Project by maintaining continuity of

their employment; that instructions existed in the petitioner for absorption in

permanent grades of pay but the said instructions had also not been complied

with qua the respondent workmen; that the reference entailed two disputes

i.e. qua reinstatement in service and qua regularization in service.

4. The respondent workmen in the claim petition before the Industrial

Adjudicator itself also disclosed that they along with other workmen also

employed at Mathura and who were also not being regularized in service

inspite of employment for more than four years had earlier also raised a

dispute which was referred by the Government of Uttar Pradesh for

adjudication before the Industrial Tribunal, Agra. A perusal of the award

dated 8th January, 1998 of the Industrial Tribunal, Agra shows that one of the

disputes then referred for adjudication was "Whether the action of the

employer / management in not regularizing the services of 102 labours was

illegal and / or unjustified? And if yes to what relief and from which date the

concerned labour are entitled to and with other details, if any?"

5. The Industrial Tribunal, Agra in the award aforesaid answered the

reference aforesaid as under:

"There is no right available to the workers for their regular appointment. They have already been appointed on ad-hoc basis. It is legal and justified to give them the regular appointment whenever the post becomes available at any place and till then all the efforts will be made by the Company to keep them regularly on the job and they shall be removed from the services as per the seniority of the workers and as far as possible regular appointment will be given to them according to the policies and rules of the Company, if they fulfill educational and other qualifications. But otherwise the workers have no right for their regular appointment. That will be available only according to the rules and as per the feasibility of the work of the Company, but as the work of the Company is going on in whole of the Country and also in the foreign countries there should not be any break, as far as possible, in the services of the workers."

6. The respondent workmen challenged the award aforesaid of the

Industrial Tribunal, Agra by filing a writ petition in the High Court at

Allahabad but thereafter withdrew the said writ petition. The counsel for the

respondent workmen explains that since during the pendency of the said writ

petition before the High Court of Allahabad, the services of the respondent

workmen were terminated as aforesaid on 3rd June, 1998, the respondent

workmen abandoned the challenge to the award of the Industrial Tribunal,

Agra.

7. It is further the admitted position that the respondent workmen

thereafter filed a writ petition before the High Court of Allahabad impugning

the termination of their services. The said writ petition was dismissed on

30th July, 1998 with liberty to the respondent workmen to approach the

Industrial Adjudicator. The respondent workmen preferred a Special Leave

Petition to the Supreme Court which was also dismissed vide order dated

20th November, 1998 but with a direction that upon a dispute being raised by

the respondent workmen, the same shall be referred for adjudication to the

Industrial Adjudicator. It was thereafter that the dispute on which reference

as set out in para 1 hereinabove was made, was raised by the respondent

workmen and the award made whereon is impugned in the present petition.

8. The Industrial Adjudicator in the award impugned in this petition

observed / held:

(i) That each of the workman had completed more than 240 days

in each year of their service before their termination;

(ii) That there is no dispute that the provisions of Section 25F of the

ID Act are applicable in this case;

(iii) According to the respondent workmen their services were

illegally terminated without compliance of the provision of

Section 25F of the ID Act; they were paid nothing at the time of

their retrenchment / termination nor any earlier notice of

termination was given to them; on the other hand the petitioner

claims that the management had paid to all the respondent

workmen one month‟s salary, compensation, gratuity, etc. as

required by the provisions of Section 25F of the ID Act;

(iv) It is admitted fact that the petitioner carries on its industrial

work and business throughout the country as well as in U.P. and

even abroad; the nature of work in which the petitioner is

engaged is perennial in nature;

(v) There is no evidence that the respondent workmen were

employed in respect of construction of Delhi Mathura Road

Project only; there is also no evidence that they were engaged

for a limited period only; they could also be engaged anywhere

in any of the Project of the petitioner but the petitioner has

wrongly applied the principle of close down of undertaking in

the instant case; there is nothing on record to show that the

entire business of the management was closed down on

completion of Delhi Mathura Road Project;

(vi) That though the petitioner had produced copies of termination

order showing that certain amounts of salary, one month salary

in lieu of notice and compensation as required under Section

25FFF(2) and under Section 25F(b) of the ID Act along with

other amount of gratuity and leave encashment was tendered

but there was no detail therein of the period of service for

fixation of compensation at 15 days‟ salary / pay for every

completed year of service;

(vii) That no payment was made to the respondent workmen at the

time of their termination / retrenchment, though the respondent

workmen admitted that certain amount through cheque was

received by them later on much after their termination;

(viii) That there was no evidence to show the compliance of Section

25F(c);

(ix) That there was thus no direct compliance of Section 25F or

Section 25FFF of the ID Act before retrenchment / termination

of the respondent workmen;

(x) Therefore the termination of the respondent workmen was

illegal as the amount of their salary and compensation was not

correctly computed and the provisions of Section 25F not

correctly followed;

(xi) That the petitioner had not abided by the award of the Industrial

Tribunal, Agra also.

9. It is not in dispute that the petitioner is a construction Company and

was on 23rd May, 1991 awarded contract by the Uttar Pradesh PWD for

widening of National Highway-2 between Delhi and Mathura from two lanes

to four lanes and that all the respondent workmen came to be engaged /

employed by the petitioner for the said work. As per the contract, the said

work was to be completed and handed over within four years but was

completed and handed over by the petitioner only on 19 th February, 1998 and

whereafter the services of the respondent workmen were terminated as

aforesaid on 3rd June, 1998.

10. The senior counsel for the petitioner has contended that it was the case

of the respondent workmen themselves that they were employees of the said

Project of the petitioner which constitutes an "undertaking" within the

meaning of Section 25FFF of the ID Act and not of the petitioner Company.

Reference in this regard is made to:

(i) The application for withdrawal of the Writ Petition

No.14128/1998 before the High Court of Allahabad, where it

was stated that the respondents "were engaged in a Project"

started by the petitioner at Mathura but "were treated as casual

labour on daily rated basis"; that they had raised industrial

dispute regarding their regularization and in which award

against the respondent workmen challenged in the said writ

petition has been given; "that now the Project is over" and the

petitioner had terminated the services "of all employees

working in the project on or before 3rd June, 1998"; that thus the

said writ petition had become infructuous;

(ii) Writ Petition No. 15419/2004 preferred by the respondent

workmen in this Court against the award (impugned in this

petition also) insofar as awarding back wages of 50% only to

the respondent workmen and claiming full back wages (and

which writ petition stands dismissed for non-prosecution on

27th March, 2006); where also it is pleaded that the respondent

workmen "were engaged locally in various categories and their

services were liable to be retained for duration of the project"

and that "after completing and handing over of the Project to

the Uttar Pradesh PWD, on 3rd June, 1998, the services of all

the respondent workmen were terminated after tendering

compensation as required under Section 25FFF(2) of the ID

Act" ;

(iii) To the cross examination of Sh. Brijesh Kumar Yadav

(respondent no. 3) sole witness on behalf of all the 37

respondent workmen before the Industrial Adjudicator, where it

was admitted that the respondent workmen were engaged orally

and there was no order of appointment;

(iv) The letters of contractual appointment issued by the Chief

Project Manager of the Delhi Mathura Highway Project of the

petitioner to each of the respondent workmen (it was contended

that had the appointment been by the petitioner Company, the

letters would not have been issued by the Project Manager but

by the Head / Corporate Office of the petitioner Company);

(v) The application for appointment made by the respondent

workmen also to the Project Manager of the petitioner and not

to the petitioner;

(vi) The terms and conditions of contractual appointment

whereunder it was terminable without any notice;

(vii) To the counter affidavit of the respondent workmen to the

present petition also where it is pleaded that the main dispute

revolved around the concept of "closure" with the contention of

the petitioner being that completion of project amounted to

"closure" and the contention of the respondent workmen being

that as per Section 25FFF(2) they were entitled to notice and

payment in terms of Section 25F and of which no details had

been given.

11. The senior counsel for the petitioner has contended that in view of the

aforesaid material on record and inspite of the Industrial Adjudicator

noticing the judgment of the Apex Court in Management of Hindustan

Steel Ltd. Vs. The Workmen (1973) 3 SCC 564, the Industrial Adjudicator

has held to the contrary, making the award perverse and liable to be set

aside. It is further contended that the respondent workmen before this Court

have for the first time made out a new case of being employees of the

petitioner Company and not of the Project. It is yet further contended that the

appointment of each of the respondent workmen being not as per

Recruitment Rules of the petitioner, the direction of the Industrial

Adjudicator to the petitioner to regularize the respondent workmen is

contrary to the dicta of the Apex Court in Secretary, State of Karnataka Vs.

Umadevi AIR 2006 SC 1806. It is yet further contended that since the

Project in which the respondent workmen were employed had ceased to

exist, the Industrial Adjudicator could not have directed reinstatement.

Reliance in this regard is placed on F.R. Jesuratnam Vs. UOI AIR 1981 SC

1595. The senior counsel for the petitioner has further contended that the

present was not a case of closure governed by Section 25-O(1) but a case

governed by Section 25FFF(2).

12. The counsel for the respondent workmen has on the contrary

contended that if the respondent workmen are found to be employees of the

Project then they would be governed by Section 25FFF(2) but their

contention is that they are employees not of the Project but of the petitioner

Company and were working in one of the Projects of the petitioner

Company. He has further argued that it has never been the case of the

respondent workmen that they were recruited only for a particular Project.

He has argued that each of the respondent workmen is a skilled workman

and the Recruitment Rules relied upon by the petitioner relate to executive

posts while the rules applicable are those for non executive posts and as per

which they became entitled to absorption after completion of five years of

employment and which they had. He has further contended that the

contracts of appointment placed by the petitioner before this Court and relied

upon as aforesaid did not form part of the record of the Industrial

Adjudicator and thus cannot be considered. He has further contended that

none of the admissions attributed to the respondent workmen and as noticed

in para 10 hereinabove are admissions of being Project employees but only

amount to admissions of working in the Project. He claims that the

respondent workmen are entitled to Section 25F protection and the question

for determination was whether the respondent workmen were employees of

the petitioner Company or of the Project and which has not been determined

either by the Industrial Adjudicator at Delhi or by the Industrial Tribunal at

Agra. He has further contended that in the judgment Lal Mohammad Vs.

Indian Railway Construction Co. Ltd. AIR 2007 SC 230 relied upon by the

petitioner, there was a finding of the employees therein being employees of

the Project and which is not the case here. He has further contended that

some of the respondent workmen had been transferred and which was one of

the disputes referred to the Industrial Tribunal, Agra; there could be no

question of Project employees being transferred and the same was also

indicative of the respondent workmen being the employees of the petitioner

Company and not of the Project. Reliance is placed on the judgment dated

4th August, 2005 of the High Court of Allahabad in Civil Misc. WP No.

9762/2003 titled Ircon International Ltd. Vs. Baikunth Nath Dubey &

Ors.. He has yet further contended that the factual findings of the Industrial

Adjudicator are not to be interfered with. Reliance in this regard is placed

on Harjinder Singh Vs. Punjab State Warehousing Corporation 2010 (1)

SCALE 613 and it is contended that judgments of earlier date relied upon by

the petitioner are to be ignored. Reference is also made to Krishan Singh

Vs. Haryana State Agricultural Marketing Board (2010) 3 SCC 637 and

Anoop Sharma Vs. Public Health Division, Haryana (2010) 5 SCC 497 as

to the effect of non compliance of Section 25F. It is contended that there is a

categorical finding by the Industrial Adjudicator of the respondent workmen

being employees of the petitioner Company and sufficiency of evidence is

no ground for interference.

13. The senior counsel for the petitioner in rejoinder has urged that the

judgments cited by the respondent workmen do not relate to the construction

industry for which specific provision is made in Section 25FFF. He has

further contended that considering the nature of the business/works of the

petitioner Company, except those employed in the Head Office at Delhi, all

others are Project employee. He has further contended that no such case was

ever set up.

14. In my opinion, the respondent workmen by making the claim for

regularization before the Industrial Tribunal, Agra as well as in the

reference, award whereon is impugned in this petition admitted that they

were employees of the Mathura Project of the petitioner and were not the

employees of the petitioner Company. Had the respondent workmen been

the employees of the petitioner Company, as they have now urged in this

Court, there would have been no occasion for their claiming the relief of

regularization.

15. I am further of the opinion that the claim of the petitioners for

regularization stands finally adjudicated vide the award of the Industrial

Tribunal, Agra. The Industrial Tribunal, Agra unequivocally held that the

respondent workmen have "no right for their regular appointment". Though

the respondent workmen challenged the said award before the High Court of

Allahabad but subsequently withdrew the said writ petition. A perusal of the

order dated 15th October, 2004 of the High Court of Allahabad shows that

the writ petition impugning the award of the Industrial Tribunal, Agra was

withdrawn and no liberty whatsoever was granted to the respondent

workmen. With the withdrawal of the said writ petition, the award of the

Industrial Tribunal, Agra attained finality and as per which the respondent

workmen are/were employees of the Project and not of the petitioner

Company and had no right to regularization.

16. In fact, in view of the award of the Industrial Tribunal, Agra, the

reference on which the award impugned in the present petition has been

made, insofar as again claiming the relief of regularization was not even

maintainable and was bad. It appears that the said reference came to be

made owing to the order dated 20th November, 1998 (supra) of the Supreme

Court while dismissing the appeal preferred by the respondent workmen

against the order of the High Court of Allahabad in the second round of writ

petition impugning the order of termination. However, the said order cannot

confer upon the respondent workmen a right to again claim what had already

been denied to them vide the award of the Industrial Tribunal, Agra. Neither

the Supreme Court nor the High Court of Allahabad had gone into the said

aspect or dealt therewith.

17. The Supreme Court in Bharat Barrel & Drum Mfg. Co. (P) Ltd. Vs.

Employees Union (1987) 2 SCC 591 held that rule of res judicata applies to

proceedings before the Industrial Tribunals also. It was held that any

legislation regulating the relation between the Capital and the Labour, as the

Industrial Disputes Act is, has two objects in view - it seeks to ensure to the

workmen fair returns for their labour, it also seeks to prevent disputes

between employer and employees, so that production might not be adversely

affected and the larger interests of the society might not suffer. It was held

that to hold that the rule of res judicata does not apply to industrial disputes

would rather than bringing in industrial peace, make the awards mere truces

giving only breathing time before resuming hostile action with renewed

vigour.

18. Thus, the only dispute which could have been raised by the respondent

workmen after the award of the Industrial Tribunal, Agra had attained

finality was as to the validity of the action dated 3rd June, 1998 of the

petitioner Company of terminating the services of the respondent workmen.

19. The said action dated 3rd June, 1998 was post the award of the

Industrial Tribunal, Agra and thus could not possibly be subject thereof.

Even otherwise, merely because the respondent workmen had been held by

the Industrial Tribunal, Agra to be employees of the Mathura Project and ad-

hoc and not entitled to absorption in any other Project of the petitioner

Company, would not deprive the respondent workmen from raising a dispute

as to their termination. It is settled position in law (see Balley Vs. MCD ILR

(2010) VI Delhi 44 discussing the case law on the subject) that the

provisions of Section 25F of the I.D. Act apply to both the regular as well as

the temporary or ad-hoc employees if they have completed more than 240

days of employment and which the respondent workmen in the instant case

had.

20. However, the respondent workmen challenged the action of 3 rd June,

1998 not as being in violation of Section 25F but again on the premise of

their being entitled to regularization and which question as aforesaid stood

settled vide the award of the Industrial Tribunal, Agra. A perusal of the

record including of the Industrial Adjudicator shows that the parties

proceeded on the said basis only rather than establishing as to whether the

ingredients of Section 25F had been complied with or not. Though in the

pleadings and in the evidence, it was generally so stated but if the case of the

respondent workmen was of their removal being in violation of Section 25F,

they ought to have expressly pleaded and proved as to how compensation in

accordance with Section 25F(b) had not been tendered / paid. There exists

on record the termination letters dated 3rd June, 1998 issued by the petitioner

to each of the 37 respondent workmen and which disclose the tender of

compensation in terms of Section 25F(b). The respondent workmen though

sought to argue before this Court that the computation of the said

compensation has not been disclosed, ought to have themselves stated as to

how the said tender was not in accordance with Section 25F(b). The same

has not been done. On the contrary, it is the admitted position that the

cheques tendered by the petitioner Company to the respondent workmen

stand encashed.

21. Though it is correct that the petitioner also in its evidence did not

expressly prove as to since when each of the respondent workmen was

employed and at what emoluments but in the face of the letters of

termination disclosing that compensation in terms of Section 25F(b) had

been tendered and paid, the onus was on the respondent workmen to

establish as to how the said tender / payment was not complete. Rather there

also exists on record, a copy of the notice issued by the petitioner Company

in terms of Section 25F(c) of the ID Act.

22. Unfortunately the Industrial Adjudicator also has not addressed

himself on the aforesaid aspect and has merely made a general statement that

Section 25F has not been complied with.

23. The energy expended by the counsels for the parties on as to whether

Section 25F or Section 25FFF(2) is applicable is not found to be apposite in

the aforesaid circumstances.

24. I may notice that it has never been the case of the petitioner Company

that it is liable for compensation under Section 25FFF(1) only. Its case

unequivocally has been that it was liable for compensation in accordance

with Section 25FFF(2) and compensation whereunder is the same as under

Section 25F(b).

25. However, the respondent workmen having failed to plead, neither

before the Industrial Adjudicator nor before this Court as to how the

compensation is not in accordance with Section 25F(b) and more than 10

years having elapsed, it is not deemed expedient to grant a second chance to

the respondent workmen when they have failed to avail of the first.

26. The award of the Industrial Adjudicator impugned in this petition is

thus found to be perverse and is set aside.

27. The Division Bench of this Court in appeal (supra) against the Section

17B order having made the payments to the respondent workmen subject to

the outcome of the petition, it also needs to be adjudicated whether in view

of the dismissal of the writ petition, the respondent workmen are liable to

refund the amounts received under the order under Section 17B. The senior

counsel for the petitioner has however chosen not to address any arguments

on the said aspect. The contention of the petitioner before the Division

Bench was that the dispute raised being as to regularization, the direction in

the award of reinstatement is beyond reference and superfluous and thus

Section 17B is not attracted.

28. I am unable to agree. As aforesaid, the claim of the respondent

workmen of regularization stood adjudicated by the award of the Industrial

Tribunal, Agra which had attained finality. The only dispute which could be

raised was only as to termination; termination if found to be illegal would

have entitled the respondent workmen to the relief of reinstatement. The

Industrial Adjudicator, even though wrongly as held hereinabove, granted

the relief of reinstatement. The order under Section 17B was thus

appropriate and cannot be said to be superfluous and without jurisdiction so

as to invite a direction for refund of the amounts paid under Section 17B.

29. The writ petition is accordingly allowed. The award dated 27 th April,

2004 of the Industrial Adjudicator is set aside and quashed. The reference

insofar as on the claim of the respondent workmen for regularization is held

to be bad owing to the award of the Industrial Tribunal, Agra. The

respondent workmen are found to have failed to prove any illegality in the

order dated 3rd June, 1998 of their termination. The petitioner will

accordingly be allowed refund of amount deposited in this Court together

with interest if any accrued thereon. It is directed accordingly.

No order as to costs.

RAJIV SAHAI ENDLAW (JUDGE) JULY 13, 2011 „gsr‟