Holding

The Tribunal’s direction to regularise the 425 N.M.R. workers is illegal; the workers are entitled only to compensation under Section 25(fff) of the Industrial Disputes Act.

Summary

The Supreme Court examined whether the Dandakaranya Project, undertaken by the Central Government for refugee rehabilitation, qualified as an "industry" under Section 2(j) of the Industrial Disputes Act, 1947, and whether the Industrial Tribunal could lawfully direct the regularisation of 425 non‑ministerial regular (N.M.R.) workers after the project was wound up. The Court held that the project indeed constituted an industry, but the Tribunal’s order directing the authorities not to retrench the workers and to find them regular posts was illegal because the project had been closed, its assets transferred to the states, and no regular positions existed. Consequently, the workers are entitled only to compensation under Section 25(fff) of the Act. The Court set aside the Tribunal’s award and the High Court’s refusal to interfere, vacated the interim order, and allowed the appeal. No costs were awarded.

Issues considered

Whether the Dandakaranya Project is an "industry" within the meaning of Section 2(j) of the Industrial Disputes Act, 1947.
Whether the Industrial Tribunal had jurisdiction to direct regularisation and issue mandamus for the N.M.R. workers after the project was wound up.
Whether the direction not to retrench the workers and to find them regular employment is legally sustainable.
Whether the workers are entitled only to compensation under Section 25(fff) of the Industrial Disputes Act.

Legislation cited

Industrial Disputes Act, 1947s. 10(1)(d), s. 10(2)(a), s. 25(fff), s. 2(j)

Subjects

industrial disputedefinition of industryretrenchmentregularisationcompensationmandamusclosure of undertakingN.M.R. workersIndustrial Tribunal

Judgment

MANAGEMENT OF DANDAKARANYA PROJECT, KOREPUT A
v.
WORKMEN THROUGH REHABILITATION
EMPLOYEES' UNION AND ANR.

JANUARY, 7, 1997
B
(S.C. AGRAWAL AND G.B. PATTANAIK, JJ.)

Labour Law.~Industrial Disputes Act, 1947 : Sections 2(j) and
IO(l)(d) & (2-A) and 25-FFF.

"lndust1y''-Scope of-Dandakaranya Project-Disputes of employees
c
-Reference of-Held : the said project was indust1y--Hence, reference of
disputes, not incompetent.

Retrenchment-Closure of Undertaking-Dandakaranya Project--
Rehabilitated refugees and wound up after completion of work-lts assets and D
liabilities transferred to concemed States-No employment facilities ifXisted
for regular abs01ption of N.M.R. workers-Project authority and Central
Govemment, despite their best eff01ts could not absorb N.M.R. workers in any
· Govemment job or Public Sector U11dertaki11g-Howeve1; lndusflial Tiibunal
directed not to retrench the said N.M.R. workers-Held: In such circumstan-
ces, the said direction of Indusflial T1ibunal was illegal-The said N.M.R. E
workers entitled only to compensation S. 25-FFF of I.D. Act.

Retrenchment-Closure of Unde1taking-Issuance of mandamus-By
Tribunal-Not to retrench workers and to find out work for them-Held.:
Issuance of mandamus illegal.
F
Words and Phrases :

"Indusfly''-Meaning of-In the context of S. 2(j) of the lndustlial
Disputes Act, 1947.

The Central Government in exercise of its powers under Sections G
lO(l)d) and 10(2-A) of the Industrial Disputes Act, 1947 referred certain
disputes, arising out of the demands raised by the respondents to the
Industrial Tribunal for adjudication. The Industrial Tribunal directed the
appellant-management not to retrench the N.M.R. workers after the
project was wound up and to find out through the Central Government H
55
56 SUPREME COURT REPORTS [1997] 1 S.C.R.

A ways and means to regulariSe these N.M.R. workers either under the
Central Government of the concerired State Governments or under Public
Sector Undertakings of the Central GoverRlIR!nt. The High Court refused
to interfere with the award of the Tribunal. Henee this appeal.

On behalf of the appellant it was cooteoded that the project was
B undertaken by the Central Government in discharge of its sovereign
function to rehabilitate the refugees from Pakistan and, therefore, the
project was not an 'industry' and consequently the reference was incom-
petent; and that the project itself having been wound up and its assets and
liabilities having been transferred to the roncerned States there did not
C exist regular posts and, therefore, the question of regularisation of the
N.M.R. workers did not arise.

Allowing the appeal, this Court

Held : 1.1. Bearing in mind the dominant nature of the activities of
D the project and the nature of duties discharged by the workers in the
project it has to be held that the Dandakaranya Project is an industry
within the meaning of Section 2(j) of the Industrial Disputes Act, 1947 and
the conclusion of the Tribunal ,in this respect fs unassailable. [59-F]

E Bang/ore Water SuppZy & Sewerage Board v.A. Rajappa, [1978] 2 SCC
213, followed.

1.2. Steps have been taken duly and bona fide by the authorities of
the project as well as the competent authority of the Central Government
and inspite of their best efforts and persuasion it has not been possible to
F absorb the N.M.R. workers in any of the department of the Government
or in any Public Sector Undertakings, in view of the relevant rules and
regulations and in view of the situation prevailing in those organisations.
In such circumstances, the Industrial Tribunal's direction to the project
authorities not to retrench the said N.M.R. workers and to find out
G through the Central Government ways and means to regularise them is
illegal. The said N.M.R. workers are entitled only to compensation under
Section 25-FFF of tl1e Act. [60-F-G]

2. Even after coming to the conclusion that the project has been
wound up and there are no employment facilities for these N.M.R. workers
H for regular absorption, yet the Tribunal issued the direction requiring the
M.O.D. PROJECTv. REHABILITATION EMPLOYEES UNION [PATIANAIK, J.J 57

).
project authorities to find out work for the N.M.R. workers who have been A
working in the project continuously for more than 240 days. It is no doubt
true that in the interest of these N.M.R. workers who have spent a consid-
erable period with the project anthoriti,es, possibility of their absorption
on regular basis should be explored. But even after exploring such pos-
sibility if the concerned authorities failed in their attempt, it would not be
appropriate for a Court to issue mandamus in that regard and thus the
B
., Tribunal was wholly in error in issuing the impugned direction. Pursuant
to the interim direction of this Court the concerned authorities explored
the possibility of absorption of NMRs in any Public Sector Undertaking
or in the respective State Governments, and the attempt was bona fide
made and yet the authorities have failed to get these N.M.R. workers c
absorbed on regular basis. In such circumstances, it has to be held that
the direction issued by the Tribunal to regularise these N.M.R. workers
was wholly unsustainable in law. [61-E, F-H, 62-A-B]

G. Govinda Rajulu v.A.P. State Constmction C01poration Ltd. &Anr.,
'.r [1986] Supp. SCC 651, held inapplicable. D

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. Z2-23 of
1997.

From the Judgment and Order dated 2.2.95 of the Orissa High Court
in 0.J.C. Nos. 2502/90 and 82 of 1991. E

V.R. Reddy, Additional Solicitor General, Tara Chandra Sharma,
and P. Parmeswaran for the Appellant.

Ms. Indira .Tai Singh, Raj Kumar Gupta, Rajesh, H.P. Sharma and
B.B. Das for the Respondents. F

The Judgment of the Court was delivered by

PATTANAIK, J. Leave granted.

This appeal by special leave is directed against the award passed by G
., >._
the Industrial Tribunal, Bhubaneshwar in Industrial Disputes Case No. 13
., of 1988 and the judgment of the Orissa High Court in O.J.C. No. 2502 of
1990, whereunder the Orissa High Court refused to interfere with the
award of the Industrial Tribunal in exercise of power under Article 226 of
r
' the Constitution. Though the award relates to different items of demand H
"I
58 SUPREME COURT REPORTS [1997] 1 S.C.R.

A but in this appeal Mr. Reddy, the Additional Solicitor General restricted
his submission to the direction of the Tribunal to regularise 425 N.M.R.
workers which were Item Nos. 1 and 3 of the workers. union.

The Government of India in the Ministry of Labour in exercise of
the powers conferred upon them under Clause (d) of sub-section (1) and
B sub-section (2)( a) of Section 10 of the Industrial Disputes Act referred the
dispute for adjudication by the Industrial Tribunal to the following effect:

"Whether the following demands raised by Rehabilitation
Employees' Union of the management of Dandakaranya Project,
c Koraput, are justified, if so, to what relief the concerned workmen
are entitled to and from what date."

Demands No. 1 and 3 with which we are concerned are as under :

"1. Regularisation of all muster roll workers who have been working
D from 1958 onwards after completion of 240 days with all consequential
benefits of such regularisation.

3. Stoppage of retrenchment of all workers of Dandakaranya Project
and absorption of all muster roll workers after their regularisation in other
E Central Government organisation through Central Government Surplus
Cell as is done in case of regular employees of Dandakaranya Project."

The appellant management took the stand before the Tribunal that
the reference itself was incompetent as the Dandakaranya Project is not an
industry. So far as the demands of the N.M.R. workers are concerned, the
p management took the stand that the project itself having been wound up
and there being no necessity for further continuance of the project which
had been taken up by the Government of India on humanitarian considera-
tion for rehabilitation of the refugees from Pakistan the question of
regularisation of the N.M.R. workers does not arise. The Union on the
other hand took the stand that the plea of the management that no work
G is available for the N.M.R. workers is not correct and as such, N.M.R.
workers are being employed in several construction and irrigation works
and, therefore, the project authorities have the obligation of regularising
the service who have been working since 1950. The Industrial Tribunal
negatived both the contentions raised on behalf of the management and
H came. to hold that the project is an Industry. It further came to hold that
M.O.D. PROJECTv. REHABILITATION EMPLOYEES UNION [PATTANAIK, J.] 59

J the claim for regularisation of 425 N.M.R. employees is justified and they A
would not be retrenched and the project authorities through the Govern-
ment of India should find out the ways and means to regularise them either
under the Central Government or the concerned State Governments or
under Public Sector Undertakings of the Central Government. When the
award of the Tribunal was assailed in the High Court by moving an B
application under Article 226 of the Constitution, the High Court came to
the conclusion that the award does not contain any error of law which
could be corrected by issuance of writ of certiorari in exercise of power
under Article 226 of the Constitution and accordingly the Writ Petition
filed by the Management stood dismissed.
c
Mr. V.R. Reddy, learned Additional Solicitor General appearing for
the appellant contends that the rehabilitation project undertaken by the
Government of India to rehabilitate the refugees from Pakistan was in
discharge of the sovereign function of the Government and, therefore,
cannot be held to be an industry and consequently neither the reference D
was competent nor the Tribunal had any jurisdiction to examine the
demands raised by the employees union. Having examined the aforesaid
contention of Mr. Reddy, learned Additional Solicitor General and having
scrutinised the materials on record and the nature of duties discharged by
the workers and in view of the decision of this Court in Bangalore Water
Supply case it is difficult for us to accept the contention raised by learned E
Additional Solicitor General. Bearing in mind the dominant nature of the
activities of the project and the nature of duties discharged by the workers
in the project we are of the considered opinion that the Dandakaranya
Project is an industry within the meaning of Section 2G) of the Industrial
Disputes Ast and the conclusion of the Tribunal in this respect is unas- F
sailable.

Mr. Reddy, learned Additional Solicitor General then contended
that the project was for the limited purpose of rehabilitating the refugees
from Pakistan and the said purpose having been achieved and the project G
itself having been wound up and its assets and liabilities having been passed
on to the State of Orissa and State of Madhya Pradesh there do not exist
regular posts with the project authorities so as to consider the question of
regularisation of 425 N.M.R. workers and therefore, the ultimate con-
clusion of the Tribunal on this score is wholly unsustainable in law. H
60 SUPREME COURT REPORTS (1997] 1 S.C.R.

A Ms. Indira J aisingh, learned senior counsel appearing for the respon-
dent workers, on the other hand argued with vehemence that these N.M.R.
workers having spent their major part of life in serving under the project,
it is the constitutional obligation of the project authorities or the Govern-
ment of India to get these workers absorbed in some departments of the
Government of India or in any Public Sector Undertakings and, therefore,
B the impugned direction of the Tribunal is wholly justified. The learned
senior counsel further urged that even in the project itself there exist
sufficient vacancies against which these N.M.R. workers could be
regularised and the appellant- therefo~e, is not justified in contending that
there do not exist any vacancies for considering the regularisation of these
C N.M.R. workers.

Before we examine the correctness of the rival submissions it would
be appropriate to notice that when this matter came up before this Court
on 18.9.95 the Court had called upon the appellant to explore the pos-
D sibility of the 425 N.M.R. employees being adjusted in any other project of
the Government of India or in the concerned State Governments. The
aforesaid direction had been given bearing in mind the nature of direction
given by the Tribunal. Pursuant to the aforesaid direction of this Court the
appellant as well as the Government of India took certain steps for explor-
ing the possibilities of regularising the N.M.R. workers in any other
E projects and a detailed affidavit has been filed indicating in inability of the
Union Government to absorb these N.M.R. workers on regular basis in any
other department of Government of India or in any Public Sector Under-
takings. After going through the affidavits filed on behalf of the appellant
as well as the Government of India we are satisfied that steps have been
F taken duly and bona fide by the authorities of the project as well as the
competent authority of the Government of India and inspite of their best
efforts and persuasion its has not been possible to absorb 425 N.M.R.
workers in any of the department of the Government or in any Public
Sector Undertakings, in view of the relevant rules and regulations and in
view of the situation prevailing in those organisations. In this view of the
G matter the only question which requires consideration by this Court is
whether the impugned direction of the Tribunal in the circumstances as
found by it are at all sustainable in law. ,;.,

The Tribunal after elaborately discussing the evidence on record
H came to the conclusion as under :
M.O.D. PROJECTv. REHABILITATION EMPLOYEES UNION [PATTANAIK, J.] 61

)
"(a) At present there are 425 N.M.R employees in the employment A
of the D.D.A. for whom there is no sufficient work for absorption as
regulars.

(b) The Dandakaranya Development Authority is in the process of
being wound up since it has competed its work of rehabilitating displaced
persons in the project area. B

. (c) The assets of the Project have been transferred by the D.D.A. to
the concerned States, namely, the State Governments of Madhya Pradesh
and Orissa.

(d) The 425 employees have been working in the project since many
c
years and most of them would not be eligible to secure fresh employment
elsewhere.

(e) All the work charged employees after an agitation made by them
,, . were regularised while the N.M.R. employees were not regularised. D
(f) The bulk of the N.M.R. employees do not have any work in the
project though the works in which they had been engaged are continuing
under the respective State Government by the State Governments did not
take them along with the works."
E
Even after coming to the conclusion that the project has been wound
up and there are no employment facilities for these N.M.R. workers for
regular absorption yet the Tribunal issued the direction requiring the
project authorities to find out work for the N.M.R. workers who have been
working in the project continuously for more than 240 days. It may be F
stated that even though the project has been wound up and its assets and
liabilities have been transferred to the State of Orissa and State of Madhya
Pradesh yet on account of an interim order passed by this Court the 425
NMR workers are sittiog idle and getting wages to the tune of Rs. 1.50 lacs
per month which is undoubtedly an unnecessary financial strain en the
public exchequer. It is no doubt true that in the interest of these N.M.R. G
i .A
workers who have spent a considerable period with the project authorities,
possibility of their absorption on regular basis should be explored but even
after exploring such possibility if the concerned authorities failed in their
attempt, in our considered opinion it would not be appropriate for a Court
to issue mandamus in that regard and thus the Tribunal was wholly in error H
_(

62 SUPREME COURT REPORTS [1997) 1 S.C.R.

A in issuing the impugned direction. As has been stated earlier, while the
matter was pending in this Court pursuant lo the interim direction of this
Court the concerned authorities explored the possibility of absorption of
these N.M.R. workers either under the Central Government or under any
Public Sector Undertakings or in the respec.tive· State Governments of
Orissa and Madhya Pradesh but affidavit has been filed indicating how they
B failed in their attempt to get these N.M.R. workers absorbed on regular
basis and we have already held that the attempt was bona fide made and
yet the authorities have failed to get these N.M.R. workers absorbed on
regular basis.

C Ms. Indira Jaisingh, the learned senior counsel, however, in course
of her argument relied upon a decision of this Court in the case of G.
Govinda Rajulu v. Andhra Pradesh State Constmction C01poration Limited
and Anotlw; (1986) Supp Supreme Court Cases 651 wherein this Court
had issued direction to the State of Andhra Pradesh to,absorb the
D employees of the Andhra Pradesh State Construction Corporation Limited
whose services stood terminated on account of closure of the Corporation.
But in the aforesaid case neither there has been any discussion on any
question of law nor any circumstances have been indicated under which
the direction was given. This being the position the aforesaid decision
cannot .be of universal application in all cases where there has been a
E closure of the Project which resulted in termination of the employees.
Under the Industrial Disputes ·Act if an industry is closed the employees
thereof are entitled to compensation as provided under Section 25(fft) of
the Industrial Disp\)tes Act. During the pendency of this appeal on behalf
of the Unio,1 a Scheme has been framed seeking 100 months' full pay as ,.
F compensation, the Scheme being called the Golden Handshake Scheme,
but even the said Scheme was found'to be unworkable and the concerned
Ministry filed an affidavit indicating the reasons for not implementing the
said Scheme. On the admitted position that the bal1dakaranya Project has
been completely wound up since 1990 and these N.M.R. workers would
have been otherwise retrenched but for the interim order of this Court in
G consequence of which the project authorities have been paying every month
to these workers to the tune of Rs. 1.50 lacs without getting them engaged
in any work, we think that any direction to pay compensation in terms of
the Scheme will not be in the interest of jmtice. But, however, the workers
would be entitled to their rightful dues on account of closure of the project
H as envisaged under Section 25(fft) of the Industrial Disputes Act.
)
M.O.D. PROJECTv. REHABILITATION EMPLOYEES UNION [PATIANAIK, J.] 63

In the circumstances we hold that the direction issued by the A
Tribunal to regularise 425 N.M.R. workers is wholly unsustainable in law
and we accordingly set aside the same. The High Court committed an error
in not interfering with the aforesaid direction of the Tribunal. The award
of the Industrial Tribuna~ so far as it relates to 425 N.M.R. workers is
accordingly set aside and we hold that these N.M.R. workers should be
entitled to compensation as provided unde.r Section 25(fff) of the Industrial B
Disputes Act. The interim order passed by this court in relation to these
N.M.R. workers stands vacated. The appeal is accordingly allowed. But in
the circumstances there will be no orders as to costs.

v.s.s. Appeals are allowed.