# 7 S.C.R. 406 NATIONAL ALUMINIUM CO. LTD. & ORS v. ANANTA KISHORE ROUT & ORS

- **Citation:** [2014] 7 S.C.R. 406
- **Court:** Supreme Court of India
- **Decided:** 2014-05-08
- **Case number:** Civil Appeal No. 5989 of 2008
- **Bench:** Surinder Singh Nijjar, A.K. Sikri
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/7-s-c-r-406-national-aluminium-co-ltd-ors-v-ananta-kishore-rout-ors-30166
- **Pages:** 31

## Headnote

SERVICE LAW:
c
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
0
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
E
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
G in State of Orissa.
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
H
406
NATIONAL ALUMINIUM CO. LTD. v. ANANTA
407
KISHORE ROUT & ORS.
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
B
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
0
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
H
408
SUPREME COURT REPORTS
[2014] 7 S.C.R.
A
Allowing the appeals, the Court
HELD: 1. No doubt, th~ school was established by
the appellant. The appellant was providing necessary
infrastructure and adequate financial support inasmuch
8 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 w

## Text

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A
B
[2014) 7 S.C.R. 406
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
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
0
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
E
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
G in State of Orissa.
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
H
406
NATIONAL ALUMINIUM CO. LTD. v. ANANTA
407
KISHORE ROUT & ORS.
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
B
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
0
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
H
408
SUPREME COURT REPORTS
[2014] 7 S.C.R.
A
Allowing the appeals, the Court
HELD: 1. No doubt, th~ school was established by
the appellant. The appellant was providing necessary
infrastructure and adequate financial support inasmuch
8 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]
2. In order to determine the existence of employeremployee 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
E 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
409
KISHORE ROUT & ORS.
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]
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 .
0
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
0 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;
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
411
KISHORE ROUT & ORS.
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.
A.K. Bindal & Anr. v. Union of India & Ors. (2003) 5 SCC
163: 2003 (3) SCR 928; State of West Bengal & Anr. v. West
Bengal Registration Copywriters Association and Anr. (2009)
14 SCC 132: 2009 (8) SCR 334; Nihal Singh & Ors. v. State
E
of Punjab & Ors (2013) 10 Scale 162 - referred to.
F
Case Law Reference :
2003 (3) SCR928
Referred to
Para 17
2009 (8) SCR334
Referred to
Para 17
G
(2013) 1 O Scale 162
Referred to
Para 17
2007 (9) SCR 130
Relied on
Para 28
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
5989 of 2008.
H
412
SUPREME COURT REPORTS
· [2014] 7 S.C.R.
A
From the Judgment and Order dated 21.12.2006 of the
High Court of Orissa at Cuttack in OJC. No. 11761 of 2001. ·
WITH
C.A. Nos. 5992 and 5993 of 2008.
B
P.P. Rao, Ashok Gopta, K.K. Venugopal, Jaideep Gupta
· Manu Nair, Anuj Berry, Tanuj Bhushan (for Suresh A. Shroff &
Co,), K.L. Janjani, Dip_ak Kumar Jena, Minakshi Ghosh Jena,
Harish Shukla, Tarun Kumar, Shivnath Mahanta, Anurag
c Pandey for the appearing parties.
The Judgment of the Court was delivered by
A.K. SIKRI, J. 1. The Appellant herein, National Aluminium
Company Limited (NALCO) has established two schools for the
D 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
E 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,
F 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.rnvolved, both these writ petitions were
G 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. Presen
H
NATIONAL ALUMINIUM CO. LTD. v. ANANTA
413
KISHORE ROUT & ORS. [A.K. SIKRI, J.]
appeals, filed by NALCO, question the validity of the aforesaid
A
judgment of the High Court.
3. We may first take note of those facts which ~re not in
dispute. These are as follows:
NALCO is a Public Sector Enterprise under the
8
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
C
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, o
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
E
said schools admittedly are unaid~d 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
F
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
G
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
H
414
SUPREME COURT REPORTS
[2014) 7 S.C.R. .
A 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,
B 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
Se,cretary-cum-correspondent were to be the nominees of
c 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
0 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
E 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
F
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."
G
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 iri these
schools.
H
NATIONAL ALUMINIUM CO. LTD .. v. ANANTA
415
KISHORE ROUT & ORS .. [A.K. SIKRI, J.]
7. These agreen:ients came to an end by efflux of time in
A
1the year 1998. It appears that CCMT was not interested in
continuing with the aforesaid arrangement. This led NALCO to
find another organizatjon for running and managing the schools.
It is how SVS came into the picture which agreed tG manage
both the schools. Accordingly Agreement dated 18th May, 1990
B
was entered into by NALCO with SVS. As per the Agreement,
name of the school was changed from Chinmaya Vidyalaya
Damahjodi to Sa~aswati Vidya Mandiar (SVM). As per this
agreement NALCO agreed to pay Rs.i,OOO/- per month to the
SVS towards its supervision charges wh.ich was enhanced from
C
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
D
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
E
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
F
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
G
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416
SUPREME COURT REPORTS
[2014) 7 S.C.R.
A
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
8
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,
C 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
D the students, by NALCO is also maintained. Other functions
which are specifically assigned to the Managing Committee,
as per this Agreement, are as follow:
E
F
"(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
G the schools as provided in clause 25 thereof, which is to the
H
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
0
NATIONALALUMINIUM CO. LTD. v. ANANTA
417
KISHORE ROUT & ORS)A.t<. SIKRI, J.]
Managing Committee in due c.ourse may review the
A
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
8
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 · C
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 ~nd Conditions of Service Rules, 1995' (Rules'
hereinafter). The Rules so framed were approved by the
D
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
E
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
F
of teaching and other staff incJuding promotion, pay fixation,
seniority, grant of leave, disciplinary action, retirement,
termination etc. This has been so demonstrated by NALCO by
G
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
H
418
SUPREME COURT REPORTS
[2014) 7 S.C.R.
A 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
8 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
C 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
D 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
E 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
F 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.
G
H
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
NATIONAL ALUMINIUM CO. LTD. v. ANANTA
419
KISHORE ~OUT & ORS. [A.K. SIKRI, J.]
employees and therefore NALCO cannot be treated as the
A
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
8
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
C
CCMl\ 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
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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 dee·p and
pervasive control over the schools. It is the NALCO, which
pays the salary, Provident fund, and makes the medical
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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
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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
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· employees, the school was given grant and was converted
into a High.er Secondary School. Even though a managing
committee was constituted for the said school,
representatives of trade unions and of guardians and
parents as well a~ the officials of the corporation were also
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[2014) 7 S.C.R.
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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
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and ultimately, directed the corporation to accept the
petitioners to be its employees.
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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.
1
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 i
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 coun.sel for NALCO, and Mr. B.N. Rath,
NATIONAL ALUMINIUM CO. LTD. v. ANANTA
421
KISHORE ROUT & ORS. [A.K. SIKRI, J.]
·learned counsel appearing for SVS in both the Writ
A
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
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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
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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
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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
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responsibility as a model employer which can be termed as a
step towards "Corporate Social Responsibility". /1..s a "Jelfare
measure, NALCO wanted to provide this facility in the 'wo
NALCO campuses. However, by providing land, bu1!d'ng and
infrastructure and setting up of the school, all of it has been
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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 · G
good corporate governance. He argued that the real test in such
a case was to examine as to which authority was the appointin•
authority of the employees, and was fixing terms and conditions
of the employment, including fixing their service conditions I'
pay fixation, seniority, grant of leave, promotion etc. When
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SUPREME COURT REPORTS
{2014] 7 S.C.R.
A these powers were with the Managing Committee or the SVS
.. which was so specifically provided in the service rules as well,
B
· 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
C. 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 tha~ 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
D 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
F 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:
:G
(i) AK. Bindal & Anr. v. Union of India & Ors.; (2003) 5
sec 163;
(ii) State of West Bengal & Anr. v. West Bengal
Registration Copywriters Association and Anr.; (2009) 14
sec 132,
NATIONAL ALUMINIUM CO. LTD. v. ANANTA
KISHORE ~OUT & ORS. [AK. SIKRI, J.]
423
(iii) Nihal Singh & Ors. v. State of Punjab & Ors; (2013)
A
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
8
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
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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.
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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
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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
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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 wel~ as
full financial support on continuous basis. Further the schools
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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
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SUPREME COURT REPORTS
[2014] 7 S.C.R.
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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.
NATIONAL ALUMINIUM CO. LTD. v. ANANTA
425
KISHORE ROUT & ORS. [A.K. SIKRI, J.]
(vii) Documents show that day to day grievances of the
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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
8
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,
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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.
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Therefore, it would follow that NALCO is t.he real employer which
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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
E
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
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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 -
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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
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[2014] 7 S.C.R.
A 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
1
be done. This was so explained by formulating the following ;
6
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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
E 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.