Jhar HC | Employees of Telco Recreation Club cannot claim parity in pay with employees of Telco Ltd.; HC quashes Labour Court’s order

Jharkhand High Court: S.N.Pathak, J., held that the employees of Telco Recreation Club cannot claim parity in pay and other benefits at par with the regular employees of Telco Ltd. The Bench held that,

“When the initial appointment letter of the workmen has not been issued by the petitioner-Management, the question of parity in pay etc. with the employees of the petitioner-Management does not arise.”

Factual Matrix of the Case

The petitioner Company-Telco Ltd., was a leading manufacturer and seller of automobiles in the Country. In 1958, the company had started a separate department under the name and style of “Telco Recreation Club” for carrying activities of welfare and recreation of its employees. The said Telco Recreation Club was a Society registered under Societies Act having a separate legal entity of its own with its own source of income, its own constitution and bye-laws and had no direct connection with the petitioner-company and the petitioner company, under its corporate responsibility, provide financial assistance to several Societies in the area including the said Club.

The case of the petitioner-company was that it had no control over TELCO Recreation Club, which was run and managed by a Managing Committee elected/ selected by its members, yet one Indra Deo Prasad on behalf of 21 persons employed in Telco Recreation Club made a claim of parity in pay and other benefits at par with the regular employees of Telco Ltd. It was also the stand of the company that the government of Bihar had found Telco Recreation Club to be an independent establishment and had made a reference being Ref. Case No. 06 of 1991 to Industrial Tribunal, Ranchi, which was never challenged or objected by the employees of the said Club and therefore, the petitioner-company could not be treated to be the employer of the workmen of Telco Recreation Club.

Decision by the Labour Court

 The Labour Court held that there existed a relationship of employer and employees between the parties, and Telco Recreation Club was a department/wing of the company, and that petitioner-company provided all facilities to said Club and had direct control over the Managing Committee of the said Club as the General Manager of Telco Ltd. was the President of the Club; the reference was maintainable. The Labour Court had further held that the concerned workmen were also permanent employees of  Teclo Ltd., and hence, they were entitled to get pay and other benefits at par with the employees of Telco Ltd. Accordingly, the issue was decided in favour of the workmen.

Findings of the Court

Considering the rival submission of the parties and on perusal of Judgments brought on record, the Bench reached the conclusion that the impugned Award suffered from patent illegalities and was based upon errors of law. Admittedly, there was no relationship of employer-employee between the petitioner-Management and the concerned workman. The Bench clarified,

“Neither in the appointment of workmen nor in the process of their engagement, the petitioner-Management has played any role, therefore, the industrial disputes against the petitioner-Management is wholly illegal and uncalled for.”

The concerned workmen were being governed by the rules, regulations and bye-laws of the Club and not the petitioner-Management. Even the disciplinary control was of the Club and not of the Management. Hence, the findings of the Tribunal were totally perverse and error of law. Finding force in the arguments of the petitioner-company that the Club was incorporated as a separate body and concerned workmen were admittedly appointed by the Club and not by the petitioner-Management, the Bench opined that the claim of the concerned workmen was not sustainable.

Reliance was placed by the Court upon the decision of Supreme Court in Bengal Nagpur Cotton Mills v. Bharat Lal, (2011) 1 SCC 635,  wherein it had held that two of the well-recognized tests to find out whether the contract labourers are the direct employees of the principal employer are-

  • Whether the principal employer pays salary instead of the contractor?
  • Whether the principal employer control and supervises the work of the employees?

Accordingly, the Bench held that in the instant case on both these counts, the workmen had failed to establish their case as they could not establish that they were working directly under control and supervision of the management, hence, the question of the employer-employee relationship did not arise at all.

Placing reliance on Bhuwanesh Kumar Dwivedi v. Hindalco Industries, (2014) 11 SCC 85,wherein, the Supreme Court had held that, “where Labour Court commits patent mistake in law in arriving at a conclusion contrary to law, the same can be corrected by the High Court. In the instant case, the Tribunal has committed a patent error of law to hold that the employer-employee relationship exists between the petitioner-Management and the concerned workman”; the Bench opined that

“In the instant case, the concerned workmen have sought for parity in pay and other benefits at par with the regular employees of TELCO Ltd. whereas the fact is that the petitioner-Management has never issued appointment letters to them rather these workmen were appointed by the Club, which is a separate entity.  When the initial appointment letter of the workmen has not been issued by the petitioner-Management, the question of parity in pay etc. with the employees of the petitioner-Management does not arise and as such the impugned Award suffers from patent illegalities and is fit to be interfered.”

In the backdrop of above, the impugned Award was quashed.  [Management of Motors Ltd. v. State of Jharkhand, 2021 SCC OnLine Jhar 413, decided on 18-06-2021]


Kamini Sharma, Editorial Assistant has reported this brief.


Appearance before the Court by:

For the Petitioner: Sr. Adv. Kamal Nayan Choubey, Sr.Adv. V.P. Singh, Adv.  Amit Kumar Das, Adv. Rashmi Kumar and Adv. Arun Kumar Singh

For the Respondents:     Sr. Adv. Ajit Kumar and Adv. Kumari Sugandha

For the State: GP-III O.P. Tiwari

Join the discussion

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.