Full Judgment Text
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CASE NO.:
Appeal (civil) 224-226 of 2003
PETITIONER:
State of Karnataka & Ors.
RESPONDENT:
KGSD Canteen Employees Welfare Association & Ors.
DATE OF JUDGMENT: 03/01/2006
BENCH:
S.B. Sinha & P.P. Naolekar
JUDGMENT:
J U D G M E N T
W I T H
CIVIL APPEAL NOS. 449-468 OF 2003 & 4180-82 OF 2003
S.B. SINHA, J:
Both the State of Karnataka and K.G.S.D. Canteen Employees
Welfare Association are in appeal before us aggrieved by and dissatisfied
with the judgments and orders dated 29.05.2002 and 30.50.2002 passed by a
Division Bench of the Karnataka High Court in Writ Appeal Nos.5690-5692
of 2000 and 4613-32 of 2000.
WRIT PROCEEDINGS
The First Respondent herein is an Association of the employees of the
Karnataka Government Secretariat Departmental Canteen. The Respondent
Nos.2 and 3 are its members. They filed a writ petition before the Karnataka
High Court, inter alia, contending that the said canteen having been run by
the State Government for the benefit of the secretariat employees and 74
employees working therein having completed more than 10 years of service
were in effect and substance the employees of the State Government itself,
although they were termed as ’employees of the canteen’. Further
contention of the respondents herein was that their wages were absolutely
meagre being little more than the minimum wages, but despite several
representations made by them, they were not paid the same salary as was
payable to the employees of the State who were similarly situated.
The Appellant herein rejected their request for grant of scale of pay
and other service benefits applicable to the Government servants, inter alia,
on the premise that they were not its employees.
HIGH COURT
A learned Single Judge of the High Court opined that the canteen can
be equated to the Government Hospitality Organization where the canteen
facilities are made available and consequently directed the Appellant to
implement the notification dated 22.6.1996 which was applicable in relation
to the Government Hospitality Organization, as far as possible to the said
canteen employees with such revisions as are permissible under law as on
the said date.
The learned Single Judge opining that the employees of the canteen
are employees of the State Government directed :
"The second prayer of the petitioners is to declare
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them as Government Servants. In this regard I deem it
proper to modify the relief by issuing a direction to the
Government to regularize the services of the petitioners
in the following manner :
Government is directed to regularize the services
of such of those petitioners who have put in ten years of
service subject to the Government satisfaction of
qualification if any for the post held by them and keeping
in view the long services rendered by them.
It is declared that the petitioners are the employees
of the Government and are entitled for pay parity as per
Annexure-O with revision from time to time.
The petitioners have approached this Court in the
year 1996 and the petition is heard and disposed of in the
year 2000. Petitioners have been provided some increase
in the wages from time to time. In these circumstances, I
deem it proper that the petitioners are not to be given any
arrears for the past period and the direction is to with
effect from 1.1.2000 and not for the earlier period. The
arrears from 1.1.2000 is to be made available to the
petitioners within three months from the date of receipt
of this order."
Appeals having been preferred by the State thereagainst, a Division
Bench of the High Court disposed of the appeals modifying the judgment of
the learned Single Judge as regard the date of regularization of their services
as also payment of back wages, directing :
"(i) The effective date from which the pay-scales
and other service benefits should be extended to the
employees of KGSD Canteen by regularizing their
service is changed from 01.01.2000 to 29.05.2002."
The learned Single Judge as also the Division Bench despite the fact
that the Appellant herein had denied and disputed the relationship of
employer and employee between it and the employees of the canteen,
proceeded to determine the said question on the basis of various documents
produced before it.
PRESENT APPEALS
The State of Karnataka has filed Civil Appeal Nos.224-226 of 2003
and 449-468 of 2003, questioning the impugned judgment in its entirety
whereas the K.G.S.D. Canteen Employees Welfare Association preferred
Civil Appeal Nos.4180-82 of 2003 questioning that part of the judgment
whereby the judgment and order of the learned Single Judge was modified
restricting the benefit of regularization from the date of the judgment and
back wages from 29.05.2002 instead of 01.01.2000.
CONTENTIONS OF THE PARTIES
Mr. P.P. Rao, the learned Senior Counsel appearing on behalf of the
Appellants, would, inter alia, submit that the High Court committed a
serious error in passing the impugned judgment insofar as it misconstrued
and misinterpreted various Government orders as regard establishment and
management of the canteen issued in their proper perspective. The High
Court, Mr. Rao urged, furthermore misdirected itself in passing the
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impugned judgment insofar as it failed to take into consideration that the
canteen was not required to be run by the State Government in terms of any
statute or otherwise.
Mr. Naveen R. Nath, the learned counsel appearing on behalf of the
respondents herein, on the other hand, would support the judgment of the
High Court contending that a finding of fact has been arrived at by the High
Court that there existed a relationship of employer and employee between
the State and the concerned employees as the State exercised total control
over them and, therefore, this Court should not interfere therewith.
It was contended that the employees of the canteen in view of Article
14 of the Constitution of India, were entitled to parity in wages with that of
the employees of the State Government for the period they had worked and,
furthermore, they having been in such employment for a long time their
services have rightly been directed to be regularized.
SCHEME
The canteen was being run by private contractors for a long time. In
the year 1974, the State of Karnataka intended to run the canteen by a
committee, consisting of ten persons, six of them representing the
Government and the remaining four representing the Association as
mentioned in order bearing No. GAD 106 DBM dated 19th November, 1974.
Amenities and facilities, e.g., premises, furniture, cooking utensils, crockery,
cutlery etc. for running the canteen were to be provided by the State only for
a period of one year. Some of the relevant provisions laid down in the
Scheme for running the said canteen were as under :
"An outright grant of Rs. 25,000 (Rs. Twenty five
thousand only) is sanctioned towards working expenses,
namely, initial purchase of provisions, salaries of staff to
be appointed like cooks, services, etc\005
The grant of Rs.25,000 (Rupees Twenty five thousand
only) will be debited to the new sub-heard "IV Grant to
the Karnataka Govt., Secretariat Canteen (Non Plan)"
"under the major, minor, and Group sub-Head" "288-
Social Security and Welfare-E-Other social Security and
Welfare Programmes & Others "Programmes-C. Welfare
of Government Employees" \026 pending re-appropriation
of savings under the above major head.
The Chairman of the Committee is requested to
take action to start the canteen.
The working of the Canteen under the above
arrangement would be reviewed at the end of the one
year and then the future set up shall be decided."
The State by reason thereof, thus, made a provision for grant of
Rs.25,000/-. In terms of the said scheme, all the furniture and equipments
which were handed over to the committee were required to be accounted for
and returned to the Government upon the closure of the canteen. The
employees were appointed, indisputably, by the committee on an ad hoc
basis/daily wages.
It, furthermore, appears that the Government had sanctioned grant in
aid from time to time. The management of the said canteen was handed over
to the Respondent Association. Constitution of the Managing Committee
was being changed on a regular basis. In the order dated 27.7.2000 issued
by the Government of Karnataka, it was stated :
"\005This canteen is running under constant loss for the
past few years and consequently Government had to
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sanction Grant-in-aid a few times. These Grant-in-aids
were sanctioned keeping in view the welfare of the
Secretariat Employees. In this background, all the
members of the Management Committee have tendered
their resignation to Government with a request to make
alternate arrangements in view of the fact that they are
unable to run the canteen on "No Profit No Loss" basis
and also considering the fact that Government has not
agreed to give further Grant-in-aid to the Managing
Committee. In this background, a meeting was convened
under the chairmanship of Additional Chief Secretary to
Government to consider making alternate arrangements
for running the canteen. Finally in a meeting convened
on 23.2.2000 under the chairmanship of Secretary to
Department of Personnel & Administrative Reforms, it
was decided to handover the Management of the canteen
to Karnataka Government Secretariat Employees
Association temporarily for a period of one year
commencing from 6.4.2000 and it is also proposed to
continue the existing Grant-in-aid and other facilities to
Karnataka Government Secretariat Employees
Association for running the canteen. Apart from this, it
is also proposed to provide the services of six secretariat
employees (Junior assistants & assistants) for supervising
the affairs of the canteen by treating them as "on other
duty" for a period of one year. These proposals were
examined and accordingly order was issued as given
below :
ORDER NO. DPAR 5 DSW 2000, BANGALORE,
DATED : 27.7.2000
Keeping in view the interest/welfare of Karnataka
Government Secretariat Employees, sanction is accorded
to handover the Management of the Karnataka
Government Secretariat Canteen to Karnataka
Government Secretariat Employees Association w.e.f.
4.8.2000 temporarily for a period of one year, from the
Management Committee constituted by the
Government\005"
The facilities and terms and conditions were also stated therein,
some of which are as under :
"6) While taking over the Management of the Canteen,
the Karnataka Government Secretariat Employees
Association should prepare a list of furnitures,
utensils, L.P.G. etc. and receive a proper
acknowledgement from the Management
Committee and submit a copy to the Government.
7) It is the responsibility of the Karnataka
Government Secretariat Employees Association to
keep all the assets of the canteen like furnitures,
utensils, gas etc. safe and secure.
8) Karnataka Government Secretariat Employees
Association can take the assistance of DPAR
(Executive-A) section for maintenance and repair
of canteen building."
In an affidavit filed before us, it is stated that the Karnataka
Government Secretariat Employees Association which was running the
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canteen from 04.08.2000 to 31.03.2003 by a letter dated 10.03.2003,
expressed its inability to run the canteen beyond 31.03.2003 and, thus, the
canteen services were closed from 01.04.2003. It is further stated that the
State Government demolished the main canteen building pursuant to the
Government Note dated 04.08.2003. Certain litigations had thereafter been
initiated before several authorities. A writ petition had also been filed by the
Association before the High Court, which was marked as Writ Petition
No.41207 of 2004 seeking direction to make the balance payment of LIC
premium and contribution towards EPF for the period from 01.01.2003 to
31.03.2003.
This Court evidently is not concerned with the pending litigation but
we have noticed the said fact only for the purpose of showing that the State
intended to run the canteen departmentally through a committee, but
according to the State, the committee has a distinct and different existence or
different entity than the Government.
The fact situation obtaining in this case already suggests that the State
had no intention to run and maintain the canteen as a department. Had the
intention of the State been to run the said canteen as one of its departments,
the question of giving any grant or for that matter making of a provision for
return of the furniture and equipments would not have arisen.
EMPLOYEES OF A CANTEEN - STATUS
The question as to whether the employees of the canteen are
employees of the State or whether their services should be directed to be
regularized or not, in view of several decisions of this Court would be
dependent upon the issues as to whether the canteens are required to be
made in terms of the provisions of a statute or otherwise. Admittedly, the
State had no statutory compulsion to run and maintain any canteen for its
employees.
In The Saraspur Mills Co. Ltd. v. Ramanlal Chimanlal and Others
[(1974) 3 SCC 66] where the Management was under a statutory obligation
in terms of Section 46 of the Factories Act and the rules made thereunder to
maintain the canteen for the workers which was being run by a Co-operative
Society wherewith the Management had nothing to do. This Court relied
upon its earlier decision in Basti Sugar Mills Ltd. v. Ram Ujagar [(1964) 2
SCR 838] holding:
"The above case was treated as an authority for the
proposition that an employee engaged in a work or
operation which was incidentally connected with
the main industry was a workman if other
requirements of the statute were satisfied and that
the malis in that case were workers. It was pointed
out that the bungalows and gardens on which the
malis in that case worked were a kind of amenity
supplied by the mills to its officers and on this
reasoning the malis were held to be engaged in
operation incidentally connected with the main
industry carried out by the employer. The High
Court in Ahmedabad Mfg. & Calico Printing Co.
Ltd. v. Workmen had relied on the above ratio and
come to the conclusion that the workers in order to
come within the definition of an "employee" need
not necessarily be directly connected with the
manufacture of textile fabrics. The decision in
Basti Sugar Mills case1 was treated as binding in
the former case."
In Parimal Chandra Raha and Others v. Life Insurance Corporation of
India and Others [1995 Supp (2) SCC 611], relying upon a large number of
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decisions of this Court including M.M.R. Khan v. Union of India [1990
Supp SCC 191], in the peculiar facts and circumstances, it was held that the
canteen which was being run by a Co-operative Society became a part of the
establishment of the Corporation. The said decision was arrived at upon
lifting the corporate veil of the cooperative society. In that case, although
there was no statutory liability on the part of the Respondent therein, to
maintain a canteen for their employees, this Court observed:
"What emerges from the statute law and the
judicial decisions is as follows:
(i) Whereas under the provisions of the Factories
Act, it is statutorily obligatory on the employer to
provide and maintain canteen for the use of his
employees, the canteen becomes a part of the
establishment and, therefore, the workers
employed in such canteen are the employees of the
management.
(ii) Where, although it is not statutorily obligatory
to provide a canteen, it is otherwise an obligation
on the employer to provide a canteen, the canteen
becomes a part of the establishment and the
workers working in the canteen, the employees of
the management. The obligation to provide a
canteen has to be distinguished from the obligation
to provide facilities to run canteen. The canteen
run pursuant to the latter obligation, does not
become a part of the establishment.
(iii) The obligation to provide canteen may be
explicit or implicit. Where the obligation is not
explicitly accepted by or cast upon the employer
either by an agreement or an award, etc., it may be
inferred from the circumstances, and the provision
of the canteen may be held to have become a part
of the service conditions of the employees.
Whether the provision for canteen services has
become a part of the service conditions or not, is a
question of fact to be determined on the facts and
circumstances in each case.
Where to provide canteen services has become a
part of the service conditions of the employees, the
canteen becomes a part of the establishment and
the workers in such canteen become the employees
of the management.
(iv) Whether a particular facility or service has
become implicitly a part of the service conditions
of the employees or not, will depend, among
others, on the nature of the service/facility, the
contribution the service in question makes to the
efficiency of the employees and the establishment,
whether the service is available as a matter of right
to all the employees in their capacity as employees
and nothing more, the number of employees
employed in the establishment and the number of
employees who avail of the service, the length of
time for which the service has been continuously
available, the hours during which it is available,
the nature and character of management, the
interest taken by the employer in providing,
maintaining, supervising and controlling the
service, the contribution made by the management
in the form of infrastructure and funds for making
the service available etc.
[Emphasis supplied]
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The said decision, however, was distinguished by a 3-Judge Bench of
this Court in Employees in relation to the Management of Reserve Bank of
India v. Workmen [(1996) 3 SCC 267] stating that M.M.R. Khan (supra)
was decided on the facts of that case. Although, a question was raised
therein that the propositions 3 and 4 laid down in Parimal Chandra Raha
(supra) are very wide and require reconsideration and appropriate
modification, this Court refused to go thereinto holding that it was not
required to do so therein as the Tribunal had proceeded to follow M.M.R.
Khan (supra) only, holding:
"\005On the facts of this case, in the absence of any
statutory or other legal obligation and in the
absence of any right in the Bank to supervise and
control the work or the details thereof in any
manner regarding the canteen workers employed in
the three types of canteens, it cannot be said that
the relationship of master and servant existed
between the Bank and the various persons
employed in three types of canteens. 166 persons
mentioned in the list attached to the reference are
not workmen of the Reserve Bank of India and that
they are not comparable employees employed in
the Officers’ lounge. Therefore, the demand for
regularisation is unsustainable and they are not
entitled to any relief. We hold that the award
passed by the Tribunal is factually and legally
unsustainable."
[Emphasis supplied]
A new gloss to the question, however, was given by this Court in
Indian Petrochemicals Corporation Ltd. v. Shramik Sena and Others [(1999)
6 SCC 439]. This Court following the judgment M.M.R. Khan (supra) and
Reserve Bank of India (supra) opined that the ratio sought to be laid down in
Parimal Chandra Raha (supra) that "the workers employed in such canteen
are the employees of the Management" is not correct and further opined that
the "workmen of a statutory canteen would be the workmen of the
establishment for the purpose of the Factories Act only and not for all other
purposes". [Emphasis supplied]
However, in Indian Overseas Bank v. I.O.B. Staff Canteen Workers’
Union and Another [(2000) 4 SCC 245] whereupon the High Court relied
upon, in the peculiar facts and circumstances of the said case, this Court
relied on M.M.R. Khan (supra) and Parimal Chandra Raha (supra) and
distinguished Indian Petrochemicals Corporation Ltd. (supra) holding:
"\005A cumulative consideration of a few or more of
them, by themselves or in combination with any
other relevant aspects, may also serve to be a safe
and effective method to ultimately decide this
often agitated question. Expecting similarity or
identity of facts in all such variety or class of cases
involving different type of establishments and in
dealing with different employers would mean
seeking for things, which are only impossible to
find.
The decision in Indian Petrochemical case does
not, in our view, lay down any different criteria
than those declared in the other decisions for
adjudging the issue, except that it had also
considered specifically the further question as to
the effect of a declaration, that the workers of a
particular canteen, statutorily obligated to be run
render no more than to deem them to be workers
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for the limited purpose of the Factories Act and not
for all purposes. In the case before us, the claim is
not that there was any such statutory obligation
and the entire consideration proceeded only on the
footing that it is a non-statutory recognised canteen
falling within the second of the three categories
envisaged in the earlier decisions and the Tribunal
as well as the Division Bench of the High Court
endeavoured to find out whether the obligation to
run was explicit or implicit, on the facts proved in
this case."
A Constitution Bench of this Court in Steel Authority of India Ltd.
and Ors. v. National Union Waterfront Workers and Ors. [(2001) 7 SCC 1]
noticed the following circumstances under which contract labour could be
held to be the workman of the principal employer:
"An analysis of the cases, discussed above, shows
that they fall in three classes: (i) where contract labour is
engaged in or in connection with the work of an
establishment and employment of contract labour is
prohibited either because the industrial adjudicator/court
ordered abolition of contract labour or because the
appropriate Government issued notification under
Section 10(1) of the CLRA Act, no automatic absorption
of the contract labour working in the establishment was
ordered; (ii) where the contract was found to be a sham
and nominal, rather a camouflage, in which case the
contract labour working in the establishment of the
principal employer were held, in fact and in reality, the
employees of the principal employer himself. Indeed,
such cases do not relate to abolition of contract labour
but present instances wherein the Court pierced the veil
and declared the correct position as a fact at the stage
after employment of contract labour stood prohibited;
(iii) where in discharge of a statutory obligation of
maintaining a canteen in an establishment the principal
employer availed the services of a contractor the courts
have held that the contract labour would indeed be the
employees of the principal employer.
Such observation, however, was made in the light of the provisions
contained in Contract Labour (Regulation and Abolition) Act, 1970.
Rajendra Babu, J., as the learned Chief Justice then was, speaking for
a Division Bench of this Court in Barat Fritz Werner Ltd. v. State of
Karnataka [(2001) 4 SCC 498] observed:
"\005Of course, in Indian Petrochemicals Corpn.
Ltd. v. Shramik Sena a new gloss was given to this
decision by stating that the presumption arising
under the Factories Act in relation to such workers
is available only for the purpose of the Act and no
further. However, in Employers of Reserve Bank
of India v. Workmen this Court struck a different
note. Again this Court in Indian Overseas Bank v.
I.O.B. Staff Canteen Workers’ Union considered
the effect of the decisions in M.M.R. Khan,
Parimal Chandra Raha, Reserve Bank of India and
Indian Petrochemicals Corpn. Ltd. v. Shramik
Sena and it was made clear that the workers of a
particular canteen statutorily obligated to be run
render no more than to deem them to be workers
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for limited purpose of the Factories Act and not for
all purposes and in cases where it is a non-
statutory recognised canteen the court should find
out whether the obligation to run was implicit or
explicit on the facts proved in that case and the
ordinary test of control, supervision and the nature
of facilities provided were taken note of to find out
whether the employees therein are those of the
main establishment\005"
However, in that case, the court was only concerned with a
notification abolishing contract labour under Contract Labour (Regulation
and Abolition) Act.
Yet again in Hari Shankar Sharma and Others v. Artificial Limbs
Manufacturing Corpn. and Others [(2002) 1 SCC 337], this Court, following
Barat Fritz Werner Ltd (supra) opined:
"The submission of the appellants that because the
canteen had been set up pursuant to a statutory
obligation under Section 46 of the Factories Act
therefore the employees in the canteen were the
employees of Respondent 1, is unacceptable. First,
Respondent 1 has disputed that Section 46 of the
Factories Act at all applies to it. Indeed, the High
Court has noted that this was never the case of the
appellants either before the Labour Court or the
High Court. Second, assuming that Section 46 of
the Factories Act was applicable to Respondent 1,
it cannot be said as an absolute proposition of law
that whenever in discharge of a statutory mandate,
a canteen is set up or other facility is provided by
an establishment, the employees of the canteen or
such other facility become the employees of that
establishment. It would depend on how the
obligation is discharged by the establishment. It
may be carried out wholly or substantially by the
establishment itself or the burden may be
delegated to an independent contractor. There is
nothing in Section 46 of the Factories Act, nor has
any provision of any other statute been pointed out
to us by the appellants, which provides for the
mode in which the specified establishment must
set up a canteen. Where it is left to the discretion
of the establishment concerned to discharge its
obligation of setting up a canteen either by way of
direct recruitment or by employment of a
contractor, it cannot be postulated that in the latter
event, the persons working in the canteen would be
the employees of the establishment. Therefore,
even assuming that Respondent 1 is a specified
industry within the meaning of Section 46 of the
Factories Act, 1946, this by itself would not lead to
the inevitable conclusion that the employees in the
canteen are the employees of Respondent 1."
In National Thermal Power Corporation Ltd. v. Karri Pothuraju and
Others [(2003) 7 SCC 384], Rajendra Babu, J., speaking for himself and
Raju, J., however, held that in view of a catena of decisions of this Court it is
aptly clear that where in discharge of a statutory obligation of maintaining a
canteen in an establishment the principal employer availed the services of a
contractor the contract labour would indeed be the employees of the
principal employer.
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The same bench in Mishra Dhatu Nigam Ltd. and Others v. M.
Venkataiah and Others [(2003) 7 SCC 488], having regard to the provisions
contained in Rules 65 and 71 of Andhra Pradesh Factories Rules, 1950,
reiterated the same view.
In Haldia Refinery Canteen Employees Union and Others v. Indian
Oil Corporation Ltd. and Others [(2005) 5 SCC 51], Ashok Bhan, J.,
speaking for a Division Bench of this Court, distinguished Indian
Petrochemicals Corporation Ltd. (supra) opining:
"\005The management unlike in Indian
Petrochemicals Corpn. Ltd. case is not reimbursing
the wages of the workmen engaged in the canteen.
Rather the contractor has been made liable to pay
provident fund contribution, leave salary, medical
benefits to his employees and to observe statutory
working hours. The contractor has also been made
responsible for the proper maintenance of
registers, records and accounts so far as
compliance with any statutory
provisions/obligations is concerned. A duty has
been cast on the contractor to keep proper records
pertaining to payment of wages, etc. and also for
depositing the provident fund contributions with
the authorities concerned. The contractor has been
made liable to defend, indemnify and hold
harmless the employer from any liability or
penalty which may be imposed by the Central,
State or local authorities by reason of any violation
by the contractor of such laws, regulations and also
from all claims, suits or proceedings that may be
brought against the management arising under or
incidental to or by reason of the work
provided/assigned under the contract brought by
the employees of the contractor, third party or by
the Central or State Government authorities."
It was specifically noticed that the workmen of the Canteen and the
contractor had entered into independent settlements without impleading the
owner or occupier of the factory as a party therein which also went to show
that the workmen were treating themselves the workmen of the contractor
and not that of the owners.
We have referred to the aforementioned decisions in order to show
that in each of the aforementioned cases the industrial adjudicator was
required to apply the relevant tests laid down by this Court in the fact
situation obtaining therein. Most of the cases referred to hereinbefore were
considered by this Court in the peculiar facts and circumstances obtaining
therein and, thus, it is even not proper for the industrial adjudicator to apply
the ratio of one decision to the exclusion of other without considering the
facts and circumstances involved therein. The law, however, does not
appear to be settled as to whether even in a case where the employer is
required to run and maintain a canteen in terms of the provisions of the
statute, the employees of the canteen would automatically be held to be the
workers of the principal employer for all intent and purport and not for the
purpose of the Factories Act alone. We, however, are not concerned with
the said question in this matter and refrain ourselves from making any
observation in respect thereof.
We, however, intend to point out that in a case of this nature even an
industrial adjudicator may have some difficulty in coming to the conclusion
that employees of a canteen for all intent and purport are employees of the
principal employer.
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Question of issuance of direction to regularize the services of the
employees stand absolutely on a different footing to which we shall advert to
a little later.
MAINTAINABILITY OF THE WRIT PETITION
In a case of this nature, where serious disputed questions fact were
raised, in our opinion, it was not proper for the High Court for embark
thereupon an exercise under Article 226 of the Constitution. The High Court
in its judgment relied upon a large number of decisions of this Court, inter
alia, in Reserve Bank of India (supra) and State Bank of India & Ors. v.
State Bank of India Canteen Employees’ Union (Bengal Circle) and Ors.
[AIR 2000 SC 1518] ignoring the fact that all such disputes were
adjudicated in an industrial adjudication.
The High Court arrived at a finding that the Committee was merely a
cloak of the Government and an arm of the State. When allegations are
made that a body is a cloak and/or smoke screen or a camouflage, the
adjudication of such a disputed question should be left to the Industrial
Court. In Steel Authority of India Ltd. (supra), as noticed hereinbefore, this
Court analysed the decision of this Court to say that they fall in three classes.
It was observed :
"We have quoted the definitions of these terms above
and elucidated their import. The word "workman" is
defined in wide terms. It is a generic term of which
contract labour is a species. It is true that a combined
reading of the terms "establishment" and "workman"
shows that a workman engaged in an establishment
would have direct relationship with the principal
employer as a servant of master. But what is true of a
workman could not be correct of contract labour. The
circumstances under which contract labour could be
treated as direct workman of the principal employer have
already been pointed out above."
The legal position was reiterated in Rourkela Shramik Sangh v. Steel
Authority of India Ltd. and Another [(2003) 4 SCC 317] stating:
"There cannot, thus, be any doubt whatsoever that
the appellants were fully aware of the fact that they
were required to approach the Industrial Tribunal
in terms of the provisions of the Industrial
Disputes Act for ventilating their grievances. The
submission of Mr Shanti Bhushan to the effect that
the High Court acts as an authority while
exercising its power under Article 226 of the
Constitution of India cannot be countenanced. The
order of this Court dated 16-10-1995, as quoted
supra, is absolutely clear and unambiguous. The
term "authority" used in this Court’s order dated
16-10-1995 must be read in the context in which it
was used. The appellant in terms thereof could
seek a reference which would mean a reference in
terms of Section 10 of the Industrial Disputes Act.
It could also approach "the authority in accordance
with law" which would mean authority under a
statute. The High Court, by no stretch of
imagination, can be an authority under a statute."
It was, furthermore, reiterated that a disputed question of fact
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normally would not be entertained in a writ proceeding.
To the same effect is the decision of this Court in Workmen of Nilgiri
Coop. Mkt. Society Ltd. v. State of T.N. and Others [(2004) 3 SCC 514]
wherein this Court considered in detail the relevant factors for determining
the relationship of employer and workman. It was held that the burden of
proof was upon the workman. In what circumstances, control test taken
recourse to by the High Court can inter alia be applicable for determining a
disputed question of relation of employer and employee has also been
considered therein at some details. It was firmly laid down that whether a
contract is a sham or camouflage is not a question of law but of fact.
Hussainbhai, Calicut v. The Alath Factory Thezhilali Union, Kozhikode and
Others [(1978) 4 SCC 257], whereupon the High Court has placed strong
reliance, was held to be falling under Class (ii) envisaged in Steel Authority
of India Ltd. (supra).
We may, moreover, notice that in Workmen of the Canteen of Coates
of India Ltd. v. Coates of India Ltd. and Others [(2004) 3 SCC 547], a
Division Bench of this Court observed:
"Learned counsel for the appellant strenuously
urged that the respondent Company has the
statutory obligation to provide a canteen in the
premises and therefore, the employees of the
canteen must be presumed to be the workmen
employed by the respondent Company and no one
else. Learned counsel referred to certain decisions
for this purpose. It is sufficient for us to state that
some requirement under the Factories Act of
providing a canteen in the industrial establishment,
is by itself not decisive of the question or sufficient
to determine the status of the persons employed in
the canteen. The effect, if any, relating to
compliance with the provisions of the Factories
Act is a different matter which does not arise for
consideration in the present case, for which reason
we express no opinion on any such question. It is
sufficient for us to say that the finding recorded by
the learned Single Judge also leaves no escape
from the conclusion that these workmen cannot be
held to be workmen employed by the respondent
Company."
Albeit in a different context, this Court in U.P. State Bridge
Corporation Ltd. and Others v. U.P. Rajya Setu Nigam S. Karamchari Sangh
[(2004) 4 SCC 268] emphasised the need of adjudication of a disputed
question of fact before Industrial Court stating:
"The only reason given by the High Court to
finally dispose of the issues in its writ jurisdiction
which appears to be sustainable, is the factor of
delay, on the part of the High Court in disposing of
the dispute. Doubtless the issue of alternative
remedy should be raised and decided at the earliest
opportunity so that a litigant is not prejudiced by
the action of the Court since the objection is one in
the nature of a demurrer. Nevertheless even when
there has been such a delay where the issue raised
requires the resolution of factual controversies, the
High Court should not, even when there is a delay,
short-circuit the process for effectively
determining the facts. Indeed the factual
controversies which have arisen in this case remain
unresolved. They must be resolved in a manner
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which is just and fair to both the parties. The High
Court was not the appropriate forum for the
enforcement of the right and the learned Single
Judge in Anand Prakash case had correctly refused
to entertain the writ petition for such relief."
Yet recently, this Court in Rajasthan State Road Transport Corpn.
And Others v. Zakir Hussain [(2005) 7 SCC 447] in the context of the
jurisdiction of the Industrial Court vis-‘-vis the Civil Court highlighted the
object of the Industrial Disputes Act stating:
"The object of the Industrial Disputes Act, as its
preamble indicates, is to make provision for the
investigation and settlement of industrial disputes,
which means adjudication of such disputes also.
The Act envisages collective bargaining, contracts
between union representing the workmen and the
management, a matter which is outside the realm
of the common law or the Indian law of
contract\005"
Keeping in view of the facts and circumstances of this case as also the
principle of law enunciated in the above referred decisions of this Court, we
are, thus, of the opinion that recourse to writ remedy was not apposite in this
case.
REGULARISATION
The question which now arises for consideration is as to whether the
High Court was justified in directing regularization of the services of the
Respondents. It was evidently not. In a large number of decisions, this
Court has categorically held that it is not open to a High Court to exercise its
discretion under Article 226 of the Constitution of India either to frame a
scheme by itself or to direct the State to frame a scheme for regularising the
services of ad hoc employees or daily wages employees who had not been
appointed in terms of the extant service rules framed either under a statute or
under the proviso to Article 309 of the Constitution of India. Such a
scheme, even if framed by the State, would not meet the requirements of law
as the executive order made under Article 162 of the Constitution of India
cannot prevail over a statute or statutory rules framed under proviso to
Article 309 thereof. The State is obligated to make appointments only in
fulfilment of its constitutional obligation as laid down in Articles 14, 15 and
16 of the Constitution of India and not by way of any regularization scheme.
In our constitutional schemes, all eligible persons similarly situated must be
given opportunity to apply for and receive considerations for appointments
at the hands of the authorities of the State. Denial of such a claim by some
officers of the State times and again had been deprecated by this Court. In
any view, in our democratic polity, an authority howsoever high it may be
cannot act in breach of an existing statute or the rules which hold the field.
It is not necessary for us to dilate further on the issue as recently in
State of U.P. v. Neeraj Awasthi and Ors. [2005 (10) SCALE 286], it has
been clearly held that the High Court has no jurisdiction to frame a scheme
by itself or direct framing of such a scheme by the State.
In Mahendra L. Jain and Others v. Indore Development Authority and
Others [(2005) 1 SCC 639], it was categorically held:
"The question, therefore, which arises for
consideration is as to whether they could lay a
valid claim for regularisation of their services. The
answer thereto must be rendered in the negative.
Regularisation cannot be claimed as a matter of
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right. An illegal appointment cannot be legalised
by taking recourse to regularisation. What can be
regularised is an irregularity and not an illegality.
The constitutional scheme which the country has
adopted does not contemplate any back-door
appointment. A State before offering public
service to a person must comply with the
constitutional requirements of Articles 14 and 16
of the Constitution. All actions of the State must
conform to the constitutional requirements. A
daily-wager in the absence of a statutory provision
in this behalf would not be entitled to
regularisation. (See State of U.P. v. Ajay Kumar
and Jawaharlal Nehru Krishi Vishwa Vidyalaya v.
Bal Kishan Soni.)"
In Zakir Hussain (supra), even in relation to the temporary employee,
it was stated:
"The respondent is a temporary employee of the
Corporation and a probationer and not a
government servant and, therefore, is not entitled
for any protection under Article 311 of the
Constitution. He was a party to the contract. In
view of the fact that the respondent was appointed
on probation and the services were terminated
during the period of probation simpliciter as the
same were not found to be satisfactory, the
appellant Corporation is not obliged to hold an
enquiry before terminating the services. The
respondent being a probationer has got no
substantive right to hold the post and was not
entitled to a decree of declaration as erroneously
granted by the lower courts and also of the High
Court."
PARITY IN THE SCALE OF PAY
The contention that at least for the period they have worked they were
entitled to the remuneration in the scale of pay as that of the government
employees cannot be accepted for more than one reason. They did not hold
any post. No post for the canteen was sanctioned by the State. According to
the State, they were not its employees. Salary on a regular scale of pay, it is
trite, is payable to an employee only when he holds a status. [See Mahendra
L. Jain and Others (supra)]
The High Court was, thus, not correct in holding that the members of
the First Respondent could be treated at par with the Hospitality
Organization of the State of Karnataka. Such equation is impermissible in
law. In the Hospitality Organization of the State, the posts might have been
sanctioned. Only because, food is prepared and served, the same would not
mean that a canteen run by a Committee can be equated thereto.
SUBSEQUENT EVENT
Subsequent events which had taken place is also worth taking note of.
The fact remains that the canteen now is closed. The judgment and order of
the High Court, thus, otherwise also cannot be implemented. The employees
concerned, therefore, cannot be directed to be reinstated in service. We have
noticed, hereinbefore, that other proceedings have been initiated by them.
The said proceedings may be disposed of in accordance with law.
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CONCLUSION
For the reasons aforementioned, we are of the opinion that the
impugned judgment cannot be sustained, which is set aside accordingly.
Consequently the appeals filed by the State Government being Civil Appeal
Nos. 224-226 of 2003 and 449-468 of 2003 are allowed and that of the First
Respondent being Civil Appeal Nos. 4180-82 of 2003 are dismissed.
However, in the facts and circumstances of this case, the parties shall bear
their own costs.