Full Judgment Text
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PETITIONER:
RADHU K. KAKDE OF BOMBAY INHABITANT, BOMBAY
Vs.
RESPONDENT:
UNION OF INDIA & ORS.
DATE OF JUDGMENT11/12/1985
BENCH:
ERADI, V. BALAKRISHNA (J)
BENCH:
ERADI, V. BALAKRISHNA (J)
MISRA, R.B. (J)
KHALID, V. (J)
CITATION:
1986 AIR 291 1985 SCR Supl. (3) 822
1986 SCC (1) 400 1985 SCALE (2)1261
ACT:
Payment of Bonus Act, 1965 section 32(iv), scope of
Whether the Canteen Stores Department (India) under the
Ministry of Defence is an "establishment" engaged in any
industry carried on by or under the authority of any
Department of the Central Government and therefore, covered
by the provisions of section 32(iv) of the Act.
HEADNOTE:
Prior to July 1, 1942, canteen facilities had been
provided to the armed forces of the country by a company
known as "Canteen Contractors’ Syndicate". On June 13, 1942
the defence department took over the business of the said
company and it was run by the Government of India under the
title and name "Canteen Stores Department". After partition
of the country, the Canteen Stores Department of undivided
India was wound up and its terminal profits were distributed
between India and Pakistan and India’s share formed the
working capital for the Canteen Stores Department (India),
which was formally inaugurated as a "Government of India
Undertaking" for a period of three years in the first
instance commencing from January 1, 1948. The recruitment
rules for the various categories of services of the Canteen
Stores Department (India) were notified by the president by
the Ministry of Defence letter dated June 28, 1973. By
another letter dated January 28, 1969, Government orders as
applicable to defence (Civilians) were made applicable to
the Canteen Stores Department (India) employees in toto
automatically from the date of their applications to Defence
(Civilians). Canteen Stores Department (India) was allowed
to tender military credit notes for payment of railway
freight by the Government of India (Ministry of Railways)
Memorandum dated February 28, 1971 addressed to the Ministry
of defence. When the question of applicability of section
32(iv) of the Payment of Bonus Act, 1965 came up before the
Division Bench of the High Court of Bombay, the High Court
held that the exemption provided in that section is
attracted inasmuch as the Canteen Stores Department is an
establishment engaged in an industry carried on by or under
the authority of a department of a Central Government. Hence
the appeal by special leave.
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Dismissing the appeal, the Court,
^
HELD: In the light of all the facts pertaining to the
history, organizational structure, exercise of functional
control by Government authorities and the special nature of
service rendered by the Canteen Stores Department (India) to
the defence forces of the country, it is an "establishment"
engaged in an industry carried on by or under the authority
of a department of the Central Government namely, the
Ministry of Defence. [826 C-E]
Rashtriya Mill Mazdoor Sangh, Nagpur v. The Model
Mills, Nagpur and Anr., [1985] 1 S.C.R. 751 applied.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 484 of
975.
From the Judgment and Order dated 25.6.1973 of the
Bombay High Court in Special Civil Appln. No. 1189 of 1968.
Jitendra Sharma for the Appellant.
M.S. Gujaral, G.D. Gupta and R.N. Poddar for the
Respondents.
The Judgment of the Court was delivered by
BALAKRISHNA ERADI, J. In this appeal by special leave
against the judgment of a Division Bench of the High Court
of Bombay, the only question raised is whether the
provisions of the Payment of Bonus Act, 1965 (hereinafter
called the ’Act’) are applicable to the employees of the
Canteen Stores Department. The answer to this question will
depend upon whether the Canteen Stores Department is an
’establishment’ engaged in any industry carried on by or
under the authority of any department of the Central
Government; that is because Section 32(iv) of the Act lays
down that "Nothing in this Act shall apply to - employees
employed by an establishment engaged in any industry carried
on by or under the authority of any department of the
Central Government or a State Government or a local
authority." In the judgment under appeal, the High Court has
held that the exemption provided for in Section 32(iv) is
attracted inasmuch as the Canteen Stores Department is an
establishment engaged in any industry carried on by or under
the authority of a department of the Central Government. The
correctness of the said conclusion recorded by the High
Court is assailed by the appellant in this appeal.
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After bestowing our careful consideration to all
aspects of the case we are clearly of opinion that the view
taken by the High Court is perfectly correct and that this
appeal has only to be dismissed. That the Canteen Stores
Department is engaged in an industry is not in dispute
before us and the sole question is whether the said industry
is carried on by or under the authority of any department of
the Central Government. For a determination of the said
question one has to examine inter alia the history, origin
and organisational structure of the establishment, which are
the authorities exercising financial, administrative and
executive control over it and the rules that govern its
functioning.
The High Court has in its judgment set out in elaborate
detail all the relevant facts pertaining to the origin and
development of this Department right from the period of
Second World War up till the present time. It is unnecessary
for us to recapitulate in this judgment all those materials
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in full. However, we shall refer to certain salient features
emerging from the record produced in the case which
according to us conclusively go to show that the Canteen
Stores Department is an establishment engaged in an industry
carried on by or under the authority of a department of the
Central Government.
Prior to July 1, 1942, canteen facilities had been
provided to the armed forces of the country by a company
known as "Canteen Contractors’ Syndicate." By a Notification
(Annexure ’A’) dated June 13, 1942 published by the Defence
Department in the Gazette of India, the business of the said
company was taken over by the Government of India and it was
to be run by the Government under the name "The Canteen
Stores Department." As and from the date of taking over i.e.
July 1, 1942, the Government assumed control of the
company’s business and undertook to meet all liabilities of
the company as existed on the date of the taking over. This
was how the Canteen Stores Department came into being and it
was continuing to function as such up till the date of the
partition of the country. After partition of the country,
the Canteen Stores Department of undivided India was wound
up and its terminal profits were distributed between India
and Pakistan and India’s share formed the working capital
for the Canteen Stores Department (India). By a letter dated
December 19, 1947 issued by the Ministry of Defence,
Government of India to the Quartermaster General (India)
sanction of the Governor General was conveyed to the
inauguration of Canteen Stores Department (India) as a
’Government Undertaking’ for a period of three years in the
first instance commencing from January 1, 1948. The Services
were to comprise:-
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(i) Canteen Services (India) Board of Control.
(ii) Canteen Section as a part of Q/Coord in QMG’s
Branch Army Headquarters (India).
(iii) Canteen Stores Department (India).
The duties and functions of the three bodies were to be as
set out in the Annexure to the said letter. Subsequently, by
another letter dated October 27, 1950, the sanction of the
President was conveyed to the continuance of Canteen
Services (India) inclusive the Canteen Stores Department
(India) as a Government of India Undertaking to function
under the control of the Ministry of Defence.
A Study Group appears to have been constituted to
examine the organisational set up of the Canteen Stores
Department (India) and based on the recommendations of the
said Study Group, Canteen Services (India) was reorganized
and besides the three wings mentioned earlier an Executive
Committee of the Board of Control was also set up by the
letter dated April 17, 1969 issued by the Government of
India, Ministry of Defence to the Chief of the Army Staff.
Detailed instructions regarding the policy to be pursued in
regard to procurement, storage, distribution, disposal of
stores and fixation of wholesale and retail prices were
issued by the Government of India to the Chief of the Army
Staff by the letter (Annexure ’E’), dated August 29, 1969
and it was as per these instructions that the Canteen Stores
Department was carrying on its activities. It is noteworthy
that this letter was issued with the concurrence of the
Ministry of Finance (Defence) and this is specifically
stated in the last paragraph thereof.
By the notification (Annexure ’F’) dated February 1,
1966, issued by the Ministry of Law in exercise of the
powers conferred by clause (1) of Article 299 of the
Constitution, various Officers of the Canteen Stores
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Department (India) designated therein were authorised to
enter into contracts on behalf of the President of India.
The Notification states that contracts for local purchases
could be entered into by the Chairman Board of
Administration and that contracts and deeds relating to
supply or purchase for the Canteen Stores Department (India)
and leases of lands and buildings belonging to a department
could also be executed by the Chairman Board of
Administration.
The recruitment rules for the various categories of
services of the Canteen Stores Department (India) were
notified
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by the President by the Ministry of Defence letter dated
June 28, 1973 - Annexure ’G’. By the letter dated January
28, 1969, addressed by the Army Headquarters to the
Chairman, Board of Administration, Canteen Stores Department
(India), it was intimated that Government orders as
applicable to Defence (Civilians) should be made applicable
to the Canteen Stores Department (India) employees in
automatically from the date of their applications to Defence
(Civilians). That the Government had complete control over
the surplus generated by the department and that it could be
distributed only with the sanction of the President is clear
from the letter dated January 9, 1975 - Annexure ’I’ issued
by the Ministry of Defence to the Chief of the Army Staff.
The canteen Stores Department (India) was allowed to tender
military credit notes for payment of railway freight by the
Government of India (Ministry of Railways) Memorandum dated
February 20, 1971 addressed to the Ministry of Defence.
In the light of all these facts pertaining to the
history, organisational structure, exercise of functional
control by Governmental authorities and the special nature
of service rendered by it to the Defence forces of the
country, we have no hesitation to hold that the High Court
was clearly right in holding that the Canteen Stores
Department (India) is an ’establishment’ engaged in an
industry carried on by or under the authority of a
department of the Central Government namely, the Ministry of
Defence.
The scope of the expression "establishment engaged in
any industry carried on by or under the authority of any
department of the Central Government or State Government or
local authority" occurring in Section 32(iv) has been
explained in a recent decision of this Court in Rashtriya
Mill Mazdoor Sangh, Nagpur v. The Model Mills, Nagpur and
Anr., [1985] 1 S.C.R. 751, to which judgment two of us
(Eradi J. and Khalid J.) were parties. On an application of
the interpretation given to the expression in that judgment,
the present case clearly falls within the scope of Section
32 (iv) of the Act in view of the special and exclusive
nature of the service rendered by the Canteen Stores
Department (India) to the defence personnel for which
purpose alone the "Industry" is being carried on by the
establishment.
We accordingly, confirm the judgment of the High Court
and dismiss this appeal. There will be no order as to costs.
S.R. Appeal dismissed.
827