Full Judgment Text
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PETITIONER:
ALL INDIA RAILWAY INSTITUTE EMPLOYEES’ ASSOCIA-TION THROUGH
Vs.
RESPONDENT:
UNION OF INDIA THROUGH THE CHAIRMAN
DATE OF JUDGMENT27/02/1990
BENCH:
SAWANT, P.B.
BENCH:
SAWANT, P.B.
MISRA RANGNATH
RAMASWAMY, K.
CITATION:
1990 AIR 952 1990 SCR (1) 594
1990 SCC (2) 542 JT 1990 (1) 319
1990 SCALE (1)295
ACT:
Railway Institutes and Clubs--Employees--Whether enti-
tled to be treated on par with employees in Statutory Can-
teens run by Railway Administration.
HEADNOTE:
This petition under Article 32 of the Constitution of
India has been filed by an Association of about 2,000 em-
ployees working in 500 Railway Institutes and Clubs in
various parts of the country claiming that they should be
treated on the same par as the employees in the Statutory
Canteens run by the Railway Administration. In support of
their claim the petitioners while enumerating the range of
activities handled by them, they have attempted to draw a
parallel with the regular employees contending inter alia
that not only they receive grants-in-aid and a number of
facilities from the Govt., the Railway Board has always
treated these institutes and clubs as an integral part of
the Railways.
The Respondents resisted the petition stoutly and con-
tended that the Institutes and Clubs are managed by a Com-
mittee representing its membership which engages such staff
as is required and meets the cost of their wages and allow-
ances etc., that the Railways are not the principal employ-
ers of their staff, that they are not paid directly from the
Consolidated Fund of India and whatever facilities are
provided to them they are confined to the wholetime staff as
a special case and not on account of any obligation under
any law. On consideration of respective contentions and
documents on record while dismissing the petition, this
Court.
HELD: There is a material difference between the can-
teens run in the Railway establishments and the Institutes
and Clubs. The Institutes/ Clubs have to run on the member-
ship fees and fixed grants received from the Staff Benefit
Fund. The fund consists of receipts from the forfeited
provident fund and bonus, and of fines. The grant is made as
pointed out by the Respondents, to each Institute/Club at
the rate of
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Rs. 14 per capita of the non-gazetted staff employed at the
relevant establishment. Out of this contribution, only Rs.4
per capita are spent on the activities of the education.
relief in case of distress and sickness, sports, scouts
activities and for other miscellaneous purposes. There is
further no dispute that the wages and allowances of the
Staff of the Institutes/Clubs are paid by the
Institutes/Clubs themselves and they are not subsidised by
the Railway Administration as in the case of the statutory
and non-statutory recognised canteens. [600H] 160 [E-F & G]
On the facts, it cannot be held that there is a rela-
tionship of employer-employee between the Railway Adminis-
tration and the employees engaged in the Institutes and
Clubs. Neither law nor facts spell out such relationship. If
the present service conditions of these employees are unsat-
isfactory, the remedy lies elsewhere. [603B-C]
JUDGMENT:
CIVIL ORIGINAL JURISDICTION: Writ Petition No. 1389 of
1987.
(Under Article 32 of the Constitution of India).
G. Ramaswamy, Additional Solicitor General, M.K. Rama-
murthy, Mrs. Shyamala Pappu, K.K. Venugopal, Gobind Mukhoty,
M.A. Krishnamurthy, Ms. Chandan Ramamurthy, Dalveer Bhand-
ari, C. Ramesh, G.D. Gupta, L.K. Gupta, G. Venkatesh Rao,
Ms. A Subhashini, Ms. Susma Suri, C.V.S. Rao, P. Parmeshwa-
ran, Mrs. Urmila Kapoor, Krishna Prasad, Indra Makwana and
S.K. Jain, for the Appearing Parties.
The Judgment of the Court was delivered by
SAWANT, J. This petition is filed as stated in the
petition by an Association of about 2,000 employees working
in 500 Railway Institutes and Clubs in various parts of the
country. Their grievance, as in the case of the petitioners
in the matters pertaining the Railway Canteens, is that they
are not treated as railway employees. It is their case that
although the Institutes/Clubs in which they work are non-
statutory, they are on par with the employees in the statu-
tory canteens run in the Railway establishments proper.
According to them, the Railway Institutes and Clubs were set
up to provide recreational facilities to the railway employ-
ees. They are managed by Committees consisting of represen-
tatives of all the members of the Institutes/Clubs elected
periodically. The Institutes/Clubs have the following cate-
gory of employees: (1) Manager (2) Accountant (3) Clerk (4)
Librarian in-
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charge (5) Librarian (6) Watchman (7) Daftry (8) Watermen
(9) Canteen employees (10) Billiards Marker etc. These
employees are appointed by the Committee and their salaries
are paid out of the contributions received from the members
of the respective Institutes/ Clubs and the grants-in-aid
given by the Railway Board to the Institutes/Clubs. The
Committees of management is presided over by a president who
is the concerned Divisional Railway Manager or his nominee.
The Railway Administration has the right to dissolve or to
from an ad-hoc Committee.
2. According to the petitioners further, the Railway
Board has always treated the Institutes and Clubs as an
integral part of the Railways, since they not only receive
grants-in-aid but also other facilities from .the Govern-
ment. Section B of Chapter XXVIII of the Railway Establish-
ment Manual makes a special provision for the Institutes and
Clubs. Paragraph 2808 of the Manual states that a Railway
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Institute should be looked upon as a club provided by the
Railway, rent free for the benefit of its employees and
therefore, the Railway should provide everything which a
landlord ordinarily would, and the Institute should pay for
all that a tenant would usually be liable to pay. Paragraph
2809 states that the Railway Administration will bear (a)
the first cost of the building including the cost of elec-
tric installations with necessary furniture, roads, fences,
tennis courts and other play-grounds. Wherever possible a
garden will also be provided; (b) the cost of maintenance
and alterations.
In the case of tennis courts and play-grounds the Rail-
way Administration will bear only the cost of ordinary
engineering repairs. The said paragraph however requires
that the Institute funds should bear (a) the cost of roll-
ing, watering, grass-cutting and other maintenance charges
of play-grounds, other than engineering repairs; (b) the
cost of maintenance of its gardens and ornamental grounds;
(c) the cost of maintenance and renewal, whether partial or
complete, of electric installations (which include electric
fans) payable at a flat rate of 5 per cent per annum on the
capital cost of the installations; (d) the cost of electric
current consumed and hire of meter; (e) the occupier’s share
of municipal taxes for specific direct services rendered to
an Institute by a municipality such as conservancy, water
and the like taxes as distinct from taxes of a general
nature; (f) water charges calculated at so much per tap,
each Railway Administration fixing its own scale of charges.
In cases where large quantities of water are supplied by the
Railway Administration, as in the case of swimming baths,
the actual cost of water supplied should be recovered. Para-
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graph 2810 provide that: (i) no rent is recoverable in the
case of Railway buildings used as officers’ club provided
conditions stipulated para 1942-E are fulfilled; (ii) no
rent is recoverable in the case officers’ clubs if the
buildings are specially constructed against amounts specifi-
cally sanctioned by the Railway Board (iii) no rent is
recoverable in the case of clubs, if additional expenditure
is incurred in converting an existing building into a club
or providing anciliaries to make it suitable as a club. if
the expenditure is incurred with the specific approval of
the Railway Board and (iv) no rent is recoverable in the
case of clubs where the building is erected by the club at
its costs on Railway land. Paragraph 28 11 further provides
that: Class IV staff employed in Railway Institutes may be
given residential accommodation free of rent provided such
accommodation is either part and parcel of the Institute
building and its recognised out-houses, or is not required
for any other railway purpose, or cannot be rented to out-
siders and would otherwise lie vacant. According to para-
graph 28 13 the membership of the Institute/Club is option-
al. Paragraph 28 17 gives powers to the respective General
Managers to frame rules to suit local requirements of the
Railway Administrations and other circumstances of the
place.
The employees of the Institutes/Clubs are entitled to
free passes, and to get medical facilities provided by the
Railway Hospitals. The employees belonging to Class IV are
eligible for absorption in the Railways and for that purpose
they are given relaxation in age.
The petitioners, therefore, claim that they should be
treated on the same par as the employees in statutory can-
teens and non statutory canteens there being no difference
in their status.
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3. The petition is resisted on behalf of the respondent
Union of India. According to the respondents, the Institutes
and Clubs have their origin in the rules regarding Staff
Benefit Fund which is provided for in Chapter VIII of Rail-
way Establishment Code Vol. 1 (1985 edition). According to
the rules contained in this Chapter as clarified/ modified
by the administrative instructions from time to time. the
main objectives of the Fund are to provide additional ameni-
ties to the railway servants and their families in the
sphere of education, recreation, relief to the distressed,
financial assistance during sickness and development of
sports and scouting activities. The Fund consists of contri-
bution from Railway revenues at the rate of Rs. 14 per
capita of the sanctioned strength of non-gazetted employees
as on 3last March of each year. The contribution of Rs. 14
is broadly apportioned amongst
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various spheres of activities as under:
(i) (a) Education 2.50
(b) Recreation other than sports 2.00
(c) Relief of distress, sickness etc. 3.50
(d) Miscellaneous items 0.50
(ii) Sports activities 2.50
(iii) Scouts activities 1.00
(iv) Recreational facilities to officers 2.00
and supervisory staff
According to the respondents further, as per the provi-
sions of the Railway Establishment Code and the Establish-
ment Manual, the Institutes and Clubs are managed by a
committee representing its membership. It is the Managing
Committee which engages such staff as is required and meets
the cost of their wages and allowances. The conditions of
service including the scales of pay of the staff are decided
upon by the respective Managing Committees and hence they
vary from Institute to Institute and Club to Club. The cost
of the staff running the institute including the pay bill of
the staff is met by the Managing Committee from membership
fees and from grants received from the Staff Benefit Fund.
As will be evident from the apportionment of the per capita
grant among the various activities, only a sum of Rs.4 per
capita comes to the share of the recreational facilities.
The funds available for recreational facilities are further
limited because the membership of the Institutes/Clubs is
optional. These facilities further, in the nature of things,
are availed of by the members for a few hours beyond working
hours. The Managing Committees therefore, engage only part-
time staff. They engage full-time staff only when it is
considered absolutely necessary. There are about 449 Insti-
tutes and 332 Clubs and they have engaged about 1741 employ-
ees of whom about 887 are on full time basis, the rest being
engaged on part time basis. The whole-time employees are
allowed passes and Privilege Ticket Orders on a restricted
scale in terms of para 1526 of the Railway Establishment
Manual.
It is, therefore, contended on behalf of the respond-
ents, that the Railways are not the principal employers of
the staff engaged in the Institutes/Clubs and they have no
control whatsoever on it. The staff is not paid directly
from the Consolidated Fund of India. Whatever facilities are
provided to the whole-time staff are provided only as a
599
special case, and not on account of any obligation under any
law. It is also contended that in fact it is the Managing
Committees who have engaged the staff and they ought to have
been joined as parties to the petition. The respondent Union
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of India having no relationship with the employees, the
petition is liable to be dismissed on account of non-join-
der/mis-joinder of parties. The respondent have also ques-
tioned the locus standi of the present Association to file
the petition since according to them no such Association
exists.
4. The respondent further point out that the Managing
Committees of the Institutes/Clubs do not receive any subsi-
dy or loan from the Railways for meeting specifically the
wage bill of the employees as do the Managing Committees of
the statutory/non-statutory recognised canteens and, there-
fore, the present employees stand on a different footing
than that of the employees in the statutory/non-statutory
recognised canteens. In reply to the contention of the
petitioners that the rules framed for the constitution of
Managing Committees of the Institutes/Clubs give power to
the Railway Administration to dissolve the Managing Commit-
tees or to appoint ad hoc Committees, it is pointed out that
these rules are framed locally by General Managers of Zonal
Railways, Production Units etc. in terms of the provisions
contained in para 2817 of the Establishment Manual. They are
not uniform and not all rules so framed provide for either
the dissolution of the Managing Committee or appointment of
ad hoc Committee by the Railway Administration. The respond-
ents also deny that the Railway Board has treated Insti-
tutes/Clubs as an integral part of the Railways. It is also
pointed out that the Railway free-passes and privilege
ticket orders are given only to the full time employees as a
special case. But even they are given on a restricted scale.
As regards the medical facilities, again, it is pointed out
that it is given to the employees and not to their family
members or dependent relatives. As regards the facilities of
absorption in the Railways by relaxing the age limit, the
respondent points out that it is not only this staff but
also the staff of cooperative societies, canteen commission
bearers, vendors of departmental canteen who are eliteble
for such relaxation in age limit to the extent of the serv-
ice rendered in such organisation whichever is less, for
appointment in Group D categories. But they have to appear
before Railway Service Commissions/Railway Recruitment Board
alongwith casual labourors and substitutes, and they are
considered only after the eligible casual labourers and
substitutes are considered. It is lastly submitted on behalf
of the respondents that although there is no obligation on
the Railways, the Railways have issued administrative in-
structions to the Zonal Railways etc. that whenever it is
found
600
absolutely necessary by the Managing Committees of the
Institutes/ Clubs to employ staff on full time basis they
should be paid remuneration keeping in view the local market
conditions.
5. It is also the contention of the respondents that the
Railways are providing financial assistance/grants-in-aid
for various non-welfare activities and to non-railway agen-
cies such as private schools run in the railway colonies,
cooperative societies/banks etc. Since the employees engaged
in these activities/non-railway organisations do not ipso
facto become railway servants, the employees of these Insti-
tutes/Clubs can also not become the railway employees for
the same reason. The service in the railway Institutes/Clubs
is purely in the nature of private employment. On the other
hand, the railway employees are recruited according to the
rules of recruitment. They are subjected to rigorous stand-
ards with regard to age limit, educational qualifications,
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medical fitness, interviews, character verification etc. as
well as to stiff competition. To treat the employees in
Railway Institutes/Clubs as railway-employees would amount
to a back-door entry of these employees to Government serv-
ice without following the regular procedure. It is also
contended by them that the letters of appointment offered to
these employees by the respective Managing Committees make
it clear that they are not to be treated as railway serv-
ants. For all these reasons, these employees form a separate
class and they are not comparable with any other category of
staff of the Railways. It is also submitted on behalf of the
respondents that the analogy of the employees in railway
canteens is not applicable to these employees because the
status of the canteen employees is itself being contested by
the respondents. It is lastly contended that if this Court
deems it proper to treat the full time employees of the
Institutes/Clubs as railway servants it will have to be left
open to the Respondents to frame such rules as it considered
necessary for the efficient running of the Institutes/Clubs
and for engaging such staff as are considered necessary. If
the employees concerned are then directed to be absorbed
only subject to the requisite standards of age, educational
qualifications etc. and only such of them as are found
suitable, many of the present employees may be faced with
unemployment which will not be in the interests of the
employees themselves.
6. After considering the respective contentions of the
parties and the documents on record, we are of the view that
there is a material difference between the canteens run in
the Railway establishments, and the Railway Institutes and
Clubs. In the first instance, the canteens are invariably a
part of the establishments concerned. They
601
are run to render services during the hours of work since
the services, by their very nature are expected directly to
assist the staff in discharging their duties efficiently.
The lack of canteen-facilities is ordinarily bound to hamper
and interfere with, the normal working of the staff and
affect their efficiency. The importance of the services
rendered by the canteens to the staff in the day-to-day
discharge of their work therefore needs no further emphasis.
Suffice it to say that the canteen services are today re-
garded as a part and parcel of every establishment. So much
so that they have been made statutorily mandatory under the
Factories Act, 1948 in establishments governed by the said
Act where more than 250 workers are employed. The canteen-
services are thus no longer looked upon as a mere welfare
activity but as an essential requirement where sizable
number of employees work. That is why even the Railway
Administration has, by its Establishment Manual made a
provision for canteens even where the Factories Act does not
apply, and has laid down procedure for their registration
and approval and for extending to them almost the same
facilities and monetary assistance as in the case of the
statutory canteens. However, the same cannot be said of the
Institutes and Clubs. Although for them also the Railway
Establishment Manual makes provisions in the same Chapter
XXVIII dealing with Staff Welfare, the provisions are of a
materially different nature and pattern. In the first in-
stance, there is no provision either for subsidy or loan
directly from the funds of the Railway Administration. The
Institutes/Clubs have to run on the membership fees and
fixed grants received from the Staff Benefit Fund. The Fund
consists of receipts from the forfeited provident fund and
bonus, and of fines. The grant is made as pointed out by the
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Respondents, to each Institute/Clubs at the rate of Rs. 14
per capita of the non-gazetted staff employed at the rele-
vant establishment. Out of this contribution, only Rs.4 per
capita are spent on the activities of the Institutes and
Clubs, the rest of the amount being spent on education,
relief in case of distress and sickness, sports, scouts
activities and for other miscellaneous purposes. There is
further no dispute that the wages and allowances of the
staff of the Institutes/Clubs are paid by the
Institutes/Clubs themselves and they are not subsidised by
the Railway Administration as in the case of the statutory
and nonstatutory recognised canteens.
5-A. By their very nature further the services of the
Institutes/ Clubs are availed of beyond working hours only.
It is common knowledge that not all members of the Railway-
staff avail of them. One has to be a member to do so by
paying fees. The membership is also optional. That is why
most of the staff employed in the Institutes/
602
Clubs is part time. As has been stated by the respondents,
out of about 1741 employees engaged in 449 Institutes and
332 Clubs nearly half are part time employees. The services
rendered by the employees are not of a uniform nature. They
are engaged for different services with different, service
conditions according to the requirement. The
Institutes/Clubs further do not engage in uniform activi-
ties, the activities conducted by them varying depending
upon the infrastructure and the facilities available at the
respective places.
7. What is more importance as far as the issue involved
in this petition is concerned, is that the provision of the
Institutes/Clubs is not mandatory. They are established as a
part of the welfare measure for the Railway staff and the
kind of activities they conduct depend, among other things,
on the funds available to them. The activities have to be
tailored to the budgets since by their very nature the funds
are not only limited but keep on fluctuating. If the costs
of the activities go beyond the means, they have to be
curtailed. So also, while starting a new activity, it is
necessary to take into account its financial implications
and the capacity of the Institute/Club to raise the neces-
sary funds. The only varying component of the funds is the
membership fee which is uncertain.
8. If as contended by the petitioner Association the
workers engaged in these Institutes/Clubs are treated as
Railway employees, the danger is that these welfare activi-
ties which are otherwise encouraged by the Railway Adminis-
tration may in course’ of time shrink and cease altogether
for want of funds. This will not be in the interests of the
workers themselves. One cannot lose sight of the fact that
today the emoluments of government servants including those
of the Railway employees, may they belong to Class IV or to
a higher category, are substantial and inhibit fresh re-
cruitment. The services rendered by a government agency,
therefore, become costly and uneconomical. Compared to the
services which are rendered by the Institutes/Clubs and the
benefits which flow from them, an increase in their adminis-
trative expenditure which may result from granting the
status of the railway employees to their workers. will be
disproportionately high and forbidding. This will also have
a snow-bailing effect on other welfare activities carried on
by the Railways and similar activities carried on by all
other organisations. We also cannot lose sight .of fact that
the workers engaged in the welfare activities today are
drawn from the respective localities without restrictions of
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the qualifications of education, age etc. Whatever little
scope for employment is available to the local population at
the respective places may
603
also vanish with the cessation of these activities. After
all, the number of employees who may benefit by becoming
railway employees does not today exceed 887 who are the full
time employees scattered all over the country. But, they may
deprive many of their bread in the presenti and in the
future. For, as pointed out by the Respondents, if the
Railway Service Rules are made applicable, many of the
present employees will also have to face immediate unemploy-
ment. This is of course yet a larger related socio-economic
consideration.
9. On the facts placed before us which we have discussed
above, we are also not persuaded to hold that there is a
relationship o[ employer-employee between the Railway Admin-
istration and the employees engaged in the Institutes and
Clubs. Neither law nor facts spell out such relationship. If
the present service conditions of these employees are unsat-
isfactory, the remedy lies elsewhere.
lO. Since we are disposing of the petition on merits, it
is not necessary to deal with the legal contentions raised
on behalf of the Respondents that the petitioner Association
has no locus standi and that the petition is not maintain-
able for non˜joinder and/or misjoinder of the parties.
11. In the result, we dismiss the Writ Petition and
discharge the rule with no order as to costs.
R. N.J. Petition dismissed.
604