Full Judgment Text
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PETITIONER:
PARIMAL CHANDRA RAHA & ORS.
Vs.
RESPONDENT:
LIFE INSURANCE CORPORATION OF INDIA & ORS.
DATE OF JUDGMENT29/03/1995
BENCH:
SAWANT, P.B.
BENCH:
SAWANT, P.B.
MAJMUDAR S.B. (J)
CITATION:
1995 AIR 1666 1995 SCC Supl. (2) 611
JT 1995 (3) 288 1995 SCALE (2)518
ACT:
HEADNOTE:
JUDGMENT:
SAWANT, J.:
1. The appellants - 42 workmen -working in the canteens
at four different offices of the respondent-Corporation
in Calcutta, are involved in the present proceedings. In
1985, they had approached this Court for certain reliefs by
a writ petition under Article 32 of the Constitution. By
its order of 19th July, 1986, this Court had directed them
to approach. the High (Court. hence they had withdrawn die
writ petition with liberty to move the High Court under
Article 226 of the Constitution, which they did and the
present appeal arises out of the said proceedings. Since on
behalf of the respondents an objection is raised that the
appellants have been claiming in these proceedings relief
which they had never prayed for in the writ petition before
the High Court, we may at the outset summarise the contents
of the writ petition filed by them in the High Court.
2. In para 2 of the writ petition, the appellants have
averred that they are canteen employees of the Corporation
and working in the canteens managed by the Corporation. In
para 3, they have stated that they are employed in the
canteens of the Corporation and some of them for decades,
since the inception of the Corporation and others for a
minimum of seven years, and are holding the designations
variously of Canteen General Manager, Canteen Manager-cum-
Salesman, Kitchen Clerk, Canteen Clerk, Halwai, Assistant
Halwai, Cook, Bearer, Wash-boy and Sweeper etc. In para 4
they have specified the four departmental canteens of the
Corporation where they have been working. In para 5, they
have averred there that they are paid at the rate much below
the rate at which canteen employees working under different
Government departmental canteens including those run by
statutory Corporations and Railways are paid. They have
also stated there that the employees of the canteens in
different Government offices and Railways throughout the
country are enjoying at least the pay-scales which are
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enjoyed by the peons of the respective offices. In para 6,
they have given the emoluments which the Class-IV employees
of the Corporation get which are between Rs.700/- and 800/-
per month against the wages they get as canteen employees
ranging from Rs. 100/- to Rs.200/per month. In paras 7 and
16 of the writ petition, to quote them verbatim, it is then
averred as follows:
"Your petitioners state that the employees and
the staffs of the respondent no. 1 at all its
establishments axe provided with facilities of
canteen by the respondents for more than few
decades and as such providing of canteen
facilities forms a condition of service of the
employees and staffs of the respondent no. 1.
Your petitioners state that by usage and cus-
tomary benefits, canteen facilities has become
the condition of service of the employees of
the respondent no. 1 and as such running of
the Canteen is incidental to the running
business and/or industry of the Life Insurance
Corporation of India [Respondent No. 1].
x x x x x
Your petitioners state that they are engaged
in the work of the canteen which
292
is incidentally connected with the main
industry of the respondent no.1 and as such
they are workmen working under the respondent
no. 1"
3. It is against the background of the said averments in
the main body of the writ petition that in paragraph 18
thereof they have averred that the respondent-Corporation
being an instrumentality of the State and being the State
within the meaning of Article 12 of the Constitution, cannot
deny them equal pay-scales with other canteen employees of
the Government departments/Railways and other statutory
Corporations or take a stand or policy different from that
followed by the Government department, Railways and other
instrumentalities of the State. With regard to pay-scales
of the canteen employees, they have stated there that till
date the respondent-Corporation has not framed any pay-scale
for the canteen employees and as such have acted in a
discriminatory manner violating Article 14 of the Constitu-
tion. Thereafter, in ground No.2 of the petition they have
stated that the canteen workers of the respondent-
Corporation being engaged in operation incidentally
connected with the industry carried on by the respondents,
the respondents cannot deny them the minimum wages given to
their employees. In ground No.3, it is alleged that the
canteen facility being condition of service of the staff and
employees of the respondent-Corporation as per usage and
custom, the appellants, being canteen employees and engaged
in operation incidentally connected with the industry
carried on by the respondent, "automatically become the
direct employees under the respondents and as such they
cannot be discriminated against and denied the minimum wages
that is prevalent in the Life Insurance Corporation. In
ground No.4,they have stated that the appellants are working
under the respondents through the agencies, and being
engaged in work incidentally connected with the industry
carried on by the Corporation, they are entitled to get the
pay that is admissible to regular employees of the
Corporation. It is with these averments in the main body of
the petition and the grounds that the appellants have in
prayer [b] of the petition, claimed the relief of the
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issuance of the writ of mandamus commanding die respondent-
Corporation to comply with the policy of "equal pay for
equal work" and pay them the minimum salary that is enjoyed
by the staff of the Corporation and also to follow the
policy that is prevalent for canteen workers in other
Government departments, Railways and statutory Corporations.
It is thus clear from the writ petition filed by the
appellants before the High Court that they have prayed for
the relief of minimum wages paid to the employees of the
respondent-Corporation on the ground that they are the
regular employees of the Corporation. In other words, it is
implicit in the said relief claimed by them that they are to
be deemed to be the regular employees of the Corporation and
paid the minimum salary that is paid to its other regular
employees.
4.The case of the respondent-Corporation before the learned
Single Judge of the High Court as made out in their counter
to the writ petition was that the canteens did not belong to
it nor were they run by it. The Corporation only gave its
employees the facilities to run the canteens. The canteens
were run during different periods either by the canteen-
committees of the staff or their cooperative society through
the contractors, and the appellants were engaged by the
contractors or the- coop-
293
erative society. It has no connection much less contract of
employment with the appellants. Nor does it have any
control over their working, conditions of service or the
termination of their services. They are, therefore, not the
employees of the Corporation and cannot be deemed- to be so.
Hence they are not entitled to the relief claimed by them.
5.The learned Single Judge by his decision of 27th
September, 1989 allowed the writ petition and directed the
respondent-Corporation to implement the policy of equal pay
for equal work and pay the appellants minimum salary as is
enjoyed by the regular staff of the Corporation or such pay
as is enjoyed by regular canteen workers in the other
Government establishments or public undertakings. The
learned Judge also directed that the appellants shall be
treated as direct workers under the Corporation and shall be
given all service benefits accordingly.
6.Against the said decision of the learned Single Judge, the
respondent-Corporation preferred a Letters Patent Appeal
before the Division Bench of the High Court which by the
impugned decision dated 10th October, 1991, allowed the ap-
peal, set aside the decision of the learned Single Judge and
dismissed the appellants writ petition. It is this decision
of the Division Bench which is under challenge in the
present appeal.
7.The questions to be answered in this appeal, therefore,
are: [i] whether the appellants are or should be deemed to
be the regular employees of the respondent Corporation, and
if the answer is in the affirmative, [ii] what pay-scales
and other service conditions should be made available to
them.
8. A preliminary objection was raised to the framing of
the first issue by Shri Sanghi appearing for the respondent-
Corporation, as pointed out at the outset, that be
appellants had not claimed any such relief in the writ
petition itself and hence they cannot widen the scope of the
petition and ask for the relief in question in this appeal.
We have referred in extenso to the averments made in the
writ petition, earlier. They show in unmistakable terms
that the appellants approached the High Court with a
specific plea that they are the employees of the respondent-
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Corporation and as such, they should be paid the minimum
wages which are being paid to it other regular employees.
The relief of minimum wages paid to the other regular
employees of the Corporation on the basis of the principle
of equal pay for equal work is thus claimed on the ground
that they are also the regular employees of the Corporation.
Thus, the relief claimed includes in it the basis of the
relief, viz., their status as the regular employees of the
Corporation. It is unnecessary to restate here the law
regarding the interpretation of the pleadings. They have to
be read as a whole and construed accordingly. Thus con-
strued, the relief claimed leaves no doubt that it is based
on the claim for the status of the regular employees of the
Corporation. We, therefore, find no substance in the
preliminary objection.
9. Coming now to the main question as to whether the
appellants should be deemed to be the regular employees of
the Corporation, we may first refer to the statutory
provisions with regard to the canteen.
10. Section 46 of the Factories Act,
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1948 which is a Central enactment reads as follows:
"46. Canteens. - [1] The State Government may
make rules requiring that in any specified
factory wherein more than two hundred and
fifty workers are ordinarily employed, a
canteen or canteens shall be provided and
maintained by the occupier for the user of the
workers
[2] Without prejudice to the generality of the
foregoing power, such rules may provide for -
[a] the date by which such canteen shall be
provided.
[b] the standards in respect of construction,
accommodation, furniture and other equipment
of the canteen;
[c] the foodstuffs to be served therein and
the charges which may be made therefor;
[d] the constitution of a managing committee
for the canteen and representation of the
workers in the management of the canteen;
[dd) the items of expenditure in the running
of the canteen which are not to be taken into
account in fixing the cost of foodstuffs and
which shall be borne by the employer;
[e] the delegation to the Chief Inspector,
subject to such conditions as may be pre-
scribed, of the power to make rules under
clause [c]."
11.This provision has to be read with the relevant
provisions of Section 47 [1] of the said Act which are as
follows:
"47. Shelters, rest rooms and lunch rooms. -
[1] In every factory wherein more than one
hundred and fifty workers are ordinarily
employed, adequate and suitable shelters or
rest rooms and a suitable lunch room with
provision for drinking water where workers can
cat meals brought by them shall be provided
and maintained for the use of be workers;
Provided that any canteen maintained in
accordance with the provisions of Section 45
shall be regarded as part of the requirements
of this sub-section:"
12.There is no dispute that the Factories Act is not
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applicable to the offices of the respondent-Corporation.
What is applicable is the West Bengal Shops and Es-
tablishments Act which is a State enactment. However, there
is no provision in the said Act with regard to canteens.
13.We may now refer to the law on the subject as is evolved
through various judicial decisions.
14.In the Ahmedabad Manufacturing and Calico Printing
Company, Ltd[ Calico Mills] v. Their Workmen [(1953) II LLJ
647] which is a decision of the Labour Appellate Tribunal of
India and which is quoted approvingly in Saraspur Mills Co.
Ltd. v. Ramanlal Chimanlal and Ors. [infra], the facts were
that by notifications issued by the State Government, the
provisions of Section 46 of the Factories Act, 1948 were
made applicable to a large number of textile mills including
the appellants before the Tribunal. As a result, it was
compulsory for the mills to maintain suitable canteens for
the use of their workmen. The contention of the appellant-
Mills was that assuming that the canteens were run through
the contractors, the canteen was not a part of the
undertaking so as to render the management respon-
295
sible for the wages and dearness allowance of the staff of
the canteen and that the maintenance of the canteen was not
in the course of, or for the purpose of conducting the
undertaking. The Tribunal held that in view of the
statutory obligation cast on the mills to run the canteen,
the running of the canteen was a part of the undertaking.
For this purpose, the Tribunal also relied upon the decision
of its Special Bench in Elphinstone Spinning and Weaving
Mills Company Ltd. v. SM. Sable and nine other clerks [the
Bombay Textile Clerks’ Union] [1953 ) LLJ 7521 where the
Tribunal had considered the case of employees of the grain
shops run in the Mills by the contractors. The Special
Bench had held there that the employees of the grain shops
were entitled to be regarded as the employees of be 1516
since the running of the grain shop had become a part of the
undertaking within the meaning of the definition of
’employer’ in subsection [14] (e) of Section 3 of the Bombay
Industrial Relations Act. The Tribunal held that there was
a considerable similarity between the grain shop and the
canteen for the purposes of the said definition. The
Tribunal overruled the contention that the earlier decision
of the Special Bench was erroneous and needed further
consideration.
15.In Dharangadhara Chemical Works Lsd v. State of
Saurashtra [(1957) SCR 1521, the question was whether the
agarias who were engaged by the manufactures of salt were
the workmen of the manufactures or whether they were inde-
pendent contractors. The facts were that the appellant
manufacturers were the lessees holding licences for the
manufacture of salt on the demised land. The salt was
manufacture by a class of professional labourers known as
agarias from rain water that got mixed up with the saline
matter in the soil. The work was seasonal in nature and
commenced in October after the rains and continued till
June. Thereafter, the agarias left for their own villages
for cultivation work. ’The demised lands were divided into
plots called pattas and allotted to the agarias with a sum
of Rs.400/- for each patta to meet the initial expenses.
The same patta was generally allotted to the same agaria
every year and if the patta was extensive in area, A was
allotted to two agarias. After the manufacture of salt,
they were paid 5 as. 6 pies per maund. At the end of each
season, accounts were settled and they were paid the.
balance due to them. They worked with the members of their
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families and were free to engage extra our on their own
account and the manufacturer had no concern therewith. No
hours of work had been prescribed, no muster rolls main-
tained nor were working hours controlled by the appellants.
There were, no rules as regards leave or holidays and they
were free to come out of the works after making arrangements
for manufacture of salt. On these facts, the Industrial
Tribunal found that the agarias were workmen ,within the
meaning of the Industrial Disputs Act 1947. This finding
was confirmed by the High Court which also held that the
reference of the dispute made by the Government under
Section 10 of the Industrial Disputes Act was competent.
This Court while confirming the finding of the Industrial
Tribunal and of the High Court, held that it was well-
settled that the prima facie test of the relationship of
master and servant was the existence of the right in the
employer not merely to direct what work was to be done but
also to control the manner in which it was to
296
be done, the nature and extent of such control varying in
different businesses and being by its very nature incapable
of being precisely defined. The correct approach is to
consider whether having regard to the nature of the work,
there is due control and supervision of the employer. A
person could be workman even though he did piece work and
was paid not per day but by the job, or employed his own
workmen and paid them for it. The Court noted the
observations of Somervell, LJ., in Cassidy v. Ministry of
Health [(1951) 1 T.L.R. 5391 which had taken the view that
it was not necessary for holding that a pep son was an
employee that the employer should be proved to have control
over his work. The test of control was not one of universal
application and there were many contracts in which the
master could not control the manner in which the work was
don, the correct approach would be to consider whether
having regard to the nature of the work, there was due
control and supervision by the employer. The Court quoted
the opinion of Fletcher Moulton, L.J, in Simmons v. Health
Laundry Company (1910) 1 K.B. 5431 where the learned Judge
has observed as follows:
"In my opinion it is impossible to lay down
any rule of law distinguishing the one from
the other. It is a question of fact to be
decided by all the circumstances of the case.
The greater the amount of direct control
exercised over the person rendering the
services by the person contracting for them
the stronger the grounds for holding it to be
a contract of service, and similarly the
greater the degree of independence of such
control the the probability that the services
rendered WV of the-nature of professional
services and that the contract is not one of
service."
16.The Court then observed that the broad distinction
between a workman and an independent contractor lies in this
that while the former agrees himself to work, the latter
agrees to get other persons to work. A person who himself
agrees to work and does so work and is, therefore a workman,
does not ceases to be such by reason merely of the fact that
he gets other persons also to work along with him and those
persons are under his control and arc paid by him. What
determines whether a person is a workman or an independent
contractor is whether lie has agreed to work personally or
not. If he has, then he is a workman and the fact that he
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gets the assistance from other persons would not at feet Ms
swum.
17.hi Basti Sugar Mills Ltd. v. Ron Ujagar and Others
[(1963) 2 SCR 838], the case of the appellant-employer was
that the work of the remove of the press mud had been given
by it to a contractor and the respondent-workmen were
employed by that contractor to do that work. It is the
contractor who had terminated their services and the
management had nothing to do with the workmen who had ap-
proached the Court for relief against the termination of
their services and also for paying them the minimum wages
prescribed under the Government notifications. This Court
held that the workmen were persons employed in the industry
to do manual work for reward. Further, the appellant-
Company was their employer as the workmen were employed by
the contractor with whom the company had contracted in the
course of conducting the industry for the execution by the
said contractor, of the work of removal of press mud which
is ordinarily part of the industry. The Court also held
that the expres-
297
sion "employed by the factory" which occurred in the
definition of ’workman’ in the Standing Orders applicable to
the company, included every person who was employed to do
the work of the factory and was wide enough to include the
workmen employed by the contractor of the factory also.
18. In Saraspur Mills Co. -Ltd. v. Ramanlal Chimanlal &
Ors. [(1974) 3 SCC 66], the facts were that the appellant-
Company which was responsible for maintaining the canteen
under the provisions of Section 46 of the Factories Act and
the rules made thereunder, had entrusted the task of running
the canteen to a co-operative society. The society employed
the respondent-workmen in the canteen. The workmen filed an
application before the Labour Court under the Bombay In-
dustrial Relations Act, 1946 making a grievance that they
were not paid wages and dearness allowance in accordance
with the award of the Industrial Tribunal. In support of
their claim, the workmen alleged that they become workers of
the appellant who -was bound to pay images and dearness
allowance as per the award. Since the appellant was running
the canteen under an obligation to do so under the Factories
Act, the running of the canteen was ordinarily a part of the
undertaking although the appellant did not itself run the
canteen but handed over the premises to the co-operative
society to run it for the use and welfare of the company’s
employees and to discharge its legal obligation. The
appellant had resisted the claim by contending that the
workmen had never been employed by it or by its agent or
contractor They were, in fact, employed by the co-operative
society which was in licensee. The Labour Court dismissed
the workers’ claim. However, in appeal, the Industrial
Court allowed the claim by holding that the employees of the
co-operative society were the employees of the appellant.
This Court referred to the amended definition of ’employee’
and employer’ in Sections 3 [13] and 3 [14] of the Bombay
Industrial Relations Act which read as follows.
"[13] ’employee’ means any person (including
an apprentice) employed in any industry to any
skilled or unskilled manual, supervisory,
technical or clerical work for hire or reward
whether the terms of employment be express or
implied and includes-(a) a person employed in
the execution of any work in respect of which
the owner of an undertaking is an employer
within the meaning of sub-clause (e)of clause
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(14).
x x x x x x
(14) ’employer’ includes-
x x x x x x
(e) Where the owner of any undertaking in the
course of or for the purpose of conducting the
undertaking entrusts he execution of the whole
or-any part of any work which is ordinarily a
part of the undertaking to any person
otherwise than as the servant or agent of the
owner, the owner of be undertaking"
19.The Court also referred to the definition of ’worker’
under the Factories Act, 1948. The Court then referred to
its earlier decision in Basti Sugar Mills Ltd. v. Ram Ujagar
and Others [(1963) 2 SCR 8381 and held that since under the
Factories Act, it was the duty of tic appellant to run and
maintain the canteen for use of its employees, the ratio of
the decision in Ahmedabad Mfg & Calico Printing Co.
298
Ltd. & Others v. Their Workmen (1953 II LLJ 647] would be
fully applicable in which the very same provisions of the
Act were considered and confirmed the finding of the
Industrial Court.
20. In Hussainbhai, Calicut v. The Alath Factory Thozhilali
Union, Kozhikode and Others [ (1978) 4 SCC 257], the facts
were that the petitioner was a factory owner manufacturing
ropes. A number of workers were engaged by him to make
ropes. According to the petitioner, they were hired by
contractors who had executed agreements with the petitioner
to get the work done. Out of the workmen engaged by the
contractor, 29 were denied employment. They raised an
industrial dispute which was referred by the State Govern-
ment to the Industrial Tribunal. The Tribunal upheld the
contention of the workmen that they were the employees of
the petitioner and directed their reinstatement. The award
of the Tribunal was upheld by the learned Single Judge of
the High Court as well as by the Division Bench in appeal.
This Court while dismissing the employer’s petition at the
admission stage itself with an elaborate judgment, held that
the work done by the workmen was an integral part of the
industry. The raw material was supplied by the management
The factory premises as well as the equipment used belonged
to the management and even finished product was taken by the
management for its own trade. Defective articles were
directed to be rectified by the management. The workmen
were broadly under the control of the management On these
facts, the Court held that where a worker or a group of
workers labours to produce goods or services and these goods
or services are for the business of another, that other is
in fact, the employer. He has economic control over the
workers’ subsistence, skill and continued employment. If he
for any reason, chokes of the workers are virtually laid
off. The presence of intermediate contractors with whom
alone the workers have immediate or direct relationship ex
contractu is of no consequence, when on lifting the veil or
looking at the conspectus of factors governing employment,
we discern the naked truth, though draped in different
perfect paper arrangement that the real employer is the
Management, not the immediate contractor. Myriad devices,
half-hidden in fold after fold of legal form depending on
the degree of concealment needed, die type of industry, the
local conditions and the like may be resorted to when labour
legislation casts welfare obligations on the real employer,
based on Articles 38, 39,42,43 and 43-A of the Constitution.
The Court must be astute to avoid the mischief and achieve
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the purpose of be law and not be misled by the maya of legal
appearances. If the livelihood of the workmen substantially
depends on labour rendered to produce goods and services for
the benefit and satisfaction of an enter prise, the absence
of direct relationship or the presence of dubious
intermediaries or to make-believe trappings of detachment
from the management cannot snap the real life-bond. The
liability cannot be shaken off. The Court, however, added
that if there is totaldissociation in fact between the
disowning management and the aggrieved workmen,the
employment is in substance and in real-life terms by
another. The management’s adventitious connections cannot
ripen into real employment. On this reasoning, the Court
con firmed the finding of the High Court and dismissed the
petition.
299
21.In Workmen of the Food Corporation of India v. Food
Corporation of India [(1985) 2 SCC 136], initially the work
of handling foodgrains at Siliguri depot of the respondent-
Corporation was entrusted by it to a contractor. The
contractor engaged handling-mazdoors for the purposes of the
work. The mazdoors received the wages from the contractor
as determined by him or as agreed between the contractor and
the workmen. From January 1973, pursuant to an agreement
between the Corporation and the workers working in the
Corporation’s godown, the direct payment system to the
workmen was introduced in place of the existing contract
labour system. Under this system, the bills for the piece-
rate wages payable to the handling mazdoors were to be
prepared by the depot staff and the Sardar/Mondal was to
accept the payment after giving acquittance and signed bills
on their behalf and distribute the wages to the handling-
mazdoors. The bill with acquittance in the original would
remain with the Corporation. The Union of the workmen was
informed to advise local representative of the workmen to
submit the wage bill in time mentioning therein particulars
’per head outturn by name’ till January 1975. This system
of payment man in vogue till January 1975 when the
Corporation superseding the direct payment system
reintroduced the contract labour system without giving any
notice to the affected workmen. Consequently, 464 workmen
attached to the Siliguri depot were treated as employed by
the contractor. An industrial dispute was raised by the
union against this action of the Corporation and a reference
was made to the Tribunal for adjudication. The Tribunal
justified the corporation’s action and held that
reintroduction of the contractor system did not constitute
discontinuance of the services of the affected workmen.
The questions for determination were whether as a result of
the introduction of the direct payment system, the concerned
workmen had become direct workmen of the Corporation and
whether the reintroduction of the contractor system of
payment resulted in discontinuance of the services under the
Corporation for which notice under Section 9A of the
Industrial Disputes Act, 1947 was essential, The Court while
allowing the workmen’s appeal held that the essential
condition for a person to be a workman within the meaning of
the Industrial Disputes Act is that he should be employed to
do the work in an industry, and there should be an em-
ployment of his by the employer and that there should be a
relationship of the employer and employee as between master
and servant. Where the contractor em ploys a workman to do
the work which he contracted with a third person to accom-
plish, the workmen of the contractor would without something
more become the workman of that third person. When the con-
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tractor system was in vogue, the contractor was being paid
in lump sum arrived at by multiplying the rate per bag to
total number of bags. Thus, the Corporation was solely
concerned with the number of bags handled by the contractor.
It was not a contract for supply of labour, but specifically
a contract for handling bags of foodgrains. Therefore, when
the contractor system was in vogue, the workmen employed by
the contractor were not workmen of the Corporation. But
introduction of the direct payment system, brought about a
basic qualitative change in the relationship between the
Corporation and the workmen engaged for handling foodgrains
in that on the disappearance of the intermediary contractor,
a direct relationship of
300
master and servant came into existence between the
Corporation and the workmen. It was obligatory on the
Corporation to arrange for handling the bags of foodgrains.
The workmen handled the foodgrains for the Corporation and
none else. For this service rendered, the Corporation
agreed to pay and paid wages at piece rate to each workman
whose name appeared in the register maintained for the
purpose as per the directions given by the District Manager.
If the pay packets were actually distributed by
Sardars/Mondals, they can be said to be doing clerical work
on behalf of the Corporation. Thus since the introduction
of the direct payment system, the workmen became the
workmen of the corporation and a direct master-servant
relationship came into existence. When workmen working
under an employer are told that they have ceased to be the
workmen of that employer and have become workmen of another
employer, viz., the contractor in this case, in legal
parlance such an act of the first employer constitutes
discharge, termination of service or retrenchment by
whatsoever name called, and a fresh employment by another
employer, viz., the contractor. If the termination of
service by the first employer is contrary to the well-
established legal position, the effect of the employment by
the second employer is wholly irrelevant. The introduction
of a contractor so as to bring about a cessation of contract
of employment between the workmen and the Corporation and a
fresh contract of employment between the workmen and the
contractor, if motivated to effect retrenchment, ex facie
the action is contrary to Section 25-F of the Industrial
Disputes Act. Viewed from either angle, the action of
reintroducing the contractor so as to displace the contract
of service between the Corporation and the workmen would be
illegal and invalid and ab initio void and such action would
not alter, change or have any effect on the status of die
affected workmen who had become workmen of the Corporation.
Even assuming that the scheme of the Food Corporation Act,
1964 permits the Corporation to engage a contractor, the Act
would not permit the Corporation, which is an
instrumentality of the State comprehended in the expression
’other authority’ in Article 12, to act in a manner
thoroughly arbitrary by first keeping a contractor, removing
him and reinducting him without a semblance of consideration
for the fate of the workmen working for it for its benefit
or for some work connected with the functions of the
Corporation. By cancelling the direct payment system and
introducing the contractor, both the ’wages’ and the ’mode
of payment’ within the meaning of Item 1 of the Fourth
Schedule to the Industrial Disputes Act are being altered to
the disadvantage of the workmen. Therefore, a notice of
change under Section 9-A was a must before introducing the
change, otherwise it would be an illegal change which would
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attract penalty under Section 31 (2). Such an illegal
change would be wholly ineffective.
22. In M.M.R. Khan & Ors. v. Union of India & Ors. [(1 990)
Supp. SCC 191 J, the facts were that the canteens run by
different railway establishments were classified into three
categories, viz, [i] statutory canteens, i.e., canteens
required to be provided compulsorily in view of Section 46
of the Factories Act, 1948, [ii] nonstatutory recognised
canteens set up as a staff welfare measure with the prior
approval and recognition of the Railway Board as per the
procedure detailed in the
301
Railway Establishment Manual, and [iii] non-statutory non-
recognised canteens, i.e., those which were established
without the prior approval or recognition of the Railway
Board. The Government of India notification. dated 11th
December, 1979 had declared the employees of the depart-
mental canteens/tiffin rooms as holders of civil posts. The
Division Bench of the Calcutta High Court had directed the
Union of India to recognise the workers of the statutory
canteen at Kharagpur as employees of the Railway
administration under the Factories Act but had rejected the
workers’ demand to pay salary and allowances to them as if
they were railway employees. The appeal preferred by the
Union of India against the said decision was disposed of by
this Court by its order of October 27, 1990 in the following
words:
"The benefits accruing to the workers under
the decision of the Calcutta High Court do not
require to be interfered with in this appeal.
Prima facie we are inclined to agree that the
High Court decision is right. Moreover, the
learned Attorney General agrees to apply the
Act as if it were applicable to canteen
employees. In this view, a final
pronouncement on this question by this Court
need not be given in the present case. We
leave it open to Union of India in an
appropriate case to raise the point and seek a
pronouncement. "
23.On December 4, 1984, a Division Bench of the Madras High
Court relying upon the aforesaid order of this Court held in
a case that canteen employees will have to be treated as
Railway employees for die purpose of the Factories Act in
view of the concessions made by the Railways before this
Court and also the concessions’ made by the counsel
appearing for the Railways before the High Court. Against
this background, writ petitions under Article 32 and appeals
by. special leave were filed by the employees of all the
three types of railway canteens claiming that they should be
treated as railway employees and should be extended all
service conditions available to the railway employees.
While allowing the writ petition#, and the appeals of the
employees of the statutory canteens and of the non-statutory
recognised canteens, this Court held as follows:
"Since in terms of the Rules made by the State
Governments under Section 46 of the Factories
Act, it is obligatory on the railway
administration to provide a canteen, and the
statutory, canteens love been established
pursuant to the said provision, it must be
held that the canteens are incidental to or
connected with the manufacturing process or
the subject of the manufacturing process. The
provision of the canteens is demmed by the
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statute as a necessary concomitant of the
manufacturing activity. Even where the
employees are appointed by the staff
committee/cooperative society, their
appointment is made by the department through
the agency of the comnuttee/society as the
case may be. The statutory canteens have been
in existence at their respective places
continuously for a number of years. The
premises as well as the entire paraphernalia
for the canteens is provided by the railway
administration and belong to it. The
employees engaged in the canteens have also
been in service uninterruptedly for many
years. Their wages axe reimbursed in full by
the railway administration. The entire running
of the canteens including the work of the
employees is subject to the supervision and
control of the agency of the railway
administration whether the agency is the staff
committee or the society. In the Establish-
302
ment Manual the legal responsibility for
runnig the canteen ultimately rests with the
railways, whatever the agency that may
intervene. The number and the category of the
staff engaged in the canteen is strictly
controlled by the administration.
x x x x x
No distinction can be made between the
employees of statutory canteens and those of
non-statutory canteens. The only difference
is that the statutory canteens are established
wherever the railway establishments employ
more than 250 persons as is mandatory under
the provisions of Section 46 of the Factories
Act while non-statutory canteens are required
to be established under paragraph 2831 of the
Railway Establishment Manual where the
strength of the staff is 100 or more. The
employees who otherwise do the same work and
work under the same conditions and under a
similar management cannot be treated
differently merely because the canteen happens
to run at an establishment which employs 250
or less than 250 members of the staff, The
smaller strength of the staff may justify
a
smaller number of the canteen workers to serve
them. But that does not make any difference
to the working conditions of such workers. A
classification made between the employees of
the two types of canteens would be
unreasonable and will have no rational nexus
with the purpose of the classification. The
"Administrative Instructions on Departmental
Canteens in Offices and Industrial
Establishments of the Government" are
applicable to both statutory and non-statutory
recognised canteens. The Instructions do not
make any difference between the two so far as
their applicability is concerned.
However, the employees of the nonstatutory
non-recognised canteens am not entitiled to
claim de status of the railway servants.
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These Canteens are run more or less on ad hoc
bask, the railway administration having no
control on their working. Neither is there a
record of these canteens nor of the
contractors who run them who keep on changing,
much less of the workers engaged in these
conteens. "
24. Accordingly, this Court held that the workers engaged
by the statutory canteens as well as those engaged in non-
statutory recognised canteens in the railway establishment
were railway employees and they were entitled to be treated
as such.
25. In All India Institute Employees’ Association v. Union
of India [JT 1990 (1) S.C. 319] the writ petition was filed
in this Court by an Association of about 2000 employees
working in 500 different Railway institutes and clubs in
various parts of the country. Their grievance was that they
were not treated as railway employees. It was their case
that although the institutes and clubs in which they worked
were not statutory, they were on par -with the employees in
the statutory canteens run in the railway establishments
proper. It was further their case that the institutes and
clubs were set up to provide recreational facilities to the
railway employees and they were managed by committees
consisting of representatives of all the members of the
institutes/clubs elected periodically. The institutes/clubs
had about 10 categories of employees. The employees were
appointed by the committees and the salaries were paid out
of the contributions received from the members of the
respective institute/club and the grants-in-aid given by the
Railway Board to them. The committee of management was pre-
sided over by the President who was the concerned Railway
Divisional Manager or his nominee. The railway
administration
303
had the right to dissolve or to form the ad hoc committees
for running the institutes/ clubs. It was also the case of
the workmen that the Railway Board had always treated the
institutes/clubs as an integral part of the railways since
not only they received grants-in-aid but also other fa-
cilities from the Railway.-,. The Railway Establishment
Manual made a special provision for the institutes and clubs
and it stated that a railway institute should be looked upon
as a club provided by the railway, rent-free for the benefit
of its employees and, therefore, the railways should provide
everything which a landlord ordinarily would, and the
institute should pay for all that a tenant should usually be
liable to pay. The Manual stated that th railway
administration will bear [a] the first cost of the building
including the cost of electric installations- necessary
furniture, roads, fancies, tennis court and other play-
grounds and wherever possible, the garden was also to be
provided and [b] the cost of maintenance and alterations.
This Court distinguished the canteens run in the railway
establishments and the railway institutes and clubs by
pointing out the material difference between the two.
Firstly, the canteens were invariably a part of the
establishment concerned and they were run to render services
during the hours of work since the services by their very
nature were expected directly to assist the staff in dis-
charging 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 Court also held that the canteen services are today
regarded as a part and parcel of every establishment so much
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so that they have been made statutorily mandatory under the
Factories Act 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 employed work and that is why the Railway
Establishment Manual made a provision for canteens even
where the Factories Act did not apply. However, the same
cannot be said of the institutes and clubs. Although the
Railway Establishment Manual makes provisions for them, the
provisions are of a materially different nature and pattern.
There is no provision either for subsidy or loan directly
from the funds of the railway administration. They have to
run on the membership fees and fixed grants received from
the Staff Benefit Fund which consists of receipts from the
forfeited provident fund and bonus and of fine. The grant
further is made to each institute/club at the rate of Rs.
14/- per capita of the non-gazetted staff employed at the
relevant railway establishment. Out of this contribution,
only Rs.4/ - per capita are spent on activities of the
institutes/clubs, the rest of the amount being spent on
education etc. The wages and allowances of die staff the
institutes/clubs are paid by the institutes/clubs themselves
and they arc not subsidised by the railway administration as
in the case of the statutory and non-statutory recognised
canteens. Further, by their very nature the services of the
institutes/clubs are availed of beyond working hours only
and not all the members of the railway staff avail of them.
One had to be a member by paying fees to do so. The member-
ship was further optional. That is why most of the staff
employed in the institutes/clubs was part-time. Out of
about 1741 employees engaged in 449 institutes and 332 clubs
nerely half were part-time employees. The sorvices rendered
by the
304
employees were also not of a uniform nature. They were
engaged for different services with service conditions
according to the requirement. The institutes/clubs also do
not engage in any uniform activities, the activities
conducted by them varying depending upon the infrastructure
and the facilities available at the respective places. What
is more important 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 having been
tailored to the budgets. If the cost of activities goes
beyond the means, they have to be curtailed. On these
facts, this Court held that the staff members employed by
the railway institutes/clubs are not the employees of the
Railways.
26. In Surendra Prasad Khugsal v. Chairman, MMT
Corporation of India Ltd. [JT 1993 (5) SC 80], the workers
employed in non-statutory recognised canteens in the
respondent-Corporation had approached this Court by a writ
petition under Article 32 of the Constitution, relying upon
the decision of this Court in M.M.R. Khan case [supra]. The
Court found that the said decision which had decided the
claim of the non-statutory recognised canteens was decided
on the facts of that case including the provisions of the
Railway Establishment Manual, the notifications and
circulars issued by the Railway Board from time to time and
other documents. On the other hand, there were disputed
facts in the case in hand which could not be resolved in a
writ petition under Article 32. The Court, therefore,
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referred the matter to the Industrial Tribunal for adjudica-
tion.
27. What emerges from the statute law, and the judicial
decisions is as follows:
[i] Where, as under the provision 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
employeer to provide a canteen, the canteen become 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.
[iiij 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 agree ment or an
award etc., it may be inferred from the circumstances, and
the provision of the canteen may be held to have be, come a
part of the service conditions of the employe". Whether the
provision for canteen services has become a part of the of
service conditions or not is it 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 em-
305
ployees 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,
28. We may now examine the facts in the present case in the
light of the above tests.
29. There is no dispute that the respondent-Corporation has
not explicitly undertaken to provide canteen services to its
employees working in the offices in question. The only
obligation that it had explicitly accepted was to provide to
the employees facilities to run canteen, such as premises,
furniture, electricity, water etc. However, the facts on
record show that the Corporation had implicitly accepted the
obligation to provide canteen services and not merely the
facilities to run the canteen. These facts are:
[a] In para 6 of the counter-affidavit filed on behalf of
the Corporation before the learned Single Judge in the High
Court, it is stated that at the time the Corporation was
established, i.e., 1st September, 1956, all the Insurers
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carrying on life insurance business in India both inland and
foreign were merged and/or vested in the Corporation. Some
of the merged offices of the erstwhile Insurers had canteens
which were used to be run or managed by different employees’
unions. After the establishment of the Corporation, those
canteens continued to be run and managed by the particular
employees’ unions. While being so run there were complaints
to the Corporation from the employees about the quality and
nature of food supplied as is evident from the letters of
several employees’ unions written in or about 1972. Hence,
in or about 1973, the Corporation was obliged to appoint a
committee to examine the alleged complaints and to find out
ways and means as to how best such canteens could be run and
managed. The Committee made its recommendations and in
pursuance of the recommendations, the responsibility to run
and manage the canteens was entrusted to contractors obvi-
ously by the Corporation, though the counter has not stated
the latter fact in so marl, words. The contractors started
managing the canteens and this practice continued till 1979.
It is stated in the counter that one of the employees’
unions was the Life Insurance Corporation Employees’
Association [Calcutta Division] of which one Shri Sukumar
Mukherjee was the General Secretary and the said Mukherjee
is also the President of the Employees’ Unions of the
appellants herein. Although it is also averred there that
the said Mukherjee who represented the appellants at all
material times also did not come out with a case that the
appellants were the
306
employees of any departmental canteens run or managed by the
Corporation and that it was for the first time that before
this Court in the writ petition filed under Article 32 of
the Constitution that the appellants had sought to make out
the purported case that they were the employees of the
departmental canteens belonging to and/or run and/or managed
by the Corporation, these facts are not relevant for the
purpose of examining whether, in fact the relationship of
employer and employee existed between the Corporation and
the appellants.
[b] The counter further goes on to say that in the
meanwhile, the workers working in the canteens started
agitating for higher emoluments and/or other benefits and as
such, the contractors abandoned their entrustment and the
facilities of canteen available to the employees suddenly
came to a stop. Thereafter, a cooperative society of the
employees of the Corporation known as LIC Employees Coopera-
tive Society Ltd., was formed and it started managing
canteens at different offices of the Corporation in Calcutta
w.e.f 1st September, 1979. While such management was
continuing, the workers in the canteens in or about 1981
started agitation for enhancement of their salary and other
benefits and submitted a charter of demands both to die said
cooperative society and to the Corporation. The dispute was
referred to the Assistant Labour Commissioner [(Ventral] and
in pursuance of a notice dated 15th April, 1982 issued by
the Assistant Labour Commissioner, a me was held at his
behest on 10th May, 1982 with a representative each of the
cantee workers’ union and of the Corporation. The
employees’ cooperative society, ever, did not participate in
the conciliation proccedings. By a notice dated 14th Au-
gust, 1982 the canteen workers notified that they would go
on strike if the demands were not met. Thereafter, the As-
sistant Labour Commissioner called the Zonal Manager of the
Eastern Zonal Office of the Corporation at Calcutta and oth-
ers concerned, for a discussion on 10th September, 1982.
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The canteen workers went on strike w.e.f 1st December, 1982
and the conciliation proceedings were held for the last time
on 15th December, 1982. As a result of the said strike, the
canteen facilities available to the employees of the
Corporation were again stopped. Thereupon, the LIC
Employees’ Association complained against the stoppage of
the said facilities. Pursuant to the said complaint, the
Labour Commissioner [Central] took up the matter and issued
notice to the respective parties which of course included
the respondent-Corporation, for discussion. The central
office of the Corporation was also eager to make some
alternative arrangement for running the said canteen. The
discussions were held at the conciliation level and the
Conciliation Officer submitted his failure report. Cut 26th
March, 1983, the Corporation addressed a letter to the then
Zonal Labour Commissioner explaining the entire position.
The canteen workers continued their strike and the
Corporation had to find out some other alternative,
management with a view to continue the canteen service
rendered to the employees. The Corporation, therefore, by a
notice dated 14th March, 1983 called for appointment of
contractors to run the canteens and in pursuance thereof,
contractors were appointed -who in turn took over the
responsibility of the canteen workers who were till that
tine working in the canteens.
307
It is, however, the case of the Corporation in the counter
that in spite of the failure report submitted by the
Regional Tabour Commissioner [Calcutta], the dispute was not
referred for adjudication and the Central Government
accepted that the canteen workers were not the employees of
the Corporation but were the employees of the contractors as
is evident from letter dated 6th February, 1984 addressed by
the Central Government to the Zonal Manager, Eastern Zonal
Office of the Corporation.
It is also the case of the Corporation in the said counter
that the Corporation at no point of time exercised any cow
Vol over the contractors except those covered by the
contracts in writing between the contractors and the
Corporation.
From the aforesaid averments in the counter, the following
facts emerge. Even from times much prior to the coming into
existence of the respondent-Corporation, canteen services
were available to the employees of the insurance companies
which were later merged with the Corporation in 1956.
Between 1956 and 1971 the canteens were being managed by the
canteen committees. Between 1973 and 1979, they were
managed by the contractors appointed by the Corporation. In
1979, the management was taken over by the cooperative
society of the employees. In 1981, there was an industrial
dispute raised by the canteen workers both with the
cooperative society and the Corporation. In the concilia-
tion proceedings it is only the Corporation which
participated. From 1983 onwards, the canteens were again
managed by the contractors appointed by the Corporation with
written agreements with them. The Central Government’s
letter dated 6th February, 1984 refusing reference of the
dispute for adjudication to the Industrial Tribunal makes it
clear that the demand raised by the canteen workers was both
for increase of wages and for their absorption in the
Corporation. Ile parties to the dispute included the Zonal
Manager, Eastern Zonal Office as well as Senior Divisional
Manager of the Corporation at Calcutta. In the letter the
Central Government while refusing to refer the dispute for
adjudication gave the reason that the canteen employees were
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reported to have been employed by the cooperative society
and not by the LIC and, therefore, there was no employcr-
employee relationship between the canteen employees and the
LIC. In other words, the Central Government had taken the
stand that the employees concerned were not the employees of
the contractors but of the employee’s cooperative society.
Although this cannot be taken as the conclusive finding on
the issue, it has relevance of its own in the context of the
facts which have emerged in the matter of the employment of
the canteen workers.
[c] We have then a copy of the agreement dated 15th June,
1983 entered into between the Corporation and the contrac-
tor, and the Corporation has admitted that similar
agreements were entered into with the later contractors from
time to time. The contents of the specimen of the agreement
are revealing for our purpose. [i] The agreement is entered
into exclusively between the contractor and the Corporation
and there is no other party to the contract. The preamble
of the agreement begins as follows:"Whereas the Life
Insurance Corporation of India, Calcutta Divisional
Office....is desirous of running a canteen by a contractor
on approved terms and conditions at ... and whereas the said
contractor
308
has accepted the said terms as offered to him... It is
hereby declared and agreed a,% follows:". It is, therefore,
clear from the preamble itself that it is the Corporation
and not the employees of the Corporation or their union or
cooperative society which was desirous of running the
canteen and which had engaged the contractors; [ii] The
Corporation was desirous of running the canteen through a
contractor on the terms offered to him by the Corporation.
In other words, the contractor is only an agent of the
Corporation; [iii] Clause [1] of the agreement shows that
contract deals with quality of foodstuff, tea coffee and
other permissible drinks to the employees of the Corporation
and the contract will remain operative for a period of one
year only from the date of the contract; [iv] by clause [2],
the Corporation undertakes to provide to the contractor free
of cost, space, tables, chairs, fans, lights and water,
although the cost of fuel or gas charges were not to be
borne by the Corporation; [v] Clause [3] makes it clear that
the foodstuff was to be cooked and prepared inside the
premises of the canteen and no outside foodstuff except cold
drinks would be sold in the canteen. Clause [4] makes it
obligatory on the contractor to maintain regular supply of
quality food while clause [5] provides that the existing
price of the foodstuff, tea coffee etc. should be continued
for a period of about six months from the date of the
contract and revision will be considered thereafter or even
before by discussion with the canteen committee as well as
with the contractor, [vi] Clause [6] makes it clear that the
fittings, furniture and fixtures of the canteen shall belong
to the Corporation’s concerned office and removal of the
above in any circumstances was impermissible; [vii] Clause
[8] states that the caution money is to be kept with the
Corporation as interest free deposit and the question of
revision or adjustment of such deposit will arise either at
the time of the termination of the contract or at any time
earlier should the Corporation decide in the event of any
loss or damage; [viii] Clause [9] is important in that it
states that it is the Divisional Office of the Corporation
which reserves the right to add to, alter or rescind the
terms and conditions of the contract and also to advise on
any mater connected with the canteen; [ix] Clause [1] then
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stipulates that the canteen shall not be kept open for
counter service but only floor service shall be allowed and
no employee shall be allowed to use the canteen except
during the lunch hours.
The aforesaid terms of the contract further make it clear
that the Corporation has the dominating say in dictating the
terms and conditions of the contract and that apart from the
fact that the Corporation alone is a party to the contract
and neither the Corporation’s employees nor any cooperative
society of the employees, it is the Corporation which has
the right to continue or terminate the contract and also to
modify and dictate the new terms of the contract. This is
the state of affairs which has been continuing at least from
1983.
[d] It is also apparent from the history of the management
of the canteen that it was managed through different mecha-
nisms such as the canteen committee, cooperative society and
the contractor. During the major period from 1973 to 1979
and thereafter from 1983 onwards, the contractors have been
on the scene. Although, we do not have the specimen of the
contract that was entered into with the contractors from
1973 to 1979, even if it is
309
presumed that the contractors were appointed during that
period by the canteen committees, it is not disputed that
even these canteen committees were controlled by the
Corporation and were manned by the Corporation ’s officers.
[e] What is further in the rejoinder filed by the appellants
before the Division Bench of the High Court it was
specifically averred in paragraph 6 thereof that the job
done by the canteen employees was of perennial nature and
was incidental to the running of the main business of the
Corporation. It was being done by the Corporation through
their intermediaries - sometimes by contractors, sometimes
by cooperative society and sometimes by canteen employees
themselves. The intermediaries came and went but the
employment of the workers under the Corporation remained
constant. These averments have not been denied by the
Corporation.
[f] In the writ petition filed by the appellants, further,
it was averred that the employees of the Corporation at all
its establishments, are provided with facilities of canteen
by the Corporation for more than a few decades and as such
the provision of canteen facilities was a condition of
service of the employees of the Corporation and that by
usage and custom the benefits of canteen facilities had
became the conditions of service and that the running of
the canteen was incidental to the running of the business
of the Corporation. This is not controverted specifically
by the Corporation in its reply filed before the Court.
[g] In addition, there are certain other facts which
indicate that it was the Corporation was taking interest in
not only managing the canteen but also in the constitution
of the committees for management of the canteens. The
appellants have produced a letter dated 14th -March, 1983
addressed by the Additional Zonal Manager of the Corporation
to the employees of the Corporation who were elected to the
canteen committee to inform them that they had been so
elected and hoping that their help and cooperation will
strengthen the committee in the discharge of its duties. If
the Corporation had nothing to do with the management and
the constitution of the committees and their election, there
was no reason for the said functionary to address such
letter to the elected members of the committee.The letter
shoos that even in organising and electing the canteen
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committees, the Corporation was playing its functional role.
[h] There is further a letter dated 22nd August, 1983
addressed by the very same functionary to one M/s. S.
Mistry in the matter of supply of three black-boards. The
letter shows that the quotations for the black-boards for
the canteen were invited by the Corporation and the order
for the supply of the same was also placed by it and the
bill was also to be paid by it.
30. In the face of the aforesaid facts, it is difficult to
support the findings of the Division Bench that [a] the
canteen is being run by a committee or cooperative society
of the staff members of the Corporation [b] the Corporation
only agreed to provide space to house the canteen and cer-
tain chairs and tables for the use of its staff members, [c]
an independent contractor has been appointed to run the
canteen [d] and since no letter of appointment has ever been
issued by the Corporation and no attendance register is
maintained and
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the salary of the canteen workers is being paid by the
independent contractor and not from the funds of the
Corporation, there is no employer and employee relationship
between the Corporation and the appellants.
31. The facts on record on the other hand, show in
unmistakable terms that canteen services have been provided
to the employees of the Corporation for a long time and it
is the Corporation which has been from time to time, taking
steps to provide the said services. The canteen committees,
the cooperative society of the employees and the contractors
have only been acting for and on behalf of the Corporation
as its agencies to provide the said services. The
Corporation has been taking active interest even irk
organising the canteen committees. It is further the Cor-
poration which has been appointing the contractors to run
the canteens and entering into agreements with them for the
purpose The terms of the contract further show that they are
in the nature of directions to the contractor about the
manner in which the canteen should be run and the canteen
services should be rendered to the employees. Both the
appointment of the contractor and the tenure of the contract
is as per the stipulations made by the Corporation in the
agreement. Even the prices of the items served, the place
where they should be cooked, the hours during which and the
place where they should served, are dictated by the
Corporation. The Corporation has also reserved the right to
modify the terms of the contract unilaterally and the
contractor has no say in the matter. Further, the record
shows that almost all the workers of the canteen like the
appellants have been working in the canteen continuously for
a long time what ever the mechanism employed by the
Corporation to supervise and control the working of the
canteen. Although the supervising and managing body of the
canteen has changed hands from time to time, the workers
have remained constant. This is apart from the fact that
the infrastructure for running the canteen, viz., the
promises, furniture, electricity, water etc. is supplied by
the Corporation to the managing agency for running the
canteen. Further, it cannot be disputed that the canteen
service is essential for the efficient working of the em-
ployees and of the offices of the Corporation, In fact, by
controlling the hours during which the counter and floor
service will he made available to the employees by the
canteen, the Corporation has also tied to avoid the waste of
time which would otherwise be the result if the employees
have to go outside the offices in search of such services.
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The service is available to all the employees in the pre-
mises of the office itself and continuously since inception
of the Corporation, as pointed out earlier, The employees of
the Corporation have all along been making the complaints
About the poor or in adequate service rendered by the
canteen to them, only to the Corporation and the Corporation
has been taking steps to remedy the defects in the canteen
service. Further, whenever there was a temporary breakdown
in the canteen service, on account of the agitation or of
strike by the canteen workers, it is the Corporation which
has been taking active interest in getting the dispute
resolved and the canteen workers have also looked upon the
Corporation as their real employer and joined it as a party
to the industrial dispute raised by them. In the
circumstances, we are of the view that the canteen has
become a part of the establishment of the Corporation. The
canteen committees,the
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cooperative society of the employees and the contractors
engaged from time to time are in reality the agencies of the
Corporation and am, on, a veil between the Corporation and
the canteen workers. We have., therefore, no hesitation in
coming to the conclusion that the canteen workers are in
fact the employees of the Corporation.
32. The next question is as to what relief the appellants
are entitled. As pointed out earlier, the appellants have
prayed for the relief of their absorption by the Corporation
as its regular employees and also for pay as is paid to the
other employees of the Corporation. In view of our finding
that the appellants who are the canteen workers in the four
offices of the Corporation in Calcutta are entitled to be
the employees of the Corporation, the appellants are
certainly entitled to the first relief they have claimed.
The question, however, is to what service conditions they
would be entitled, They have prayed for the minimum salary
paid to the employees of the Corporation which necessarily
means the minimum salary of the lowest paid employees of the
Corporation, i.e., of class IV employees. There would be no
difficulty in directing the payment to them of the minimum
of the salary paid to the Class IV employees of the
Corporation. However, there is distinction between the
present service conditions of the appellants and the other
Class IV employees of the Corporation. For example, the
appellants get free food, and free tea. Their hours of
service may also differ. There are also different
categories of canteen workers such as General Manager,
Canteen Managercum-Salesman, Kitchen Clerk, Canteen Clerk,
Halwai, Assistant Halwai, Cook Bearer, Wash-boy, Sweeper
etc. It is not possible for the Court to evaluate the work
done by each of the categories. Hence different service
conditions will have to be prescribed for the different
appellants. The Corporation may have, therefore, to
prescribe appropriate service conditions for the canteen
workers.
33. Pending the prescription of such service conditions,
the Corporation should pay to all the appellants the minimum
of the salary presently paid to its Class IV employees
taking into consideration and making allowance for the
special facilities, if any available to them and also their
special working conditions. In addition, the Corporation
should also give them the benefit of the other service
conditions available to its Class IV employees.
34. The question further is from which date the appellants
should be deemed to have become the employees of the
Corporation and should, therefore, be entitled to the
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minimum salary and ,he. other benefits. taking into
consideration the relevant facts and circumstances on
record, we are of the view that they should be deemed to
have become the regular employees of the Corporation from
the date of the filing of the writ petition before the High
Court and should, therefore, be paid the arrears of salary
and other monetary benefits, if any, from the said date
after adjusting the salary and monetary benefits that they
may have received. The years of continuous service put in
by them even prior to the aforesaid date as canteen workas
should, however be taken into account for the purpose of
calculating their retiral benefits.
35. We, however, make it clear that the above direction to
treat the appellants
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as the regular employees of the Corporation will be subject
to two conditions, viz, [a] that they were above the minimum
and below the maximum age limit and medically fit as per the
regulations of the Corporation on the date of the filing of
the writ petition and [b] that on the date of the filing of
the writ petition before the High Court, they had put in a
minimum of three years continuous service as canteen workers
in the canteens in question. For the purposes of
calculating the said three years qualifying service and the
retiral benefits, the service prior to the attainment of the
minimum qualifying age under the Corporation’s regulations
shall be ignored.
36. The appeal is allowed in the above terms with no order
as to costs.
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