Calcutta High Court
Indian Oil Corporation Ltd., Haldia Oil ... vs Haldia Refinery Canteen Employees ... on 31 March, 2000
Equivalent citations: (2000)3CALLT19(HC)
JUDGMENT V. K. Gupta, J.
1. This appeal is directed against the Judgment dated 24.03.1998 passed by a learned single Judge of this Court In C.O. No. 6266(W) of 1990 with C.O. No. 6274(W) of 1990 whereby the writ application filed by the respondent Nos. 1 to 120 has been allowed and the appellant and respondents 121 to 124 have been directed by the learned single Judge to regularise the services of respondents Nos. 2 to 120 who had been claiming to be the workmen entitled to be absorbed in the employment of the appellant.
2. The writ applications involving common questions of law and fact were filed in this Court. The writ petitioners in both the writ applications claimed that even though they were working in the Canteen of the appellant, but run and operated by a Canteen Contractor, they were essentially and substantially the employees of the appellant and therefore were entitled to be absorbed in the regular employment of the appellant which In effect and substance meant that the appellant was under an obligation to regularise their services with it. Undoubtedly the Canteen in question is run by the appellant on contract basts after inviting tenders from potential Contractors and after acceptance of the lender of the successful bidder. The claim of the writ petitioners for absorption in the service of the appellant has been summarised, with respect to various grounds forming the basis of such claim by the learned single Judge in the Judgment under appeal to the following effect.
"(a) Canteener are run to tender service during the hours of work since the services, by their very nature are expected directly to assist the staff in discharging their duties efficiently:
(b) Lack of canteen facilities is ordinarily bound to hamper and interfere with the normal working of staff and affect their efficiency.
(c) Canteen services are today regarded as a part and parcel of every establishment to such so that they have been made statutorily mandatory under the Factories Act, 1948 In establishments governed by the satd Act where more than 250 workers are employed:
(d) Canteen services are no longer looked upon as a more welfare activity but as an essential requirement.
(e) both law and facts spell out that there is a relationship of employer-employee between the respondents and the employees, the petitioners.
(f) Canteen is subsidised, supervised and managed by the management of Haldla Refinery.
(g) the wages and other facilities of the petitioners are being determined through negotiation with the management.
(h) the refinery canteen was set up to meet the food requirements of various personnel deployed in the refinery complex. They are served at regular intervals in the form of snacks, lunch, dinner etc. Besides the common serving in centralised dinning hall, the serving is also done at various working points in the refinery to meet the operational requirements and due to continuous nature of operations in the refinery manpower is deployed at various sections on rotational as well as general shifts".
3. It is the undisputed ease of the parties that after inviting tenders from potential bidders, the appellant allotted the contract of running the Canteen in favour of the successful bidder on various terms and conditions as were forming part of the said Contract Agreement. It is also the undisputed case of the parties that the Canteen in question is a statutory Canteen because of the statutory requirement on the part of the appellant for running, operating and maintaining such a Canteen in terms of section 46 of the Factories Act. It is also the undisputed case of the parties that the Canteen is not only a statutory Canteen but is also a recognised one. The learned single Judge has taken great pains in culling out various terms and conditions in the Contract agreement between the Canteen Contractor and the appellant and has also referred to various statutory provisions, including the Rules framed under the Factories Act to form an opinion and come to the conclusion that the appellant exercises a very high degree of control over the Contractor who has been awarded the contract of running the Canteen. During the course of hearing of this appeal, the learned Advocates of the parties before us also extensively referred to these terms and conditions to point out their respective points of view about the nature of the contract and as to whether the Canteen is run by a Contractor In his capacity and status as a Contractor or the Contractor is nothing but a mere Agent or Servant of the appellant and that the contract is a sham transaction or that It is merely for the sake of record.
4. We have very carefully considered the arguments of the learned Advocates of the parties. In the latest Judgment of the Supreme Court in the case of Indian Petro Chemicals Corporation Ltd. and Another v. Shramik Sena and others reported In JT 1999(5) SC 340 their Lordships of the Supreme Court while disposing of an identical and similar question of law and fact with regard to the status of the Contractor who was running a Canteen on contract basis and the status of the employee working in the Canteen elaborately dealt with the scope of section 46 of the Factories Act 1948, particularly with reference to the definition of "Worker" as occurring in section 2(1) of the Factories Act. After analysing various facts of the controversy and various relevant aspects of the provisions of law on tills question, their Lordships held as under :
"It is clear from this definition that a person employed either directly or by or through any contractor in a place where manufacturing process is carried on, is a 'Workman' for the purpose of this Act. Section 46 of the Act empowers the State Government to make rules requiring any specified factory wherein more than 250 workers are ordinarily employed to provide and maintain a canteen by the occupier for the use of the workers. It is not in dispute, pursuant to this requirement of law, the management is providing canteen facilities wherein the respondent employees are working. Hence, it is fairly conceded by the learned counsel for the management that the respondent workmen by virtue of the definition of the 'workman' under the Act are the employees of the appellant-management for purposes of the Act."
5. After having gone into the question of the worker being declared as the employee of the management for the purposes of the Factories Act, the Court further analysed the question as to whether such relationship as existed between the worker and the employer under the Factories Act could be extended to wider areas. The following observations in Para 17 of the Judgment are apposite.
"17. The question however is: does this status of a workman under the Factories Act confine the relationship of the employer and the employees to the requirements of the Factories Act alone or does this definition extend for all other purposes which Include continuity of service, seniority, pension and other benefits which a regular employee enjoys. The Factories Act does not govern the rights of employees with reference to recruitment, seniority, promotion, retirement benefits etc. These are governed by other statutes, rules, contracts or policies. Therefore, the workmen's contention that employees of a statutory canteen ipso facts become the employees of the establishment for all purposes cannot be accepted."
6. After referring to the arguments advanced and the prevlous judgments of the Supreme Court on the related question, their Lordships further held as under :
"22. If the argument of the workmen in regard to the interpretation of Raha's case is to be accepted then the same would run counter to the law laid down by a larger Bench of this Court in Khan's case (supra). On this point similar is the view of another three Judge Bench of this Court In the case of Employers In relation to the Management of Reserve Bank of India v. Workmen . Therefore, following the judgment of this Court In the cases of Khan and RBI (supra), we hold that the workmen of a statutory canteen would be the workmen of the establishment for the purpose of the Factories Act only and not for all other purposes."
7. Having thus declared in unequivocal terms that the employees working in a Canteen can be treated as the employees of the principal employer only for the limited purpose of their coming within the purview of the Factories Act, the Court went on to examine further question as to whether, on the basis of the material on record in that case, these employees could also be treated as the employees of the principal employer for all other purposes. The following broad parameters were laid down in order to scrutinise whether this relationship existed or not.
"(a) The canteen has been three since the inception of the appellant's factory.
(b) The workmen have been employed for long years and despite change of contractors the workers have continued to be employed in the canteen.
(c) The premises, furniture, fixture, fuel, electricity, utensils etc. have been provided for by the appellant.
(d) The wages of the canteen workers have to be reimbursed by the appellant.
(e) The supervision and control on the canteen Is exercised by the appellant through its authorised officer, as can be seen from the various clauses of the contract between the appellant and the contractor.
(f) The contractor is nothing but an agent or a manager of the appellant, who works completely under the supervision, control and directions of the appellant.
(g) The workmen have the protection of continuous employment in the establishment."
8. On the question of fact their Lordships ultimately came to the conclusion that the Contractor in that case was engaged only for the purpose of record and that for all purposes the workers were in fact the workmen of the management.
9. Para 27 of the Judgment records such a finding which we reproduce hereinbelow. It reads thus :
"At this stage, It is necessary to note another argument of Mr. Andhyarujina that in view of the fact that there is no abolition of contract labour in the canteen of the appellant's establishment, it is open to the management to manage its canteen through a contractor. Hence, he contends that by virtue of the contract entered into by the management with the contractor, the respondent-workmen cannot be treated as the employees of the management. This argument would have had some substance if in reality the management had engaged a contractor who was wholly independent of the management, but we have come to the conclusion on facts that the contractor in the present case is engaged only for the purpose of record and for all purposes the workmen in this case are in fact the workmen of the management. In the background of this finding, the last argument of Mr. Andhyarujins should also fall."
10. In the light of the aforesaid pertinent observations of the Apex Court in Indian Petro Chemicals Corporation, with reference to the facts of our case we have to find out whether, based on the terms and conditions of the Contract agreement between the Contractor and the Appellant and other relevant materials which has been referred to and relied upon by the learned Advocates of the parties, the respondent-writ petitioners can be declared to be the employees of the appellant for all purposes, thus entitling them to the benefit of regularlsation of their services with the appellant.
11. A Tripartite Settlement between a Contractor, the employees and the Assistant Labour Commissioner of the area came to materialise, the same being valid from 1st December, 1987 to 30th November, 1990 whereby certain terms and conditions were agreed upon between these parlies with regard to some labour Issues relating to the workmen employed by the Contractor. Another settlement between the same parties, this time valid upto 1st December 1993 was also arrived at concerning once again the labour issues between the workmen and the Contractor. A perusal of both these settlements clearly shows that the appellant was not a party to either of these two settlements and that the petitioners themselves were claiming to be the employees of the Contractor all through. Not only that we have perused two communications addressed by any on behalf of the employees whereby they requested the appellant for their absorption with the Indian Oil Corporation. We have also gone through, minutely and extensively the terms and conditions of the Contract Agreement having been entered Into between the Contractor and the Appellant wherein a free hand is given to the Contractor with regard to the engagement of the services of the employees working in the Canteen. Unlike other Contract Agreements in vogue between the principal employees and the Canteen Contractors in various other Cases wherein a Clause for a stipulation exists that the employees presently working in the Canteen must be retained and engaged compulsorlly even If a new Contractor takes over. In the present Case before us no such stipulation or condition exists In the Contract Agreement between the Contractor and the appellant. On the other hand, what we find is that the terms and conditions of the Agreement clearly suggests that the Contractor was always at liberty to engage persons of his choice and there is no stipulation whatsoever that the employees working in the Canteen at the time of commencement of the Contract must be retained by the Contractor.
12. The following terms and conditions of the Contract Agreement being relevant being quoted with advantage :
"5. CATERING STAFF :
5.1 The Contractor shall at his cost maintain adequate number of catering staff such as Cooks, helpers, service boys, sweepers and other persons for smooth and efficient running of the canteen services. The contractor shall engage required number of persons In the canteen with the explicit permission/approval of the Owner.
5.2 The present man power in the Canteen in 119 covering all categories of personnel as mentioned below :
However, if at any time at its decided to increase or decrease the manpower, the contractor shall get proportionate increase or decrease of monetary compensation in this respect provided such increase or decrease in the manpower should be done only with the express approval of the owner. If any manpower is added without approval of the Owner, it will be at the cost of the Contractor and no liability for compensation whatsoever shall accrue on the Owner for such act/acts. No person below the age of 18 years or found to be medically unfit, will be allowed employment in the Canteen. Also if, at any time, any canteen employees is found involved in moral turpitude in any Court of law. the services of such Canteen employee will be immediately terminated by the Contractor and no liability for compensation whatsoever will accrue on the owner for such act/acts.
5.3 The contractor shall maintain a register showing names and addresses of the persons so engaged alongwith photographs of each person and shall produce the same for inspection on demand by Welfare officer or such other person so authorised by the Owner. The contractor shall not use or allow to be authorised to be used Canteen Building or any part thereof for dwelling purpose and shall not allow any outsider to loiter in and around the Canteen without valid authority."
13. If there was any doubt with regard to the nature of employment of the employees working in the Canteen, stipulation figuring at SI. No. 4,6 made that clear will produce this stipulation which reads thus :
"4.6 The Contractor, shall be required to employ/engage only that member of employees/workers as may be specifically authorised by the owner from time to time and shall maintain complete records of such employees/workers with regard to their names, address, qualifications, experience and other required details. The owner shall have absolute right to test, interview or otherwise assess or determine skills knowledge proficiency, capability etc. so as to ensure that such employees/workers are competent qualified or otherwise suitable for efficiently and safety performing the work covered by this contract. Any employee/worker rejected not authorised by the owner shall not be employed/engaged by the Contractor on the work covered by this Contract."
14. A lot was said about the control exercised by the appellant over the Contractor in the running of the Canteen. Various terms and conditions of the contract and its salient features were referred to and relied upon to convince the Court about the extent of such control. Undoubtedly the appellant does exercises effective control over the Contractor into all matters and affairs relating to the running of the Canteen, the nature of services to be provided and so on and so forth. Such exercise of effective control is inherent In every such contract because the principal has to ensure that the contract is carried out properly and that the purpose of awarding the contract is not frustrated, particularly in a case where the contract relates to the running of a Canteen. It Is quite natural for the principal to provide for its effective control, supervision and interference In all matters relating to the provisions of services, eatables and drinks, sanitation, hyegine, cleanliness, proper furniture, crockery, cutlery, quality of food stuff, the rate structure and so on and so forth. This will be more particularly so in a case like the present one where the services are highly subsidised by the principal since the Canteen is to run 24 hours every day because of the nature of the operations In the Factory. Nobody can dispute that the exercise of control by the principal is very effective and that the Contractor has very little say In the operations and running of the Canteen- All this however does not mean that the employees working in the Canteen become the employees of the Principal. Suppose a Canteen contract in a new factory is given for the first time to a Contractor who recruits his own Staff, newly recruited by him, as employees to run the Canteen but the terms and conditions of the contract agreement do stipulate total, effective and complete control by the principal employer with respect to all matters relating to the running of the Canteen. Does it mean that the employees, because of the fact of exercise of such control by the principal, become the employees of the principal and cease to be the employees of the Contractor.
15. Indian Petro Chemicals Corporation is a clear Authority on the subject that the employees do become the workers as far as the Factories Act is concerned, but that does not mean that they shall be termed as the workers of the principal employer for other purposes and thus entitled to absorption into the services of the principal employer. According to us the learned single Judge erred in treating the writ-petitioners as the employees of the appellant, only and merely on the basis of the effective control exercised by the appellant over the affairs of the Canteen. We have no doubt that the exercise of such effective control does not by itself amount to the employees becoming the workman of the appellant because we are quite convinced that the engagement of the Contractor for running the Canteen was a genuine and bonafide contract between the appellant and the Contractor and that it was not a sham transaction and further that the contractor was not an agent or employee of the Appellant. Various terms and conditions of the contract agreement clearly suggests that it was an authentic, genuine and bonafide contract, notwithstanding the exercise of control by the appellant. We may reiterate that the exercise of such control is inherent and inevitable in all such contracts because the principal employer cannot allow the contractor's unfettered discretion in running and operating the Canteen.
For what we have said therefore, we feel that the judgment under appeal is to be set aside.
We accordingly allow this appeal and set aside the Judgment of the learned single Judge but without any order as to costs.
M. K. Basu, J.--I agree.
16. Appeal allowed