Kerala High Court
Hindusthan Newsprint Industrial ... vs Hindusthan Newsprint Ltd. on 6 March, 2006
Equivalent citations: 2006(2)KLT103, (2006)IIILLJ292KER
Author: S. Siri Jagan
Bench: S. Siri Jagan
JUDGMENT S. Siri Jagan, J.
1. The issue involved is common to both these cases. The issue is whether the employees employed in a canteen by a principal employer through a contractor in fulfillment of the statutory obligation of maintaining a canteen as provided under the Factories Act are, in fact, employees of the principal employer and entitled to regularisation as such.
2. In both cases, the principal employers are institutions fully owned by the Government. One is a Government Company and the other is an authority under the Major Port Trusts Act. It is not disputed that these principal employers are statutorily obliged to maintain a canteen for its employees as per the provisions of the Factories Act. It is also not disputed that they are maintaining the canteen by entrusting such maintenance of canteen to a contractor as per the terms of a contract. But workers and the union of the institutions claimed that going by the decisions of the Supreme Court in respect of the canteens maintained pursuant to statutory obligation, the employees of the canteen are, in fact, employees of the principal employer himself and as such are entitled to regularisation. The principal employers, relying on other decisions of the Supreme Court submits that as the law stands today, the employees of the canteen maintained by the principal employer in fulfillment of the obligation under the Factories Act can be regarded as employees of the principal employer only for the purpose of the Factories Act and not for any other purpose.
3. We have heard counsel for the management-employers and the workers and the union. Both sides cited before us respective Supreme Court decisions available on the point which supports their case. Unfortunately for us, there are decisions supporting both of them. Some decisions such as Indian Petro Chemicals Corporation Ltd. and Anr. v. Shramik Sena and Ors. and Haldia Refinery Canteen Employees Union and Ors. v. Indian Oil Corporation Ltd and Ors. do support the case of the management-employers. On the other hand, the decisions in M.M.R. Khan v. Union of India 1990 Supp (2) SCC 191, Parimal Chandra Raha v. L.I.C. of India 1995 Supp (2) SCC 611 and the Constitutional Bench decision in Steel Auihority of India Limited v. National Union Waterfront Workers do support the case of the workers and Union. However, we are unable to come to a definite conclusion as to the law as it prevails today, based on these decisions because the decisions relied on by each support their case. As such, we have no option but to hold that the law on the subject is not settled as on today. We are supported in this view by the latest decision of the Supreme Court itself on the point which is State of Karnataka and Ors. v. K.G.S.D. Canteen Employees' Welfare Assn. and Ors. (2006) 1 SCC 567. In that case, after cataloguing all decisions on the point, including those cited by both parties before us, the Supreme Court, in paragraph 32 of the decision, held as follows:
32. We have referred to the aforementioned decisions in order to show that in each of the aforementioned cases the industrial adjudicator was required to apply the relevant tests laid down by this Court in the fact situation obtaining therein. Most of the cases referred to hereinbefore were considered by this Court in the peculiar facts and circumstances obtaining therein and, thus, it is even not proper for the industrial adjudicator to apply the ratio of one decision to the exclusion of other without considering the facts and circumstances involved therein. The law, however, does not appear to be settled as to whether even in a case where the employer is required to run and maintain a canteen in terms of the provisions of the statute, the employees of the canteen would automatically be held to be the workers of the principal employer for allintent and purport and not for the purpose of the Factories Act alone. We however, are not concerned with the said question in this matter and refrain ourselves from making any observation in respect thereof.
(Emphasis supplied) Of course, based on the last sentence of the paragraph, counsel for the union-petitioner in the Original Petition would submit that that observation need not be taken as the final word in this regard because the last sentence referred to specifically shows that in that decision, the Supreme Court was not considering the facts similar to one which is the basis of the Writ Petition and the Writ Appeal under consideration.
4. We cannot but disagree. In this decision, the Supreme Court had specifically addressed themselves to the very question as to whether in respect of employees of statutory canteens the principal employer would be the employer of the employees of the canteen and whether such employees are entitled to regularisation. Further, the Supreme Court had reviewed all its earlier decisions on this subject and ultimately came to the conclusion, which is emphasised by us in the paragraph extracted from the decision above. Therefore, we have no hesitation to hold that the matter on the subject as on today stands unsettled.
5. Of course, when the law is unsettled, we may have to decide the law afresh. Counsel for the principal-employers would beseech us to follow a Division Bench decision of the Madras High Court in Elangovan M. and Ors. v. Madras Refineries Ltd., Chennai and Ors. 2005-II LLJ 653, wherein after reviewing the Supreme Court Decisions except the decision in K.F.S.D. Canteen Employees Welfare Association case (supra), the Madras High Court came to the conclusion that such canteen employees of statutory canteens are not employees of the principal employer and such employees are not entitled to regularisation as employees of the principal employer. But we are of opinion that for deciding the case, essentially we have to come to certain findings on facts, such as whether the contract entered into between the principal employer and the contractor is a bonafide or a sham transaction, whether the terms of the contract would amount to in fact absolute control on the part of the principal employer in the running of the canteen, whether the principal employer had any role in the recruitment of the employees whether the principal employer had control over the employees of the canteen etc., etc.... We feel that these matters cannot be decided in proceedings under Article 226 of the Constitution of India. Further, we find that in the decision in K.F.S.D. Canteen Employees' Welfare Association itself, the Supreme Court had held that it is not open to a High Court to exercise its discretion to interfere in labour matters when serious disputed questions of fact as to existence of employer-employee relationship are raised and the High Court should leave such adjudication of disputed questions of fact to the Industrial Board. The Court further held that it is not open to the High Court to exercise its discretion under Article 226 of the Constitution either to frame a scheme by itself or to direct the State to frame a scheme for regularising the services of ad hoc employees or compel wage employees who had not been appointed in terms of service rules framed either under a statute or under the proviso to Article 309 of the Constitution. We feel that in view of the binding precedent we are not expected to go into these questions of fact to come to a finding as to whether the employees of the canteen are in fact employees of the principal employer itself. These are matters which have to be resolved in an appropriately raised industrial dispute under the provisions of the Industrial Disputes Act by resorting to the procedure prescribed under the said Act.
Accordingly, leaving the parties to get these matters resolved in an industrial dispute raised for the purpose, we allow W. A. No. 48/2004 and set aside the judgment of the learned Single Judge and dismiss the Original Petition. O.P.No. 11295/1996 would also stand disposed of without prejudice to the right of the workers or unions to raise an industrial dispute.