Rajasthan High Court - Jaipur
Hindustan Machine Tools Employees ... vs Hindustan Machine Tools Ltd. And Ors. on 3 May, 1995
Equivalent citations: (1997)IIILLJ610RAJ, 1995(2)WLN507
JUDGMENT V.K. Singhal, J.
1. This judgment shall dispose of all the above writ petitions as the point involved is common in all these writ petitions, namely, whether the employees of the canteen could be considered the employees of H.M.T. Ltd. (hereinafter called the company) or/are the employees of H.M.T. Employees Co-operative Canteen, Ltd. (hereinafter called co-operative canteen).
Writ petition No. 1341 of 1986 has been filed by H.M.T. Employees Union against the award of the Labour Court, dated March 27, 1986, in which it was decided that the H.M.T. Employees Co-operative Canteen Ltd., is the employer of V.N. Bose and not the company. A prayer is made that the said employee be declared the employee of the company irrespective of the fact that he was working in the co-operative canteen.
Writ Petition No. 1477 of 1987 has been filed by the H.M.T. Employees Union against the award of the Industrial Tribunal, dated November 5, 1986, in which it was declared that the employees of the canteen are regular employees of the management, i.e. the company and they are entitled to perks including the leave as the regular employees in the establishment of the management. The employees in canteen at serial Nos. 1 to 20 and 26 to 36 were directed to be placed in WG-1 Grade and employees at serial Nos. 21 to 25 were directed to be placed in WG-II Grade. The award was made applicable from the date of the award and the prayer in the writ petition was made that the award be made operative from January 1, 1983 and Viswanath workman at serial No. 25 be declared entitled to be fixed in WG-III Grade instead of WG-II Grade.
Writ Petition No. 4704 of 1991, has been preferred by H.M.T., Ltd., against the award, dated October 1, 1990, of the Industrial Tribunal, Jaipur in which it was held that the employees Kishan Singh, Tej Singh, Kan Singh, Om Prakash, Om Prakash Rao and Hari Singh are the employees of the company and are entitled to WG-I Grade.
Writ Petition No. 671 of 1987 has been filed by H.M.T., Ltd., against the award, dated November 5, 1986, which have also been challenged by the union as mentioned above and the employees of co-operative canteen were considered as employees of the company.
The facts of the case are that H.M.T. Ltd., is a company incorporated under the Companies Act, 1956, in which 100 per cent shares are of Government of India. A co-operative society in the name of H.M.T. Employees Co-operative Canteen Ltd. was registered under the provisions of Rajasthan Co-operative Societies Act, 1965, with effect from November 17, 1979. The object of the canteen was to promote the economic interest of the members, to encourage self help and mutual help amongst its members, to provide better canteen facilities for better work and better living of the H.M.T. employees at Ajmer, the purchase and sale of the articles of requirement of good quality for H.M.T. employees at reasonable price, to carry on any other thing which is incidental and conducive to the contents of the objects of the canteen and to provide a fair rate of return on share-holders' investment. The membership of the co-operative canteen was restricted to the employees of the company.
H.M.T. Employees Union was having the membership of about 300 workers and is said to be unrecognised union. H.M.T. Shramik Sangh was having about 800 workers and is said to be a recognised union. An application was moved by H.M.T. Employees Union to the Deputy Labour Commissioner, Labour Department that the employees of the society working in the canteen should be treated as employees of the company. There was a failure report of the Conciliation Officer which was sent to the Government on January 231 1984. The dispute was preferred under Section 10(1) read with Section 12(5) of the Industrial Disputes Act to the Industrial Tribunal. The Statements of claim were filed by the Union on October 22, 1984 and reply by the company on February 15, 1985. An objection was taken that H.M.T. Co-operative Canteen Ltd. is a necessary party and on that basis the application, dated May 15, 1986, was moved by the union. The said application was ultimately withdrawn on July 29, 1986 with the change of Presiding Officer.
2. The grievance of the company in this writ petition is that the union is not a recognised union and does not represent the majority of the employees. After coming into existence of the co-operative society, none of the employees have made representation that they should be treated as employees of the company. The company has given the contract to run the canteen to the co-operative society as the Contract Labour (Regulation and Abolition) Act does not prohibit execution of the work on contract basis. The said co-operative society has obtained the licence under the Contact Labour Act. The dispute, if any, should have been preferred under Section 75 of the Rajasthan Co-operative Societies Act. The co-operative society was a necessary party. The canteen is not run by the company nor the co-operative society is the creature of the management of the company. The co-operative society came into existence at the instance of the employees of the company. Merely because certain amenities including financial assistance for subsidised rates have been given by the company, it cannot be said that there was any financial or managerial control or supervision over the employees of the society by the company. There were certain officers who were acting in dual capacity and the management committee of the co-operative society is constituted by election. A copy of registration certificate of the society Exhibit M2, dated November 17, 1979, have been placed on record. The copy of Exhibit M1, dated November 21, 1979, written by the company to the co-operative canteen have also been placed on record in which it is mentioned that the company will provide canteen as per provisions of the Factories Act, 1948, and the society will supply lunch, snacks on rates fixed by the company. The amount incurred by the society for the service of canteen will be paid on actual basis in the form of subsidy. It was also mentioned that the society would pay its employees atleast minimum wages as per the Minimum Wages Act as amended from time to time and will observe strictly that law of land under the terms and conditions of the services of its employees. If the services of the canteen were found unsatisfactory, the contract could be terminated by the management of the company.
In the statement claim it was mentioned that there are about 1700 workers and the H.M.T. Employees Co-operative Canteen, Ltd., is only a pseudo name. All the members and officers of the society are employees of the company. The President of the society N. V. Tandon and Secretary V. Balani are the Chief Personnel Manager and Deputy Personnel Manager and there is complete administrative control of the officers.
In the above four writ petitions the awards, dated March 27, 1986, November 5, 1986 and October 1, 1990, are in dispute. According to the management the operations of the canteen are being carried on by a co-operative society in the name of H.M.T. Employees Co-operative Canteen Ltd., and the employees of which the dispute has been raised were employed by the said canteen. The letter of appointment, dated November 21, 1979, by H.M.T. Ltd., to award the contract to run the canteen to the said Co-operative Canteen Ltd., have been placed on record and, therefore, it is submitted that the company cannot be made responsible with regard to the termination or other benefits claimed by the employees of the said canteen.
While according to the H.M.T. Employees Union the company is under statutory obligation to maintain the canteen and it is alleged that the entire management is of the company itself. Only the veil is to be lifted to bring the correct position on record. It is submitted that the termination of the employees by the canteen is not in accordance with law and that the employees are entitled for the various benefits for which the demand was made to which the other employees of the company are entitled to. In order to appreciate the contention of both the sides the findings which have been recorded in the award have been taken into consideration. It may be noted that the award, dated March 27, 1986, is in favour of the management while the award, dated November 5, 1986 and October 1, 1990, are in favour of the employees union. The findings which has been recorded in the award, dated March 27, 1986, are as under:
The dispute in this case was with regard to the termination of services of V.N. Bose. The statement of B. Balani and V.P. Gupta were recorded in which they have stated that the management of the canteen is run by the Employees Co-operative Canteen, Ltd., and the company H.M.T. Ltd., is not responsible for it. In the statement of Bhanwarlal it was stated that the management is run by the co-operative society canteen but, the officers of the company are the executives of the canteen also. The employee was appointed by Sri Tandon who is the Chief Personnel Manager of the company and the President of the canteen. In the statement Sri P.C. Joshi has stated that the control on the staff was of Sri Bose.
On behalf of the company it was stated that the employees of the canteen were appointed by the contractor, i.e., the Cooperative Canteen Ltd.
3. On the basis of the evidence which was produced the Judge came to the conclusion that it is not true that the employee was given the appointment by the company or that the company has control over the management of the canteen. The canteen co-operative society is responsible for the management of the canteen and the company cannot be made responsible for it. The employees Co-operative Canteen Ltd., is the employer. In the award, dated November 5, 1986, the dispute was with regard to the demand of 36 employees of the canteen. The Judge, Industrial Tribunal found that the canteen is run within the premises of H.M.T. Ltd., Ajmer, Sri V.N. Tandon and Sri B. Balani are the President and Secretary of the co-operative canteen respectively and also the Chief Personnel Manager and Deputy Personnel Manager of the company. The entire furniture, utensils and other articles which are used in the canteen are provided by the management. The eatables provided are subsidised by the management and the price of the eatables are fixed by management. The wages of the employees working in the canteen are paid by the management by giving the subsidy. It was found that the Contract Labour Act has been enacted to regulate the employment of contract labour in certain establishments and to provide for its abolition in certain circumstances. The case of the employees was that the canteen is run by the management through the co-operative canteen in, compliance with the statutory provisions contained in Section 46 of the Factories Act, 1948, and the co-operative canteen has no independent existence of its own but, is a creature of management which is providing building, utensils, furniture and subsidy through the canteen and exercising the administrative and economic control over the canteen. The company contended that the co-operative canteen has an independent existence and is a registered body. It is run and managed by the managing committee which is elected by the workers. The employees are employed by the canteen and there is no relationship of master and servant between the employees of the canteen and the company.
On behalf of the workers a document Exhibit W1, dated March 14, 1982 was produced having the signature of Deputy General Manager (Personnel) Sri K.A. Gandhi with regard to the increase in wages of the employees of the canteen. It was contended on behalf of the company that the sanction was given by Sri K.A. Gandhi as the President of the co-operative canteen for which the minutes of the meeting recorded in Exhibit M-7, dated July 14, 1982, were submitted. The Judge Industrial Tribunal was of the view that the increase in the wages of the office-bearers proves that they are the employees of the company and the company has to bear the expenses resulting from the revision to effect the increase of wages of employees of the canteen. Exhibit W5 is in respect of regularisation of services of casual workers employed in the co-operative canteen was also taken note. Exhibit W6 in connection with provident fund deduction of employees working in the canteen and visit of K.G. Sharma who was Personnel Officer in the management was also taken into consideration. Exhibit W7 was in respect of the items supplied by the management to the company. Exhibit W8 as a statement of extra-duty of Kalicharan-canteen-boy in the Personnel Department of management in the month of November and December, 1982 was also produced. Exhibit W9 was a document for fixation of lunch-time of the contract labour. Exhibits W10 and W12 was in respect of the furniture requirement of the canteen. Exhibit W11, dated January 27, 1981, was for the transfer of beehive hard coke from foundry to canteen. Exhibit W13 prescribed the system by which the sale of articles in the canteen is made. Exhibit W14 is the indent of purchase of articles required for use in canteen. Exhibit W15 is for repair of weighing scale of the canteen for which the order was given by the Personnel Officer, Sri P. Sharma. Exhibit W16 is the letter by which the Chief Personnel Manager, Sri V.N. Tandon has given a separate code number RJ 3291 to govern the canteen under the Employees' Provident Fund Act as a separate establishment. Exhibit W17 is the certificate of employment issued by the officer of management to Santosh Kumar in canteen. Exhibits W18 and 19 are the notes whereby the canteen-boy Kalicharan was asked to give his duties in the Welfare Department of H.M.T. Ltd., in the month of March 1983. Exhibits W20 and W21 show that one Lal Singh has deposited the canteen money with the H.M.T. Ltd., and obtained the receipt. Exhibit W23 is copy of written statement in which Sri K.G. Sharma (since removed) was shown as employee of the company. Exhibit W24 has declared the canteen as department of the company.
P.W.1 Bhanwarlal deposed in the affidavit that the canteen is run by the management through co-operative canteen. The official who run cooperative canteen is the employee of the management. The articles like furniture, utensils and coal are provided by the management to the canteen and building of canteen is situated in the premises of the management. The management takes the decision with regard to the increase of wages of the employees working in the canteen. Menu is prepared by the company.
Sri Phool Chand one of the workers in his affidavit stated that the canteen is run in the premises of the company and the articles used in the canteen are supplied by the management. Price of eatables are fixed by the management and that he was employed by the manager of the co-operative canteen. Another employee Babu Khan has deposed that he was employed as attendant in the canteen and the utensils, furniture, electric power and water are made available from the management. He was employed by the contractor before 1975 and many a times the vehicles of the management used to bring the articles from the market to canteen.
Sri O.P. Sharma, Treasurer of the co-operative canteen deposed that the official control of the canteen lies with the co-operative canteen and the management has nothing to do with its day to day functioning. The fact of giving the subsidy was admitted and the canteen is being run in the building of the company was also admitted. The furniture is stated to be supplied by the co-operative canteen and not by the management. Sri Syed Ahmed, Manager of the canteen, deposed that the canteen is controlled by the co-operative canteen and is run in the building which is not within the premises of the management. The officials of the co-operative canteen were admitted to be employees of the management. Sri Pramod Sharma, Ex. Secretary, deposed that the canteen is run by the co-operative canteen which exercises the economic and administrative control. Sri C.L Lalwani, Deputy Personnel Manager stated that the canteen is run pursuant to the statutory obligation. The management does not exercise control over the canteen.
Certificate of registration and bye-laws governing the functioning of the co-operative canteen were also submitted in which under Article 5 it was provided that the membership of the co-operative canteen shall be open to the employees of the management and under Article 23 the supreme authority was to vest in the general meeting of the members of the co-operative canteen. Article 33 referred to the election of the various office-bearers of the canteen. Article 42 refers to the authority of the management to the canteen which have appointed the staff of the canteen.
4. On the basis of the above documentary and oral evidence the Judge Industrial Tribunal came to the conclusion that there is financial and economic beside the administrative control and it was held that the employees of the canteen are regular employees of the management.
In the award, dated October 5, 1990, the dispute was with regard to the employees; Kishan Singh, Tej Singh, Ram Singh, Om Prakash, Om Prakash Rai and Hari Singh. On behalf of the union the affidavit of Om Prakash and Bhanwarlal were submitted while on behalf of the management affidavit of Shahid Ahmed, Umesh Bhargava and Sushil Kumar Malhotra were submitted. A document PW1 with regard to the fixation of salary of the employees of the canteen by the company was submitted. PW2 was with regard to the responsibility of the company to run the canteen and PW5 and 6 was a document showing the sanction of DGM for furniture. PW8 was a document for repair of the weighing scale of the canteen and other documents as were referred in the award, dated November 5, 1986, were submitted. The Judge Industrial Tribunal came to the conclusion that the employees of the canteen were the employees of the management. The bye-laws (Annexure I) of the H.M.T. Employees Co-operative Canteen and the registration certificate of the H.M.T. Employees Co-operative Canteen registered under the Contract Labour (Regulation and Abolition) Act, 1970 (Annexure 4), were also submitted.
Because the controversy is centered on the point as to whether the employees of the co-operative canteen would be considered as the employees of the company, it is necessary to refer the relevant provisions of law.
Section 46 of the Factories Act, 1948, casts a statutory obligation for providing maintenance of canteen by the occupier for the use of workers. The provisions of Section 46 are us under :
"46. Canteen.--(1) The State Government may make rules requiring that in a 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 use 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 statements 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 prescribed, of the power to make rules under Clause (c)"
Section 2(n) provides the "occupier" of a factory means the person who has ultimate control over the affairs of the factory. The definition of "workers" has been given under Clause(1) which means a person employed directly or by or through any agency (including a contractor) with or without the knowledge of the principal-employer, whether for remuneration or not, in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to, or connected with, the manufacturing process, but, does not include any member of the armed force of the union.
25. "Manufacturing process" has been defined under Clause 2(k); means any process for--
(i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking- up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale transport, delivery, or disposal; or
(ii) pumping oil, water, sewage or any other substance; or
(iii)generating, transferring or transmitting power; or
(iv) composing types for printing by letter press, lithography, photogravure or other similar process or book binding; or
(v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels; or
(vi) preserving or storing any article in cold storage.
In the Contract Labour (Regulation and Abolition) Act, 1970, "contractor" is defined as under:
"Section 2(a) 'contractor' in relation to an establishment, means a person who undertakes to produce a given result for the establishment, other than a mere supply of goods or articles of manufacture to such establishment, through contract labour, or who supplies contract labour for any work of the establishment and includes a sub-contractor.
2(g) 'Principal-employer" means --
(i) in relation to any office or department of the Government, or a local authority, head of that office or department or such other officer of the Government or the local authority, as the law may be, may specify in this behalf,
(ii) in a factory, the owner or occupier of the factory, and where a person has been named as a manager of the factory under the Factories Act, 1948, the person so named,
(iii) not relevant
(vi) not relevant"
"Section 20 : Liability of principal employer in certain cases.-- (1) If any amenity required to be provided under Sections 16 to 18 or Section 19 for the benefit of the contract labour employed in an establishment is not provided by the contractor within the time prescribed therefor, such amenity shall be provided by the principal employer within such time as may be prescribed.
(2) All expenses incurred by the principal-employer in providing the amenity may be recovered by the principal employer from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor."
"Section 21: Responsibility of payment of wages.-- (1) A contractor shall be responsible for payment of wages to each worker employed by him as contract labour and such wages shall be paid before the expiry of such period as may be prescribed.
(2) Every principal-employer shall nominate a representative duly authorised by him to be present at the time of disbursement of wages by the contractor and it shall be the duty of such representative to certify the amount paid as wages in such manner as may be prescribed.
(3) It shall be the duty of the contractor to ensure the disbursement of wages in the presence of the authorised representative of the principal-employer.
(4) In case the contractor fails to make payment within the prescribed period, or makes short payment then the principal-employer shall be liable to make payment of wages in full or the unpaid balance due, as the case may be, to the contract labour employed by the contractor and recover the amount so paid from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor."
Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970, which is reproduced as under:
"10. Prohibition of employment of contract labour.-- (I) Notwithstanding anything contained in this Act, the appropriate Government may, after consultation with the Central Board or, as the case be a State Board, prohibit by notification in the Official Gazette employment of contract labour in any process, operation or other work in the establishment.
(2) Before issuing any notification under Sub-section (1) in relation to an establishment, the appropriate Government shall have regard to the conditions of work and benefits provided for the contract labour in that establishment and other relevant factors, such as--
(a) whether any process, operation or other work is incidental to, or necessary for the industry, trade, business, manufacture, or occupation that is carried on in the establishment;
(b) whether it is of perennial nature that is to say, it is of sufficient duration, having regard to the nature of industry, trade, business, manufacture or occupation carried on in that establishment;
(c) whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto;
(d) whether it is sufficient to employ considerable number of whole time "workmen."
5. From the above provisions of law it is evident that obligation to provide and maintain the canteen is on the occupier for the use of its workers where the number of workers ordinarily employed exceeds 250. It is not in dispute that there were more than 250 workers ordinarily employed in the company and, as such, the company being the occupier was under obligation to provide and maintain the canteen. The dispute is mainly, as to whether the co-operative canteen could be considered as a contractor to which the work of management of the canteen has been given. The occupier may provide and maintain the canteen itself through its employees or it may be through the agent/contractor or any other body of persons including a society to whom the work may be entrusted to run the canteen. The premises, equipments and the facilities have to be provided by the occupier. It is only the maintenance which would be a different agency. Whether the work of maintenance of the canteen have been entrusted to a different agency or it is only a camouflage is one of the aspects to be seen in the matter. A society registered under the Co-operative Societies Act, is definitely a different legal entity than a company which is registered under the Companies Act. This is in spite of the fact that even the members or the office-bearers may be common to both. The share capital in the case of the company is provided by the Government of India. In the case of the society this is not the position. Society cannot be said to be owned by Government of India but has been formed by the workers/employees of the company.
In Kanpur Suraksha Karamchari Union v. Union of India, (1989-I-LLJ-26) it was observed by the Apex Court that a canteen is an integral part of the defence establishment belonging to the Union of India. There cannot be a canteen without sufficient number of workers working in the canteen. They have to be appointed by the occupier in compliance with Section 46 of the Act. The occupier, who under Section 2(n) is the person appointed to manage the affairs of the factory by the Central Government, is under an obligation to comply with Section 46 by establishing a canteen for the benefit of workers. In the case of canteen run by a contractor or co-operative society or some other body, the contractor or the co-operative society or some other body will be the employer but not the managing committee.
(emphasis given).
In this case it was observed that a canteen managing committee's function was merely advisory. Under Rule 68 of the Uttar Pradesh Factories Rules, 1950, canteen managing committee was to be established under Rule 68(20) of the Rules and looking to the nature of function of the canteen managing committee it was held that the defence establishment of Kanpur, is the occupier. It was observed by the Apex Court that the Act is applicable to the factories run by Government and the factories run by the other private companies and other persons, etc., which is enacted for the purpose of improving the conditions of the workers in the factory. By an order, dated July 25, 1981, sanction was accorded by the President of India to treat all employees of canteen establishment in defence industrial installations under Section 46 of the Act as Government employees with immediate effect. The Government order further provided that it would be applicable to all employees of the statutory canteens irrespective of the type and management of the canteens, till the Government decides otherwise. The employees retired after October 22, 1980 were declined the benefit of the services rendered prior to that date for the purpose of pension on the ground that they became Government employees from October 22, 1980. Considering the provisions of Section 46 of the Factories Act and Uttar Pradesh Factories Rules, 1950, it was observed that the employees working in the canteen were the employees of the factory and the managing committee cannot be said to be employer of those workmen looking to its functions which were merely advisory. It was clearly stated that the canteen run by the contractor or a co-operative society or some other body, the position may be different.
In Cominco Binani Zinc Ltd. v. Pappachan, (1989-I-LLJ-452) it was held by Kerala High Court that, in Para 5, at Page 477 :
"the mere fact that the petitioner had the responsibility to provide and maintain canteen under Section 46 of the Factories Act, cannot make them the ultimate employer of the workers engaged in the canteen for all purposes. Canteen may be run by independent contractors or by co-operative societies of the workers or may be run by the company itself in discharge of the obligation under Section 46 of the Factories Act. In the first two categories the workers in the canteen cannot be considered to be the employees of the management. When the management entrusts the responsibility of running the canteen with a contractor the workmen employed and paid by such contractor cannot be treated as workmen of the management. There is no employer-employee relationship between the management and such workmen. All claims of the workmen are to be met by the contractor or the society as the case may be. If the canteen is run by the contractor or co-operative society the employer in relation to the workers engaged in the canteen will be the contractor or the society."
In Saraspur Mills Company Ltd v. Ramanlal Chimanlal and Ors., (1973-II-LLJ-130) it was observed by the Apex Court that if a person is working in a co-operative society which has been entrusted the task of discharging the activity of running of canteen, the co-operative society is the real employer and not the company. It was by virtue of the amendment brought by the Gujarat Legislature in 1962, amending Clauses 13 and 14 of Section 3 on the basis of which it was observed that by virtue of fiction created by the amendment introduced in the Act, the employees of the society became the employees of the company. The definition under Clauses 13 and 14 by which the amendment was made was as under, in Para 6, at Page 425:
"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) person employed in the execution of any work in respect of which the owner of an undertaking is an employer within the meaning Sub-clause (e) of Clause 14...
14. 'employer' includes...
(e) Where the owner of any undertaking in the course of or for the purpose of conducting the undertaking entrusts the 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 the undertaking.
In Hussainbhai v. Alath Factory Thozhilali Union and Ors., (1978-II-LLJ-397) it was observed by the Apex Court, in Para 4, at pages 398-399 :
"This argument is impeccable in laissez faire economics "red in tooth and claw." and under the Contract Act rooted in English common law. But the human gap of a century yawns between this strict doctrine and industrial jurisprudence. The source and strength of the industrial branch of Third World Jurisprudence is social justice proclaimed in the preamble to the Constitution. This Court in Ganesh Beedi case, (1974-I-LLJ-367) has relied on British and American rulings to hold that mere contracts are not decisive and the complex of consideration relevant to the relationship is different. Indian Justice, beyond Atlantic liberalism, has a rule of law which runs to the aid of the rule of life. And life, in conditions of poverty aplently is livelihood, and livelihood is work with wages. Raw societal realities, not finespun legal niceties, not competitive marks economics but complex protective principles, shape the law when the weaker, working class sector needs succour for livelihood through labour. The conceptual confusion between the classical law of contracts and the special branch of law sensitive to exploitative situations accounts for the submission that the High Court is in error in its holding against the petitioner. The true test may, with brevity, be indicated once again. Where a worker or group of workers labour to produce goods or services and these goods or services are for the business of another, the other is, in fact, the employer. He has economic control over the workers' subsistence, skill, and continued employment. If he, for any reason, chokes off, the worker is 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 arrangements, that the real employer is the management, not the immediate contractor. Myraid devices, half-hidden in fold after fold of legal form depending on the degree of concealment needed the 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 43-43AA of the Constitution. The Court must be astute to avoid the mischief and achieve the purpose of the law and not to be misled by the maya of legal appearances."
In M.M.R Khan v. Union of India, (1995-III-LLJ (Suppl.)-166) it was held by the Apex Court that the canteens would be classified in three categories:
(i) statutory canteens;
(ii) non-statutory recognised canteens; and
(iii) non-statutory non-recognised canteens.
In respect of statutory canteens and non-statutory recognised canteens; workers were held employees of railway while in respect of non-statutory non-recognised canteens in railway were held not to be employees of the railway, The statutory canteens were considered those who were under obligation under Section 46 of the Factories Act, 1948, to maintain the canteen and the number of workers is more than 250. The non-statutory-recognised canteens may or may not have 250 employees and in law they are under no obligation to maintain the canteen. Such canteens are established with the prior approval of the Railway Board. The non-statutory non-recognised canteens were considered where the employees are 100 or less and the canteen is run without prior approval or recognition of the Railway Board. It was found that the non-statutory non-recognised canteens are run by the private contractors and the workers go alongwith the contractors. In respect of statutory canteens, the Railway Board issued a letter on May 22, 1991 conveying the decision of the Ministry of Railways that the employees of canteen should be deemed to be railway servants from September 22, 1980.
In Chintaman Rao and Anr. v. State of Madhya Pradesh, (1958-II-LLJ-252) it was observed by the Supreme Court that, a worker under the definition means a person employed directly or through an agency. In either case there is a contract of employment between the management and persons employed. The expression "directly or through any agency" in Section 2(1) of the Factories Act, could not include in its fold persons employed by an independent contractor for executing his contract and over whom the owner or occupier had no power or control of supervision.
In Coats India Ltd. v. Fourth Industrial Tribunal West Bengal, 1981 (1) LLN 103 the decision in the case of Bengal Water Proof Works v. State of Bengal 1970 L.& I.C. 7. was not relied and the decision of Saraspur Mills Company Ltd v. Ramanal Chimanlal (supra) and Ahmedabad Manufacturing and Calico Printing Company Ltd v. Ram Tahel Roman and Ors. (1972-II-LLJ-165) of the Apex Court were relied. It was observed that it is the obligation of the company to maintain a canteen which is a kind of amenity and the employees must be deemed to be engaged in an operation incidentally connected with the industry carried on by the company. Mere intervention of an independent contractor was not considered sufficient not to treat them as employees of the company.
In General Labour Union (Red Flag) v. K.M. Desai, (1990-II-LLJ-259) Bombay High Court found that the employees engaged by contractor to run the canteen would not become the employees of the company even when the contractor is not registered one.
Madras High Court in the case of Secretary, Madras State General Industries and Commercial Employees Union, Madras v. Additional Labour Court, Madras(1986-I-LLJ-208), observed that: at page 209.
It is one thing to say that the first respondent is bound to run a canteen under Section 46 of the Factories Act. But it is another thing to say that when the canteen run by the cooperative society became defunct, the first respondent is bound to provide employment to the workmen. As soon as the management of the canteen was entrusted to the co-operative society and it became a distinct entity by itself, the obligation of the first respondent to provide employment for the workmen in the canteen ceased to have effect. As pointed out by the third respondent, merely because the President of the cooperative society which runs the canteen is an employee of the first respondent, it cannot said that the first respondent itself was the employer of the workers in the canteen and, therefore, it is bound to provide employment to them in spite of the closure of the canteen by the society."
In Vegoils Private Ltd. v. Workmen , (1971-II-LLJ-567) (SC) the principles for abolition of the contract labour were considered.
In Workmen of Food Corporation of India v. Food Corporation of India 1985 (50) FLR 142 it was observed by the Apex Court that, in Para 11, at page 26:
"Where a contractor employs workman to do the work which he contracted with a third person to accomplish, the workmen of the contractor would not without something more become the workmen of that third person. Therefore, when the contract system was in vogue, the workmen employed by the contractor were certainly not the workmen of the Corporation and no claim to that effect has been made by the union."
Madras High Court in the case of Workmen of Best and Crompton Industries Ltd. (by General Secretary, Socialist Workers' Union, Madras v. Best and Crompton Engineering Ltd, (1985-I-LLJ-492) observed that only such number of workmen employed as per certificate granted under the Contract Labour (Regulation and Abolition) Act, 1970, can be deemed to be contract labour. If more workers than the maximum number permitted under the licence were to be employed by the management through the contractor, the additional force shall not be deemed to be contract labour.
In Workmen employed in Ashok Leyland Ltd. and Ashok Leyland Co-operative Canteen Ltd. Madras v. Ashok Leyland Ltd., Madras, (supra.) it was observed that where the co-operative society was running the canteen which was closed on account of incurring huge losses, the canteen workers were seeking employment under the company is not bound to provide the employment for canteen workers merely because President of the canteen society is employee of the company.
In Indian Explosives Ltd. v. State of Uttar Pradesh, ( 1981-I-LLJ-423) the dispute was with regard to the validity of the reference. In this case Allahabad High Court observed that the canteen in question is situated within the premises of the petitioner-mill. The petitioner supervises the functioning of canteen and it regulates the menu. The furniture and the crockery of the canteen belong to the petitioner company. Food and other edibles are supplied to the workmen employed by the petitioner-mill at the coupon issued at subsidized rates. The Tribunal found that no licence had been obtained by the contractor under the 1970 Act nor the petitioner-mill had not (sic.) obtained the licence under the said Act for enacting the contract labour and on that basis the Tribunal held the petitioner-mill as employer. It may be noted that in this case the definition of "workmen" under Section 2(z) of the Uttar Pradesh Industrial Disputes Act, 1947, and the extended meaning of the expression "employer" as defined by Section 2(1)(iv) were taken into consideration, according to which the workmen employed by contractor were treated as the employees of the industry.
In Workmen of Swatantra Bharat Mills Canteen, New Delhi v. Swatantra Bharat Mills, New Delhi, 1985 (50) FLR 20 Delhi High Court found that no single factor provides a clear and candid test to decide, whether the relationship of employer and employee exists in a particular case. All factors, viz., employers power of selection and dismissal, right of control and supervising the method of doing work, the nature and place of work, the economic control and all other relevant circumstances, have to be kept in mind.
In Indian General Navigation and Railway Company Ltd. v. Workmen, 1950-67-3160-SCLJ it was observed that if the workmen are not directly employed by the company and have been employed through contractor and the payments were at prescribed rates to the workmen concerned is guaranteed by company and such money is paid by the company to contractor to be paid to workmen from month to month the workmen concerned were held to be not employed by the company.
In Workmen of Swatantra Bharat Mills Canteen, New Delhi v. Swatanra Bharat Mills (supra), employees of canteen run by trust premises of mill were held employees of the mill. The supervision, control test, organisational test, economic test and other circumstances were taken into consideration.
6. From the various decisions which have been cited it has to be seen as to whether the relationship of the employer or the employee exists between the H.M.T. Ltd., and employees of the canteen. The letters of appointment in the present case were given by the employees cooperative canteen and not by the same company. The employees co-operative canteen is registered under the Co-operative Societies Act and is separate legal juristic person which has to exercise its power under the Co-operative Societies Act and bye-laws framed. The terms and conditions of the services are governed by the letter of appointment given by the co-operative canteen as well as the statutory provisions which have been made applicable to such employees. Simply because one or two of the officers of the company, who have the power of recruitment, are the office bearers of the society, it cannot be said that the society is only a camouflage of the company and is not in existence in reality. The officers of the company who are members of the society or the executives or office-bearers of the society act in dual capacity. The mere fact of their certain powers in the company itself.(sic.). The company is a separate legal entity registered under the Companies Act and has its own rights and obligations. The obligation which has been provided under Section 46 of the Factories Act is to maintain and provide the canteen. The obligation of the company has been discharged by providing the space and utensils, etc. The subsidy which is provided by the company to the society or the exercise of the power with regard to the firealisation of price of the food articles in the canteen was for the benefit of the workers and could not be considered that, on that account the company was exercising the power of over all superintendence/management of the workers of the canteen.
From the facts which have come to record it is established that H.M.T. Employees Co-operative Canteen, Ltd., is a society registered on November 17, 1979 at serial No. 2768 under Section 8(2) of the Rajasthan Co-operative Societies Act, 1965. The said society has its own bye-laws and the membership is restricted to the employees of the H.M.T. only under Section Clause 5. Under Clause 20 the canteen is at liberty to stock and sell the goods to non-members. Under Clause 21 the President or the Secretary and three members of the Board of Directors have to sign the papers. The supreme authority of the canteen is vested in the general meeting under Clause 23. These duties of the Manager, Secretary have been described beside the powers of the Committee. The power to appoint the staff under Clause 24 has been given to the Committee. The letter, dated November 1, 1979, is a letter written by the H.M.T. Ltd., to the. H.M.T. Employees Co-operative Canteen Ltd., to award the contract to run the canteen. The said co-operative canteen is registered under the Contract Labour (Regulation and Abolition) Act, 1910 (Annexure 4). The various documents which have come on record establish that in order to comply with the requirements of Section 46 of the Factories Act, the company was under obligation to maintain the canteen and the management of the said canteen is run by the co-operative canteen. The said canteen was situated in the premises of the company. The price of eatables were subsidised and the subsidy was provided by the company for the subsidised rates or eatables and even for making the payment of salary of the employees of the society. The employees of the canteen were recruited by the co-operative canteen. Above are undisputed facts. Certain documents which have been submitted on behalf of the employees union, an effort has been made to prove that there was an economic, financial and administrative control of the company particularly with reference to the transfer of coal from the foundry to the canteen and duty of Kalicharan-canteen-boy being availed in the Personnel Department of the company. The settlement between the employees representatives of H.M.T. Employees Co-operative Canteen, Ltd., and workmen representatives and H.M.T. Shramik Sangh was the document which was taken note of.
Since the company was under statutory obligation to provide the canteen for the employees under Section 46 of the Factories Act, providing the building for the canteen cannot be determinative factor with regard to the administrative or financial control. Articles, utensils and other articles were also provided by the company but the fact remains that the contract was given by the company to the co-operative canteen to run the said canteen. Even if giving of said contract is considered to be a camouflage then the Court could lift the veil and come to the conclusion that the management is of the company and the company is the employer. Even in the statements of the workers they have admitted that the appointment was given by the co-operative canteen. This fact therefore remains undisputed. It was only in respect of one employee out of a number of employees of the canteen, i e. Kalicharan ; where it is alleged that he worked in the Personnel Department of the company also. Working of one person would not change the entire character of the management of the company. The various officers of the company were allegedly acting on behalf of the company were in-fact acting in their dual capacity as the membership was restricted in the co-operative canteen to the employees of the company. Therefore, any executive or office-bearer of the cooperative canteen was bound to be an employee of the company. That does not make the cooperative canteen a pseudo entity. The contention that the rates were controlled by the company shows the financial and administrative control in running of the canteen has also no substance, because, the company was to provide the subsidy and the rate of the eatables which were fixed for the benefit of the employees. The deficit on account of the subsidised rates in providing the eatables was to be provided by the company and, therefore, it was only in respect of the financial burden that the company could have a say in the matter. But, so far as the management of the canteen is concerned, it has nowhere been proved that the company was managing the canteen. It was the managing committee of the co-operative canteen which was managing it through its elected office-bearers. If the officebearers so elected were the employees of the company then their position as the office-bearers of the canteen cannot be ignored.
In the award, dated March 27, 1986, the co-operative canteen was made as respondent while in the other award the canteen was not made as a respondent. The co-operative canteen is a registered body and has a separate legal existence. The appointment letters which have been issued by the co-operative canteen to its employees cannot be considered as a document by which they were appointed by the company inspite of the fact that the Personnel Officer of the company has signed the same as it was in the capacity as the President of the society.
The submission of the learned counsel for the union that the object of Contract Labour (Regulation and Abolition) Act, 1970, is to prohibit further getting the work done through contract labour has no force because, there is no such notification issued under the said Act prohibiting the employees of contract labour in the canteen. The power which could have been exercised by the appropriate Government have not been exercised and therefore, it is regulatory and the existing contract labour when the Act came into force or the contract labour of the future are to be regulated by the provisions of the said Act. It is only in a case where the contractor fails to make the payment, the principal-employer can be made responsible but, the fact that the employees of the canteen were the employees of the co-operative canteen remains unrebutted. The memorandum of settlement Annexure 13 in the Writ No. 4704 of 1991, shows that it was a settlement between the employer and the employees and employer was H.M.T. Employees Co-operative Canteen, Ltd., Ajmer, and the workmen were represented by H.M.T. Shramik Sangh.
7. The legal position has been examined by the Apex Court in various decisions referred to above and the consensus of all the decisions is that if the canteen is run by the company then the employees of the canteen would be considered to be employees of the company and if it is run by a contractor, i e. co-operative society then the employees would be considered as the employees of the co-operative canteen. I am satisfied from the documents produced and the evidence on record that the company has given the contract for running the canteen to the cooperative canteen to discharge its statutory obligations and the co-operative canteen is a separate legal entity. The employees of the cooperative canteen cannot be considered to be the employees of the company The appointment to the employees of canteen was given by the Secretary of the co-operative canteen.
The word "employer" has been defined in Section 2(g) of the Industrial Disputes Act and the said Act was amended by Rajasthan Amendment Act. Clause (iii) was added in Section 2(g) as under:
Employer means:
"(iii) Where the owner of the industry in the course of or for the purpose of conducting the industry contracts with the person for the execution by or under the contractor of the whole or any part of any work which is ordinarily a part of the industry, the owner of the industry."
The fact that the Committee has the power to appoint the Manager and other staff of the canteen in terms of bye-law 42 of the H.M.T. Employees Canteen has not been disputed. The power thus for the appointment of the staff was with the Committee. Regulation 36(n) also provides the power of the Committee in respect of the appointment, suspension, dismissal of employees or to require them to furnish the security. Thus the power to appoint and dismissal was with the co-operative canteen. For conducting of business it was found that the coupons were provided by the canteen and the co-operative canteen itself was managing its affairs regarding the preparation of eatables and distribution of the eatables. The company was only providing the financial assistance and if a financial assistance is provided by way of the subsidy or otherwise it cannot be said that the company is having the administrative control over the canteen. The entire administrative control was of the cooperative canteen. Except in one case of Kalicharan-- canteen-boy, all the oral or written evidence which has come on record it has been found that the employees of the canteen were working in the canteen itself. Without going into this factual dispute it may be observed that one exception would not make it a general rule. The licence of the contract under the Act of 1970, has been obtained (Annexure M-14). Even the separate account of provident fund for the employees of the canteen have been opened. The arguments that the office-bearers of the Committee were officers of the company would not make the administrative control over the canteen because it is only by way of election that the office-bearers of the canteen are elected. The said office-bearers have to be the employees of the company and thus the office-bearers of the Executive Committee have always to be from the employees of the company. The officers of the company were not automatically the members of the canteen by virtue of their postings and even if when a particular officer of the company is retired the other person posted on the said post was not automatically to be considered as the member of the Executive Committee. It was only by Way of the election of the person and not the person designated on a particular post.
In B.H E.L. Workers Association v. Union of India, (1985-I-LLJ-428) the request of union for a ban on the employment of contract labour by public undertaking was not accepted by the Apex Court. The submission of Sri Bandhu to this effect that the object of the Contract Labour (Regu-lation and Abolition) Act, 1970, was to prohibit further employment to the workmen through the contractor has no force, as no notification of the appropriate Government was issued in this regard. In the case of Mathura Refinery Corporation v. Indian Oil Corporation, 1991 (62)FLR 425 it was observed by the Apex Court that even the demand of the workmen who were employed through the contractor to be treated at par with other regular employees of the refinery cannot be accepted. General Labour Union (Red Flag) v. KM. Desai (supra) Bombay High Court relying on the decision of the Apex Court observed that workmen employed in the canteen under the contract cannot be considered the workmen or the employees of the company under Sections 46 and 103 of the Factories Act, 1948.
Delhi High Court in New Delhi General Mazdoor Union v. Standing Conference of Public Enterprises, 1992 (64) FLR 31 (Sum.) observed that the Act of 1970 does not prohibit employing contract labour altogether but only regulates the employment of contract labour in certain establishment and provides employment in certain circumstances which would appear to be the ultimate object. The workmen who were working with the principal-employer and who were hired to the contractor were considered not the employees of the principal-employer, even if the principal-employer is not registered under Section 7 of the Act/or the contractor does not possess a licence under Section 12.
The Tribunal has proceeded on the basis that the company is under statutory obligation to maintain the canteen but, by that reason alone it cannot be considered that the canteen is managed and run by the company when the contract has been given to the co-operative society. The premises have to be given by the company as under the Section it is mentioned that the employer has to provide the canteen. The canteen cannot be outside the premises of the factory as it may affect even the working of the company. The subsidy which has been given is to reimburse the already incurred expenses by the canteen. When a claim was made by the employees-union the burden was on them to prove that the canteen is managed and supervised by the company. Simply the employees of the company who were also the executive members of the Committee of co-operative canteen, it cannot be considered that there was a direct link to manage or supervise the canteen by the company. The Industrial Tribunal has proceeded on a wrong assumption that the company has not produced any document showing that the contractor has been registered under the Act of 1970. The said document was duly produced and proved by Shahid Ahmed and, therefore, the findings recorded by the Tribunal are vitiated and the award suffers from mistake apparent from record. The attendance register of the employees of the canteen is separately maintained. The pay-bills are separately prepared. The registration of the co-operative canteen under the Co-operative Societies Act as well as under the Act of 1970, proves that the H.M.T. Employees Cooperative Canteen was not a fictitious entity. The power of appointment and dismissal of an employee of the canteen could be exercised by it.
In these circumstances, the award, dated March 27, 1986, is upheld and the awards, dated November 5, 1986 and October 1, 1990, are set aside and it is held that the employees of the canteen are the employees of the H.M.T. Employees Co-operative Canteen Ltd., and not of the company, H.M.T.Ltd.
All the writ petitions stand disposed of accordingly.