Madras High Court
Tuticorin Port Trust Democratic vs Tuticorin Port Trust on 17 June, 2004
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 17/06/2004
CORAM
THE HONOURABLE MR.JUSTICE K.P.SIVASUBRAMANIAM
W.P.NO.10907 OF 1998
Tuticorin Port Trust Democratic
Staff Union,
affiliated to CITU
represented by Secretary P.L.Sampath
No.16, Masilamanipuram III Street
Toothukudi-628 008
Regd. No.259/Tin .. Petitioner
-Vs-
Tuticorin Port Trust,
Tuticorin
rep. by its Chairman
Tuticorin-4 .. Respondent
This writ petition is preferred under Section 226 of the Constitution
of India praying for the issue of a writ of mandamus directing the respondent
to absorb the Departmental Canteen Workers, Port of New Tuticorin with all
consequential benefits including regular pay scales and other benefits.
For Petitioner : Mr.P.V.S.Giridhar
For Respondent : Mr.Anand
:ORDER
In this writ petition filed by the Staff Union of the Tuticorin Port Trust, the Union prays for a mandamus to direct the respondent to absorb the departmental Canteen Workers, Port of New Tuticorin with all consequential benefits including regular pay scales and other benefits.
2. According to the Union, the Canteen was established in the year 1
973. After the Port Trust project was completed in the year 1976, the Canteen was recognised as the departmental Canteen of the Port. Initially, the Canteen was receiving 50% grant from the Central Government and the Canteen workers were also receiving Central Government pay scales. The Management of the Canteen was under the Port Trust Management Committee and the said Committee used to fix salary for workers from 1976. In 1979, the Minor port became merged with Major port. The workers of the Canteen were originally appointed on a temporary basis, and later made permanent. But, they were denied proper pay scale and other service benefits available to the other employees of the port trust. They were also entitled to be absorbed in the service of port trust. Though they have been agitating for their right for a long time, their demand had not been complied with, and hence they approached this Court.
3. In the counter affidavit filed by the respondent/Port Trust after stating the facts relating to the establishment of the Canteen, the respondent had contended that the Canteen was neither a departmental canteen nor a Co-operative Canteen. The Canteen is being run by the Management Committee separately. The Canteen is not administered or controlled by the Tuticorin Port Trust and it is the Canteen Management Committee, which makes appointments and takes disciplinary action against the Canteen workers. The contention that the Canteen workers were being paid Central Government pay scale was neither true nor correct. The Canteen workers are not included in the schedule of Staff of Port under Section 23 of the Major Port Trust Act, 1963. The service conditions of the petitioner are also not governed by the Port Regulations. The Canteen is an independent establishment and hence the demands of the petitioner for absorption into the Port Trust have been rightly rejected. It is further contended that the Canteen was not a part of the Port establishment. The employees were governed by a non pensionable service of the Canteen and entitled to the retirement benefits only in terms of the Provident Fund scheme as applicable to the private organisations.
4. Mr.Giridhar, appearing for the petitioner Union, contends that the Canteen is a part and parcel of the Port Trust Administration and he relies on the following features in support of his contention that the Canteen workers are the regular employees of the Port Trust.
(1) Salaries are fixed by and disciplinary actions are taken only by the Port Trust Management Committee;
(2) On 6.12.1994, a settlement was arrived at between the Management and the Union under Section 12(3) of the Industrial Disputes Act and it was agreed that subsidised food will be provided near the place of work under Clause 25.2.(10), and therefore, there was a statutory obligation on the part of the Management to establish a Canteen apart from Section 46 of the Factories Act, which provides for a mandatory canteen.
(3) On 18.8.1995, the Board of Trustees passed a resolution agreeing in principle for the absorption of canteen workers in terms of the scheme adopted by the Bombay Port Trust.
(4) The facility of the canteen has become a part of the service condition and welfare of the employees.
(5) The infrastructure and the funds of the canteen are being provided only by the Management. (6) Similar demands of canteens of other Ports were upheld by the other High Courts. Hence, there is no justification for the denial of the same reliefs to the petitioner Union.
5. The learned counsel also relies on some of the judgments of the Supreme Court in the said context, to which reference will be made subsequently.
6. The learned counsel for the respondent, however, contends that though the Managing Committee of the Port Trust was administering the Canteen, the Managing Committee was functioning independently and the administration of the Port Trust has no control over the functioning of the Canteen. The Port Trust has no control over the finance/funds of the canteen nor has any control over the ap pointments to the Canteen nor has any power to take disciplinary action against such employees. There was no statutory obligation on the part of the Trust to conduct the Canteen and Section 46 of the Factories Act was not applicable to the Port Trust. Even under the provisions of the Major Port Trust Act, there was no mandate on the employer to run a Canteen. Though the employees were covered by the Provident Fund Scheme, the scheme was operated as in the case of any other private establishment. The contribution was made only by the Managing Committee and not by the Port Trust. The retirement benefits are also extended only by the Managing Committee. It is further stated that the Canteen caters to the needs of not only the workers, but also for various other third parties, like visitors, transport operators, contractors, etc., and hence the functioning of the Canteen is not exclusively meant for the Port Trust workers only.
7. Learned counsel also refers to some of the judgments of the Supreme Court, which will be discussed below.
8. I have considered the submissions of both sides and as regards the right of the canteen workers of various industrial/commercial establishments to be treated and regularised in the service of the main establishment, the issue has been the subject matter of consideration in number of judgments of the Supreme court.
9. In M.M.R. KHAN AND OTHERS ETC. VS. UNION OF INDIA AND OTHERS, ETC.(AIR 1990 SC 937), the Supreme Court has held that while the employees in Statutory and Non-statutory recognised railway canteens are entitled to be treated as railways employees, the employees of the non statutory and non recognised canteens were not entitled to the said right. In that case, it was held that in terms of Section 46 of the Factories Act and Rules made thereunder, it was obligatory on the part of the Railways to run a Canteen and even though the canteen might have been run by the Staff Committee or Co-operative society, the legal responsibility for running and managing the canteen was with the Railways and hence the employees were entitled to the status of Railway employees.
10. In PARIMAL CHANDRA RAHA AND ORS. VS. LIFE INSURANCE CORPORATION OF INDIA AND ORS.(1995-II-LLJ 339) the Supreme Court held that the Canteen workers of the L.I.C. Offices were entitled to be absorbed as regular employees. The decision in M.M.R. KHAN's case was followed.
11. In EMPLOYERS IN RELATION TO THE MANAGEMENT OF RESERVE BANK OF INDIA VS. THEIR WORKMEN (JT 1996 (3) SC 226), the Supreme Court had to deal with the canteen at the Offices of the Reserve Bank of India in Bombay. The Tribunal, following the decision of M.M.R.Khan's case, held that the employer exercised control over the administration of the canteen and hence by treating the canteen as non statutory, but a recognised canteen, held that the employees of the canteen were entitled to the benefit of regularisation. The Supreme Court, though did not differ from the views stated or tests prescribed in M.M.R.Khan's case, yet on facts explained and distinguished the case on hand and held that there was a total absence of any statutory or legal obligation for the bank to run the canteen, and that there was also no right for the bank to supervise and to control the work of the canteen or over its workers. With the result, the appeal by the Reserve Bank was allowed holding against the claim of the workers.
12. In INDIAN OVERSEAS BANK VS. IOB STAFF CANTEEN WORKERS UNION AND ANOTHER (2000-I-LLJ-1618), the employer/Indian Overseas Bank was running canteens in the Head Office to cater to the needs of the employees of the Bank. The Bank directed the employees to form a cooperative society and provided infrastructure facilities, like premises, furniture, utensils, electricity, etc. Subsequently, due to the refusal on the part of the management to increase the subsidy, a dispute arose. The Tribunal, after considering the evidence, held that it was the Bank, which was running the Canteen and hence the relationship of the master and servant existed. However, the High Court interfered with the said finding on facts. The Supreme court, after referring to the fact and the earlier judgments, held that the facts disclosed that the Canteen was originally established only by the Bank and that the Bank was always conscious of the fact that the running of the canteen was not only essential, but would also help to contribute for better efficiency of service by its employees. It was also held that the High Court ought not to have interfered with the findings on facts recorded by the Tribunal.
13. In STATE BANK OF INDIA AND OTHERS VS. STATE BANK OF INDIA CANTEEN EMPLOYEES' UNION (BENGAL CIRCLE) AND OTHERS (JT 2000(5) SC 63), it was held that neither the terms of Sastri Award nor the Hand book cast any obligation, statutory or contractual, that the staff working in canteen would be employees of Bank as the Bank was not obliged to provide canteen facilities. It was, therefore, held that there was no obligation on the part of the Bank to run such a canteen.
14. In HARI SHANKAR SHARMA AND OTHERS VS. ARTIFICIAL LIMBS MANUFACTURING CORPN. AND OTHERS (2002 (1) SCC 337), the Supreme Court dealt with the statutory canteens run by the Contractors. It was held that in the establishment, which discharges the statutory duties under Section 46 of the Factories Act, the employees of the Canteen set up by the establishment would be the de facto employees of the main establishment.
15. In MISHRA DHATU NIGAM LTD. AND OTHERS VS. M. VENKATAIAH AND OTHERS (2003(7) SCC 488) also, the Supreme Court dealt with the employees of statutory canteen run by the Contractor and their demand for regularisation and held that in terms of Section 46 of the Factories Act, such employees were deemed to be the employees of the principal employer.
16. In DAMODAR VALLEY CORPORATION VS. DAMODAR VALLEY CORPORATION CANTEEN WORKERS' UNION AND OTHERS (2002-1-LLJ 398), on consideration of the facts, a Division Bench of the Calcutta High Court held that the Corporation was not under any obligation, statutory or otherwise to provide canteen service to its employees, an d therefore, the employees of the canteen cannot be treated as employes of the Corporation.
17. The analysis of the above rulings bring out the following criteria for ascertaining whether in a given case, the employes of canteen attached to a financial or commercial establishment would be treated as employees of the principal establishment itself.
I) Employees in statutory and non statutory recognised canteens are entitled to be treated as regular employees;
II) But, in the case of non statutory recognised canteen, the facts of each case have to be analysed to find out whether the relationship of employer/employee existed between the parties, depending upon the background in which canteen was established, whether the canteen was essential for the staff and for the proper functioning of the establishment, the extent of administrative control, supervision, financial commitments and whether there was any statutory or legal obligation to provide canteen facilities, etc. The cumulative effect of all the said features have to prevail and either presence or absence of any one of the said requirements would not be conclusive.
III) Whether in a given case, such features are satisfied or not would be a question of fact to be examined on the basis of the evidence in each case and it was open to the Tribunal/Court to analysis the evidence and pierce the veil to find out the true nature of the state of affairs - 2000-I-LLJ-1618, cited above.
IV) The fact that the canteen was being run by the Committee appointed by the management or by the contractor or by a Cooperative Society would be irrelevant, if the said requisites are satisfied.
V) Whether there is any agreement between the parties covering the issue or any commitment by the employer to treat the employees of the canteen as regular employees.
VI) If the finding of the Labour Court/Tribunal are based on proper analysis of the evidence and materials on record, the High Court under Article 226 of the Constitution of India will not ordinarily interfere with the said finding unless there are compelling reasons to disagree with the said finding.
18. In the background of the above factors, the claim of the petitioner requires to be examined.
19. Admittedly, the Port Trust is not a factory within the meaning of "factory" as defined under the Factories Act, 1948 and it is not the case of the petitioner Union that the respondent Port is covered by the provisions of the Factories Act. Hence, Section 46 of the said Act, which provides for canteen is not applicable. There is also no specific provision in Act 38 of 1963, mandating the establishment of a canteen. Therefore, there can be no dispute for the fact that the canteen, in this case, is not a statutory canteen.
20. The next issue which requires to be resolved is as to whether the canteen is a recognised canteen and to what extent the administration of the canteen is intrinsically connected with the requirement of the employees and the nexus with the management of the Port trust. On this issue, I am inclined to hold that the facts submitted and admitted in the counter of the respondent are by themselves overwhelming and sufficient to uphold the claim of the petitioner Union. Such admitted facts are enlisted below.
I) The canteen was opened on 21.11.1973 in the interest of workers, contractors and visitors after the private canteens, which were running earlier had been closed down.
II) Though the canteen was started with the contribution made by six Officers, the then Chief Engineer and the Administrator of the project was the Patron of the Canteen. The Managing Committee was constituted consisting of Officers of the Port Trust. The capital contributed by the six officers were returned to them with interest.
III) The Project had also given grant/subsidy to the canteen workers inclusive of 25% of the pay and 75% of the D.A. A sum of Rs.17,500/- was also granted for the purchase of equipments, furniture and for running a tiffin room.
IV) The grant/subsidy was continued even after the Port Trust was constituted with effect from 1.4.1979 for a few months, but was discontinued later.
V) The building for running the Canteen was provided by the Trust at a nominal charge of Re.1/- per annum and water and electricity was provided free of costs.
VI) Board of Trustees was granted monthly financial assistance of Rs.25000/- with effect from 1.6.1994.
VII) In response to the demand of the Union for parity in pay scale and for absorption into the establishment, the Board of Trustees in the meeting held on 18.8.1995 constituted a Committee and the Committee recommended revision of pay scale on par with the scale of pay applicable to the staff of Madras Port Trust Co-operative Canteen. The demand for absorption was, however, rejected. The recommendations of the Committee regarding pay scale were approved and implemented. The additional financial assistance of Rs.25000/ - was also provided.
VIII) It would be appropriate to extract Paragraph No.13 of the Counter, which is as follows:
"It is submitted that the Canteen Management Committee which was reconstituted from 1.4.1997 by the Chairman had taken various efforts to increase the scales. The Committee during the period from 1.4.1997 to 30.6.2000 had sanctioned a pay hike of 110% to all workers, in the form of 100% D.A., 10% H.R.A. Family Medical Allowance at Rs.100/- per month was also sanctioned with effect from March, 1999. Thus, a worker in the lowest grade of Cleaner who had drawn a minimum of pay of Rs.1000/0 alone as on 1.4.1997 without any D.A/H.R.A. etc., is now drawing a salary of Rs.2200/- as on date i.e. Pay Rs.1000/-, D.A. Rs.10 00/-, H.R.A. Rs.100/- and Family Medical Allowance Rs.100/-. Now a total financial assistance of Rs.9,00,000/- per annum is provided to the Canteen by the Port."
IX) The workers of the Canteen are covered by Provident Fund Scheme. Gratuity was also payable in terms of Payment of Gratuity Act on his retirement or to his widow on his death. As regards the P.F., on retirement the contribution made by the employer is retained and in lieu of the same, the service pension was payable to the employee in addition to the payment of subscribed amount. Family pension was also payable to the widow on the death of the employee.
X) The Managing Committee was reconstituted from time to time only by the Chairman with the Officers of the Port.
21. The above stated facts, as culled out from the counter affidavit, themselves are sufficient to uphold the claim of the petitioner. The need of the Canteen for the welfare of the workers is clearly admitted and the canteen was opened in the year 1973 itself after the private Canteens were closed down. Though it was initially started with a capital of Rs.3000/-, contributed by six officers, the amount was paid back to them with interest and the Managing Committee was constituted. The Tuticorin Harbour Project has also paid Rs.17,500/- for the purchase of equipment, furniture and also to run a tiffin room in addition to the initial grant. Apart from that, it has paid grant/ subsidy to cover the pay and D.A. payable to the workers of the canteen. The building was provided on a nominal charge of Re.1/- per annum and water and electricity were supplied at free of cost. The Managing Committee itself is not an autonomous body of persons, but constituted only by the Chairman from time to time, consisting of the Officers of the Port. These facts themselves are sufficient to establish that the requirement of the canteen was found to be imperative and a must for the welfare of the workers. If the project/Port found that the Canteen was unnecessary for the survival of the project/Port, there was absolutely no need for the project itself to take over the control of the Canteen after paying back the capital amount to the six officers along with interest. Such an action is not to be generally expected of an institution run by and under the control of the Central Government. It is true that the Canteen is stated to have been useful not only to the employees, but also to the Contractors and other visitors. It cannot be denied that such third parties were coming to the Port only in connection with its day today commercial activities. Otherwise, there is no reason or justification for the Central Government establishment to pay the capital amount to the original contributors and to run it under the control of the Managing Committee appointed by the Board itself, in a building belonging to the Port. No amount was charged towards water and electricity. The facts of this case correspond to the decision of the Supreme Court in 2000 (1) LLJ 1618, cited above. The extract of the annual report of the Port Trust of the year 1979-80 clearly establishes the compelling need for the Canteen for the proper functioning of the Port. The said observation is extracted below.
"A Canteen, having three branches, one at the harbour colony and one each at the Administrative Office complex and the Wharf, caters to the needs of the employees of the Port. The canteen provides coffee and tea at reduced rates to the Port employees. The affairs of the Canteen are being controlled by a Management Committee consisting of Officers and staff of the Port. The Canteen is run on a no-profit-noloss basis."
Therefore, the fact that the project/Port itself had felt the necessity to run a Canteen for the benefit of its workers and other visitors in connection with the working of the Port is clearly substantiated.
22. Now, coming to the funding of the Canteen, the total financial assistance per annum given to the Canteen in the year 2000 is stated to be Rs.9 lakhs. This fact alone is sufficient not only to establish that the Port Trust clearly recognised the indispensable nature of the Canteen for the functioning of the Port Trust, but also that the very survival of the Canteen depends upon the grant thus given by the Trust. It cannot be disputed that, but for the grant thus given by the Port, the Canteen cannot at all be run. Apart from the grant, as stated earlier, the entire premises is given free (Re.1/- per annum) along with free supply of water and electricity.
23. The fact that the Managing Committee is put in-charge of the administration does not mean that the Canteen is run only by the Managing Committee or that the Canteen does not depend upon the Port Trust for its survival as it it is sought to be made out by the respondent. Such a contention is bereft of any merit having regard to the huge finance and other over all assistance given to the Canteen.
24. The fact of the Managing Committee being in-charge of the administration cannot militate against the fact of apparent and obvious control, which is being exercised by the committee. Admittedly, the very constitution of the Committee is in the hands of the Trust. It is not as though the Committee is an independent body of individuals, who act and succeed on their own choice. They are frequently changed and the Committee is reconstituted from time to time by the Chairman himself.
25. It is also relevant to bear in mind that the Board itself in the meeting held on 18.8.1995 had recognised the need for running the Canteen and in fact, it was resolved that two or three locations have to be identified for starting a canteen/restaurant to cater to the needs of the employees of different agencies in view of the growing traffic to the Port daily. By the same meeting, the demand of the workers to be absorbed in the Port services was also considered and after considering the favourable precedents, inclusive of the decision of the Bombay Port Trust to absorb the canteen employees in regular service, it was resolved that the Board had "agreed in principle with the whole scheme, but desire that the matter be examined in detail and brought up early" and that such absorption will be made in a phased manner.
26. Subsequent events, after filing of the writ petition as disclosed in the counter itself in Paragraph 13 as extracted above, will disclose that the pay scales have been fixed on par with the employees of the Madras Port Trust Co-operative Canteen.
27. The learned counsel for the petitioner also rightly relied on the judgment of the Calcutta High Court in ACHINTA KUMAR MONDAL AND ORS. VS. CALCUTTA PORT TRUST AND ANOTHER-C.O.NO.12246 (2) OF 1989. A similar issue arose for consideration as to whether the employees of Calcutta Port Trust Canteen were in fact employees of the principal employer. After a very detailed analysis, the Calcutta High Court held in favour of the employees and directed that the employees be treated as regular employees of the Port Trust from the date of filing of the writ petition and that the employees will also be entitled to all consequential monetary benefits.
28. The decision of the Calcutta High Court, considered along with the decision of the Bombay Port Trust, in my opinion, would render the reluctance on the part of the respondent Port Trust to recognise the rights of the petitioner, unsustainable. As stated earlier, the Board, after taking into account such precedents in the other Port Trust Offices, had also agreed in principle to absorb them in service. Such decision was taken as early as on 18.8.1995, but was arbitrarily postponed for no justifiable reason. The legitimate rights of the parties cannot be made to depend upon the unilateral will and pleasure of one party to the dispute.
29. Learned counsel for the petitioner also refers to the Office Memorandum dated 29.1.1992 issued by the Ministry of Personnel, Public Grievances and Pensions in the context of non-statutory departmental/ Co-operative Canteen employees located in the Central Government Offices. By the said Memorandum, the Central Government directed all the Ministries to treat such employees as Government servants with effect from 1.10.1991. It is true that the said Office Memorandum deals with the issue of Canteens in Government Offices and will not be directly applicable to Port Trusts. But, there is no reason as to why there should be any discrimination between the Canteens in Government Offices and institutions like the Port Trusts, which also discharge public functions and would be "State" under Article 12 of the Constitution of India.
30. The attitude of the respondent in declining the demands of the petitioner cannot at all be sustained in view of the facts stated above. In fact, the contention of the petitioner is that in terms of the agreement between the workers and the Port Trust, it was obligatory on the part of the Port Trust to run the Canteen. Though the said fact may not amount to characterising the canteen as statutory canteen, yet the obligation to maintain the canteen cannot be ignored. The fact that the Port has also agreed to incur heavy liability by way of subsidy and several other contributions, would also positively point out towards the intrinsic connection of the Canteen with the day today administration and functioning of the Trust. As pointed out earlier, in the year 2000 itself, a sum of Rs.9 lakhs have been provided as contribution to the Canteen and such a huge commitment could not have been made without any justifiable reason. The revenue and expenditure of the Port Trust is dealt with under Chapter VIII of Act 38/1963 and no expenditure can be incurred at the pleasure of the Board of Trustees, if the expenditure does not refer to the obligations connected with and the needs of the Port Trust.
31. Therefore, I am inclined to hold that there are overwhelming materials to show that the employees of the Canteen are part and parcel of the principal establishment of the Port Trust.
32. Reference was made to the earlier litigation between the parties, which need not be gone into as they are neither relevant for the issue on hand and also do not have any legal impact. The suit filed by one of the trustees of the Port Trust in O.S No.23 of 1982 before the Additional Sub court, Tuticorin, praying for declaration that the Canteen was the asset of the Central Government, ultimately ended in dismissal in S.A.No.821 of 1985 on the ground that the suit as filed by one of the trustees was not maintainable. W.P.No.5796 of 1984, which was filed by some of the employees of the Canteen questioning the retrenchment, was dismissed as withdrawn and there was no decision on the merit of any issue.
33. For all the aforesaid reasons, the petitioner is entitled to succeed and I am inclined to allow the writ petition. Accordingly, this writ petition is allowed subject to the following observations.
(1) All the permanent Canteen employees of the petitioner/Canteen shall be absorbed and regularised as permanent employees of the respondent with effect from 18.8.1995, being the date on which the Board had agreed to absorb them in service, with continuity of service;
(2) The employees, who had been made permanent by the Canteen after 18.8.1995, shall also be absorbed and be made permanent employees of the Port with effect from the date on which they were appointed permanently by the Canteen;
(3) Temporary employees shall be absorbed and made permanent with effect from the date on which they had completed two years of continuous service, with continuity of service;
(4) As regards the consequential monetary benefits, if any, the same shall be payable to the employees with effect from 28.7.1998, on which date this writ petition has been filed.
(5) No costs.
Index : Yes Internet : Yes vvk To The Chairman Tuticorin Port Trust, Tuticorin-4