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CASE NO.:

Appeal (civil) 224-226 of 2003

PETITIONER:

State of Karnataka & Ors.

RESPONDENT:

KGSD Canteen Employees Welfare Association & Ors.

DATE OF JUDGMENT: 03/01/2006

BENCH:

S.B. Sinha & P.P. Naolekar

JUDGMENT:

J U D G M E N T

W I T H

CIVIL APPEAL NOS. 449-468 OF 2003 & 4180-82 OF 2003

S.B. SINHA, J:

Both the State of Karnataka and K.G.S.D. Canteen Employees

Welfare Association are in appeal before us aggrieved by and dissatisfied

with the judgments and orders dated 29.05.2002 and 30.50.2002 passed by a

Division Bench of the Karnataka High Court in Writ Appeal Nos.5690-5692

of 2000 and 4613-32 of 2000.

WRIT PROCEEDINGS

The First Respondent herein is an Association of the employees of the

Karnataka Government Secretariat Departmental Canteen. The Respondent

Nos.2 and 3 are its members. They filed a writ petition before the Karnataka

High Court, inter alia, contending that the said canteen having been run by

the State Government for the benefit of the secretariat employees and 74

employees working therein having completed more than 10 years of service

were in effect and substance the employees of the State Government itself,

although they were termed as 'employees of the canteen'. Further

contention of the respondents herein was that their wages were absolutely

meagre being little more than the minimum wages, but despite several

representations made by them, they were not paid the same salary as was

payable to the employees of the State who were similarly situated.

The Appellant herein rejected their request for grant of scale of pay

and other service benefits applicable to the Government servants, inter alia,

on the premise that they were not its employees.

HIGH COURT

A learned Single Judge of the High Court opined that the canteen can

be equated to the Government Hospitality Organization where the canteen

facilities are made available and consequently directed the Appellant to

implement the notification dated 22.6.1996 which was applicable in relation

to the Government Hospitality Organization, as far as possible to the said

canteen employees with such revisions as are permissible under law as on

the said date.

The learned Single Judge opining that the employees of the canteen

are employees of the State Government directed :

"The second prayer of the petitioners is to declare

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them as Government Servants. In this regard I deem it

proper to modify the relief by issuing a direction to the

Government to regularize the services of the petitioners

in the following manner :

Government is directed to regularize the services

of such of those petitioners who have put in ten years of

service subject to the Government satisfaction of

qualification if any for the post held by them and keeping

in view the long services rendered by them.

It is declared that the petitioners are the employees

of the Government and are entitled for pay parity as per

Annexure-O with revision from time to time.

The petitioners have approached this Court in the

year 1996 and the petition is heard and disposed of in the

year 2000. Petitioners have been provided some increase

in the wages from time to time. In these circumstances, I

deem it proper that the petitioners are not to be given any

arrears for the past period and the direction is to with

effect from 1.1.2000 and not for the earlier period. The

arrears from 1.1.2000 is to be made available to the

petitioners within three months from the date of receipt

of this order."

Appeals having been preferred by the State thereagainst, a Division

Bench of the High Court disposed of the appeals modifying the judgment of

the learned Single Judge as regard the date of regularization of their services

as also payment of back wages, directing :

"(i) The effective date from which the pay-scales

and other service benefits should be extended to the

employees of KGSD Canteen by regularizing their

service is changed from 01.01.2000 to 29.05.2002."

The learned Single Judge as also the Division Bench despite the fact

that the Appellant herein had denied and disputed the relationship of

employer and employee between it and the employees of the canteen,

proceeded to determine the said question on the basis of various documents

produced before it.

PRESENT APPEALS

The State of Karnataka has filed Civil Appeal Nos.224-226 of 2003

and 449-468 of 2003, questioning the impugned judgment in its entirety

whereas the K.G.S.D. Canteen Employees Welfare Association preferred

Civil Appeal Nos.4180-82 of 2003 questioning that part of the judgment

whereby the judgment and order of the learned Single Judge was modified

restricting the benefit of regularization from the date of the judgment and

back wages from 29.05.2002 instead of 01.01.2000.

CONTENTIONS OF THE PARTIES

Mr. P.P. Rao, the learned Senior Counsel appearing on behalf of the

Appellants, would, inter alia, submit that the High Court committed a

serious error in passing the impugned judgment insofar as it misconstrued

and misinterpreted various Government orders as regard establishment and

management of the canteen issued in their proper perspective. The High

Court, Mr. Rao urged, furthermore misdirected itself in passing the

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impugned judgment insofar as it failed to take into consideration that the

canteen was not required to be run by the State Government in terms of any

statute or otherwise.

Mr. Naveen R. Nath, the learned counsel appearing on behalf of the

respondents herein, on the other hand, would support the judgment of the

High Court contending that a finding of fact has been arrived at by the High

Court that there existed a relationship of employer and employee between

the State and the concerned employees as the State exercised total control

over them and, therefore, this Court should not interfere therewith.

It was contended that the employees of the canteen in view of Article

14 of the Constitution of India, were entitled to parity in wages with that of

the employees of the State Government for the period they had worked and,

furthermore, they having been in such employment for a long time their

services have rightly been directed to be regularized.

SCHEME

The canteen was being run by private contractors for a long time. In

the year 1974, the State of Karnataka intended to run the canteen by a

committee, consisting of ten persons, six of them representing the

Government and the remaining four representing the Association as

mentioned in order bearing No. GAD 106 DBM dated 19th November, 1974.

Amenities and facilities, e.g., premises, furniture, cooking utensils, crockery,

cutlery etc. for running the canteen were to be provided by the State only for

a period of one year. Some of the relevant provisions laid down in the

Scheme for running the said canteen were as under :

"An outright grant of Rs. 25,000 (Rs. Twenty five

thousand only) is sanctioned towards working expenses,

namely, initial purchase of provisions, salaries of staff to

be appointed like cooks, services, etc\005

The grant of Rs.25,000 (Rupees Twenty five thousand

only) will be debited to the new sub-heard "IV Grant to

the Karnataka Govt., Secretariat Canteen (Non Plan)"

"under the major, minor, and Group sub-Head" "288-

Social Security and Welfare-E-Other social Security and

Welfare Programmes & Others "Programmes-C. Welfare

of Government Employees" \026 pending re-appropriation

of savings under the above major head.

The Chairman of the Committee is requested to

take action to start the canteen.

The working of the Canteen under the above

arrangement would be reviewed at the end of the one

year and then the future set up shall be decided."

The State by reason thereof, thus, made a provision for grant of

Rs.25,000/-. In terms of the said scheme, all the furniture and equipments

which were handed over to the committee were required to be accounted for

and returned to the Government upon the closure of the canteen. The

employees were appointed, indisputably, by the committee on an ad hoc

basis/daily wages.

It, furthermore, appears that the Government had sanctioned grant in

aid from time to time. The management of the said canteen was handed over

to the Respondent Association. Constitution of the Managing Committee

was being changed on a regular basis. In the order dated 27.7.2000 issued

by the Government of Karnataka, it was stated :

"\005This canteen is running under constant loss for the

past few years and consequently Government had to

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sanction Grant-in-aid a few times. These Grant-in-aids

were sanctioned keeping in view the welfare of the

Secretariat Employees. In this background, all the

members of the Management Committee have tendered

their resignation to Government with a request to make

alternate arrangements in view of the fact that they are

unable to run the canteen on "No Profit No Loss" basis

and also considering the fact that Government has not

agreed to give further Grant-in-aid to the Managing

Committee. In this background, a meeting was convened

under the chairmanship of Additional Chief Secretary to

Government to consider making alternate arrangements

for running the canteen. Finally in a meeting convened

on 23.2.2000 under the chairmanship of Secretary to

Department of Personnel & Administrative Reforms, it

was decided to handover the Management of the canteen

to Karnataka Government Secretariat Employees

Association temporarily for a period of one year

commencing from 6.4.2000 and it is also proposed to

continue the existing Grant-in-aid and other facilities to

Karnataka Government Secretariat Employees

Association for running the canteen. Apart from this, it

is also proposed to provide the services of six secretariat

employees (Junior assistants & assistants) for supervising

the affairs of the canteen by treating them as "on other

duty" for a period of one year. These proposals were

examined and accordingly order was issued as given

below :

ORDER NO. DPAR 5 DSW 2000, BANGALORE,

DATED : 27.7.2000

Keeping in view the interest/welfare of Karnataka

Government Secretariat Employees, sanction is accorded

to handover the Management of the Karnataka

Government Secretariat Canteen to Karnataka

Government Secretariat Employees Association w.e.f.

4.8.2000 temporarily for a period of one year, from the

Management Committee constituted by the

Government\005"

The facilities and terms and conditions were also stated therein,

some of which are as under :

"6) While taking over the Management of the Canteen,

the Karnataka Government Secretariat Employees

Association should prepare a list of furnitures,

utensils, L.P.G. etc. and receive a proper

acknowledgement from the Management

Committee and submit a copy to the Government.

7) It is the responsibility of the Karnataka

Government Secretariat Employees Association to

keep all the assets of the canteen like furnitures,

utensils, gas etc. safe and secure.

8) Karnataka Government Secretariat Employees

Association can take the assistance of DPAR

(Executive-A) section for maintenance and repair

of canteen building."

In an affidavit filed before us, it is stated that the Karnataka

Government Secretariat Employees Association which was running the

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canteen from 04.08.2000 to 31.03.2003 by a letter dated 10.03.2003,

expressed its inability to run the canteen beyond 31.03.2003 and, thus, the

canteen services were closed from 01.04.2003. It is further stated that the

State Government demolished the main canteen building pursuant to the

Government Note dated 04.08.2003. Certain litigations had thereafter been

initiated before several authorities. A writ petition had also been filed by the

Association before the High Court, which was marked as Writ Petition

No.41207 of 2004 seeking direction to make the balance payment of LIC

premium and contribution towards EPF for the period from 01.01.2003 to

31.03.2003.

This Court evidently is not concerned with the pending litigation but

we have noticed the said fact only for the purpose of showing that the State

intended to run the canteen departmentally through a committee, but

according to the State, the committee has a distinct and different existence or

different entity than the Government.

The fact situation obtaining in this case already suggests that the State

had no intention to run and maintain the canteen as a department. Had the

intention of the State been to run the said canteen as one of its departments,

the question of giving any grant or for that matter making of a provision for

return of the furniture and equipments would not have arisen.

EMPLOYEES OF A CANTEEN - STATUS

The question as to whether the employees of the canteen are

employees of the State or whether their services should be directed to be

regularized or not, in view of several decisions of this Court would be

dependent upon the issues as to whether the canteens are required to be

made in terms of the provisions of a statute or otherwise. Admittedly, the

State had no statutory compulsion to run and maintain any canteen for its

employees.

In The Saraspur Mills Co. Ltd. v. Ramanlal Chimanlal and Others

[(1974) 3 SCC 66] where the Management was under a statutory obligation

in terms of Section 46 of the Factories Act and the rules made thereunder to

maintain the canteen for the workers which was being run by a Co-operative

Society wherewith the Management had nothing to do. This Court relied

upon its earlier decision in Basti Sugar Mills Ltd. v. Ram Ujagar [(1964) 2

SCR 838] holding:

"The above case was treated as an authority for the

proposition that an employee engaged in a work or

operation which was incidentally connected with

the main industry was a workman if other

requirements of the statute were satisfied and that

the malis in that case were workers. It was pointed

out that the bungalows and gardens on which the

malis in that case worked were a kind of amenity

supplied by the mills to its officers and on this

reasoning the malis were held to be engaged in

operation incidentally connected with the main

industry carried out by the employer. The High

Court in Ahmedabad Mfg. & Calico Printing Co.

Ltd. v. Workmen had relied on the above ratio and

come to the conclusion that the workers in order to

come within the definition of an "employee" need

not necessarily be directly connected with the

manufacture of textile fabrics. The decision in

Basti Sugar Mills case1 was treated as binding in

the former case."

In Parimal Chandra Raha and Others v. Life Insurance Corporation of

India and Others [1995 Supp (2) SCC 611], relying upon a large number of

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decisions of this Court including M.M.R. Khan v. Union of India [1990

Supp SCC 191], in the peculiar facts and circumstances, it was held that the

canteen which was being run by a Co-operative Society became a part of the

establishment of the Corporation. The said decision was arrived at upon

lifting the corporate veil of the cooperative society. In that case, although

there was no statutory liability on the part of the Respondent therein, to

maintain a canteen for their employees, this Court observed:

"What emerges from the statute law and the

judicial decisions is as follows:

(i) Whereas under the provisions of the Factories

Act, it is statutorily obligatory on the employer to

provide and maintain canteen for the use of his

employees, the canteen becomes a part of the

establishment and, therefore, the workers

employed in such canteen are the employees of the

management.

(ii) Where, although it is not statutorily obligatory

to provide a canteen, it is otherwise an obligation

on the employer to provide a canteen, the canteen

becomes a part of the establishment and the

workers working in the canteen, the employees of

the management. The obligation to provide a

canteen has to be distinguished from the obligation

to provide facilities to run canteen. The canteen

run pursuant to the latter obligation, does not

become a part of the establishment.

(iii) The obligation to provide canteen may be

explicit or implicit. Where the obligation is not

explicitly accepted by or cast upon the employer

either by an agreement or an award, etc., it may be

inferred from the circumstances, and the provision

of the canteen may be held to have become a part

of the service conditions of the employees.

Whether the provision for canteen services has

become a part of the service conditions or not, is a

question of fact to be determined on the facts and

circumstances in each case.

Where to provide canteen services has become a

part of the service conditions of the employees, the

canteen becomes a part of the establishment and

the workers in such canteen become the employees

of the management.

(iv) Whether a particular facility or service has

become implicitly a part of the service conditions

of the employees or not, will depend, among

others, on the nature of the service/facility, the

contribution the service in question makes to the

efficiency of the employees and the establishment,

whether the service is available as a matter of right

to all the employees in their capacity as employees

and nothing more, the number of employees

employed in the establishment and the number of

employees who avail of the service, the length of

time for which the service has been continuously

available, the hours during which it is available,

the nature and character of management, the

interest taken by the employer in providing,

maintaining, supervising and controlling the

service, the contribution made by the management

in the form of infrastructure and funds for making

the service available etc.

[Emphasis supplied]

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The said decision, however, was distinguished by a 3-Judge Bench of

this Court in Employees in relation to the Management of Reserve Bank of

India v. Workmen [(1996) 3 SCC 267] stating that M.M.R. Khan (supra)

was decided on the facts of that case. Although, a question was raised

therein that the propositions 3 and 4 laid down in Parimal Chandra Raha

(supra) are very wide and require reconsideration and appropriate

modification, this Court refused to go thereinto holding that it was not

required to do so therein as the Tribunal had proceeded to follow M.M.R.

Khan (supra) only, holding:

"\005On the facts of this case, in the absence of any

statutory or other legal obligation and in the

absence of any right in the Bank to supervise and

control the work or the details thereof in any

manner regarding the canteen workers employed in

the three types of canteens, it cannot be said that

the relationship of master and servant existed

between the Bank and the various persons

employed in three types of canteens. 166 persons

mentioned in the list attached to the reference are

not workmen of the Reserve Bank of India and that

they are not comparable employees employed in

the Officers' lounge. Therefore, the demand for

regularisation is unsustainable and they are not

entitled to any relief. We hold that the award

passed by the Tribunal is factually and legally

unsustainable."

[Emphasis supplied]

A new gloss to the question, however, was given by this Court in

Indian Petrochemicals Corporation Ltd. v. Shramik Sena and Others [(1999)

6 SCC 439]. This Court following the judgment M.M.R. Khan (supra) and

Reserve Bank of India (supra) opined that the ratio sought to be laid down in

Parimal Chandra Raha (supra) that "the workers employed in such canteen

are the employees of the Management" is not correct and further opined that

the "workmen of a statutory canteen would be the workmen of the

establishment for the purpose of the Factories Act only and not for all other

purposes". [Emphasis supplied]

However, in Indian Overseas Bank v. I.O.B. Staff Canteen Workers'

Union and Another [(2000) 4 SCC 245] whereupon the High Court relied

upon, in the peculiar facts and circumstances of the said case, this Court

relied on M.M.R. Khan (supra) and Parimal Chandra Raha (supra) and

distinguished Indian Petrochemicals Corporation Ltd. (supra) holding:

"\005A cumulative consideration of a few or more of

them, by themselves or in combination with any

other relevant aspects, may also serve to be a safe

and effective method to ultimately decide this

often agitated question. Expecting similarity or

identity of facts in all such variety or class of cases

involving different type of establishments and in

dealing with different employers would mean

seeking for things, which are only impossible to

find.

The decision in Indian Petrochemical case does

not, in our view, lay down any different criteria

than those declared in the other decisions for

adjudging the issue, except that it had also

considered specifically the further question as to

the effect of a declaration, that the workers of a

particular canteen, statutorily obligated to be run

render no more than to deem them to be workers

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for the limited purpose of the Factories Act and not

for all purposes. In the case before us, the claim is

not that there was any such statutory obligation

and the entire consideration proceeded only on the

footing that it is a non-statutory recognised canteen

falling within the second of the three categories

envisaged in the earlier decisions and the Tribunal

as well as the Division Bench of the High Court

endeavoured to find out whether the obligation to

run was explicit or implicit, on the facts proved in

this case."

A Constitution Bench of this Court in Steel Authority of India Ltd.

and Ors. v. National Union Waterfront Workers and Ors. [(2001) 7 SCC 1]

noticed the following circumstances under which contract labour could be

held to be the workman of the principal employer:

"An analysis of the cases, discussed above, shows

that they fall in three classes: (i) where contract labour is

engaged in or in connection with the work of an

establishment and employment of contract labour is

prohibited either because the industrial adjudicator/court

ordered abolition of contract labour or because the

appropriate Government issued notification under

Section 10(1) of the CLRA Act, no automatic absorption

of the contract labour working in the establishment was

ordered; (ii) where the contract was found to be a sham

and nominal, rather a camouflage, in which case the

contract labour working in the establishment of the

principal employer were held, in fact and in reality, the

employees of the principal employer himself. Indeed,

such cases do not relate to abolition of contract labour

but present instances wherein the Court pierced the veil

and declared the correct position as a fact at the stage

after employment of contract labour stood prohibited;

(iii) where in discharge of a statutory obligation of

maintaining a canteen in an establishment the principal

employer availed the services of a contractor the courts

have held that the contract labour would indeed be the

employees of the principal employer.

Such observation, however, was made in the light of the provisions

contained in Contract Labour (Regulation and Abolition) Act, 1970.

Rajendra Babu, J., as the learned Chief Justice then was, speaking for

a Division Bench of this Court in Barat Fritz Werner Ltd. v. State of

Karnataka [(2001) 4 SCC 498] observed:

"\005Of course, in Indian Petrochemicals Corpn.

Ltd. v. Shramik Sena a new gloss was given to this

decision by stating that the presumption arising

under the Factories Act in relation to such workers

is available only for the purpose of the Act and no

further. However, in Employers of Reserve Bank

of India v. Workmen this Court struck a different

note. Again this Court in Indian Overseas Bank v.

I.O.B. Staff Canteen Workers' Union considered

the effect of the decisions in M.M.R. Khan,

Parimal Chandra Raha, Reserve Bank of India and

Indian Petrochemicals Corpn. Ltd. v. Shramik

Sena and it was made clear that the workers of a

particular canteen statutorily obligated to be run

render no more than to deem them to be workers

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for limited purpose of the Factories Act and not for

all purposes and in cases where it is a non-

statutory recognised canteen the court should find

out whether the obligation to run was implicit or

explicit on the facts proved in that case and the

ordinary test of control, supervision and the nature

of facilities provided were taken note of to find out

whether the employees therein are those of the

main establishment\005"

However, in that case, the court was only concerned with a

notification abolishing contract labour under Contract Labour (Regulation

and Abolition) Act.

Yet again in Hari Shankar Sharma and Others v. Artificial Limbs

Manufacturing Corpn. and Others [(2002) 1 SCC 337], this Court, following

Barat Fritz Werner Ltd (supra) opined:

"The submission of the appellants that because the

canteen had been set up pursuant to a statutory

obligation under Section 46 of the Factories Act

therefore the employees in the canteen were the

employees of Respondent 1, is unacceptable. First,

Respondent 1 has disputed that Section 46 of the

Factories Act at all applies to it. Indeed, the High

Court has noted that this was never the case of the

appellants either before the Labour Court or the

High Court. Second, assuming that Section 46 of

the Factories Act was applicable to Respondent 1,

it cannot be said as an absolute proposition of law

that whenever in discharge of a statutory mandate,

a canteen is set up or other facility is provided by

an establishment, the employees of the canteen or

such other facility become the employees of that

establishment. It would depend on how the

obligation is discharged by the establishment. It

may be carried out wholly or substantially by the

establishment itself or the burden may be

delegated to an independent contractor. There is

nothing in Section 46 of the Factories Act, nor has

any provision of any other statute been pointed out

to us by the appellants, which provides for the

mode in which the specified establishment must

set up a canteen. Where it is left to the discretion

of the establishment concerned to discharge its

obligation of setting up a canteen either by way of

direct recruitment or by employment of a

contractor, it cannot be postulated that in the latter

event, the persons working in the canteen would be

the employees of the establishment. Therefore,

even assuming that Respondent 1 is a specified

industry within the meaning of Section 46 of the

Factories Act, 1946, this by itself would not lead to

the inevitable conclusion that the employees in the

canteen are the employees of Respondent 1."

In National Thermal Power Corporation Ltd. v. Karri Pothuraju and

Others [(2003) 7 SCC 384], Rajendra Babu, J., speaking for himself and

Raju, J., however, held that in view of a catena of decisions of this Court it is

aptly clear that where in discharge of a statutory obligation of maintaining a

canteen in an establishment the principal employer availed the services of a

contractor the contract labour would indeed be the employees of the

principal employer.

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The same bench in Mishra Dhatu Nigam Ltd. and Others v. M.

Venkataiah and Others [(2003) 7 SCC 488], having regard to the provisions

contained in Rules 65 and 71 of Andhra Pradesh Factories Rules, 1950,

reiterated the same view.

In Haldia Refinery Canteen Employees Union and Others v. Indian

Oil Corporation Ltd. and Others [(2005) 5 SCC 51], Ashok Bhan, J.,

speaking for a Division Bench of this Court, distinguished Indian

Petrochemicals Corporation Ltd. (supra) opining:

"\005The management unlike in Indian

Petrochemicals Corpn. Ltd. case is not reimbursing

the wages of the workmen engaged in the canteen.

Rather the contractor has been made liable to pay

provident fund contribution, leave salary, medical

benefits to his employees and to observe statutory

working hours. The contractor has also been made

responsible for the proper maintenance of

registers, records and accounts so far as

compliance with any statutory

provisions/obligations is concerned. A duty has

been cast on the contractor to keep proper records

pertaining to payment of wages, etc. and also for

depositing the provident fund contributions with

the authorities concerned. The contractor has been

made liable to defend, indemnify and hold

harmless the employer from any liability or

penalty which may be imposed by the Central,

State or local authorities by reason of any violation

by the contractor of such laws, regulations and also

from all claims, suits or proceedings that may be

brought against the management arising under or

incidental to or by reason of the work

provided/assigned under the contract brought by

the employees of the contractor, third party or by

the Central or State Government authorities."

It was specifically noticed that the workmen of the Canteen and the

contractor had entered into independent settlements without impleading the

owner or occupier of the factory as a party therein which also went to show

that the workmen were treating themselves the workmen of the contractor

and not that of the owners.

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 all intent 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.

We, however, intend to point out that in a case of this nature even an

industrial adjudicator may have some difficulty in coming to the conclusion

that employees of a canteen for all intent and purport are employees of the

principal employer.

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Question of issuance of direction to regularize the services of the

employees stand absolutely on a different footing to which we shall advert to

a little later.

MAINTAINABILITY OF THE WRIT PETITION

In a case of this nature, where serious disputed questions fact were

raised, in our opinion, it was not proper for the High Court for embark

thereupon an exercise under Article 226 of the Constitution. The High Court

in its judgment relied upon a large number of decisions of this Court, inter

alia, in Reserve Bank of India (supra) and State Bank of India & Ors. v.

State Bank of India Canteen Employees' Union (Bengal Circle) and Ors.

[AIR 2000 SC 1518] ignoring the fact that all such disputes were

adjudicated in an industrial adjudication.

The High Court arrived at a finding that the Committee was merely a

cloak of the Government and an arm of the State. When allegations are

made that a body is a cloak and/or smoke screen or a camouflage, the

adjudication of such a disputed question should be left to the Industrial

Court. In Steel Authority of India Ltd. (supra), as noticed hereinbefore, this

Court analysed the decision of this Court to say that they fall in three classes.

It was observed :

"We have quoted the definitions of these terms above

and elucidated their import. The word "workman" is

defined in wide terms. It is a generic term of which

contract labour is a species. It is true that a combined

reading of the terms "establishment" and "workman"

shows that a workman engaged in an establishment

would have direct relationship with the principal

employer as a servant of master. But what is true of a

workman could not be correct of contract labour. The

circumstances under which contract labour could be

treated as direct workman of the principal employer have

already been pointed out above."

The legal position was reiterated in Rourkela Shramik Sangh v. Steel

Authority of India Ltd. and Another [(2003) 4 SCC 317] stating:

"There cannot, thus, be any doubt whatsoever that

the appellants were fully aware of the fact that they

were required to approach the Industrial Tribunal

in terms of the provisions of the Industrial

Disputes Act for ventilating their grievances. The

submission of Mr Shanti Bhushan to the effect that

the High Court acts as an authority while

exercising its power under Article 226 of the

Constitution of India cannot be countenanced. The

order of this Court dated 16-10-1995, as quoted

supra, is absolutely clear and unambiguous. The

term "authority" used in this Court's order dated

16-10-1995 must be read in the context in which it

was used. The appellant in terms thereof could

seek a reference which would mean a reference in

terms of Section 10 of the Industrial Disputes Act.

It could also approach "the authority in accordance

with law" which would mean authority under a

statute. The High Court, by no stretch of

imagination, can be an authority under a statute."

It was, furthermore, reiterated that a disputed question of fact

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normally would not be entertained in a writ proceeding.

To the same effect is the decision of this Court in Workmen of Nilgiri

Coop. Mkt. Society Ltd. v. State of T.N. and Others [(2004) 3 SCC 514]

wherein this Court considered in detail the relevant factors for determining

the relationship of employer and workman. It was held that the burden of

proof was upon the workman. In what circumstances, control test taken

recourse to by the High Court can inter alia be applicable for determining a

disputed question of relation of employer and employee has also been

considered therein at some details. It was firmly laid down that whether a

contract is a sham or camouflage is not a question of law but of fact.

Hussainbhai, Calicut v. The Alath Factory Thezhilali Union, Kozhikode and

Others [(1978) 4 SCC 257], whereupon the High Court has placed strong

reliance, was held to be falling under Class (ii) envisaged in Steel Authority

of India Ltd. (supra).

We may, moreover, notice that in Workmen of the Canteen of Coates

of India Ltd. v. Coates of India Ltd. and Others [(2004) 3 SCC 547], a

Division Bench of this Court observed:

"Learned counsel for the appellant strenuously

urged that the respondent Company has the

statutory obligation to provide a canteen in the

premises and therefore, the employees of the

canteen must be presumed to be the workmen

employed by the respondent Company and no one

else. Learned counsel referred to certain decisions

for this purpose. It is sufficient for us to state that

some requirement under the Factories Act of

providing a canteen in the industrial establishment,

is by itself not decisive of the question or sufficient

to determine the status of the persons employed in

the canteen. The effect, if any, relating to

compliance with the provisions of the Factories

Act is a different matter which does not arise for

consideration in the present case, for which reason

we express no opinion on any such question. It is

sufficient for us to say that the finding recorded by

the learned Single Judge also leaves no escape

from the conclusion that these workmen cannot be

held to be workmen employed by the respondent

Company."

Albeit in a different context, this Court in U.P. State Bridge

Corporation Ltd. and Others v. U.P. Rajya Setu Nigam S. Karamchari Sangh

[(2004) 4 SCC 268] emphasised the need of adjudication of a disputed

question of fact before Industrial Court stating:

"The only reason given by the High Court to

finally dispose of the issues in its writ jurisdiction

which appears to be sustainable, is the factor of

delay, on the part of the High Court in disposing of

the dispute. Doubtless the issue of alternative

remedy should be raised and decided at the earliest

opportunity so that a litigant is not prejudiced by

the action of the Court since the objection is one in

the nature of a demurrer. Nevertheless even when

there has been such a delay where the issue raised

requires the resolution of factual controversies, the

High Court should not, even when there is a delay,

short-circuit the process for effectively

determining the facts. Indeed the factual

controversies which have arisen in this case remain

unresolved. They must be resolved in a manner

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which is just and fair to both the parties. The High

Court was not the appropriate forum for the

enforcement of the right and the learned Single

Judge in Anand Prakash case had correctly refused

to entertain the writ petition for such relief."

Yet recently, this Court in Rajasthan State Road Transport Corpn.

And Others v. Zakir Hussain [(2005) 7 SCC 447] in the context of the

jurisdiction of the Industrial Court vis-`-vis the Civil Court highlighted the

object of the Industrial Disputes Act stating:

"The object of the Industrial Disputes Act, as its

preamble indicates, is to make provision for the

investigation and settlement of industrial disputes,

which means adjudication of such disputes also.

The Act envisages collective bargaining, contracts

between union representing the workmen and the

management, a matter which is outside the realm

of the common law or the Indian law of

contract\005"

Keeping in view of the facts and circumstances of this case as also the

principle of law enunciated in the above referred decisions of this Court, we

are, thus, of the opinion that recourse to writ remedy was not apposite in this

case.

REGULARISATION

The question which now arises for consideration is as to whether the

High Court was justified in directing regularization of the services of the

Respondents. It was evidently not. In a large number of decisions, this

Court has categorically held that it is not open to a High Court to exercise its

discretion under Article 226 of the Constitution of India 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 daily wages employees who had not been

appointed in terms of the extant service rules framed either under a statute or

under the proviso to Article 309 of the Constitution of India. Such a

scheme, even if framed by the State, would not meet the requirements of law

as the executive order made under Article 162 of the Constitution of India

cannot prevail over a statute or statutory rules framed under proviso to

Article 309 thereof. The State is obligated to make appointments only in

fulfilment of its constitutional obligation as laid down in Articles 14, 15 and

16 of the Constitution of India and not by way of any regularization scheme.

In our constitutional schemes, all eligible persons similarly situated must be

given opportunity to apply for and receive considerations for appointments

at the hands of the authorities of the State. Denial of such a claim by some

officers of the State times and again had been deprecated by this Court. In

any view, in our democratic polity, an authority howsoever high it may be

cannot act in breach of an existing statute or the rules which hold the field.

It is not necessary for us to dilate further on the issue as recently in

State of U.P. v. Neeraj Awasthi and Ors. [2005 (10) SCALE 286], it has

been clearly held that the High Court has no jurisdiction to frame a scheme

by itself or direct framing of such a scheme by the State.

In Mahendra L. Jain and Others v. Indore Development Authority and

Others [(2005) 1 SCC 639], it was categorically held:

"The question, therefore, which arises for

consideration is as to whether they could lay a

valid claim for regularisation of their services. The

answer thereto must be rendered in the negative.

Regularisation cannot be claimed as a matter of

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right. An illegal appointment cannot be legalised

by taking recourse to regularisation. What can be

regularised is an irregularity and not an illegality.

The constitutional scheme which the country has

adopted does not contemplate any back-door

appointment. A State before offering public

service to a person must comply with the

constitutional requirements of Articles 14 and 16

of the Constitution. All actions of the State must

conform to the constitutional requirements. A

daily-wager in the absence of a statutory provision

in this behalf would not be entitled to

regularisation. (See State of U.P. v. Ajay Kumar

and Jawaharlal Nehru Krishi Vishwa Vidyalaya v.

Bal Kishan Soni.)"

In Zakir Hussain (supra), even in relation to the temporary employee,

it was stated:

"The respondent is a temporary employee of the

Corporation and a probationer and not a

government servant and, therefore, is not entitled

for any protection under Article 311 of the

Constitution. He was a party to the contract. In

view of the fact that the respondent was appointed

on probation and the services were terminated

during the period of probation simpliciter as the

same were not found to be satisfactory, the

appellant Corporation is not obliged to hold an

enquiry before terminating the services. The

respondent being a probationer has got no

substantive right to hold the post and was not

entitled to a decree of declaration as erroneously

granted by the lower courts and also of the High

Court."

PARITY IN THE SCALE OF PAY

The contention that at least for the period they have worked they were

entitled to the remuneration in the scale of pay as that of the government

employees cannot be accepted for more than one reason. They did not hold

any post. No post for the canteen was sanctioned by the State. According to

the State, they were not its employees. Salary on a regular scale of pay, it is

trite, is payable to an employee only when he holds a status. [See Mahendra

L. Jain and Others (supra)]

The High Court was, thus, not correct in holding that the members of

the First Respondent could be treated at par with the Hospitality

Organization of the State of Karnataka. Such equation is impermissible in

law. In the Hospitality Organization of the State, the posts might have been

sanctioned. Only because, food is prepared and served, the same would not

mean that a canteen run by a Committee can be equated thereto.

SUBSEQUENT EVENT

Subsequent events which had taken place is also worth taking note of.

The fact remains that the canteen now is closed. The judgment and order of

the High Court, thus, otherwise also cannot be implemented. The employees

concerned, therefore, cannot be directed to be reinstated in service. We have

noticed, hereinbefore, that other proceedings have been initiated by them.

The said proceedings may be disposed of in accordance with law.

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CONCLUSION

For the reasons aforementioned, we are of the opinion that the

impugned judgment cannot be sustained, which is set aside accordingly.

Consequently the appeals filed by the State Government being Civil Appeal

Nos. 224-226 of 2003 and 449-468 of 2003 are allowed and that of the First

Respondent being Civil Appeal Nos. 4180-82 of 2003 are dismissed.

However, in the facts and circumstances of this case, the parties shall bear

their own costs.