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CASE NO.:

Appeal (crl.) 1039-1040 of 1999.

Appeal (civil) 1041 of 1999 Appeal (civil) 1042-1043 of 1999

PETITIONER:

UNION OF INDIA AND ORS.

Vs.

RESPONDENT:

M. ASLAM AND ORS.

DATE OF JUDGMENT: 04/01/2001

BENCH:

G.B.Pattanaik, B.N.Pattanaik

JUDGMENT:

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JUDGMENT

PATTANAIK,J.

Union of India is the appellant in all these appeals

and these appeals are directed against the orders of

different Central Administrative Tribunals. The respondents

are the employees of the Unit- Run-Canteens which provide

canteen facilities to the troops at the unit level.

Applications before the Central Administrative Tribunals

were filed by these employees claiming benefits as regular

defence personnel employees or at least as civilian

employees serving under the Ministry of Defence on the

allegation that the Unit-Run- Canteens are part of the

Canteen Stores Department and since the Canteen Stores

Department forms a part of the Government in the Ministry of

Defence there is no reason as to why the Unit-Run-Canteens

should not be held to be a part of Ministry of Defence. On

behalf of Union of India the jurisdiction of the Tribunal

was assailed on the ground that these employees cannot be

held to be the Government employees and consequently the

Tribunal did not have the jurisdiction to entertain the

applications and decide the grievances of the employees.

According to the Union of India the Unit-Run-Canteens are

operated by the non-public funds and the expenditure

required to run the Unit Canteens is made out of the profits

earned by the canteens itself and, therefore, so far as the

personnel serving in such canteens, there is no relationship

of master and servant between the Government of India and

the employees, and consequently the applications before the

Tribunal should be rejected. The Central Administrative

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Tribunals, however, at Jodhpur and Bombay took the view that

the Unit-Run-Canteens are the part of Defence establishment

and consequently the holder of a post in the management of

such canteen must be held to be connected with the Defence

Services. The Tribunals examined the relevant provisions

made by different personnel providing all pervasive control

with the Ministry of Defence and thus held that there

subsist master and servant relationship between the

employees serving in Unit-Run- Canteens and the Ministry of

Defence and, therefore, the Tribunal retains the

jurisdiction to entertain applications and decide those

applications in accordance with law. Mr. Goswami, learned

senior counsel appearing for the Union of India vehemently

contended before us, that these Unit-Run- Canteens are

different from the Canteen Stores Department and the salary

of the employees serving in the Unit-Run- Canteens are not

paid out of the Consolidated Fund of India but a fund

created at the unit level and profit out of sales in Unit

and Canteens are utilised for the payment of salary as well

as for creating assets of the canteens, and consequently it

is not possible to hold that there exist relationship of

master and servant between the employees serving in these

canteens and the Union of India in the Ministry of Defence.

According to Mr.Goswami, no doubt, some amount of control is

vested with the local defence personnel, be it Army, Air

Force or Navy, over the employees serving in

Unit-Run-Canteens, but conferment of such disciplinary

control alone will not clothe the employees with the status

of Government servant or servants under the Ministry of

Defence and the Tribunal, therefore, committed serious error

in declaring the status of these employees as Government

servants. Mr. Goswami also strongly relied upon the

judgment of this Court in the case of Union of India and

Another vs. Chotelal and others (1999) 1 Supreme Court

Cases 554, in which case this Court has held that the Dhobis

in the National Defence Academy, Khadakwasla are not

Government servants, particularly because their salary is

not paid out of the Consolidated Fund of India. According

to Mr. Goswami, the Administrative Tribunals at Allahabad

and Punjab and Haryana High Court at Chandigarh have taken

contrary view so far as the status of these Unit-Run-

Canteens employees are concerned, and according to the

learned counsel that constitutes a correct view.

Mr. Mohta, Mr. P.N. Mishra, senior advocates and

several other learned counsel appearing for the respondents,

on the other hand contended, that the Central Administrative

Tribunals at Jodhpur and Bombay have taken the correct view

with regard to the status of such employees. According to

them the decision of this Court and the test indicated in

the Life Insurance Corporation case would fully apply to the

facts and circumstances of the present case and, as such,

there will be no reason to hold that the employees in the

Unit-Run-Canteens are not the Government servants.

In order to decide whether the employees serving in

the Unit-Run-Canteens can be held to be Government servants,

it is necessary to find out the mode of appointment of such

employees, Rules and Regulations governing the conditions of

service of such employees, fund from which such salary is

paid, and other factors which really determine the existence

of relationship of master and servant between the Government

and the employees. In the Defence Services there are two

types of canteens;, (1) Canteen Stores Department, and (2)

Unit-Run-Canteens. The Canteen Stores Department was in

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existence in this country even during pre- independence days

and it has its Head Office and Base Depot in Bombay with 33

Area Depots all over the country. These Area Depots are the

wholesale outlets, which serve Unit-Run Canteens in their

respective zones. The Canteen Stores Department after the

independence from 1948 onwards function as a Department

under the Ministry of Defence initially for 3 years on an

experimental basis and later from 1950 has been working on

permanent basis. We are concerned in the present case with

the Unit-Run Canteens and the status of the employees

serving therein. As has been stated earlier, these Unit-Run

Canteens under their respective Commanding Officers in the

three services Army, Navy and Air Force get their articles

from the wholesale outlets in Area Depot of the Canteen

Stores Department and at present there exist 3400 Unit-Run

Canteens. Prior to the World War II the retail trade in the

Defence Services was in the hands of the contractors.

During World War II a regular cadre called Indian Canteen

Code came to be formed under the Canteen Services (India) to

handle retail trade in operational areas where contractors

were not expected to go. After 1947, the organisation split

into two : Canteen Stores Department (India) and Canteen

Stores Department (Pakistan). The retail trade, however,

was reverted to the contractors. But by the early fifties

it was realised that the margin of profit between the

wholesale price and the retail rate could be a welcome

source of funds available to commanding officers for welfare

purposes. Thus, the concept of unit-run canteens was born,

and contractors were driven out. When Major Gen. K.S.

Thimaya took over as Quarter Master General, he gave

detailed thought to providing canteen facilities to the

troops at the unit level. He found that retail outslts

being in the hands of the unit canteen contractors, the

margin between the wholesale price and retail price of goods

went to the contractors whereas the amount in the hands of

individual commanding officers of units in the Army, Navy

and Air Force could be utilised for the welfare of the

troops. The case was therefore, made out jointly for taking

over of contractor-run canteens by units or formations, as

the case may be, so that the profits from the sale of

canteen stores could be retained within the unit.

Contractors, no doubt, put up considerable objection to the

aforesaid proposal but the Government agreed to the proposal

of General Thimaya and orders were issued. The concept of

Unit-Run Canteens, therefore, became an accepted doctrine

though it took considerable period for implementing change

over. It goes without saying that from 1948 onwards the

Canteen( for short CSD) functioned as a department under

the Ministry of Defence, initially for three years on an

experimental basis, and later from 1950 on a permanent basis

and yet right upto 1977 the legal status of the same

remained nebulous. For functional purposes, it was a

commercial undertaking, but for actual practice it was

treated as a Department of the Ministry of Defence. The

result was that the terms and conditions of employees

presented various problems which quite often became a source

of discontent and unpleasant employer- employee relations.

As has been stated earlier, for effective functioning of the

defence services it is absolutely necessary to provide

canteen facilities through out the country and while the

Canteen Stores Department serve as whole sale outlet it is

the Unit-Run Canteens which serve as retail outlet. A set

of Rules regulating the terms and conditions of service of

the employees of Unit-Run canteens have been framed which

confers all pervasive control over the employees with the

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authorities of Defence services. Though the funding of the

Unit-Run Canteens is not made out of the Consolidated Fund

of India but it is made by the Canteen Stores Department and

this Department it its turn has formed a part of the

Ministry of Defence, admittedly. In Parimal Chandra Raha

and others vs. Life Insurance Corporation of India and

others - 1995 Supp. (2) Supreme Court Cases 611, the

employees of different canteens in different offices of the

Life Insurance Corporation whether were employees of the

Corporation itself was under consideration by this Court.

This Court evolved four principles which are quoted

hereunder :-

(i) Canteens maintained under obligatory provisions

of the Factories Act for the use of the employees became a

part of the establishment and the workers employed in such

canteens are employees of the management. (ii) Even if

there is a non-statutory obligation to provide a canteen,

the position is the same as in the case of statutory

canteens. However, if there is a mere obligation to provide

facilities to run a canteen, the canteen does not become

part of the establishment. (iii) The obligation to provide

canteen may be explicit or implicit. 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. (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 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.`

Applying the aforesaid principle to the facts in the

present case, it is difficult to conceive as to how the

employees working in the Unit-Run Canteens can be held to be

not Government servants, when it has emerged that providing

canteen facilities to the Defence service personnel is

obligatory on the part of the Government and in fact these

Unit-Run Canteens discharge the duty of retail outlets after

getting their provision from the wholesale outlet or depot

of the Canteen Stores Department. Mr. Goswami, the learned

senior counsel appearing for the Union of India strongly

relied upon the judgment of this Court in Union of India and

another vs. Chotelal & Others (1999) 1 Supreme Court

Cases 554, wherein the question for consideration was

whether Dhobis appointed to wash the clothes of cadets at

NDA at Khadakwasla who are being paid from the regimental

fund could be treated as holders of civil post within the

Ministry of Defence. This Court answered in the negative

because the regimental fund was held not to be a public fund

as defined in paragraph 802 of Defence Services Regulation.

Payment to such dhobis out of the regimental fund and the

character of that regimental fund was the determinative

factor. But in the case in hand if the Canteen Stores

Department forms a part of the Ministry of Defence and if

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their funds form a part of the Consolidated Fund of India

and it is the said Canteen Stores Department which provides

fund as well as different article through the retail outlets

of Unit-Run Canteens then the employees who discharge the

duties of salesmen in such retail outlets must be held to be

employees under the Government. The officers of the Defence

Services have all pervasive control over the Unit-Run

Canteens as well as the employees serving therein. Regular

set of Rules have been framed determining the service

conditions of the employees in Unit-Run Canteens. The

funding of articles are provided by Canteen Stores

Department which itself is a part of the Ministry of

Defence. The report of a Committee of Subordinate

Legislation went into detail the working conditions of the

employees engaged in the Unit-Run Canteens and categorically

came to the conclusion that these employees are recruited,

controlled and supervised by the Rules and Regulations made

by the Defence Services although these have been given the

name of Executive Instructions. The said Committee came to

the conclusion that for all intent and purposes the

employees in the Unit-Run Canteens are Government employees

and should be treated as such. In the aforesaid premises,

we are of the considered opinion that the status of the

employees in the Unit-Run Canteens must be held to be that

of a government employee and consequently the Central

Administrative Tribunal would have the jurisdiction to

entertain applications by such employees under the

provisions of Administrative Tribunal Act. Civil Appeal

Nos. 1039-1040 of 1999 by the Union of India against the

order of the Central Administrative Tribunal, Jodhpur Branch

in O.A. No. 86 of 1995 accordingly stand dismissed.

Civil Appeal No. 1041 of 1999 is Unions appeal

against the decision of Central Administrative Tribunal,

Jodhpur Branch in O.A. No. 157 of 1993 and OA No. 333 of

1994. By the impugned orders the Tribunal came to hold that

it had the jurisdiction to entertain the applications filed

by the employees of the Unit-Run Canteens and further

directed that those employees are entitled to pay and other

benefits similar to the pay and other benefits available to

the canteen employees in the CSDI. The Tribunal also

further directed that the applicants should get the minimum

of the salary presently being paid to their counter-parts in

the CSDI and all the benefits of the other service

conditions available to the regular Government employees in

the CSDI. It also further directed that they should be

treated as Government employees from the date of the filing

of the applications before the Tribunal. It also directed

that they would be entitled to retiral benefits. As already

stated, we have come to the conclusion about the status of

the employees serving in Unit-Run Canteens to be that of

Government servants, but that by itself ipso facto would not

entitle them to get all the service benefits as is available

to the regular government servant or even their counter

parts serving in the CSD Canteens. It would necessarily

depend upon the nature of duty discharged by them as well as

on the Rules and Regulations and Administrative Instructions

issued by the employer. We have come across a set of

Administrative Instructions issued by he Competent Authority

governing the service conditions of the employees of such

Unit-Run Canteens. In this view of the matter, the

direction of the Tribunal that the employees of the Unit-Run

Canteens should be given all the benefits including the

retiral benefits of regular government servants cannot be

sustained and we accordingly, set aside that part of the

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direction. We, however, hold that these employees of the

Unit-Run Canteens will draw at the minimum of the regular

scale of pay available to their counter parts in the CSDI

and, we further direct the Ministry of Defence, Union of

India to determine the service conditions of the employees

in the Unit-Run Canteens at an early date, preferably within

six months from the date of this judgment. This appeal is

accordingly disposed of with the aforesaid direction and

observation.

Civil Appeal Nos. 1042-43 of 1999. These appeals by

the Union of India are directed against the order of the

Central Administrative Tribunal, Jodhpur Bench in OA No.

231 of 1994, whereunder the Tribunal has directed the Union

Government to review the payment of subsistance allowance

payable to the employees in the light of the E.F.R. 53 of

the Fundamental Rules. Notwithstanding the fact that we

have recorded the conclusion that the employees serving

under Unit-Run Canteens could be treated as Government

servants, but that does not necessarily mean that the

service conditions of such employees are governed by the

Fundamental Rules. It would be open for the employer to

frame separate conditions of service of the employees or to

adopt the Fundamental Rules. There is no decision of the

employer that Fundamental Rules would be applicable to such

employees and in the absence of such decision the Tribunal

was not justified to direct that the question of payment of

subsistance allowance should be reviewed in accordance with

the provisions contained in the Fundamental Rules. In this

view of the matter, though we uphold the jurisdiction of the

Tribunal to entertain applications filed by employees

serving in Unit-Run Canteens but the impugned direction for

reviewing the payment of subsistance allowance in terms of

Fundamental Rules cannot be sustained and that part of the

direction accordingly stands set aside and Unions appeal to

that extent stands allowed.

These appeals are disposed of with aforesaid

directions and observations.