IMPORTANT POINT
Employees of canteen established by a Govt. Co. through a Contractor are not employees of the Govt. Co. by any statutory presumption. The issue is primarily and ultimately one of fact to be determined by a fact finding Tribunal.

Headnote:(i) Factories Act, 1948-Section 46-Canteen established by respondent 1 pursuant to statutory obligation under Section 46-Respondent 1 appointed Respondent No. 2 as Contractor of Canteen-Whether employees of Respondent No. 2 would be treated as employers of Respondent No. 1? (No)-Case law explained -Workmen of statutory canteen are workman of establishment only for Factories Act. (Para 6)
       Held : 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 No.1, is unacceptable. First, the respondent No.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 the respondent No.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 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 concerned establishment 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 the respondent No. 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 No.1. (Para 5)
       (ii) Contract of canteen between Govt. Co. (Respondent No. 1) and Contractor (Respondent No. 2)-One of the clauses giving direction to Contractor to employ the workers already working in the canteen (like the appellants)-Whether appellants become employees of Respondent No. 1?-Labour Court finding in the negative-Interference by High Court under writ jurisdiction not warranted in law-Interference in appeal by Special Leave equally not required-Appeal dismissed-(Constitution of India-Articles 226 & 136-Industrial Disputes Act, 1947-Section 10).
       Held : The issue is, therefore, primarily and ultimately one of fact to be determined by a fact finding tribunal [See: Indian Petrochemicals Corporation Ltd. v. Shramik Sena and others, 1999(6) SCC 439 : 1999(6) Supreme 542]. In the case before us, the terms of the agreement are inconclusive. Before the Labour Court the contractor stated in cross-examination that he used to supervise and control his employees and pay their salaries. Even the witnesses for the appellants stated that their salaries were paid by the contractor. The appellants witnesses also said that the respondent No. 2 brought the raw material. The respondent No. 1 s witnesses said that the respondent No. 1 had no hand in the selection of the employees of the canteen. The prescribed procedure for appointing employees of the respondent No. 1 was not applied to them. The respondent No. 1 did not record their attendance nor paid them their salaries. The Labour Court also noted that the appellants witnesses were unable to identify or name any officer of the respondent No.1 who they claimed supervised their work. The Labour Court found that the appellants were unable to prove that the respondent No. 1 exercised any control or supervision over the employees of the contractor. After a detailed analysis of the evidence, the Labour Court concluded that the appellants were not the employees of respondent No. 1. The finding cannot be termed to be perverse. Given this, it would have been inappropriate for the High Court under Article 226 to re-appreciate the evidence and come to a different factual conclusion. The High Court did not do that nor do we propose to do so under Article 136. We accordingly dismiss the appeal but without any order as to costs. (Paras 11, 12 & 13)

JUDGMENT

Ruma Pal, J.-The respondent No. 1 is a Government of India undertaking. It was incorporated under the Companies Act,1956 on 30th November 1972. One of the main objects for which the respondent No. 1 was established was to promote, encourage and develop the availability, use, supply and distribution at reasonable cost in the country or artificial limbs to needy persons particularly disabled defence personnel. For this purpose the respondent No. 1 set up a factory where more than 700 persons are employed. The respondent No. 1 also set up a canteen for its employees. From time to time agreements were entered into between the respondent No. 1 and different contractors by which the contractor agreed to prepare and serve food stuffs and other refreshments at the canteen. At the relevant time the concerned contractor was Aditya Shukla, the respondent No. 2 herein.

2. According to the appellants, they were employed by several of the contractors and had been serving in the canteen for several years. During the pendency of the contract with the respondent No. 2, the appellants raised an industrial dispute claiming to be regular workmen of the respondent No. 1. The dispute was referred by the State Government to the Labour Court. The Labour Court considered the evidence, both oral and documentary, and by an award dated 10th May 1996, came to the conclusion that the appellants were not the employees of respondent No. 1 but were employees of respondent No. 2. Being aggrieved with the award, the appellants filed a writ petition before the High Court at Allahabad. The High Court was of the view that the appellants claim was primarily for abolition of contract labour in canteens and consequent absorption of the contract labourers as employees of the principal employer, in this case the respondent No. 1. The High Court rejected the submission and dismissed the writ petition.

3. Before us learned counsel for the appellant submitted that the High Court had wholly misdirected itself. According to the appellants, the issue was not whether the Labour Court could have directed abolition of contract labour but the issue was whether the Labour Court was bound, on the basis of the decision of this Court in Parimal Chandra Raha and others v. Life Insurance Corporation of India and others, 1995 Supp (2) SCC 611, to hold that the appellants were in fact regular employees of the respondent No.1. It was submitted that the respondent No. 1 was bound by Section 46 of the Factories Act, 1948 to set up the canteen. It was also submitted that the State Government had by notification specified the factory of the respondent No. 1 under the provisions of Section 46(1) of the Factories Act. It was contended that since the respondent No. 1 was statutorily obliged to provide and maintain a canteen for the use of its employees, the canteen was part of the respondent No.1 s establishment, and therefore the appellants who were employed in such canteen were the employees of the respondent No.1. It is the appellants case that the various terms in the contract between the contractor and the respondent No. 1 clearly showed that the appellants were under the direct supervision and control of respondent No.1. This, together with the fact that the appellants had continued to be employed in the canteen despite several changes of contractors, showed that the appellants were in fact the respondent No. 1 s employees.

4. Learned counsel for the respondent No. 1 submitted that the appellants had never challenged the contract between the respondent No. 1 and the contractor as being a sham document to camouflage the fact that the appellants were really the respondent No.1 s employees. It was contended that in the absence of such a challenge, there was no scope for the appellants to claim to be regular employees of the respondent No. 1. Furthermore, according to the respondent No. 1, the Labour Court had duly considered the terms of the con

Click Here to Read the rest of this document

2001 Supreme(SC) 1613

IMPORTANT POINTEmployees of canteen established by a Govt. Co. through a Contractor are not employees of the Govt. Co. by any statutory presumption. The issue is primarily and ultimately one of fact to be determined by a fact finding Tribunal.

Cases Referred (4)

IMPORTANT POINT
Employees of canteen established by a Govt. Co. through a Contractor are not employees of the Govt. Co. by any statutory presumption. The issue is primarily and ultimately one of fact to be determined by a fact finding Tribunal.