Important point
Canteen workers employed by a contractor do not become workers of the management for a purpose other than the Factories Act.

Headnote:Indian Factories Act, 1948—Sections 2(1) and 46—Canteen workers—Claim of absorption and regularisation—Appellants are working in statutory canteen run by the Indian Oil Corporation through contractor in its factory at Haldia—Respondent was treating appellants as employees of the contractor—Appellants filed writ applications alleging that canteen is a part of establishment of the management and the workers in the canteen are the employees of the management as the work carried on is perennial in nature—Management had refused to grant status of regular employees to appellants and treated them as employees of canteen contractor—Respondent management exercises effective control over the contractor on certain matters in regard to running of the canteen—But a free hand has been given to the contractor with regard to engagement of employees working in the canteen—There is no stipulation of the contract that the employees working in the canteen at the time of commencement of the contract must be retained by the contractor—Management is not reimbursing the wages of workmen engaged in the canteen—Contractor has been made liable to pay provident fund contribution, leave salary, medical benefits to his employees and to observe statutory hours—Appellants did not become workers of the management for a purpose other than the Factories Act—Their claim for absorption and regularisation held liable to be dismissed.
Held : The management has kept with it the right to test, interview or otherwise assess or determine the quality of the employees/workers with regard to their level of skills, knowledge, proficiency, capability etc. so as to ensure that the employees/workers are competent and qualified and suitable for efficient performance of the work covered under the contract. This control has been kept by the management to keep a check over the quality of service provided to its employees. It has nothing to do with either the appointment or taking disciplinary action or dismissal or removal from service of the workmen working in the canteen. Only because the management exercises such control does not mean that the employees working in the canteen are the employee of the management. Such supervisory control is being exercised by the management to ensure that the workers employed are well qualified and capable of rendering the proper service to the employees of the management. (Para 16)
Another fact which goes to show that the appellants are the employees of the canteen contractor is that a settlement was arrived at between the contractor and the workmen of the canteen in the presence of Assistant Labour Commissioner of the area which was valid for the period from 01.12.1987 to 30.11.1990 wherein certain terms and conditions were agreed upon between these parties with regard to some labour issues relating to the workmen employed by the contractor. Another settlement between the same parties was also arrived at which was valid upto 01.12.1993 concerning once again the labour issues between the workmen and the contractor. Respondent-management was not a party to either of these two settlements. This clearly goes to show that the workmen were treating themselves to be the employees of the contractor and not that of the management. (Para 18)

Judgment

Bhan, J.—This appeal by grant of leave is directed against the judgment dated 31.03.2000 passed by the Division Bench of the High Court of Calcutta at Calcutta in M.A.T. No. 4310 of 1998. By the impugned order the Division Bench has set aside the judgment and order of the Single Judge of the same High Court in C.O.No. 6266 (W) of 1990 with C.O.No. 6274 (W) of 1990. The Single Judge had allowed the writ application filed by the appellants and directed the Indian Oil Corporation Limited, Haldia Oil Refinary (hereinafter referred to as “the respondent”) to absorb the appellants in its service and regularise their services. Division Bench has set aside the aforesaid direction given by the learned Single Judge and held that the appellants were neither entitled to be absorbed nor regularised in the service of the respondent.

2. Short facts of the case are as under:—

Two sets of writ applications were filed in the High Court of Calcutta involving common question of law and fact, both of them were taken up together by the Single Judge and disposed of by the common judgment. Admittedly, the appellants are working in the statutory canteen run by the respondent through contractor in its factory at Haldia, District Midnapore, West Bengal. Respondent was treating the appellants as the employees of the contractor. Aggrieved against this, the appellants filed the writ applications in the High Court contending therein that the factory of the respondent where the workmen are employed is governed by the provisions of Indian Factories Act, 1948 (for short “the Factories Act”) and the canteen where the said workman are employed is a statutory canteen established by the respondent as required under the provisions of the Act. It is averred in the petition that the canteen is maintained for the benefit of the workmen employed in the factory and the respondent has direct control over them. Contractor though shown as a contractor has no control over the management, administration and functioning of the canteen. That the canteen is a part of the establishment of the management and the workers in the canteen are the employees of the management. That the work carried on is perennial in nature and the canteen is incidental to and is connected with the establishment of the management. It was contended that the appellants were the regular employees of the respondent. The management had refused to grant the status of regular employees to the appellants and treated them as employees of the canteen contractor contrary to the statutory provisions and judicial pronouncements of this Court. Writ applications were filed seeking issuance of mandamus to the respondent to absorb the appellants in its service and to regularise them as such.

3. Respondents in their written statement denied that the appellants were its employees or they were entitled to be regularised as such. None of the appellants was appointed by the respondents. All of them were appointed by the contractor and therefore, they were the employees of the contractor. Under the Factories Act, a factory employing more than 250 workers is required to provide the facility of a canteen. The Factories Act or the Rules framed thereunder do not require that such a canteen should be managed and run by regular employees of the establishment. In law it is open and permissible to the management to entrust the same to a contractor. It was contended that the respondent being a public sector undertaking has devised and put in place rigid employment strategies for its core activities based on employment strengths derived on the basis of production and output norms and requirement studies. All recruitment by and within the corporation is made strictly according to those norms on the basis of staff strength and quotas fixed for direct recruitment on the basis of job qualifications, employment norms, reservation of posts to be filled by internal promotion pursuant to settlements arrived at by the corporation with its

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2005 Supreme(SC) 747

Important pointCanteen workers employed by a contractor do not become workers of the management for a purpose other than the Factories Act.

Cases Referred (2)

Important point
Canteen workers employed by a contractor do not become workers of the management for a purpose other than the Factories Act.