Back
IN THE HIGH COURT OF MADRAS
K.K. SASIDHARAN, J
The General Manager, Bharat Heavy Electricals Ltd. - Appellant
Versus
Canteen Workers of BHEL, The Secretary, Indco Service Society Ltd. And The Presiding Officer, Labour Court - Respondent
Writ Petition No. 10861 of 2000
Decided on : 04-01-2010
The issue before the court was whether the canteen workers of Bharat Heavy Electricals Limited (BHEL) were its regular workers. The Labour Court declared them as regular workers and directed BHEL to grant them permanent status with effect from 23.11.1987 with all monetary benefits. BHEL challenged this award in the High Court.
Fact of the Case:
BHEL had provided a canteen to its employees in accordance with Section 46 of the Factories Act, 1948. The canteen was initially managed by an independent contractor. Subsequently, the second respondent Society, a labour Co-operative Society registered under the Tamil Nadu Co-operative Societies Act, 1961, was formed by the workmen of the contractor. The Society entered into an agreement with BHEL to provide food to BHEL employees by employing their own personnel to run the canteen. BHEL paid the agreed amount to the Society. The Society had obtained a separate licence u/s 12 of the Contract Labour (Regulation and Abolition) Act, 1970 and was a separate entity by virtue of its constitution and registration as a Co-operative Society. The Society's Board of Directors comprised representatives of both BHEL and the workers of the Society. The Chief Executive Officer of the Society was a Government servant. The Society had its own by-laws. The management of the Society vested with the Board of Directors and the day-to-day administration was conducted by the President through the Secretary. The President had a general control over the affairs of the Society and was expected to monitor the day-to-day administration of the Society. There was no dispute that originally the canteen was entrusted to a private contractor by BHEL. The contractor was running the canteen on the basis of an agreement executed with BHEL. The members of the Union were the workers of the contractor. It was only in the year 1986, the idea of incorporating a Co-operative Society was emerged in the meeting between the management of BHEL and the Union. The letter dated 12.6.1986 sent by the Union to BHEL contains a reference about the discussion. In fact the Labour Commissioner as per letter dated 30.11.1985 called upon the management of BHEL to inspect MRL Industrial Co-operative Service Society Limited and to form a Society of such kind in BHEL. It appears that the said suggestion also made an impact in coming to an agreement with the workers to organise an Industrial Co-operative Society. Disputes regarding nature of employment of workmen in statutory and non-statutory canteens were the subject matter before the Supreme Court time and again. There were two kinds of canteens. Those canteens which were established as per the provisions of the Factories Act were termed as statutory canteens. Other canteens which were established by the management without such compulsion were termed as non-statutory canteens.
Finding of the Court:
The High Court held that the canteen was run by BHEL and the Society was only a name lender. The canteen was a statutory canteen in all respects, opened and operated by BHEL. The second respondent Society was only a name lender. The canteen was a statutory canteen in all respects, opened and operated by BHEL. The High Court also held that the Labour Court's direction to grant the status of permanent employees from 23.11.1987 and to pay the entire arrears was not justified. The High Court directed that the absorption should take effect from 17.12.1999 with 50% of differential wages.
Issues: 1. Whether the canteen workers of BHEL were its regular workers? 2. Whether the Labour Court was justified in declaring the canteen workers as regular workers and directing BHEL to grant them permanent status with effect from 23.11.1987 with all monetary benefits?
Ratio Decidendi: The High Court held that the canteen was run by BHEL and the Society was only a name lender. The canteen was a statutory canteen in all respects, opened and operated by BHEL. The second respondent Society was only a name lender. The canteen was a statutory canteen in all respects, opened and operated by BHEL. The High Court also held that the Labour Court's direction to grant the status of permanent employees from 23.11.1987 and to pay the entire arrears was not justified. The High Court directed that the absorption should take effect from 17.12.1999 with 50% of differential wages.
Final Decision: The High Court allowed the writ petition in part. The award of the Labour Court regarding declaration of status was confirmed with modification regarding the effective date and payment of differential wages.
K.K. Sasidharan, J.
This writ petition is directed against the award of the Labour Court, Vellore dated 17-12-1999 in I.D. No. 93 of 1992 whereby and whereunder the Labour Court declared the canteen workers of Bharat Heavy Electricals Limited (hereinafter referred to as “BHEL”), Ranipet as their regular workers and directed the management to grant such status with effect from 23.11.1987 with all monetary benefits.
BACKGROUND FACTS:
2. The petitioner is a Public Sector Undertaking Company wholly owned by the Government of India, engaged in the manufacture of Heavy machinery. The petitioner Unit is located at Ranipet in the State of Tamil Nadu.
3. The petitioner has provided a canteen to its employees in accordance with Section 46 of the Factories Act, 1947. The canteen was originally managed by an independent contractor. Subsequently in the year 1986, the second respondent Society was formed by the workmen of the contractor. The second respondent (hereinafter referred to as “Society”) is a labour Co-operative Society registered under the Tamil Nadu Co-operative Societies Act, 1961.
4. The petitioner has entered into a written agreement with the Society and as per the said agreement, the Society has to provide food to BHEL employees by employing their own personnel to run the canteen and the petitioner would pay the agreed amount. The Society was a separate entity by virtue of its constitution and registration as a Co-operative Society. The Society is governed by its own by laws.
5. The management of the Society vests with the Board of Directors and the profit and loss as the case may be shall be borne by the Society. The Society is answerable to the Registrar of Industrial Co-operative Societies. The admission and expulsion of the members of the Society are as per the terms of the by-laws and the status of the members of the Society is totally independent and unconnected with the employees of BHEL. The petitioner has no financial or supervisory control over the Society.
6. The Society had obtained a separate licence u/s 12 of the Contract Labour (Regulation and Abolition) Act, 1970 and as such it is a “Contractor” within the meaning of the said Act. The workmen employed by the Society are neither directly nor indirectly employed by BHEL. They have no lien on BHEL in terms of their employment, wages or conditions of service. The workmen were under the direct control of the Society and there never existed Master - Servant relationship between the members of the first respondent Union (hereinafter referred to as “Union”) and BHEL. BHEL was nothing more than a principal employer as defined under the Contract Labour Act, 1970. The Society has been functioning as a separate entity catering to the needs of the workers of BHEL on the basis of the agreement executed from time to time.
7. While the matters stood thus, the Union made a demand that the workmen of the Society should be conferred with permanent status in BHEL. The Union approached the Labour Officer for conciliation. BHEL appeared before the Labour Officer and submitted their explanation on 13.1.1988. BHEL maintained that the workmen employed by the Society never functioned as their employees and as such there was no legal relationship of employer-employee between the parties. However the Union persisted in their demand. Ultimately the Government of Tamil Nadu referred the matter to the Labour Court for adjudication. The order of reference was challenged by the petitioner before this Court in W.P. No. 15145 of 1988. The writ petition was disposed of as per order dated 3.12.1997 directing the Labour Court to decide the issues taking note of the objections submitted by BHEL.
8. The dispute was originally pending before the II Additional Labour Court, Madras. Subsequently it was transferred to the Labour Court, Vellore and it was registered as I.D. No. 93 of 1992. The dispute was initially raised by the Anna Workers Union. Subsequently BHEL Canteen Workers Union stepped into the
AI
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
