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SUPREME COURT OF INDIA
H.L. DATTU, R.K. AGRAWAL, ARUN MISHRA, JJ.
BALWANT RAI SALUJA & ANR. – APPELLANTS
VERSUS
AIR INDIA LTD. & ORS. – RESPONDENTS
Decided On : 25-08-2014
(1992) 4 SCC 363; (1990) 3 SCC 682; (1999) 6 SCC 172 – Relied upon
(b) Factories Act, 1948 – Section 46 – Workmen of a statutory canteen would be the workmen of the establishment for the purpose of the Factories Act,1948 only – Not for all other purposes – Employer would be liable for these employees Act only – Section 46 does not govern the rights of employees with reference to appointment, seniority, promotion, dismissal, disciplinary actions, retirement benefits, etc. – Employees of the statutory Canteen do not ipso-facto become employees of the principal employer. (Para 38)
(1999) 6 SCC 439; (2002) 1 SCC 337; (2004) 3 SCC 547; (2005) 5 SCC 51; (2006) 1 SCC 567; (1992) 4 SCC 363; (1990) 3 SCC 682; (1999) 6 SCC 172; (1996) 3 SCC 267; (2000) 4 SCC 245; (2001) 4 SCC 498 – Relied upon
(1978) 4 SCC 257; 1990 Supp SCC 191; 1995 Supp (2) SCC 611; (2011) 1 SCC 635; (2009) 13 SCC 374; (2014) 6 SCC 756; (1997) 9 SCC 377; (2005) 5 SCC 51; (2002) 1 SCC 337; 178 ITR 548 (SC) – Referred
(1974) 3 SCC 66; (2001) 7 SCC 1 – Distinguished
(c) Service law – Employer-employee relationship – Relevant factors establishing employer-employee relationship would include (i) who appoints the workers; (ii) who pays the salary/remuneration; (iii) who has the authority to dismiss; (iv) who can take disciplinary action; (v) whether there is continuity of service; and (vi) extent of control and supervision, i.e. whether there exists complete control and supervision. (Para 61)
[1968] 2 QB 497; (1946) 62 TLR 427; [2012] EWCA Civ 938; AIR 1957 SC 274; (2004) 3 SCC 514 – Relied upon
(d) Factories Act, 1948 – Section 46 – HCL a subsidiary of the respondent Air India running its statutory canteen – Principle of piercing the corporate veil allows Courts to disregard separate entity of a company – However this principle should be applied in a restrictive manner. (Para 70)
(2012) 6 SCC 613; 141 L Ed 2d 43: 524 US 51 (1998); [1897] AC 22; [2008] EWHC 2380 (Fam); [2013] UKSC 34; [2013] UKSC 34 – Referred
(e) Service law – Employer-employee relationship between employees of canteen run by HCL for Air India and Air India – Memorandum and articles of HCL not showing that it functions only for Air India or its fundamental activity is to run canteen for Air India – HCL is not merely a veil between the canteen employees and the Air India – Supervision exercised by Air India over canteen affairs cannot entitle the employees to claim employer-employee relationship with Air India – Moreover, there is no parity in nature of work, mode of appointment, experience, qualifications, etc., between the regular employees of the Air India and the workers of the canteen. (Para 77, 78, 80, 82, 85, 86)
Facts of the case:
The question arising in this case is whether the workmen engaged in statutory canteens, through a contractor, could be treated as employees of the principal establishment.
Because of difference of opinion between the two Judges, this case has been referred to a larger Bench.
The Judges differed in their opinion regarding the liability of the principal employer running statutory canteens and further regarding the status of the workmen engaged thereof. The learned Judges differed on the aspect of supervision and control which was exercised by the Air India Ltd.- respondent No. 1, and the Hotel Corporations of India Ltd. -respondent No. 2, over the said workmen employed in these canteens. The learned Judges also had varying interpretations regarding the status of the HCI as a sham and camouflage subsidiary by the Air India created mainly to deprive the legitimate statutory and fundamental rights of the concerned workmen and the necessity to pierce the veil to ascertain their relation with the principal employer.
Finding of the Court:
Employees of the statutory canteen of Air India run by HCL are employees of Air India for the purposes of the Factories Act only and no other purpose.
Result: Appeals dismissed.
JUDGMENT
H.L. DATTU, J.
1. In view of the difference of opinion by two learned Judges, and by referral order dated 13.11.2013 of this Court, these Civil Appeals are placed before us for our consideration and decision. The question before this bench is whether the workmen engaged in statutory canteens, through a contractor, could be treated as employees of the principal establishment.
2. At the outset, it requires to be noticed that the learned Judges differed in their opinion regarding the liability of the principal employer running statutory canteens and further regarding the status of the workmen engaged thereof. The learned Judges differed on the aspect of supervision and control which was exercised by the Air India Ltd. (for short, “the Air India”)- respondent No. 1, and the Hotel Corporations of India Ltd. (for short, “the HCI”)-respondent No. 2, over the said workmen employed in these canteens. The learned Judges also had varying interpretations regarding the status of the HCI as a sham and camouflage subsidiary by the Air India created mainly to deprive the legitimate statutory and fundamental rights of the concerned workmen and the necessity to pierce the veil to ascertain their relation with the principal employer.
3. The Two Judge bench has expressed contrasting opinions on the prevalence of an employer–employee relationship between the principal employer and the workers in the said canteen facility, based on, inter alia, issues surrounding the economic dependence of the subsidiary role in management and maintenance of the canteen premises, representation of workers, modes of appointment and termination as well as resolving disciplinary issues among workmen. The Bench also differed on the issue pertaining to whether such workmen should be treated as employees of the principal employer only for the purposes of the Factories Act, 1948 (for short, “the Act, 1948”) or for other purposes as well.
FACTS :
4. The present set of appeals came before a two- Judge Bench of this Court against a judgment and order dated 02.05.2011 of a Division Bench of the High Court of Delhi in LPA Nos. 388, 390 and 391 of 2010. The present dispute finds origin in an industrial dispute which arose between the Appellants-workmen herein of the statutory canteen and Respondent No. 1-herein. The said industrial dispute was referred by the Central Government, by its order dated 23.10.1996 to the Central Government Industrial Tribunal cum Labour Court (for short “the CGIT”). The question referred was whether the workmen as employed by Respondent No. 3-herein, to provide canteen services at the establishment of Respondent No. 1-herein, could be treated as deemed employees of the said Respondent No. 1. Vide order dated 05.05.2004, the CGIT held that the workmen were employees of the Respondent No.1-Air India and therefore their claim was justified. Furthermore, the termination of services of the workmen during the pendency of the dispute was held to be .illegal.
5. By judgment and order dated 08.04.2010, the learned Single Judge of the High Court of Delhi set aside and quashed the CGIT’s award and held that the said workmen would not be entitled to be treated as or deemed to be the employees of the Air India. The Division Bench of the High Court of Delhi vide impugned order dated 02.04.2011 found no error in the order passed by the learned Single Judge of the High Court. The appeal was dismissed by the Division Bench confirming the order of the learned Single Judge who observed that the responsibility to run the canteen was absolutely with the HCI and that the Air India and the HCI shared an entirely contractual relationship. Therefore, the claim of the appellants to be treated as employees of the Air India and to be regularized was rejected by the learned Single Judge.
6. In the present set of appeals, the appellants are workers who claim to be the deemed employees of the management of Air India on the grounds, inter alia, that they work in a canteen establi
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