# M.M.R. KHAN AND ORS. ETC v. UNION OF INDIA AND ORS. ETC

- **Citation:** [1990] 1 S.C.R. 687
- **Court:** Supreme Court of India
- **Decided:** 1990-02-27
- **Bench:** Ranganath Misra, P.B. Sawant, K. Ramaswamy
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-m-r-khan-and-ors-etc-v-union-of-india-and-ors-etc-10659
- **Pages:** 28

## Headnote

Railway Establishment Manual: Para 2831-Employees of Railways established statutory and non statutory recognised canieensWhether railway servants.
The petitioners in this group of Writ Petitions are workers in
canteens run in different railway establishments. The relief claimed in
all the petitions is that the workers concerned should be treated as
railway employees and should be extended all service conditions which
are available to the railway employees.
For convenience sake, the canteens have been classified into three
categories, viz., (i) Statutory canteens; (ii) Non-statutory Recognised
Canteens, and (iii) Non-Statutory Non-Recognised canteens.
Chapter XXVIII of the Railway Establishment Manual contains
A
B
c
D
the necessary instructions for running the canteens. Paragraph 2829 of E
Chapter XXVIII of the Manual refers to the provisions of Section 46 of
the Factories Act, 1948 and nnder-writes the fact that under these
provisions, there is a statutory obligation on the Railway Administration to set up canteens in Railway establishments which are governed by
~
- the said Act and which employ more than 250 persons. Paragraph 2831
~ lays down the principles governing the setting up of the canteens which
F
apply also to the non-statutory canteens provided for under paragraph
2830. Paragraph 2832 inter alia states that although the Administration
can employ as agent a Staff Committee or a Co-operative Society for
management, the legal responsibility for proper management rests not
with the agency but solely with the Railway Administration.
G
The Department of Personnel & Training, Ministry of Personnel,
Government of India, had issued Administrative Instructions on
Departmental Canteens in Offices and Industrial Establishments of the
Government. It is made clear in these instructions that the orders issued
under the said Instructions are applicable to all Canteens/Tiffin Rooms
functioning or to be set up in any Ministry, Department, EstablishH
687
688
SUPREME COURT REPORTS
[ 1990] I S.C.R.
A.
ment, Office, or Installation of the government of India (Industrial or '1111
non-industrial), including those functioning under the Ministries of J
Defence, P & T and Railways unless these three Ministries had previously decided to exempt any of the said Instructions due to specific
reasons.
R
It was contended on behalf of the petitioner-workers that, in view
of the documents on record there is no reason why the employees in the 4
canteens concerned should not be giwn the status of the railway
employees with all consequential benefits.
On the other hand. it was contended on behalf of the Railways
that (i) the canteen employees are appointed by the Staff Managing
C Committees or Co-operative Societies and not by the Railway Administration and as such there is no relationship of master and servant bet- )
ween the Railwasy Administration and the Canteen employees, and in
no case can they be deemed as holders of civil posts, either for Article
309 or for Article 311 of the Constitution; (ii) the control exercised by
D the Railway administration is only to ensure that the canteens are run in
conformity with certain requirements; (iii) the Railways have a primary
objective of carrying goods and passengers and the welfare activities are
ancillary to the main objective; (iv) the canteens continue at the discre-
~
lion of the Railway Administration, and at any stage the Government
can change the form of this welfare measure and choose to have another
E set-up; (v) the Railways undertake varied welfare activities, and if it is
decided to treat the employees engaged in the canteens as railway
employees, it will be difficult to resist the claim from employees of these
other institutions for a similar status; and (vi) the Railway Establishment Manual contains the necessary instructions for running the canteens, and hence the Railway Administration should be deemed to have '~
F been exempted from the operation of the Administrative Instructions on
f

## Text

_Characters 0–39,992 of 72,357. This is a partial read: ask again with offset=39992 for what follows._

M.M.R. KHAN AND ORS. ETC.
v.
UNION OF INDIA AND ORS. ETC.
FEBRUARY 27, 1990
[RANGANATH MISRA, P.B. SAWANT AND
K. RAMASWAMY, JJ.]
Railway Establishment Manual: Para 2831-Employees of Railways established statutory and non statutory recognised canieensWhether railway servants.
The petitioners in this group of Writ Petitions are workers in
canteens run in different railway establishments. The relief claimed in
all the petitions is that the workers concerned should be treated as
railway employees and should be extended all service conditions which
are available to the railway employees.
For convenience sake, the canteens have been classified into three
categories, viz., (i) Statutory canteens; (ii) Non-statutory Recognised
Canteens, and (iii) Non-Statutory Non-Recognised canteens.
Chapter XXVIII of the Railway Establishment Manual contains
A
B
c
D
the necessary instructions for running the canteens. Paragraph 2829 of E
Chapter XXVIII of the Manual refers to the provisions of Section 46 of
the Factories Act, 1948 and nnder-writes the fact that under these
provisions, there is a statutory obligation on the Railway Administration to set up canteens in Railway establishments which are governed by
~
- the said Act and which employ more than 250 persons. Paragraph 2831
~ lays down the principles governing the setting up of the canteens which
F
apply also to the non-statutory canteens provided for under paragraph
2830. Paragraph 2832 inter alia states that although the Administration
can employ as agent a Staff Committee or a Co-operative Society for
management, the legal responsibility for proper management rests not
with the agency but solely with the Railway Administration.
G
The Department of Personnel & Training, Ministry of Personnel,
Government of India, had issued Administrative Instructions on
Departmental Canteens in Offices and Industrial Establishments of the
Government. It is made clear in these instructions that the orders issued
under the said Instructions are applicable to all Canteens/Tiffin Rooms
functioning or to be set up in any Ministry, Department, EstablishH
687
688
SUPREME COURT REPORTS
[ 1990] I S.C.R.
A.
ment, Office, or Installation of the government of India (Industrial or '1111
non-industrial), including those functioning under the Ministries of J
Defence, P & T and Railways unless these three Ministries had previously decided to exempt any of the said Instructions due to specific
reasons.
R
It was contended on behalf of the petitioner-workers that, in view
of the documents on record there is no reason why the employees in the 4
canteens concerned should not be giwn the status of the railway
employees with all consequential benefits.
On the other hand. it was contended on behalf of the Railways
that (i) the canteen employees are appointed by the Staff Managing
C Committees or Co-operative Societies and not by the Railway Administration and as such there is no relationship of master and servant bet- )
ween the Railwasy Administration and the Canteen employees, and in
no case can they be deemed as holders of civil posts, either for Article
309 or for Article 311 of the Constitution; (ii) the control exercised by
D the Railway administration is only to ensure that the canteens are run in
conformity with certain requirements; (iii) the Railways have a primary
objective of carrying goods and passengers and the welfare activities are
ancillary to the main objective; (iv) the canteens continue at the discre-
~
lion of the Railway Administration, and at any stage the Government
can change the form of this welfare measure and choose to have another
E set-up; (v) the Railways undertake varied welfare activities, and if it is
decided to treat the employees engaged in the canteens as railway
employees, it will be difficult to resist the claim from employees of these
other institutions for a similar status; and (vi) the Railway Establishment Manual contains the necessary instructions for running the canteens, and hence the Railway Administration should be deemed to have '~
F been exempted from the operation of the Administrative Instructions on
f
Departmental Canteens in Offices and Industrial Establishments of the
Government, issued by the Department of Personnel & Training.
Allowing the petitions filed by the employees of the statutory cantee:.s and non-statutory (recognised) canteens, and dismissing those of
G the non-statutory (non-recognised) canteens. this Court,
HELD: Statutory Canteens
(I) In terms of the Rules made by the State Governments under
Section 46 of the Factories Act, 1948 it is obligatory on the Railway
)I{ Administration to provide a canteen in an establishment which employs
M.M.R. KHAN v. U.0.1.
689
more than 250 persons. The provision of the canteen is therefore,
deemed by the statute as a necessary concomitant of the manufacturing
activity; [692C; G]
(2) The employees of the departmental canteens/tiffin rooms were
declared as holders of civil posts under the Government of India Notification dated December 11, 1979 which is annexed to the Administrative
Instructions on Departmental Canteens in Offices and Industrial
Establishments of the Government. That Notification states that all
posts in the said canteens/tiffin rooms are to be treated as posts in
connection with the affairs of the Union, and hence the incumbents
would qualify as holders of civil posts. Accordingly, service rules were
framed under Article 309 as per the notification issued by the Government of India, Department of Personnel & Training on December 23,
1980. [705H; 706A-B]
(3) The provisions contained in the Administrative Instructions,
show that the Govern111ent has a complete control o.ver the canteens and
the workers employed therein ·are holders of civil posts within the
meaning of Article 311 of the Constitution. There recruitment and
service conditions are governed by the rules applicable to the employees of the Department/Office/Establishment to which the canteens
are attached. [701E]
( 4) Although there is nothing expressly on record to show that the
railway canteens are exempted from the said Administrative Instructions, but even assuming that the railway canteens are exempted by
·virtue of the relevant provisions of the Railway Manual, the fact
remains that there are as yet no notifications on the lines of December
11, 1979 and December 23, 1980 issued for the benefit of the employees
.in the railway canteens. [706E-F]
(5) It cannot be argued that there is any difference in the work
performed by the employees in the canteens run in the establishments of
A
B
c
D
E
F
the Ministries. If the said two notifications are applicable to the
employees in the canteens rnn by the other departments of the Government of India, there is no reason why the same should not apply also to
G
the employees in the canteens run by the Railways. In the circumstances, it would be highly discriminatory not to apply the said two
_notifications to the employees in the Railway canteens. It would be
violative of Articles 14 and 16 of the Constitution. The employees in the
Statutory canteens of the Railways will therefore have to be treated as
Railway servants. [706F-H; 707 A]
H
A
B
690
SUPREME COURT REPORTS
[1990] I S.C.R.
( 6) Thus the relationship of employer and employee stands
created between the Railway Administration and the canteen employees
from the very inception. Hence, it cannot be gainsaid that for the
purposes of the Factories Act the employees in the statutory canteens
are the employees of the Railways. [7078]
Order dated 22.10.1980 in Civil Appeal No. 368of1978 (Supreme
Court); Madras High Court; Writ Appeals Nos. 414-415 of 1978. referred to.
(7) If by virtue of all these facts the employees are entitled to the
status of Railway employees they cannot be deprived of that status
merely because some other employees similarly or dis-similarly situated
C
may also claim the same status. The argument to say the least can only
D
be described as one in terroram, and as any other argument of the kind
l.
has to be disregarded. [708E]
Non-Statutory Recognised Canteen
(8) These canteens are run in the establishments which employ
250 or less than 250 employees; and are established with the prior
approval and recognition of the Railway Board. There is hardly any "'1
difference between the statutory canteens and non-statutory recognised
canteens. The only material difference is that while one is obligatory
E under the Factories Act, the other is not. However. there is no difference in the management of the two type of canteens. [711G; 712C]
(9) The Administration Instructions on Departmental Canteens
in Government Offices and Government Industrial Establishments do
not make any difference between the two so far as their applicability _is
'(
F concerned. Hence, it cannot be seen why any distinction be made between the employees of the two types of canteens so far as their service
conditions are concerned. For this very reason, the two notifications of
December 11, 1979 and December, 23, 1980 should also be equally
applicable to the employees of these canteens. [712G-H]
G
(10) If that is so, then these employees would also be entitled to be
treated as railway servants. A classification made between the
Ji
employees of the two types of canteens would be unreasonable and will
~
have no rational nexus with the purpose of the classification. Surely it
I~·
cannot be argued that the employees who otherwise do the same work
and work under the same conditions and under a similar management
H have to be treated differently merely because the canteen happens to be
'
it
)
'---'
~/
1'
i
M.M.R. KHAN v. u:o.1.
691
run at an establishment which employees 250 or less than 250 members
of the staff. [712H; 713A-B]
Non-Statutory Non-Recognised Canteens
(11) These canteens are run at establishments which employ JOO
or less than 100 employees, and are established without prior approval
or recognition of the Railway Board. [692E]
The Canteens are run more or less on ad hoc basis, the Railway
Administration having no control of their functioning. They are not
required to be managed either as per the provisions of the Railway
Establishment Manual or the Administrative Instructions. In the
circumstances the workers engaged in these canteens are not entitled to
claim the status of the railway servants. [713H; 714A]
ORIGINAL JURISDICTION:
Writ Petitions (C) Nos. 2275-86 of 1982 Etc.
(Under Articie 32 of the Constitution of India)
WITH
Special Leave Petition (C) No. 4090 of 1985.
From the Judgment and Order dated 4.12.1984 of the Madras High
Court in W.A. No. 414/78.
A
B
c
D
E
B. Datta, Additional Solicitor General, G. Ramaswamy, Additional Solicitor General, M.K. Ramamurthy, V.M. Tarkunde, Gobind
F
Mukhoty, S.C. Manchanda, G.B. Pai, K.K. Venugopal, Mrs.
Shyamala Pappu, M.A. Krishnamurthy, Ms. Chandan Ramamurthy,
J.D. Jain, Ms. Kanwaljit Kochhar, K.B. Rohtagi, B.R. Agarwala,
Ms. Sushma Manchanda, R.B. Hathikhanwala, Ms. Sunita Sharma,
P.H. Parekh, S.S. Khanduja, Y.P. Dhingra, B.K. Saluja, H.S.
Parihar, Vipin .Chandra, R.K. Maheshwari, Pramod Dayal, R.P.
G
Saxena, D.K. Garg, A.D. Sanger, Pramod Swamp, Krishna Prasad,
P.C. Kapur, A.N. Badriyar, M.P. Jha, V.N. Sharma Petitioner-inperson, B.B. Sahoo, S. Srinivasan, Vineet Kumar, Ms. Urmila
Kapoor, Ms. S. Janani, Dalveer Bhandari, C. Ramesh, G.D. Gupta,
L.K. Gupta, G. Venkatesh Rao, Ms. A. Subhashini, Ms. Sushma Suri,
C.V. Subba Rao, P. Parmeshwaran, J. R. Das, S.K. Patri, Ms. Lira
H
692
SUPREME COURT REPORTS
[ 1990] I S.C.R.
Goswami, D.N. Mishra, V.J. Francis, N.M. Popli, S.K. Dhingra, K.J.
Ji
John, Y.P. Rao, Mahabir Singh, Ms. Bharti Anand, Indra Makwana
and S.K. Jain for the appearing parties.
The Judgment of the Court was delivered by
B
SAW ANT, J. This group of petitions concerns the workers in
-t--·
canteens run in the different railway establishments. The relief
'\
claimed in all the petitions is that the workers concerned should be
treated as railway employees and should be extended all service conditions which are available to the railway employees.
2. For our purpose, these canteens have to be classified into
C three categories, viz. (i) Statutory Canteens-These are canteens
required to be provided compulsorily in view of the provisions of
Section 46 of the Factories Act, 1948 (hereinafter referred to as the
Act) since the Act admittedly applies to the establishments concerned
and the employees working in the said establishments exceed 250; (ii)
D Non-Statutory Recognised Canteens-These canteens are run in the
establishments which may or may not be governed by the Act but
which admittedly employ 250 or less than 250 employees, and hence, it
is not obligatory on the railways to maintain them. However, they
have been set up as a staff-welfare measure where the employees
exceed 100 in number. These canteens are established with the prior
E approval and recognition of the Railway Board as per the procedure
detailed in the Railway Establishment Manual; and (iii) Non-Statutory
Non-Recognised Canteens-These canteens are run at establishments
in category (ii) above but employ 100 or Jess than 100 employees, and
are established without the prior approval or recognition of the Railway Board
F
3. The present petitions concern employees in all the three types
of canteens. It will be convenient to deal separately with the employees in the three types of canteens, because, the history of litigation
and the arguments advanced in respect of each of the categories are
different.
4.(i) Statutory Canteens: Section 46 of the Act which makes it
obligatory on an occupier of a factory as defined under the Act, to
provide a canteen or canteens where more than 250 workers are ordinarily employed ru~s as follows:
"Canteens: (1) The State Government may make rules
M.M.R. KHAN v. U.0.1. [SAWANT, J.)
693
requiring that in any specified factory wherein more than
two hundred and fifty workers are ordinarily employed, a
canteen or canteens shall be provided and maintained by
the occupier for the use of the workers.
(2) Without prejudice to the generality of the foregoing
power, such rules may provide for-
(a) the date by which such canteen shall be provided;
(b) the standards in respect of construction, accommodation, furniture and other equipment of the canteen;
( c) the foodstuffs to be served therein and the charges
which may be made therefore;
>
( d) the constitution of a managing committee for the canteen and representation of the workers in the management
A
B
c
of the canteen;
D
(dd) the items of expenditure in the running of the canteen
which are not to be taken into account in fixing the cost of
foodstuff and which shall be borne by the employer;
( e) the delegation to the Chief Inspector, subject to such
E
conditions as may be prescribed, of the power to make
rules under clause ( c)."
It is evident from the aforesaid provision that the occupier of a factory
(a railway establishment for the purposes of the said provisions is a
factory within the meaning of the Act) is not only obliged to run a
F
canteen where more than 250 workers are employed but is also obliged
to abide by the rules which the concerned Government may make,
including the rules for constitution of a managing committee for running the canteen and for representation of the workers in the management of the canteen. The occupier may also be required to bear a part
of the expenses of running the canteen and to comply with the rules
G
prescribing standards in respect of construction, accommodation,
furniture and other equipment of the canteen the foodstuffs to be
served and the prices to be charged for them. In other words, the
whole paraphernalia of the canteen has to conform to the statutory
rules made in that behalf. As is pointed out on behalf of the Railways,
it appears that there are 89 such statutory canteens functioning in the
H
railway premises.
694
SUPREME COURT REPORTS
[ 1990[ 1 S.C.R.
A
5. It appears that the workers working in the statutory canteen
at Loco-Carriages and Electrical Workshops of the South Eastern
Railways Workshop, Kharagpur had preferred a writ petition in the
Calcutta High Court praying for a direction to the Union of India to
recognise them as railway employees and grant them all service conditions available to the railway employees. A learned Single Judge by his
B decision dated 7 .8.1973 dismissed the said petition holding that the
workers were not entitled to the reliefs claimed by them. Against the
said decision, the workers preferred an appeal before the Division
Bench of the said Court and the Division Bench by its decision of July
16, 1974, allowed the same and directed the respondent Union of India
to recognise the workers as employees of the Railway Administration
under the Factories Act, but rejected the demand to pay salary and
C allowances to them as if they were railway employees. On the other
hand, the High Court held that the employment of the workers must
be deemed to be on the basis of appointment letters and that they had
no statutory or legal right and the Railway Administration had no
corresponding statutory or legal obligation to pay salaries etc. above
D the minimum wages, or dearness allowances as claimed by them. The
court held that their service conditions were in the realm of contract or
depending on a policy followed by the Railway Administration, at its
discretion. Being aggrieved, the Union of India had come in appeal to
this Court being Civil Appeal No. 368 of 1978. This Court by its order
of October 22, 1980 disposed of the appeal as follows:
E
"The benefits accruing to the workers under the decision of
the Calcutta High Court do not require to be interfered
with in this appeal. Prima facie we are inclined to agree
that the High Court decision is right. Moreover, the
y
learned Attorney General agrees to apply the Act as if it
./
were applicable to canteen employees. In this view, a final
f
F
pronouncement on this question by this Court need not be
given in the present case. We leave it open to Union of
India in an appropriate case to raise the point and seek a
pronouncement."
G
The Act referred to in the aforesaid order obviously means the
Factories Act. Therefore, what was confirmed by this Court was the
;...
declaration given by the Cakutta High Court that the employees of the
Statutory Canteens were railway employees for the purposes of the
Factories Act and that their service conditions were determined by the
contract as incorporated in their appointment letters or by the policy
H decision of the Railway Administration which was discretionary. It is
M.M.R. KHAN ·v. U.0.1. ISAWANT, J.]
695
I
t
necessary to note this fact at the very outset.
A
It has further to be remembered that the Calcutta High Court
had given the aforesaid declaration in favour of the statutory canteen
workers notwithstanding the fact that the canteens were managed by
the Committee of Management_ nominated by the Railway Administ1
ration or by a managing committee elected or nominated by the
B
,
employees or by the Cooperative Society relying on the express provision contained in Chapter XXVIII of the Railway Establishment
Manual. It may, however, be mentioned that the High Court had
taken into consideration Note 2 of Para 2834(2) of the Manual which
had declared that in cases where the canteens were being run on cooperative basis either by the Co-operative Society or the managing c
committee of the staff, the canteen staff shall not be treated as railway
-~ servants because in that case master and servant relationship existed
between the Co-operative Society (through its managing committee)
and the concerned employees. The High Court had relied upon the
fact that even in such cases the entire cost of the staff was reimbursed
by the Railway Administration tci the Co-operative Society managing
D
committee and that over-all control over the canteen and the staff,
vested in the Railway Administration. In fact, the direction under para
....
2832 of the Railway Establishment Manual was that where even a
Co-operative Society was running the canteen, the bye-laws of the
Society should be suitably amended to provide for such overall control
by the Railway Administration since the legal responsibility for the
E
proper management of the canteen vested not with the agent like the
'!'.
Co-operative Soceity but solely with the Railway Administration.
6. It is undoubtedly true, however, that this Court in its Order
'r
dated October 22, 1980 had reserved the right to the Union of India to
raise the question as to whether the employees of the Statutory canF
teens were the employees of the Railway Establishment under the
Factories Act and get a pronouncement on the san1e. It appears that
after the said order of this Court, the Railway Board had issued a
letter dated May 22, 1981 to the General Manager, South Eastern
Railway, Calcutta Conveying the decision of the Ministry of the Railways that the employees of Kharagpur Workshop Statutory Canteen,
G
d,
(which employees were a party to the said decision) should be deemed
to be railway servants with effect from October 22, 1980 and till
Government decided otherwise, the said workers would continue to be
governed by the conditions of service and emoluments as existed on
October 21, 1980. It was also stated there that what was stated in the
letter had the sanction of the President and the letter was issued with
H
696
SUPREME COURT REPORTS
[ 1990] 1 S.C.R.
the concurrence of the Finance Directorate of the Ministry of Rail-
"""
A ways. Subsequently, the Board issued another circular letter of June 8,
•
1981 addressed to the General Managers of all Indian Railways stating
therein that it was decided that employees of all other statutory canteens on the railways irrespective of the type and management of the
canteens should also be deemed to be railway servants w.e.f. October
B 22, 1980 and that till Government decided otherwise, the staff of the
.t
statutory canteens would continue to be governed by the conditions of
\
service and emoluments as existed on October 21, 1980.
7. On March 11, 1982, the Railway Board issued a letter and
referred to its earlier communication of June 8, 1981 and September
18, 1981. In this, letter, it was stated ·that pursuant to the said two
C earlier communications (where it was stated that the question of pay
scale and retirement benefits were under consideration and that a
separate communication would follqw), a Schedule showing revised
pay scale applicable to the employees of the statutory canteens of the
railways was enclosed for necessary action. The letter stated that the
D existing employees of these canteens would be entitled to exercise an
option under Rule 2019 (F.R. 23) and Rule II either to retain their
existing pay scale as presently applicable to them or opt for the revised
pay scale. However, on promotion such employees would be compulsorily brought on to the revised pay scales. It was made clear that
those who opt for the revised scales would not be eligible to other
E facilities/perquisites admissible to them in their existing pay scale such
as free food, snacks, commission etc. A period of three months was
given for exercising the option and it was stated that if no option was
exercised it would be assumed that the employees concerned had
elected to be governed by the revised pay scales w.e.f. October 22,
1980. The Schedule annexed to the letter mentioned, among other
p
things, that the canteen employees will be entitled to the dearness
allowance, house rent allowance and city compensatory allowance as
per the instructions issued by the Railway Ministry; that the age of
retirement of employees would be 58 years as in the case of other
railway employees; and that the employees of the canteen would be
entitled to the benefit of productivity linked bonus on the principles
V applicable to the staff of the office/establishment to which they were
attached from the date of their being declared as railway servants.
8. In a decision of this Court reported in 1988 (4) SCC 478, this
Court directed that for the purpose of calculating pensionary benefits,
the service rendered by the said employees prior to October 22, 1980
H should also be computed. By its letter dated May 13, 1983 addressed to
I "
i
I
t
J..
M.M.R. KHAN v. U.0.1. [SAWANT, J.J
697
all the General Managers, the Ministry of Railways placed on record
the fact that pursuant to the Order of this Court dated October 22,
1980 the employees of all the statutory and 11 Delhi based nonstatutory canteens had been treated as railway servants w.e.f. October
22, 1980, and the revised pay scale applicable to the employees had
been communicated vide the Railway Board's letter dated March 11,
1982.
9. On December 4, 1984, a Division Bench of the Madras High
Court delivered a Judgment in Writ Appeal No. 414 of 1978, Railway
Board & Anr. v. Parthasarthy and Anr., and in Writ Appeal No. 415 of
1978 relying upon the order dated October 22, 1980, passed by this
Court and held that canteen-employees will have to be treated as
railway employees for the purposes of the Factories Act, in view of the
concession made by the Railways before this Court and also the con
cession made by the counsel appearing for the Railways before the
High Court.
10. We have then on record an Office Order dated July 27, 1983
issued to an employee of a statutory canteen conveying to him appointment as a TY/Cleaner in a scale of pay plus usual allowances w.e.f.
January 12, 1983. In this order, it is stated that the employee would be
eligible for house rent allowance under the Rules in force from time to
time, that he will be on .Probation for a period of one year and that the
appointment would be term·inated with 14 days' notice on either side.
It is, however, a!lded that no such notice would be required, for the
termination of service as and by way of removal or dismissal as a
disciplinary measure effected after compliance with the provisions of
clause (2) of Article 311 of the Constitution of India. It is also stated
that the employee should take oath of allegiance to the Union of India
and that he should apply for allotment of quarters within 7 days from
the date of his appointment and then alone should apply for house rent
allowance.
11. It is now necessary to refer to the relevant provisions of the
Railway Establishment Manual which deal with the canteens. Paragraph 2829 of Chapter XXVIII of the Manual refers to the provisions
of Section 46 of the Factories Act 1948 and underwrites the fact that
under these provisions, there is a statutory obligation on the Railway
Administration to set up canteens in Railway establishments which are
governed by the said Act and which employ more than 250 persons.
The paragraph further mentions that Railway Administration should
strictly abide by the rules which are framed by the respective State
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A Governments under sub-section 2 of the Act regarding the constitution of the Managing Committees of such canteens. Paragraph 2832
then ordains that the staff served by the said canteens should be
actively associated in their management, and for this purpose a Committee of management of the staff should be formed in accordance
with the rules framed by the concerned State Government. The
B paragraph further states that although the Administration can employ
as agent a Staff Committee or a Co-operative Society for management,
the legal responsibility for proper management rests not with the
agency but solely with the Railway Administration. In case the management is entrusted to a consumer co-operative society the bye-laws
of the society are directed by the said paragraph to be amended suite ably to provide for an overall control by the Railway Administration.
Paragraph 2834 deals with the incidence of cost of the canteens. As
regards the statutory canteens, the paragraph directs that in addition
to the facilities which are given to the non-statutory canteens, the
Administration will have also to bear the expenditure on the entire
paraphernalia including the furniture as well as the salaries of the cook
D and the canteen staff. Note 2 of the said paragraph then states that
where the canteens are being run on co-operative basis either by
co-operative society or by Managing Committee of the staff and there
subsists a relationship of master and servants between the society/
managing committee and the workers, i.e. where the canteen staff has
been employed by the society/managing committee and not by the
E Administration as such, the canteen-staff are not to be treated as
railway servant even though the cost of this staff is reimbursed by the
Administration.
12. We have also on record the second edition (1988) of
"ADMINISTRATIVE INSTRUCTIONS ON DEPARTMENTAL
--.;'
F
CANTEENS IN OFFICES AND INDUSTRIAL ESTABLISH~
I
G
MENTS OF THE GOVERNMENT" issued by the the Deptt. of
Personnel & Training, Ministry of Personnel, Public Grievances &
Pensions of the Govt. of India, first published in 1980 (hereinafter
briefly called as the Instructions). They are applicable to:
(a) Canteens/Tiffin Rooms set up on departmental basis and run
as per scheme issued by the Dept!. of Personnel and Training;
(b) Canteens/Tiffin Rooms set up on Co-operative basis by a
Society of Government employees with the Head of the Dept!./
Office/Establishment or his nominee as Chairman; and
H
( c} Canteens/Tiffin Rooms set up in Industrial Establishments
)
M.M.R. KHAN v. U.0.1. [SAWANT, J.]
699
:... ,
(other than those covered under Section, 46 of the Factories Act)
,.-,
of the Government and which have not been exempted from
A
following the rules in the said Instructions due to the availability
of a separate and distinct set of rules and guidelines framed by
the controlling Ministries/Departments. (para 1.3)
~·
It is made clear in these Instructions that the orders issued under the
B
said Instructions are applicable to all Canteens/Tiffin Rooms functioning or to be set up in any Ministry, Department, Establishment,
Office, Installation of the Government of India (industrial or nonindustrial) which should be centrally registered with the office of the
Director of Canteens, Deptt. of Personnel & Training, New Delhi
including those functioning under the Ministries of Defence, P & T c
'
and Railways, unless these three Ministries had previously decided to
.J..
exempt any of their Canteens/Tiffin Rooms from the purview of the
said Instructions due to specific reasons, and they had framed or they
propose to frame a separate set of instructions for the exempted canteens. (para 1.4). The Instructions further state that the policy matters
and coordination on canteen matters will be centrally done by the
D
Deptt. of Personnel and Training (Director of Canteens) (para 1.14).
r·
To be entitled to subsidy all the departmental canteens have to get
themselves registered centrally with the Director of Canteens arid
Training (Para 1.15). The canteens are entitled to subsidy on wages
and gratuity payable to the workers employed in the canteens and for
their uniforms as well as to capital and replacement grants for equipE
ment including utensils, crockeries, cuttlery and furniture and also to
interest-free loans. In addition to subsidy for equipment, the canteens
are also entitled to other facilities such as accommodation on nominal
)
rent of Rs. l electricity, water etc. The Instructions in terms state that
since the canteens are run departmentally as a measure of staff
welfare, the beverages, snacks and meals etc. have to be made availF
able to the staff at economic rates and for this purpose the Government has to provide necessary accommodation at the nominal rent and
provide the necessary grants, subsidy and. loans. (Para 1.2). fo addition, the ~oncerned DeQartment/Office has to bear the electricity and
water bills. In chapter V which deals with the personnel in the canteens,
1the Instructions lay down the entitlement of Canteens/Tiffin Rooms to G
the number and categories of employees according to the grades of
Canteens/Tiffin Rooms. With regard to the recruitment rules, conditions of service, status and the scales of pay of the canteen workers,
the procedure for taking disciplinary action against them as well as for
giving training to them, the chapter makes it clear that since the canteen workers have acquired the status of the holders of civil posts H
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w .e.f. October 1, 1979, their recruitment and conditions of service etc.
would'be governed by the rules framed under proviso to Article 309 of
the Constitution contained in GSR 54 issued under Government of
India, Department of Personnel and Training Notification dated 23rd
December, 1980. It is made clear that the said rules also apply to 'the
employees of the Canteens run by the Co-operative Societies in con-
$ junction with the bye-laws of the Society and local co-operative laws in
force. It is further made clear that the workers in the non-statutory
departmental and co-operative Canteens/Tiffin Rooms will be paid the
pay and allowances at the same rate and on the same basis w.e.f. 26.9.
83 on which the employees of the statutory canteens are paid the same.
The chapter also mentions that before taking any disciplinary
C action against any canteen worker procedure as set out in chapter IV
r
(Conduct and Discipline) of GSR of 1954 dated 23rd December, 1980
)
published in the Gazette of India Part II Section 3, sub-Section (I) '
dated 17th January, 1981 will be followed. The chapter further directs
periodical training programmes to be arranged by the Director of Can0 teens for managerial. personnel and other canteen staff.
13. Chapter VI contains guidelines for constituting the Managing Committees of the canteens. This chapter ordains that the
Chairman of the managing committee should preferably be the Head
of the Department/Office himself or his Deputy, and that the HonorE ary Secretary of the managing committee should normally be the
Welfare Officer or the Administrative Officer of the Department/
Office of the minimum rank of a Section Officer or a Major or equivalent in services, who shall be nominated by the Office/Establishment,
and in the case of Co-operative Canteens may be elected as per the
bye-laws of the Society. One of the officials who should be of the rank
IF of Section Officer/Major or above is to be nominated on the managing
Committee by the Chairman. Paragraph 6.11 defines the Legal Status
of the Managing Committee. It says that the Committee functions in
the Deptt./Office/establishment of the Government of India for the
welfare of the Govt. employees, under the orders of the Government
of India and its functions are connected with the affairs of the Union.
G The Committee, therefore does not enjoy an autonomous status. With
respect to the contractual obligations, it functions "for and on behalf
of the the President of India". The proceedings of the Committee will
not be conducted or decided on resolutions or voting system, but the
official decision will rest with the Chairman of the Managing Committee or the Head of the Department/Office. In the case of canteens run
lf by the co-operative societies, this provision is to apply as per the
-
M.M.R. KHAN v. U.0.1. [SAWANT, J.j
701
bye-laws of the society and the co-operative law in force. The presence
of the Chairman" and the Hony. Secretary is necessary to constitute the
quorum for holding the meeting of the Managing Committee. The
Head of the Department/Office is given power to depute a Government servant of the rank of Section Officer/equivalent or below if he
can be spared, for part time or whole time assistance to the Managing
Committee. The Department/Office concerned is required to provide
stationery, stencils, cyclostyling facilities, postage stamps, office assistance etc. to enable the Managing Committee to conduct its
business.
14. The annual accounts of the Canteens have to be submitted to
the Financial Advisers of the Department/Office concerned with
copies thereof to the Director of the canteens, and the audit of the
_l_
accounts of the Canteens/Tiffin Rooms is to be carried out by the
"' Departmentalised Accounts Organisations of the concerned Ministries/Departments/Offices. Out of the surplus of net profits of the Canteens, 1/3 amount is required to be remitted to the Director of Canteens Funds for welfare of the canteen employees in general.
15. All the aforesaid provisions apply to all types of Tiffin
Rooms classified into Type B and A where the strength of the Department/Office is between 25-49 and 50-99 respectively and to the Canteens classified in Types D, C, B and A where the strength is between
100-249, 250-499, 500-699 and 700-1200 respectively. Where the
strength is above 1200 a further higher classification is given to the
Canteens.
16. These provisions contained in the Instructions, therefore,
show that the Government has a complete control over the canteens
and the workers employed therein are holders of civil posts within the
meaning of Article 311 of the Constitution. Their recruitment and
service conditions are governed by the rules applicable to the
employees of the Government Deptt./Office/Establishment to which
the canteens are attached.
17. It is against this background that we have to consider the
question as to whether the staff employed in the statutory canteens in
the Railway Establishment, industrial or non-industrial, are railway
employees or not. According to the workers, in view of the aforesaid
documents on record there is no reason why the employees in the
canteens concerned should not be given the status of the railway
e_mployees with all consequential benefits. On the other hand, the
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A contention advanced on behalf of the Railways is that the documents
in question show that the employees of the statutory canteens are to be
deemed railway employees only for the purpose of the Factories Act
and for no other purpose. In no case, they can be deemed as holders of
civil posts either for Article 309 or for Article 311 or for any other
purpose.
B
18. On behalf of the employees, a preliminary objection was
raised, namely, that in view of the order of this Court dated October
22, 1980 in Civil Appeal No. 368 of 1978 and another, it is not open to
the Railways to agitate the question whether the employees in the
statutory canteens are railway employees or not, and further whether
they are railway employees for the purposes of the Factories Act. We
C are not inclined to entertain this objection for it is clear from the said
order that the Court had left open even the question as to whether the
employees of the statutory canteens were railway employees for the
purposes of the said Act. Hence, the question whether they are
employees of the railways for all purposes necessarily remains res
o integra. We may reproduce here the said order which is clear enough
on the subject:
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"The benefits accruing to the workers under the decision of the Calcutta High Court do not require to be
interfered with in this appeal. Prima facie we are inclined
to agree that the High Court decision is right. Moreover,
the learned Attorney General agrees to apply the Act as if
it were applicable to canteen employees. In this view a final
pronouncement on this question by this Court need not be
given in the present case. We leave it open to the Union of
India in an appropriate case to raise the point and seek a
pronouncement.
Leave granted in the petition filed by Railway Canteen Karmachari Association.
We have in C.A. No. 368 of 1978 passed an order and
the point raised by the workmen in this appeal closely
resembles the one raised in the sister case just referred to.
We apply the same principle as has been decided by the
Calcutta High Court to this case also and the workmen will
be given the same benefits.