# RADllll K. KAKllE OF l!OMBAY INHABITA!<'r, l!OMBAY v. UNION OF INDIA & ORS

- **Citation:** [1985] Supp. 3 S.C.R. 822
- **Court:** Supreme Court of India
- **Decided:** 1985
- **Case number:** Special Civil Appln. No. 1189 of 1968
- **Bench:** V. Balakrishna Eradi, R.B. Misra, V. Khalid
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/radllll-k-kaklle-of-l-ombay-inhabita-r-l-ombay-v-union-of-india-ors-9218
- **Pages:** 5

## Headnote

Paianent of Bonus Act, 1965 section 32(iv), scope of -
Whether the Canteen Stores Departn>ant (India) under the Ministry
of Defence is an "establishn>ant" engaged in any industry carried
on by or under the authority of any Department of the Central
Governn>ant and therefore, covered by the provisions of section
32(iv) of the Act.
Prior to July 1, 1942, canteen facilities had been provided
to the anned forces of the country by a company known as "Canteen
Contractors' Syndicate". On June 13, 1942 the defence department
took over the business of the said company and it was run by the
Governn>ant of lndis under the title and name "Canteen Stores
Department". After partition of the country, the Canteen Stores
Department of undivided India was wound up and its termiDal
profits were distributed between India and Pakistan and lndis 1 s
share fotmed
the working capital for
the Canteen Stores
Department
(India),
which
was
formally
inaugurated
as
a
"Governn>ant of lndis Ulldertaking" for a perioJ of three years in
the first instance c..,_ncfng from January 1,
1948.
The
recruitment rules for the various categories of services of the
Canteen Stores Department (India) were notified by the president
by the Ministry of Defence letter dated June 28, 1973. By 8110ther
letter dated January 28, 1969, Government orders as applicable to
defence (Civilians) were made applicable to the Canteen Stores
Department (lndis) employees in toto automatically from the date
of their applications to Defence (Civilians). Canteen Stores
Department (lndis) was allowed to tender military credit notes
for payn>ant of railway freight by the Governn>ant of lndis
(Ministry of Railways) Memorandum dated Februsry 28,
1971
addressed to the Ministry of defence. When the question of
applicability of section 32(iv) of the Payn>ant of Bonus Act, 1965
C8llle up before the Division Bench of the High Court of Bombay,
the High Court held that the ezemption provided in that section
is attracted ina81111Ch as the Canteen Stores Department is an
establishment engaged in an industry carried on by or under the
authority of a department of a Central Governn>ant. Hence the
appeal by specisl leave.
R,K. KAl<DE v. U,O,I, [ERADI, J,]
823
DiSJDissing the appeal, the Court,
HELD: In the light of all the facts pertaining to the
history, organisational structure, exercise of functional control
by Government authorities and the special nsture . of service
rendered by the Canteen Stores Department (lDdia) to the defence
A
forces of the country, it is an "establishment" engaged in an
B
industry carried on by or under the authority of a department of
the Central Government nsmely, the Ministry of Defence, (826 C-£]
lasbtriya Mill !lazdoor Sangh, Nagpur v. 1be lloclel Hills,
Nagpur and Anr., [1985] l s.c.R. 751 applied.

## Text

A
B
c
D
E
F
G
H
822
RADllll K. KAKllE OF l!OMBAY INHABITA!<'r, l!OMBAY
v.
UNION OF INDIA & ORS.
DECEMllER 11, 1985
[V. BALAKRISHNA ERADI, R.B. MISRA AND V. KHALID, JJ.]
Paianent of Bonus Act, 1965 section 32(iv), scope of -
Whether the Canteen Stores Departn>ant (India) under the Ministry
of Defence is an "establishn>ant" engaged in any industry carried
on by or under the authority of any Department of the Central
Governn>ant and therefore, covered by the provisions of section
32(iv) of the Act.
Prior to July 1, 1942, canteen facilities had been provided
to the anned forces of the country by a company known as "Canteen
Contractors' Syndicate". On June 13, 1942 the defence department
took over the business of the said company and it was run by the
Governn>ant of lndis under the title and name "Canteen Stores
Department". After partition of the country, the Canteen Stores
Department of undivided India was wound up and its termiDal
profits were distributed between India and Pakistan and lndis 1 s
share fotmed
the working capital for
the Canteen Stores
Department
(India),
which
was
formally
inaugurated
as
a
"Governn>ant of lndis Ulldertaking" for a perioJ of three years in
the first instance c..,_ncfng from January 1,
1948.
The
recruitment rules for the various categories of services of the
Canteen Stores Department (India) were notified by the president
by the Ministry of Defence letter dated June 28, 1973. By 8110ther
letter dated January 28, 1969, Government orders as applicable to
defence (Civilians) were made applicable to the Canteen Stores
Department (lndis) employees in toto automatically from the date
of their applications to Defence (Civilians). Canteen Stores
Department (lndis) was allowed to tender military credit notes
for payn>ant of railway freight by the Governn>ant of lndis
(Ministry of Railways) Memorandum dated Februsry 28,
1971
addressed to the Ministry of defence. When the question of
applicability of section 32(iv) of the Payn>ant of Bonus Act, 1965
C8llle up before the Division Bench of the High Court of Bombay,
the High Court held that the ezemption provided in that section
is attracted ina81111Ch as the Canteen Stores Department is an
establishment engaged in an industry carried on by or under the
authority of a department of a Central Governn>ant. Hence the
appeal by specisl leave.
R,K. KAl<DE v. U,O,I, [ERADI, J,]
823
DiSJDissing the appeal, the Court,
HELD: In the light of all the facts pertaining to the
history, organisational structure, exercise of functional control
by Government authorities and the special nsture . of service
rendered by the Canteen Stores Department (lDdia) to the defence
A
forces of the country, it is an "establishment" engaged in an
B
industry carried on by or under the authority of a department of
the Central Government nsmely, the Ministry of Defence, (826 C-£]
lasbtriya Mill !lazdoor Sangh, Nagpur v. 1be lloclel Hills,
Nagpur and Anr., [1985] l s.c.R. 751 applied.
CIVIL APPELLATE JURISDICTION : Civil Appeal No, 484 of
975,
From the Judgment and Order dated 25.6.1973 of the Bombay
High Court in Special Civil Appln. No. 1189 of 1968,
Jitendra Sharma for the Appellant.
M.S. Gujaral, G.D. Gupta and R.N. Poddar for the Respondents.
c
D
The Judgment of the Court was de1.ivered by
E
llALAKlUSJINA
EBADI, J, In this appeal by special leave
against the judgment of a Division Bench of the High Court of
Bombay, the only question raised is whether the provisions of the
Payment of Bonus Act, 1965 (hereinafter called the 'Act') are
applicable to the employees of the Canteen Stores Department. The
answer to this question will
depend upon whether the Canteen
F
Stores Department is an 'establishment' engaged in any industry
carried on by or under the authority of any department of the
. Central Government; that is because Section 32(iv) of the Act
lays down that ''Nothing in ·this Act shall apply to - employees
employed by an establishment engaged in any industry carried on
by or under the authority of any department of the Central
G
Govermiient or a State Government or a local authority." In the
judgment under appeal, the High Court has held that the exemption
provided for in Section 32(iv) is attracted inasmuch as the
Canteen Stores Department is an establishment engaged in any
industry carried on by or under the authority of a department of
the Central Government. The correctness of the said conclusion
recorded by the High Court is assailed by the appellant in this
H
appeal.
824
SUPREME COURT REPORTS
[1985] SUFP. 3 s.c.R.
A
After bestowing our careful consideration to all aspects of
the case we are clearly of opinion that the view taken Ly the
High Court is perfectly correct and that this appeal has only to
be dismissed. 1hat the Canteen Stores Lepartn.ent is engaged in an
industry is not in dispute before us and the sole question is
whether the said industry is carried on by or under the authority
ll
of any department of the Central Government. For a determination
of the said question one has to examine inter alia the history,
origin and organisational structure of the establishment, which
are the authorities exercising financial, adrr,inistrative and
executive control over it and
the rules that govern· its
functioning.
c
The high Court has in its judgment set out in elaborate
detail all the relevant facts pertaining to the origin and
development of this Lepartment right from the period of Second
World War up till the present time. It is unnecessary for us to
recapitulate in this judf,lllent all those materials in full.
Hcrwever, we shall refer to certain salient features emerging from
the
record
produced
in the
case which
according
to us
D
conclusively go to show that the Canteen Stores Department is an
establishment engaged in an industry carried on by or under the
authority of a department vf the Central Government.
Prior to July 1, 1942, canteen facilities had been provided
to the armed farces of the country by a company known as "Canteen
E
Contractors' Syndicate." By a Notification (Annexure 'A') dated
June 13, 1942 published by the Defence Department in the Gazette
of India, the business of the sal.d company was taken over by the
Government of India and 1 c was to be run by the Government under
the name· "'The Canteen Stores Department.•• As and from the date of
taking over i.e. July 1, 1942, the Government assun.ed control of
F
the company's business and undertook to meet all liabilities of
the company as existed on the date of the taking over. This was
how the Canteen Stores J;,epartment came into being and it was
continuing to function as such up till the date of the partition
of the country. After partition of the country, the Canteen
Stroes Department of undivided India was wound up and its
G
terminal profits were distributed between India and Fakistan and
India's share formed the working capital for the Canteen Stores
Department (India). by a letter dated December 19, 1947 issued by
the 11inistry of Defence, Government of India to the Quartermaster
General (India) sanctior. of the Governor General was conveyed to
the inauguration of Canteen Stores Department (India) as a
H
'Government Undertaking' for a period of three years in the fi<st
instance commendr" from J.-:c•.1uy 1, 1948. The Services were to
comprise:-
R.R. KAKDE v. U.Q.I. [ERADl, J.]
825
(i) Canteen Services (India) Board of Control.
(ii) Canteen Section as a part of Q/Coord in QMG's
Branch Army Headquarters (India).
(iii) Canteen Stores Department (India).
The duties and functions of the three bodies were to be as set
out in the Annexure to the said letter. Subsequently, by another
letter dated October 27, 1950, the sanction of the President was
conveyed to the continuance·of Canteen Services (India) inclusive
the Canteen Stores Department (India) as a Government of India
Undertaking to function under the control of the hinistry of
Defence.
·
A Study Group appears to have been constituted to examine
the organisational set up of the Canteen Stores Department
(India) and based on the recommendations of the said Study Group,
Canteen Services (India) was re-organised and besides the three
wings mentioned earlier an Executive COllllllittee of the Board of
Control waa also set up by the letter dated April 17, 1969 issued
by the Government of India, Ministry of Defence to the Chief of
the Army Staff. Detailed instructions.regarding the policy to be
pursued in regard to procurement, storage, distribution, disposal
of stores and fixation of wholesale and retail prices were issued
by the Government of India to the Chief of the Army Staff' by the
letter (Annexure 'E'), dated August 29, 1969 and it was as per
these
instructions
that
the
Canteen
Stores Department was
carrying on its activities. It is noteworthy that this letter was
issued with the concurrence of the Yd.nistry of Finance (Defence)
and this is specifically stated in the last paragraph thereof.
By the notification (Annexure 'F') dated February 1, 1966,
issued by the Ministry of Law in exercise of the powers conferred
by clause (1) of Article 299 of the Constitution, various
Officers of the Canteen Stores Department (India) designated
therein were authorised to enter into contracts on behalf of the
President of India. The Notification states that contracts for
local purchases could be entered into by the Chairman Board of
Administration and that contracts and deeds relating to supply or
purchase for the Canteen Stores Department (India) and leases of
lauds and buildings belonging to a department could also be
executed bY the Chairman Board of Administration.
The
recruitment
rules
for
the
various
categories of
services of the Canteen Stores Department (India) were notified
A
B
c
D
E
F
G
H
A
ll
c
D
E
F
G
H
826
SUPREME COURT REPORTS
[1985] SUPP. 3 s.c.R.
by the President by the Ministry of Defence letter dated June 28,
1973 -
Annexure 'G'. By the letter dated January 28, 1969,
addressed by the Army Headquarters to the Chairman, Board of
Administration,Canteen Stores Department (India), it was intimated that Government orders as applicable to Defence (Civilians)
should be made applicable to the Canteen Stores Department
(India) employees in automatically from the date of their applications to Defence (Civilians). That the Government had complete
control over the surplus generated by the department and that it
could be distributed only with the sanction of the Fresident is
clear from the letter dated January 9, 1975 - Annexure 'I' 'issued
by the Ministry of Defence to the Chief of the Army Staff, The
canteen Stores Department (India) was allowed to tender military
credit notes for payment of railway freight by the Government of
India (Ministry of Railway.s) ~iemorandum dated February 20, 1971
addressed to the Ministry of Defence.
In the light of all these facts pertaining to the history,
organisational structure, exercise of functional control by
Governmental authorities and the special nature of service
rendered by it to the Defence forces of the country, we have no
hesitation to hold that the High Court was clearly rl.ght in
holding that the Canteen Stores Department (India)
is
an
'establishment' engaged in an industry carried on by or under the
authority of a department of the Central Government namely, the
Ministry of Defence.
The scope of the expression "establishment engaged in any
industry carried on by or under the authority of any department
of the Central Government or State Government or local authority"
occurring in Section 32(iv) has been explained in a recent
decision of this Court in Bashtriya Mill Mazdoor Sangh, Nagpur v.
The Model llills, Nagpur and Anr., [1985] 1 s.c.R. 751, to which
judgment two of us (1radi J. and Khalid J.) were parties. On an
application of the interpretation given to the expression in that
judgment, the present case clearly falls within the scope of
Section 32 (iv) of the Act in view of the special and exclusive
nature of the service rendered by the Canteen Stores· Department
(India) to the defence personnel for which purpose alone the
"Industry" is being carried on by the establishment.
We accordingly, confirm the judgment of the High Court and
dismiss this appeal. There will be no order as to costs.
S.R.
App~al dismissed.