# SARASPUR MILLS CO. LTD v. RAMANLAL CHIMANLAL & ORS

- **Citation:** [1973] 3 S.C.R. 967
- **Court:** Supreme Court of India
- **Decided:** 1973-04-12
- **Case number:** Civil Appeal No. 1957 G of 1968
- **Bench:** A. N. Grover, C. A. Vaidialingam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/saraspur-mills-co-ltd-v-ramanlal-chimanlal-ors-6594
- **Pages:** 6

## Headnote

Bombay Industrial Disputes Act, Gujarat A1nend111ent 1962--Clauses
13 and 14 of Section 3-En~rustnzent of work which in ordinarily a part
of the undertaking-Legal obligation of a factory to run a canteen under
Section 46 of Factories Act-Entrust1nent of running the canteen to a
Cooperative Society-Factories Act 1948, Section 2(1) work incidental
to the manufacturirlg process-Running of a canteen by a textile 1nill.
The appellant Textile Mill had a statutory obligation, as a factory,
under the provisions of Section 46 of Factories Act and the Rules made
thereunder for maintaining a canteen for its workers.
The
appellant ·
entrusted the management of the canteen to a cooperative society. The
workers of the canteen demanded additional wages and dearness allowance,
in terms of certain awards claiming that they were the employee of the
appellant within the meaning of Clauses (13) and (14) of Sec. 3 of the
Bombay Industrial Disputes Act, 1938 as amended by Gujarat Legislature
in 1962. The workers contended. that the running of the canteen was an
ordinary part of the undertaking of appellants, since it was a statutocy obligation for the appellant to do so. The appellant on the other hand contended that the cooperative society was neither the agent nor the contractor
of appellant.
Rejecting the appea1,
HELD : Under the Factories Act, it was the duty of the appellant to
run and maintain canteen for the use of its employees. Under
c1all3es
( 13) and ( 14) of Section 3 as amended in 1962, the definition of an
employee is extended by a fiction (if law and certain employees are recognised 1l9 statutory employees. The workers in question fall under the said
definition. [972B]
Ahmedabad Mfg. & Calico Printing Co. Ltd. and Ors. v. Their Workmen. [1964] 2 S.C.R. 838, relied upon.
Basti Sugar Mills Ltd. v. Ram Ujagar and Ors. [1953] II L.L.J. 647,
followed,

## Text

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SARASPUR MILLS CO. LTD.
v.
RAMANLAL CHIMANLAL & ORS.
April 12, 1973
[A. N. GROVER AND C. A. VAIDIALINGAM, JJ.)
Bombay Industrial Disputes Act, Gujarat A1nend111ent 1962--Clauses
13 and 14 of Section 3-En~rustnzent of work which in ordinarily a part
of the undertaking-Legal obligation of a factory to run a canteen under
Section 46 of Factories Act-Entrust1nent of running the canteen to a
Cooperative Society-Factories Act 1948, Section 2(1) work incidental
to the manufacturirlg process-Running of a canteen by a textile 1nill.
The appellant Textile Mill had a statutory obligation, as a factory,
under the provisions of Section 46 of Factories Act and the Rules made
thereunder for maintaining a canteen for its workers.
The
appellant ·
entrusted the management of the canteen to a cooperative society. The
workers of the canteen demanded additional wages and dearness allowance,
in terms of certain awards claiming that they were the employee of the
appellant within the meaning of Clauses (13) and (14) of Sec. 3 of the
Bombay Industrial Disputes Act, 1938 as amended by Gujarat Legislature
in 1962. The workers contended. that the running of the canteen was an
ordinary part of the undertaking of appellants, since it was a statutocy obligation for the appellant to do so. The appellant on the other hand contended that the cooperative society was neither the agent nor the contractor
of appellant.
Rejecting the appea1,
HELD : Under the Factories Act, it was the duty of the appellant to
run and maintain canteen for the use of its employees. Under
c1all3es
( 13) and ( 14) of Section 3 as amended in 1962, the definition of an
employee is extended by a fiction (if law and certain employees are recognised 1l9 statutory employees. The workers in question fall under the said
definition. [972B]
Ahmedabad Mfg. & Calico Printing Co. Ltd. and Ors. v. Their Workmen. [1964] 2 S.C.R. 838, relied upon.
Basti Sugar Mills Ltd. v. Ram Ujagar and Ors. [1953] II L.L.J. 647,
followed,
CIVIL APPELLATE JURISDICTION :
Civil Appeal No. 1957
G
of 1968.
'
Appeal by special leave from the Award dated March 26,
1968 of the Industrial Court Gujarat Ahmedabad in Appeal
( fC) No. 58 of 1966.
.
S. V. Gupte, P. C. Bhartari, and l. B. Dadachanji & Co., for
If
th; appellant.
V. M. Tarkunde, and S. S. Shukla, for respondents 1 (a) to
l(hj.
9f1
968
SUPREME COURT REPORTS
(1973] 3 S,C.R.
1he Judgment of the Court was delivered by
GROVER, J : This is an Appeal by special leave from an Order
of the Industrial Court,, Gujarat which reversed an order made
by the 2nd Labour Court, Alunedabad.
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Ramanlal Chimanlal and others are the workers of a canteen
which is run by the
Saraspur Mills Canteen
Co-operative
Society Limited, Ahmedabad (hereinafter called the co-operative
society).
The appellant company is responsible for maintaining
the canteen under the provisions of S. 46 of the Factories· Act and
the rules made thereunder.
The appellant handed over to the
co-operative society the task cf running the canteen. The·workers
mentioned above filed an application before the 2nd Labour Court
at Ahmedabad under S. 79 of the Bombay Industrial Relations
Act, 1946 (hereinafter called the Act), complaining that the
appellant was not paying them the wages and deamess allowances
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as per the directions contained in the
Award of the Bombay
Industrial Court made in Reference No. 18 of 194 7 and supplementary Award given in certain miscellaneous applications of
1956 and 1962 respectively relating to additional wages sanctioned
by the said Award. It was alleged by the applicants in support
of their claim that by virtue of certain amendments made in the
Act in the definition cf the word "employer" they became workers
of the appellant, which was bound to pay wages and dearness
allowances settled by the aforesaid Award and !he supplementary
Awards referred to.
The case of the workmen was that the
appellant was running the canteen only because it was under an
obligation to do so under the Factories Act and the rules made
thereunder.
Thus the running of the canteen was ain ordinary
part of the undertaking of the appellant. It was admitted that
the appellant did not run the canteen itself but halllded over the
premises to the co-operative ·society to run the canteen for the
use and welfare of. the mill's employees and discharge its legal
obligations.
The appellant denied the allegations of the workmen that they
were its employees.
It was claimed that the aforesaid workers
had never been employed either by the appellant or by its agent
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or contractor.
The workers in fact were stated to have been
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employed by the licences of the appellant and, therefore, there
was no question of the wage settlements or Awards being binding
on the appellant. The 2nd Labour Court by its Order dated 14th
April, 1966 dismissed the claim of the workmen, who filed an
appeal before the Industrial Court, which was allowed by it'
order dated 26th March, 1968. The Industrial Coult held that
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the employees of the co-operative society, who were
working
in the canteen, were employees of the appellant and, their wages
and dearness allowance etc. were payable in accordance with
SARASPUR MILLS v. RAMANLAL (Grover,].)
969
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the Awards mentioned before. The direction was made that the
appellant should pay the difference in wages and dearness
allowance in accordance with those Awards.
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The only question which requires determination is whether
the canteen workers employed by the co-operative society could
be treated as employees of the appellant within the meaning of
the relevant provisions of the Act for the 1'UI'POSC of payment of
their wages in spite of the fact that they are employees of the co·
operative society and were hieing paid wages by that society.
Prior to the Act, Bombay. Industrial Disputes Act 1938 was in
force in the erstwhile province of Bombay. Under that Act no
statutory employees were created but only ithose persons who
were directly employed by the employer were treated as employees.
The Act replealed the 1938 Act. Section 3(13) of the Act contained the definition of the term "employee". Before its amen:!-
ment this provision was as follows :
"(13) .. ·.. .. .. and includes :
(a) a person employed by a contractor to do any work
for him in the execution of a contract with an employer
within the meaning of sub-clause ( e) of clause 14 .....
..
Sub-clause (e) of clause 14 is as follows :
( 14) "employer" includes . . . . . . . . ( e)
where the
owner of any undertaking in the course of or for the purpose of conducting the undertaking
contracts
with
any person for the execution by or under the contractor
of the whole or any part of any work which is ordinarily
part of the undertaking, 'the . . . . . . owner of the
undertaking·.
The Factories Act, 1948 came into force on April l, 1949.
Section 2 ( 1 ) of that Act is as follows:
"(I ) 'worker' means a person employed ' directly
or through any agency, whether for wages or not, in
any manufacturing process, or in cleaning any part of
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the machinery or
permises used for
manufacturing
process, or in any other kind of work incidental to, or
com1ected with, the manufacturing process, or the sub11,
ject of manufacturing process"
The expression 'occupier' was also defined by section 2(n)
to mean the person .who has .ultimate control over the affairs of
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the factory, and where the said affairs were entrusted to a managing !!gent
such a~ent shall be deemed to be the occupier of the
factory.
The BomblaY. High Court had held in certain matters
which were brought before it that in spite of the fact that the
14-L7~7Sup Cl/73
970
SUPREME COURT REPORTS
[1973] 3 s.c.R.
co-opetative society wa-s mentioned in the Bombay
Factories
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Rules, 1950, the employee employed by the co-operative society
could not bje treated as employees under the Act. The Gujarat
. Legislature passed an Act in 1962 amending clause ( 13) and ( 14)
of Section 3 of the Act. After the amendment these clauses run as
follows:
·
"( 13) 'employee' means. any person (including an
apprentice) employed in any industry to any skilled or
unskilled manual, supervisory, technical or cleric.al work
for hire or reward, whether the teons cl employment be
express or implied and includes-( a) a person employed
in the execution of' any work in respect of which the
owner of an undertaking is an
employer within the
meaning of sub-clause ( e) of clause (14) .
"
•
•
•
•
(14) 'employer' includes-
•
•
•
•
( e) Where the owner of any
undertaking in the
course pf or for the purpose of conducting the undertaking entrusts the execution of the whole or any part of
any work which is ordinarily a part of the undertaking
to any person otherwise than as the servant or agent of
the owner, the owner of the undertaking." ........... .
The Industrial Court was of the view that the term "employee"
under the Act had been given an extended meaning. An employee
was not only a person who was employed by the employer or
over whom the employer had con\rol, but also certain types of
persons had been constituted statutory employees under the Act.·
-
Before such a person could become the employee of the owner
of the undertaking, the conditions that must bje fulfilled were: (1)
the owner of the undettaking must entrust to any person the execution of the whole or any part of any work; (2) such entrustment
rn ust be in the course of or t'or the purpose of conducting the under·
taking; (3) such entrustment must be otherwise than_ as the ser·
vant or ·agent of the owner and ( 4) such work must be any work
which is ordinarily a part of the undertaking:
The Industrial Court referred to the earlier decisions including
that of the Labour Appellate Tribunal and of the Bambay High
Court and examined the circumstances in which the relevant provisions of the Act came to be amended. It wa~ pointed out that
in the stat~ment of ob.iects and reasons appearing in the Bill to the
Amendiitg Act, it was stated that the definition of an employee
was being amended so as to cover persons employed by a contractor or any other person to whom the owner of an undertaking had
entrusted the execution of arry work which was ordinarily part
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SARASPUR MILLS v. RAMANLAL (Grover, I.)
971
of the undertaking. The definition of 'employer' was also amend•
ed correspondingly. According .to the ~dustrial Court there was
a statutory obligation on the part of the mils to provide a canteen
and this obligation had been discharged biY the mills by entrusting
that task to the co-operative society, even if there was no positive
evidence of such entrustment of work. It was pointed out that
B the· activities of running the canteen could hardly have been
undertaken by !he co-operative society unless it was entrusted to it
by the mills. lt was finally held that although the c<r<>perative
society which was the real employer and not the present appellant,
but by virutue of the fiction created by the amendment introduced
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in the Act, the employees of the Society became tile employees of
the appellant. They were, therefore, entitled to the benefits of the
Awards.
The sole point which has been strenuously urged on behalf
of !the appellant is that on a proper constmction of the amended
clauses ( 13) and ( 14) of Section 3 of the Act, the workers employed in the canteen whtch was being run biY the co-operative society,
cquld not have been held to be employees of the appellant. It
is coDtended that the appellant was under a statutory obligation
because of section 46 of the Factories Act and the relevant rules
made thereunder to maintain the Canteen for the w<irkers, but
the canteen was being actiially run by the co-operative Slleiety
and the appellant had nothing to do with it nor did it pay any
E · wages to the employees of. the society who were working in the
canteen.
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The matter seems to be concluded by the judgment of. this
Court in Civil Appeal No. 1044 of 1968 decided on April 14,
1972, in which an identical argument had been addressed that
certain gardeners who had been employed by a contractor for
working in the gardens of the textile mills, could not be said to fall
within the definition of the word "employed" as contained iii Section
3 (13) of the Act. In that case reference was made to the decision in Bast/ Sugar Mills Ltd. v. Ram Ujagar.and Ors.(') It had
been held that the workmen fell wtthin the definition of that word
as given lib' S. 2 (z) of. the U.P. Industrial Disputes Act 1947 as
they were persons employed in the industry to do manual work for
G reward. The workmen had been employed by a contractor with
whom the mills had contracted in the course of conducting the
industry for execution by the said contractor of the work of removal
of press mud which is ordinarily a part of the industry.
The above case was treated as an authority for the proposi!tion
that an employee engaged in a work or operation which was inciH dentally connected with the main industry was a workman if other
requirements of the statute were satisfied and that the Malis in tha'!
(I) [1964] (2) S. C. R. 838.
(2) (1953] 11. L. L. J. 647.
972
SUPREME COURT REPORTS
[1973] 3 S,C.R.
case were workers.
It was pointed out that the bungalows and
gardens on which the Malis in that case worked were a kind of
amenity supplied by the mills to its officers and on this reasoning
the Malis were held to be engaged in operation incidentally connected with the main industry carried out by the employer. The
High Court in Ahmedabad Mfg. & Calico Printing Co. Ltd, & Ors
v. Their Workmen(') had relied on the above ratio and came to
the conclusion that the workers in order to come within the
definition of an "employee" need not necessarily be directly
connected with the manufacture of textile fabrics. The decision in
Basti Sugar Mills' case was treated as ~nding in the former case.
Since, under the Factories ·Act it was the duty of the appellant
to run and maintain the canteen tor the use of its employees, it
appears to us that the ratio of the decision in Ahmedabad Manufacturing & Calico Printing Co. Ltd. v. Their Workmen would,
be fully applicable in which the same provisions of the Acf were
considered.
·
The appeal, therefore, must fail and it is dismissed with costs.
S.B.W.
Appeal dismissed.
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