# STATE OF KARNATAKA AND ORS v. KGSD CANTEEN EMPLOYEES WELFARE ASSOCIATION AND ORS

- **Citation:** [2006] 1 S.C.R. 93
- **Court:** Supreme Court of India
- **Decided:** 2006-01-03
- **Bench:** S.B.Sinha, P.P. Naolekar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-karnataka-and-ors-v-kgsd-canteen-employees-welfare-association-and-ors-21145
- **Pages:** 23

## Headnote

Service Law:
Pay x'ale-Parity in- Claim of, by canteen employees with Governme1 .. c
Servants-Entitlement of-Held: Members of canteen run by Committee cannot
be equated with the Government Hospitality Organisation only because food
is served and prepared by them-Canteen employees did not hold any post as
\
sanctioned by State for canteen-They were not employees of State-Hence,
not entitled to parity in scale-Constitution of India, 1950-Article 14.
D
Regularization-Claim of canteen employees-Grant of, by High CourtJustification of-Held: High Court cannot exercise its jurisdiction to frame a
scheme by itself or direct framing of scheme for regularizing services of
employees by State-Such scheme would not meet requirements of law-Action
of State must conform to the constitutional requirements-<;onstitution of India, E
1950-Articles 226, 14, 15, 16, 162 and 309 proviso.
,(
Constitution of India, 1950-Article 226-Disputed question of facts as
to existence of employee and employer relation-If members of canteen run
by committee constituted by State Government are employees oj State-Writ
F
petition-Maintainability of-Held: Recourse to writ remedy is not
appropriate-Adjudication of such disputed question should be left to Industrial
Court-Industrial Disputes Act, 1947.
A canteen was run through a Committee constituted by State
Government for the welfare of the Secretariat employees. State G
,.
Government provided amenities and facilities for running the canteen.
Grant-in-aid was also sanctioned from time to time. Committee also
appointed employees on ad-hoc basis. Since the canteen was running under
constant loss, the management committee tendered their resignation.
Thereafter, Management of the canteen was handed over to the first
93
H
94
SUPREME COURT REPORTS
[2006] I S.C.R.
A respondent-State Government Secretariat Employees' Association. First
respondent then sought regularization of their services as employees of
State Government and also parity in pay scales with the State Government
employees. Appellant-State rejected the claim. Single Judge of High Court
holding that the canteen can be equated to the Government Hospitality
B Organisation and the employees of the canteen are employees of State
Government, directed regularization of services of employees. State filed
an appeal. Division Bench of High Court modified the judgment of High
Court with regard to the date of regularization of their services as also
payment of back wages. Hence the present appeals.
C
Allowing the State Government's appeals and dismissing that of the
canteen employees, the Court
HELD: 1. In the case of this nature, where serious disputed question
fact were raised, it was not proper for the High Court to embark
thereupon an exercise under Article 226 of the Constitution of India. High
D Court relied upon number of decisions of this Court ignoring the fact that
all such disputes were adjudicated in an industrial adjudication. High
Court arrived at a finding that the Committee was merely a cloak of the
Government and an arm of the State. When allegations are made that a
body is a cloak and/or smoke screen or a camouflage, the adjudication of
such a disputed question should be left to the Industrial Court. (110-A-CI
E
State Bank of India and Ors. v. State Bank of India Canteen employees'
Union (Bengal Circle) and Ors .. AIR (2000) SC 1518; Rourke/a Shramik
Sangh v. Steel Authority of India and Anr .. [2003( 4 SCC 317; Workmen of
Nilgiri Coop. Mkt. Society Ltd v. State of T.N. and Ors .. (2004( 3 SCC 514;
F Hussainbhai, Calicut v. The A lath Factory Thezhilali Union Kozhikode & Ors.
(1978( 4 SCC 257; Workmen of the Canteen of Coates of India Ltd. v. Coates
of India Ltd & Ors .. [2004[ 3 SCC 547; U.P. State Bridge Corporation Ltd
& Ors. v. U.P. Rajya Setu Nigam S. Karamchari Sangh, (2004[ 4 SCC 268;
Rajasthan State Road Transport Corpn. & Ors. v. Zakir Hussain, (2005[ 7
SCC 447; The Saraspur Mills Co.Ltd. v. Raman/al Chimanlal & Ors. (1974)
G 3 SCC 66; Parima

## Text

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1
STATE OF KARNATAKA AND ORS.
A
v.
KGSD CANTEEN EMPLOYEES WELFARE
ASSOCIATION AND ORS.
JANUARY 3, 2006
B
[S.B.SINHA AND P.P. NAOLEKAR, JJ.]
Service Law:
Pay x'ale-Parity in- Claim of, by canteen employees with Governme1 .. c
Servants-Entitlement of-Held: Members of canteen run by Committee cannot
be equated with the Government Hospitality Organisation only because food
is served and prepared by them-Canteen employees did not hold any post as
\
sanctioned by State for canteen-They were not employees of State-Hence,
not entitled to parity in scale-Constitution of India, 1950-Article 14.
D
Regularization-Claim of canteen employees-Grant of, by High CourtJustification of-Held: High Court cannot exercise its jurisdiction to frame a
scheme by itself or direct framing of scheme for regularizing services of
employees by State-Such scheme would not meet requirements of law-Action
of State must conform to the constitutional requirements-<;onstitution of India, E
1950-Articles 226, 14, 15, 16, 162 and 309 proviso.
,(
Constitution of India, 1950-Article 226-Disputed question of facts as
to existence of employee and employer relation-If members of canteen run
by committee constituted by State Government are employees oj State-Writ
F
petition-Maintainability of-Held: Recourse to writ remedy is not
appropriate-Adjudication of such disputed question should be left to Industrial
Court-Industrial Disputes Act, 1947.
A canteen was run through a Committee constituted by State
Government for the welfare of the Secretariat employees. State G
,.
Government provided amenities and facilities for running the canteen.
Grant-in-aid was also sanctioned from time to time. Committee also
appointed employees on ad-hoc basis. Since the canteen was running under
constant loss, the management committee tendered their resignation.
Thereafter, Management of the canteen was handed over to the first
93
H
94
SUPREME COURT REPORTS
[2006] I S.C.R.
A respondent-State Government Secretariat Employees' Association. First
respondent then sought regularization of their services as employees of
State Government and also parity in pay scales with the State Government
employees. Appellant-State rejected the claim. Single Judge of High Court
holding that the canteen can be equated to the Government Hospitality
B Organisation and the employees of the canteen are employees of State
Government, directed regularization of services of employees. State filed
an appeal. Division Bench of High Court modified the judgment of High
Court with regard to the date of regularization of their services as also
payment of back wages. Hence the present appeals.
C
Allowing the State Government's appeals and dismissing that of the
canteen employees, the Court
HELD: 1. In the case of this nature, where serious disputed question
fact were raised, it was not proper for the High Court to embark
thereupon an exercise under Article 226 of the Constitution of India. High
D Court relied upon number of decisions of this Court ignoring the fact that
all such disputes were adjudicated in an industrial adjudication. High
Court arrived at a finding that the Committee was merely a cloak of the
Government and an arm of the State. When allegations are made that a
body is a cloak and/or smoke screen or a camouflage, the adjudication of
such a disputed question should be left to the Industrial Court. (110-A-CI
E
State Bank of India and Ors. v. State Bank of India Canteen employees'
Union (Bengal Circle) and Ors .. AIR (2000) SC 1518; Rourke/a Shramik
Sangh v. Steel Authority of India and Anr .. [2003( 4 SCC 317; Workmen of
Nilgiri Coop. Mkt. Society Ltd v. State of T.N. and Ors .. (2004( 3 SCC 514;
F Hussainbhai, Calicut v. The A lath Factory Thezhilali Union Kozhikode & Ors.
(1978( 4 SCC 257; Workmen of the Canteen of Coates of India Ltd. v. Coates
of India Ltd & Ors .. [2004[ 3 SCC 547; U.P. State Bridge Corporation Ltd
& Ors. v. U.P. Rajya Setu Nigam S. Karamchari Sangh, (2004[ 4 SCC 268;
Rajasthan State Road Transport Corpn. & Ors. v. Zakir Hussain, (2005[ 7
SCC 447; The Saraspur Mills Co.Ltd. v. Raman/al Chimanlal & Ors. (1974)
G 3 SCC 66; Parimal Chandra Raha & Ors. v. Life Insurance Corporation of
India & Ors .. ( 1995 ( Supp 2 SCC 611; Employees in relation to the
Management of Reserve Bank of India v. Workmen, [ 1996( 3 SCC 267; Indian
Petrochemicals Corporation Ltd. v. Shramik Sena & Ors .. [1999( 6 SCC 439;
Indian Overseas Bank v. f(}B Staff Workers' Union & Anr. (2000[ 4 SCC 245;
H Steel Authority of India Ltd. & Ors. v. National Union Waterfront Workers &
STATE OF KARNAT AKA'" KGSD CANTEEN E\1PLOYEES WELFARE ASSOCIATION
95
Ors. 120011 7 SCC I; Baral Fritz Werner Ltd. v. State of Karnataka 120011 4 A
SCC 498; Hari Shankar Sharma & Ors. v. Artificial limbs Manufacturing
Corpn. & Ors. 1200211 SCC 337; National Thermal Power Corporation Ltd.
v. Karri Pothuraju & Ors. 120031 7 SCC 384; Mishra Dhatu Nigam Ltd. &
Ors. v. M. Venkataiah & Ors. 1200317 SCC 488 and Haldia Refinery Canteen
Employees Union & Ors. v. Indian Oil Corporation ltd. & Ors .. 1200515 SCC B
51, referred to.
2.1. In the instant case, State Government had no statutory
compulsion to run and maintain any canteen for its employees. The facts
also suggest th.at the State had no intention to run and maintain' the
canteen as a department. Had the intention of the State been to run the C
said canteen as on~ of its departments, the question of giving any grant
or for that matter making of a provision for return of the furniture and
equipments would not have arisen. 1102-C-D, E-FI
·1
2.2. It is not open to High Court to exercise its discretion under
Article 226 of the Constitution of India either to frame a scheme by itself D
or to direct the State to frame a scheme for regularizing the services of
ad hoc employees or daily wages employees who had not been appointed
in terms of the extant service rules framed either under a statute or und.er
the proviso to Article 309 of the Constitution. Such a scheme, even1 if
framed by the State, would not meet the requirements of law a~ the
executive order made under Article 162 of the Constitution cannot prevail
over a statute or statutory rules framed under proviso to Article 309
thereof. The State is obligated to make appointments only in fulfillment
of its constitutional obligation as laid down in Articles 14, 15 and 16 of
E
the Constitution and not by way of any regularization scheme. In our
constitutional schemes, all eligible persons similarly situated must be given p
opportunity to apply for and receive considerations for appointments at
the hands of the authorities of the State. Denial of such a claim by some
officers of the State time and again has been deprecated. In any view, in
democratic polity, an authority howsoever high it may be cannot act in
breach of an existing statute or the rules which hold the field. Therefore,
High Court was not justified in directing regularization of the services of G
the respondents. 1113-B-EI
State of U.P. v. Neeraj Awasthi & Ors. (2005) (IO) SCALE 286;
Mahendra L Jain & Ors. v. Indore Development A111hori1y & Ors. !20051 I
sec 639, relied on.
H
96
Sl'PREME COURT REPORTS
(2006] I S.C.R.
A
Rajasthan State Road Transport Corpn. & Ors. v. Zakir Hussain, (20051
7 sec 447, referred to.
3.1. Salary on a regular scale of pay, is payable to an employee only
when he holds a status. ·In the instant case, the employees did not hold
any post. No post for the canteen was sanctioned by the State. According
B to the State, they were not its employees. It cannot be said that at least
for the period they have worked they were entitled to the remuneration
in the scale of pay as that of the Government employees. fl 14-E-Ff
3.2. High Court erred in holding that the members of the first
C respondent could be treated at par with the Hospitality Organisation of
the State. Such equation is impermissible in law. In the Hospitality
Organisation of the State, the posts might have been sanctioned. Only
because, food is prepared and served, the same would not mean that a
canteen run by a Committee can be equated thereto. ll 14-F-GI
D
Mahendra l Jain & Ors. v. Indore Development Authority & Ors. (2005(
I SCC 639, relied on.
Cl.VIL APPELLATE JURISDICTION: Civil Appeal Nos. 224-226 of
2003.
E
From the Judgment and Order dated 29.5.2002 of the Karnataka High
F
G
Court in Writ Appeal Nos. 5690-5692 of 2000.
WITH
C.A. Nos. 449-468 and 4180-82/2003.
P. Rao. Sanjay R. Hegde. Anil K. Mishra, A. Rohen Singh and S.
Jayalaxmi Pavani for the Appellants.
Raveen R. Nath. Ms. Lalit Mohini Bhat, Ms. Anita Shenoy. Ms. Hetu
Arora and Ms. Samanti Chakrabarti for the Respondents.
The Judgment of the Court was delivered by
S.8. SINHA, J. Both the State of Karnataka and K.G.S.D. Canteen
Employees Welfare Association are in appeal before us aggrieved by and
dissatisfied with the judgments and orders dated 29.05.2002 and 30.50.2002
H passed by a Division Bench of the Kamataka High Court in Writ Appeal
v
, .
STATE OF KARNATAKA o·. KGSD CA~TEE~ E\lPLOYEES WELFARE ASSOC I.·\ TIO~ (S!NHA. J]
97
Nos.5690-5692 of 2000 and 4613-32 of 2000.
A
WRIT PROCEEDINGS
The First Respondent herein is an Association of the employees of the
Karnataka Government Secretariat Departmental Canteen. The Respondent
Nos.2 and 3 are its members. They filed a writ pet:tion before the Karnataka B
High Court, inter alia, contending that the said canteen having been run by
the State Government for the benefit of the secretariat employees and 74
employees working therein having completed more than I 0 years of service
were in effect and substance the employees of the State Government itself,
although they were termed as 'employees of the canteen'. Further contention
of the respondents herein was that their wages were absolutely meagre being C
little more than the minimum wages, but despite several representations made
by them, they were not paid the same salary as was payable to the employees
of the State who were similarly situated.
The Appellant herein rejected their request for grant of scale of pay and D
other service benefits applicable to the Government servants, inter alia, on
the premise that they were not its employees.
HIGH COURT
A learned Single Judge of the High Court opined that the canteen can E
be equated to the Government Hospitality Organization where the canteen
facilities are made available and consequently directed the Appellant to
implement the notification dated 22.6.1996 which was applicable in relation
to the Government Hospitality Organization. as far as possible to the said
canteen employees with such revisions as are p~rmissible under law as on the
said date.
F
The learned Single Judge opining that the employees of the canteen are
employees of the State Government directed :
"The second prayer of the petitioners is to declare them as
Government Servants. In this regard I deem it proper to modify the G
relief by issuing a direction to the Government to regularize the
services of the petitioners in the following manner :
Government is directed to regularize the services of such of those
petitioners who have put in ten y~ars of service subject to the
Government satisfaction of qualification if any for the post held by H
98
SUPREME COURT REPORTS
[20061 I S.C.R.
A
them and keeping in view the long services rendered by them.
It is declared that the petitioners are the employees of the
Government and are entitled for pay parity as per Annexure-0 with
revision from time to time.
B
The petitioners have approached this Court in the year 1996 and
the petition is heard and disposed of in the year 2000. Petitioners
have been provided some increase in the wages from time to time. In
these circumstances, I deem it proper that the petitioners are not to
be given any arrears for the past period and the direction is to with
effect from 1.1.2000 and not for the earlier period. The arrears from
C
1.1.2000 is to be made available to the petitioners within three months
from the date of receipt of this order."
Appeals having been preferred by the State thereagainst, a Division
Bench of the High Court disposed of the appeals modifying the judgment of
the learned Single Judge as regard the date of regularization of their services
D as also payment of back wages, directing :
"(i) The effective date from which the pay-scales and other service
benefits should be extended to the employees of KGSD Canteen by
regularizing their service is changed from 01.01.2000 to 29.05.2002."
E
The learned Single Judge as also the Division Bench despite the fact
F
that the Appellant herein had denied and disputed the· relationship of employer
and employee between it and the employees of the canteen, proceeded to
determine the said question on the basis of various documents produced
before it.
PRESENT APPEALS
The State of Karnataka has filed Civil Appeal Nos.224-226 of 2003
and 449-468 of 2003, questioning the impugned judgment in its entirety
whereas the K.G.S.D. Canteen Employees Welfare Association preferred Civil
G Appeal Nos.4180-82 of 2003 questioning that part of the judgment whereby
the judgment and order of the learned Single Judge was modified restricting
the benefit of regularization from the date of the judgment and back wages
from 29.05.2002 instead of 01.01.2000.
H
t
STA TE OF KARXATAK,\ ,., KGSD fAXTEE' E\1PLOYEES \\'EIS.IRE ASSOCIATION [SINH.~. J. I
99
CONTENTIONS OF THE PARTIES
Mr. P.P. Rao, the learned Senior Counsel appearing on behalf of the
Appellants. would, inter a/ia, submit that the High Court committed a serious
error in passing the impugned judgment insofar as it misconstrued and
A
mis interpreted various Government orders as regard establishment and
management of the canteen issued in their proper perspective. The High B
Court, Mr. Rao urged. furthermore misdirected itself in passing the impugned
judgment insofar as it failed to take into consideration tliat the .canteen was
not required to be run by the State Government in terms of any statute or
otherwise.
Mr. Naveen R. Nath. the learned counsel appearing on behalf of the C
respondents herein. on the other hand, would support the judgment of the
High Court contending that a finding of fact has been arrived at by the High
Court that there existed a relati-Onship of employer and employee between the
\
State and the concerned employees as the State exercised total control over
them and. therefore. this Court should not interfere therewith.
D
It was contended that the employees of the canteen in view of Article
14 of the Constitution of India. ·were entitled to parity in wages with that of
the employees of the State Government for the period they had worked and.
furthermore. they having been in such employment for a long time their
services have rightly been directed to be regularized.
SCHEME
E
The canteen was being run by private contractors for a long time. In the
year 1974, the State of Karnataka intended to run the canteen by a committee.
consisting of ten persons, six of them representing the Government and the F
remaining four representing the Association as mentioned in order bearing
No. GAD 106 DBM dated 19th November. 1974. Amenities and facilities,
e.g., premises. furniture, cooking utensils, crockery, cutlery etc. for running
the canteen were to be ~rovided by the State only for a period of one year.
Some of the relevant provisions laid down.in the Scheme for running the said G
canteen were as under :
"An outright g1~a111 of Rs. 25.000 (Rs. Twenty five thousand only) is
sanctioned towards working expenses. namely, initial purchase of
provisions. salaries of staff to be appointed like cooks, services. etc ...
H
100
SUPREME COliRT REPORTS
12006 I I S.C.R.
A
The grant of Rs.25,000 (Rupees Twenty five thousand only) will be
debited to the new sub-head "IV Grant to the Karnataka Govt.,
Secretariat Canteen (Non Plan)" ··under the major, minor, and Group
sub-Head" "288-Social Security and Welfare-E-Other social Security
and Welfare Programmes & Others "Programmes-C. Welfare of
B
Government Employees" - pending re-appropriation of savings under
the above major head.
The Chairman of the Committee is requested to take action to
start the canteen.
The working of the Canteen under the above arrangement would
C
be reviewed at the end of the one year and then the future set up shall
be decided."
The State by reason thereof, thus, made a prov1swn for grant of
Rs.25,000/-. In terms of the said scheme, all the furniture and equipments
which were handed over to the committee were required to be accounted for
D and returned to the Government upon the closure of the canteen. The
employees were appointed, indisputably, by the committee on an ad hoc
basis/daily wages.
It. furthermore, appears that the Government had sanctioned grant in
E aid from time to time. The management of the said canteen was handed over
to the Respondent Association. Constitution of the Managing Committee was
being changed on a regular basis. In the order dated 27.7.2000 issued ily the
Government of Karnataka, it was stated :
" ... This canteen is running under constant loss for the past few years
F
and consequently Government had to sanction Grant-in-aid a few
times. These Grant-in-aids were sanctioned keeping in view the welfare
of the Secretariat Employees. In this background. all the members of
the Management Committee have tendered their resignation to
Government with a request to make alternate arrangements in view of
the fact that they are unable to run the canteen on "No Profit No
G
Loss" basis and also considering the fact that Government has not
t
agreed to give further Grant-in-aid to the Managing Committee. In
<.
H
this background, a meeting was convened under the chairmanship of
Additional Chief Secretary to Government to consider making alternate
arrangements for running the canteen. Finally in a meeting convened
on 23.2.2000 under the chairmanship of Secretary to Department of
'\
I
STATE Of KARNATAKA 1·. KGSD CANTEEN E:\IPLOYEES WELFARE ASSOflATJON 1s1;-.;HA, J J IO I
Personnel & Administrative Reforms, it was decided to handover the A
Management of the canteen to Karnataka Government Secretariat
Employees Association temporarily for a ~eriod of one year
commencing from 6.4.2000 and it is also proposed to continue the
existing Grant-in-aid and other facilities to Karnataka Government
Secretariat Employees Association for running the canteen. Apart
from this, it is also proposed to provide the services of six secretariat B
employees (Junior assistants & assistants) for supervising the affairs
of the canteen by treating them as "on other duty" for a period of one
year. These proposals were examined and accordingly order was. issued
as given below :
c
ORDER NO. DPAR 5 DSW 2000, BANGALORE, DATED: 27.7.2000
'
Keeping in view the interest/welfare of Karnataka Government
· Secretariat Employees, sanction is accorded to handover the
Management of the Karnataka Government Secretariat Canteen. to
Karnataka Government Secretariat Employees Association w.e.f. D
4.8.2000 temporarily for a period of one year, from the Management
Committee constituted by the Government..."
The facilities and terms and conditions were also stated therein, some
of which are as under :
'
"(6) While taking over the Management of the Canteen, the Karnataka
Government Secretariat Employees Association should prepare a
list of furnitures, utensils, L.P.G. etc. and receive a proper
acknowledgement from the Management Committee and submit
a .copy to the Government.
(7) It is the responsibility of the Karnataka Government Secretariat
Employees Association to keep all the assets of the canteen like
furnitures, utensils, gas etc. safe and secure.
E
F
(8) Karnataka Government Secretariat Employees Association can
take the assi"stance of DPAR (Executive-A) section for G
maintenance and repair of canteen building."
In an affidavit filed before us, it is stated that the Karnataka Government
Secretariat Employees Association which was running the canteen from
04.08,2000 to 31.03.2003 by a letter dated I 0.03.2003, expressed its inability
to run the canteen beyond 3 1.03 .2003 and, thus, the canteen services were H
102
SUPREME COURT REPORTS
[2006) I S.C.R.
A closed from 01.04.2003. It is further stated that the State Government
demolished the main canteen building pursuant to the Government Note dated
04.08.2003. Certain litigations h·ad thereafter been initiated before several
authorities. A writ petition had also been filed by the Association before the
High Court, which was marked as Writ Petition No.41207 of 2004 seeking
direction to make the balance payment of LIC premium and contribution
B towards EPF for the period from 01.01.2003 to 31.03.2003.
This Court evidently is not concerned with the pending litigation but
we have noticed the said fact only for the purpose of showing that the State
intended to run the canteen departmentally through a committee, but according
C to the State, the committee has a distinct an\! different existence or different
entity than the Government.
The fact situation obtaining in this case already suggests that the State
had no intention to run and maintain the canteen as a department. Had the
intention of the State been to run the said canteen as one of its departments,
D the question of giving any grant or for that matter making of a provision for
return of the furniture and equipments would not have arisen.
EMPLOYEES OF A CANTEEN - STATUS
The question as to whether the employees of the canteen are employees
E of the State or whether their services should be directed to be regularized or
not, in view of several decisions of this Court would be dependent upon the
issues as to whether the canteens are required to be made in terms of the
provisions of a statute or otherwise. Admittedly, the State had no statutory
compulsion to run and maintain any canteen for its employees.
F
In The Saraspur Mills Co. ltd. v. Raman/al Chimanlal and Ors., [1974]
3 SCC 66 where the Management was under a statutory obligation in terms
of Section 46 of the Factories Act and the rules made thereunder to maintain
the canteen for the workers which was being run by a Co-operative Society
wherewith the Management had nothing to do. This Court relied upon its
G earlier decision in Basti Sugar Mills ltd. v. Ram Ujagar. [1964) 2 SCR 838]
holding:
H
"The above case was treated as an authority for the proposition that
an employee engaged in a work or operation which was incidentally
connected with the main industry was a workman if other requirements
of the statute were satisfied and that the malis in that case were
·t
I
·I
STATE OF KARNATAKA •·. KGSD CANTEEN EMPLOYEES WELFARE ASSOCIATION (SINliA. J ] 103
'"'
workers. It was pointed out that the bungalows and gardens on which A
·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. v. Workmen had relied on the above ratio B
and come to the conclusion that the workers in order to come within
the definition of ail "employee" need not necessarily be directly
connected with the manufacture of textile fabrics. The decision in
Basti Sugar Mills case I was treated as binding in the former case."
In Parimal Chandra Raha and Ors. v. Life Insurance Corporation of c
India and Ors., [ 1995] Supp 2 SCC 611, relying upon a large number of
decisions of this Court including M.M.R. Khan v. Union of India, [1990]
Supp SCC 191, in the peculiar facts and circumstances, it was held that the
canteen which was being run by a Co-operative Society became a part of the
)
establishment of the Corporation. The said decision was arrived at upon
'
lifting the corporate veil of the cooperative society. In that case, although D
there was no statutory liability on the part of the Respondent therein, to
maintain a canteen for their employees, this Court observed:
"What emerges from the statute law and the judicial decisions is as
l
follows:
E
(i) Whereas under the provisions of the Factories Act, it is statutorily
obligatory on the employer to provide and maintain canteen for the
use of his employees, the canteen becomes a part of the establishment
and, therefore, the workers employed in such canteen are the
employees of the management.
F
(ii) Where, although it is not statutorily obligatory to provide a canteen,
it is otherwise an obligation on the employer to provide a canteen, the
canteen becomes a part of the establishment and the workers working
in the canteen. the employees of the management. The obligation to
provide a canteen has to be distinguished from the obligation to G
provide facilities to run canteen. The canteen run pursuant to the
-~
latter obligation, does not become a part of the establishment.
(iii) The obligation to provide canteen may be explicit or implicit.
Where the obligation is not explicitly accepted by or cast upon the
employer either by an agreement or an award, etc., it may be inferred H
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(2006] I S.C.R.
A
from the circumstances. and the provision of the canteen may be held
to have become a part of the service conditions of the employees.
Whether the provision for canteen services has become a part of the
service conditions or not, is a question ojjact to be determined on the
facts and circumstances in each case.
B
Where to provide canteen services has become a part of the service
conditions of the employees, the canteen becomes a part of the
establishment and the workers in such canteen become the employees
of the management.
(iv) Whether a particular facility or service has become implicitly a
C
part of the service conditions of the employees or not, will depend,
among others, on the nature of the service/facility, the contribution
the service in question makes to the efficiency of the employees and
the establishment, whether the service is available as a matter of right
to all the employees in their capacity as employees and nothing more,
D
E
the number of employees employed in the establishment and the
number of employees who avail of the service, the length of time for
which the service has been continuously available, the hours during
which it is available, the nature and character of management, the
interest taken by the employer in providing, maintaining, supervising
and controlling the service, the contribution made by the management
in the form of infrastructure and funds for making the service available
etc.
[Emphasis supplied]
The said dedsion, however, was distinguished by a 3-Judge Bench of
F this Court in Employees in relation to the Management of Reserve Bank of
India v. Workmen, (1996) 3 SCC 267 stating that M.M.R. Khan (supra) was
decided on the facts of that case. Although, a question was raised therein that
the propositions 3 and 4 laid down in Parimal Chandra Raha (supra) are
very wide and require reconsideration and appropriate modification, this Court
G refused to go thereinto holding that it was not required to do so therein as the
Tribunal had proceeded to follow M.M.R. Khan (supra) only, holding:
" ... On the facts of this case, in the ahsence of any statutory or other
legal obligation and in the absence of any right in the Bank to
supervise and control the work or the details thereof in any manner
H
regarding the canteen workers employed in the three types of canteens,
,.
, •
STATE OF KARNATAKA •·. KGSD CANTEEN EMPLOYEES WELFARE ASSOCIATION [SINHA. J.]
] 05
it cannot be said that the relationship of master and sen1ant existed A
between the Bank and the various persons employed in three types of
canteens. 166 persons mentioned in the list attached to the reference
are not workmen of the Reserve Bank of India and that they are not
comparable employees employed in the Officers' lounge. Therefore,
the demand for regularisation is unsustainable and they are not entitled B
to any relief. We hold that the award passed by the Tribunal is factually
and legally unsustainable."
[Emphasis supplied]
A new gloss to the question, however, was given by this Court in
Indian Petrochemicals Corporation ltd. v. Shramik Sena and Ors., [I 999] 6 C
SCC 439. This Court following the judgment M MR. Khan (supra) and Resen1e
Bank of India (supra) opined that the ratio sought to be laid down in Parima/
Chandra Raha (supra) that "the workers employed in such canteen are the
employees of the Management"· is not correct and further opined that the
·-1
"workmen ofa statutory canteen would be the workmen of the establishment D
for the purpose of the Factories Act only and not for all other purposes".
[Emphasis supplied]
However, in Indian Overseas Bank v. 1.0.B. Staff Canteen Workers'
Union and Anr., (2000] 4 sec 245 whereupon the High Court relied upon, E
in the peculiar facts and circumstances of the said case, this Court relied on
MMR. Khan (supra) and Parimal Chandra Raha (supra) and distinguished
Indian Petrochemicals Corporation ltd. (supra) holding:
" ... A cumulative consideration ofa few or more of them, by themselves
or in combination with any other relevant aspects, may also serve to
be a safe and effective method to ultimately decide this often agitated
question. Expecting similarity or identity of facts in all such variety
or c!ass of cases involving different type of establishments and in
dealing with different employers would mean seeking for things, which
are only impossible to find.
The decision in Indian Petrochemical case does not, in our view, lay
down any different criteria than those declared in the other decisions
·for adjudging the issue, except that it had also considered specifically
the further question as to the effect of a declaration, that the workers
F
G
of a particular canteen, statutorily obligated to be run render no more H
106
A
B
SUPREME COURT REPORTS
[2006] I S.C.R.
than to deem them to be workers for the limited purpose of the
Factories Act and not for all purposes. In the case before us, the
claim is not that there was any such statutory obligation and the
entire consideration proceeded only on the footing that it is a nonstatutory recognised canteen falling within the second of the three
categories envisaged in the earlier decisions and the Tribunal as well
as the Division Bench of the High Court endeavoured to find out
whether the obligation to run was explicit or implicit, on the facts
proved in this case."
A Constitution Bench of this Court in Steel Authority of India Ltd and
C Ors. v. National Union Waterfront Workers and Ors., [2001] 7 SCC I noticed
the following circumstances under which contract labour could be held to be
the workman of the principal employer:
D
E
F
G
"An analysis of the cases, discussed above, shows that they fall
in three classes: (i) where contract labour is engaged in or in connection
with the work of an establishment and employment of contract labour
is prohibited either because the industrial adjudicator/court ordered
abolition of contract labour or because the appropriate Government
issued notification under Section I 0( I) of the CLRA Act, no automatic
absorption of the contract labour working in the establishment was
ordered; (ii) where the contract was found to be a sham and nominal,
rather a camouflage, in which case the contract labour working in the
establishment of the principal employer were held, in fact and in
reality, the employees of the principal employer himself. Indeed, such
cases do not relate to abolition of contract labour but present instances
wherein the Court pierced the veil and declared the correct position
as a fact at the stage after employment of contract labour stood
prohibited; (iii) where in discharge of a statutory obligation of
maintaining a canteen in an establishment the principal employer
availed the services of a contractor the courts have held that the
contract labour would indeed be the employees of the principal
employer.
Such observation, however, was made in the light of the provisions
contained in Contract Labour (Regulation and Abolition) Act, 1970.
Rajendra Babu, J., as the learned Chief Justice then was, speaking for
a Division Bench of this Court in Barat Fritz Werner ltd v. State of Karnataka,
H [2001 J 4 sec 498 observed:
t
. ;
,•
\
STATE OF KARNATAK.A •·. KGSDCANTEEN EMPLOYEES WELFARE ASSOCIATION [SINHA. J] ] 07
" ... Of course, in Indian Petrochemicals Corpn. ltd. v. Shramik Sena A
a new gloss was given to this decision by stating that the presumption
arising under the Factories Act in relation to such workers is available
only for the purpose of the Act and no further. However, in Employers
df Reserve Bank of India v. Workmen this Court struck a different
note. Agaittth_is Court in Indian Overseas Bank v. I.OB. Staf!Canteen B
Workers' Unioll' considered the effect of the decisions in M.M.R.
Khan, Parimal Chandra Raha, Reserve Bank of India and Indian
Petrochemicals Corpn. Ltd. v. Shramik Sena and it was made dear
that the workers of a particular canteen statutorily obligated to be run
render no more than to d\!em them to be workers for limited purpose
of the Factories Act and not for all purposes and in cases where it is C
a non-statutory recognised canteen the court should find out whether
the obligation to run was implicit or explicit on the facts proved in
that case and the ordinary test of control, supervision and the nature
of facilities provided were taken note of to find out whether the
employees therein are those of the main establishment..."
However, in that case, the court was only concerned with a notification
abolishing contract labour under Contract Labour (Regulation and Abolition)
Act.
D
Yet again in Hari Shankar Sharma and Ors v. Artificial Limbs
Manufacturing Corpn. and OrM, (2002] I SCC 337, this Court, following E
Baral Fritz Werner Ltd'(supra) opined:
"The submission of the appellants that because the canteen had been
F
set up pursuant to a statutory obligation under Section 46 of the
Factories Act therefore the employees in the canteen were. the
employees of Respondent I, is unacceptable. First, Respondent I has
disputed that Section 46 of the Factories Act at all applies to it.
Indeed, the High Court has noted that th is was never the case of the
appellants either before the Labour Court or the High Court. Second,
assuming that Section 46 of the Factories Act was applicable to
Respondent I, it cannot be said as an absolute proposition of law that G
whenever in discharge of a statutory mandate, a canteen is set up or
other facility is provided by an establishment, the employees of the
canteen or such other facility become the employees of that
establishment. It would depend on how the obligation is discharged
by the establishment. It may be carried out wholly or substantially by H
108
SL:PREME COURT REPORTS
[20061 I S.C.R.
A
the establishment itself or the burden may be delegated to an
independent contractor. There is nothing in Section 46 of the Factories
Act, nor has any provision of any other statute been pointed out to
us by the appellants, which provides for the mode in which the
specified establishment must set up a canteen. Where it is left to the
B
c
discretion of the establishment concerned to discharge its obligation
of setting up a canteen either by way of direct recruitment or by
employment of a contractor, it cannot be postulated that in the latter
event, the persons working in the canteen would be the employees of
the establishment. Therefore, even assuming that Respondent I is a
specified industry within the meaning of Section 46 of the Factories
Act, 1946, this by itself would not lead to the inevitable conclusion
that the employees in the canteen are the employees of Respondent
In National Thermal Power Corporation Ltd. v. Karri Pothuraju and
Ors., [2003] 7 SCC 384, Rajendra Babu, J., speaking for himself and Raju,
C J., however, held that in view of a catena of decisions of this Court it is aptly
clear that where in discharge of a statutory obligation of maintaining a canteen
in an establishment the principal employer availed the services of a contractor
the contract labour would indeed be the employees of the principal employer.
The same bench in Mishra Dhatu Nigam Ltd. and Ors. v. M. Venkataiah
E and Ors., [2003] 7 sec 488, having regard to the provisions contained in
Rules 65 and 71 of Andhra Pradesh Factories Rules, 1950, reiterated the
same view.
F
In Haldia Refinery Canteen Employees Uniun and Ors. v. Indian Oil
Corporation Ltd. and Ors., (2005) 5 SCC 51, Ashok Bhan, J., speaking for
a Division Bench of this Court, distinguished Indian Petrochemicals
Corporation Ltd. (supra) opining:
" ... The management unlike in Indian Petrochemicals Corpn. Ltd. case
is not reimbursing the wages of the workmen engaged in the canteen.
G
Rather the contractor has been made liable to pay provident fund
contribution, leave salary, medical benefits to his employees and to
observe statutory working hours. The contractor has also been made
responsible for the proper maintenance of registers, records and
accounts so far as compliance with any statutory provisions/obligations
js. concerned. A duty has been ca~t on the contractor to keep proper
H
records pertaining to payment of wages, etc. and also for depositing
STATE OF KARNATAKA "· KGSD CANTEEN EMPLOYEES WELFARE ASSOCIATION [SINHA, J.] ] 09
the provident fund contributions with the authorities concerned. The A
contractor has been made liable to defend, indemnify and hold
harmless the employer from any liability or penalty which may be
imposed by the Central, State or local authorities by reason of any
violation by the contractor of such laws, regulations and also from all
claims, suits or proceedings that may be brought against the B
management arising under or incidental to or by reason of the work
provided/assigned under the contract brought by the employees of the
contractor, third party or by the Central or State Government
authorities."
It was specifically noticed that the workmen of the Canteen and the C
contractor had entered into independent settlements without impleading the
owner or occupier of the factory as a party therein which also went to show
that the workmen were treating themselves the workmen of the contractor
and not that of the owners.
We have referred to the aforementioned decisions in order to show that D
in each of the aforementioned cases the industrial adjudi£ator was required
to apply the relevant tests laid down by this Court in the fact situation obtaining
therein. Most of the cases referred to hereinbefore were considered by this
Court in the peculiar facts and circumstances obtaining therein and, thus, it
is even not proper for the industrial adjudicator to apply the ratio of one
decision to the exclusion of other without considering the facts and E
circumstances involved therein. The law, however, does not appear to be
settled as to whether even in a case where the employer is required to run and
maintain a canteen in terms of the provisions of the statute, the employees of
the canteen would automatically be held to be the workers of the principal
employer for all intent and purport and not for the purpose of the Factories p
Act alone.