Saraspur Mills Co. Ltd. Vs. Ramanlal
Chimanlal & Ors  INSC 80 (12 April 1973)
CITATION: 1973 AIR 2297 1973 SCR (3) 967 1974
SCC (3) 66
Bombay Industrial Disputes Act, Gujarat
Amendment 1962--Clauses 13 and 14 of section3--Entrustment 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--Entrustment of running the canteen
to a Cooperative Society--Factories Act 1948, Section 2(1) work incidental to
the manufacturing process--Running of a canteen by a textile mill.
The appellant Textile Mill had a statutory
obligation, as a factory, under the provisions of Section 46 of Factories Act
and the Rules made there under 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 statutory 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 appeal,
HELD : Under the Factories Act, it was the
duty of the appellant to run and maintain canteen for the use of its employees.
Under clauses (13) and (14) of Section 3 as amended in 1962, the definition of
an employee is extended by a fiction of law and certain employees are recognised
as statutory employees. The workers in question fall under the said definition.
[972B] Ahmadabad Mfg. & Calico Printing Co. Ltd. and Ors. v. Their Workmen.
 2 S.C.R. 838, relied upon.
Basti Sugar Mills Ltd. v. Ram Ujagar add Ors.
 11 L.L.J. 647, followed.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
1957 of 1968.
Appeal by special leave from the Award dated
March. 26, 1968 of the Industrial Court Gujarat Ahmadabad in Appeal (IC) No. 58
S.V. Gupte, P. C. Bhartari, and J. B,
Dadachanji & Co., for the appellant.
V. M. Tarkunde, and S. S. Shukla, for
respondents 1 (a) to 1(h).
968 The 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
Ramanlal Chimanlal and others are the workers
of a canteen which is run by the Saraspur Mills Canteen Co-operative Society
Limited, Ahmadabad (hereinafter called the cooperative society). The appellant
company is responsible for maintaining the canteen under the provisions of S.
46 of the Factories Act and the rules made there under. The appellant handed
over to the co-operative society the task of running the canteen. The workers
mentioned above filed an application before the 2nd Labour Court at Ahmadabad
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
dearness allowances as per the directions contained in the Award of the Bombay
Industrial Court made in Reference No. 18 of 1947 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 of the word "employer" they became workers of the
appellant, which was bound to pay wages and dearness allowances settled by the
aforesaid Award and the 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 an ordinary part of the
undertaking of the appellant. It was admitted that the appellant did not run
the canteen itself but handed over the premises to the cooperative 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 or contractor.
The workers in fact were stated to have beep 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 its order dated 26th March, 1968.
The Industrial Court held that 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 969 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.
The only question which requires determination
is whether the canteen workers employed by the cooperative society could be
treated as employees of the appellant within the meaning of the relevant
provisions of the Act for the purpose of payment of their wages in spite of the
fact that they are employees of the cooperative society and were wing 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 those person-, who were directly employed by
the employer were treated as employees. The Act repealed the 1938 Act. Section
3(13) of the Act contained the definition of the term "employee".
Before its amendment 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
The Factories Act, 1948 came into force on
April 1, 1949. Section 2(1) of that Act is as follows:
"(1) '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 the machinery or premises used for
manufacturing process, or in any other kind of work incidental to, or connected
with, the manufacturing process, or the subject 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 the factory, and where the said
affairs were entrusted to a managing agent such agent shall be deemed to be the
occupier of the factory. The Bombay High Court had held in certain matters
which were brought before it that in spite of the fact that the L797Sup Cl/73
970 co-operative society was mentioned in the Bombay Factories Rules, 1950, the
employee employed by the co-operative society could not be 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 clerical work for hire or reward, whether the
terms of 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 of 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 control, 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 be fulfilled were: (1) the owner of the
undertaking must entrust to any person the execution of the whole or any part
of any work; (2) such entrustment must be in the course of or for the purpose
of conducting the undertaking; (3) such entrustment must be otherwise than as
the servant 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, Bombay
High Court and examined the circumstances in which the relevant provisions of
the Act came to be amended. It was pointed out that in the statement of objects
and reasons appearing in the Bill to the Amending 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 any work which was ordinarily part 971 of the
undertaking. The definition of 'employee was also amended correspondingly.
According to the Industrial Court there was a statutory obligation on the part
of the mills to provide a canteen and this obligation had been discharged by
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
the activities of running the canteen could hardly have been undertaken by the
co-operative society unless it was entrusted to it by, the mills. It was
finally held that although the cooperative society which wag the real employer
and not the present appellant, but by virtue of the fiction created by the
amendment introduce,-' in the Act, the employees of the Society became the
employees of the appellant. They were, therefore, entitled to the benefits of
The sole point which has been strenuously
urged on behalf of the appellant is that on a proper construction of the
amended clauses (13)and (14) of Section 3 of the Act, the workers, employed in
the canteen which was being run by the co-operative society, could not have
been held to be employees of the appellant. It is contended that the appellant
was under a statutory obligation because of section 46 of the Factories Act and
the relevant rules made there under to maintain the Canteen for the workers,
but the canteen was being actually run by the cooperative society and the
appellant had nothing to do with it nor did it pay any wages to the employees
of the society who were working in the canteen.
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 in Section 3 (13) of the Act. In that case
reference was made to the decision in Basti Sugar Mills Ltd.
v. Ram Ujagar and Ors. (1) It had been held
that the workmen fell within the definition of that word as given by S. 2 (z)
of the U.P. Industrial Disputes Act 1947 as they were persons employed in the
industry to do manual work for 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 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 (1)
 (2) S. C. R. 838.
(2)  11. L. L. J. 647.
972 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 Ahmadabad Mfg. &
Calico Printing Co. Ltd. & Ors v. Their Workmen (2) 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 binding in the former case.
Since, under the Factories Act it was the
duty of the appellant to run and maintain the canteen for the use of its
employees, it appears to us that the ratio of the decision in Ahmadabad
Manufacturing & Calico Printing Co. Ltd. v. Their Workmen would, be fully
applicable in which the same provisions of the Act were considered.
The appeal, therefore, must fail and it is
dismissed with costs.