Haldia
Refinery Canteen Emps. Union & Others Vs. M/S. Indian Oil
Corporation Ltd. & Others [2005] Insc 294 (29 April 2005)
Ashok
Bhan & A.K. Mathur Bhan, J.
This
appeal by grant of leave is directed against the judgment dated 31.03.2000
passed by the Division Bench of the High Court of Calcutta at Calcutta in
M.A.T. No.4310 of 1998. By the impugned order the Division Bench has set aside
the judgment and order of the Single Judge of the same High Court in C.O.
No.6266 (W) of 1990 with C.O. No.6274 (W) of 1990. The Single Judge had allowed
the writ application filed by the appellants and directed the Indian Oil
Corporation Limited, Haldia Oil Refinary (hereinafter referred to as "the
respondent") to absorb the appellants in its service and regularise their
services.
Division
Bench has set aside the aforesaid direction given by the learned Single Judge
and held that the appellants were neither entitled to be absorbed nor regularised
in the service of the respondent.
Short
facts of the case are as under:- Two sets of writ applications were filed in
the High Court of Calcutta involving common question of law and fact, both of
them were taken up together by the Single Judge and disposed of by the common
judgment.
Admittedly,
the appellants are working in the statutory canteen run by the respondent
through contractor in its factory at Haldia, District Midnapore, West Bengal. Respondent was treating the
appellants as the employees of the contractor. Aggrieved against this, the
appellants filed the writ applications in the High Court contending therein
that the factory of the respondent where the workmen are employed is governed
by the provisions of Indian Factories Act, 1948 (for short "the Factories
Act") and the canteen where the said workman are employed is a statutory
canteen established by the respondent as required under the provisions of the
Act. It is averred in the petition that the canteen is maintained for the
benefit of the workmen employed in the factory and the respondent has direct
control over them. Contractor though shown as a contractor has no control over
the management, administration and functioning of the canteen. That the canteen
is a part of the establishment of the management and the workers in the canteen
are the employees of the management. That the work carried on is perennial in
nature and the canteen is incidental to and is connected with the establishment
of the management. It was contended that the appellants were the regular
employees of the respondent. The management had refused to grant the status of
regular employees to the appellants and treated them as employees of the
canteen contractor contrary to the statutory provisions and judicial
pronouncements of this Court. Writ applications were filed seeking issuance of
mandamus to the respondent to absorb the appellants in its service and to regularise
them as such.
Respondents
in their written statement denied that the appellants were its employees or
they were entitled to be regularised as such. None of the appellants was
appointed by the respondents. All of them were appointed by the contractor and
therefore, they were the employees of the contractor. Under the Factories Act,
a factory employing more than 250 workers is required to provide the facility
of a canteen. The Factories Act or the Rules framed thereunder do not require
that such a canteen should be managed and run by regular employees of the
establishment. In law it is open and permissible to the management to entrust
the same to a contractor. It was contended that the respondent being a public
sector undertaking has devised and put in place rigid employment strategies for
its core activities based on employment strengths derived on the basis of
production and output norms and requirement studies. All recruitment by and
within the corporation is made strictly according to those norms on the basis
of staff strength and quotas fixed for direct recruitment on the basis of job
qualifications, employment norms, reservation of posts to be filled by internal
promotion pursuant to settlements arrived at by the corporation with its recognised
unions and such employment can only be made against existing vacancies. It
cannot appoint any person in contravention of the recruitment policy which
requires the management to follow the system. Therefore, apart from the fact
that the appellants were not in regular employment of the respondent, the
absorption or regularisation of their services would contravene Article 16(4)
of the Constitution as well as the reservation policy which is applicable for
recruitment in the establishment managed by it.
The
learned Single Judge before whom the writ applications came up for hearing
relying upon the two judgments of this Court in M.M.R. [1990 (Supp) SCC 191]
and Parimal Chandra of India & Others [1995 Supp (2) SCC 611] held that
under the provisions of the Factories Act, it is the statutory obligation of
the employer to provide and maintain a canteen for the use of its employees.
The canteen becomes a part of the establishment and, therefore, the workers employed
in such canteen are the employees of the management.
After
referring to the various provisions including the rules framed under the
Factories Act the learned Single Judge came to the conclusion that the
respondent exercises a very high degree of control over the contractor who has
been given the contract of running the canteen. The obligation to provide
canteen being statutory the facility became a part of service condition of the
employees. It was held that the appellants were in fact the employees of the
respondent and were being wrongly treated as employees of the contractor.
Accordingly, a direction was given to the respondents to absorb the appellants
in its service and regularise them with effect from the date of filing of the
writ application.
Aggrieved
against the judgment and order of the Single Judge, the respondent-management
filed intra court appeal which has been accepted. The Division Bench relying
upon a later Three-Judge Bench judgment of this Court in Indian Petrochemicals
Corporation Ltd. & SCC 439] reversed the judgment of the Single Judge and
dismissed the writ applications filed by the appellants. Aggrieved against the
aforesaid judgment of the Division Bench, the present appeal has been filed.
We
have carefully considered the submissions made by the learned counsels for the
parties. In Indian Petrochemicals Corporation Ltd. & Another (supra) this
Court while disposing of an identical and similar question of law and fact with
regard to the status of the employees working in the canteen and the status of
the contractor who was running the canteen on the contract basis elaborately
dealt with the scope of Section 46 of the Factories Act, 1948, particularly
with reference to the definition of 'worker' as occurring in Section 2(1) of the
Factories Act. After elaborate analysis of the earlier two judgments of this
Court in M.M.R. Khan & Others and Parimal Chandra Raha & Others cases
(supra), it was held that what has been held in these cases is that the workmen
were the employees of the management for the purposes of Factories Act alone
and did not become the employees of the establishment for any other purpose.
After referring the arguments advanced it was held:-
"If
the argument of the workmen in regard to the interpretation of 'Raha' case is
to be accepted then the same would run counter to the law laid down by a larger
Bench of this Court in Khan case. On this point similar is the view of another
three-Judge Bench of this Court in the case of Reserve Bank of India v. Workmen. Therefore, following
the judgment of this Court in the cases of Khan and R.B.I., we hold that the
workmen of a statutory canteen would be the workmen of the establishment for
the purpose of the Factories Act only and not for all other purposes."
[Emphasis supplied] Further it was observed:- "It is clear from this
definition that a person employed either directly or by or through any
contractor in a place where manufacturing process is carried on, is a
"workman" for the purpose of this Act. Section 46 of the Act empowers
the State Government to make rules requiring any specified factory wherein more
than 250 workers are ordinarily employed to provide and maintain a canteen by
the occupier for the use of the workers. It is not in dispute, pursuant to this
requirement of law, the Management has been providing canteen facilities
wherein the respondent employees are working. Hence, it is fairly conceded by
the learned counsel for the Management that the respondent workmen by virtue of
the definition of the "workman" under the Act, are the employees of
the appellant Management for purposes of the Act." After having gone into
the question of worker being declared the employee of the management for the
purpose of Factories Act, the Court further analysed the question as to whether
such relationship as existed between the worker and the employer under the
Factories Act could be extended to wider arenas. It was held that the status of
a workman under the Factories Act confine the relationship of employer and the
employees to the requirements of Factories Act alone and does not extend for
any other purpose. It was observed as under:- "The question however is:
does this status of a workman under the Factories Act confine the relationship
of the employer and the employees to the requirements of the Factories Act
alone or does this definition extend for all other purposes which include
continuity of service, seniority, pension and other benefits which a regular
employee enjoys. The Factories Act does not govern the rights of employees with
reference to recruitment, seniority, promotion, retirement benefits etc. These
are governed by other statutes, rules, contracts or policies. Therefore, the
workmen's contention that employees of a statutory canteen ipso facto become
the employees of the establishment for all purposes cannot be accepted."
[Emphasis supplied] After having declared in unequivocal terms the employees
working in the canteen can be treated as the employees of the principal
employer only for the limited purposes of the Factories Act, the Court went on
to examine further as to whether on the basis of material present on the
record, the employees could be treated as the employees of the principal
employer for all/any other purpose. After noticing the fact that the employees
in the said case were entitled to continue in the employment of the company
irrespective of the change in the contractor in view of an order passed by the
Industrial Court and the fact that the management was reimbursing the wages of
the canteen workers and certain other peculiar features of the case came to the
conclusion that the respondents in that case were in fact the workmen of the
management.
These
factors were summarised as:-
"(a)
The canteen has been there since the inception of the appellant's factory.
(b)
The workmen have been employed for long years and despite a change of
contractors the workers have continued to be employed in the canteen.
(c)
The premises, furniture, fixture, fuel, electricity, utensils etc. have been
provided for by the appellant.
(d)
The wages of the canteen workers have to be reimbursed by the appellant.
(e)
The supervision and control on the canteen is exercised by the appellant
through its authorised officer, as can be seen from the various clauses of the
contract between the appellant and the contractor.
(f)
The contractor is nothing but an agent or a manager of the appellant, who works
completely under the supervision, control and directions of the appellant.
(g)
The workmen have the protection of continuous employment in the
establishment."
Considering
these factors cumulatively in addition to the fact that the canteen in the
establishment of the management is a statutory canteen the workmen were held to
be the employees of the management. On the question of fact it was concluded
that the contractor in that case was engaged only for the purpose of record and
for all other purposes the workers were in fact the workmen of the management.
It was observed in para 27 as under:-
"At
this stage, it is necessary to note another argument of Mr. Andhyarujina that
in view of the fact that there is no abolition of contract labour in the
canteen of the appellant's establishment, it is open to the Management to
manage its canteen through a contractor. Hence, he contends that by virtue of
the contract entered into by the Management with the contractor, the respondent
workmen cannot be treated as the employees of the Management. This argument
would have had some substance if in reality the Management had engaged a
contractor who was wholly independent of the Management, but we have come to
the conclusion on facts that the contractor in the present case is engaged only
for the purpose of record and for all purposes the workmen in this case are in
fact the workmen of the Management. In the background of this finding, the last
argument of Mr. Andhyarujina should also fail." The Division Bench with
reference to the facts of the present case came to the conclusion that the
appellants were not the employees of the management.
During
the course of hearing, the learned advocates on both the sides extensively
referred to the terms and conditions of the contract between the canteen
contractor and the respondent and also to the various statutory provisions of
the Factories Act and the rules framed thereunder to point out their respective
points of view about the nature of the contract and as to whether the canteen
is run by the contractor in his capacity and status of a contractor or that the
contractor was merely an agent or servant of the respondent and was functioning
merely for the sake of record.
We
have gone through the terms and conditions of the contract agreement entered
between the parties and in particular the following terms and conditions on
which lot of emphasis was laid by the counsel for the appellant to show the
extent of control exercised by the management over the contractor in the
running of the canteen:-
"5.
CATERING STAFF:
5.1
The contractor shall at his cost maintain adequate number of catering staff
such as Cooks, helpers, service boys, sweepers and other persons for smooth and
efficient running of the canteen services. The contractor shall engage required
number of persons in the canteen with the explicit permission/approval of the
Owner.
5.2
The present man power in the canteen is 119 covering all categories of
personnel as mentioned below:
However,
if at any time it is decided to increase or decrease the manpower, the
contractor shall get proportionate increase or decrease of monetary
compensation in this respect provided such increase or decrease in the manpower
should be done only with the express approval of the owner. If any manpower is
added without approval of the Owner, it will be at the cost of the contractor
and no liability for compensation whatsoever shall accrue on the Owner for such
act/acts. No person below the age of 18 years or found to be medically unfit,
will be allowed employment in the canteen.
Also
if, at any time, any canteen employee is found involved in moral turpitude in
any court of law, the services of such canteen employee will be immediately
terminated by the Contractor and no liability for compensation whatsoever will
accrue on the owner for such act/acts.
5.3
The contractor shall maintain a register showing names and addresses of the
persons so engaged along with photographs of each person and shall produce the
same for inspection on demand by Welfare Officer or such other person so authorised
by the owner. The contractor shall not use or allow to be authorised to be used
canteen building or any part thereof for dwelling purpose and shall not allow
any outsiders to loiter in or around the canteen without valid authority."
With regard to the nature of employment of the employees working in the
canteen, stipulation at S.No.4.6 reads thus:- "4.6 The contractor, shall
be required to employ/engage only that member of employees/workers as may be
specifically authorised by the owner from time to time and shall maintain
complete records of such employees/workers with regard to their names, address,
qualifications, experience and other required details. The owner shall have
absolute right to test, interview of otherwise assess or determine skills,
knowledge proficiency, capability etc. so as to ensure that such
employees/workers are competent, qualified or otherwise suitable for
efficiently and safely performing the work covered by this contract. Any
employee/worker rejected not authorised by the owner shall not be
employed/engaged by the contractor on the work covered by this contract."
No doubt, the respondent management does exercise effective control over the
contractor on certain matters in regard to the running of the canteen but such
control is being exercised to ensure that the canteen is run in an efficient
manner and to provide wholesome and healthy food to the workmen of the
establishment. This however does not mean that the employees working in the
canteen have become the employees of the management.
A free
hand has been given to the contractor with regard to the engagement of the
employees working in the canteen. There is no clause in the agreement
stipulating that the canteen contractor unlike in the case of Indian
Petrochemicals Corporation Ltd. & Another (supra) shall retain and engage
compulsorily the employees who were already working in the canteen under the
previous contractor. There is no stipulation of the contract that the employees
working in the canteen at the time of the commencement of the contract must be
retained by the contractor.
The
management unlike in Indian Petrochemicals Corporation Ltd. case (supra) is not
reimbursing the wages of the workmen engaged in the canteen. 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 of any statutory
provisions/obligations are concerned. A duty has been cast on the contractor to
keep proper records pertaining to payment of wages etc. and also for depositing
the provident fund contributions with authorities concerned.
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 management arising under or incidental to or by reason of the work
provided/assigned under the contract brought by employees of the contractor,
third party or by Central or State Government Authorities.
The
management has kept with it the right to test, interview or otherwise assess or
determine the quality of the employees/workers with regard to their level of
skills, knowledge, proficiency, capability etc. so as to ensure that the
employees/workers are competent and qualified and suitable for efficient
performance of the work covered under the contract. This control has been kept
by the management to keep a check over the quality of service provided to its
employees. It has nothing to do with either the appointment or taking
disciplinary action or dismissal or removal from service of the workmen working
in the canteen. Only because the management exercises such control does not
mean that the employees working in the canteen are the employee of the
management. Such supervisory control is being exercised by the management to
ensure that the workers employed are well qualified and capable of rendering
the proper service to the employees of the management.
In
Indian Petrochemicals Corporation Ltd. (supra) this Court after analysing the
earlier judgments on the same point has held that the workmen working in the
canteen becomes the workers of the establishment for the purposes of Factories
Act only and not for any other purpose. They do not become the employees of the
management for any other purpose entitling them for absorption into the service
of the principal employer. Factors which persuaded this Court in Indian
Petrochemicals Corporation Ltd. case (supra) to take the view that the workmen
in that case were employees of the management are missing in the present case.
No power vests in the management either to make the appointment or to take
disciplinary action against the erring workmen and their dismissal or removal
from service.
The
management is not reimbursing to the contractor the wages of the workmen. On
these facts, it cannot be concluded that the contractor was nothing but an
agent or a manager of the respondent working completely under the supervision
and control of the management.
Another
fact which goes to show that the appellants are the employees of the canteen
contractor is that a settlement was arrived at between the contractor and the
workmen of the canteen in the presence of Assistant Labour Commissioner of the
area which was valid for the period from 01.12.1987 to 30.11.1990 wherein
certain terms and conditions were agreed upon between these parties with regard
to some labour issues relating to the workmen employed by the contractor.
Another settlement between the same parties was also arrived at which was valid
upto 01.12.1993 concerning once again the labour issues between the workmen and
the contractor.
Respondent-management
was not a party to either of these two settlements. This clearly goes to show
that the workmen were treating themselves to be the employees of the contractor
and not that of the management.
For
the reasons stated above, we agree with the view taken by the Division Bench
that the appellants did not become the workers of the management for a purpose
other than the Factories Act. We do not find any merit in this appeal and
dismiss the same with no orders as to costs.
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