Indian Overseas Bank Staff Canteen Workers' Union Vs Indian Overseas Bank and Another

Kanakaraj, J.@mdashThe Government of India in exercise of the powers conferred under Clause (d) of Sub-section (1) and Sub-section (2-A) of Section 10 of the Industrial Disputes Act, 1947, referred the following dispute for adjudication by the Industrial Tribunal, Chennai :

"Whether the demand of the workmen of the Indian Overseas Bank Staff Canteen represented by the Indian Overseas Bank Staff Canteen Workers'' Union, Madras, for treating the staff of such canteens which are run by the local implementation committees, as workmen of Indian Overseas Bank for giving them the same status, pay and facilities as are available to other class IV employees of the bank is justified? If so, to what relief the workmen concerned are entitled ?"

This was taken on file as I.D. No. 72 of 1990. About one year later on December 17, 1991, the Government of India under the very same powers referred the following dispute for adjudication by the Industrial Tribunal, Chennai:

"Whether the demand of the Indian Overseas Bank Staff Canteen Workers'' Union, Madras, for reinstatement of 33 canteen employees whose names are given in the annexure, into the services of the Indian Overseas Bank, as a result of the closure of the canteen by the local implementation committee, is justified ?"

2. That was taken on file as I.D. No. 83 of 1991. Both the disputes as well as Complaint No. 4 of 1992 were decided on May 27, 1994, by a common order of adjudication. In I.D. No. 72 of, 1990, the Tribunal held that the demand of the workmen to be treated as the workmen of the Indian Overseas Bank was justified. A direction was accordingly given. In I.D. No. 83 of 1991, the demand of the workmen for reinstatement of thirty-three canteen employees was found to be justified and they were directed to be reinstated with all attendent benefits. Three writ petitions were filed, Writ Petition No. 21251 of 1994 to quash the order, dated May 27, 1994, in I.D. No. 72 of 1990, Writ Petition No. 21252 of 1994 to quash the order dated May 27, 1994, in I.D. No. 83 of 1991 and Writ Petition No. 21253 of 1994 to quash the order in Complaint No. 4 of 1994. A learned single Judge of this Court found that there was no employer and employee relationship between the parties and accordingly set aside the award in I.D. No. 72 of 1990, dated May 27, 1994. Consequently, Complaint No. 4 of 1992 was found to be without any substance and the claim for treating the workmen as workmen of the bank was also negatived. Therefore, Writ Petitions Nos. 21251 and 21252 of 1994 were allowed. The order of the learned single Judge was rendered on March 8, 1996. The present writ appeals have been filed by the canteen workers'' union as against the said judgment of the learned single Judge.

The entire case hinges on the two recent judgments of the Supreme Court, of which one alone was available to the learned single Judge, when he disposed of the writ petitions. That case is Parimal Chandra and Others Vs. Life Insurance Corporation of India and Others, (hereinafter called as the LIC case). The second judgment of the Supreme Court is Reserve Bank of India v. Their Workmen, 1996 88 FJR 740 (hereinafter called as the RBI case), rendered on February 28, 1996, but the said judgment was not brought to the notice of the learned single Judge on the date of his judgment, dated March 8, 1996. It is our task now to find out the guidelines given in the said two judgments and apply the correct ratio to the facts of the present case. One cardinal principle which we have to keep in mind is the difference between an ordinary and a statutory canteen, which a factory within the meaning of Section 46 of the Factories Act, 1948, is bound to maintain. A whole line of cases arises under the Factories Act relating to the canteen employees and their relationship with the principal employer. The principle enunciated in those cases will apply only if the employer is governed by the Factories Act. Both the LIC''s case and the RBI''s case make a reference to the line of cases relating to canteens under the Factories Act and then proceed to discuss the principles which should govern the other employers.

3. The judgment in M.M.R. Khan v. Union of India, (1995) III LLJ l66 (SC), is an authority on canteens run by establishments : covered by the Factories Act, 1948. In that case, the workers claim that they should be treated as railway employees and they should be extended all service conditions which are available to the railway employees. The Apex Court classified the canteens into three categories "

"(1) Statutory canteens which are required to be provided compulsorily in view of Section 46 of the Factories Act, 1948;

(2) Non-statutory recognised canteens--such canteens are established with the prior approval and recognition of the Railway Board as per the procedure detailed in the Railway Establishment Manual ; and

(3) Non-statutory non-recognised canteens-- these are canteens established without the prior approval or recognition of the Railway Board."

So far as the first category is concerned, it was held that the employees in the statutory canteens were regular employees. On the basis of certain subsequent orders of the Government and the Railway Board, it was found that the Government had complete control over the canteens and the workers employed therein became holders of civil posts within the meaning of Article 311 of the Constitution of India. So far as the second category is concerned, the Court relied on certain paragraphs of the Railway Establishment Manual and found that the railway administration was enjoined with a duty to develop 2 canteens as a staff welfare measure. Therefore, the employees working under such canteens are also eligible for the same service conditions as available to the railway employees. So far as the third category of workers is concerned, it was held that such workers in canteens, coming under the third category are not entitled to claim the status of railway servants. In All India Railway Institute Employees'' Association through the General Secretary Vs. Union of India through the Chairman, , the Supreme Court held as follows:

"They are established as a part of the welfare measure for the railway staff and the kind of activities they conduct depend, among other things, on the funds available to them, the activities having been tailored to the budgets. If the cost of the activities goes beyond the means, they have to be curtailed. On these facts, this Court held that the staff members employed by the railway institutes/clubs are not the employees of the Railways."

In Surendra Prasad Kungsal Vs. M.M.T. Corpn. of India and another, , the Apex Court held (sic) could not find any similar provisions like the Railway Establishment Manual and, therefore, in the absence of proof, referred the entire matter for adjudication by an Industrial Tribunal. In LIC''s case, (supra), after referring to the above decisions, four propositions of law were culled out for guidance. The first relates to the canteens governed by the Factories Act and the normal rule that workers employed in such canteens are employees of the management. The second relates to non-statutory canteens, but where there is no obligation to provide a canteen, but there is only an obligation to provide facilities to run a canteen. In such cases, the employees do not become part of the establishment. The third and fourth principles are important for deciding the present case and we quote the same :

"(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 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 of fact to be determined on the facts and circumstances of each case.

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.

Whether a particular facility or service has become implicitly a 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 employed and nothing more, 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 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."

On the above principles in the LIC''s case, (supra), the facts were discussed and it was found that canteen services were available to the employees, even before the nationalisation of the insurance companies. Even after the Corporation came into existence between 1956 and 1973, the 3 canteens were managed by themselves, between 1973 and 1979, they were managed by the contractors and in 1979, the canteen management was taken over by a co-operative society. In 1981, there was a dispute between the canteen workers and the Corporation and, therefore, from the year 1983, the canteens were managed by the contractors appointed by the Corporation. The Central Government refused to refer the dispute on the ground that there was no employer-employee relationship. The matter was directly agitated in proceedings under Article 226 of the Constitution of India and failing.in the High Court, the workers filed an appeal to the Apex Court. The Apex Court points out that it was the Corporation, which was desirous of running the canteen through a contractor. The agreement between the Corporation and the contractor related to the quality of food stuffs and drinks supplied in the canteen. The Corporation agreed to provide tables, chairs, fans, lights and water to the contractor. They had a complete control over the price of the food stuffs. The Apex Court, therefore, found that the Corporation had a dominating say in dictating terms to the contractor. The Supreme Court also took note of the fact that the job done by the canteen employees was perennial in nature. The election of the canteen committee was informed to the Corporation. On the above facts, the Apex Court reversed the finding of the High Court and came to the following conclusion at page 355 :

"Further, whenever there was a temporary breakdown in the canteen service, on account of agitation or strike by the canteen workers, it is the Corporation which has been taking active interest in getting the dispute resolved and the canteen workers have also looked upon the Corporation as their real employer and joined it as a party to the industrial dispute raised by them. In the circumstances, we are of the view that the canteen has become a part of the establishment of the Corporation. The canteen committees, the co-operative society of the employees and the contractors engaged from time to time are in reality the agencies of the Corporation and are, only a veil between the Corporation and the canteen workers. We have, therefore, no hesitation in coming to the conclusion that the canteen workers are in fact the employees of the Corporation."

However, while granting relief, the Apex Court was faced with certain difficulties and directed the Corporation to prescribe appropriate service conditions for the canteen workers. Pending such prescription of service conditions, the Corporation was directed to pay all the workers the minimum salary paid to class IV employees and also give other benefits available to class IV employees. So far as the date from which the workers should enjoy the benefits, the Apex Court held that they should get the benefits from the date of the filing of the writ petitions in the High Court. They also directed payment of arrears of salary and other monetary benefits from the said date. The Corporation was given liberty to take into account the age limits as well as the physical conditions of the employees.

4. The learned single judge who held in favour of the bank distinguished the principles laid down in the said decision by adverting to certain aspects of the present case. According to the learned judge, in the Parimal Chandra and Others Vs. Life Insurance Corporation of India and Others, , the management had a complete control over the canteen workers. The learned Judge proceeded to say that under exhibit M-l, it was the union who wanted the opening of a canteen and the bank had merely agreed to the same. Learned counsel for the appellant rightly points out that even an explicit obligation on the part of the management would bring the canteen workers as direct employees. The observation of the learned single Judge that the canteen was not for the exclusive use of the bank is not based on a proper appreciation of the evidence. The learned Judge explains away the explicit obligation on the part of the bank to run the canteen by stating that the bank had agreed to provide for a canteen with the object of maintaining good relationship between the union and the management. According to learned counsel for the appellant, this can be only called as an implicit obligation on the part of the management to run the canteen. The fact that the canteen was kept open only during banking hours is also explained away by the learned single Judge by saying that certain others were also making use of the canteens. The learned Judge could not properly explain the fact that the debts of the committee were discharged by the bank itself. The fact that subsidy was given from the bank and the same was increased from time to time shows that the bank had a total economic control over the canteen workers. The learned Judge also has assumed that the finding of the Tribunal was: perverse. Unless it is held that the findings are so bad that no reasonable person will come to such a conclusion, the findings of the Tribunal cannot be termed as perverse. We, therefore, proceed to analyse the evidence ourselves and find out whether the canteen workers are directly controlled by the bank and whether the learned single Judge was justified in reversing the findings of fact arrived at by the Tribunal. Before that we have to take note of the judgment of the Supreme Court in the RBI''s case, (supra). The dispute for adjudication by the Industrial Tribunal in the RBI''s case (supra) is as follows :

"Whether 166 employees engaged in various catering establishments of the Reserve Bank of India at Bombay are the workmen of the Reserve Bank of India ? If so, whether their demand for regularisation with retrospective effect was justified ? If so, the extent of relief payable to these 166 persons may be indicated."

In that case also, three types of canteens were involved, that run by the Implementation Committee (Canteen Committee), (2) another run by a co-operative society, and (3) yet another run by the canteen contractors engaged by the Reserve Bank of India. The Tribunal in that case was carried away by the ratio laid down by the Apex Court in M. M. R. Khan''s case, (supra) and accordingly gave a verdict in favour of the canteen employees. The Supreme Court, therefore, found that the Tribunal fell into an error because the Reserve Bank of India is under no statutory or other legal obligation to provide canteen facilities to its employees. Taking up each of the three types of canteens, the Apex Court found that there was no direct control by the bank to supervise the work done by the canteen employees. The Apex Court had no doubt weighed the evidence like the bank not having any disciplinary control over the employees and not having any control over recruitment of workers. They, however, recognised the fact that the committee members were nominated by the bank. In the case of the co-operative society the licence renewal charges were reimbursed by the bank. In the case of the canteens run by the contractors, there was an agreement between the bank and the contractor. The clause in the contract provided for subsidy and other facilities to be afforded by the bank. The good and efficient manner of running the canteens was required by the bank. Equally, the quality of food and engagement of experienced persons was also agreed for under the terms of the agreement. On an overall assessment of the case, the Apex Court concluded as follows :

" We, therefore, hold that the assumption made by the Tribunal that the instant case clearly falls within the ratio laid down by this Court in M. M. R. Khan''s case, (supra) is totally unjustified and incorrect. On the facts of this case, in the absence 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 regarding the canteen workers employed in the three types of canteens, it cannot be said that the relationship of master and servant existed between the bank and the various persons employed in the three types of canteens..."

It was only thereafter that the Supreme Court noticed the judgment in the LIC''s case,(supra) and the four principles enunciated by the Apex Court in the earlier case. If any of the principles laid down in the LIC''s case had been set aside or modified by the latter judgment of the Supreme Court, we could have totally ignored the earlier decision and followed in the RBI''s case, (supra). On the other hand, after quoting the above principles the Supreme Court, observes as follows:

"Counsel for the appellant, Mr. Salve, admitted that propositions 3 and 4 contained in para. 27 of the judgment are very wide and require reconsideration and appropriate modification, whereas Mr. Tarkunde, counsel for the respondents submitted that propositions 3 and 4 lay down the law correctly. It is unnecessary, on the facts of this case, to consider to what extent propositions 3 and 4 require to be clarified or modified, since in this case the Tribunal has proceeded only on the basis that the instant case clearly falls within the ratio laid down by this Court in M. M. R. Khan''s case, (supra), which we have held is a totally wrong perspective..."

5. It is, therefore, our difficult task to go through facts of the present case and come to a conclusion one way or the other. The first aspect of the case is that even here, there is no statutory obligation on the part of the bank to provide canteen facilities to its employees. But the question is whether there is any legal obligation implicit or explicit, as pointed out in the LIC''s case, (supra). Before the Tribunal, the following aspects were emphasised by the canteen employees:

"(i) Three promoters were appointed from" among the permanent employees of the bank for a period of one year;

(ii) At the end of one year, another committee was nominated by the bank. The promoters, were looking after the day to day supervision of the canteen apart from doing their regular work as bank employees;

(iii) The management had taken upon itself the responsibility of providing canteen facilities to the employees under a subsidised scheme;

(iv) The bank provided the basic requirements like building, utensils, crockery, cutlery, furniture, etc.;

(v) The bank was giving subsidy for meeting the salary of the canteen employees and were increasing the same from time to time;

(vi) Supply of food stuffs at concessional rate was also done by the bank;

(vii) The cost of fuel, electricity and water supply charges apart from providing refrigerators and water coolers were also met by the bank ; and

(viii) In short, the canteen was run out of the funds of the bank."

As against the above, the bank contended (i) that there was no employer-employee relationship; (ii) it was only at the request of the union that the bank agreed to provide a canteen ; (iii) the bank had no say in choosing the members of the committee; and (iv) the canteen is not for the exclusive use of the bank.

In evidence, one other important fact was brought out, viz., that the canteen workers were employed under a welfare fund scheme of the bank. They are made eligible for periodical medical check up by the doctors of the bank. On the above rival submissions and evidence the Tribunal came to the following conclusions : (i) that the canteen was run in the premises of the bank ; (ii) the canteen is for the exclusive use of the bank staff; (iii) the bank provided the infrastructure facilities; (iv) the managing committee did not contribute anything towards the capital or the expenses for running the canteen; (v) the bank gave subsidies to subsidise the purchase of food articles ; and (vi) the bank provided cycles and tricycles to the canteen for the supply food stuffs. Consequently, the Tribunal came to the conclusion that the thirty-three employees have to be treated as workmen of the bank and should be given the same status and facilities as are available to the class IV employees of the bank. The Tribunal also held that the closure of the canteen when the dispute was pending was illegal.

6. The question is whether in view of such categorical findings of fact arrived at by the Tribunal, the learned single Judge exercising jurisdiction under Article 226 of the Constitution of India could reappreciate the evidence and come to a different conclusion. We have already pointed out that the learned single Judge had erred in appreciating certain documents and the evidence in the case. We are clearly of the opinion that the learned single Judge had no material to characterise the judgment of the Tribunal as perverse. We will once again refer to certain important matters which would go a long way to decide the matter.

The inference drawn from exhibit M-1 that it was the union, who wanted the canteen is far from the truth. The subsequent evidence has got to be looked into on this aspect of the case. In exhibit M-4, dated April 23, 1988, the union has informed the bank about the new canteen was not exclusive for the bank is based on misconception. The evidence of M.W.-1 clearly shows that the canteen is meant only for the bank. His evidence is as follows:

"The canteen is meant only for the staff of the bank, the canteen will remain only closed on bank holidays..."

The observation that the bank was running the canteen to maintain good relationship between the union and the management is not appropriate and, on the other hand, it only shows that the bank was implicitly bound to maintain the canteen. The learned single Judge has not given due weight to the two principles enunciated in the LIC''s case, (supra), and undisturbed by the RBI''s case, (supra). We have already quoted those principles.

One other significant fact which has escaped the attention of the learned single Judge is the letter written by the central office of the bank when the promoters expressed their inability to run the canteen with effect from April 26, 1990. Says the management as follows:

"Members of staff are advised that the canteen will function in our canteen block with effect from October 21, 1992. The contractors will run the canteen with a minimum staff for a week on a trial basis to overcome the difficulties, if any. The canteen will run normally after a week or so..."

The bank further says that the canteen is for the welfare of the staff and directs as follows :

"All members are requested to avail of this facility and refrain from going out for coffee and tea. Since the canteen has started functioning the department heads should inform all the staff members to restrict their lunch time to half an hour between 12.30 and 3.00 p.m. and the staff may be permitted to go for lunch in fixed time to avoid heavy rush at the canteen."

The above passage quoted from the letter of the central office of the bank amply establishes that the bank had an obligation to run the canteen and in fact was running the canteen through contractors, even though the promoters had withdrawn their services. Actually, it appears that the promoters were desirous of forming a cooperative society and it did not fructify. In this view of the matter, it is clear that as in the LIC''s case, (supra), the bank had been running the canteen by one or other of the agency.

Certain other decisions were also relied upon to emphasise the master and servant relationship as well as the types of control that the management had over its employees. Certain other cases arising under the Contract Labour (Abolition and Regulation) Act, 1970, were also relied upon. Mr. N. R. Chandran, learned senior counsel for the management, also relied upon the decision in Ahmedabad Municipal Corporation Vs. Virendra Kumar Jayantibhai Patel, for the proposition that when there are regular recruitment rules, there cannot be an employment outside such recruitment rules. In our opinion, all these decisions do not advance the case of either of the parties because the issue of canteen employees is clearly governed by the principles enunciated in the LIC''s case, (supra) and the RBI''s case, (supra) to which we have already made a reference.

8. We are, therefore, obliged to set aside the judgment of the learned Judge and restore the award of the Tribunal. Accordingly, all the writ appeals are allowed and the award of the Tribunal, dated May 27, 1994, in I.D. Nos.72 of 1990 and 83 of 1991 and Complaint No. 4 of 1992 are restored. However, there will be no order as to costs.