s C Nos
2275 86 of 1982 Etc
Under Article 32 of the Constitution of India WITH Special Leave Petition C No 4090 of 1985
From the Judgment and Order dated 412
1984 of the Madras High Court in WA No 41478
B Datta Additional Solicitor General G Ramaswamy Additional Solicitor General MK Ramamurthy VM Tar kunde Gobind Mukhoty SC Manchanda GB Pai KK Venug opal Mrs Shyamala Pappu MA Krishnamurthy Ms Chandan Ramamurthy JD Jain MS
Kanwaljit Kochhar KB Rohtagi BR Agarwala Ms Sushma Manchanda RB Hathikhanwala Ms Sunita Sharma PH Parekh SS Khanduja YP Dhingra BK Saluja HS Parihar Vipin Chandra RK Maheshwari Pramod Dayal RP Saxena DK Garg AD Sanger Pramod Swarup Krishna Prasad PC Kapur AN Badriyar MP Jha VN Sharma Petitioner inperson BB Sahoo section Srinivasan Vineet Kumar Ms Urmila Kapoor Ms section Janani Dalveer Bhandari C Ramesh GD Gupta LK Gupta G Venkatesh Rao Ms A Subhashini Ms Sushma Suri CV Subba Rao P Parmeshwaran JR Das SK Patri Ms Lira 692 Goswami DN Mishra VJ Francis NM PopIi SK Dhin gra KJ John YP Rao Mahabir Singh Ms Bharti Anand Indra Makwana and SK Jain for the appearing parties
The Judgment of the Court was delivered by SAWANT J
This group of petitions concerns the workers in canteens run in the different railway establishments
The relief claimed in all the petitions is that the workers concerned should be treated as railway employees and should be extended all service conditions which are available to the railway employees
For our purpose these canteens have to be classified into three categories viz i Statutory Canteens These are canteens required to be provided compulsorily in view of the provisions of Section 46 of the hereinafter referred to as the Act since the Act admitted ly applies to the establishments concerned and the employees working in the said establishments exceed 250 ii Non Statutory Recognised Canteens These canteens are run in the establishments which may or may not be governed by the Act but which admittedly employ 250 or less than 250 employees and hence it is not obligatory on the railways to maintain them
However they have been set up as a staff welfare measure where the employees exceed 100 in number
These canteens are established with the prior approval and recog nition of the Railway Board as per the procedure detailed in the Railway Establishment Manual and iii Non Statutory Non Recognised Canteens These canteens are run at estab lishments in category ii above but employ 100 or less than 100 employees and are established without the prior approv al or recognition of the Railway Board 3
The present petitions concern employees in all the three types of canteens
It will be convenient to deal separately with the employees in the three types of can teens because the history of litigation and the arguments advanced in respect of each of the categories are different
4i Statutory Canteens Section 46 of the Act which makes it obligatory on an occupier of a factory as defined under the Act to provide a canteen or canteens where more than 250 workers are ordinarily employed runs as follows Canteens 1 The State Government may make rules 693 requiring that in any specified factory wherein more than two hundred and fifty workers are ordinarily employed a canteen or canteens shall be provided and maintained by the occupier for the use of the workers
2 Without prejudice to the generality of the foregoing power such rules may provide for a the date by which such canteen shall be provided b the standards in respect of construction accommodation furniture and other equipment of the canteen c the foodstuffs to be served therein and the charges which may be made therefore d the constitution of a managing committee for the canteen and representation of the workers in the management of the canteen dd the items of expenditure in the running of the canteen which are not to be taken into account in fixing the cost of foodstuff and which shall be borne by the employer e the delegation to the Chief Inspector subject to such conditions as may be prescribed of the power to make rules under clause c
 It is evident from the aforesaid provision that the occupier of a factory a railway establishment for the purposes of the said provisions is a factory within the meaning of the Act is not only obliged to run a canteen where more than 250 workers are employed but is also obliged to abide by the rules which the concerned Government may make including the rules for constitution of a managing committee for running the canteen and for representation of the workers in the management of the canteen
The occupier may also be required to bear a part of the expenses of running the canteen and to comply with the rules prescribing standards in respect of construction accommodation furniture and other equipment of the canteen the foodstuffs to be served and the prices to be charged for them
In other words the whole paraphernalia of the canteen has to conform to the statutory rules made in that behalf
As is pointed out on behalf of the Railways it appears that there are 89 such statutory canteens function ing in the railway premises
694 5
It appears that the workers working in the statutory canteen at Loco Carriages and Electrical Workshops of the South Eastern Railways Workshop Kharagpur had preferred a writ petition in the Calcutta High Court praying for a direction to the Union of India to recognise them as railway employees and grant them a11 service conditions available to the railway employees
A learned Single Judge by his deci sion dated 78
1973 dismissed the said petition holding that the workers were not entitled to the reliefs claimed by them
Against the said decision the workers preferred an appeal before the Division Bench of the said Court and the Division Bench by its decision of July 16 1974 allowed the same and directed the respondent Union of India to recognise the workers as employees of the Railway Administration under the  but rejected the demand to pay salary and allowances to them as if they were railway employees
On the other hand the High Court held that the employment of the workers must be deemed to be on the basis of appointment letters and that they had no statutory or legal right and the Railway Administration had no corresponding statutory or legal obligation to pay salaries etc
above the minimum wages or dearness allowances as claimed by them
The court held that their service conditions were in the realm of contract or depending on a policy followed by the Railway Administration at its discretion
Being aggrieved the Union of India had come in appeal to this Court being Civil Appeal No 368 of 1978This Court by its order of October 22 1980 disposed of the appeal as follows The benefits accruing to the workers under the decision of the Calcutta High Court do not require to be interfered with in this appeal
Prima facie we are inclined to agree that the High Court decision is right
Moreover the learned Attorney General agrees to apply the Act as if it were applicable to canteen employees
In this view a final pronouncement on this question by this Court need not be given in the present case
We leave it open to Union of India in an appropriate case to raise the point and seek a pronouncement
 The Act referred to in the aforesaid order obviously means the 
Therefore what was confirmed by this Court was the declaration given by the Calcutta High Court that the employees of the Statutory Canteens were railwayemployees for the purposes of the and that their service conditions were determined by the con tract as incorporated in their appointment letters or by the policy decision of the Railway Administration which was discretionary
It is 695 necessary to note this fact at the very outset
It has further to be remembered that the Calcutta High Court had given the aforesaid declaration in favour of the statutory canteen workers notwithstanding the fact that the canteens were managed by the Committee of Management nomi nated by the Railway Administration or by a managing commit tee elected or nominated by the employees or by the Corpera tive Society relying on the express provision contained in Chapter XXVIII Of the Railway Establishment Manual
It may however be mentioned that the High Court had taken into consideration Note 2 of Para 28342 of the Manual which had declared that in cases where the canteens were being run on cooperative basis either by the Co operative Society or the managing committee of the staff the canteen staff shall not be treated as railway servants because in that case master and servant relationship existed between the Co operative Society through its managing committee and the concerned employees
The High Court had relied upon the fact that even in such cases the entire cost of the staff was reimbursed by the Railway Administration to the Co operative Society managing committee and that over all control over the canteen and the staff vested in the Rail way Administration
In fact the direction under para 2832 of the Railway Establishment Manual was that where even a Co operative Society was running the canteen the bye laws of the Society should be suitably amended to provide for such overall control by the Railway Administration since the legal responsibility for the proper management of the can teen vested not with the agent like the Co operative Soceity but solely with the Railway Administration
6 1t is undoubtedly true however that this Court in its Order dated October 22 1980 had reserved the right to the Union of India to raise the question as to whether the employees of the Statutory canteens were the employees of the Railway Establishment finder the and get a pronouncement on the same
It appears that after the said order of this Court the Railway Board had issued a letter dated May 22 1981 to the General Manager South Eastern Railway Calcutta Conveying the decision of the Ministry of the Railways that the employees of Kharagpur Workshop Statu tory Canteen which employees were a party to the said decision should be deemed to be railway servants with effect from October 22 1980 and till Government decided otherwise the said workers would continue to be governed by the conditions of service and emoluments as existed on October 21 1980
It was also stated there that what was stated in the letter had the sanction of the President and the letter was issuedwith 696 the concurrence of the Finance Directorate of the Ministry of Railways
Subsequently the Board issued another circular letter of June 8 1981 addressed to the General Managers of all Indian Railways stating therein that it was decided that employees of all other statutory canteens on the railways irrespective of the type and management of the canteens should also be deemed to be railway servants wef October 22 1980 and that till Government decided otherwise the staff of the statutory canteens would continue to be gov erned by the conditions of service and emoluments as existed on October 21 1980
On March 11 1982 the Railway Board issued a letter and referred to its earlier communication of June 8 1981 and September 18 1981
In this letter it was stated that pursuant to the said two earlier communications where it was stated that the question of pay scale and retirement benefits were under consideration and that a separate commu nication would follow a Schedule showing revised pay scale applicable to the employees of the statutory canteens of the railways was enclosed for necessary action
The letter stated that the existing employees of these canteens would be entitled to exercise an option under Rule 2019 FR 23 and Rule II either to retain their existing pay scale as presently applicable to them or opt for the revised pay scale
However on promotion such employees would be compul sorily brought on to the revised pay scales
It was made clear that those who opt for the revised scales would not be eligible to other facilitiesperquisites admissible to them in their existing pay scale such as free food snacks commission etc
A period of three months was given for exercising the option and it was stated that if no option was exercised it would be assumed that the employees con cerned had elected to be governed by the revised pay scales wef October 22 1980
The Schedule annexed to the letter mentioned among other things that the canteen employees will be entitled to the dearness allowance house rent allowance and city compensatory allowance as per the in structions issued by the Railway Ministry that the age of retirement of employees would be 58 years as in the case of other railway employees and that the employees of the canteen would be entitled to the benefit of productivity linked bonus on the principles applicable to the stall of the officeestablishment to which they were attached from the date of their being declared as railway servants
In a decision of this Court reported in   this Court directed that for the purpose of calculating pensionary benefits the service rendered by the said em ployees prior to October 22 1980 should also be computed
By its letterr dated May 13 1983 addressed to 697 all the General Managers the Ministry of Railways placed on record the fact that pursuant to the Order of this Court dated October 22 1980 the employees of all the statutory and 11 Delhi based nonstatutory canteens had been treated as railway servants wef October 22 1980 and the revised pay scale applicable to the employees had been communicated vide the Railway Board s letter dated March 11 1982
On December 4 1984 a Division Bench of the Madras High Court delivered a Judgment in Writ Appeal No 414 of 1978 Railway Board  Anr
vs Parthasarthy and Anr and in Writ Appeal No 415 of 1978 relying upon the order dated October 22 1980 passed by this Court and held that can teen employees will have to be treated as railway employees for the purposes of the  in view of th con cession made by the Railways before this Court and also the con cession made by the counsel appearing for the Railways before the High Court
We have then on record an Office Order dated July 27 1983 issued to an employee of a statutory canteen con veying to him appointment as a TYCleaner in a scale of pay plus usual allowances wef
January 12 1983
In this order it is stated that the employee would be eligible for house rent allowance under the Rules in force from time to time that he will be on probation for a period of one year and that the appointment would be terminated with 14 days  notice on either side
It is however added that no such notice would be required for the termination of service as and by way of removal or dismissal as a disciplinary measure effected after compliance with the provisions of clause 2 of Article 311 of the Constitution of India
It is also stated that the employee should take oath of allegiance to the Union of India and that he should apply for allotment of quarters within 7 days from the date of his appointment and then alone should apply for house rent allowance
It is now necessary to refer to the relevant provi sions of the Railway Establishment Manual which deal with the canteens
Paragraph 2829 of Chapter XXVIII of the Manual refers to the provisions of Section 46 of the and underwrites the fact that under these provisions there is a statutory obligation on the Railway Administra tion to set up canteens in Railway establishments which are governed by the said Act and which employ more than 250 persons
The paragraph further mentions that Railway Admin istration should strictly abide by the rules which are framed by the respective State 698 Governments under sub section 2 of the Act regarding the constitution of the Managing Committees of such canteens
Paragraph 2832 then ordains that the staff served by the said canteens should be actively associated in their manage ment and for this purpose a Committee of management of the staff should be formed in accordance with the rules framed by the concerned State Government
The paragraph further states that although the Administration can employ as agent a Staff Committee or a Co operative Society for management the legal responsibility for proper management rests not with the agency but solely with the Railway Administration
In case the management is entrusted to a consumer co opera tive society the bye laws of the society are directed by the said paragraph to be amended suitably to provide for an overall control by the Railway Administration
Paragraph 2834 deals with the incidence of cost of the canteens
As regards the statutory canteens the paragraph directs that in addition to the facilities which are given to the non statutory canteens the Administration will have also to bear the expenditure on the entire paraphernalia including the furniture as well as the salaries of the cook and the canteen staff
Note 2 of the said paragraph then states that where the canteens are being run on co operative basis either by co operative society or by Managing Committee of the staff and there subsists a relationship of master and servants between the society managing committee and the workers ie where the canteen staff has been employed by the societymanaging committee and not by the Administration as such the canteen staff are not to be treated as railway servant even though the cost of this staff is reimbursed by the Administration
We have also on record the second edition 1988 of ADMINISTRATIVE INSTRUCTIONS ON DEPARTMENTAL CANTEENS IN OFFICES AND INDUSTRIAL ESTABLISHMENTS OF THE GOVERNMENT issued by the the Deptt
of Personnel  Training Ministry of Personnel Public Grievances  Pensions of the Govt
of India first published in 1980 hereinafter briefly called as the Instructions
They are applicable to a CanteensTiffin Rooms set up on departmental basis and run as per scheme issued by the Deptt
of Personnel and Training b CanteensTiffin Rooms set up on Co operative basis by a Society of Government employees with the Head of the Deptt OfficeEstablishment or his nominee as Chairman and c CanteensTiffin Rooms set up in Industrial Establish ments 699 other than those covered under Section 46 of the  of the Government and which have not been exempted from following the rules in the said Instructions due to the availability of a separate and distinct set of rules and guidelines framed by the controlling MinistriesDepartments
para 13 It is made clear in these Instructions that the orders issued under the said Instructions are applicable to all CanteensTiffin Rooms functioning or to be set up in any Ministry Department Establishment Office Installation of the Government of India industrial or nonindustrial which should be centrally registered with the office of the Direc tor of Canteens Deptt
of Personnel  Training New Delhi including those functioning under the Ministries of Defence P  T and Railways unless these three Ministries had previ ously decided to exempt any of their CanteensTiffin Rooms from the purview of the said Instructions due to specific reasons and they had framed or they propose to frame a separate set of instructions for the exempted canteens
para 14
The Instructions further state that the policy matters and coordination on canteen matters will be central ly done by the Deptt
of Personnel and Training Director of Canteens para 114
To be entitled to subsidy all the departmental canteens have to get themselves registered centrally with the Director of Canteens and Training Para 115
The canteens are entitled to subsidy on wages and gratuity payable to the workers employed in the canteens and for their uniforms as well as to capital and replacement grants for equipment including utensils crockeries cutt lery and furniture and also to interest free loans
In addition to subsidy for equipment the canteens are also entitled to other facilities such as accommodation on nomi nal rent of Rs 1 electricity water etc
The Instructions in terms state that since the canteens are run departmental ly as a measure of staff welfare the beverages snacks and meals etc
have to be made available to the staff at econom ic rates and for this purpose the Government has to provide necessary accommodation at the nominal rent and provide the necessary grants subsidy and loans
Para 12
In addi tion the concerned DepartmentOffice has to bear the elec tricity and water bills
In chapter V which deals with the personnel in the canteens the Instructions lay down the entitlement of CanteensTiffin Rooms to the number and categories of employees according to the grades of CanteensTiffin Rooms
With regard to the recruitment rules conditions of service status and the scales of pay of the canteen workers the procedure for taking disciplinary action against them as well as for giving training to them the chapter makes it clear that since the canteen workers have acquired the status of the holders of civil posts 700 wef October 1 1979 their recruitment and conditions of service etc
would be governed by the rules framed under proviso to Article 309 of the Constitution contained in GSR 54 issued under Government of India Department of Personnel and Training Notification dated 23rd December 1980
It is made clear that the said rules also apply to the employees of the Canteens run by the Co operative Societies in con junction with the bye laws of the Society and local co operative laws in force
It is further made clear that the workers in the non statutory departmental and co operative CanteensTiffin Rooms will be paid the pay and allowances at the same rate and on the same basis wef 269
83 on which the employees of the statutory canteens are paid the same
The chapter also mentions that before taking any disci plinary action against any canteen worker procedure as set out in chapter IV Conduct and Discipline of GSR of 1954 dated 23rd December 1980 published in the Gazette of India Part II Section 3 sub Section 1 dated 17th January 1981 will be followed
The chapter further directs periodical training programmes to be arranged by the Director of Can teens for managerial personnel and other canteen staff
Chapter VI contains guidelines for constituting the Managing Committees of the canteens
This chapter ordains that the Chairman of the managing committee should prefera bly be the Head of the DepartmentOffice himself or his Deputy and that the Honorary Secretary of the managing committee should normally be the Welfare Officer or the Administrative Officer of the Department Office of the minimum rank of a Section Officer or a Major or equivalent in services who shall be nominated by the OfficeEstablish ment and in the case of Co operative Canteens may be elect ed as per the bye laws of the Society
One of the officials who should be of the rank of Section OfficerMajor or above is to be nominated on the managing Committee by the Chair man
Paragraph 611 defines the Legal Status of the Managing Committee
It says that the Committee functions in the DepttOfficeestablishment of the Government of India for the welfare of the Govt
employees under the orders of the Government of India and its functions are connected with the affairs of the Union
The Committee therefore does not enjoy an autonomous status
With respect to the contractual obligations it functions for and on behalf of the the President of India
The proceedings of the Committee will not be conducted or decided on resolutions or voting system but the official decision will rest with the Chairman of the Managing Commitsee or the Head of the DepartmentOffice
In the case of canteens run by the co operative societies this provision is to apply as per the 701 bye laws of the society and the co operative law in force
The presence of the Chairman and the Hony
Secretary is necessary to constitute the quorum for holding the meeting of the Managing Committee
The Head of the DepartmentOffice is given power to depute a Government servant of the rank of Section Officerequivalent or below if he can be spared for part time or whole time assistance to the Managing Commit tee
The DepartmentOffice concerned is required to provide stationery stencils cyclostyling facilities postage stamps office assistance etc
to enable the Managing Com mittee to conduct its business
The annual accounts of the Canteens have to be submitted to the Financial Advisers of the DepartmentOffice concerned with copies thereof to the Director of the can teens and the audit of the accounts of the CanteensTiffin Rooms is to be carried out by the Departmentalised Accounts Organisations of the concerned MinistriesDepartmentsOf fices
Out of the surplus of net profits of the Canteens 13 amount is required to be remitted to the Director of Canteens Funds for welfare of the canteen employees in general
All the aforesaid provisions apply to all types of Tiffin Rooms classified into Type B and A where the strength of the DepartmentOffice is between 25 49 and 50 99 respec tively and to the Canteens classified in Types D C B and A where the strength is between 100 249 250 499 500 699 and 700 1200 respectively
Where the strength is above 1200 a further higher classification is given to the Canteens
These provisions contained in the Instructions therefore show that the Government has a complete control over the canteens and the workers employed therein are holders of civil posts within the meaning of Article 311 of the Constitution
Their recruitment and service conditions are governed by the rules applicable to the employees of the Government DepttOfficeEstablishment to which the canteens are attached
It is against this background that we have to con sider the question as to whether the staff employed in the statutory canteens m  the Railway Establishment industrial or non industrial are railway employees or not
According to the workers in view of the aforesaid documents on record there is no reason why the employees in the canteens con cerned should not be given the status of the railway employ ees with all consequential benefits
On the other hand the 702 contention advanced on behalf of the Railways is that the documents in question show that the employees of the statu tory canteens are to be deemed railway employees only for the purpose of the and for no other purpose
In no case they can be deemed as holders of civil posts either for Article 309 or for Article 311 or for any other purpose
On behalf of the employees a preliminary objection was raised namely that in view of the order of this Court dated October 22 1980 in Civil Appeal No 368 of 1978 and another it is not open to the Railways to agitate the question whether the employees in the statutory canteens are railway employees or not and further whether they are railway employees for the purposes of the 
We are not inclined to entertain this objection for it is clear from the said order that the Court had left open even the question as to whether the employees of the statutory can teens were railway employees for the purposes of the said Act
Hence the question whether they are employees of the railways for all purposes necessarily remains res integra
We may reproduce here the said order which is clear enough on the subject The benefits accruing to the workers under the decision of the Calcutta High Court do not require to be interfered with in this appeal
Prima facie we are inclined to agree that the High Court decision is right
Moreover the learned Attorney General agrees to apply the Act as if it were applicable to canteen employees
In this view a final pronouncement on this question by this Court need not be given in the present case
We leave it open to the Union of India in an appropriate case to raise the point and seek a pronouncement
Leave granted in the petition flied by Railway Canteen Karmachari Association
We have in CA No 368 of 1978 passed an order and the point raised by the workmen in this appeal closely resembles the one raised in the sister case just referred to
We apply the same principle as has been decided by the Calcutta High Court to this case also and the workmen will be given the same benefits
We however make it clear here also that the Union of India will be free in an appopriate case to challenge the correctness of the legal point 703 decided by the Calcutta High Court
It will be equaly open to the workmen to challenge the decision of the Delhi High Court if it becomes necessary
With these observations we dispose of both the appeals
The appellants in CA No 3681978 will pay the costs of the respondents
 It must be remembered in this connection that both the Calcutta and the Madras High Courts had taken the view that the employees in the statutory canteens were the employees of the Railways for the purposes of the said Act
The Delhi High Court had distinguished the decision of the Calcutta High Court on the ground that that decision did not apply to the employees in the non statutory canteens with which it was concerned and had held that the employees of the non statutory canteens were not railway employees for any pur pose
It is in this circumstance that this Court had given liberty to the Railway Administration as well as the employ ees to challenge the respective decisions of the Calcutta and Delhi High Courts
It will not therefore be correct to say that this Court had pronounced its final opinion on the said issue by the said order
It has also to be remembered in this connection that the issue before this Court in those matters was whether the employees either of the statutory or non statutory canteens were the railway employees for the purposes of the 
The larger issue whether they were railway employees for all purposes was neither dis cussed nor even tentatively decided in those proceedings
We are therefore of the view that both the said issues are at large in the case of the employees of the statutory as well as of the non statutory canteens
Before us therefore two issues arise for considera tion viz a whether the employees of the statutory can teens are railway employes for the purposes of the said Act and b whether they are railway employees for all other purposes as well 20
As regards the first contention namely whether the said employees are the employees of the Railway Administra tion for the purposes of the said Act according to us the view taken by the Calcutta High Court in that behalf is correct
Section 21 of the defines worker as follows Worker means a person employed directly or through any agency including a contractor with or without the knowl edge of the principal employer whether for remuneration or not in any manufacturing process or in 704 cleaning any part of the machinery or premises used for a manufacturing process or in any other kind of work inciden tal to or connected with the manufacturing process or the subject of the manufacturing process but does not include any member of the armed forces of the Union Since in terms of the Rules made by the State Govern ments under Section 46 of the Act it is obligatory on the Railway Administration to provide a canteen and the can teens in question have been established pursuant to the said provision there is no difficulty in holding that the can teens are incidental to or connected with the manufacturing process or the subject of the manufacturing process
The provision of the canteen is deemed by the statute as a necessary concomitant of the manufacturing activity
Para graph 2829 of the Railway Establishment Manual recognises the obligation on the Railway Administration created by the Act and as pointed out earlier paragraph 2834 makes provi sion for meeting the cost of the canteens
Paragraph 2832 acknowledges that although the Railway Administration may employ anyone such as a Staff Committee or a Co operative Society for the management of the canteens the legal re sponsibility for the proper management rests not with such agency but solely with the Railway Administration
If the management of the canteen is handed over to a consumer cooperative society the bye laws of such society have to be amended suitably to provide for an overall control by the Railway Administration
In fact as has been pointed out earlier the Adminis trative Instructions on departmental canteens in terms state that even those canteens which are not governed by the said Act have to be under a complete administrative control of the concerned Department and the recruitment service condi tions and the disciplinary proceedings to be taken against the employees have to be taken according to the rules made in that behalf by the said Department
In the circumstances even where the employees are appointed by the Staff Commit tee Cooperative Society it will have to be held that their appointment is made by the Department through the agency of the Committee Society as the case may be
In addition as stated earlier the Railway Board by its circular dated June 8 1981 had communicated that it was decided to treat the employees of all statutory canteens as railway servants irrespective of the type and management of the canteens and to extend to them the conditions of service and emoluments of the railway servants as existed on October 21 1980 wef
22nd October 1980
No doubt it was stated in this letter that the said decision would 705 prevail till Government decided otherwise
Subsequently on March 11 1982 the Board also prescribed the pay scales dearness allowance house rent allowance city compensatory allowance and productivity bonus and fixed the age of their superannuation
As also pointed out earlier this court in its decision reported in   subsequently directed that for the purpose of calculating pensionary benefits the service rendered by the said employees prior to October 22 1980 would be computed
What is further the Ministry of Railways by its letter of May 13 1983 placed on record the fact that not only the employees of all the statutory canteens but the employees of eleven Delhi based non statutory canteens had been treated as railway servants with effect from October 22 1980
It must be remembered in this connection that neither the Railway Ministry nor the Railway Board had stated in their lettersorders that the employees of the statutory canteens and of the eleven Delhi based non statutory canteens were being treated as railway servants only for the purposes of the or that they were to be so treated till further decision of this Court
It is possible to place a liberal construction on these letters orders and interprete the relevant direction name ly till further directions from the Government as being the directions after the decision of this Court in the present matters and for the sake of argument we may proceed on that basis while dealing with the present contention
The admitted facts however are that these canteens have been in existence at their respective places continuously for a number of years
The premises as well as the entire para phernalia for the canteens is provided by the Railway Admin istration and belong to it
The employees engaged in the canteens have also been in service uninterruptedly for many years
Their wages are reimbursed in full by the Rly
Admin istration
The entire running of the canteens including the work of the employees is subject to the supervision and control of the agency of the Railway Admn
whether the Agency is the staff committee or the society
In fact as stated by the Rly
Administration in its Establishment Manual the legal responsibility for running the canteen ultimately rests with it whatever the agency that may intervene
The number and the category of the staff engaged in the canteen is strictly controlled by the Administration
As has been pointed out earlier much before the order of this Court dated October 22 1980 the employees of the departmental canteenstiffin rooms were declared as holders of civil posts under the Government of India Notification No 622377 Welfare dated December 11 1979 which notifi cation is an annexure 4 to the Administrative Instructions 706 referred to above
That notification stated that all posts in the said canteenstiffin rooms are to be treated as posts in connection with the affairs of the Union and according ly present and future incumbents of such posts would quali fy as holders of civil posts under the Central Government
The notification further stated that necessary rules govern ing the conditions of service of the employees would be framed under proviso to Article 309 of the Constitution to have retrospective effect from October 1 1979
Accordingly the service rules were framed under Article 309 as per the Notification No GSR 54 issued by the Govt
of India Deptt
of Personnel  Training on December 23 1980
These rules contained both the recruitment rules and conditions of service of the said employees including the procedure for disciplinary action to be taken against them
As stated earlier the Administrative Instructions are applicable to the canteenstiffin rooms run by all the Ministries includ ing the Railway Ministry unless they had previously decided to be exempt from them and had framed their own rules in that behalf
On behalf of the respondents one Shri Sud Joint Director of Establishment Ministry of Railways has filed an affidavit contending that Section F of Chapter XXVIII of the Railway Establishment Manual to the relevant paragraphs of which we have made a reference earlier con tains the necessary instructions for running the canteens and hence the Railway Administration should be deemed to have been exempted from the operation of the said Adminis trative Instructions
Although there is nothing expressly on record to show that the railway canteens are exempted from the said Instructions we will proceed on the assumption that they are so exempted by virtue of the relevant provi sions of the Railway Manual
But the fact remains that there are as yet no notifications on the lines of December 11 1979 and December 23 1980 issued for the benefit of the employees in the railway canteens
Whatever the differences in the nature of work performed by the order staff in the different Ministries it cannot be argued that there is any difference in the work performed by the employees in the canteens run in the establishments of the Ministries
Hence we are of the view that if the said two notifications are applicable to the employees in the canteens run by the other departments of the Government of India there is no reason why the same should not apply also to the employees in the canteens run by the Railways
On behalf of the Railway Admn
no material has been placed before us to treat the employees in their canteens as a class separate from the employees in the canteens run by the other departments of the Government
In the circumstances it would be highly discriminatory not to apply the said two notification to the employees in the Railway canteens
It would be violative of Articles 14 and 16 of 707 the Constitution
We are therefore of the view that the employees in the statutory canteens of the Railways will have to be treated as Railway servants
Thus the relationship of employer and employee stands created between the Railway Administration and the canteen employees from the very inception
Hence it cannot be gainsaid that for the purposes of the the employees in the statutory canteens are the employees of the Railways
The decision of the Calcutta and Madras High Courts supra on the point therefore are both proper and valid
The next question is whether the said employees are railway employees for all purposes
Mr Ramaswamy the learned counsel appearing for the Railways contended that the Railways undertake varied welfare activities in the nature of handicrafts centres cooperative stores banks housing societies credit societies educational institu tions etc
and the Railways spend about a hundred crores annually on these activities
He submitted that if it is decided to treat the employees engaged in the canteens as railway employees it will be difficult to resist the claim from employees of these other institutions numbering over 27500 for a similar status
He also submitted that the Railways provide financial assistance to various non Railway institutions such as non Railway schools
But teachers and other employees working in these schools are the employees of the respective organisations and cannot be treated as railway servants
Since according to him the canteens are run for the benefit of the staff the Government has only a general responsibility to see that the labour laws are properly followed and not infringed
He further submitted that an indentical responsibility also devolves on the Railways in regard to contractors who execute works for the Railways with their own labour
In addition the Railways have nearly 23 lakh casual labourers who are normally employed on works which are of seasonal nature intermitant or extending over short periods
These employees are engaged by the contractor to whom the execution of work is entrust ed
In case the employees of the canteens are to be treated as Railway servants similar demands will be made from such casual labourers
His next contention in this behalf was that the Railways have a primary objective of carrying goods and passengers and the welfare activities are ancillary to the main objective
Hence the canteens continue at the discretion of the Railway Administration where there have provided 70 subsidy to the management of the statutory canteens
If at any stage the Government so decides it can change the form of this welfare measure 708 and may choose to have another set up which in their view may prove more convenient and financially workable such as engaging a contractor or an established agency like Tea Boad Coffee Board Women s Organisation etc
to run the canteens
For all these reasons he submitted the employees in the statutory canteens should not be treated as the Railway employees
While discussing above the contention that the employees in the statutory canteens cannot be treated as Railway employees even for the purposes of the said Act we have referred to the various developments and documents on record including the court decisions
It is not necessary to repeat them here
In view of the same the contention ad vanced by Mr Ramaswamy that the Railway Admn
is engaged in varied welfare activities and the employees engaged in these activities will also have to be treated as Railway employees in case the canteen employees are recognised as Railway employees does not appeal to us
We express no opinion on the subject as to whether the employees engaged in other welfare activities will or will not be entitled to the status of the Railway employees since neither they nor the facts pertaining to them are before us
Our conclusion that the employees in the statutory canteens are entitled to succeed in their claim is based purely on facts peculiar to them as discussed above
If by virtue of all these facts that they are entitled to the status of Railway employees and they cannot be deprived of that status merely because some other employees similarly or dis similarly situated may also claim the same status
The argument to say the least can only be discribed as one in terroram and as any other argument of the kind has to be disregarded
ii Non Statutory Recognised Canteens Paragraph 2830 of the Railway Established Manual enjoins upon the Rly
Administration to take steps to develop their canteen organ isation to the maximum possible extent as a measure of staff welfare preferably by encouraging the development of can teens for staff on co operative basis
This injunction is for provision of canteens in addition to the canteens as required by the for which provision is made in paragraph 2829 of the said Manual
Paragraph 2831 lays down the principles governing the setting up of the canteens which apply also to the nonstatutory canteens provided for under paragraph 2830
It says among others things that a regular canteen should be provided where the strength of the staff is 100 or more and a scheme for provision of a new canteen should be submitted to the Railway Board for approv al indicating financial implications duly vetted by the FACO Paragraph 709 2833 contains provisions for the management of such non statutory canteens
Among other things it states that such canteens can be run either by a Committee of Management to be formed for the purpose or by a Consumer Cooperative Society
The Committee of Management should consist of the duly elected representatives of the staff and where it is run by a Cooperative Society it should consist of the representatives of the share holders of the Society
Howev er in either of the cases a representative of the Railway Administration is to be nominated either as a Chairman or a Secretary or as a Member of the Committee
This nominee of the Railway Administration is under an obligation to bring to the notice of the Administration any decision of the Managing Commttee which is likely to affect the interests of the Railway Admn
in its capacity as an owner of the prem ises and of the furniture equipment etc or if the deci sion is likely to be of considerable harm to the staff
In such cases the Management Committee cannot take action on the particular decision till the General Manager of the Railway has recorded his decision thereon
The paragraph further ordains that where the canteens are managed by a co operative society the society should make a suitable provisions in its bye laws for supervision of the canteen by the Committee of Management
The paragraph also makes provi sion for granting loans to such canteens as initial capital from the Staff Benefit Fund
Paragraph 2834 then details various facilities which are extended to such canteens which include the necessary accommodation sanitary and electric installations furniture and cooking utensils
The Railway Admn
is also required to bear rent on sanitary and electric installations service taxes and charges for the electricity and water consumed
These canteens are also entitled to subsidies at present to the extent of 70 of the wages of the employees engaged therein
It is further an admitted position that for the purposes of giving subsidy for wages the rates of pay and allowances as obtaining in July 1963 were adopted as a basis
In September 1967 on account of a representation received from the canteen employees the Railway Board left the question of revision of the scales of pay and dearness allowance to the Managing Committees
However to ensure that the canteen employees functioning at the Metropolitan Cities were not affected adversely the Board prescribed a minimum dearness allowance relief to the said employees
In May 1970 the Board reviewed the question of scales of pay and decided to enhance the dearness allowance relief in respect of employees working in the Metropolitan Cities and also fixed the scales of pay of the employees working in all non statutory canteens vide a Railway Board s letter No EW 69 710 CN 1 12 dated 29 5 1970
These scales of pay were again revised in December 1979 including dearness allowance for employees working in the Metropolitan cities as well as for those working in cities other than Metropolitan cities with effect from 1 10 1979 Railway Board s letter No E W79 CN 1 12 dated 14 12 79
A further revision of pay scales was elfcoted by the Board in May 1983 Railway Board s letter No EW83CN 1 8 dated 13 5 1983 to ensure com pliance with the interim directions given by this Court on April 22 1983
The direction of this Court was to the effect that the salary and allowances of the employees of the non statutory canteens recognised should be at the same rate and on the same basis as applicable to the employ ees of the statutory canteens deemed as railway servants with effect from October 22 1980
This direction was on the basis of the decision of this Court given on October 22 1989 supra
It is further an admitted fact that the Board has made applicable to these employees the scales of pay as recommended by the Fourth Pay Commission with effect from January 1 1986
The employees in these canteens are also entitled to free medical treatment as out door patients in railway hospitals to railway passesPTO s one increment as an incentive for adoption of a small family
They are also governed by the provisions of the Employees  Provident Fund Act
The Board has also framed recruitment rules for these employees vide its letter dated June 7 1978
These rules among other things lay down minimum qualifying age for recruitment and superannuation age minimum educational qualifications the mode of recruitment and eligibility for promotion for various posts
The nominee of the Railway Administration on the Managing Committee of the canteen is to be the Appointing Authority
At present there are about 173 non statutory recognised canteens employing about 2145 workers
As pointed out earlier from the decision dated March 7 1980 of the Delhi High Court in Writ Petition No 269 of 1980 filed on behalf of the employees of eleven Delhi based non statutory recognised canteens the Railway Canteen Karamchari Association had filed a special leave petition before this Court being SLP No 4132 of 1980 which was disposed of by this Court by its decision of October 22 1980 supra
By that decision this Court had disposed of the said appeal in terms of the order which was passed in another similar Civil Appeal No 368 of 1978 and the em ployees were given the same benefits by accepting the prin ciple laid down by the Calcutta High Court
Thus by the said decision the employees of the non statutory 711 canteens were directed to be treated on par with the employ ees of the statutory canteens although by giving liberty to the Railway Administration to agitate the point that neither the employees of the statutory nor of the non statutory recognised canteens were railway employees either for the purposes of the or for any other purpose
Shri Ramaswamy advanced the same contentions in the case of these employees as he advanced in the case of the employees of the statutory canteens
He submitted that these employees are appointed by the Staff Managing Committee or Co operative Societies and not by the Rly
Administration that their service in the canteen is purely in the nature of a private employment as in a private sector undertaking and that the recruitment procedures differ widely from canteen to canteen and they are not akin to the procedure followed by the Railways
The Managing Committee which appoints the employees supervises and controls the canteens is a non Government body
The said Committee functions as a separate entity independent of the Railway Administration and the control when exercised by the Railway Administration is only to ensure that the canteen is run in conformity with certain requirements
There is no relationship of master and servant between the Rly
Administration and the canteen employees
The letters of appointment issued to the employees make it expressly clear that the employment is non Governmental and purely temporary and does not carry any pensionary or gratu ity benefits
The employees recruited further are not sub jected to rigorous standards as to age limit educational qualifications medical fitness character verification etc
He further submitted that the order dated October 22 1980 passed by this Court in the case of the employees of the eleven Delhi based non statutory canteens is expressly subject to the liberty given to the Railway Administration to contend in a future appropriate case that they are not railway employees and hence it cannot act as a precedent
He also contended as he did in the case of the statutory can teen employees that if the employees engaged in these canteens are treated as Railway servants the employees engaged in other welfare activities casual labourers etc
may have also to be treated as such 29
These arguments can be dealt with together
In the first instance there is hardly any difference between the statutory canteens and non statutory recognised canteens
The statutory canteens are established wherever the railway establishments employ more than 250 persons as is mandatory under the provisions of Section 46 of the Act while non statutory canteens are required to be established under 712 paragraph 2831 of the Railway Estb
Manual where the strength of the staff is 100 or more
In terms of the said paragraph the non statutory canteens to be recognised have to be approved of by the Railway Board in advance
Every Rly
Administration seeking to set up such canteens is required to approach the Railway Board for their prior approvalrecognition indicating financial implications involved duly vetted by the Financial Advisor and Chief Accounts Officer of the Railway concerned
It is only when the approval is accorded by the Railway Board that the canteen is treated as a recognised non statutory canteen
By the sanction the details in regard to the number of staff to be employed in the canteen recurring and non recurring expenditure etc are regulated
The only material difference between the statutory canteen and non statutory recognised canteen is that while one is obligatory under the said Act the other is not
However there is no difference in the management of the two types of canteens as is evident from the provisions of paragraphs 2832 and 2833 which respective ly provide for their management
Regarding the incidence of cost to be borne by the Railways again as far as the Manual is concerned the only additional obligation cast on the Administration in the case of the statutory canteens is that in addition to the facilities given to the non statuto ry canteens the Administration has also to meet the statu tory obligations in respect of the expenditure for providing and maintaining canteens arising from the said Act and the rules framed thereunder
A perusal of the relevant provi sions shows that the said Act and the rules made thereunder do not make demands on the Administration for more expendi ture than what is provided for in the Railway Manual for the non statutory canteens
We have already referred to the service conditions applicable to the employees of the statu tory and non statutory canteens
Besides while discussing the case of the employees in statutory canteens we have pointed out the relevant provisions of the Administrative Instructions on Departmental Canteens in Government Officers and Govt
Industrial Establishments
These Instructions are applicable to both statutory and nonstatutory recognised canteens
The Instructions do not make any difference be tween the two so far as their applicability is concerned
In fact these Instructions require that the canteens run by engaging solely part time daily wage workers may be convert ed to departmental canteens para 13
Hence we donot see why any distinction be made between the employees of the two types of canteens so far as their service conditions are concerned
For this very reason the two notifications of December 11 1979 and December 23 1980 supra should also be equally applicable to the employees of these canteens
If this is so then these employees would also be entitled to be treated as rail 713 way servants
A classification made between the employees of the two types of canteens would be unreasonable and will have no rational nexus with the purpose of the classifica tion
Surely it cannot be argued that the employees who otherwise do the same work and work under the same condi tions and under a similar management have to be treated differently merely because the canteen happens to be run at an establishment which employs 250 or less than 250 members of the staff
The smaller strength of the staff may justify a smaller number of the canteen workers to serve them
But that does not make any difference to the working conditions of such workers
We have already dealt with the other arguments advanced by Shri Ramaswamy while dealing with the cases of employees in statutory canteens
It is not necessary to repeat the said discussion here
We are therefore of the view that the case of these employees should be treated on par with that of the employees in the statutory canteens and they should also be treated for all purposes as railway servants
This is apart from the fact that by an order of this Court the employees of eleven Delhi based non statutory recognised canteens have already been directed to be treated as railway servants for all purposes
iiiNon Statutory Non Recognised Canteens The difference between the non statutory recognised and non statutory nonrcognised canteen is that these canteens are not started with the approval of the Railway Board as re quired under paragraph 2831 of the Railway Establishment Manual
Though they are started in the premises belonging to the Railways they are so started with the permission of the local officers
They are not required to be managed either as per the provisions of the Railway Establishment Manual or the Administrative Instructions Supra
There is no obligation on the Railway Administration to provide them with any facilities including the furniture utensils electricity and water
These canteens are further not enti tled to nor are they given any subsidies or loans
They are run by private contractors and there is no continuity either of the contractors or the workers engaged by them
Very often than not the workers go out with the contractors
There is further no obligation cast even on the local of fices to supervise the working of these canteens
No rules whatsoever are applicable to the recruitment of the workers and their service conditions
The canteens are run more or less on ad hoc basis the Railway Administration having no control on their working neither is there a record of these canteens or of the contractors who run them who keep on changing much less of the workers engaged in these can teens
In the circumstances we are of the view of 714 that the workers engaged in these canteens are not entitled to claim the status of the railway servants
The result therefore is that the workers engaged in the statutory canteens as well as those engaged in non statutory recognised canteens in the Railway Establishments are railway employees and they are entitled to be treated as such
The Railway Board has already treated the employees of all statutory and eleven Delhi based non statutory recog nised canteens as railway employees wef October 22 1980
The employees of the other non statutory recognised canteens will however be treated as railway employees wef April 1 1990
They would therefore be entitled to all benefits as such railway employees with effect from the said date according to the service conditions prescribed for them under the relevant rulesorders
The Writ Petitions and appeals of these employees are allowed to the above extent accordingly with no order as to costs
As far as the employees in non statutory non recog nised canteens are concerned their petitions are dismissed
There will however be no order as to costs
RSS Petitions and Appeals allowed


Summary:
In a Writ Petition flied before this Court the peti tioner assailed the order of his compulsory retirement from service made under rule 56ji of the Fundamental Rules
The petitioner contended that he was efficient had clear and unblemished record of service and his character roll entries were excellent and since no review has been made six months before he attained the age of 50 or completed thirty years of service nor he had been retired on the basis of review he was entitled to continue upto the normal retirement age of 58
On behalf of the respondents it was contended that the order of retirement was made in public interest after review and that the Committee had concluded after reviewing com plete record of service and considering the quality of work on the whole that the petitioner was not fit to be retained in public interest
Dismissing the Writ Petition this Court HELD 11 Compulsory retirement under rule 56ji is not a punishment as it does not take away any of the past benefits
Chopping off the dead wood is one of the important considerations for invoking rule 56ji of the Fundamental Rules
786G 12 An aggrieved civil servant can challenge an order of compulsory retirement on the ground i that the requisite opinion has not been formed or ii that the decision is based on collateral grounds or iii that it is an arbi trary decision
If the civil servant is able to establish that the order suffered from any of these infirmities the Court has jurisdiction to quash the same
786F G Union of India vs Col JN Sinha  Anr 1971 1 SCR 791 referred to
784 In the instant case on the basis of the service record the Committee formed the requisite opinion that the peti tioner had ceased to be useful and therefore should be retired prematurely
The petitioner has not placed any satisfactory material to prove that the decision was based on collateral grounds
Once the opinion is reached on the basis of materials on record the order cannot be treated to be arbitrary
The service record of more than five years shows that the higher officers under whom the petitioner had worked were different and different sets of reviewing offi cers had also made the entries
Therefore the reports must be taken to have reflected an appropriate and objective assessment of the performance of the petitioner
786H 787A B