WP(C)14178.04, 14181.04 & 14182.04 Page 1 of 26 ..*IN THE HIGH COURT OF DELHI AT NEW DELHI + WP(C) No.14178/2004 % Date of decision: 8th April, 2010 AIR INDIA LTD. ..... Petitioner Through: Mr. Sandeep Sethi, Sr. Advocate with Ms. Sangeeta Bharti, Ms. Nidhi Minocha & Ms. Shweta Mishra, Advocates Versus RAKESH KUMAR & ORS. ..... Respondents Through: Mr. Rohit Bhat & Mr. Vikas Mehta, Advocates for Respondents 1 to 29. AND + W.P.(C) 14181/2004 AIR INDIA LTD. ..... Petitioner Through: Mr. Sandeep Sethi, Sr. Advocate with Ms. Sangeeta Bharti, Ms. Nidhi Minocha & Ms. Shweta Mishra, Advocates Versus BALWANT RAI SALUJA & ORS. ..... Respondents Through: Mr. Rohit Bhat & Mr. Vikas Mehta, Advocates for Respondents 1 to 29. AND + W.P.(C) 14182/2004 AIR INDIA LTD. ..... Petitioner Through: Mr. Sandeep Sethi, Sr. Advocate with Ms. Sangeeta Bharti, Ms. Nidhi Minocha & Ms. Shweta Mishra, Advocates Versus MEHBOOB ALAM & ORS. ..... Respondents Through: Mr. Rohit Bhat & Mr. Vikas Mehta, Advocates for Respondents 1 to 29. WP(C)14178.04, 14181.04 & 14182.04 Page 2 of 26 CORAM :- HON’BLE MR. JUSTICE RAJIV SAHAI ENDLAW 1. Whether reporters of Local papers may be allowed to see the judgment? YES 2. To be referred to the reporter or not? YES 3. Whether the judgment should be reported YES in the Digest? RAJIV SAHAI ENDLAW, J. 1. These three writ petitions impugn the common award dated 5th May, 2004 of the Central Government Industrial Tribunal (CGIT) in three industrial disputes having identical reference, with only the names of the workmen in each being different, as under: “Whether the demand of workmen S/Shri…….. employed by Chefair to provide canteen services at the establishment of Air India is justified that they be treated as deemed employees of the management of Air India? If so, to what relief are the concerned workmen entitled to?” 2. The matter in controversy in all the three writ petitions is informed to be same and the counsel for the petitioner and the counsel for the workmen respondents in all the petitions have made common submissions with reference to the paper book in WP(C)14178/2004. 3. The claim of the workmen in each of the three cases before the CGIT was that they had been employed with the respondent No.1 Air India on casual basis in the Air India Ground Service Department Canteen, Indira Gandhi International Airport, New Delhi; that their employment with the respondent No.1 Air India was through the respondent Chefair Flight Catering which is a unit of the WP(C)14178.04, 14181.04 & 14182.04 Page 3 of 26 respondent Hotel Corporation of India (HCI) and which is a Government Corporation. It was further their claim that the said canteen is established and maintained by Air India under the Provisions of Section 46 of the Factories Act, 1948; that vide notification dated 21st January, 1991, the Lieutenant Governor of Delhi has directed that Rules 65-70 of the Delhi Factories Rules 1950 apply to the factories specified in the schedule to the said notification; that the Air India Ground Service Department Canteen is mentioned at serial No.9 at the said schedule; that the said canteen has been established for the welfare of more than 2000 workers employed in the premises of the respondent Air India. It further emerges from the statement of claim that it was the claim of the respondent workmen that the respondent HCI is under contract with the respondent Air India to maintain and run the said canteen; that the appointment letter for the period of 40 days were being issued to each of the workman and on expiry of the said 40 days fresh appointment letters again for 40 days were issued to each of the workman and that each of the workman had completed the statutory period of 240 days in a year; that the said workmen employed temporarily had been called for interview several times but had not been selected and on the contrary persons junior to them had been regularized. It was further the plea that the device of “contract” by the respondent Air India to the respondent HCI had been deployed to deny the workmen their legitimate right of regularization and other consequential benefits as an employee of Air India and to circumvent the various provisions of the Contract Labour (Prohibition and Abolition) Act, 1970. The workmen further claimed that they had been performing duties / work of a permanent and perennial nature continuously required by the respondent Air WP(C)14178.04, 14181.04 & 14182.04 Page 4 of 26 India but were being paid wages less than the regular employees performing the same duties. It was also alleged that issuance of appointment letter for 40 days with artificial break in service was an unfair labour practice. The workmen thus claimed the relief of regularization of their service with back wages in the respondent Air India. 4. The respondent Air India filed a reply to the aforesaid claim petition denying that the workmen were its employee or that any employer/employee relationship existed between the workmen and Air India. It was further pleaded that HCI of which Chefair was a unit was an independent entity and as per its Memorandum of Association was engaged in the business, inter alia, of establishing and running canteens; that the canteen was being run and maintained by the respondent HCI on the basis of fixed subsidy per employee of Air India which then was of Rs. 340/- per month; that the respondent Air India was not aware of the number of employees engaged by the respondent HCI and had no control over the said employees who were governed by the rules, regulations and service conditions of the respondent HCI. It was pleaded that while the infrastructure of the canteen had been provided by the respondent Air India, its management had been entrusted to the respondent HCI which was providing canteen services to Air India employees under the contract of running and maintaining the said canteen. It was further pleaded that the appointment letters, token numbers, ESI cards etc. had been issued to the workmen by the respondent HCI only and in the circumstances no remedy of regularization could lie against the respondent Air India. It was further pleaded that it was not a case of the respondent Air India engaging any labour through contractor but a case of the WP(C)14178.04, 14181.04 & 14182.04 Page 5 of 26 respondent Air India engaging the respondent HCI to provide canteen services. It was denied that the provisions of Contract Labour Act were attracted and without prejudice to the said plea it was further pleaded that the power to abolish the system of contract labour vested only in the appropriate government and not in the Labour Court. It was also denied that the canteen aforesaid was a statutory canteen inasmuch as the respondent Air India was not employing more than 250 workers. Without prejudice to the said plea it was further pleaded that even if it were to be a statutory canteen, the respondent Air India having engaged the respondent HCI to provide the canteen services, the employees, if any, of HCI would not become the employees of Air India. 5. The award records that the respondents Chefair and HCI also filed a reply pleading that no dispute had been raised by the workmen against Chefair and HCI and the reference made to the GCIT was also not directed against them and hence they had been wrongly impleaded as the respondents and no orders could be passed against them. 6. The CGIT in the award has found / held: “i. that Air India has not denied that the canteen aforesaid is a statutory canteen; ii. that the respondent Air India has not denied that the canteen had been established for the welfare of more than 2000 workers; iii. It is not disputed that the canteen is established within the premises of Air India; WP(C)14178.04, 14181.04 & 14182.04 Page 6 of 26 iv. That HCI carries on its business under the control and administration of Air India as provided in its Memorandum of Articles of Association. v. That Air India and HCI cannot be said to be entirely separate and independent entities. vi. that from the Articles of Association of the respondent HCI it is very much clear that HCI acts under the control of Air India and therefore it cannot be separated from Air India and any act done by the HCI for or in respect of the business or statutory duty of Air India cannot be said to be an independent act of HCI; vii. that therefore the overall supervision and management of the business cannot be separated and it cannot be accepted that the canteen was run independently by the respondent HCI on any contract basis; viii. that contract by Air India to HCI for canteen services and hiring of employees for the said purposes by HCI is merely a camouflage since it is obligatory on the part of the Air India to establish a canteen, hence any workman employed to work in the canteen through any agency will be deemed to be an employee of the owner of the canteen i.e. Air India; ix. Reliance was placed on Kanpur Suraksha Karamchari Union Vs. UOI (1988) 4 SCC 478 and M.M.R. Khan Vs.Union of India 1990 Supp (l) SCC 191; WP(C)14178.04, 14181.04 & 14182.04 Page 7 of 26 x. That Air India had constituted a Committee of persons nominated from its employees and of the employees of HCI for looking into the problems relating to service, hygiene etc in the said canteen; xi That the Deputy Manager of the Air India had in his affidavit deposed that nearly 2000 employees avail the food and snacks from the canteen and thus the plea of Air India that the canteen was for less than 250 workers cannot be accepted. The CGIT thus held that the respondent workmen were employees of Air India and the demand of the workmen was held to be justified. Further, finding that the workmen had been terminated from their service during the pendency of the dispute either before the conciliation officer or before the CGIT such termination was held to be illegal; the mandatory provisions of Section 25F of the Industrial Disputes Act were found to have been not followed. Hence, the termination of employment was set aside and the respondent workmen held entitled to reinstatement in service with continuity and consequential benefits, regularization and parity in pay together with 50% back wages. 7. Aggrieved from the aforesaid award the present three petitions were preferred. This court stayed the operation of the award and which order continues. On applications under Section 17B of the Industrial Disputes Act being filed by the respondent workmen, orders were made for payment of arrears of wages last drawn by the workmen from the date of the award and during the pendency of the present proceedings. 8. The counsel for the parties have been heard. WP(C)14178.04, 14181.04 & 14182.04 Page 8 of 26 9. The senior counsel for the petitioner, at the outset, has urged that the findings in the award, insofar as on the basis of the relationship between Air India and HCI are concerned, cannot be sustained in view of the orders of this court in other proceedings. It is contended that in or about the year 1996 writ petitions were filed in this court for the same relief as claimed before the CGIT. The said writ petitions were dismissed by a judgment dated 24th May, 1999 of a Single Judge of this court (Justice K. Ramamoorthy) on the ground that before the workmen could maintain the writ petition they should establish that HCI is owned by Air India and merely because HCI is a subsidiary of Air India will not constitute the employees of HCI as the employees of Air India. It is contended that LPA 521/1999 was preferred to the Division Bench and which was also dismissed on 29th November, 2001 on the basis of Steel Authority of India Ltd Vs. National Union Waterfront Workers (2001) 7 SCC 1 and Hari Shanker Sharma v. Artificial Limbs Manufacturing Corporation, Civil Appeal No.7731/1997 disposed of on 26th November, 2001 laying down that it cannot be said as an absolute proposition of law that whenever in discharge of a statutory mandate, a canteen is set up or other facility provided by an establishment, the employees of the canteen or such other facility become the employees of that establishment. Attention is invited to another order dated 31st January, 2008 of the Division Bench of this court in LPA 189/1999 titled Anil Kumar & Ors Vs. Air India which was dismissed citing the aforesaid Division Bench order. 10. In my opinion however, the aforesaid orders of the Single Judge and the Division Bench would not come in the way of the CGIT having taken a view contrary thereto. All that this court in the orders aforesaid held was that the WP(C)14178.04, 14181.04 & 14182.04 Page 9 of 26 question whether HCI is owned by Air India entails a disputed question of fact which is required to be adjudicated by the CGIT/ Labour Court. In the aforesaid light it is to be determined whether any case for interference in the award aforesaid is made out. 11. The senior counsel for the petitioner has next contended that the CGIT has erred in presuming that the petitioner Air India had admitted that the canteen was a statutory canteen and was for the benefit/welfare of the 2000 employees. Attention is invited to the written statement/reply filed before the CGIT where the said facts are denied. It is contended that there was no other evidence before the CGIT of the canteen being a statutory canteen or for the benefit of 2000 employees. However, the counsel for the respondent workmen draws the attention to affidavit by way of examination in chief of Mr. Surinder Kumar, Deputy Manager of Air India, filed before the CGIT. He has in para 9 of the affidavit deposed “that the employees of Air India (nearly 2000) are availing food and snacks from the canteen for which a fixed subsidy is paid to the Hotel Corporation of India”. Thus it cannot be said that the CGIT has proceeded on a wrong premise or on the basis of admissions which do not exist, so as to invite interference in the award on that ground alone. It will thus have to be examined otherwise, whether any case for interference in the award is made out. 12. Attention of the senior counsel for the petitioner was drawn to the judgment in M.M.R. Khan (supra) relied upon in the award also. It is contended that in that case the workmen were employed in the canteen but through the device of a labour contractor and were found to be under the control and WP(C)14178.04, 14181.04 & 14182.04 Page 10 of 26 supervision of the railway establishment whose canteen it was; on the contrary in the present case the petitioner Air India has never had any control or supervision over the respondent workmen. It is further contended that in M.M.R. Khan (supra) the provisions for running/operation of the canteen were in the Establishment Manual of the Railways but there is no such thing in the present case. In the present case the contractor running/operating the canteen i.e. HCI has an independent status. It is argued that the CGIT has also not returned any finding that Air India exercises any control over the employees. Attention is invited to Haldia Refinery Canteen Employees Union and Ors. v. Indian Oil Corporation Ltd (2005) 5 SCC 51 and Workmen of Nilgiri Cooperative Marketing Society Ltd Vs. State of Tamil Nadu AIR 2004 SC 1639 where the test of control and supervision over the employees was laid down. It is contended that the CGIT in the present case has failed to apply the said test. Reference is also made to Workmen of the Canteen of Coates of India Ltd. v. Coates of India Ltd. (2004) 3 SCC 547 and to Artificial Limbs Manufacturing Corporation (supra). It is contended that, what to talk of evidence, in the present case there are no pleadings even of the petitioner Air India having any control or supervision over the respondent workmen. Attention is also invited to the sample appointment letters and the evidence of the workmen before the CGIT. It is also contended that the appropriate Government has not prohibited the employment of even contract labour in the canteen. Reference is also made to Employers in relation to the Management of Reserve Bank of India v. Their Workmen (1996) 3 SCC 267 and to Secretary, State of Karnataka Vs. Uma Devi (2006) 4 SCC 1. WP(C)14178.04, 14181.04 & 14182.04 Page 11 of 26 13. Per contra, the counsel for the respondent workmen has, at the outset, contended that the legislature in its wisdom has not permitted any appeal from the award of the Labour Court/Industrial Tribunal; that this court cannot enter into the facts; that the findings of the CGIT in the present case are findings of fact and which cannot be re-tested by this court in the exercise of the writ jurisdiction. It is further contended that the Industrial Disputes Act is a benevolent legislation for protection of workmen and the said aspect cannot be lost sight of by this court while dealing with the matter. Reference is made to Harjinder Singh Vs. Punjab State Warehousing Corporation 2010 (1) SCALE 613 followed in Krishan Singh Vs. Executive Engineer (2010) 2 SCALE 848 where the Supreme Court though noting the shift in the approach of courts for sometime in between on the plea of globalization and economic liberalization but has reiterated the purpose of the labour/industrial law. 14. The counsel for the respondent workmen continuing with his submission while emphasizing that the contractor in the present case i.e. HCI is a hundred percent subsidiary of the establishment running the canteen i.e. Air India, invited attention to Indian Petrochemicals Corporation Ltd Vs. Shramik Sena (1999) 6 SCC 439. He contends that the rules of pleadings/evidence in the Labour Court / CGIT are not the same as in the Civil Court. It is his contention that CGIT has given three reasons in the award for holding the workmen to be employees of the petitioner Air India. Firstly, owing to the canteen being a statutory canteen within the meaning of Section 46 of the Factories Act; secondly owing to the respondent HCI working under the control and supervision of the petitioner Air India because of being a fully owned subsidiary of Air India and lastly of the WP(C)14178.04, 14181.04 & 14182.04 Page 12 of 26 nominees / employees of the petitioner Air India being in the Committee regulating the hygiene, menu etc of the canteen. It is also argued that the work of the canteen is of a permanent/perennial nature. It is contended that thus it cannot be said that the award is not a reasoned award and this court ought not to go into the reasons and interfere with the same. Attention is also invited to the subsidy being meted by the petitioner Air India to each employee for availing the canteen services. Attention is also invited to a letter dated 24th May, 1988 of Air India to contend that Air India was exercising the control of removal / transfer of the employees. It is also urged that the infrastructure for the canteen had been provided by Air India. It is contended that Air India thus had a large role to play in the operation and management of the canteen and in the circumstances the veil of the contractor had to be lifted and the judgment in M.M.R. Khan is fully applicable. Attention was also invited to Parimal Chandra Raha v. Life Insurance Corporation of India 1995 Supp (2) SCC 611 and to Secretary HSEB Vs. Suresh (1999) 3 SCC 601 and to Indian Overseas Bank Vs. IOB Staff Canteen Workers Union 2004 SCC 244 and Hindalco Industries Ltd Vs. Association of Engineering Workers (2008) 13 SCC 441. 15. The senior counsel for the petitioner in rejoinder has drawn attention to the affidavit filed on behalf of the Chefair Flight Catering/HCI; he has also contended that the correspondence referred to by the respondent workmen is not of control and supervision of the employees and has sought to distinguish the judgments relied upon by the respondent workmen. WP(C)14178.04, 14181.04 & 14182.04 Page 13 of 26 16. It would thus be seen that qua canteens in an establishment, whether statutory or otherwise, there are two streams of judgments. One stream holds the workmen/employees of the said canteen to be the employees of the establishment and the other stream of judgments has refused to recognize the workmen/employees of the canteen as employees of the establishment. I have analyzed the judgments in both the streams to crystallize as to what prevailed with the Court in holding one way or the other. However before proceeding to do so, it is deemed expedient to consider the effect, if any, of the respondent HCI being a 100% subsidiary of the respondent Air India. The CGIT has held the respondent workmen to be the employees of Air India for this reason also. 17. A perusal of the Memorandum and Articles of Association of HCI shows that the general management of business of HCI vests in the Board of Directors of HCI subject to the directions, if any, from time to time of Air India in regard to the finance and conduct of the business and affairs of HCI. The composition of the Board of Directors of HCI is controlled by Air India in consultation with the Government of India. The question which arises is whether for the said reason only it can be said that the employees though employed by HCI are employees of Air India. This stares in the face of the first principles of Corporate Law, dating back to Solomon Vs. Solomon and Co.Ltd. 1897 AC 22 where it was held that in law a company is a person altogether different from its shareholders. Air India is nothing but the sole holder of the shares of HCI. However HCI is a legal entity independent of its shareholders. Merely because the shareholder is one, the said fact does not eliminate the difference in the identity of a company as a separate legal identity from its shareholders. Also, WP(C)14178.04, 14181.04 & 14182.04 Page 14 of 26 merely because the Articles of Association of a company provide that the management or its affairs and business and finances shall be subject to the direction, if any, issued by the sole shareholder, the said fact again does not merge the identity of the shareholder with the company. Neither has the CGIT returned a finding nor have the respondent workmen contended that in the exercise of the aforesaid Articles of Association of HCI, Air India has issued a directive as to whom to employ and whom not to employ and is regulating or supervising the terms of employment of any of the employees of HCI. Thus, in my view the mere fact of HCI being a 100% subsidiary of Air India and the aforesaid peculiar Articles of Association would not be decisive of whether the employees aforesaid of HCI and working in the canteen of Air India are to be treated as employees of the Air India or not. 18. During the hearing, I had repeatedly put to the counsel for the respondent workmen as to how they were prejudiced in any way by not being the employees of the petitioner Air India whose employees they are seeking to be and as to why they were not satisfied with being the employees of HCI whose employees they were as per the documents. It was inquired whether HCI is continuing to be in business. Though it was informed that HCI continues to be in business but no answer whatsoever was given