THE HON’BLE SRI JUSTICE B.PRAKASH RAO AND THE HON’BLE Dr. JUSTICE G.YETHIRAJULU WRIT APPEAL Nos.339 AND 1814 OF 2001 (Date: -01-2006) WRIT APPEAL NO. 339 OF 2001: Between: Steel Plant Canteen Employees Union, Affiliated to CITU, Regd. No.D-1261/92, Visakhapatnam, China Gantyada, Visakhapatnam, Visakhapatnam District, represented by its General Secretary, G.Srinivasa Rao, S/o G.Appalaswamy, Aged 28 years and 83 others. ….Appellants. And Rashtriya Inspat Nigam Ltd., Visakhapatnam Steel, Plant, represented by its Chairman-cum- Managing Director, Visakhapatnam Steel Project, Visakhapatnam, Visakhapatnam District, A.P., and 8 others. ... Respondents. WRIT APPEAL No. 1814 OF 2001: The Steel Plant Canteen Employees Union, Visakhapatnam, Regd. No.1261/92, CITU Office, Chingantyada, Old Gajuwaka, Visakhapatnam-26, at present represented by its General Secretary Bendalam Kanna Babu, S/o Babu Rao, aged 40 years and 36 others. …Appellants And The Chairman-cum-Managing Director, Visakhapatnam Steel Project, Visakhapatnam and 6 others. …Respondents. THE HON’BLE SRI JUSTICE B.PRAKASH RAO AND THE HON’BLE Dr. JUSTICE G.YETHIRAJULU WRIT APPEAL Nos.339 AND 1814 OF 2001 COMMON JUDGMENT: (Per Hon’ble Justice B. Prakash Rao) The appellants herein, who are the un-successful writ petitioners, aggrieved against the orders dismissing the Writ Petitions filed by them seeking the relief for regularization of their services as canteen workers in the respondent-Management. In W.P.No.14296 of 1992, all the petitioners are the employees working in the statutory canteens of the respondent-Management whereas the petitioners in W.P.No.26581 of 1996 are the employees working in the non-statutory canteens of the respondent-Management. Initially, both the writ petitions were filed, inter alia, seeking directions to treat them as regular employees of the respondent- Management and make payments of allowances etc., The learned Single Judge, after going into their respective contentions, allowed the Writ Petition No.14296 of 1992 with a direction to treat them as regular employees since they are working in statutory canteens whereas dismissed the Writ Petition No.26581 of 1996 holding that they are not entitled to be treated as such since they are working in the non- statutory canteens. Later, in Writ Petition No.14296 of 1992 which was initially allowed, the respondent-Management filed Review Application and the same was allowed as per the orders dated 06.04.2001 holding that petitioner Nos.2 to 6, 8, 9, 13 to 18, 20 to 22 and 24 to 26 in W.P.No.14296 of 1992 and petitioner Nos. 12 to 28, 30 to 49, 55 to 65, 72 to 79, 81 and 82 in W.P.No.26581 of 1996 are the workmen of the establishment for the purpose of Factories Act only. Hence, these two appeals have been filed assailing the said judgment, inter alia, stating that they are entitled to be treated as regular employees of the respondent-Management even though working under contract. The few facts which are necessary for disposal of these two appeals are that no- doubt the petitioners are engaged in the respective canteens of the respondent- Management which is a public sector undertaking and therefore, they squarely fall well within the definition of the Factory and consequently as workers. Placing reliance on the principles laid down by the Supreme Court in MMR Khan & others V. Union of India holding that the workers working in the canteens established under the statutory obligation should be treated as employees of the principal employer, and they claimed that they are entitled to the benefit on par with the regular employees as per the provisions of the Factories Act. It was also pointed that in all 17,000 workers are working in the respondent public sector undertaking under the control of the Central Government and therefore, the petitioners stand to gain on the same footing. Hence, the Writ Petitions. Contesting the claim of the petitioners, the respondent-Management raised several questions including the plea that it is a registered company under the Companies Act and therefore, it does not fall as a State under Article 12 of the Constitution of India nor there is any violation of the statutory provisions and much less there exists any contractual terms inter se. Therefore, it was their contention that there is no relationship of what-so-ever nature between the petitioners and the respondent- Management as employee and employer or master and servant and in the absence of which, no such claim can be put forward for regularization of their services. Considering these and several other aspects as put forth on behalf of both the sides, the learned Single Judge by referring to the principles as laid down by the Apex Court in MMR Khan & others V. Union of India (one supra), PARIMAL CHANDRA RAHA AND OTHERS v. LIFE INSURANCE CORPORATION OF INDIA AND OTHERS, KARRI POTHU RAJU AND OTHERS v. N.T.P.C. LTD., RAMAGUNDEM, M/S BHARAT HEAVY PLATES & VESSELS LTD., VISAKHAPATNAM v. BHPV CANTEEN EMPLOYEES UNION, INDIAN PETROCHEMICALS CORPORATION LTD v. SHRAMIK SENA AND OTHERS and EMPLOYERS IN RELATION TO THE MANAGEMENT OF RESERVE BANK OF INDIA v. WORKMEN held that the respondent-Management falls within the meaning of State as contemplated under Article 12 of the Constitution of India and in view of the classification made in regard to the canteens into statutory, non-statutory and non-statutory non-recognized canteens in MMR Khan & others V. Union of India case(one supra), it was held that the employees working in the statutory canteens established and run by the respondent-Management as directly or through the contractors are the employees of the establishment for the purpose of Factories Act and not for any other purpose. Having heard the counsel on either side and on perusal of the material available on record, the main question which boils down in these two matters for consideration is as to whether the petitioners in either of the writ petitions are entitled to be regularized as employees of the respondent-Management ? Coming to the basic facts that the petitioners are the employees who have been engaged by the contractors in all those canteens which are being run within the premises of the respondent-management and those employees include the employees from the statutory canteens, non-statutory recognized canteens and also from non-statutory non-recognized canteens. As rightly held by the learned Single Judge that the statutory canteens are the one which have to be necessarily run under the statutory obligation as provided for under the provisions of various enactments as welfare measures for the benefit of the employees. None of the canteens are directly run by the Management alone and they are being run through the Contractors and the employees are being engaged by the Contractors but not by the respondent-Management. At no point of time, there is any iota of relationship to link the employees with the respondent-Management. The Management has absolutely no role to play as either at the time of appointment or at the time of removal but it is only the contractor, who exclusively on his part and on his volition engages them under obligation to provide all such service conditions. The contracts or any appointments are only in between the employees and the contractors and no role is being played by the respondent-Management. Even in regard to such contract labour, the Parliament has sought to remove the bottlenecks by enacting the provisions of Contract Labour (Regulation and Abolition) Act, 1970. However, now as pointed out on behalf of the respondent-Management, the said Act has been suitably amended by Act 10 of 2003 namely Contract Labour (Regulation and Abolition) (A.P. Amendment) Act, 2003 by including the specific provision to Section 2 of the principal Act for the definition “(dd)” Core Activity of an establishment and includes amongst others as provided there under, at item 3 the canteen and catering services. Having regard to such statutory provisions specifically made excluding the operation of the principal Act, the petitioners cannot avail any of the incidents as sought to be contemplated under the principal Act. In view of the same, the petitioners do not stand anywhere nearer to claim any right much less any enforceable one except with that of the main intermediary the Contractor who engages them. Further, recently the Supreme Court in HALDIA REFINERY CANTEEN EMPLOYEES UNION v. M/S INDIAN OIL CORPORATION LTD., while considering the provisions of the Factories Act and the Industrial Disputes Act on the question as to whether canteen employees can claim absorption or regularization in services of Management, held that: “In the instant case, a free hand had been given to the engagement of the employees working in the canteen. There was no clause in the agreement stipulating that canteen contractor shall retain and engage compulsorily the employees who were already working in the canteen under the previous contractor. There was no stipulation in the contract that the employees working in the canteen at the time of the commencement of the contract must be retained by the contractor. The management was not reimbursing the wages of the workmen engaged in the canteen. Rather the contractor had been made liable to pay provident fund contribution, leave salary, medical benefits to his employees and to observe statutory working hours. The contractor has also been made responsible for the proper maintenance of registers, records and accounts so far as compliance of any statutory provisions/obligations are concerned. A duty had been cast on the contractor to keep proper records pertaining to payment of wages etc, and also for depositing the provident fund contributions with authorities concerned. Contractor had been made liable to defend, indemnify and hold harmless the employer from any liability or penalty which may be imposed by the Central, State or local authorities by reason of any violation by the contractor of such laws, regulations and also from all claims, suits or proceedings that may be brought against the management arising under or incidental to or by reason of the work provided/assigned under the contract brought by employees of the contractor, third party or by Central or State Government Authorities. The management had kept with it the right to test, interview or otherwise assess or determine the quality of the employees/workers with regard to their level of skills, knowledge, proficiency, capability etc, so as to ensure that the employees/workers are competent and qualified and suitable for efficient performance of the work covered under the contract. This control has been kept by the management to keep a check over the quality of service provided to its employees. It has nothing to do with either the appointment or taking disciplinary action or dismissal or removal from service of the workmen working in the canteen. Only because the management exercises such control does not mean that the employees working in the canteen are the employees of the management. Such supervisory control is being exercised by the management to ensure that the workers employed are well qualified and capable of rendering the proper service to the employees of the management. Another fact which goes to show that these workers are the employees of the canteen contractor is that a settlement was arrived at between the contractor and the workmen of the canteen in the presence of Assistant Labour Commissioner of the area wherein certain terms and conditions were agreed upon between these parties with regard to some labour issues relating to the workmen employed by the contractor. Another settlement between the same parties was also arrived at concerning once again the labour issues between the workmen and the contractor. Respondent-management was not a party to either of these two settlements. This clearly goes to show that the workmen were treating themselves to be the employees of the contractor and not that of the management. Therefore, they would not become workers of the management for a purpose other than the Factories Act. These workers consequently would not be entitled to claim absorption or regularization in the services of the management.” From the above, it is very amply clear that the petitioners have absolutely no enforceable right or any relations to base upon to seek relief of regularization as such in the respondent-management herein. Either way, the petitioners do not stand to gain both statutory and the principles laid down by the Apex Court in the aforesaid decision. In these circumstances, we hold that in view of the exclusion of the canteens and catering services from the provisions of the Contract Labour (Regulation and Abolition) Act, 1970 and the principles laid down by the Apex Court in the aforesaid decision of HALDIA REFINERY CANTEEN EMPLOYEES UNION v. M/S INDIAN OIL CORPORATION LTD., (seven supra), the appellants/writ petitioners are not entitled to regularization of their services much less absorption into the services of the respondent-management. Hence, we do not find any merits in either of these appeals. In the result, the Writ Appeals are dismissed. No costs. __________________ B. PRAKASH RAO, J ___________________ Dr. G.Y. YETHIRAJULU, J January 2006. Chvn.