Case: Barat Fritz Werner Ltd Vs. State Of Karnataka

On the basis of a report made by the National Commission on Labour in the year 1966 in paragraph 9.10 to the effect that the practice of employing contract labour is prevalent in varying degree in almost all the industries and services. Since the system of employment of contract labour led to various abuses, the question of its abolition was accentuated. There had been consistent demand by the labour for abolishing the system of contract labour.2. The dispute relating to contract labour or its absorption by the employer was, therefore, held to be an industrial dispute. [Standard Vacuum Refining Co. of India Ltd. v. Its Workmen & another, 1960(3) SCR 466]. Thereafter industrial adjudication interfered to abolish or modify the system of contract labour in industrial undertakings depending on the facts arising in each case.3. Then came on the scene the fate of contract workers in the canteen established an mandated under Section 46 of the Factories Act, 1947. In Saraspur Mills Co. Ltd. v. Ramanlal Chimanlal and others, 1973(3) SCR 967, in view of Section 46 of the Factories Act and rules made thereunder requiring an employer to provide a canteen in a factory where more than 250 workers are employed for the use of the workers even if run by a cooperative society were workmen of the factory as it was under a mandatory obligation to maintain and run the canteen. This question was more elaborately dealt with in M.M.R. Khan and others v. Union of India and others, 1990 (Supp) SCC 191. In that case, this Court was concerned with canteens run by Railway establishments falling into three different categoriesCanteens compulsorily provided either pursuant to Section 16 of the Factories Act or under other enactment described as "statutory factories";2. Canteens set up as a staff welfare measure with the approval of the Railway Board in terms of Railway Establishment Manual;3. Canteens established though as a staff welfare measure but without the approval of the Railway Board in terms of Railway Establishment Manual.The employees falling in the first and the second categories were held to be employees of the Railway establishment while the employees falling in the third category were not held to be so.5. In All India Railway Institute of Employees Association v. Union of India, 1991(2) LLJ 265, again this Court dealt with this question where the employees in the Railway institute or clubs were not treated as employees of the Railway establishment.6. In the meanwhile, law further developed in such a manner that even in relation to employees working in those canteens who were not established pursuant to Section 46 of the Factories Act but pursuant to a settlement entered into with the employees or under an award made by an industrial Tribunal or by way of a condition of service, the matter was examined in Parimal Chandra Raha and others v. L.I.C. of India and others, 1995 Supp. (2) SCC 611 : 1995(3) SCT 248 (SC), that such employees must be treated as employees of the establishment. Of course, in Indian Petrochemicals Corpn. Ltd and another v. Shramik Sena and others, 1999(6) SCC 439 : 1999(2) SCt 650 (SC), a new gloss was given to this decision by stating that the presumption arising under the Factories Act in relation to such workers is available only for the purpose of the Act and no further. However, in Employers in relation to the Management of RBI v. Workmen, 1996(3) SCC 267 : 1996(2) SCT 678 (SC), this Court struck a different note. Again this Court in Indian Overseas Bank v. I.O.B. Staff Canteen Workers Union and another, 2000(4) SCC 245 : 2000(2) SCT 682 (SC), considered the effect of the decision in MMR Khan [supra], Parimal Chandra Raha [supra] and Indian Petrochemicals Corpn. Ltd. and another v. Shramik Sena and others, 1999(6) SCC 439, and it was made clear that the workers of a particular canteen statutorily obligated to be run render no more than to deem them to be workers for limited purpose of the Factories Act and not for all purposes and in cases where it is a non-statutory recognised canteen the Court should find out whether the obligation to run was implicit or explicit on the facts proved in that case and the ordinary test of control, supervision and the nature of facilities provided were taken note of to find out whether the employees therein are those of the main establishment. However, in these cases that exercise may not be required. What we are concerned with here is the validity of the notifications under the Contract Labour [Regulation and Abolition] Act, 1970 [hereinafter referred to as `the Act].7. A notification was issued by the Government of Karnataka under Section 10 of the Act on 11.4.1997 prohibiting with effect from the date of publication of the notifications employment of contract labour in industrial canteens and factories employing 250 workers or above in the State of Karnataka. Writ petitions were filed before the High Court of Karnataka challenging the validity of the same on various grounds. However, the High Court upheld the validity of the said notifications and dismissed the writ petitions. Hence these petitions under Article 136 of the Constitution.

Court's reasoning:
19. In this context, we may advert to the decision in M/s J.K. Cotton Spinning & Weaving Mills Co. Ltd. [supra] wherein gardeners engaged in maintaining the bungalows provided for the officers of the industry were also treated as workers. The contention put forth on behalf of the Petitioners to distinguish this decision is that it depended on the definition available under the ID Act as in force in that particular area where the factory had been established. It is not their case that Factories Act was not applicable in that area but in order to ascertain whether the workers are covered by the ID Act or not what was seen was the definition under the ID Act. In the same way what have to see in the present case is the definition of the term `worker as provided under the Act and not the Factories Act. The learned counsel for the Petitioners relied upon Section 119 of the Factories Act to contend that the Factories Act would weigh over the Act. In the first place, the learned counsel is unable to establish that there is any inconsistency between the Factories Act and the Act. Unless such inconsistency is pointed out this provision would not be attracted at all. Therefore, we have to reject this contention also.20. Under Rule 96 of the Karnataka Factories Rules 1969, it has been provided that if the management bears the cost of wages of canteen staff, buildings, water, lighting, fuel and insurance it shall not be incumbent on them to run the canteen on any further loss to themselves, which clearly indicate that in such circumstances they could run the canteen through an intermediary. Therefore, they contend that there is no legal obligation upon them to run a canteen but their obligation is only to provide facilities for running of the canteen by bearing the cost of wages of canteen staff, buildings, water, lighting, fuel and insurance, if the said canteen cannot be carried on in an economically viable manner. But no factual foundation has been laid in any of these petitions to point out that they have incurred losses to themselves in running these canteens and, therefore, an intermediary has become necessary. Unless that exercise is done this argument cannot be considered.It was next contended that conditions in each one of the factories had to be ascertained and separate notification had to be issued in respect of each one of the factories. This argument needs to be rejected outright because when the Government was formulating the policy it has to take note of the conditions prevalent generally in such establishments and not with reference to any one or other. In general, if it is found that it would be appropriate to abolish contract labour in canteens run by factories, individual distinctive features do not affect such a decision.25. It is next contended that only one notification is issued and not with reference to each of the establishments separately and, therefore, the action of the Government is vitiated. When the notification is applicable to establishments falling in a particular category, the fact that separate notification is not issued will not make impact on the action of the Government in the issue of a notification, if otherwise it is valid. Hence this contention also has no merit.After we reserved the matter for orders, it is brought to our notice that the Government of Karnataka has issue a notification on 15th November, 2000 in No.LD 46 LWA 2000 resending notification No. KAE 5 LWA 97 dated 11th April, 1997 prohibiting under Section 10 of the Act contract labour in certain processes of steel re-polling mills. The consideration for issue or cancellation of notifications in regard to steel re-rolling mills have no bearing on the issue on hand as in the present case prohibition is only with respect to contract labour in canteens maintained pursuant to Section 46 of the Factories Act and the principles applicable in regard to the two issues are entirely different.27. Therefore, we do not find any merit in any arguments advanced on behalf of the petitioners