Case: HALDIA REFINERY CANTEEN EMPS.UNION  Vs. M/S INDIAN OIL CORPORATION LTD.

2. Short facts of the case are under:-3. Two sets of writ applications were filed in the High Court of Calcutta involving common question of law and fact, both of them were taken up together by the Single Judge and disposed of by the common judgment. Admittedly, the appellants are working in the statutory canteen run by the respondent through contractor in its factory at Haldia, District Midnapore, West Bengal Respondent was treating the appellants as the employees of the contractor. Aggrieved against this, the appellants filed the writ applications in the High Court contending therein that the factory of the respondent where the workmen are employed is governed by the provisions of Indian Factories Act, 1948 (for short "the Factories Act") and the canteen where the said workman are employed is a statutory canteen established by the respondent as required under the provisions of the Act. It is averred in the petition that the canteen is maintained for the benefit of the workmen employed in the factory and the respondent has direct control over them. Contractor though shown as a contractor has no control over the management, administration and functioning of the canteen. That the canteen is a part of the establishment of the management and the workers in the canteen are the employees of the management. That the work carried on is perennial in nature and the canteen is incidental to and is connected with the establishment of the management. It was contended that the appellants were the regular employees of the respondent. The management had refused to grant the status of regular employees to the appellants and treated them as employees of the canteen contractor contrary to the statutory provisions and judicial pronouncements of this Court. Writ applications were filed seeking issuance of mandamus to the respondent to absorb the appellants in its service and to regularise them as such.4. Respondents in their written statement denied that the appellants were its employees or they were entitled to be regularised as such. None of the appellants was appointed by the respondents. All of them were appointed by the contractor and therefore, they were the employees of the contractor. Under the Factories Act, a factory employing more than 250 workers is required to provide the facility of a canteen. The Factories Act or the Rules framed thereunder do not require that such a canteen should be managed and run by regular employees of the establishment. In law it is open and permissible to the management to entrust the same to a contractor. It was contended that the respondent being a public sector undertaking has devised and put in place rigid employment strategies for its core activities based on employment strengths derived on the basis of production and output norms and requirement studies. All recruitment by and within the corporation is made strictly according to those norms on the basis of staff strength and quotas fixed for direct recruitment on the basis of job qualifications, employment norms, reservation of posts to be filled by internal promotion pursuant to settlements arrived at by the corporation with its recognised unions and such employment can only be made against existing vacancies. It cannot appoint any person in contravention of the recruitment policy which requires the management to follow the system. Therefore, apart from the fact that the appellants were not in regular employment of the respondent, the absorption or regularisation of their services would contravene Article 16(4) of the Constitution as well as the reservation policy which is applicable for recruitment in the establishment managed by it.5. The learned Single Judge before whom the writ applications came up for hearing relying upon the two judgments of this Court in M.M.R. Khan and others vs. Union of India and others (1990 (Supp) SCC 191) and Parimal Chandra Raha & others vs. Life Insurance Corporation of India and others (1995 Supp (2) SCC 611) held that under the provisions of the Factories Act, it is the statutory obligation of the employer to provide and maintain a canteen for the use of its employees. The canteen becomes a part of the establishment and therefore, the workers employed in such canteen are the employees of the management. After referring to the various provisions including the rules framed under the Factories Act the learned Single Judge came to the conclusion that the respondent exercises a very high degree of control over the contractor who has been given the contract of running the canteen. The obligation to provide canteen being statutory the facility became a part of service condition of the employees. It was held that the appellants were in fact the employees of the respondent and were being wrongly treated as employees of the contractor. Accordingly, a direction was given to the respondents to absorb the appellants in its service and regularise them with effect from the date of filing of the writ application.6. Aggrieved against the judgment and order of the Single Judge, the respondent-management filed intra court appeal which has been accepted. The Division Bench relying upon a later Three-Judge Bench judgment of this Court in Indian Petrochemicals Corporation Ltd. & Another vs. Shramik Sena & others (1999) 6 SCC 439 ) reversed the judgment of the Singla Judge and dismissed the writ applications filed by the appellants. Aggrieved against the aforesaid judgment of the Division Bench, the present appeal has been filed.

Court's reasoning:
13. During the course of hearing, the learned advocates on both the sides extensively referred to the terms and conditions of the contract between the canteen contractor and the respondent and also to the various statutory provisions of the Factories Act and the rules framed thereunder to point out their respective points of view about the nature of the contract and as to whether the canteen is run by the contractor in his capacity and status of a contractor or that the contractor was merely an agent or servant of the respondent and was functioning merely for the sake of record.The management has 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 employee 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.19. In Indian Petrochemicals Corporation Ltd. (supra) this Court after analysing the earlier judgments on the same point has held that the workmen working in the canteen becomes the workers of the establishment for the purposes of Factories Act only and not for any other purpose. They do not become the employees of the management for any other purpose entitling them for absorption into the service of the principal employer. Factors which persuaded this Court in Indian Petrochemicals Corporation Ltd. case (supra) to take the view that the workmen in that case were employees of the management are missing in the present case. No power vests in the management either to make the appointment or to take disciplinary action against the erring workmen and their dismissal or removal from service. The management is not reimbursing to the contractor the wages of the workmen. On these facts, it cannot be concluded that the contractor was nothing but an agent or a manager of the respondent working completely under the supervision and control of the management.20. Another fact which goes to show that the appellants 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 which was valid for the period from 1.12.1987 to 30.11.1990 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 which was valid upto 1.12.1993 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.21. For the reasons stated above, we agree with the view taken by the Division Bench that the appellants did not become the workers of the management for a purpose other than the Factories