Case: Balwant Rai Saluja &amp; Anr Etc.Etc Vs. Air India Ltd

Air India Limited was constituted under the Air Corporations Act, 1953. By virtue of Section 3 of the Air Corporations (Transfer of Undertakings and Repeal) Act, 1994, Air India has vested in Indian Airlines Limited. It has Ground Services Department at Indira Gandhi International Airport, Delhi. Respondent No. 2 is Hotel Corporation of India, which is a Government Company incorporated under the Companies Act. The authorized share capital of the Hotel Corporation of India, hereinafter referred to as the Corporation, is Rupees 10 crores, divided into 10 lakhs equity shares of Rs. 100/each. The Corporation is a wholly owned subsidiary of Air India and its entire share capital is held by Air India and its nominee. Excepting 6 shares, 4,99,994 shares have been subscribed by Air India and rest by its nominees. Air India controls the composition of the Board of Directors and appoints Directors in consultation with the Government of India. The power to remove the Directors from office before the expiry of the term is vested with Air India, in consultation with the Government of India, so also the power to fill up the vacancies caused by death, resignation, retirement or otherwise. General management of the Corporation is vested in the hands of the Managing Director. Notwithstanding that, Air India is conferred with the power to issue such directions or instructions as it may think fit in regard to the finances and the conduct of the business and affairs of the Corporation. Duty has been cast upon the Corporation to comply with and give effect to such directions and instructions. The main objects for which the Corporation is incorporated are large and include carrying the business of hotels, motels, restaurants,kitchens, refreshment rooms, canteens and depots etc. in general and its incidental and ancillary objects are establishment of catering and opening hotels, which would tend to promote or assist in Air India?s business as an international air carrier. Respondent No. 3, Chef Air Flight Catering, hereinafter referred to asAir?, is one of the units of the Corporation.Section 46 of the Factories Act, inter alia, confers power on the State Government to make rules requiring a specified factory where more than 250 workers are ordinarily employed, to provide and maintain a canteen for the use of the workers. In exercise of the aforesaid power, Rules 65 to 71 have been incorporated in the Delhi Factory Rules, 1950, hereinafter referred to asRules?. Rule 65(1) was to come into force in respect of any class or description of factories on such dates as the Chief Commissioner may by notification in the Official Gazette appoint. Rule 65(2) of the Rules, inter alia, contemplates that the occupier of every factory notified by the Chief Commissioner, where more than 250 workers are ordinarily employed, shall provide in or near the factory an adequate canteen in accordance with the standard prescribed in those Rules. In pursuance of the provisions of(1) of Rule 65 of the Rules, theof the Union Territory of Delhi, by notification in the Official Gazette, dated 21st of January, 1991, directed that Rules 65 to 70 of the Rules shall apply to the factories specified in the said Rules with effect from the date of publication of the notification in the Official Gazette. It included M/s. Air India Ground Services Department, Indira Gandhi International Airport, Delhi (Engineering Unit).The workmen working in Air India Ground Services Department Canteen, hereinafter referred to asCanteen?, raised an industrial dispute and the competent Government made a reference to the Central Government Industrial Tribunal as to whether the demand of the workmen employed by Chef Air to provide canteen service to be treated as deemed employees of the management of Air India is justified and, if so, what relief the workmen are entitled to? The workmen laid their claim and, according to them, they were employed by Air India on casual basis in the Canteen and their employment was through Chef Air, which is a unit of the Corporation. According to the workmen, the Corporation has entered into a contract with Air India to run and maintain the canteen and for that purpose, they were initially appointed for a period of 40 days and said period used to be extended from time to time and in this way each of them had completed service for 240 days in a year. According to the workmen, they were called for interview on several occasions but had not been selected and on the contrary, persons junior to them have been regularized. The workmen have further alleged that Air India had entered into a contract with the Corporation to deny the workmen their legitimate right by circumventing the various provisions of the Contract Labour (Regulation and Abolition) Act, 1970. According to them, they were performing duties of a permanent and perennial nature required by Air India but were being paid wages less than the regular employees. Case of the workmen further is that issuance of letters of appointment for 40 days with artificial break in service is an unfair labour practice and on the aforesaid grounds they sought regularization of the services with back wages in Air India.Air India resisted the claim of the workmen, inter alia, stating that they were not their employees and relationship of employer and employee does not exist between them. According to them, Chef Air is a unit of the Corporation engaged in various businesses including establishing and running of canteens. According to Air India, the Canteen is being run and maintained by the Corporation on the basis of a fixed subsidy per employee provided by them. It is a specific assertion of Air India that they have no control over the workmen and that their conditions of service are governed by the Rules and Regulations of the Corporation. Air India has admitted that the infrastructure of the Canteen was provided by them but its management is in the hands of the Corporation. Air India has further pointed out that letters of appointment, token numbers, ESI cards etc. have been issued to the workmen by the Corporation and, hence, the prayer for regularizing their services by Air India is misconceived. Air India has denied that the Canteen in question is a statutory canteen and was employing more than 250 workers.On the basis of the materials placed on record, the Central Government Industrial Tribunal, hereinafter referred to as ?the Tribunal?, came to the conclusion that the Corporation is 100% subsidiary of Air India and the Canteen in question is a statutory Canteen established for the welfare of more than 2,000 workers. The Tribunal also came to the conclusion that the Canteen is established within the premises of Air India and the Corporation carries on its business under the control and administration of Air India. According to the Tribunal, the running of the Canteen by the Corporation in respect of the statutory duty of Air India cannot be said to be its independent act. Accordingly, the Tribunal observed that hiring of employees for running the statutory canteen by the Corporation is a camouflage and the workmen employed in the Canteen are deemed employees of Air India. Thus, the Tribunal held the demand of the workers to be justified and finding that the workmen have been terminated from their services during the pendency of the dispute held that the termination is illegal and, accordingly, set aside the termination of their employment and directed reinstatement with 50% back wages.Assailing the aforesaid award of the Tribunal, Air India preferred writ petition before the High Court.The learned Single Judge held that Air India is the sole holder of the shares of the Corporation but it is a separate legal entity which is independent of its shareholders. The authority to issue directions does not merge the identity of the Corporation with the shareholder. The learned Single Judge accordingly held asin 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 Air India or not.?As regards the grievance of the workmen that Air India had devised to employ the workmen through a unit of the Corporation to defeat their rights, the learned Single Judge observed as follows:?19. One thing which emerges is that in the present case, no motive to defeat any rights of the employees, in Air India entering into a contract with Chef Air (a unit of HCI) for operating its canteen, even if it be a statutory canteen have been established. It was not as if by employing workmen in HCI instead of in Air India, the workmen were being made employees of a weaker entity against whom they can claim no rights. After all HCI is also a Government of India company as Air India is.?The learned Single Judge further came to the conclusion that the Corporation was not incorporated for the sole purpose of operating the Canteen for Air India but was set up as a legal entity to carry on business in diverse fields. According to the learned Single Judge, Air India engaged the Corporation which has expertise in the field to run and operate the Canteen and that will not make the workmen employees of Air India. The learned Single Judge ultimately held as follows:?23. HCI in the present case is seen as one such expert. It has been providing flight catering services to Air India and other airlines besides carrying on other allied businesses. As aforesaid, HCI was not incorporated merely to run the canteen of Air India so as to keep the employees of the said canteen, managed through the medium of HCI, at arm?s length from Air India. HCI is a business entity in its own right and no mala fides have been established in Air India entrusting the operation and management of the canteen aforesaid to HCI. As aforesaid, in spite of repeated asking, no prejudice is shown to have been caused to the workmen in them being the employees of the HCI instead of Air India. Of my own I can only gauge that may be as employees of Air India they may be entitled to a free flight once in a while and which they may not be entitled to as an employee of HCI. However, that is hardly determinative of the matter in controversy. Again it is not as if Air India is attaining to offload its canteen employees to an entity which is sick or near the stage of being closed down. HCI is informed to be a running concern.?Accordingly, it set aside the award passed by the Tribunal.The workmen, aggrieved by the same, preferred an appeal before the Division Bench of the High Court. The Division Bench framed the following question for its consideration:?11. The core issue that emanates for consideration is whether in the obtaining factual matrix it can be held that the employees of the canteen established by Air India in its premises and run by the HCI be treated as regular employees of Air India. Before we advert to the factual canvas, we think it appropriate to refer to the citations in the field, cull out the principles and analyse whether they are applicable to the material brought on record.?The Division Bench of the High Court analysed the facts, referred to the various decisions of this Court and ultimately came to the conclusion that the Corporation is a separate entity and not a part of Air India as found by the Tribunal. It endorsed the finding of the learned Single Judge that merely because the Articles of Association confer power on Air India to issue such directions or instructions as it may think fit in regard to conduct of the business and affairs of the Corporation and make it obligatory for the Corporation to carry on the direction of Air India, would not merge the identity of the shareholders with the Corporation. The Division Bench ultimately affirmed the decision of the learned Single Judge and, while doing so, observed as follows:?20. On the basis of the aforesaid enunciation of law, the factual matrix is required to be tested. As is manifest, there is no material on record to show that the respondentAir India had any role in the appointment of the employees in the canteen. No administrative or disciplinary action could be taken by the respondent against the canteen workers. The respondent had itself not undertaken the obligation to run the canteen but had only provided facility so that its employees could avail the canteen facilities. It is not a case where the employees of the canteen were enlisted under a welfare fund scheme, provident fund scheme and medical scheme of the respondentmanagement. The responsibility to run the canteen was absolutely with the HCI and it was totally a contractual relationship between the two. Air India had no say in the selection or other affairs of the canteen workers.?

Court's reasoning:
53. Since I have answered point No. 4 in favour of the concerned workmen and against Air India, the appellants are entitled for the reliefs as prayed for in these appeals. Accordingly, these appeals are allowed and common award dated 5.5.2004 passed in I.D. Nos.97 to 99 of 1996 in favour of the workmen is restored. Further, I direct the Management of Air India to absorb all the concerned workmen covered in the I.D. Nos.97 to 99 of 1996 as permanent workmen on its rolls from the date of their appointment and grant all the consequential benefits such as salary for which they are entitled for after computing properly, taking into consideration the pay scale and periodical wage revision that has taken place and are applicable to the respective posts of the concerned workmen as per the notification issued by the Lt. Governor, Union Territory of Delhi and on the basis of similar notifications applicable for them.54. Since I have allowed I.D. Nos. 97 to 99 of 1996, the Industrial Dispute case Nos. 107 and 108 of 1996 involving the workmen whose services were terminated during the pendency of petition before CGIT, must also be treated as permanent workmen at par with the concerned workmen involved in the instant case. The award for their reinstatement to their posts shall be passed with all consequential benefits with full back wages.Both the learned single Judge and the Division Bench have exceeded in their jurisdiction in exercising their extraordinary and supervisory jurisdiction in the Writ Petitions and the Letter Patent Appeals, while examining the correctness and findings recorded by the CGIT in the common award which the High Court has disagreed with and has set aside the common award impugned in the Writ Petitions filed by Air India. Both the learned single Judge and the Division Bench have exceeded their jurisdiction in interfering with findings of fact recorded by the CGIT on the points of dispute and the contentious issues on proper appreciation of pleadings, evidence on record and law laid down by this Court in the cases referred to in the award I have referred to the relevant factual aspects and legal evidence and the statutory provisions of the Factories Act, Rules and the Industrial Disputes Act, while answering to Point Nos.1, 2 and 3 in favour of the concerned workmen by recording my reasons in this judgment. Therefore, I have to hold that the learned single Judge and the Division Bench exceeded in their jurisdiction to interfere with the finding of fact recorded by the CGIT on the points of dispute which were referred to by the Central Government. For the reasons recorded by me on point Nos. 1 and 2 in this judgment and further answering the point No.3 in affirmative in favour of the concerned workmen holding that findings and reasons recorded by the CGIT on the point of dispute referred to it by the Central government are neither erroneous nor suffers from error in law. Also I have to hold while answering to point No. 4 that both the learned single Judge and the High Court have disagreed with the correct finding of fact recorded by the CGIT in its award. The findings recorded by the learned Singh Judge and Division Bench in the impugned judgment are not only erroneous but suffers from error in law as the same is contrary to the statutory provisions and law laid down by this Court which have been extensively referred to by me in the reasoning portion of this judgment in answer to point Nos. 1 and 2. Hence, I have to hold that findings and reasons recorded in the impugned judgment is wholly untenable and liable to be set aside and accordingly set aside by answering point no. 4 in affirmative in favour of the concerned workmen.In view of the foregoing reasons recorded by me in answering the point Nos. 1 and 2 after adverting to the relevant facts and interpretation of certain provisions of the Factories Act, Rules and the Industrial Disputes Act, particularly Sections 2(k), 2(s) read with the provisions of Section 25(T) and Section 25(U) of the Industrial Disputes Act and Entry No.10 in the Vth Schedule under the definition of unfair labour practices as defined in Section 2(ra) regarding the employment of the workmen on contract basis against the permanent nature of employment in the statutory canteen I have held that this practice by Air India constitutes unfair labour practice. The decisions rendered by this Court which have been extensively referred to by me and some of the cases referred to by the CGIT have rightly answered the points of dispute in favour of the concerned workmen, on proper appreciation of the facts pleaded, legal evidence on record and I have applied the legal principles laid down by this Court in the cases of Basti Sugar Mills Ltd., Parimal Chandra Raha, Kanpur Suraksha Karamchari Union and M.M.R. Khan (all referred to supra) to the fact situation of the case on hand to restore the award of the CGIT. The CGIT has rightly come to the conclusion and recorded the finding of fact assigning valid and cogent reasons. Therefore, I have to answer that the findings and reasons recorded by CGIT on the points of dispute in relation to the concerned employees declaring that the concerned contract workers of the canteen are deemed employees of Air India is a right decision which has been reached after appreciation of evidence on record and adhering to the legal principles laid down by this Court in catena of cases. Further, setting aside the termination orders passed against some of the concerned workmen covered in the industrial dispute case Nos.97 to 99 of 1996 is also justified for the reason that the services of the concerned workmen in the above cases were terminated during pendency of the industrial disputes before CGIT regarding absorption of the concerned workmen as permanent employees, without obtaining approval from the CGIT as required under Section 33(2)(b) of the I.D. Act. Apart from the above reason, the termination of services of the workmen involved in the above industrial dispute cases is unsustainable in law for the reason that they have not complied with the mandatory provisions of Section 25F, clauses (a) and (b) of the I.D. Act and have not obtained the permission from the Central Government as required under Section 25N of Chapter VB of the I.D. Act. Therefore, the orders of termination passed against the concerned workmen are void ab initio in law and the same are liable to be set aside. I have to hold that the CGIT has rightly passed an award in favour of all the workmen in all the Industrial Disputes on the file of CGIT on findings and reasons recorded on the points of dispute referred to it by the Central Government upon which adjudication is made by the CGIT. The same cannot be termed either as erroneous or error in law. Accordingly, I answer the point No.3 in favour the concerned workmen.The legal principle laid down by this Court by following the exposition of law for lifting the veil to find out real facts is very much necessary to the facts of the case in hand having the law laid down in the case of Salomon v. Salomon (supra) to examine the correctness of the findings of the High Court in reversing the finding of fact recorded in favour of the concerned workmen by the CGIT in its award with a view to find out whether the arrangement with or without the consent of the owner company facilitated the violation of the basic principles of labour jurisprudence established in this country over a period of more than six decades, especially principles relating to security of tenure, retrenchment, natural justice, and many other standards relating to "decent conditions at work". If two statutory corporations owned by the Government of India are governed by Rule of law, namely Factories Act and Industrial Disputes Act, in the manner in which they contended, it would be opposed to the labour jurisprudence and constitute a clear case of unfair labour practice which is against the law enunciated by this Court in plethora of cases referred to supra whose relevant paragraphs are extracted as above in support of my conclusion to hold that the finding in the impugned judgments of the High Court that is, the HCI, though it is a subsidiary company of Air India, yet it is a separate and distinct legal entity and that the concerned workmen have been employed by the HCI and not Air India and hence, there is no relationship of employer and employee and disciplinary control upon them by Air India, which has been reached at by the High Court and setting aside the findings recorded by the CGIT in favour of the concerned workmen, is not only erroneous but also suffers from error in law as the same is opposed to the law laid down by this Court in catena of cases referred to supra.43. Any other test required to be applied to the question of the legal entity of the so called independent contractor, is irrelevant to the critical issues which arise in this case. The view taken by the Delhi High Court regarding the separate legal identity of both these corporations, and erroneously setting aside the findings of the CGIT is not the determining factor in this case. There have been varying practices in vogue in this regard. In the Parimal Chandra Raha?s case (supra), it is noticed that there were Managing Committees?, and Cooperative Societies which could not exist without a separate legal personality that is, Contractors, many of them also create convenient legal personalities under garb of different legal entities. The presence of a contractor clothed with a legal personality or not as in the case of the defence establishments referred to above in the Suraksha Karamchari Union?s case (supra) also has hardly ever been considered to be a determinative test pertaining to canteen workers on contract.44. For the reasons recorded by me on the contentious points with reference to the facts, legal evidence and law laid down by this Court in plethora of cases, I am in agreement with the CGIT on the finding of facts recorded by it on the question of the relationship between the concerned workmen and the Air India on proper appreciation of pleadings and the legal evidence on record and piercing the veil to the fact situation to find out true facts which is rightly answered by CGIT on the points of disputes and the said finding is in conformity with the law laid down by this Court in Hussainbhai? case and M.M.R. Khan and other cases referred to supra for the reason that the contract with the HCI which is a subsidiary Company of Air India and employing the contract workers to work in the statutory canteen, is a sham contract. They have been engaged in permanent nature of work continuously for number of years. The finding of fact recorded by the CGIT on the points of dispute holding that they are entitled for regularization and to be absorbed as employees of Air India, without prejudice to any managerial arrangement to avail the expertise of the HCI of India through existing arrangements. Indeed that would be asituation for all the stake holders concerned in this casethe corporates, the Air India employees numbering more than 2000 in this case and the disempowered canteen workers and that would also be in harmony with our constitutional jurisprudence.For the above reasons, in addition to the test of economic control, as held by this Court in Hussainbhai?s case, I am of the view that the relief sought for by the concerned workmen which is accepted by the CGIT is legal and valid. Therefore, I have to accept the finding and reasons recorded by the CGIT though the reasons which I have assigned are not the reasons assigned by it but the conclusions arrived at by the CGIT while determining the points of dispute referred to it are legal and valid. Therefore, the reasons assigned by me in this judgment must be read into the reasons of the award of the CGIT. The aforesaid reasons are assigned by me in this judgment after careful examination of the rival legal contentions urged by the learned senior counsel on behalf of the parties with reference to the provisions of the Factories Act, Rules, Contract Labour Act and Industrial Disputes Act and law laid down by this Court in catena of cases. These points are accordingly answered in favour of the workmen.However it must be clarified that the requirement of reservation as provided for in Articles 14 and 16 of the Constitution must be complied with while regularizing the canteen workers as employees of Air India. This can be achieved by complying with relevant provisions of the I.D. Act in contrast to the action taken by the HCI in violation of the said statute. It is also further relevant to note that the only relief the workers have sought is one of regularization on the rolls of Air India. This does not itself impose any additional expenditure for it. Therefore, the concern of the learned single Judge of the High Court, on this count is not attracted in the context of the relief sought for by the concerned workmen.For the above reasons, in addition to the test of economic control, as held by this Court in Hussainbhai?s case, I am of the view that the relief sought for by the concerned workmen which is accepted by the CGIT is legal and valid. Therefore, I have to accept the finding and reasons recorded by the CGIT though the reasons which I have assigned are not the reasons assigned by it but the conclusions arrived at by the CGIT while determining the points of dispute referred to it are legal and valid. Therefore, the reasons assigned by me in this judgment must be read into the reasons of the award of the CGIT. The aforesaid reasons are assigned by me in this judgment after careful examination of the rival legal contentions urged by the learned senior counsel on behalf of the parties with reference to the provisions of the Factories Act, Rules, Contract Labour Act and Industrial Disputes Act and law laid down by this Court in catena of cases. These points are accordingly answered in favour of the workmen.