VST INDUSTRIES LTD.

VST INDUSTRIES WORKERS' UNION AND ANR. ETC.

DECEMBER 7, 2000

(S. RAJENDRA BABU AND S.N. VARIAVA, JJ.]

Constitution of India- Article 226 Writ of mandamus on a public limited company incorporated under the Companies Act, 1956-Held, writ C would not lie since the company, on facts, is not discharging any public duty.

labour laws :

Factories Act, 1948 Section 46- Entitlement of employees working in canteen run by contractors in a company s factory as employees of the D company and grant of monetary and other consequential benefits thereof- Held, on facts, the employees to be treated as employees of the company.

Appellant-company is engaged in manufacture and sale of cigarettes. A canteen is pr!Jvided in factory premises of the appellant pursuant to Section 46 of the Factories Act, 1948. The appellant was managing the canteen till E 1982 and later the management of the canteen was given on contract to different contractors from time to time and the personnel employed in the canteen were retained and paid salaries through the contractors along with ESI and Provident Fund benefits. The appellant provided the necessary utilities to run the canteen having a control on quality of food and rates. Respondentunion filed a petition before High Court seeking a writ of mandamus to treat F members of the union working in canteen of applicant's factory as regular employees of the appellant and for grant of monetary and consequential benefits thereby. Single Judge of the High Court held that a writ of mandamus would lie against a company as it is called upon to discharge a public duty under the Factories Act, 1948 and held that the personnel working in the G canteen are employees of the appellant and granted reliefs imposing certain restrictions. The Division Bench affirmed the view taken by the Single Judge.

In certain appeals, a Reference was made to the Industrial Tribunal on this point. The Tribunal passed an award on facts that the workmen be treated as employees of the appellant, who are entitled to payment of appropriate scales H and designations with all consequential and attendant benefits of arrears of 438

VST INDUSTRIES LTD. 1•. VST INDUSTRIES WORKERS UNION 439

pay, etc. together with counting of entire service for the purpose of terminal A benefits. Hence these appeals.

The appellant contended that no writ would lie as the appellant is a company and not an authority or a person discharging any public duty. The appellant further contended that under the Petroleum Rules framed under the Petroleum Act, 1934, there are certain hazardous areas and a canteen B cannot be situated in those areas.

Partly dismissing the appeals, the Court

HELD : 1.1. The words 'any person or authority' used in Article 226 would not be confined only to statutory authorities or instrumentalities of the C State but would cover any other person or body performing public duty. The form of the body concerned is not very much relevant. What is relevant is the nature of the duty imposed on that body. The duty must be judged in the light of positive obligation owed by the person or authority to affected party, no matter by what means the duty is imposed, if a positive obligation exists, mandamus D cannot be denied. (442-H, 443-A, BJ

1.2. Manufacture and sale of cigarettes carried on by the appellant will not involve any public function. Incidental to that activity there is an obligation under Section 46 of the Factories Act, 1948 to set up a canteen when the establishment has more than 250 workmen. It is a condition of service in E

relation to a workman providing better facilities to workmen to discharge their duties properly and maintain their own health or welfare. It is only a labour welfare device for the benefit of its work force unlike a provision where Pollution Control Act makes it obligatory even on a private company not to discharge certain effluents. In such cases public duty is owed to the public in F general and not specific to any person or group of persons. Further the damage that would cause in not observing them is immense. lf a part of the conditions of service of a workman is violated there is no justification to hold that such activity will amount to public duty. Therefore, the High Court fell into error in saying that the appellant is amenable to writ jurisdiction.1445-G, H; 446-A, Bl

1.3. On examination of the facts, there was a canteen within the premises G

of the appellant till 1982 and from 1982 onwards the management of the canteen was entrusted to a private contractor; that the canteen workers continued to be the same irrespective of the change in the contractors from time to time; that wages are paid to the workmen in the canteen by the management through the contractor; that the appellant provided the H

'IUPREME COUR1 REPORTS (2000] SUPP. 5 S.C.R.

A accommodation, furniture, fuel, electricity, utensils, etc.; that the appellant exercises control over the standard in quality, quantity and the rate of the food items supplied to the workmen for whose benefit the canteen is established.

From these circumstances, it clearly indicates that the appellant has a complete control over the activities in respect of the canteen and the contractor B has absolutely no discretion either in regard to the menu, quality and quantity of the food items and the rates at which the food are supplied to the workmen.

When the management of the appellant exercises such a complete control, the canteen is deemed to be run by the appellant itself. (447-A-D(

1.4. The respondents do not have a strong case on merits since the High C Court has no jurisdiction to entertain a petition under Article 226 of the Constitution. In the special features of the case, after clarifying the legal position, it is felt that the decision of the High Court should not be disturbed.

(447-EJ

2.1. There is no substance in the contention of the appellant that a O canteen cannot be located in hazardous areas as per the Petroleum Rules framed under the Petroleum Act, I 934. The fact of the fire incident in 1997 do not come in the way of the award made by the Tribuna~ as it is possible to locate the canteen in an appropriate place where there is no hazard of the kind envisaged under the Petroleum Rules. (449-B-DI

E Parimal Chandra Raha v. Life Insurance Corporation of India, (1995( Supp. 2 SCC 611; Anadi Mukta Sadguru Shree Muktajee Vandas Swami Survarna Jayanti Mahotsav Smarak Trust & Ors. v. VR. Rudani & Ors., (1989( 2 SCC 691; Indian Petrochemicals Corporation Ltd & Anr. v. Shramik Sena & Ors., (1999] 6 SCC 439; Reserve Bank of India v. Workmen, [1996) 3 SCC F 267; MMR. Khan v. Union of India, (1990) Supp. SCC 191; T Gattaiah v.

Commissioner of Labour, (1981) II LW 54 and Rakesh Gupta v. Hyderabad Stock Exchange Ltd Hyderabad & Ors., AIR (1996) AP 430, referred to.

De Smith, Woolf and Jowell's Judicial Review of Administrative Action, 5th Edn., referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 670of1997.

From the Judgment and Order dated 27 .11.96 of the Andhra Pradesh High Court in W.A. No. 430 of 1996.

WITH

VST INDUSTRIES LTD. 1•. VST INDUSTRIES WORKERS UNION [RAJENDRA BABU, J.! 44 J

Civil Appeal Nos. 6533/97 and 6534/97.

Harish N. Salve, Solicitor General, Ashok H. Desai, K.K. Venugopal, N.B. Shetye, Ms. Indira Jaising, Dushyant Dave, G.B. Pai, R. Venkataramani,

Har Dev Singh, S. Ganesh, C.R. Sridharan, Rajan Narain, Ms. Pooja Sriram, Narain Shetty, Ms. Nivedita Puggal, V. Balaji, Ms. Shanthi, A.T.M. Sampath, Sanjay Kapur, Ms. Shubhra Kapur, L. Nageshwara Rao, Harris Beeran, B Siddharth, S. Udaya Kumar Sagar, S. Ashok Anand Kumar, Ms. Madhu Moolchandani, D.P. Mohanty, K.K. Mahalik, J.R. Das, Janaranjan Das, R.N.

Keshwani, T.G. Narayanan Nair, P.P. Singh, Ms. Deepa Rathore, Ms. Anitha Shenoy and K.N. Tripathy for the appearing parties.

The Judgment of the Court was delivered by

RAJENDRA BABU, J. :

Civil Appeal No. 670 OF 1997.

The appellant is a company incorporated under the Companies Act, 1956 with the object of manufacture and salt: of cigarettes. Members of general public are the shareholders and the shares of the company are traded in through various stock exchanges in the country. A petition was filed under Article 226 of the Constitution by respondent No. I seeking for a writ of mandamus to treat the members of the respondentunion who arc employees working in the canteen of the appellant's factory as employees of the appellant and for grant of monetary and other consequential benefits. The canteen is provided in the factory premises of the appellant pursuant to Section 46 of the Factories Act, 1948 [hereinafter referred to as 'the Act'], which obliges a factory employing more than 250 workmen to provide such a canteen. On behalf of the respondents, it is contended that the appellant had been managing the canteen up to the year 1982 and thereafter introduced the contract system for maintaining the canteen so established; that though the management of the canteen had been entrusted to the contractors from time to time, the personnel employed in the canteen were retained by all the contractors and they have been paid salaries through contractors; that the workmen employed in the canteen have been provided with ES! benefits under the Code No. VST, the appellant, and benefits arising under the Employees Provident Funds Act

are also provided similarly; that the appellant has also provided a building along with furniture, utensils, cutlery, gas, electricity, water supply and other facilities; that the contractor is engaged only to prepare the food and serve H

A it to the employees and that the quality of the food and the rates are controlled by the management of the appellant.

On behalfofthe appellant, contention was raised that no writ would lie against the appellant inasmuch as the appellant is a company, which is not an authority or a person against whom a writ would lie. It was submitted that B they do not discharge any public duty and hence the writ cannot be issued.

Orr the merits of the matter, the appellant disputed various questions of fact and urged that the decision of this Court in Parimal Chandra Raha v. Life Insurance Corporation of India, [ 1995] Supp. 2 SCC 611, would not be applicable to the appellant in the facts and circumstances of the case. The C learned Single Judge, who decided the matter in the first instance, held that a writ would lie against a company under a private management following the decision in T Gattaiah v. Commissioner of Labour, (1981) [JI ] LLJ 54, in which it was held that establishment of a canteen and its maintenance is a statutory requirement; under Section 46 of the Act a public duty is imposed on the company to establish and maintain the canteen; inasmuch as members D of the respondent-union are working in the canteen they are entitled to seek a mandamus. He, therefore, held that when a public duty is called upon to be discharged by a private management, a writ of mandamus would lie and could be issued under Article 226 of the Constitution. He thus rejected the contention.

E On the merits of the matter, the learned Single Judge followed the decision in Parimal Chandra Raha 's case holding that when the duty had been enjoined on the illppellant to provide and maintain a canteen facility under the Factories Act it becomes the obligation of the appellant to establish a canteen and that is what the appellant had done. Therefore, when that work F is got done through somebody else by providing the necessary infrastructure and other facilities, when the personnel did not change though the contractors changed from time to time, he held that they become employees of the appellant. On that basis the learned Single Judge granted reliefs sought for by the respondents, however, imposing certain rstrictions with regard to the age, being medically fit. on the date of the writ petition, had put in a minimum G of three years of continuous service and such service prior to the attainment of the minimum qualifying age under the company should be ignored.

On appeal, the Division Bench of the High Court affirmed the view taken by the learned Single Judge. The Division Bench referred to their H decision in Rakesh Gupta v. Hyderabad Stock Exchange Ltd. Hyderabad &

VSl INDUSTRIES LTD., .. VST INDUSTRIES WORKERS UNION (RAJENDRA BABU, J.J 443

Ors., AIR ( 1996) AP 430, that a writ in the nature of mandamus, certiorari and A prohibition are recognised as public law remedies and are not available to enforce private law rights. However, noticing that the expression 'any person or authority' used in Article 226 of the Constitution should not be confined only to statutory authorities and instrumentalities of State but would cover any other person or body performing public duty. The form of the body B concerned is not very much relevant. What is relevant is the nature of the duty imposed on that body. The duty must be judged in the light of positive obligation owed by the person or authority to the affected party, no matter by what means the duty is imposed. On that basis, the Division Bench of the High Court dismissed the writ appeal. Hence this appeal.

On behalf of the appellant contention put forth at the forefront is that a writ would not lie against the appellant inasmuch as the appellant is engaged in the manufacture and sale of cigarettes and as an incident thereto has provided a canteen to its workmen pursuant to an obligation under Section 46 of the Act. Shri S. Ganesh, learned counsel for the appellant, pressed into service the decision of this Court in Anadi Mukta Sadguru Shree Muktajee Vandas Swami Survarna Jayanti Mahotsav Smarak Trust & Ors. v. VR. Rudani & Ors., (1989] 2 SCC 691, to contend that mere running of a factory to manufacture and sell of cigarettes can never be considered to be a public duty much less an incident thereto such as providing a canteen

to its workmen. On behalf of the respondent, heavy reliance was placed on E this decision and also the decision of the High Court in T. Gattaiah' s case, to contend that in running a canteen under Section 46 of the Act, the appellant was discharging a public duty and, therefore, a writ of mandamus would lie against it.

In Anadi Mukta 's case, the contention, similar to the present case, had F been raised. Writ petitioners were seeking for a writ of mandamus to put them back in the college and they were claiming only a tenninal benefit or arrears of salary payable to them. In that background, it was observed that if the rights are purely of a private character no mandamus could be issued and also, if the management of the college were purely a private body with no public duty mandamus would not lie. In that case, the respondent was managing G the affiliated college to which public money is paid as Government aid which played a major role in the control, maintenance and working of educational institutions. The aided institutions, it was noticed, like Government institutions discharge public function by way of imparting education to students. They were subject to the rules and regulations of the affiliating University and their II

A activities Were closely supervised by the University authorities. Employment in such institutions, therefore, is not devoid of any public character inasmuch as the service conditions of the academic staff were controlled by the University particularly in regard to their pay scales and the protection by Universify decisions creating a legal right or duty relationship between the staff and the B management. When there is existence of such relationship mandamus could not be refused to such an aggrieved party. It was further explained in that decision that the term 'authority' used in Article 226 of the Constitution should receive a liberal meaning unlike the term in Article 12, which is only for the purpose of enforcement of fundamental rights under Article 32. The words 'any person or authority' used in Article 226 are, therefore, not be C confined only to statutory authorities or instrumentalities of the State but would cover any other person or body performing public duty. The form of the body concerned is not very much relevant. What is relevant is the nature of the duty imposed on that body. The duty must be judged in the light of positive obligation owed by the person or authority to the affected party, no matter by what means the duty is imposed, if a positive obligation exists, D mandamus cannot be denied.

In De Smith, Woolf and Jowell's Judicial Review of Administrative Action, 5th Edn., it is noticed that not all the activities of the private bodies are subject to private law, e.g., the activities by private bodies may be governed by the standards of public law when its decisions are subject to E duties conferred by statute or when, by virtue of the function it is performing or possibly its dominant position in the market, it is under an implied duty to act in the public interest. By way of illustration, it is noticed that a private company selected to run a prison although motivated by commercial profit should be regarded, at least in relation to some of its activities, as subject to p public law because of the nature of the function it is performing. This is because the prisoners, for whose custody and care it is responsible, are in the prison in consequence of an order of the court, and the purpose and nature of their detention is a matter of public concern and interest. After detailed discussion, the learned authors have summarized the position with the following propositions: G (I) The test of whether a body is perfonning a public function, and is hence amenable to judicial review, may not depend upon the source of its power or whether the body is ostensibly a "public" or a "private" body.

(2) The principles of judicial review primafacie govern the activities

VST INDUSTRIES LTD. v. VST INDUSTRIES WORKERS UNION IRAJENDRA BABU, J.I 445

of bodies performing public functions.

(3) However, not all decisions taken by bodies in the course of their public functions are the subject matter of judicial review. In the following two situations judicial. review will not normally be appropriate even though the body may be performing a public function:

(a) Where some other branch of the law more appropriately governs the dispute between the parties. In such a case, that branch of the law and its remedies should and normally will be applied; and

(b) Where there is a contract between the litigants. in such a C case the express or implied terms of the agreement should normally govern the matter. This reflects the normal approach of English law, namely, that the terms of a contract will normally govern the transaction, or other relationship between the parties, rather than the general law. Thus, D where a special method of resolving disputes (such as arbitration or resolution by private or domestic Tribunals) has been agreed by the parties (expressly or by necessary implication), that regime, and not judicial review, will normally govern the dispute.

The High Court has relied very strongly on the decision of a learned Single Judge in T. Gattaiah s case wherein it was stated that a writ may lie under Article 226 of the Constitution against a company incorporated under

the Companies Act, 1956 as it is permissible to issue a writ against any person. Prima facie, therefore, a private person or an incorporated company cannot be taken out of the sweep and the contemplation of Article 226 of the F Constitution. That decision does not take note of the fact as to the nature of the functions that a person or an incorporated company should be performing to attract judicial review under Article 226 of the Constitution. In Anadi Mukta s case this Court examined the various aspects and the distinction between an authority and a person and after analysis of the decisions referred G in that regard came to the conclusion that it is only in the circumstances when the authority or the person performs a public function or discharges a public duty Article 226 of the Constitution can be invoked. In the present case, the appellant is engaged in the manufacture and sale of cigarettes. Manufacture and sale of cigarettes will noc involve any public function. Incidental to that activity there is an obligation under Section 46 of the Act to set up a canteen H

A when the establishment has more than 250 workmen. That means, it is a condition of service in relation to a workman providing better facilities to workmen to discharge their duties properly and maintain their own health or welfare. In other words, it is only a labour welfare device for the benefit of its work force unlike a provision where Pollution Control Act makes it obligatory B even on a private company not to discharge certain effluents. In such cases public duty is owed to the public in general and not specific to any person or group of persons. Further the damage that would be caused in not observing them is immense. If merely what can be considered a part of the conditions of service of a workman is violated then we do not think there is any justification to hold that such activity will amount to public duty. Thus, we C are of the view that the High Court fell into error that appellant is amenable to writ jurisdiction.

This Court in Indian Petrochemicals Corporation ltd. & Am: v. Shramik Sena & Ors., [1999] 6 SCC 439, referred to the decisions in Parimal Chandra Raha 's case, Reserve Bank of India v. Workmen, [1996] 3 SCC 267 and MM.R. 0 Khan v. Union of India, [1990) Supp. SCC 191, and held that the workmen of a statutory canteen, as in the present case, would be workmen of an establishment for the purposes of the Act only and not for other purposes.

Thereafter, this Court further examined whether the material on record would show that the workmen are employees of the management for all purposes E and adopted some of the tests as follows:

The canteen has been there since the inception of the appellant's factory.

2 The workmen have been employed for long years and despite a change of contractors the workers have continued to be F employed in the canteen.

The premises, furniture, fixture, fuel, electricity, utensils, etc. have been provided for by the appellant.

The wages of the canteen workers have to be rdmbursed by the appellant.

The supervision and control on the canteen is exercised by the appellant through its authorised officer, as can be seen from the various clauses of the contract between the appellant and the contractor.

The contractor is nothing but an agent or a manager of the appellant, who works completely under the supervision, control

VST INDl.'STRIES LTD. v. VST INDUSTRIES WORKERS UNION :RAJENDRA BABU, J.) 447

and directions of the appellant.

The workmen have the protection of continuous employment in the establishment.

In the present case, the findings recorded by the learned Single Judge

on examination of the facts available is that there had been a canteen within B the premises of the appellant up to the year 1982 and it is only from 1982 onwards the management of the canteen has been entrusted to a private contractor; that even after change of the contractor, the canteen workers have continued to be the same irrespective of the change in the contractors from time to time; that wages were paid to the workmen in the canteen by the management through the contractor; that the appellant has provided the C accommodation, furniture, fuel, electricity, utensils, etc.; that the management exercises control over the standard in quality, quantity and the rate of the food items supplied to the workmen for whose benefit the canteen is established.

Thus, these circumstances clearly indicate that the appellant has a complete control over the activities in respect of the canteen and the contractor has D absolutely no discretion either in regard to the menu, quality and quantity of the food items much less the rate at which the same are supplied to the workmen. When the management of the appellant exercises such a complete control, the canteen shall be deemed to be run by the management itself. The appellant in any manner cannot controvert these facts.

We do agree that the respondents have a strong case on merits. Since we have held that the High Court had no jurisdiction to entertain a petition under Article 226 of the Constitution, we would have set aside the order made by the High Court. However, in the special features of the case, although we

do not agree with the High Court on the first question raised, we feel, after clarifying the legal position, that we should not disturb the decision given by F the High Court.

The appeal, therefore, stands dismissed subject to what is stated in regard to writs to be issued by the High Court in respect of persons or authorities exercising public duty or otherwise. No costs.

Civil Appeal Nos. 6533197 & 6534197 G

In these appeals, on a reference made on the question whether certain persons employed in the canteen should be treated as employees of the appellant and, if so, in what category they are to be fitted in and to what wages they are entitled to, the Industrial Tribunal, Hyderabad, [hereinafter H

A referred to as 'the Tribunal'] inquired into the matter. The contesting respondents contended that the workmen in the canteen had been working right from its inception, that is, since 1967; that from 1976 onwards, after expiry of the contract with the Industrial Catering Services, they had been directly working with the appellant without any contractor; that they sought B for regularization of their services by letter dated 28.2.1978; that the said letter

was corrected and redrafted by the Personnel Manager to indicate the idea of floating an Association/Society to run the canteen; that this modified request contained in Ex. W-49 was stated to be contradictory to the stand taken by the workmen all through. The Tribunal concluded that there was no doubt that the Personnel Manager modified Ex.W-50 and obtained Ex.W-49 C in the modified form. The Tribunal held against them, as there was no material to show that the management had discussed on each point and thereafter an agreement had been drafted. The Tribunal recorded the findings that the canteen had been working for the benefit of the workmen within the premises provided by and with the equipment supplied by the appellant; that the appellant supplies the provisions for the preparation of foodstuffs; that the D appellant issues token to the employees, who on production of the same obtain foodstuffs from the canteen; that the Committee appointed by the appellant decides the menu and as per the directions and supervision of the Catering Officer, the canteen functions; that the quality and quantity of the foodstuffs is supervised by him, who functions under the Committee. The E contributions like ESI, Provident Fund, etc. had also been categorically specified to be provided by the appellant and ES! code for the permanent establishment and for the present workmen was the same; that after the evidence was tendered by the workmen the appellant got the code changed and the appellant transferred the workmen from one place to another and that the amount to be surrendered by way of unpaid salaries had to be remitted back to the F management. Thus the Tribunal held that these facts clearly indicated that the appellant exercised administrative, financial and disciplinary control over the workmen in question. The Tribunal held that no other material is required to hold them to be employees of the appellant. In those circumstances, the Tribunal passed an award that these workmen should be treated as employees G of the appellant and they are entitled to payment of appropriate scales and designations in tenns of Ex. W 12 and W 14 from 1.4.1979 with all consequential and attendant benefits of arrears of pay, etc. together with counting of entire service for the purpose of terminal benefits.

Against this award, a writ petition was filed before the High Court. The H High Court dismissed the same stating that it is covered by another matter.

VST INUUSTRIES LTD 1• VST INDUSTRIES WORKERS UNION [RAJENDRA BABU, J I 449

It is unnecessary to examine the contention whether the matter is covered by A a subsequent decision or not as the facts of the present case stand on its own. The reference had been made to the Tribunal and adjudication had been made by the Tribunal as to the status of the workmen, the nature of employment, control exercised by the appellant, which leave no room for doubt that they are the employees of the appellant.

A contention is also sought to be made that it is not possible to run a canteen in the refinery area. It is contended that under the Petroleum Rules framed under the Petroleum Act, 1934, there are certain hazardous areas where there cannot be a canteen as no fire, furnace, source of heat or light capable

of igniting inflammable vapours shall be allowed except in the firing spaces C or stills and boilers. However, there is no material on record to show that the canteen is located in such an area where it would be hazardous to have a fire, furnace, source of heat or light to cook food. In the absence of such material, we find no substance in this contention. It is brought to our notice that a fire had taken place on a tank on 14.9.1997 and that it was extinguished after 14 days, which severely damaged all the building including the canteen and that D food and beverages being provided to its employees by making an arrangement to obtain the same from outside the premises of the appellant. These facts are brought to our notice by an affidavit filed on 21.11.2000. But these factors do not come in the way of the award made by the Tribunal, as it is possible to locate the canteen in an appropriate place where there is no hazard of the E kind envisaged under the Petroleum Rules. This contention is also rejected.

In the circumstances aforesaid, the contention vis-a-vis the findings recorded by the Tribunal, we find absolutely no merit in these appeals and the same shall stand dismissed. No costs.

B.S.

Appeals dismissed.