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PETITIONER: ALL INDIA RAILWAY INSTITUTE EMPLOYEES’ ASSOCIA-TION THROUGH

       Vs.

RESPONDENT: UNION OF INDIA THROUGH THE CHAIRMAN

DATE OF JUDGMENT27/02/1990

BENCH: SAWANT, P.B. BENCH: SAWANT, P.B. MISRA RANGNATH RAMASWAMY, K.

CITATION:  1990 AIR  952            1990 SCR  (1) 594  1990 SCC  (2) 542        JT 1990 (1)   319  1990 SCALE  (1)295

ACT:     Railway  Institutes and Clubs--Employees--Whether  enti- tled  to be treated on par with employees in Statutory  Can- teens run by Railway Administration.

HEADNOTE:     This  petition under Article 32 of the  Constitution  of India  has been filed by an Association of about  2,000  em- ployees  working  in  500 Railway Institutes  and  Clubs  in various  parts of the country claiming that they  should  be treated  on the same par as the employees in  the  Statutory Canteens  run by the Railway Administration. In  support  of their  claim the petitioners while enumerating the range  of activities  handled by them, they have attempted to  draw  a parallel  with the regular employees contending  inter  alia that  not  only they receive grants-in-aid and a  number  of facilities  from  the Govt., the Railway  Board  has  always treated  these institutes and clubs as an integral  part  of the Railways.     The  Respondents resisted the petition stoutly and  con- tended  that the Institutes and Clubs are managed by a  Com- mittee representing its membership which engages such  staff as is required and meets the cost of their wages and  allow- ances etc., that the Railways are not the principal  employ- ers of their staff, that they are not paid directly from the Consolidated  Fund  of  India and  whatever  facilities  are provided to them they are confined to the wholetime staff as a  special case and not on account of any  obligation  under any  law.  On consideration of  respective  contentions  and documents  on  record while dismissing  the  petition,  this Court.     HELD:  There is a material difference between  the  can- teens  run in the Railway establishments and the  Institutes and Clubs. The Institutes/ Clubs have to run on the  member- ship  fees and fixed grants received from the Staff  Benefit Fund.  The  fund  consists of receipts  from  the  forfeited provident fund and bonus, and of fines. The grant is made as pointed  out by the Respondents, to each  Institute/Club  at the rate of 595

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Rs. 14 per capita of the non-gazetted staff employed at  the relevant establishment. Out of this contribution, only  Rs.4 per  capita  are spent on the activities of  the  education. relief  in  case of distress and  sickness,  sports,  scouts activities  and for other miscellaneous purposes.  There  is further  no  dispute that the wages and  allowances  of  the Staff   of   the   Institutes/Clubs   are   paid   by    the Institutes/Clubs  themselves and they are not subsidised  by the  Railway Administration as in the case of the  statutory and non-statutory recognised canteens. [600H] 160 [E-F & G]     On  the facts, it cannot be held that there is  a  rela- tionship  of employer-employee between the Railway  Adminis- tration  and  the employees engaged in  the  Institutes  and Clubs. Neither law nor facts spell out such relationship. If the present service conditions of these employees are unsat- isfactory, the remedy lies elsewhere. [603B-C]

JUDGMENT:     CIVIL  ORIGINAL JURISDICTION: Writ Petition No. 1389  of 1987. (Under Article 32 of the Constitution of India).     G.  Ramaswamy, Additional Solicitor General, M.K.  Rama- murthy, Mrs. Shyamala Pappu, K.K. Venugopal, Gobind Mukhoty, M.A.  Krishnamurthy, Ms. Chandan Ramamurthy, Dalveer  Bhand- ari,  C. Ramesh, G.D. Gupta, L.K. Gupta, G.  Venkatesh  Rao, Ms. A Subhashini, Ms. Susma Suri, C.V.S. Rao, P.  Parmeshwa- ran,  Mrs. Urmila Kapoor, Krishna Prasad, Indra Makwana  and S.K. Jain, for the Appearing Parties. The Judgment of the Court was delivered by     SAWANT,  J.  This  petition is filed as  stated  in  the petition by an Association of about 2,000 employees  working in 500 Railway Institutes and Clubs in various parts of  the country. Their grievance, as in the case of the  petitioners in the matters pertaining the Railway Canteens, is that they are not treated as railway employees. It is their case  that although  the Institutes/Clubs in which they work  are  non- statutory, they are on par with the employees in the  statu- tory  canteens  run in the  Railway  establishments  proper. According to them, the Railway Institutes and Clubs were set up to provide recreational facilities to the railway employ- ees. They are managed by Committees consisting of  represen- tatives  of all the members of the Institutes/Clubs  elected periodically. The Institutes/Clubs have the following  cate- gory of employees: (1) Manager (2) Accountant (3) Clerk  (4) Librarian in- 596 charge  (5) Librarian (6) Watchman (7) Daftry  (8)  Watermen (9)  Canteen  employees  (10) Billiards  Marker  etc.  These employees are appointed by the Committee and their  salaries are paid out of the contributions received from the  members of  the respective Institutes/ Clubs and  the  grants-in-aid given  by  the Railway Board to  the  Institutes/Clubs.  The Committees of management is presided over by a president who is the concerned Divisional Railway Manager or his  nominee. The  Railway Administration has the right to dissolve or  to from an ad-hoc Committee.     2.  According  to the petitioners further,  the  Railway Board  has  always treated the Institutes and  Clubs  as  an integral  part of the Railways, since they not only  receive grants-in-aid  but also other facilities from  .the  Govern- ment. Section B of Chapter XXVIII of the Railway  Establish- ment Manual makes a special provision for the Institutes and Clubs.  Paragraph 2808 of the Manual states that  a  Railway

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Institute  should be looked upon as a club provided  by  the Railway,  rent  free for the benefit of  its  employees  and therefore,  the  Railway should provide everything  which  a landlord ordinarily would, and the Institute should pay  for all that a tenant would usually be liable to pay.  Paragraph 2809  states that the Railway Administration will  bear  (a) the  first cost of the building including the cost of  elec- tric installations with necessary furniture, roads,  fences, tennis  courts and other play-grounds. Wherever  possible  a garden  will also be provided; (b) the cost  of  maintenance and alterations.     In the case of tennis courts and play-grounds the  Rail- way  Administration  will  bear only the  cost  of  ordinary engineering  repairs.  The said paragraph  however  requires that  the Institute funds should bear (a) the cost of  roll- ing,  watering, grass-cutting and other maintenance  charges of  play-grounds,  other than engineering repairs;  (b)  the cost  of maintenance of its gardens and ornamental  grounds; (c) the cost of maintenance and renewal, whether partial  or complete, of electric installations (which include  electric fans) payable at a flat rate of 5 per cent per annum on  the capital cost of the installations; (d) the cost of  electric current consumed and hire of meter; (e) the occupier’s share of municipal taxes for specific direct services rendered  to an  Institute by a municipality such as  conservancy,  water and  the  like  taxes as distinct from taxes  of  a  general nature;  (f)  water charges calculated at so much  per  tap, each Railway Administration fixing its own scale of charges. In cases where large quantities of water are supplied by the Railway  Administration, as in the case of  swimming  baths, the actual cost of water supplied should be recovered. Para- 597 graph  2810 provide that: (i) no rent is recoverable in  the case  of Railway buildings used as officers’  club  provided conditions  stipulated  para 1942-E are fulfilled;  (ii)  no rent  is  recoverable  in the case officers’  clubs  if  the buildings are specially constructed against amounts specifi- cally  sanctioned  by  the Railway Board (iii)  no  rent  is recoverable in the case of clubs, if additional  expenditure is  incurred in converting an existing building into a  club or  providing anciliaries to make it suitable as a club.  if the  expenditure is incurred with the specific  approval  of the  Railway  Board and (iv) no rent is recoverable  in  the case  of clubs where the building is erected by the club  at its costs on Railway land. Paragraph 28 11 further  provides that:  Class IV staff employed in Railway Institutes may  be given  residential accommodation free of rent provided  such accommodation  is  either part and parcel of  the  Institute building  and its recognised out-houses, or is not  required for  any other railway purpose, or cannot be rented to  out- siders  and would otherwise lie vacant. According  to  para- graph 28 13 the membership of the Institute/Club is  option- al.  Paragraph 28 17 gives powers to the respective  General Managers  to frame rules to suit local requirements  of  the Railway  Administrations  and  other  circumstances  of  the place.     The  employees of the Institutes/Clubs are  entitled  to free  passes, and to get medical facilities provided by  the Railway  Hospitals. The employees belonging to Class IV  are eligible for absorption in the Railways and for that purpose they are given relaxation in age.     The  petitioners, therefore, claim that they  should  be treated  on the same par as the employees in statutory  can- teens  and non statutory canteens there being no  difference in their status.

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   3. The petition is resisted on behalf of the  respondent Union of India. According to the respondents, the Institutes and  Clubs  have their origin in the rules  regarding  Staff Benefit Fund which is provided for in Chapter VIII of  Rail- way  Establishment Code Vol. 1 (1985 edition). According  to the  rules contained in this Chapter as clarified/  modified by  the administrative instructions from time to  time.  the main objectives of the Fund are to provide additional ameni- ties  to  the  railway servants and their  families  in  the sphere  of education, recreation, relief to the  distressed, financial  assistance  during sickness  and  development  of sports and scouting activities. The Fund consists of contri- bution  from  Railway  revenues at the rate of  Rs.  14  per capita of the sanctioned strength of non-gazetted  employees as  on 3last March of each year. The contribution of Rs.  14 is broadly apportioned amongst 598 various spheres of activities as under: (i)  (a)  Education                             2.50      (b) Recreation other than sports           2.00      (c) Relief of distress, sickness etc.      3.50      (d) Miscellaneous items                    0.50 (ii)       Sports activities                    2.50 (iii)      Scouts activities                    1.00 (iv)       Recreational facilities to officers  2.00            and supervisory staff     According to the respondents further, as per the  provi- sions  of the Railway Establishment Code and the  Establish- ment  Manual,  the  Institutes and Clubs are  managed  by  a committee  representing its membership. It is  the  Managing Committee which engages such staff as is required and  meets the  cost of their wages and allowances. The  conditions  of service including the scales of pay of the staff are decided upon  by the respective Managing Committees and  hence  they vary from Institute to Institute and Club to Club. The  cost of the staff running the institute including the pay bill of the  staff is met by the Managing Committee from  membership fees  and from grants received from the Staff Benefit  Fund. As will be evident from the apportionment of the per  capita grant  among the various activities, only a sum of Rs.4  per capita  comes to the share of the  recreational  facilities. The funds available for recreational facilities are  further limited  because the membership of the  Institutes/Clubs  is optional. These facilities further, in the nature of things, are availed of by the members for a few hours beyond working hours. The Managing Committees therefore, engage only  part- time  staff.  They engage full-time staff only  when  it  is considered absolutely necessary. There are about 449  Insti- tutes and 332 Clubs and they have engaged about 1741 employ- ees of whom about 887 are on full time basis, the rest being engaged  on  part time basis. The whole-time  employees  are allowed  passes and Privilege Ticket Orders on a  restricted scale  in  terms of para 1526 of the  Railway  Establishment Manual.     It  is, therefore, contended on behalf of  the  respond- ents,  that the Railways are not the principal employers  of the  staff engaged in the Institutes/Clubs and they have  no control  whatsoever  on it. The staff is not  paid  directly from the Consolidated Fund of India. Whatever facilities are provided to the whole-time staff are provided only as a 599 special case, and not on account of any obligation under any law.  It is also contended that in fact it is  the  Managing Committees who have engaged the staff and they ought to have been joined as parties to the petition. The respondent Union

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of  India  having no relationship with  the  employees,  the petition  is liable to be dismissed on account of  non-join- der/mis-joinder  of parties. The respondent have also  ques- tioned  the locus standi of the present Association to  file the  petition  since according to them no  such  Association exists.     4.  The respondent further point out that  the  Managing Committees of the Institutes/Clubs do not receive any subsi- dy  or loan from the Railways for meeting  specifically  the wage bill of the employees as do the Managing Committees  of the statutory/non-statutory recognised canteens and,  there- fore,  the  present employees stand on a  different  footing than  that of the employees in  the  statutory/non-statutory recognised  canteens.  In  reply to the  contention  of  the petitioners  that the rules framed for the  constitution  of Managing  Committees of the Institutes/Clubs give  power  to the Railway Administration to dissolve the Managing  Commit- tees or to appoint ad hoc Committees, it is pointed out that these rules are framed locally by General Managers of  Zonal Railways,  Production Units etc. in terms of the  provisions contained in para 2817 of the Establishment Manual. They are not  uniform and not all rules so framed provide for  either the dissolution of the Managing Committee or appointment  of ad hoc Committee by the Railway Administration. The respond- ents  also  deny that the Railway Board has  treated  Insti- tutes/Clubs as an integral part of the Railways. It is  also pointed  out  that  the Railway  free-passes  and  privilege ticket orders are given only to the full time employees as a special case. But even they are given on a restricted scale. As regards the medical facilities, again, it is pointed  out that  it is given to the employees and not to  their  family members or dependent relatives. As regards the facilities of absorption  in the Railways by relaxing the age  limit,  the respondent  points  out that it is not only this  staff  but also the staff of cooperative societies, canteen  commission bearers,  vendors of departmental canteen who  are  eliteble for such relaxation in age limit to the extent of the  serv- ice  rendered  in such organisation whichever is  less,  for appointment  in Group D categories. But they have to  appear before Railway Service Commissions/Railway Recruitment Board alongwith  casual  labourors and substitutes, and  they  are considered  only  after the eligible  casual  labourers  and substitutes are considered. It is lastly submitted on behalf of  the respondents that although there is no obligation  on the  Railways, the Railways have issued  administrative  in- structions  to the Zonal Railways etc. that whenever  it  is found 600 absolutely  necessary  by  the Managing  Committees  of  the Institutes/  Clubs to employ staff on full time  basis  they should be paid remuneration keeping in view the local market conditions.     5. It is also the contention of the respondents that the Railways  are providing  financial  assistance/grants-in-aid for various non-welfare activities and to non-railway  agen- cies  such as private schools run in the  railway  colonies, cooperative societies/banks etc. Since the employees engaged in  these activities/non-railway organisations do  not  ipso facto become railway servants, the employees of these Insti- tutes/Clubs  can also not become the railway  employees  for the same reason. The service in the railway Institutes/Clubs is purely in the nature of private employment. On the  other hand,  the railway employees are recruited according to  the rules of recruitment. They are subjected to rigorous  stand- ards  with regard to age limit, educational  qualifications,

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medical fitness, interviews, character verification etc.  as well  as  to stiff competition. To treat  the  employees  in Railway  Institutes/Clubs as railway-employees would  amount to a back-door entry of these employees to Government  serv- ice  without  following the regular procedure.  It  is  also contended by them that the letters of appointment offered to these  employees by the respective Managing Committees  make it  clear that they are not to be treated as  railway  serv- ants. For all these reasons, these employees form a separate class and they are not comparable with any other category of staff of the Railways. It is also submitted on behalf of the respondents  that  the analogy of the employees  in  railway canteens  is not applicable to these employees  because  the status of the canteen employees is itself being contested by the  respondents. It is lastly contended that if this  Court deems  it  proper to treat the full time  employees  of  the Institutes/Clubs as railway servants it will have to be left open to the Respondents to frame such rules as it considered necessary for the efficient running of the  Institutes/Clubs and for engaging such staff as are considered necessary.  If the  employees  concerned are then directed to  be  absorbed only subject to the requisite standards of age,  educational qualifications  etc.  and  only such of them  as  are  found suitable,  many of the present employees may be  faced  with unemployment  which  will  not be in the  interests  of  the employees themselves.     6.  After considering the respective contentions of  the parties and the documents on record, we are of the view that there  is a material difference between the canteens run  in the  Railway establishments, and the Railway Institutes  and Clubs. In the first instance, the canteens are invariably  a part of the establishments concerned. They 601 are  run to render services during the hours of  work  since the services, by their very nature are expected directly  to assist  the staff in discharging their  duties  efficiently. The lack of canteen-facilities is ordinarily bound to hamper and  interfere  with, the normal working of  the  staff  and affect  their  efficiency. The importance  of  the  services rendered  by  the canteens to the staff  in  the  day-to-day discharge of their work therefore needs no further emphasis. Suffice  it to say that the canteen services are  today  re- garded as a part and parcel of every establishment. So  much so that they have been made statutorily mandatory under  the Factories  Act, 1948 in establishments governed by the  said Act  where more than 250 workers are employed. The  canteen- services  are thus no longer looked upon as a  mere  welfare activity  but  as  an essential  requirement  where  sizable number  of  employees  work. That is why  even  the  Railway Administration  has,  by  its Establishment  Manual  made  a provision for canteens even where the Factories Act does not apply,  and has laid down procedure for  their  registration and  approval  and  for extending to them  almost  the  same facilities  and  monetary assistance as in the case  of  the statutory canteens. However, the same cannot be said of  the Institutes  and  Clubs. Although for them also  the  Railway Establishment  Manual makes provisions in the  same  Chapter XXVIII  dealing with Staff Welfare, the provisions are of  a materially  different nature and pattern. In the  first  in- stance,  there  is no provision either for subsidy  or  loan directly  from the funds of the Railway Administration.  The Institutes/Clubs  have  to run on the  membership  fees  and fixed grants received from the Staff Benefit Fund. The  Fund consists  of receipts from the forfeited provident fund  and bonus, and of fines. The grant is made as pointed out by the

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Respondents,  to each Institute/Clubs at the rate of Rs.  14 per  capita of the non-gazetted staff employed at the  rele- vant establishment. Out of this contribution, only Rs.4  per capita  are  spent on the activities of the  Institutes  and Clubs,  the  rest of the amount being  spent  on  education, relief  in  case of distress and  sickness,  sports,  scouts activities  and for other miscellaneous purposes.  There  is further  no  dispute that the wages and  allowances  of  the staff   of   the   Institutes/Clubs   are   paid   by    the Institutes/Clubs  themselves and they are not subsidised  by the  Railway Administration as in the case of the  statutory and nonstatutory recognised canteens.     5-A.  By their very nature further the services  of  the Institutes/ Clubs are availed of beyond working hours  only. It is common knowledge that not all members of the  Railway- staff  avail  of them. One has to be a member to  do  so  by paying  fees. The membership is also optional. That  is  why most of the staff employed in the Institutes/ 602 Clubs  is part time. As has been stated by the  respondents, out  of about 1741 employees engaged in 449  Institutes  and 332 Clubs nearly half are part time employees. The  services rendered by the employees are not of a uniform nature.  They are  engaged for different services with different,  service conditions    according    to    the    requirement.     The Institutes/Clubs  further do not engage in  uniform  activi- ties,  the  activities conducted by them  varying  depending upon the infrastructure and the facilities available at  the respective places.     7. What is more importance as far as the issue  involved in this petition is concerned, is that the provision of  the Institutes/Clubs is not mandatory. They are established as a part  of the welfare measure for the Railway staff  and  the kind of activities they conduct depend, among other  things, on  the funds available to them. The activities have  to  be tailored to the budgets since by their very nature the funds are  not only limited but keep on fluctuating. If the  costs of  the  activities  go beyond the means, they  have  to  be curtailed.  So  also, while starting a new activity,  it  is necessary  to take into account its  financial  implications and  the capacity of the Institute/Club to raise the  neces- sary  funds. The only varying component of the funds is  the membership fee which is uncertain.     8.  If  as contended by the petitioner  Association  the workers  engaged  in these Institutes/Clubs are  treated  as Railway employees, the danger is that these welfare  activi- ties which are otherwise encouraged by the Railway  Adminis- tration  may in course’ of time shrink and cease  altogether for want of funds. This will not be in the interests of  the workers  themselves. One cannot lose sight of the fact  that today the emoluments of government servants including  those of the Railway employees, may they belong to Class IV or  to a  higher  category, are substantial and inhibit  fresh  re- cruitment.  The  services rendered by a  government  agency, therefore,  become costly and uneconomical. Compared to  the services which are rendered by the Institutes/Clubs and  the benefits which flow from them, an increase in their adminis- trative  expenditure  which  may result  from  granting  the status  of the railway employees to their workers.  will  be disproportionately high and forbidding. This will also  have a snow-bailing effect on other welfare activities carried on by  the  Railways and similar activities carried on  by  all other organisations. We also cannot lose sight .of fact that the  workers  engaged in the welfare  activities  today  are drawn from the respective localities without restrictions of

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the  qualifications of education, age etc.  Whatever  little scope for employment is available to the local population at the respective places may 603 also  vanish with the cessation of these  activities.  After all,  the  number of employees who may benefit  by  becoming railway employees does not today exceed 887 who are the full time employees scattered all over the country. But, they may deprive  many  of  their bread in the presenti  and  in  the future.  For,  as  pointed out by the  Respondents,  if  the Railway  Service  Rules  are made applicable,  many  of  the present employees will also have to face immediate unemploy- ment. This is of course yet a larger related  socio-economic consideration.     9. On the facts placed before us which we have discussed above,  we  are also not persuaded to hold that there  is  a relationship o[ employer-employee between the Railway Admin- istration  and the employees engaged in the  Institutes  and Clubs. Neither law nor facts spell out such relationship. If the present service conditions of these employees are unsat- isfactory, the remedy lies elsewhere.     lO. Since we are disposing of the petition on merits, it is  not necessary to deal with the legal contentions  raised on behalf of the Respondents that the petitioner Association has  no locus standi and that the petition is not  maintain- able for non˜joinder and/or misjoinder of the parties.     11.  In  the result, we dismiss the  Writ  Petition  and discharge the rule with no order as to costs. R. N.J.                            Petition dismissed. 604