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PETITIONER: PARIMAL CHANDRA RAHA & ORS.

       Vs.

RESPONDENT: LIFE INSURANCE CORPORATION OF INDIA & ORS.

DATE OF JUDGMENT29/03/1995

BENCH: SAWANT, P.B. BENCH: SAWANT, P.B. MAJMUDAR S.B. (J)

CITATION:  1995 AIR 1666            1995 SCC  Supl.  (2) 611  JT 1995 (3)   288        1995 SCALE  (2)518

ACT:

HEADNOTE:

JUDGMENT: SAWANT, J.: 1.   The appellants - 42 workmen -working    in the canteens at four different offices     of the  respondent-Corporation in  Calcutta, are involved in the present  proceedings.   In 1985, they had approached this Court for certain reliefs  by a  writ petition under Article 32 of the  Constitution.   By its  order of 19th July, 1986, this Court had directed  them to  approach. the High (Court. hence they had withdrawn  die writ  petition  with liberty to move the  High  Court  under Article  226  of the Constitution, which they  did  and  the present appeal arises out of the said proceedings.  Since on behalf  of the respondents an objection is raised  that  the appellants  have been claiming in these  proceedings  relief which they had never prayed for in the writ petition  before the High Court, we may at the outset summarise the  contents of the writ petition filed by them in the High Court. 2.   In  para  2 of the writ petition, the  appellants  have averred  that they are canteen employees of the  Corporation and working in the canteens managed by the Corporation.   In para  3,  they  have stated that they are  employed  in  the canteens  of the Corporation and some of them  for  decades, since  the  inception of the Corporation and  others  for  a minimum  of  seven years, and are holding  the  designations variously  of Canteen General Manager, Canteen  Manager-cum- Salesman,  Kitchen Clerk, Canteen Clerk,  Halwai,  Assistant Halwai,  Cook, Bearer, Wash-boy and Sweeper etc.  In para  4 they  have specified the four departmental canteens  of  the Corporation  where they have been working.  In para 5,  they have averred there that they are paid at the rate much below the rate at which canteen employees working under  different Government  departmental  canteens including  those  run  by statutory  Corporations  and Railways are paid.   They  have also  stated  there that the employees of  the  canteens  in different  Government  offices and Railways  throughout  the country  are  enjoying  at least the  pay-scales  which  are

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enjoyed by the peons of the respective offices.  In para  6, they have given the emoluments which the Class-IV  employees of the Corporation get which are between Rs.700/- and  800/- per  month against the wages they get as  canteen  employees ranging from Rs. 100/- to Rs.200/per month.  In paras 7  and 16 of the writ petition, to quote them verbatim, it is  then averred as follows:               "Your petitioners state that the employees and               the staffs of the respondent no. 1 at all  its               establishments axe provided with facilities of               canteen  by the respondents for more than  few               decades  and  as  such  providing  of  canteen               facilities forms a condition of service of the               employees and staffs of the respondent no.  1.               Your petitioners state that by usage and  cus-               tomary benefits, canteen facilities has become               the  condition of service of the employees  of               the  respondent no. 1 and as such  running  of               the  Canteen  is  incidental  to  the  running               business and/or industry of the Life Insurance               Corporation of India [Respondent No. 1].               x        x        x       x        x               Your  petitioners state that they are  engaged               in the work of the canteen which               292               is   incidentally  connected  with  the   main               industry  of the respondent no.1 and  as  such               they are workmen working under the  respondent               no.  1" 3.   It  is against the background of the said averments  in the  main  body of the writ petition that  in  paragraph  18 thereof  they have averred that  the  respondent-Corporation being  an instrumentality of the State and being  the  State within the meaning of Article 12 of the Constitution, cannot deny  them equal pay-scales with other canteen employees  of the  Government  departments/Railways  and  other  statutory Corporations  or take a stand or policy different from  that followed  by the Government department, Railways  and  other instrumentalities  of the State.  With regard to  pay-scales of  the canteen employees, they have stated there that  till date the respondent-Corporation has not framed any pay-scale for  the  canteen  employees and as such  have  acted  in  a discriminatory manner violating Article 14 of the  Constitu- tion.  Thereafter, in ground No.2 of the petition they  have stated   that  the  canteen  workers  of   the   respondent- Corporation   being   engaged  in   operation   incidentally connected  with the industry carried on by the  respondents, the respondents cannot deny them the minimum wages given  to their  employees.   In ground No.3, it is alleged  that  the canteen facility being condition of service of the staff and employees  of  the respondent-Corporation as per  usage  and custom, the appellants, being canteen employees and  engaged in  operation  incidentally  connected  with  the   industry carried  on  by the respondent,  "automatically  become  the direct  employees  under the respondents and  as  such  they cannot be discriminated against and denied the minimum wages that  is  prevalent in the Life Insurance  Corporation.   In ground No.4,they have stated that the appellants are working under  the  respondents  through  the  agencies,  and  being engaged  in  work incidentally connected with  the  industry carried on by the Corporation, they are entitled to get  the pay   that  is  admissible  to  regular  employees  of   the Corporation.  It is with these averments in the main body of the  petition  and the grounds that the appellants  have  in prayer  [b]  of  the petition, claimed  the  relief  of  the

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issuance of the writ of mandamus commanding die  respondent- Corporation  to  comply with the policy of  "equal  pay  for equal work" and pay them the minimum salary that is  enjoyed by  the  staff  of the Corporation and also  to  follow  the policy  that  is  prevalent for  canteen  workers  in  other Government departments, Railways and statutory Corporations. It  is  thus  clear  from the writ  petition  filed  by  the appellants  before the High Court that they have prayed  for the  relief  of minimum wages paid to the employees  of  the respondent-Corporation  on  the  ground that  they  are  the regular employees of the Corporation.  In other words, it is implicit in the said relief claimed by them that they are to be deemed to be the regular employees of the Corporation and paid  the minimum salary that is paid to its  other  regular employees. 4.The case of the respondent-Corporation before the  learned Single Judge of the High Court as made out in their  counter to the writ petition was that the canteens did not belong to it  nor were they run by it. The Corporation only  gave  its employees the facilities to run the canteens.  The  canteens were  run  during different periods either by  the  canteen- committees of the staff or their cooperative society through the  contractors,  and the appellants were  engaged  by  the contractors or the- coop- 293 erative society.  It has no connection much less contract of employment  with  the  appellants.  Nor  does  it  have  any control  over  their working, conditions of service  or  the termination of their services.  They are, therefore, not the employees of the Corporation and cannot be deemed- to be so. Hence they are not entitled to the relief claimed by them. 5.The   learned  Single  Judge  by  his  decision  of   27th September,  1989 allowed the writ petition and directed  the respondent-Corporation to implement the policy of equal  pay for  equal work and pay the appellants minimum salary as  is enjoyed by the regular staff of the Corporation or such  pay as  is  enjoyed  by regular canteen  workers  in  the  other Government  establishments  or  public  undertakings.    The learned  Judge  also directed that the appellants  shall  be treated as direct workers under the Corporation and shall be given all service benefits accordingly. 6.Against the said decision of the learned Single Judge, the respondent-Corporation  preferred  a Letters  Patent  Appeal before  the  Division Bench of the High Court which  by  the impugned decision dated 10th October, 1991, allowed the  ap- peal, set aside the decision of the learned Single Judge and dismissed the appellants writ petition.  It is this decision of  the  Division  Bench which is  under  challenge  in  the present appeal. 7.The  questions to be answered in this  appeal,  therefore, are:  [i] whether the appellants are or should be deemed  to be the regular employees of the respondent Corporation,  and if  the answer is in the affirmative, [ii]  what  pay-scales and  other  service conditions should be made  available  to them. 8.   A  preliminary objection was raised to the  framing  of the first issue by Shri Sanghi appearing for the respondent- Corporation,   as  pointed  out  at  the  outset,  that   be appellants  had  not  claimed any such relief  in  the  writ petition itself and hence they cannot widen the scope of the petition and ask for the relief in question in this  appeal. We  have  referred in extenso to the averments made  in  the writ  petition,  earlier.  They show in  unmistakable  terms that  the  appellants  approached  the  High  Court  with  a specific plea that they are the employees of the respondent-

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Corporation  and  as such, they should be paid  the  minimum wages  which are being paid to it other  regular  employees. The  relief  of  minimum wages paid  to  the  other  regular employees  of the Corporation on the basis of the  principle of  equal pay for equal work is thus claimed on  the  ground that they are also the regular employees of the Corporation. Thus,  the  relief claimed includes in it the basis  of  the relief,  viz., their status as the regular employees of  the Corporation.   It  is unnecessary to restate  here  the  law regarding the interpretation of the pleadings.  They have to be  read  as a whole and construed accordingly.   Thus  con- strued, the relief claimed leaves no doubt that it is  based on the claim for the status of the regular employees of  the Corporation.   We,  therefore,  find  no  substance  in  the preliminary objection. 9.   Coming  now  to  the main question as  to  whether  the appellants  should be deemed to be the regular employees  of the  Corporation,  we  may  first  refer  to  the  statutory provisions with regard to the canteen. 10.  Section 46 of the Factories Act, 294 1948 which is a Central enactment reads as follows:               "46.  Canteens. - [1] The State Government may               make  rules  requiring that in  any  specified               factory  wherein  more than  two  hundred  and               fifty  workers  are  ordinarily  employed,   a               canteen  or  canteens shall  be  provided  and               maintained by the occupier for the user of the               workers               [2] Without prejudice to the generality of the               foregoing power, such rules may provide for -               [a]  the date by which such canteen  shall  be               provided.               [b] the standards in respect of  construction,               accommodation,  furniture and other  equipment               of the canteen;               [c]  the foodstuffs to be served  therein  and               the charges which may be made therefor;               [d]  the constitution of a managing  committee               for  the  canteen and  representation  of  the               workers in the management of the canteen;               [dd)  the items of expenditure in the  running               of the canteen which are not to be taken  into               account  in fixing the cost of foodstuffs  and               which shall be borne by the employer;               [e]  the  delegation to the  Chief  Inspector,               subject  to  such conditions as  may  be  pre-               scribed,  of  the power to  make  rules  under               clause [c]." 11.This   provision  has  to  be  read  with  the   relevant provisions  of Section 47 [1] of the said Act which  are  as follows:               "47.  Shelters, rest rooms and lunch rooms.  -               [1]  In  every factory wherein more  than  one               hundred  and  fifty  workers  are   ordinarily               employed,  adequate and suitable  shelters  or               rest  rooms  and a suitable  lunch  room  with               provision for drinking water where workers can               cat  meals brought by them shall  be  provided               and maintained for the use of be workers;               Provided   that  any  canteen  maintained   in               accordance  with the provisions of Section  45               shall be regarded as part of the  requirements               of this sub-section:" 12.There  is  no  dispute  that the  Factories  Act  is  not

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applicable  to  the offices of  the  respondent-Corporation. What  is  applicable  is  the  West  Bengal  Shops  and  Es- tablishments Act which is a State enactment.  However, there is no provision in the said Act with regard to canteens. 13.We may now refer to the law on the subject as is  evolved through various judicial decisions. 14.In  the  Ahmedabad  Manufacturing  and  Calico   Printing Company, Ltd[ Calico Mills] v. Their Workmen [(1953) II  LLJ 647] which is a decision of the Labour Appellate Tribunal of India and which is quoted approvingly in Saraspur Mills  Co. Ltd. v. Ramanlal Chimanlal and Ors. [infra], the facts  were that  by notifications issued by the State  Government,  the provisions  of  Section 46 of the Factories Act,  1948  were made applicable to a large number of textile mills including the  appellants  before the Tribunal.  As a result,  it  was compulsory  for the mills to maintain suitable canteens  for the use of their workmen.  The contention of the  appellant- Mills  was that assuming that the canteens were run  through the  contractors,  the  canteen  was  not  a  part  of   the undertaking so as to render the management respon- 295 sible  for the wages and dearness allowance of the staff  of the canteen and that the maintenance of the canteen was  not in  the  course  of, or for the purpose  of  conducting  the undertaking.   The  Tribunal  held  that  in  view  of   the statutory  obligation cast on the mills to run the  canteen, the  running of the canteen was a part of  the  undertaking. For this purpose, the Tribunal also relied upon the decision of  its  Special Bench in Elphinstone Spinning  and  Weaving Mills Company Ltd. v. SM.  Sable and nine other clerks  [the Bombay  Textile  Clerks’ Union] [1953 ) LLJ 7521  where  the Tribunal  had considered the case of employees of the  grain shops  run  in the Mills by the  contractors.   The  Special Bench  had held there that the employees of the grain  shops were  entitled  to be regarded as the employees of  be  1516 since the running of the grain shop had become a part of the undertaking   within  the  meaning  of  the  definition   of ’employer’ in subsection [14] (e) of Section 3 of the Bombay Industrial Relations Act.  The Tribunal held that there  was a  considerable  similarity between the grain shop  and  the canteen  for  the  purposes of  the  said  definition.   The Tribunal overruled the contention that the earlier  decision of  the  Special  Bench was  erroneous  and  needed  further consideration. 15.In   Dharangadhara  Chemical  Works  Lsd  v.   State   of Saurashtra  [(1957) SCR 1521, the question was  whether  the agarias  who were engaged by the manufactures of  salt  were the  workmen of the manufactures or whether they were  inde- pendent  contractors.   The facts were  that  the  appellant manufacturers  were  the lessees holding  licences  for  the manufacture  of  salt  on the demised  land.  The  salt  was manufacture  by a class of professional labourers  known  as agarias  from rain water that got mixed up with  the  saline matter  in  the soil.  The work was seasonal in  nature  and commenced  in  October after the rains  and  continued  till June.   Thereafter, the agarias left for their own  villages for cultivation work.  ’The demised lands were divided  into plots  called pattas and allotted to the agarias with a  sum of  Rs.400/-  for each patta to meet the  initial  expenses. The  same  patta was generally allotted to the  same  agaria every  year  and if the patta was extensive in area,  A  was allotted  to  two agarias.  After the manufacture  of  salt, they  were paid 5 as. 6 pies per maund.  At the end of  each season,  accounts  were  settled and  they  were  paid  the. balance due to them.  They worked with the members of  their

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families  and  were free to engage extra our  on  their  own account  and the manufacturer had no concern therewith.   No hours  of  work had been prescribed, no muster  rolls  main- tained nor were working hours controlled by the  appellants. There  were, no rules as regards leave or holidays and  they were free to come out of the works after making arrangements for  manufacture  of salt.  On these facts,  the  Industrial Tribunal  found  that the agarias were workmen  ,within  the meaning  of the Industrial Disputs Act 1947.   This  finding was  confirmed  by the High Court which also held  that  the reference  of  the  dispute made  by  the  Government  under Section  10  of the Industrial Disputes Act  was  competent. This  Court while confirming the finding of  the  Industrial Tribunal  and  of  the High Court, held that  it  was  well- settled  that  the prima facie test of the  relationship  of master  and  servant was the existence of the right  in  the employer  not merely to direct what work was to be done  but also to control the manner in which it was to 296 be  done, the nature and extent of such control  varying  in different businesses and being by its very nature  incapable of  being  precisely defined.  The correct  approach  is  to consider  whether having regard to the nature of  the  work, there  is  due control and supervision of the  employer.   A person  could be workman even though he did piece  work  and was  paid  not per day but by the job, or employed  his  own workmen  and  paid  them  for  it.   The  Court  noted   the observations  of Somervell, LJ., in Cassidy v.  Ministry  of Health  [(1951) 1 T.L.R. 5391 which had taken the view  that it  was  not  necessary for holding that a pep  son  was  an employee that the employer should be proved to have  control over his work.  The test of control was not one of universal application  and  there  were many contracts  in  which  the master  could not control the manner in which the  work  was don,  the  correct  approach would be  to  consider  whether having  regard  to  the nature of the work,  there  was  due control  and supervision by the employer.  The Court  quoted the  opinion of Fletcher Moulton, L.J, in Simmons v.  Health Laundry Company  (1910) 1 K.B. 5431 where the learned  Judge has observed as follows:               "In  my opinion it is impossible to  lay  down               any  rule of law distinguishing the  one  from               the  other.   It is a question of fact  to  be               decided by all the circumstances of the  case.               The  greater  the  amount  of  direct  control               exercised   over  the  person  rendering   the               services  by the person contracting  for  them               the stronger the grounds for holding it to  be               a  contract  of  service,  and  similarly  the               greater  the degree of independence   of  such               control the the probability that the  services               rendered  WV  of  the-nature  of  professional               services  and that the contract is not one  of               service." 16.The  Court  then  observed  that  the  broad  distinction between a workman and an independent contractor lies in this that  while  the former agrees himself to work,  the  latter agrees  to get other persons to work.  A person who  himself agrees to work and does so work and is, therefore a workman, does not ceases to be such by reason merely of the fact that he gets other persons also to work along with him and  those persons  are  under his control and arc paid by  him.   What determines  whether a person is a workman or an  independent contractor  is whether lie has agreed to work personally  or not.   If he has, then he is a workman and the fact that  he

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gets the assistance from other persons would not at feet  Ms swum. 17.hi  Basti  Sugar  Mills Ltd. v.  Ron  Ujagar  and  Others [(1963)  2 SCR 838], the case of the appellant-employer  was that the work of the remove of the press mud had been  given by  it  to  a contractor  and  the  respondent-workmen  were employed  by  that contractor to do that work.   It  is  the contractor  who  had  terminated  their  services  and   the management  had nothing to do with the workmen who  had  ap- proached  the  Court for relief against the  termination  of their  services and also for paying them the  minimum  wages prescribed  under the Government notifications.  This  Court held that the workmen were persons employed in the  industry to  do  manual  work for reward.   Further,  the  appellant- Company  was their employer as the workmen were employed  by the  contractor with whom the company had contracted in  the course  of conducting the industry for the execution by  the said  contractor, of the work of removal of press mud  which is  ordinarily  part of the industry.  The Court  also  held that the expres- 297 sion  "employed  by  the  factory"  which  occurred  in  the definition of ’workman’ in the Standing Orders applicable to the  company, included every person who was employed  to  do the  work of the factory and was wide enough to include  the workmen employed by the contractor of the factory also. 18.  In  Saraspur  Mills Co. -Ltd. v. Ramanlal  Chimanlal  & Ors.  [(1974) 3 SCC 66], the facts were that the  appellant- Company  which was responsible for maintaining  the  canteen under the provisions of Section 46 of the Factories Act  and the rules made thereunder, had entrusted the task of running the canteen to a co-operative society.  The society employed the respondent-workmen in the canteen.  The workmen filed an application  before  the Labour Court under the  Bombay  In- dustrial  Relations Act, 1946 making a grievance  that  they were  not  paid wages and dearness allowance  in  accordance with  the award of the Industrial Tribunal.  In  support  of their claim, the workmen alleged that they become workers of the  appellant  who -was bound to pay  images  and  dearness allowance as per the award.  Since the appellant was running the canteen under an obligation to do so under the Factories Act, the running of the canteen was ordinarily a part of the undertaking  although the appellant did not itself  run  the canteen  but  handed over the premises to  the  co-operative society to run it for the  use and welfare of the  company’s employees  and  to  discharge  its  legal  obligation.   The appellant  had  resisted the claim by  contending  that  the workmen  had  never been employed by it or by its  agent  or contractor They were, in fact, employed by the  co-operative society  which was in licensee.  The Labour Court  dismissed the  workers’  claim.  However, in  appeal,  the  Industrial Court allowed the claim by holding that the employees of the co-operative  society were the employees of  the  appellant. This Court referred to the amended definition of  ’employee’ and  employer’ in Sections 3 [13] and 3 [14] of  the  Bombay Industrial Relations Act which read as follows.               "[13]  ’employee’ means any person  (including               an apprentice) employed in any industry to any               skilled  or  unskilled  manual,   supervisory,               technical or clerical work for hire or  reward               whether the terms of employment be express  or               implied and includes-(a) a person employed  in               the execution of any work in respect of  which               the  owner  of an undertaking is  an  employer               within the meaning of sub-clause (e)of  clause

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             (14).               x x          x       x        x        x               (14)  ’employer’ includes-               x     x          x x        x x               (e)   Where the owner of any undertaking  in  the               course of or for the purpose of conducting the               undertaking entrusts he execution of the whole               or-any part of any work which is ordinarily  a               part   of  the  undertaking  to   any   person               otherwise than as the servant or agent of  the                             owner, the owner of be undertaking" 19.The  Court  also referred to the definition  of  ’worker’ under  the Factories Act, 1948.  The Court then referred  to its earlier decision in Basti Sugar Mills Ltd. v. Ram Ujagar and Others [(1963) 2 SCR 8381 and held that since under  the Factories  Act, it was the duty of tic appellant to run  and maintain the canteen for use of its employees, the ratio  of the decision in Ahmedabad Mfg & Calico Printing Co. 298 Ltd.  & Others v. Their Workmen  (1953 II LLJ 647] would  be fully  applicable in which the very same provisions  of  the Act  were  considered  and  confirmed  the  finding  of  the Industrial Court. 20.  In Hussainbhai, Calicut v. The Alath Factory Thozhilali Union,  Kozhikode and Others [ (1978) 4 SCC 257], the  facts were  that the petitioner was a factory owner  manufacturing ropes.   A  number of workers were engaged by  him  to  make ropes.   According  to the petitioner, they  were  hired  by contractors who had executed agreements with the  petitioner to  get  the work done.  Out of the workmen engaged  by  the contractor,  29  were  denied employment.   They  raised  an industrial  dispute which was referred by the State  Govern- ment  to the Industrial Tribunal.  The Tribunal  upheld  the contention  of the workmen that they were the  employees  of the petitioner and directed their reinstatement.  The  award of  the Tribunal was upheld by the learned Single  Judge  of the  High Court as well as by the Division Bench in  appeal. This  Court while dismissing the employer’s petition at  the admission stage itself with an elaborate judgment, held that the  work  done by the workmen was an integral part  of  the industry.   The raw material was supplied by the  management The factory premises as well as the equipment used  belonged to the management and even finished product was taken by the management  for  its  own trade.   Defective  articles  were directed  to  be rectified by the management.   The  workmen were  broadly under the control of the management  On  these facts,  the  Court held that where a worker or  a  group  of workers labours to produce goods or services and these goods or  services are for the business of another, that other  is in  fact,  the employer.  He has economic control  over  the workers’ subsistence, skill and continued employment.  If he for  any reason, chokes of  the workers are  virtually  laid off.   The  presence of intermediate contractors  with  whom alone  the workers have immediate or direct relationship  ex contractu is of no consequence, when on lifting the veil  or looking  at the conspectus of factors governing  employment, we  discern  the  naked truth, though  draped  in  different perfect  paper  arrangement that the real  employer  is  the Management,  not the immediate contractor.  Myriad  devices, half-hidden  in fold after fold of legal form  depending  on the degree of concealment needed, die type of industry,  the local conditions and the like may be resorted to when labour legislation casts welfare obligations on the  real employer, based on Articles 38, 39,42,43 and 43-A of the Constitution. The  Court must be astute to avoid the mischief and  achieve

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the purpose of be law and not be misled by the maya of legal appearances.  If the livelihood of the workmen substantially depends on labour rendered to produce goods and services for the benefit and satisfaction of an enter prise, the  absence of   direct   relationship  or  the  presence   of   dubious intermediaries  or to make-believe trappings  of  detachment from  the  management cannot snap the real  life-bond.   The liability cannot  be shaken off.  The Court, however,  added that if there is totaldissociation  in fact  between  the disowning management  and  the  aggrieved   workmen,the employment  is   in  substance and in  real-life  terms   by another.   The management’s adventitious connections  cannot ripen  into real employment.  On this reasoning,  the  Court con  firmed the finding of the High Court and dismissed  the petition. 299 21.In  Workmen  of the Food Corporation of India  v.  Food Corporation of India [(1985) 2 SCC 136], initially the  work of handling foodgrains at Siliguri depot of the  respondent- Corporation  was  entrusted  by it  to  a  contractor.   The contractor engaged handling-mazdoors for the purposes of the work.   The mazdoors received the wages from the  contractor as determined by him or as agreed between the contractor and the  workmen.  From January 1973, pursuant to  an  agreement between  the  Corporation  and the workers  working  in  the Corporation’s  godown,  the  direct payment  system  to  the workmen  was  introduced in place of the  existing  contract labour system.  Under this system, the bills for the  piece- rate  wages  payable  to the handling mazdoors  were  to  be prepared  by  the depot staff and the Sardar/Mondal  was  to accept the payment after giving acquittance and signed bills on  their behalf and distribute the wages to  the  handling- mazdoors.   The bill with acquittance in the original  would remain  with the Corporation.  The Union of the workmen  was informed  to advise local representative of the  workmen  to submit the wage bill in time mentioning therein  particulars ’per  head outturn by name’ till January 1975.  This  system of  payment  man  in  vogue  till  January  1975  when   the Corporation   superseding   the   direct   payment    system reintroduced  the contract labour system without giving  any notice  to the affected workmen.  Consequently, 464  workmen attached  to the Siliguri depot were treated as employed  by the  contractor.   An industrial dispute was raised  by  the union against this action of the Corporation and a reference was  made  to the Tribunal for adjudication.   The  Tribunal justified   the   corporation’s   action   and   held   that reintroduction  of the contractor system did not  constitute discontinuance of     the services of the affected  workmen. The questions for determination were whether as a result  of the introduction of the direct payment system, the concerned workmen  had  become direct workmen of the  Corporation  and whether  the  reintroduction  of the  contractor  system  of payment resulted in discontinuance of the services under the Corporation  for  which  notice  under  Section  9A  of  the Industrial Disputes Act, 1947 was essential, The Court while allowing  the  workmen’s  appeal  held  that  the  essential condition for a person to be a workman within the meaning of the Industrial Disputes Act is that he should be employed to do  the  work  in an industry, and there should  be  an  em- ployment  of his by the employer and that there should be  a relationship of the employer and employee as between  master and servant.  Where the contractor em ploys a workman to  do the  work which he contracted with a third person to  accom- plish, the workmen of the contractor would without something more become the workman of that third person.  When the con-

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tractor  system was in vogue, the contractor was being  paid in  lump sum arrived at by multiplying the rate per  bag  to total  number  of bags.  Thus, the  Corporation  was  solely concerned with the number of bags handled by the contractor. It was not a contract for supply of labour, but specifically a contract for handling bags of foodgrains.  Therefore, when the contractor system was in vogue, the workmen employed  by the  contractor  were not workmen of the  Corporation.   But introduction  of the direct payment system, brought about  a basic  qualitative  change in the relationship  between  the Corporation and the workmen engaged for handling  foodgrains in that on the disappearance of the intermediary contractor, a direct relationship of 300 master   and  servant  came  into  existence   between   the Corporation  and  the  workmen.  It was  obligatory  on  the Corporation to arrange for handling the bags of  foodgrains. The  workmen handled the foodgrains for the Corporation  and none  else.   For  this service  rendered,  the  Corporation agreed  to pay and paid wages at piece rate to each  workman whose  name  appeared  in the register  maintained  for  the purpose as per the directions given by the District Manager. If   the   pay   packets  were   actually   distributed   by Sardars/Mondals, they can be said to be doing clerical  work on  behalf of the Corporation.  Thus since the  introduction of the direct payment system, the  workmen    became     the workmen  of  the  corporation and  a  direct  master-servant relationship  came  into existence.   When  workmen  working under  an employer are told that they have ceased to be  the workmen of that employer and have become workmen of  another employer,  viz.,  the  contractor in  this  case,  in  legal parlance  such  an  act of the  first  employer  constitutes discharge,   termination  of  service  or  retrenchment   by whatsoever  name called, and a fresh employment  by  another employer,  viz.,  the  contractor.  If  the  termination  of service  by  the  first employer is contrary  to  the  well- established legal position, the effect of the employment  by the second employer is wholly irrelevant.  The  introduction of a contractor so as to bring about a cessation of contract of employment between the workmen and the Corporation and  a fresh  contract  of employment between the workmen  and  the contractor,  if motivated to effect retrenchment,  ex  facie the  action  is contrary to Section 25-F of  the  Industrial Disputes  Act.   Viewed  from either angle,  the  action  of reintroducing the contractor so as to displace the  contract of service between the Corporation and the workmen would  be illegal and invalid and ab initio void and such action would not  alter, change or have any effect on the status  of  die affected workmen who had become workmen of the  Corporation. Even  assuming that the scheme of the Food Corporation  Act, 1964 permits the Corporation to engage a contractor, the Act would   not   permit   the   Corporation,   which   is    an instrumentality of the State comprehended in the  expression ’other  authority’  in  Article  12,  to  act  in  a  manner thoroughly arbitrary by first keeping a contractor, removing him and reinducting him without a semblance of consideration for  the fate of the workmen working for it for its  benefit or  for  some  work  connected with  the  functions  of  the Corporation.   By cancelling the direct payment  system  and introducing  the contractor, both the ’wages’ and the  ’mode of  payment’  within  the meaning of Item 1  of  the  Fourth Schedule to the Industrial Disputes Act are being altered to the  disadvantage  of the workmen.  Therefore, a  notice  of change  under Section 9-A was a must before introducing  the change, otherwise it would be an illegal change which  would

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attract  penalty  under  Section 31 (2).   Such  an  illegal change would be wholly ineffective. 22.  In M.M.R. Khan & Ors. v. Union of India & Ors. [(1 990) Supp.   SCC 191 J, the facts were that the canteens  run  by different railway establishments were classified into  three categories,  viz,  [i] statutory  canteens,  i.e.,  canteens required  to be provided compulsorily in view of Section  46 of  the  Factories Act, 1948, [ii]  nonstatutory  recognised canteens  set up as a staff welfare measure with  the  prior approval  and  recognition of the Railway Board as  per  the procedure detailed in the 301 Railway  Establishment Manual, and [iii] non-statutory  non- recognised  canteens,  i.e., those  which  were  established without  the  prior approval or recognition of  the  Railway Board.   The  Government of India notification.  dated  11th December,  1979  had declared the employees of  the  depart- mental canteens/tiffin rooms as holders of civil posts.  The Division  Bench of the Calcutta High Court had directed  the Union  of  India to recognise the workers of  the  statutory canteen   at   Kharagpur  as  employees   of   the   Railway administration under the Factories Act but had rejected  the workers’  demand to pay salary and allowances to them as  if they  were railway employees.  The appeal preferred  by  the Union of India against the said decision was disposed of  by this Court by its order of October 27, 1990 in the following words:               "The  benefits accruing to the  workers  under               the decision of the Calcutta High Court do not               require to be interfered with in this  appeal.               Prima facie we are inclined to agree that  the               High  Court decision is right.  Moreover,  the               learned  Attorney General agrees to apply  the               Act  as  if  it  were  applicable  to  canteen               employees.     In   this   view,    a    final               pronouncement  on this question by this  Court               need  not  be given in the present  case.   We               leave  it  open  to  Union  of  India  in   an               appropriate case to raise the point and seek a               pronouncement.  " 23.On December 4, 1984, a Division Bench of the Madras  High Court relying upon the aforesaid order of this Court held in a  case  that canteen employees will have to be  treated  as Railway  employees for die purpose of the Factories  Act  in view  of  the concessions made by the Railways  before  this Court  and  also  the  concessions’  made  by  the   counsel appearing  for the Railways before the High Court.   Against this background, writ petitions under Article 32 and appeals by.  special  leave were filed by the employees of  all  the three types of railway canteens claiming that they should be treated  as  railway employees and should  be  extended  all service  conditions  available  to  the  railway  employees. While  allowing the writ petition#, and the appeals  of  the employees of the statutory canteens and of the non-statutory recognised canteens, this Court held as follows:               "Since in terms of the Rules made by the State               Governments under Section 46 of the  Factories               Act,   it   is  obligatory  on   the   railway               administration  to provide a canteen, and  the               statutory,  canteens  love  been   established               pursuant  to  the said provision, it  must  be               held  that the canteens are incidental  to  or               connected  with the manufacturing  process  or               the subject of the manufacturing process.  The               provision  of  the canteens is demmed  by  the

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             statute  as  a necessary  concomitant  of  the               manufacturing   activity.   Even   where   the               employees   are   appointed   by   the   staff               committee/cooperative      society,      their               appointment is made by the department  through               the  agency  of the comnuttee/society  as  the               case may be.  The statutory canteens have been               in   existence  at  their  respective   places               continuously  for  a  number  of  years.   The               premises  as well as the entire  paraphernalia               for  the canteens is provided by  the  railway               administration   and   belong  to   it.    The               employees  engaged in the canteens  have  also               been  in  service  uninterruptedly  for   many               years.  Their wages axe reimbursed in full  by               the railway administration. The entire running               of  the  canteens including the work   of  the               employees is subject to the supervision and               control   of   the  agency  of   the   railway               administration whether the agency is the staff               committee or the society.  In the Establish-               302               ment  Manual  the  legal  responsibility   for               runnig  the canteen ultimately rests with  the               railways,   whatever  the  agency   that   may               intervene.  The number and the category of the               staff  engaged  in  the  canteen  is  strictly               controlled by the administration.               x        x        x       x         x               No   distinction  can  be  made  between   the               employees  of statutory canteens and those  of               non-statutory  canteens.  The only  difference               is that the statutory canteens are established               wherever  the  railway  establishments  employ               more  than 250 persons as is  mandatory  under               the provisions of Section 46 of the  Factories               Act while non-statutory canteens are  required               to be established under paragraph 2831 of  the               Railway   Establishment   Manual   where   the               strength  of  the staff is 100 or  more.   The               employees  who otherwise do the same work  and               work  under  the same conditions and  under  a               similar    management   cannot   be    treated               differently merely because the canteen happens               to  run at an establishment which employs  250               or  less  than 250 members of the  staff,  The                             smaller  strength  of the staff may  justify a               smaller number of the canteen workers to serve               them.   But that does not make any  difference               to the working conditions of such workers.   A               classification  made between the employees  of               the   two   types   of   canteens   would   be               unreasonable  and will have no rational  nexus               with  the purpose of the classification.   The               "Administrative  Instructions on  Departmental               Canteens    in    Offices    and    Industrial               Establishments   of   the   Government"    are               applicable to both statutory and non-statutory               recognised canteens.  The Instructions do  not               make any difference between the two so far  as               their applicability is concerned.               However,  the  employees of  the  nonstatutory               non-recognised  canteens am not  entitiled  to               claim  de  status  of  the  railway  servants.

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             These Canteens are run more or less on ad  hoc               bask,  the  railway administration  having  no               control on their working.  Neither is there  a               record   of   these  canteens   nor   of   the               contractors who run them who keep on changing,               much  less  of the workers  engaged  in  these               conteens.  " 24.  Accordingly,  this Court held that the workers  engaged by  the statutory canteens as well as those engaged in  non- statutory  recognised canteens in the railway  establishment were railway employees and they were entitled to be  treated as such. 25.  In All India Institute Employees’ Association v.  Union of India [JT 1990 (1) S.C. 319] the writ petition was  filed in  this  Court by an Association of  about  2000  employees working  in  500 different Railway institutes and  clubs  in various parts of the country.  Their grievance was that they were  not treated as railway employees.  It was  their  case that although the institutes and clubs in which they  worked were not statutory, they were on par -with the employees  in the  statutory  canteens run in the  railway  establishments proper.   It was further their case that the institutes  and clubs were set up to provide recreational facilities to  the railway  employees  and  they  were  managed  by  committees consisting  of  representatives of all the  members  of  the institutes/clubs elected periodically.  The institutes/clubs had  about 10 categories of employees.  The  employees  were appointed  by the committees and the salaries were paid  out of  the  contributions  received from  the  members  of  the respective institute/club and the grants-in-aid given by the Railway Board to them.  The committee of management was pre- sided  over by the President who was the  concerned  Railway Divisional   Manager   or   his   nominee.    The    railway administration 303 had  the right to dissolve or to form the ad hoc  committees for running the institutes/ clubs.  It was also the case  of the  workmen that the Railway Board had always  treated  the institutes/clubs  as an integral part of the railways  since not  only  they received grants-in-aid but  also  other  fa- cilities  from  the Railway.-,.  The  Railway  Establishment Manual made a special provision for the institutes and clubs and it stated that a railway institute should be looked upon as a club provided by the railway, rent-free for the benefit of its employees and, therefore, the railways should provide everything  which  a  landlord  ordinarily  would,  and  the institute should pay for all that a tenant should usually be liable   to  pay.   The  Manual  stated  that   th   railway administration will bear [a] the first cost of the  building including  the  cost of  electric  installations-  necessary furniture,  roads,  fancies, tennis court  and  other  play- grounds  and  wherever possible, the garden was also  to  be provided  and [b] the cost of maintenance  and  alterations. This  Court  distinguished the canteens run in  the  railway establishments  and  the  railway institutes  and  clubs  by pointing  out  the  material  difference  between  the  two. Firstly,  the  canteens  were  invariably  a  part  of   the establishment concerned and they were run to render services during  the hours of work since the services by  their  very nature  were expected directly to assist the staff  in  dis- charging  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  Court  also held that the canteen  services  are  today regarded as a part and parcel of every establishment so much

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so that they have been made statutorily mandatory under  the Factories  Act  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  employed  work  and  that  is  why  the  Railway Establishment  Manual  made a provision  for  canteens  even where  the Factories Act did not apply.  However,  the  same cannot  be said of the institutes and clubs.   Although  the Railway Establishment Manual makes provisions for them,  the provisions are of a materially different nature and pattern. There  is no provision either for subsidy or  loan  directly from the funds of the railway administration.  They have  to run  on the membership fees and fixed grants  received  from the  Staff Benefit Fund which consists of receipts from  the forfeited  provident fund and bonus and of fine.  The  grant further  is made to each institute/club at the rate  of  Rs. 14/-  per capita of the non-gazetted staff employed  at  the relevant  railway establishment.  Out of this  contribution, only  Rs.4/  -  per capita are spent on  activities  of  the institutes/clubs,  the  rest of the amount  being  spent  on education  etc.  The wages and allowances of die  staff  the institutes/clubs are paid by the institutes/clubs themselves and they arc not subsidised by the railway administration as in  the case of the statutory and  non-statutory  recognised canteens.  Further, by their very nature the services of the institutes/clubs  are availed of beyond working  hours  only and not all the members of the railway staff avail of  them. One had to be a member by paying fees to do so.  The member- ship  was further optional.  That is why most of  the  staff employed  in  the institutes/clubs was  part-time.   Out  of about 1741 employees engaged in 449 institutes and 332 clubs nerely half were part-time employees.  The sorvices rendered by the 304 employees  were  also not of a uniform  nature.   They  were engaged  for  different  services  with  service  conditions according to the requirement.  The institutes/clubs also  do not  engage  in  any  uniform  activities,  the   activities conducted by them varying depending upon the  infrastructure and the facilities available at the respective places.  What is   more   important   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 having  been tailored  to  the budgets.  If the cost of  activities  goes beyond  the  means,  they have to be  curtailed.   On  these facts,  this Court held that the staff members  employed  by the  railway institutes/clubs are not the employees  of  the Railways. 26.  In   Surendra   Prasad   Khugsal   v.   Chairman,   MMT Corporation  of India Ltd. [JT 1993 (5) SC 80], the  workers employed   in  non-statutory  recognised  canteens  in   the respondent-Corporation  had approached this Court by a  writ petition under Article 32 of the Constitution, relying  upon the decision of this Court in M.M.R. Khan case [supra].  The Court  found  that the said decision which had  decided  the claim  of the non-statutory recognised canteens was  decided on  the facts of that case including the provisions  of  the Railway   Establishment   Manual,  the   notifications   and circulars issued by the Railway Board from time to time  and other  documents.   On the other hand, there  were  disputed facts  in the case in hand which could not be resolved in  a writ  petition  under  Article  32.  The  Court,  therefore,

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referred the matter to the Industrial Tribunal for adjudica- tion. 27.  What  emerges  from the statute law, and  the  judicial decisions is as follows: [i]  Where, as under the provision of the Factories Act,  it is  statutorily  obligatory on the employer to  provide  and maintain  canteen for the use of his employees, the  canteen becomes  a  part of the establishment  and,  therefore,  the workers  employed in such canteen are the employees  of  the management. [ii]  Where,  although it is not statutorily  obligatory  to provide  a  canteen, it is otherwise an  obligation  on  the employeer to provide a canteen, the canteen become a part of the  establishment and the workers working in  the  canteen, the employees of the management.  The obligation to  provide a  canteen  has to be distinguished from the  obligation  to provide facilities to run canteen.  The canteen run pursuant to  the  latter obligation, does not become a  part  of  the establishment. [iiij  The obligation to provide canteen may be explicit  or implicit.   Where the obligation is not explicitly  accepted by  or cast upon the employer either by an agree ment or  an award  etc., it may be inferred from the circumstances,  and the provision of the canteen may be held to have be, come  a part of the service conditions of the employe".  Whether the provision  for canteen services has become a part of the  of service  conditions  or  not is it question of  fact  to  be determined on the facts and circumstances in each case. Where  to provide canteen services has become a part of  the service  conditions of the employees, the canteen becomes  a part  of the establishment and the workers in  such  canteen become the em- 305 ployees of the management. [iv]           Whether a particular facility or service  has become  implicitly a part of the service conditions  of  the employees  or not, will depend, among others, on the  nature of  the  service/facility, the contribution the  service  in question  makes to the efficiency of the employees  and  the establishment, whether the service is available as a  matter of right to all the employees in their capacity as employees and  nothing more, the number of employees employed  in  the establishment  and the number of employees who avail of  the service,  the length of time for which the service has  been continuously  available,  the  hours  during  which  it   is available,  the  nature  and character  of  management,  the interest  taken by the employer in  providing,  maintaining, supervising  and controlling the service,  the  contribution made  by  the management in the form of  infrastructure  and funds for making the service available etc, 28.  We may now examine the facts in the present case in the light of the above tests. 29.  There is no dispute that the respondent-Corporation has not explicitly undertaken to provide canteen services to its employees  working  in the offices in  question.   The  only obligation that it had explicitly accepted was to provide to the  employees facilities to run canteen, such as  premises, furniture,  electricity, water etc.  However, the  facts  on record show that the Corporation had implicitly accepted the obligation  to provide canteen services and not  merely  the facilities to run the canteen.  These facts are: [a]    In para 6 of the counter-affidavit filed on behalf of the Corporation before the learned Single Judge in the  High Court,  it  is stated that at the time the  Corporation  was established,  i.e.,  1st September, 1956, all  the  Insurers

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carrying on life insurance business in India both inland and foreign were merged and/or vested in the Corporation.   Some of the merged offices of the erstwhile Insurers had canteens which were used to be run or managed by different employees’ unions.   After the establishment of the Corporation,  those canteens  continued to be run and managed by the  particular employees’ unions.  While being so run there were complaints to the Corporation from the employees about the quality  and nature  of food supplied as is evident from the  letters  of several employees’ unions written in or about 1972.   Hence, in  or about 1973, the Corporation was obliged to appoint  a committee to examine the alleged complaints and to find  out ways and means as to how best such canteens could be run and managed.   The  Committee made its  recommendations  and  in pursuance of the recommendations, the responsibility to  run and  manage the canteens was entrusted to contractors  obvi- ously by the Corporation, though the counter has not  stated the latter fact in so marl, words.  The contractors  started managing the canteens and this practice continued till 1979. It  is  stated  in the counter that one  of  the  employees’ unions   was  the  Life  Insurance  Corporation   Employees’ Association  [Calcutta Division] of which one  Shri  Sukumar Mukherjee  was the General Secretary and the said  Mukherjee is  also  the  President of the  Employees’  Unions  of  the appellants  herein.  Although it is also averred there  that the  said  Mukherjee who represented the appellants  at  all material  times also did not come out with a case  that  the appellants were the 306 employees of any departmental canteens run or managed by the Corporation  and that it was for the first time that  before this  Court in the writ petition filed under Article  32  of the Constitution that the appellants had sought to make  out the  purported  case  that they were the  employees  of  the departmental canteens belonging to and/or run and/or managed by  the  Corporation, these facts are not relevant  for  the purpose  of examining whether, in fact the  relationship  of employer  and employee existed between the  Corporation  and the appellants. [b]  The  counter  further  goes  on  to  say  that  in  the meanwhile,  the  workers  working in  the  canteens  started agitating for higher emoluments and/or other benefits and as such,  the contractors abandoned their entrustment  and  the facilities  of canteen available to the  employees  suddenly came  to a stop.  Thereafter, a cooperative society  of  the employees of the Corporation known as LIC Employees Coopera- tive  Society  Ltd.,  was formed  and  it  started  managing canteens at different offices of the Corporation in Calcutta w.e.f  1st  September,  1979.   While  such  management  was continuing,  the  workers in the canteens in or  about  1981 started agitation for enhancement of their salary and  other benefits and submitted a charter of demands both to die said cooperative society and to the Corporation.  The dispute was referred to the Assistant Labour Commissioner [(Ventral] and in  pursuance of a notice dated 15th April, 1982  issued  by the  Assistant  Labour Commissioner, a me was  held  at  his behest  on 10th May, 1982 with a representative each of  the cantee   workers’  union  and  of  the   Corporation.    The employees’ cooperative society, ever, did not participate in the  conciliation proccedings.  By a notice dated  14th  Au- gust,  1982 the canteen workers notified that they would  go on strike if the demands were not met.  Thereafter, the  As- sistant Labour Commissioner called the Zonal Manager of  the Eastern Zonal Office of the Corporation at Calcutta and oth- ers  concerned,  for a discussion on 10th  September,  1982.

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The canteen workers went on strike w.e.f 1st December,  1982 and the conciliation proceedings were held for the last time on 15th December, 1982.  As a result of the said strike, the canteen  facilities  available  to  the  employees  of   the Corporation   were  again  stopped.   Thereupon,   the   LIC Employees’  Association complained against the  stoppage  of the  said facilities.  Pursuant to the said  complaint,  the Labour Commissioner [Central] took up the matter and  issued notice  to the respective parties which of  course  included the  respondent-Corporation,  for discussion.   The  central office  of  the  Corporation was also  eager  to  make  some alternative  arrangement for running the said canteen.   The discussions  were  held at the conciliation  level  and  the Conciliation Officer submitted his failure report.  Cut 26th March, 1983, the Corporation addressed a letter to the  then Zonal  Labour Commissioner explaining the  entire  position. The   canteen  workers  continued  their  strike   and   the Corporation   had  to  find  out  some  other   alternative, management  with  a  view to continue  the  canteen  service rendered to the employees.  The Corporation, therefore, by a notice  dated  14th March, 1983 called  for  appointment  of contractors  to run the canteens and in  pursuance  thereof, contractors  were  appointed  -who in  turn  took  over  the responsibility  of  the canteen workers who were  till  that tine working in the canteens. 307 It  is, however, the case of the Corporation in the  counter that  in  spite  of  the failure  report  submitted  by  the Regional Tabour Commissioner [Calcutta], the dispute was not referred   for  adjudication  and  the  Central   Government accepted that the canteen workers were not the employees  of the Corporation but were the employees of the contractors as is evident from letter dated 6th February, 1984 addressed by the  Central Government to the Zonal Manager, Eastern  Zonal Office of the Corporation. It  is also the case of the Corporation in the said  counter that  the Corporation at no point of time exercised any  cow Vol  over  the  contractors  except  those  covered  by  the contracts  in  writing  between  the  contractors  and   the Corporation. From  the aforesaid averments in the counter, the  following facts emerge.  Even from times much prior to the coming into existence  of the respondent-Corporation,  canteen  services were  available to the employees of the insurance  companies which  were  later  merged with  the  Corporation  in  1956. Between 1956 and 1971 the canteens were being managed by the canteen  committees.   Between  1973  and  1979,  they  were managed by the contractors appointed by the Corporation.  In 1979,  the  management  was taken over  by  the  cooperative society of the employees.  In 1981, there was an  industrial dispute  raised  by  the  canteen  workers  both  with   the cooperative  society and the Corporation.  In the  concilia- tion   proceedings   it  is  only  the   Corporation   which participated.   From 1983 onwards, the canteens  were  again managed by the contractors appointed by the Corporation with written  agreements  with them.   The  Central  Government’s letter  dated 6th February, 1984 refusing reference  of  the dispute for adjudication to the Industrial Tribunal makes it clear that the demand raised by the canteen workers was both for  increase  of  wages and for  their  absorption  in  the Corporation.  Ile parties to the dispute included the  Zonal Manager,  Eastern Zonal Office as well as Senior  Divisional Manager  of the Corporation at Calcutta.  In the letter  the Central  Government while refusing to refer the dispute  for adjudication gave the reason that the canteen employees were

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reported  to have been employed by the  cooperative  society and  not by the LIC and, therefore, there was  no  employcr- employee relationship between the canteen employees and  the LIC.   In other words, the Central Government had taken  the stand that the employees concerned were not the employees of the  contractors but of the employee’s cooperative  society. Although  this cannot be taken as the conclusive finding  on the issue, it has relevance of its own in the context of the facts which have emerged in the matter of the employment  of the canteen workers. [c]  We have then a copy of the agreement dated  15th  June, 1983  entered into between the Corporation and the  contrac- tor,   and  the  Corporation  has  admitted   that   similar agreements were entered into with the later contractors from time to time. The contents of the specimen of the  agreement are revealing for our purpose. [i] The agreement is  entered into exclusively between the contractor and the  Corporation and  there is no other party to the contract.  The  preamble of  the  agreement  begins  as  follows:"Whereas  the   Life Insurance   Corporation   of  India,   Calcutta   Divisional Office....is  desirous of running a canteen by a  contractor on approved terms and conditions at ... and whereas the said contractor 308 has  accepted  the  said terms as offered to  him...  It  is hereby declared and agreed a,% follows:".  It is, therefore, clear  from the preamble itself that it is  the  Corporation and  not the employees of the Corporation or their union  or cooperative  society  which  was  desirous  of  running  the canteen  and  which had engaged the  contractors;  [ii]  The Corporation  was desirous of running the canteen  through  a contractor  on the terms offered to him by the  Corporation. In  other  words,  the contractor is only an  agent  of  the Corporation;  [iii] Clause [1] of the agreement  shows  that contract  deals  with quality of foodstuff, tea  coffee  and other permissible drinks to the employees of the Corporation and  the contract will remain operative for a period of  one year only from the date of the contract; [iv] by clause [2], the Corporation undertakes to provide to the contractor free of  cost,  space, tables, chairs, fans,  lights  and  water, although  the  cost of fuel or gas charges were  not  to  be borne by the Corporation; [v] Clause [3] makes it clear that the  foodstuff  was  to be cooked and  prepared  inside  the premises of the canteen and no outside foodstuff except cold drinks  would be sold in the canteen.  Clause [4]  makes  it obligatory  on the contractor to maintain regular supply  of quality  food  while clause [5] provides that  the  existing price of the foodstuff, tea coffee etc. should be  continued for  a  period  of about six months from  the  date  of  the contract and revision will be considered thereafter or  even before  by discussion with the canteen committee as well  as with the contractor, [vi] Clause [6] makes it clear that the fittings, furniture and fixtures of the canteen shall belong to  the  Corporation’s concerned office and removal  of  the above  in any circumstances was impermissible; [vii]  Clause [8]  states  that the caution money is to be kept  with  the Corporation  as  interest free deposit and the  question  of revision or adjustment of such deposit will arise either  at the  time of the termination of the contract or at any  time earlier  should the Corporation decide in the event  of  any loss  or damage; [viii] Clause [9] is important in  that  it states  that it is the Divisional Office of the  Corporation which  reserves  the right to add to, alter or  rescind  the terms  and conditions of the contract and also to advise  on any  mater connected with the canteen; [ix] Clause [1]  then

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stipulates  that  the  canteen shall not be  kept  open  for counter service but only floor service shall be allowed  and no  employee  shall  be allowed to use  the  canteen  except during the lunch hours. The  aforesaid terms of the contract further make  it  clear that the Corporation has the dominating say in dictating the terms and conditions of the contract and that apart from the fact  that the Corporation alone is a party to the  contract and neither the Corporation’s employees nor any  cooperative society  of the employees, it is the Corporation  which  has the right to continue or terminate the contract and also  to modify  and dictate the new terms of the contract.  This  is the state of affairs which has been continuing at least from 1983. [d]  It is also apparent from the history of the  management of the canteen that it was managed through different  mecha- nisms such as the canteen committee, cooperative society and the  contractor.  During the major period from 1973 to  1979 and thereafter from 1983 onwards, the contractors have  been on the scene.  Although, we do not have the specimen of  the contract  that  was entered into with the  contractors  from 1973 to 1979, even if it is 309 presumed  that  the contractors were appointed  during  that period  by the canteen committees, it is not  disputed  that even  these  canteen  committees  were  controlled  by   the Corporation and were manned by the Corporation ’s officers. [e] What is further in the rejoinder filed by the appellants before  the  Division  Bench  of  the  High  Court  it   was specifically  averred in paragraph  6 thereof that  the  job done  by the canteen employees was of perennial  nature  and was  incidental to the running of the main  business of  the Corporation.  It was being done by the  Corporation  through their  intermediaries - sometimes by contractors,  sometimes by  cooperative society and sometimes by canteen   employees themselves.  The  intermediaries  came  and  went   but  the employment  of the  workers under the  Corporation  remained constant.  These  averments   have not been  denied  by  the Corporation. [f]  In the writ petition filed by the appellants,  further, it was averred that the employees of the Corporation at  all its establishments, are provided with facilities of  canteen by  the Corporation for more than a few decades and as  such the  provision  of canteen facilities  was  a  condition  of service  of the  employees of the Corporation and   that  by usage  and custom the  benefits  of canteen facilities   had became  the conditions  of service  and that the running  of the  canteen  was incidental to the running of the  business of  the Corporation. This is not  controverted  specifically by the Corporation in its reply filed before  the Court. [g]  In  addition,  there  are  certain  other  facts  which indicate  that it was the Corporation was taking interest in not only managing the canteen but also in the   constitution of  the  committees  for management of  the  canteens.   The appellants  have produced a letter dated 14th  -March,  1983 addressed by the Additional Zonal Manager of the Corporation to the employees of the Corporation who were elected to  the canteen  committee  to  inform them that they  had  been  so elected  and  hoping that their help  and  cooperation  will strengthen the committee in the discharge of its duties.  If the  Corporation had nothing to do with the  management  and the constitution of the committees and their election, there was  no  reason  for the said functionary  to  address  such letter  to the elected members of the  committee.The  letter shoos  that  even  in organising and  electing  the  canteen

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committees, the Corporation was playing its functional role. [h]  There  is  further a letter  dated  22nd  August,  1983 addressed  by  the  very same functionary to  one  M/s.   S. Mistry  in the matter of supply of three black-boards.   The letter  shows that the quotations for the  black-boards  for the  canteen were invited by the Corporation and  the  order for  the  supply of the same was also placed by it  and  the bill was also to be paid by it. 30.  In the face of the aforesaid facts, it is difficult  to support  the  findings of the Division Bench  that  [a]  the canteen  is being run by a committee or cooperative  society of the staff members of the Corporation [b] the  Corporation only  agreed to provide space to house the canteen and  cer- tain chairs and tables for the use of its staff members, [c] an  independent  contractor has been appointed  to  run  the canteen [d] and since no letter of appointment has ever been issued  by  the Corporation and no  attendance  register  is maintained and 310 the  salary  of  the canteen workers is being  paid  by  the independent  contractor  and  not  from  the  funds  of  the Corporation, there is no employer and employee  relationship between the Corporation and the appellants. 31.  The  facts  on  record  on  the  other  hand,  show  in unmistakable terms that canteen services have been  provided to  the employees of the Corporation for a long time and  it is the Corporation which has been from time to time,  taking steps to provide the said services.  The canteen committees, the cooperative society of the employees and the contractors have  only been acting for and on behalf of the  Corporation as   its  agencies  to  provide  the  said  services.    The Corporation  has  been  taking  active  interest  even   irk organising  the canteen committees.  It is further the  Cor- poration  which has been appointing the contractors  to  run the canteens and entering into agreements with them for  the purpose The terms of the contract further show that they are in  the  nature of directions to the  contractor  about  the manner  in which the canteen should be run and  the  canteen services  should  be rendered to the  employees.   Both  the appointment of the contractor and the tenure of the contract is  as per the stipulations made by the Corporation  in  the agreement.   Even the prices of the items served, the  place where they should be cooked, the hours during which and  the place  where  they  should  served,  are  dictated  by   the Corporation.  The Corporation has also reserved the right to modify  the  terms  of the  contract  unilaterally  and  the contractor  has no say in the matter.  Further,  the  record shows  that almost all the workers of the canteen  like  the appellants have been working in the canteen continuously for a  long  time  what  ever  the  mechanism  employed  by  the Corporation  to  supervise and control the  working  of  the canteen.  Although the supervising and managing body of  the canteen  has  changed hands from time to time,  the  workers have  remained constant.  This is apart from the  fact  that the  infrastructure  for  running  the  canteen,  viz.,  the promises, furniture, electricity, water etc. is supplied  by the  Corporation  to  the managing agency  for  running  the canteen.   Further, it cannot be disputed that  the  canteen service  is essential for the efficient working of  the  em- ployees  and of the offices of the Corporation, In fact,  by controlling  the  hours during which the counter  and  floor service  will  he  made available to the  employees  by  the canteen, the Corporation has also tied to avoid the waste of time  which would otherwise be the result if  the  employees have  to go outside the offices in search of such  services.

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The  service is available to all the employees in  the  pre- mises of the office itself and continuously since  inception of the Corporation, as pointed out earlier, The employees of the  Corporation have all along been making  the  complaints About  the  poor  or in adequate  service  rendered  by  the canteen to them, only to the Corporation and the Corporation has  been taking steps to remedy the defects in the  canteen service.  Further, whenever there was a temporary  breakdown in  the canteen service, on account of the agitation  or  of strike  by the canteen workers, it is the Corporation  which has  been  taking  active interest in  getting  the  dispute resolved  and the canteen workers have also looked upon  the Corporation as their real employer and joined it as a  party to   the  industrial  dispute  raised  by  them.    In   the circumstances,  we  are  of the view that  the  canteen  has become a part of the establishment of the Corporation.   The canteen  committees,the 311 cooperative  society  of the employees and  the  contractors engaged from time to time are in reality the agencies of the Corporation  and am, on, a veil between the Corporation  and the canteen workers.  We have., therefore, no hesitation  in coming  to  the conclusion that the canteen workers  are  in fact the employees of the Corporation. 32.  The  next question is as to what relief the  appellants are  entitled.  As pointed out earlier, the appellants  have prayed for the relief of their absorption by the Corporation as its regular employees and also for pay as is paid to  the other employees of the Corporation.  In view of our  finding that the appellants who are the canteen workers in the  four offices  of the Corporation in Calcutta are entitled  to  be the  employees  of  the  Corporation,  the  appellants   are certainly  entitled to the first relief they  have  claimed. The  question, however, is to what service  conditions  they would  be entitled, They have prayed for the minimum  salary paid  to the employees of the Corporation which  necessarily means the minimum salary of the lowest paid employees of the Corporation, i.e., of class IV employees.  There would be no difficulty  in directing the payment to them of the  minimum of  the  salary  paid  to the  Class  IV  employees  of  the Corporation.   However,  there is  distinction  between  the present  service conditions of the appellants and the  other Class  IV  employees of the Corporation.  For  example,  the appellants  get  free food, and free tea.   Their  hours  of service   may  also  differ.   There  are   also   different categories  of  canteen  workers such  as  General  Manager, Canteen  Managercum-Salesman, Kitchen Clerk, Canteen  Clerk, Halwai,  Assistant  Halwai, Cook Bearer,  Wash-boy,  Sweeper etc.  It is not possible for the Court to evaluate the  work done  by  each of the categories.  Hence  different  service conditions  will  have to be prescribed  for  the  different appellants.    The  Corporation  may  have,  therefore,   to prescribe  appropriate  service conditions for  the  canteen workers. 33.  Pending  the prescription of such  service  conditions, the Corporation should pay to all the appellants the minimum of  the  salary  presently paid to its  Class  IV  employees taking  into  consideration  and making  allowance  for  the special facilities, if any available to them and also  their special  working conditions.  In addition,  the  Corporation should  also  give  them the benefit of  the  other  service conditions available to its Class IV employees. 34.  The question further is from which date the  appellants should be deemed to have become   the   employees   of   the Corporation  and  should,  therefore,  be  entitled  to  the

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minimum   salary  and  ,he.  other  benefits.  taking   into consideration  the  relevant  facts  and  circumstances   on record,  we  are of the view that they should be  deemed  to have  become the regular employees of the  Corporation  from the date of the filing of the writ petition before the  High Court  and should, therefore, be paid the arrears of  salary and  other  monetary benefits, if any, from  the  said  date after  adjusting the salary and monetary benefits that  they may  have received.  The years of continuous service put  in by  them even prior to the aforesaid date as canteen  workas should,  however  be taken into account for the  purpose  of calculating their retiral benefits. 35.  We, however, make it clear that the above direction  to treat the appellants 312 as the regular employees of the Corporation will be  subject to two conditions, viz, [a] that they were above the minimum and below the maximum age limit and medically fit as per the regulations of the Corporation on the date of the filing  of the writ petition and [b] that on the date of the filing  of the  writ petition before the High Court, they had put in  a minimum of three years continuous service as canteen workers in   the  canteens  in  question.   For  the   purposes   of calculating the said three years qualifying service and  the retiral benefits, the service prior to the attainment of the minimum  qualifying age under the Corporation’s  regulations shall be ignored. 36.  The appeal is allowed in the above terms with no  order as to costs. 313