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PETITIONER: SARASPUR MILLS CO. LTD.

       Vs.

RESPONDENT: RAMANLAL CHIMANLAL & ORS.

DATE OF JUDGMENT12/04/1973

BENCH: GROVER, A.N. BENCH: GROVER, A.N. VAIDYIALINGAM, C.A.

CITATION:  1973 AIR 2297            1973 SCR  (3) 967  1974 SCC  (3)  66

ACT: Bombay   Industrial   Disputes   Act,   Gujarat    Amendment 1962--Clauses 13 and 14 of section3--Entrustment  of   work which  in  ordinarily  a  part  of  the   undertaking--Legal obligation of a factory to run a canteen under Section 46 of Factories  Act--Entrustment  of  running the  canteen  to  a Cooperative  Society--Factories Act 1948, Section 2(1)  work incidental  to  the  manufacturing  process--Running  of   a canteen by a textile mill.

HEADNOTE: The appellant Textile Mill had a statutory obligation, as  a factory, under the provisions of Section 46 of Factories Act and the Rules made thereunder for maintaining a canteen  for its workers.  The appellant entrusted the management of  the canteen  to  a  cooperative society.   The  workers  of  the canteen demanded additional wages and dearness allowance  in terms of certain awards claiming that they were the employee of the appellant within the meaning of Clauses (13) and (14) of  Sec.  3 of the Bombay Industrial Disputes Act,  1938  as amended  by  Gujarat  Legislature  in  1962.   The   workers contended  that the running of the canteen was  an  ordinary part  of  the  undertaking of appellants,  since  it  was  a statutory  obligation  for  the appellant  to  do  so.   The appellant  on the other hand contended that the  cooperative society  was  neither  the  agent  nor  the  contractor   of appellant. Rejecting the appeal, HELD  :  Under  the Factories Act, it was the  duty  of  the appellant  to  run and maintain canteen for the use  of  its employees.   Under  clauses (13) and (14) of  Section  3  as amended  in 1962, the definition of an employee is  extended by a fiction of law and certain employees are recognised  as statutory employees.  The workers in question fall under the said definition. [972B] Ahmedabad Mfg. & Calico Printing Co. Ltd. and Ors. v.  Their Workmen. [1964] 2 S.C.R. 838, relied upon. Basti  Sugar  Mills Ltd. v. Ram Ujagar add  Ors.  [1953]  11 L.L.J. 647, followed.

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JUDGMENT: CIVIL APPELLATE JURISDICTION  Civil Appeal No. 1957 of 1968. Appeal by special leave from the Award dated March. 26, 1968 of the Industrial Court Gujarat Ahmedabad in Appeal (IC) No. 58 of 1966. S.V. Gupte, P. C. Bhartari, and J. B, Dadachanji & Co.,  for the appellant. V.   M. Tarkunde, and S. S. Shukla, for respondents 1 (a) to 1(h). 968 The Judgment of the Court was delivered by GROVER, J : This is an Appeal by special leave from an Order of  the industrial Court,, Gujarat which reversed  an  order made by the 2nd Labour Court, Ahmedabad. Ramanlal  Chimanlal and others are the workers of a  canteen which  is  run by the Saraspur  Mills  Canteen  Co-operative Society  Limited,  Ahmedabad  (hereinafter  called  the  co- operative  society).  The appellant company  is  responsible for maintaining the canteen under the provisions of S. 46 of the  Factories  Act  and the  rules  made  thereunder.   The appellant  handed over to the co-operative society the  task of  running the canteen.  The workers mentioned above  filed an  application  before the 2nd Labour  Court  at  Ahmedabad under  S.  79 of the Bombay Industrial Relations  Act,  1946 (hereinafter called the Act), complaining that the appellant was not paying them the wages and dearness allowances as per the  directions  contained  in  the  Award  of  the   Bombay Industrial  Court  made  in Reference No.  18  of  1947  and supplementary   Award   given   in   certain   miscellaneous applications.  of  1956 and 1962  respectively  relating  to additional  wages  sanctioned  by the said  Award.   It  was alleged by the applicants in support of their claim that  by virtue  of  certain  amendments  made  in  the  Act  in  the definition of the word "employer" they became workers of the appellant,  which  was  bound  to  pay  wages  and  dearness allowances   settled   by  the  aforesaid  Award   and   the supplementary  Awards referred to.  The case of the  workmen was that the appellant was running the canteen only  because it was under an obligation to do so under the Factories  Act and  the  rules made thereunder.  Thus the  running  of  the canteen  was  an  ordinary part of the  undertaking  of  the appellant.   It was admitted that the appellant did not  run the  canteen itself but handed over the premises to the  co- operative society to run the canteen for the use and welfare of the mill’s employees and discharge its legal obligations. The  appellant  denied the allegations of the  workmen  that they were its employees.  It was claimed that the  aforesaid workers  had never been employed either by the appellant  or by its agent or contractor.  The workers in fact were stated to have beep employed by the licences of the appellant  and, therefore, there was no question of the wage settlements  or Awards  being  binding on, the appellant.   The  2nd  Labour Court  by  its Order dated 14th April,  1966  dismissed  the claim  of  the  workmen,  who filed  an  appeal  before  the Industrial Court, which was allowed by its order dated  26th March,  1968.  The Industrial Court held that the  employees of the co-operative society, who were working in the canteen were  employees  of  the  appellant  and,  their  wages  and dearness allowance etc. were payable in  accordance with 969 the  Awards mentioned before.  The direction was  made  that the  appellant  should  pay  the  difference  in  wages  and dearness allowance in accordance with those Awards. The  only question which requires determination  is  whether the  canteen  workers employed by  the  cooperative  society

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could  be treated as employees of the appellant  within  the meaning  of  the  relevant provisions of  the  Act  for  the purpose of payment of their wages in spite of the fact  that they are employees of the cooperative society and were  wing paid  wages  by  that society.  Prior  to  the  Act,  Bombay Industrial  Disputes Act 1938 was in force in the  erstwhile province  of Bombay.  Under that Act no statutory  employees were  created  but  only those person-,  who  were  directly employed by the employer were treated as employees.  The Act repealed  the 1938 Act.  Section 3(13) of the Act  contained the definition of the term "employee". Before its  amendment this provision  was as follows               "(13) and includes               (a)   a person employed by a contractor to  do               any  work  for  him  in  the  execution  of  a               contract  with an employer within the  meaning               of sub-clause (e) of clause 14.               Sub-clause(e) of clause 14 is as follows                (14) " employer" includes (e) where the owner               of any undertaking in the course of or for the               purpose    of   conducting   the   undertaking               contracts with any person for the execution by               or  under the contractor of the whole  or  any               part  of any work which is ordinarily part  of               the   undertaking,   ’the    owner   of    the               undertaking".               The  Factories  Act, 1948 came into  force  on               April 1, 1949.  Section 2(1) of that Act is as               follows:               "(1) ’worker’ means a person employed directly               or  through any agency, whether for  wages  or               not,  in  any  manufacturing  process.  or  in               cleaning any part of the machinery or premises               used  for  manufacturing process,  or  in  any               other kind of work incidental to, or connected               with,  the manufacturing process, or the  sub-               ject of manufacturing process" The  expression ’occupier’ was also defined by section  2(n) to mean the person who has ultimate control over the affairs of the factory, and where the said affairs were entrusted to a  managing  agent  such agent shall be  deemed  to  be  the occupier of the factory.  The Bombay High Court had held  in certain  matters which were brought before it that in  spite of the fact that the L797Sup Cl/73 970 co-operative  society was mentioned in the Bombay  Factories Rules,  1950,  the  employee employed  by  the  co-operative society  could  not be treated as employees under  the  Act. The  Gujarat  Legislature  passed an Act  in  1962  amending clause,’  (13) and (14) of Section 3 of the Act.  After  the amendment these clauses run 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               (14).               (14)  ’employer’ includes-               (e)Where  the owner of any  undertaking  in               the course of or for the purpose of conducting               the undertaking entrusts the execution of  the

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             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    the               undertaking................ The  Industrial.   Court  was  of the  view  that  the  term "employee" under the Act had been given an extended meaning. An  employee Was not only a person who was employed  by  the employer  or  over whom the employer had control,  but  also certain  types  of persons had  been  constituted  statutory employees under the Act.  Before such a person could  become the employee of the owner of the undertaking, the conditions that   must  be  fulfilled  were:  (1)  the  owner  of   the undertaking must entrust to any person the execution of  the whole or any part of any work; (2) such entrustment must  be in the course of or for the purpose of conducting the under- taking;  (3) such entrustment must be otherwise than as  the servant or agent of the owner and (4) such work must be  any work which is ordinarily a part of the undertaking. The  Industrial  Court  referred to  the  earlier  decisions including that of the Labour Appellate Tribunal and of  the, Bombay  High Court and examined the circumstances  in  which the  relevant provisions of the Act came to be amended.   It was pointed out that in the statement of objects and reasons appearing  in  the Bill to the Amending Act, it  was  stated that  the definition of an employee was being amended so  as to  cover  persons  employed by a contractor  or  any  other person to whom the owner of an undertaking had entrusted the execution of any work which was ordinarily part 971 of  the undertaking.  The definition of ’employee  was  also amended correspondingly.  According to the Industrial  Court there was a statutory obligation on the part of the mills to provide a canteen and this obligation had been discharged by the  mills  by  entrusting that  task  to  the  co-operative society,  even  if there was no positive  evidence  of  such entrustment of work.  It was pointed out that the activities of running the canteen could hardly have been undertaken  by the  co-operative society unless it was entrusted to it  by, the  mills.   It  was finally held  that  although  the  co- operative  society which wag the real employer and  not  the present  appellant, but by virtue of the fiction created  by the amendment introduce,-’ in the Act, the employees of  the Society  became the employees of the appellant.  They  were, therefore, entitled to the benefits of the Awards. The sole point which has been strenuously urged on behalf of the  appellant  is  that on a  proper  construction  of  the amended clauses (13)- and (14) of Section 3 of the Act,  the workers, employed in the canteen which was being run by  the co-operative  society,  could  not  have  been  held  to  be employees  of  the  appellant.  It  is  contended  that  the appellant  was  under  a  statutory  obligation  because  of section 46 of the Factories Act and the relevant rules  made thereunder to maintain the Canteen for the workers, but  the canteen  was being actually run by the  cooperative  society and  the appellant had nothing to do with it nor did it  pay any  wages to the employees of the society who were  working in the canteen. The  matter  seems to be concluded by the judgment  of  this Court in Civil Appeal No. 1044 of 1968 decided on April  14, 1972, in which an identical argument had been addressed that certain gardeners who had been employed by a contractor  for working  in the gardens of the textile mills, could  not  be said to fall within the definition of the word "employed" as contained  in  Section  3 (13) of the  Act.   In  that  case

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reference was made to the decision in Basti Sugar Mills Ltd. v. Ram Ujagar and Ors. (1) It had been held that the workmen fell within the definition of that word as given by S. 2 (z) of  the  U.P.  Industrial Disputes Act  1947  as  they  were persons  employed  in  the industry to do  manual  work  for reward.  The workmen had been employed by a contractor  with whom  the mills had contracted in the course  of  conducting the  industry  for execution by the said contractor  of  the work  of removal of press mud which is ordinarily a part  of the industry. The  above  case  was  treated  as  an  authority  for   the proposition that an employee engaged in a work or  operation which was incidentally connected with the main industry  was a  workman  if  other  requirements  of  the  statute   were satisfied and that the Malis in that (1) [1964] (2) S. C. R. 838. (2) [1953] 11.  L. L. J. 647. 972 case  were workers.  It was pointed out that  the  bungalows and  gardens on which the Malis in that case worked  were  a kind of amenity supplied by the mills to its officers and on this  reasoning  the  Malis  were  held  to  be  engaged  in operation  incidentally  connected with  the  main  industry carried  out by the employer.  The High Court  in  Ahmedabad Mfg. &  Calico Printing Co. Ltd. & Ors v. Their Workmen  (2) had  relied  on the above ratio and came to  the  conclusion that  the workers in order to come within the definition  of an  "employee"  need not necessarily be  directly  connected with  the manufacture of textile fabrics.  The  decision  in Basti Sugar Mills’ case was treated as binding in the former case. Since,  under  the  Factories Act it was  the  duty  of  the appellant to run and maintain the canteen for the use of its employees,  it appears to us that the ratio of the  decision in  Ahmedabad  Manufacturing & Calico Printing Co.  Ltd.  v. Their  Workmen would, be fully applicable in which the  same provisions of the Act were considered. The  appeal, therefore, must fail and it is  dismissed  with costs. S.B.W. Appeal dismissed. 973