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CASE NO.: Appeal (civil)  224-226 of 2003

PETITIONER: State of Karnataka & Ors.

RESPONDENT: KGSD Canteen Employees Welfare Association & Ors.

DATE OF JUDGMENT: 03/01/2006

BENCH: S.B. Sinha & P.P. Naolekar

JUDGMENT: J U D G M E N T W I T H CIVIL APPEAL NOS. 449-468 OF 2003  & 4180-82 OF 2003

S.B. SINHA, J:

       Both the State of Karnataka and K.G.S.D. Canteen Employees  Welfare Association are in appeal before us aggrieved by and dissatisfied  with the judgments and orders dated 29.05.2002 and 30.50.2002 passed by a  Division Bench of the Karnataka High Court in Writ Appeal Nos.5690-5692  of 2000 and 4613-32 of 2000.

WRIT PROCEEDINGS

       The First Respondent herein is an Association of the employees of the   Karnataka Government Secretariat Departmental Canteen.  The Respondent  Nos.2 and 3 are its members.  They filed a writ petition before the Karnataka  High Court, inter alia, contending  that  the said canteen having been run by  the State Government for the benefit of the secretariat employees and 74  employees working therein having completed more than 10 years of service  were in effect and substance the employees of the State Government itself,  although they were termed as ’employees of the canteen’.  Further  contention of the respondents herein was that their wages were absolutely  meagre being little more than the minimum wages, but despite several  representations made by them, they were not paid the same salary as was  payable to the employees of the State who were similarly situated.

       The Appellant herein rejected their request for grant of scale of pay  and other service benefits applicable to the Government servants, inter alia,  on the premise that they were not its employees.

HIGH COURT

       A learned Single Judge of the High Court opined that the canteen can  be equated to the Government Hospitality Organization where the canteen  facilities are made available and consequently directed the Appellant to  implement the  notification dated 22.6.1996 which was applicable in relation  to the Government Hospitality Organization, as far as possible to the said  canteen employees with such revisions as are permissible under law as on  the said date.   

       The learned Single Judge opining that the employees of the canteen  are employees of the State Government directed :

       "The second prayer of the petitioners is to declare

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them as Government Servants.  In this regard I deem it  proper to modify the relief by issuing a direction to the  Government to regularize the services of the petitioners  in the following manner :  

       Government is directed to regularize the services  of such of those petitioners who have put in ten years of  service subject to the Government satisfaction of  qualification if any for the post held by them and keeping  in view the long services rendered by them.

       It is declared that the petitioners are the employees  of the Government and are entitled for pay parity as per  Annexure-O with revision from time to time.

       The petitioners have approached this Court in the  year 1996 and the petition is heard and disposed of in the  year 2000.  Petitioners have been provided some increase  in the wages from time to time.  In these circumstances, I  deem it proper that the petitioners are not to be given any  arrears for the past period and the direction is to with  effect from 1.1.2000 and not for the earlier period.  The  arrears from 1.1.2000 is to be made available to the  petitioners within three months  from the date of receipt  of this order."

       Appeals having been preferred by the State thereagainst, a Division  Bench of the High Court disposed of the appeals modifying the judgment of  the learned Single Judge as regard the date of regularization of their services  as also payment of back wages, directing :                         "(i) The effective date from which the pay-scales  and other service benefits should be extended to the  employees of KGSD Canteen by regularizing their  service is changed from 01.01.2000 to 29.05.2002."

       The learned Single Judge as also the Division Bench despite the fact  that the Appellant herein had denied and disputed the relationship of  employer and employee between it and the employees of the canteen,  proceeded to determine the said question on the basis of various documents  produced before it.                   PRESENT APPEALS

       The State of Karnataka has filed Civil Appeal Nos.224-226 of 2003  and 449-468 of 2003, questioning the impugned judgment in its entirety  whereas the K.G.S.D. Canteen Employees Welfare Association preferred  Civil Appeal Nos.4180-82 of 2003 questioning that part of the judgment  whereby the judgment and order of the learned Single Judge was modified  restricting the benefit of regularization from the date of the judgment and  back wages from 29.05.2002  instead of 01.01.2000.   

CONTENTIONS OF THE PARTIES

       Mr. P.P. Rao, the learned Senior Counsel appearing on behalf of the  Appellants, would, inter alia, submit that the High Court committed a  serious error in passing the impugned judgment insofar as it misconstrued  and misinterpreted various Government orders as regard establishment and  management of the canteen issued in their proper perspective.  The High  Court, Mr. Rao urged, furthermore misdirected itself in passing the

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impugned judgment insofar as it failed to take into consideration that the  canteen was not required to be run by the State Government in terms of any  statute or otherwise.   

       Mr. Naveen R. Nath, the learned counsel appearing on behalf of the  respondents herein, on the other hand, would support the judgment of the  High Court contending that a finding of fact has been arrived at by the High  Court that there existed a relationship of employer and employee between  the State and the concerned employees as the State exercised total control  over them and, therefore, this Court should not interfere therewith.

       It was contended that the employees of the canteen in view of Article  14 of the Constitution of India, were entitled to parity in wages with that of  the employees of the State Government for the period they had worked and,  furthermore, they having been in such employment for a long time their  services have rightly been directed to be regularized.

SCHEME

       The canteen was being run by private contractors for a long time.  In  the year 1974, the State of Karnataka intended to run the canteen by a  committee, consisting of ten persons, six of them representing the  Government and the remaining four representing the Association as  mentioned in order bearing No. GAD 106 DBM dated 19th November, 1974.   Amenities and facilities, e.g., premises, furniture, cooking utensils, crockery,  cutlery etc. for running the canteen were to be provided by the State only for  a period of one year.  Some of the relevant provisions laid down in the  Scheme for running the said canteen were as under :

"An outright grant of Rs. 25,000 (Rs. Twenty five  thousand only) is sanctioned towards working expenses,  namely, initial purchase of provisions, salaries of staff to  be appointed like cooks, services, etc\005       

The grant of Rs.25,000 (Rupees Twenty five thousand  only) will be debited to the new sub-heard "IV Grant to  the Karnataka Govt., Secretariat Canteen (Non Plan)"  "under the major, minor, and Group sub-Head" "288- Social Security and Welfare-E-Other social Security and  Welfare Programmes & Others "Programmes-C. Welfare  of Government Employees" \026 pending re-appropriation  of savings under the above major head.

       The Chairman of the Committee is requested to  take action to start the canteen.

       The working of the Canteen under the above  arrangement would be reviewed at the end of the one  year and then the future set up shall be decided."

       The State by reason thereof, thus, made a provision for grant of  Rs.25,000/-.  In terms of the said scheme, all the furniture and equipments  which were handed over to the committee were required to be accounted for  and returned to the Government upon the closure of the canteen.  The  employees were appointed, indisputably, by the committee on an ad hoc  basis/daily wages.              It, furthermore, appears that the Government had sanctioned grant in  aid from time to time.  The management of the said canteen was handed over  to the Respondent Association.  Constitution of the Managing Committee  was being changed on a regular basis.  In the order dated 27.7.2000 issued  by the Government of Karnataka, it was stated  :

"\005This canteen is running under constant loss for the  past few years and consequently Government had to

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sanction Grant-in-aid a few times.  These Grant-in-aids  were sanctioned keeping in view the welfare of the  Secretariat Employees.  In this background, all the  members of the Management Committee have tendered  their resignation to Government  with a request to make  alternate arrangements in view of the fact that they are  unable to run the canteen on "No Profit No Loss" basis  and also considering the fact that Government has not  agreed to give further Grant-in-aid to the Managing  Committee.  In this background, a meeting was convened  under the chairmanship of Additional Chief Secretary to  Government to consider making alternate arrangements  for running the canteen.  Finally in a meeting convened  on 23.2.2000 under the chairmanship of Secretary to  Department of Personnel & Administrative Reforms, it  was decided to handover the Management of the canteen  to Karnataka Government Secretariat Employees  Association temporarily for a period of one year  commencing from 6.4.2000 and it is also proposed to  continue the existing Grant-in-aid and other facilities to  Karnataka Government Secretariat Employees  Association for running the canteen.  Apart from this, it  is also proposed to provide the services of six secretariat  employees (Junior assistants & assistants) for supervising  the affairs of the canteen by treating them as "on other  duty" for a period of one year.  These proposals were  examined and accordingly order was issued as given  below :

   ORDER NO. DPAR 5 DSW 2000, BANGALORE,                          DATED : 27.7.2000

       Keeping in view the interest/welfare of Karnataka  Government Secretariat Employees, sanction is accorded  to handover the Management of the Karnataka  Government Secretariat Canteen to Karnataka  Government Secretariat Employees Association w.e.f.  4.8.2000 temporarily for a period of one year, from the  Management Committee constituted by the  Government\005"                           The facilities and terms and conditions were also stated therein,  some of which are as under :

"6)     While taking over the Management of the Canteen,  the Karnataka Government Secretariat Employees  Association should prepare a list of furnitures,  utensils, L.P.G. etc. and receive a proper  acknowledgement from the Management  Committee and submit a copy to the Government.

7)      It is the responsibility of the Karnataka  Government Secretariat Employees Association to  keep all the assets of the canteen like furnitures,  utensils, gas etc. safe and secure.

8)      Karnataka Government Secretariat Employees  Association can take the assistance of DPAR  (Executive-A) section for maintenance and repair  of canteen building."

In an affidavit filed before us, it is stated that the Karnataka  Government Secretariat Employees Association which was running the

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canteen from 04.08.2000 to 31.03.2003  by a letter dated 10.03.2003,  expressed its inability to run the canteen beyond 31.03.2003 and, thus, the  canteen services were closed from 01.04.2003.  It is further stated that the  State Government demolished the main canteen building pursuant to the  Government Note dated 04.08.2003.  Certain litigations had thereafter been  initiated before several authorities.  A writ petition had also been filed by the  Association before the High Court, which was marked as Writ Petition  No.41207 of 2004 seeking direction to make the balance payment of LIC  premium and contribution towards EPF for the period from 01.01.2003 to  31.03.2003.

This Court evidently is not concerned with the pending litigation but  we have noticed the said fact only for the purpose of showing that the State  intended to run the canteen departmentally through a committee, but  according to the State, the committee has a distinct and different existence or  different entity than the Government.   

The fact situation obtaining in this case already suggests that the State  had no intention to run and maintain the canteen as a department.  Had the  intention of the State been to run the said canteen as one of its departments,  the question of giving any grant or for that matter making of a provision for  return of the furniture and equipments would not have arisen.

EMPLOYEES OF A CANTEEN - STATUS

       The question as to whether the employees of the canteen are  employees of the State or whether their services should be directed to be  regularized or not, in view of several decisions of this Court would be  dependent upon the issues as to whether the canteens are required to be  made in terms of the provisions of a statute or otherwise.  Admittedly, the  State had no statutory compulsion to run and maintain any canteen for its  employees.

       In The Saraspur Mills Co. Ltd. v. Ramanlal Chimanlal and Others  [(1974) 3 SCC 66] where the Management was under a statutory obligation  in terms of Section 46 of the Factories Act and the rules made thereunder to  maintain the canteen for the workers which was being run by a Co-operative  Society wherewith the Management had nothing to do.  This Court relied  upon its earlier decision in Basti Sugar Mills Ltd. v. Ram Ujagar [(1964) 2  SCR 838] holding:

"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 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. v. Workmen had relied on the above ratio and  come 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 case1 was treated as binding in  the former case."

       In Parimal Chandra Raha and Others v. Life Insurance Corporation of  India and Others [1995 Supp (2) SCC 611], relying upon a large number of

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decisions of this Court including M.M.R. Khan v. Union of India [1990  Supp SCC 191], in the peculiar facts and circumstances, it was held that the  canteen which was being run by a Co-operative Society became a part of the  establishment of the Corporation.  The said decision was arrived at upon  lifting the corporate veil of the cooperative society.  In that case, although  there was no statutory liability on the part of the Respondent therein, to  maintain a canteen for their employees, this Court observed:

"What emerges from the statute law and the  judicial decisions is as follows: (i) Whereas under the provisions 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 employer to provide a canteen, the canteen  becomes 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. (iii) 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 agreement or an award, etc., it may be  inferred from the circumstances, and the provision  of the canteen may be held to have become a part  of the service conditions of the employees.  Whether the provision for canteen services has  become a part of the service conditions or not, is a  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 employees  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.                                                 [Emphasis supplied]

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       The said decision, however, was distinguished by a 3-Judge Bench of  this Court in Employees in relation to the Management of Reserve Bank of  India v. Workmen [(1996) 3 SCC 267] stating that M.M.R. Khan (supra)  was decided on the facts of that case.  Although, a question was raised  therein that the propositions 3 and 4 laid down in Parimal Chandra Raha  (supra) are very wide and require reconsideration and appropriate  modification, this Court refused to go thereinto holding that it was not  required to do so therein as the Tribunal had proceeded to follow M.M.R.  Khan (supra) only, holding:

"\005On the facts of this case, in the absence of any  statutory or other legal obligation and in the  absence of any right in the Bank to supervise and  control the work or the details thereof in any  manner regarding the canteen workers employed in  the three types of canteens, it cannot be said that  the relationship of master and servant existed  between the Bank and the various persons  employed in three types of canteens. 166 persons  mentioned in the list attached to the reference are  not workmen of the Reserve Bank of India and that  they are not comparable employees employed in  the Officers’ lounge. Therefore, the demand for  regularisation is unsustainable and they are not  entitled to any relief. We hold that the award  passed by the Tribunal is factually and legally  unsustainable."

                               [Emphasis supplied]

       A new gloss to the question, however, was given by this Court in  Indian Petrochemicals Corporation Ltd. v. Shramik Sena and Others [(1999)  6 SCC 439].  This Court following the judgment M.M.R. Khan (supra) and  Reserve Bank of India (supra) opined that the ratio sought to be laid down in   Parimal Chandra Raha (supra) that "the workers employed in such canteen  are the employees of the Management" is not correct and further opined that  the "workmen of a statutory canteen would be the workmen of the  establishment for the purpose of the Factories Act only and not for all other  purposes". [Emphasis supplied]

       However, in Indian Overseas Bank v. I.O.B. Staff Canteen Workers’  Union and Another [(2000) 4 SCC 245] whereupon the High Court relied  upon, in the peculiar facts and circumstances of the said case, this Court  relied on M.M.R. Khan (supra) and Parimal Chandra Raha (supra) and  distinguished Indian Petrochemicals Corporation Ltd. (supra) holding:

"\005A cumulative consideration of a few or more of  them, by themselves or in combination with any  other relevant aspects, may also serve to be a safe  and effective method to ultimately decide this  often agitated question. Expecting similarity or  identity of facts in all such variety or class of cases  involving different type of  establishments and in  dealing with different employers would mean  seeking for things, which are only impossible to  find. The decision in Indian Petrochemical case does  not, in our view, lay down any different criteria  than those declared in the other decisions for  adjudging the issue, except that it had also  considered specifically the further question as to  the effect of a declaration, that the workers of a  particular canteen, statutorily obligated to be run  render no more than to deem them to be workers

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for the limited purpose of the Factories Act and not  for all purposes. In the case before us, the claim is  not that there was any such statutory obligation  and the entire consideration proceeded only on the  footing that it is a non-statutory recognised canteen  falling within the second of the three categories  envisaged in the earlier decisions and the Tribunal  as well as the Division Bench of the High Court  endeavoured to find out whether the obligation to  run was explicit or implicit, on the facts proved in  this case."

       A Constitution Bench of this Court in Steel Authority of India Ltd.  and Ors. v. National Union Waterfront Workers and Ors.  [(2001) 7 SCC 1]  noticed the following circumstances under which contract labour could be  held to be the workman of the principal employer:   "An analysis of the cases, discussed above, shows  that they fall in three classes: (i) where contract labour is  engaged in or in connection with the work of an  establishment and employment of contract labour is  prohibited either because the industrial adjudicator/court  ordered abolition of contract labour or because the  appropriate Government issued notification under  Section 10(1) of the CLRA Act, no automatic absorption  of the contract labour working in the establishment was  ordered; (ii) where the contract was found to be a sham  and nominal, rather a camouflage, in which case the  contract labour working in the establishment of the  principal employer were held, in fact and in reality, the  employees of the principal employer himself. Indeed,  such cases do not relate to abolition of contract labour  but present instances wherein the Court pierced the veil  and declared the correct position as a fact at the stage  after employment of contract labour stood prohibited;  (iii) where in discharge of a statutory obligation of  maintaining a canteen in an establishment the principal  employer availed the services of a contractor the courts  have held that the contract labour would indeed be the  employees of the principal employer.

       Such observation, however, was made in the light of the provisions  contained in Contract Labour (Regulation and Abolition) Act, 1970.

       Rajendra Babu, J., as the learned Chief Justice then was, speaking for  a Division Bench of this Court in Barat Fritz Werner Ltd. v. State of  Karnataka [(2001) 4 SCC 498] observed:

"\005Of course, in Indian Petrochemicals Corpn.  Ltd. v. Shramik Sena a new gloss was given to this  decision by stating that the presumption arising  under the Factories Act in relation to such workers  is available only for the purpose of the Act and no  further. However, in Employers of Reserve Bank  of India v. Workmen this Court struck a different  note. Again this Court in Indian Overseas Bank v.  I.O.B. Staff Canteen Workers’ Union considered  the effect of the decisions in M.M.R. Khan,  Parimal Chandra Raha, Reserve Bank of India and  Indian Petrochemicals Corpn. Ltd. v. Shramik  Sena and it was made clear that the workers of a  particular canteen statutorily obligated to be run  render no more than to deem them to be workers

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for limited purpose of the Factories Act and not for  all purposes and in cases where it is a non- statutory recognised canteen the court should find  out whether the obligation to run was implicit or  explicit on the facts proved in that case and the  ordinary test of control, supervision and the nature  of facilities provided were taken note of to find out  whether the employees therein are those of the  main establishment\005"

       However, in that case, the court was only concerned with a  notification abolishing contract labour under Contract Labour (Regulation  and Abolition) Act.  

       Yet again in Hari Shankar Sharma and Others v. Artificial Limbs  Manufacturing Corpn. and Others [(2002) 1 SCC 337], this Court, following  Barat Fritz Werner Ltd  (supra) opined:

"The submission of the appellants that because the  canteen had been set up pursuant to a statutory  obligation under Section 46 of the Factories Act  therefore the employees in the canteen were the  employees of Respondent 1, is unacceptable. First,  Respondent 1 has disputed that Section 46 of the  Factories Act at all applies to it. Indeed, the High  Court has noted that this was never the case of the  appellants either before the Labour Court or the  High Court. Second, assuming that Section 46 of  the Factories Act was applicable to Respondent 1,  it cannot be said as an absolute proposition of law  that whenever in discharge of a statutory mandate,  a canteen is set up or other facility is provided by  an establishment, the employees of the canteen or  such other facility become the employees of that  establishment. It would depend on how the  obligation is discharged by the establishment. It  may be carried out wholly or substantially by the  establishment itself or the burden may be  delegated to an independent contractor. There is  nothing in Section 46 of the Factories Act, nor has  any provision of any other statute been pointed out  to us by the appellants, which provides for the  mode in which the specified establishment must  set up a canteen. Where it is left to the discretion  of the establishment concerned to discharge its  obligation of setting up a canteen either by way of  direct recruitment or by employment of a  contractor, it cannot be postulated that in the latter  event, the persons working in the canteen would be  the employees of the establishment. Therefore,  even assuming that Respondent 1 is a specified  industry within the meaning of Section 46 of the  Factories Act, 1946, this by itself would not lead to  the inevitable conclusion that the employees in the  canteen are the employees of Respondent 1."

       In National Thermal Power Corporation Ltd. v. Karri Pothuraju and  Others [(2003) 7 SCC 384], Rajendra Babu, J., speaking for himself and  Raju, J., however, held that in view of a catena of decisions of this Court it is  aptly clear that where in discharge of a statutory obligation of maintaining a  canteen in an establishment the principal employer availed the services of a  contractor the contract labour would indeed be the employees of the  principal employer.

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       The same bench in Mishra Dhatu Nigam Ltd. and Others v. M.  Venkataiah and Others [(2003) 7 SCC 488], having regard to the provisions  contained in Rules 65 and 71 of Andhra Pradesh Factories Rules, 1950,  reiterated the same view.

       In Haldia Refinery Canteen Employees Union and Others v. Indian  Oil Corporation Ltd. and Others [(2005) 5 SCC 51], Ashok Bhan, J.,  speaking for a Division Bench of this Court,    distinguished Indian  Petrochemicals  Corporation  Ltd. (supra) opining:

"\005The management unlike in Indian  Petrochemicals Corpn. Ltd. case is not reimbursing  the wages of the workmen engaged in the canteen.  Rather the contractor has been made liable to pay  provident fund contribution, leave salary, medical  benefits to his employees and to observe statutory  working hours. The contractor has also been made  responsible for the proper maintenance of  registers, records and accounts so far as  compliance with any statutory  provisions/obligations is concerned. A duty has  been cast on the contractor to keep proper records  pertaining to payment of wages, etc. and also for  depositing the provident fund contributions with  the authorities concerned. The contractor has been  made liable to defend, indemnify and hold  harmless the employer from any liability or  penalty which may be imposed by the Central,  State or local authorities by reason of any violation  by the contractor of such laws, regulations and also  from all claims, suits or proceedings that may be  brought against the management arising under or  incidental to or by reason of the work  provided/assigned under the contract brought by  the employees of the contractor, third party or by  the Central or State Government authorities."

       It was specifically noticed that the workmen of the Canteen and the  contractor had entered into independent settlements without impleading the  owner or occupier of the factory as a party therein which also went to show  that the workmen were treating themselves the workmen of the contractor  and not that of the owners.   

       We have referred to the aforementioned decisions in order to show  that in each of the aforementioned cases the industrial adjudicator was  required to apply the relevant tests laid down by this Court in the fact  situation obtaining therein.  Most of the cases referred to hereinbefore were  considered by this Court in the peculiar facts and circumstances obtaining  therein and, thus, it is even not proper for the industrial adjudicator to apply  the ratio of one decision to the exclusion of other without considering the  facts and circumstances involved therein.  The law, however, does not  appear to be settled as to whether even in a case where the employer is  required to run and maintain a canteen in terms of the provisions of the  statute, the employees of the canteen would automatically be held to be the  workers of the principal employer for all intent and purport and not for the  purpose of the Factories Act alone.  We, however, are not concerned with  the said question in this matter and refrain ourselves from making any  observation in respect thereof.

       We, however, intend to point out that in a case of this nature even an  industrial adjudicator may have some difficulty in coming to the conclusion  that employees of a canteen for all intent and purport are employees of the  principal employer.

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       Question of issuance of direction to regularize the services of the  employees stand absolutely on a different footing to which we shall advert to  a little later.

MAINTAINABILITY OF THE WRIT PETITION

In a case of this nature, where serious disputed questions fact were  raised, in our opinion, it was not proper for the High Court for embark  thereupon an exercise under Article 226 of the Constitution.  The High Court  in its judgment relied upon a large number of decisions of this Court, inter  alia, in Reserve Bank of India (supra) and State Bank of India & Ors. v.  State Bank of India Canteen Employees’ Union (Bengal Circle) and Ors.   [AIR 2000 SC 1518] ignoring the fact that all such disputes were  adjudicated in an industrial adjudication.      

The High Court arrived at a finding that the Committee was merely a  cloak of the Government and an arm of the State.  When allegations are  made that a body is a cloak and/or smoke screen or a camouflage, the  adjudication of such a disputed question should be left to the Industrial  Court.  In Steel Authority of India Ltd. (supra), as noticed hereinbefore, this  Court analysed the decision of this Court to say that they fall in three classes.   It was observed :

"We have quoted the definitions of these terms above  and elucidated their import. The word "workman" is  defined in wide terms. It is a generic term of which  contract labour is a species. It is true that a combined  reading of the terms "establishment" and "workman"  shows that a workman engaged in an establishment  would have direct relationship with the principal  employer as a servant of master. But what is true of a  workman could not be correct of contract labour. The  circumstances under which contract labour could be  treated as direct workman of the principal employer have  already been pointed out above."

       The legal position was reiterated in Rourkela Shramik Sangh v. Steel  Authority of India Ltd. and Another [(2003) 4 SCC 317] stating:

"There cannot, thus, be any doubt whatsoever that  the appellants were fully aware of the fact that they  were required to approach the Industrial Tribunal  in terms of the provisions of the Industrial  Disputes Act for ventilating their grievances. The  submission of Mr Shanti Bhushan to the effect that  the High Court acts as an authority while  exercising its power under Article 226 of the  Constitution of India cannot be countenanced. The  order of this Court dated 16-10-1995, as quoted  supra, is absolutely clear and unambiguous. The  term "authority" used in this Court’s order dated  16-10-1995 must be read in the context in which it  was used. The appellant in terms thereof could  seek a reference which would mean a reference in  terms of Section 10 of the Industrial Disputes Act.  It could also approach "the authority in accordance  with law" which would mean authority under a  statute. The High Court, by no stretch of  imagination, can be an authority under a statute."

       It was, furthermore, reiterated that a disputed question of fact

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normally would not be entertained in a writ proceeding.

       To the same effect is the decision of this Court in Workmen of Nilgiri  Coop. Mkt. Society Ltd. v.  State of T.N. and Others [(2004) 3 SCC 514]  wherein this Court considered in detail the relevant factors for determining  the relationship of employer and workman.  It was held that the burden of  proof was upon the workman.  In what circumstances, control test taken  recourse to by the High Court can inter alia be applicable for determining a  disputed question of relation of employer and employee has also been  considered therein at some details.  It was firmly laid down that whether a  contract is a sham or camouflage is not a question of law but of fact.   Hussainbhai, Calicut v. The Alath Factory Thezhilali Union, Kozhikode and  Others [(1978) 4 SCC 257], whereupon the High Court has placed strong  reliance, was held to be falling under Class (ii) envisaged in Steel Authority  of India Ltd. (supra).

       We may, moreover, notice that in Workmen of the Canteen of Coates  of India Ltd. v. Coates of India Ltd. and Others [(2004) 3 SCC 547], a  Division Bench of this Court observed:

"Learned counsel for the appellant strenuously  urged that the respondent Company has the  statutory obligation to provide a canteen in the  premises and therefore, the employees of the  canteen must be presumed to be the workmen  employed by the respondent Company and no one  else. Learned counsel referred to certain decisions  for this purpose. It is sufficient for us to state that  some requirement under the Factories Act of  providing a canteen in the industrial establishment,  is by itself not decisive of the question or sufficient  to determine the status of the persons employed in  the canteen. The effect, if any, relating to  compliance with the provisions of the Factories  Act is a different matter which does not arise for  consideration in the present case, for which reason  we express no opinion on any such question. It is  sufficient for us to say that the finding recorded by  the learned Single Judge also leaves no escape  from the conclusion that these workmen cannot be  held to be workmen employed by the respondent  Company."

       Albeit in a different context, this Court in U.P. State Bridge  Corporation Ltd. and Others v. U.P. Rajya Setu Nigam S. Karamchari Sangh  [(2004) 4 SCC 268] emphasised the need of adjudication of a disputed  question of fact before Industrial Court stating:

"The only reason given by the High Court to  finally dispose of the issues in its writ jurisdiction  which appears to be sustainable, is the factor of  delay, on the part of the High Court in disposing of  the dispute. Doubtless the issue of alternative  remedy should be raised and decided at the earliest  opportunity so that a litigant is not prejudiced by  the action of the Court since the objection is one in  the nature of a demurrer. Nevertheless even when  there has been such a delay where the issue raised  requires the resolution of factual controversies, the  High Court should not, even when there is a delay,  short-circuit the process for effectively  determining the facts. Indeed the factual  controversies which have arisen in this case remain  unresolved. They must be resolved in a manner

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which is just and fair to both the parties. The High  Court was not the appropriate forum for the  enforcement of the right and the learned Single  Judge in Anand Prakash case had correctly refused  to entertain the writ petition for such relief."

       Yet recently, this Court in Rajasthan State Road Transport Corpn.  And  Others v. Zakir Hussain [(2005) 7 SCC 447] in the context of the  jurisdiction of the Industrial Court vis-‘-vis the Civil Court highlighted the  object of the Industrial Disputes Act stating:

"The object of the Industrial Disputes Act, as its  preamble indicates, is to make provision for the  investigation and settlement of industrial disputes,  which means adjudication of such disputes also.  The Act envisages collective bargaining, contracts  between union representing the workmen and the  management, a matter which is outside the realm  of the common law or the Indian law of  contract\005"

       Keeping in view of the facts and circumstances of this case as also the  principle of law enunciated in the above referred decisions  of this Court, we  are, thus, of the opinion that recourse to writ remedy was not apposite in this  case.

REGULARISATION

       The question which now arises for consideration is as to whether the  High Court was justified in directing regularization of the services of the  Respondents.  It was evidently not.  In a large number of decisions, this  Court has categorically held that it is not open to a High Court to exercise its  discretion under Article 226 of the Constitution of India either to frame a  scheme by itself or to direct the State to frame a scheme for regularising the  services of ad hoc employees or daily wages employees who had not been  appointed in terms of the extant service rules framed either under a statute or  under the proviso to Article 309 of the Constitution of India.  Such a  scheme, even if framed by the State, would not meet the requirements of law  as the executive order made under Article 162 of the Constitution of India  cannot prevail over a statute or statutory rules framed under proviso to  Article 309 thereof.  The State is obligated to make appointments only in  fulfilment of its constitutional obligation as laid down in Articles 14, 15 and  16 of the Constitution of India and not by way of any regularization scheme.   In our constitutional schemes, all eligible persons similarly situated must be  given opportunity to apply for and receive considerations for appointments  at the hands of the authorities of the State.  Denial of such a claim by some  officers of the State times and again had been deprecated by this Court.  In  any view, in our democratic polity, an authority howsoever high it may be  cannot act in breach of an existing statute or the rules which hold the field.

       It is not necessary for us to dilate further on the issue as recently in  State of U.P. v. Neeraj Awasthi and Ors. [2005 (10) SCALE 286], it has  been clearly held that the High Court has no jurisdiction to frame a scheme  by itself or direct framing of such a scheme by the State.

       In Mahendra L. Jain and Others v. Indore Development Authority and  Others [(2005) 1 SCC 639], it was categorically held:

"The question, therefore, which arises for  consideration is as to whether they could lay a  valid claim for regularisation of their services. The  answer thereto must be rendered in the negative.  Regularisation cannot be claimed as a matter of

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right. An illegal appointment cannot be legalised  by taking recourse to regularisation. What can be  regularised is an irregularity and not an illegality.  The constitutional scheme which the country has  adopted does not contemplate any back-door  appointment. A State before offering public  service to a person must comply with the  constitutional requirements of Articles 14 and 16  of the Constitution. All actions of the State must  conform to the constitutional requirements. A  daily-wager in the absence of a statutory provision  in this behalf would not be entitled to  regularisation. (See State of U.P. v. Ajay Kumar  and Jawaharlal Nehru Krishi Vishwa Vidyalaya v.  Bal Kishan Soni.)"

       In Zakir Hussain (supra), even in relation to the temporary employee,  it was stated:

"The respondent is a temporary employee of the  Corporation and a probationer and not a  government servant and, therefore, is not entitled  for any protection under Article 311 of the  Constitution. He was a party to the contract. In  view of the fact that the respondent was appointed  on probation and the services were terminated  during the period of probation simpliciter as the  same were not found to be satisfactory, the  appellant Corporation is not obliged to hold an  enquiry before terminating the services. The  respondent being a probationer has got no  substantive right to hold the post and was not  entitled to a decree of declaration as erroneously  granted by the lower courts and also of the High  Court."

PARITY IN THE SCALE OF PAY                  The contention that at least for the period they have worked they were  entitled to the remuneration in the scale of pay as that of the government  employees cannot be accepted for more than one reason.  They did not hold  any post.  No post for the canteen was sanctioned by the State.  According to  the State, they were not its employees.  Salary on a regular scale of pay, it is  trite, is payable to an employee only when he holds a status.  [See Mahendra  L. Jain and Others (supra)]

       The High Court was, thus, not correct in holding that the members of  the First Respondent could be treated at par with the Hospitality  Organization of the State of Karnataka.  Such equation is impermissible in  law.  In the Hospitality Organization of the State, the posts might have been  sanctioned.  Only because, food is prepared and served, the same would not  mean that a canteen run by a Committee can be equated thereto.

SUBSEQUENT EVENT

       Subsequent events which had taken place is also worth taking note of.   The fact remains that the canteen now is closed.  The judgment and order of  the High Court, thus, otherwise also cannot be implemented.  The employees  concerned, therefore, cannot be directed to be reinstated in service.  We have  noticed, hereinbefore, that other proceedings have been initiated by them.   The said proceedings may be disposed of in accordance with law.

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CONCLUSION

       For the reasons aforementioned, we are of the opinion that the  impugned judgment cannot be sustained, which is set aside accordingly.   Consequently the appeals filed by the State Government being Civil Appeal  Nos. 224-226 of 2003 and 449-468 of 2003 are allowed and that of the First  Respondent being Civil Appeal Nos. 4180-82 of 2003 are dismissed.   However, in the facts and circumstances of this case, the parties shall bear  their own costs.