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CASE NO.: Appeal (crl.) 1039-1040  of 1999.         Appeal (civil)  1041     of 1999        Appeal (civil)  1042-1043        of 1999

PETITIONER: UNION OF INDIA AND ORS.

       Vs.

RESPONDENT: M.  ASLAM AND ORS.

DATE OF JUDGMENT:       04/01/2001

BENCH: G.B.Pattanaik, B.N.Pattanaik

JUDGMENT:

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     JUDGMENT

     PATTANAIK,J.

     Union  of India is the appellant in all these  appeals and  these  appeals  are  directed  against  the  orders  of different Central Administrative Tribunals.  The respondents are  the  employees of the Unit- Run-Canteens which  provide canteen  facilities  to  the  troops   at  the  unit  level. Applications  before  the Central  Administrative  Tribunals were  filed by these employees claiming benefits as  regular defence   personnel  employees  or  at  least  as   civilian employees  serving  under  the Ministry of  Defence  on  the allegation  that  the  Unit-Run- Canteens are  part  of  the Canteen  Stores  Department  and since  the  Canteen  Stores Department forms a part of the Government in the Ministry of Defence  there is no reason as to why the  Unit-Run-Canteens should  not be held to be a part of Ministry of Defence.  On behalf  of  Union of India the jurisdiction of the  Tribunal was  assailed  on the ground that these employees cannot  be held  to  be the Government employees and  consequently  the Tribunal  did  not  have the jurisdiction to  entertain  the applications  and  decide the grievances of  the  employees. According  to  the Union of India the Unit-Run-Canteens  are operated  by  the  non-public   funds  and  the  expenditure required to run the Unit Canteens is made out of the profits earned  by the canteens itself and, therefore, so far as the personnel serving in such canteens, there is no relationship of  master  and servant between the Government of India  and the  employees, and consequently the applications before the Tribunal  should  be rejected.  The  Central  Administrative

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Tribunals, however, at Jodhpur and Bombay took the view that the  Unit-Run-Canteens are the part of Defence establishment and  consequently the holder of a post in the management  of such  canteen must be held to be connected with the  Defence Services.   The  Tribunals examined the relevant  provisions made  by different personnel providing all pervasive control with  the  Ministry  of  Defence and thus  held  that  there subsist   master  and  servant   relationship  between   the employees  serving in Unit-Run- Canteens and the Ministry of Defence   and,   therefore,  the    Tribunal   retains   the jurisdiction  to  entertain  applications and  decide  those applications  in accordance with law.  Mr.  Goswami, learned senior  counsel appearing for the Union of India  vehemently contended  before  us,  that these  Unit-Run-  Canteens  are different  from the Canteen Stores Department and the salary of  the employees serving in the Unit-Run- Canteens are  not paid  out  of  the  Consolidated Fund of India  but  a  fund created  at  the unit level and profit out of sales in  Unit and  Canteens are utilised for the payment of salary as well as  for creating assets of the canteens, and consequently it is  not  possible to hold that there exist  relationship  of master  and  servant between the employees serving in  these canteens  and the Union of India in the Ministry of Defence. According to Mr.Goswami, no doubt, some amount of control is vested  with  the local defence personnel, be it  Army,  Air Force   or   Navy,   over     the   employees   serving   in Unit-Run-Canteens,  but  conferment  of  such   disciplinary control  alone will not clothe the employees with the status of  Government  servant  or servants under the  Ministry  of Defence and the Tribunal, therefore, committed serious error in  declaring  the status of these employees  as  Government servants.   Mr.   Goswami  also  strongly  relied  upon  the judgment  of  this Court in the case of Union of  India  and Another  vs.   Chotelal  and others (1999) 1  Supreme  Court Cases 554, in which case this Court has held that the Dhobis in  the  National  Defence   Academy,  Khadakwasla  are  not Government  servants,  particularly because their salary  is not  paid out of the Consolidated Fund of India.   According to  Mr.  Goswami, the Administrative Tribunals at  Allahabad and  Punjab and Haryana High Court at Chandigarh have  taken contrary  view  so  far  as the status  of  these  Unit-Run- Canteens  employees  are  concerned, and according  to  the learned counsel that constitutes a correct view.

     Mr.   Mohta,  Mr.  P.N.  Mishra, senior advocates  and several other learned counsel appearing for the respondents, on the other hand contended, that the Central Administrative Tribunals  at Jodhpur and Bombay have taken the correct view with  regard to the status of such employees.  According  to them  the  decision of this Court and the test indicated  in the Life Insurance Corporation case would fully apply to the facts  and  circumstances of the present case and, as  such, there  will  be no reason to hold that the employees in  the Unit-Run-Canteens are not the Government servants.

     In  order  to decide whether the employees serving  in the Unit-Run-Canteens can be held to be Government servants, it  is necessary to find out the mode of appointment of such employees, Rules and Regulations governing the conditions of service  of  such employees, fund from which such salary  is paid, and other factors which really determine the existence of relationship of master and servant between the Government and  the  employees.  In the Defence Services there are  two types  of canteens;, (1) Canteen Stores Department, and  (2) Unit-Run-Canteens.   The  Canteen Stores Department  was  in

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existence in this country even during pre- independence days and  it has its Head Office and Base Depot in Bombay with 33 Area Depots all over the country.  These Area Depots are the wholesale  outlets,  which serve Unit-Run Canteens in  their respective  zones.  The Canteen Stores Department after  the independence  from  1948  onwards function as  a  Department under  the  Ministry of Defence initially for 3 years on  an experimental  basis and later from 1950 has been working  on permanent  basis.  We are concerned in the present case with the  Unit-Run  Canteens  and  the status  of  the  employees serving therein.  As has been stated earlier, these Unit-Run Canteens  under their respective Commanding Officers in  the three services  Army, Navy and Air Force get their articles from  the  wholesale  outlets in Area Depot of  the  Canteen Stores  Department and at present there exist 3400  Unit-Run Canteens.  Prior to the World War II the retail trade in the Defence  Services  was  in  the hands  of  the  contractors. During  World  War II a regular cadre called Indian  Canteen Code came to be formed under the Canteen Services (India) to handle  retail trade in operational areas where  contractors were not expected to go.  After 1947, the organisation split into  two  :  Canteen Stores Department (India) and  Canteen Stores  Department  (Pakistan).  The retail trade,  however, was  reverted to the contractors.  But by the early  fifties it  was  realised  that  the margin of  profit  between  the wholesale  price  and  the retail rate could  be  a  welcome source of funds available to commanding officers for welfare purposes.   Thus, the concept of unit-run canteens was born, and  contractors  were  driven out.  When Major  Gen.   K.S. Thimaya  took  over  as  Quarter  Master  General,  he  gave detailed  thought  to  providing canteen facilities  to  the troops  at  the  unit level.  He found that  retail  outslts being  in  the  hands of the unit canteen  contractors,  the margin between the wholesale price and retail price of goods went  to the contractors whereas the amount in the hands  of individual  commanding  officers of units in the Army,  Navy and  Air  Force  could be utilised for the  welfare  of  the troops.  The case was therefore, made out jointly for taking over  of contractor-run canteens by units or formations,  as the  case  may  be,  so that the profits from  the  sale  of canteen   stores   could  be   retained  within  the   unit. Contractors,  no doubt, put up considerable objection to the aforesaid proposal but the Government agreed to the proposal of  General Thimaya and orders were issued.  The concept  of Unit-Run  Canteens,  therefore, became an accepted  doctrine though  it took considerable period for implementing  change over.   It  goes without saying that from 1948  onwards  the Canteen(  for short CSD) functioned as a department  under the  Ministry  of Defence, initially for three years  on  an experimental basis, and later from 1950 on a permanent basis and  yet  right  upto  1977 the legal  status  of  the  same remained  nebulous.   For  functional  purposes,  it  was  a commercial  undertaking,  but  for actual  practice  it  was treated  as  a Department of the Ministry of  Defence.   The result  was  that  the  terms and  conditions  of  employees presented various problems which quite often became a source of  discontent and unpleasant employer- employee  relations. As has been stated earlier, for effective functioning of the defence  services  it  is absolutely  necessary  to  provide canteen  facilities  through out the country and  while  the Canteen  Stores Department serve as whole sale outlet it  is the  Unit-Run Canteens which serve as retail outlet.  A  set of  Rules regulating the terms and conditions of service  of the  employees  of Unit-Run canteens have been framed  which confers  all  pervasive control over the employees with  the

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authorities  of Defence services.  Though the funding of the Unit-Run  Canteens is not made out of the Consolidated  Fund of India but it is made by the Canteen Stores Department and this  Department  it  its  turn has formed  a  part  of  the Ministry  of  Defence, admittedly.  In Parimal Chandra  Raha and  others  vs.   Life Insurance Corporation of  India  and others  -  1995  Supp.   (2) Supreme Court  Cases  611,  the employees  of different canteens in different offices of the Life  Insurance  Corporation whether were employees  of  the Corporation  itself  was under consideration by this  Court. This   Court  evolved  four   principles  which  are  quoted hereunder :-

     (i)  Canteens maintained under obligatory  provisions of  the Factories Act for the use of the employees became  a part  of the establishment and the workers employed in  such canteens  are  employees  of the management.  (ii)  Even  if there  is  a non-statutory obligation to provide a  canteen, the  position  is  the  same as in  the  case  of  statutory canteens.  However, if there is a mere obligation to provide facilities  to  run a canteen, the canteen does  not  become part  of the establishment.  (iii) The obligation to provide canteen  may be explicit or implicit.  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.  (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  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.‘

     Applying  the aforesaid principle to the facts in  the present  case,  it  is difficult to conceive as to  how  the employees working in the Unit-Run Canteens can be held to be not  Government servants, when it has emerged that providing canteen  facilities  to  the Defence  service  personnel  is obligatory  on the part of the Government and in fact  these Unit-Run Canteens discharge the duty of retail outlets after getting  their provision from the wholesale outlet or  depot of the Canteen Stores Department.  Mr.  Goswami, the learned senior  counsel  appearing for the Union of  India  strongly relied upon the judgment of this Court in Union of India and another  vs.   Chotelal  & Others  (1999) 1  Supreme  Court Cases  554,  wherein  the  question  for  consideration  was whether  Dhobis  appointed to wash the clothes of cadets  at NDA  at  Khadakwasla who are being paid from the  regimental fund  could  be treated as holders of civil post within  the Ministry  of  Defence.  This Court answered in the  negative because the regimental fund was held not to be a public fund as  defined in paragraph 802 of Defence Services Regulation. Payment  to  such dhobis out of the regimental fund and  the character  of  that  regimental fund was  the  determinative factor.   But  in  the case in hand if  the  Canteen  Stores Department  forms  a part of the Ministry of Defence and  if

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their  funds  form a part of the Consolidated Fund of  India and  it is the said Canteen Stores Department which provides fund as well as different article through the retail outlets of  Unit-Run  Canteens then the employees who discharge  the duties of salesmen in such retail outlets must be held to be employees under the Government.  The officers of the Defence Services  have  all  pervasive  control  over  the  Unit-Run Canteens  as well as the employees serving therein.  Regular set  of  Rules  have  been framed  determining  the  service conditions  of  the  employees in  Unit-Run  Canteens.   The funding   of  articles  are   provided  by  Canteen   Stores Department  which  itself  is  a part  of  the  Ministry  of Defence.    The  report  of  a  Committee   of   Subordinate Legislation  went into detail the working conditions of  the employees engaged in the Unit-Run Canteens and categorically came  to the conclusion that these employees are  recruited, controlled  and supervised by the Rules and Regulations made by  the Defence Services although these have been given  the name  of Executive Instructions.  The said Committee came to the  conclusion  that  for  all   intent  and  purposes  the employees  in the Unit-Run Canteens are Government employees and  should be treated as such.  In the aforesaid  premises, we  are  of  the considered opinion that the status  of  the employees  in the Unit-Run Canteens must be held to be  that of  a  government  employee  and  consequently  the  Central Administrative  Tribunal  would  have  the  jurisdiction  to entertain   applications  by  such   employees   under   the provisions  of  Administrative Tribunal Act.   Civil  Appeal Nos.   1039-1040  of 1999 by the Union of India against  the order of the Central Administrative Tribunal, Jodhpur Branch in O.A.  No.  86 of 1995 accordingly stand dismissed.

     Civil  Appeal  No.   1041 of 1999  is  Unions  appeal against  the  decision of Central  Administrative  Tribunal, Jodhpur  Branch in O.A.  No.  157 of 1993 and OA No.  333 of 1994.  By the impugned orders the Tribunal came to hold that it  had the jurisdiction to entertain the applications filed by  the  employees  of  the Unit-Run  Canteens  and  further directed  that those employees are entitled to pay and other benefits  similar to the pay and other benefits available to the  canteen  employees  in  the CSDI.   The  Tribunal  also further  directed that the applicants should get the minimum of the salary presently being paid to their counter-parts in the  CSDI  and  all  the   benefits  of  the  other  service conditions  available to the regular Government employees in the  CSDI.   It  also further directed that they  should  be treated  as Government employees from the date of the filing of  the applications before the Tribunal.  It also  directed that they would be entitled to retiral benefits.  As already stated,  we have come to the conclusion about the status  of the  employees  serving in Unit-Run Canteens to be  that  of Government servants, but that by itself ipso facto would not entitle them to get all the service benefits as is available to  the  regular  government servant or even  their  counter parts  serving  in the CSD Canteens.  It  would  necessarily depend upon the nature of duty discharged by them as well as on the Rules and Regulations and Administrative Instructions issued  by  the  employer.   We have come across  a  set  of Administrative Instructions issued by he Competent Authority governing  the  service conditions of the employees of  such Unit-Run  Canteens.   In  this  view   of  the  matter,  the direction of the Tribunal that the employees of the Unit-Run Canteens  should  be  given all the benefits  including  the retiral  benefits  of regular government servants cannot  be sustained  and  we accordingly, set aside that part  of  the

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direction.   We,  however, hold that these employees of  the Unit-Run  Canteens  will draw at the minimum of the  regular scale  of  pay available to their counter parts in the  CSDI and,  we  further direct the Ministry of Defence,  Union  of India  to determine the service conditions of the  employees in the Unit-Run Canteens at an early date, preferably within six  months from the date of this judgment.  This appeal  is accordingly  disposed  of with the aforesaid  direction  and observation.

     Civil  Appeal Nos.  1042-43 of 1999.  These appeals by the  Union  of India are directed against the order  of  the Central  Administrative  Tribunal, Jodhpur Bench in  OA  No. 231  of 1994, whereunder the Tribunal has directed the Union Government  to  review the payment of subsistance  allowance payable  to the employees in the light of the E.F.R.  53  of the  Fundamental  Rules.  Notwithstanding the fact  that  we have  recorded  the  conclusion that the  employees  serving under  Unit-Run  Canteens  could be  treated  as  Government servants,  but  that  does  not necessarily  mean  that  the service  conditions  of such employees are governed  by  the Fundamental  Rules.   It would be open for the  employer  to frame  separate conditions of service of the employees or to adopt  the  Fundamental Rules.  There is no decision of  the employer  that Fundamental Rules would be applicable to such employees  and in the absence of such decision the  Tribunal was  not justified to direct that the question of payment of subsistance  allowance should be reviewed in accordance with the  provisions contained in the Fundamental Rules.  In this view of the matter, though we uphold the jurisdiction of the Tribunal  to  entertain  applications   filed  by  employees serving  in Unit-Run Canteens but the impugned direction for reviewing  the payment of subsistance allowance in terms  of Fundamental  Rules cannot be sustained and that part of  the direction accordingly stands set aside and Unions appeal to that extent stands allowed.

     These   appeals  are  disposed   of   with   aforesaid directions and observations.