http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7  

CASE NO.: Appeal (civil) 670 1997

PETITIONER: VST INDUSTRIES LTD.

       Vs.

RESPONDENT: VST INDUSTRIES WORKERS UNION & ANR.

DATE OF JUDGMENT:       07/12/2000

BENCH: S R Babu, S N Variava

JUDGMENT:

L.....I.........T.......T.......T.......T.......T.......T..J

     RAJENDRA BABU, J.  :

     Civil Appeal No.  670 OF 1997

     The  appellant  is  a company incorporated  under  the Companies  Act, 1956 with the object of manufacture and sale of   cigarettes.    Members  of   general  public  are   the shareholders  and  the shares of the company are  traded  in through  various stock exchanges in the country.  A petition was  filed  under  Article  226   of  the  Constitution   by respondent  No.1 seeking for a writ of mandamus to treat the members  of the respondent- union who are employees  working in  the  canteen of the appellants factory as employees  of the   appellant  and  for  grant   of  monetary  and   other consequential  benefits.   The  canteen is provided  in  the factory  premises of the appellant pursuant to Section 46 of the  Factories  Act, 1948 [hereinafter referred to  as  the Act],  which  obliges  a factory employing  more  than  250 workmen  to  provide  such  a canteen.   On  behalf  of  the respondents,  it  is contended that the appellant  had  been managing  the  canteen  up to the year 1982  and  thereafter introduced  the contract system for maintaining the  canteen so  established;  that though the management of the  canteen had been entrusted to the contractors from time to time, the personnel  employed in the canteen were retained by all  the contractors  and  they  have   been  paid  salaries  through contractors;   that the workmen employed in the canteen have been provided with ESI benefits under the Code No.  VST, the appellant,   and  benefits  arising   under  the   Employees Provident  Funds Act are also provided similarly;  that  the appellant has also provided a building along with furniture, utensils,  cutlery, gas, electricity, water supply and other facilities;   that the contractor is engaged only to prepare the  food and serve it to the employees and that the quality of  the food and the rates are controlled by the  management of the appellant.

     On behalf of the appellant, contention was raised that no  writ  would  lie against the appellant inasmuch  as  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7  

appellant  is  a  company, which is not an  authority  or  a person against whom a writ would lie.  It was submitted that they  do  not discharge any public duty and hence  the  writ cannot  be  issued.   On  the  merits  of  the  matter,  the appellant  disputed various questions of fact and urged that the decision of this Court in Parimal Chandra Raha vs.  Life Insurance  Corporation  of India, 1995 Supp.  (2)  SCC  611, would  not  be applicable to the appellant in the facts  and circumstances  of  the case.  The learned Single Judge,  who decided  the matter in the first instance, held that a  writ would  lie  against  a company under  a  private  management following  the decision in T.  Gattaiah vs.  Commissioner of Labour,  1981  [II  ]  LLJ 54, in which  it  was  held  that establishment  of  a  canteen  and   its  maintenance  is  a statutory requirement;  under Section 46 of the Act a public duty is imposed on the company to establish and maintain the canteen;   inasmuch  as members of the respondent-union  are working in the canteen they are entitled to seek a mandamus. He,  therefore, held that when a public duty is called  upon to be discharged by a private management, a writ of mandamus would  lie  and  could be issued under Article  226  of  the Constitution.  He thus rejected the contention.

     On  the merits of the matter, the learned Single Judge followed the decision in Parimal Chandra Rahas case holding that  when  the duty had been enjoined on the  appellant  to provide  and maintain a canteen facility under the Factories Act  it becomes the obligation of the appellant to establish a  canteen  and  that  is   what  the  appellant  had  done. Therefore,  when that work is got done through somebody else by   providing  the  necessary   infrastructure  and   other facilities,  when  the personnel did not change  though  the contractors  changed  from time to time, he held  that  they become  employees  of  the  appellant.  On  that  basis  the learned  Single  Judge  granted reliefs sought  for  by  the respondents,  however,  imposing certain  restrictions  with regard  to the age, being medically fit, on the date of  the writ  petition,  had  put  in a minimum of  three  years  of continuous  service and such service prior to the attainment of  the  minimum qualifying age under the company should  be ignored.

     On  appeal,  the  Division  Bench of  the  High  Court affirmed  the  view taken by the learned Single Judge.   The Division  Bench  referred to their decision in Rakesh  Gupta vs.   Hyderabad  Stock Exchange Ltd.  Hyderabad & Ors.,  AIR 1996  AP  430,  that  a  writ in  the  nature  of  mandamus, certiorari  and  prohibition  are recognised as  public  law remedies  and  are  not  available to  enforce  private  law rights.   However, noticing that the expression any  person or authority used in Article 226 of the Constitution should not   be   confined  only  to  statutory   authorities   and instrumentalities  of State but would cover any other person or  body  performing  public  duty.  The form  of  the  body concerned  is  not very much relevant.  What is relevant  is the  nature of the duty imposed on that body.  The duty must be  judged  in the light of positive obligation owed by  the person or authority to the affected party, no matter by what means  the  duty  is imposed.  On that basis,  the  Division Bench  of  the High Court dismissed the writ appeal.   Hence this appeal.

     On behalf of the appellant contention put forth at the forefront is that a writ would not lie against the appellant

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7  

inasmuch  as the appellant is engaged in the manufacture and sale of cigarettes and as an incident thereto has provided a canteen  to  its  workmen pursuant to  an  obligation  under Section 46 of the Act.  Shri S.  Ganesh, learned counsel for the  appellant,  pressed into service the decision  of  this Court  in  Anadi Mukta Sadguru Shree Muktajee  Vandas  Swami Survarna   Jayanti  Mahotsav  Smarak   Trust  &  Ors.    vs. V.R.Rudani  &  Ors., 1989 (2) SCC 691, to contend that  mere running  of a factory to manufacture and sell of  cigarettes can  never  be considered to be a public duty much  less  an incident thereto such as providing a canteen to its workmen. On  behalf  of the respondent, heavy reliance was placed  on this  decision and also the decision of the High Court in T. Gattaiahs  case, to contend that in running a canteen under Section  46  of  the Act, the appellant  was  discharging  a public  duty  and, therefore, a writ of mandamus  would  lie against it.

     In  Anadi Muktas case, the contention, similar to the present  case,  had  been  raised.   Writ  petitioners  were seeking  for  a  writ of mandamus to put them  back  in  the college  and  they were claiming only a terminal benefit  or arrears  of salary payable to them.  In that background,  it was  observed  that  if the rights are purely of  a  private character  no  mandamus  could be issued and  also,  if  the management of the college were purely a private body with no public  duty  mandamus  would not lie.  In  that  case,  the respondent  was  managing  the affiliated college  to  which public  money is paid as Government aid which played a major role  in the control, maintenance and working of educational institutions.   The aided institutions, it was noticed, like Government  institutions discharge public function by way of imparting  education to students.  They were subject to  the rules  and  regulations  of the affiliating  University  and their  activities were closely supervised by the  University authorities.  Employment in such institutions, therefore, is not  devoid of any public character inasmuch as the  service conditions  of  the  academic staff were controlled  by  the University  particularly  in regard to their pay scales  and the  protection  by  University decisions creating  a  legal right  or  duty  relationship  between  the  staff  and  the management.   When  there is existence of such  relationship mandamus  could  not be refused to such an aggrieved  party. It  was  further  explained in that decision that  the  term authority  used in Article 226 of the Constitution  should receive  a  liberal meaning unlike the term in  Article  12, which  is only for the purpose of enforcement of fundamental rights  under  Article  32.   The   words  any  person   or authority  used  in  Article  226 are,  therefore,  not  be confined  only to statutory authorities or instrumentalities of  the  State  but  would cover any other  person  or  body performing  public duty.  The form of the body concerned  is not  very much relevant.  What is relevant is the nature  of the  duty imposed on that body.  The duty must be judged  in the  light  of  positive obligation owed by  the  person  or authority to the affected party, no matter by what means the duty  is imposed, if a positive obligation exists,  mandamus cannot be denied.

     In  De  Smith, Woolf and Jowells Judicial  Review  of Administrative  Action, 5th Edn., it is noticed that not all the  activities of the private bodies are subject to private law,  e.g., the activities by private bodies may be governed by  the  standards  of  public law when  its  decisions  are subject to duties conferred by statute or when, by virtue of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7  

the  function  it  is performing or  possibly  its  dominant position  in the market, it is under an implied duty to  act in  the  public  interest.  By way of  illustration,  it  is noticed  that  a  private company selected to run  a  prison although  motivated by commercial profit should be regarded, at  least in relation to some of its activities, as  subject to  public  law because of the nature of the function it  is performing.   This  is  because  the  prisoners,  for  whose custody  and  care it is responsible, are in the  prison  in consequence  of  an order of the court, and the purpose  and nature  of their detention is a matter of public concern and interest.   After  detailed discussion, the learned  authors have   summarized   the   position    with   the   following propositions:

     (1)  The test of whether a body is performing a public function,  and is hence amenable to judicial review, may not depend  upon the source of its power or whether the body  is ostensibly   a  public  or  a  private  body.   (2)  The principles  of  judicial  review   prima  facie  govern  the activities  of  bodies  performing  public  functions.   (3) However,  not all decisions taken by bodies in the course of their  public  functions are the subject matter of  judicial review.   In  the following two situations  judicial  review will not normally be appropriate even though the body may be performing a public function:

     (a)   Where  some  other  branch   of  the  law   more appropriately  governs the dispute between the parties.   In such  a case, that branch of the law and its remedies should and  normally  will  be applied;  and (b) Where there  is  a contract  between the litigants.  In such a case the express or implied terms of the agreement should normally govern the matter.   This reflects the normal approach of English  law, namely,  that  the terms of a contract will normally  govern the  transaction, or other relationship between the parties, rather  than the general law.  Thus, where a special  method of  resolving disputes (such as arbitration or resolution by private  or  domestic  Tribunals)  has been  agreed  by  the parties  (expressly  or  by   necessary  implication),  that regime,  and  not judicial review, will normally govern  the dispute.

     The  High  Court  has  relied  very  strongly  on  the decision  of  a learned Single Judge in T.  Gattaiahs  case wherein  it was stated that a writ may lie under Article 226 of the Constitution against a company incorporated under the Companies  Act,  1956 as it is permissible to issue  a  writ against  any  person.   Prima facie,  therefore,  a  private person or an incorporated company cannot be taken out of the sweep   and  the  contemplation  of   Article  226  of   the Constitution.   That decision does not take note of the fact as  to  the  nature  of the functions that a  person  or  an incorporated  company  should  be   performing  to   attract judicial  review under Article 226 of the Constitution.   In Anadi  Muktas case this Court examined the various  aspects and  the  distinction between an authority and a person  and after analysis of the decisions referred in that regard came to  the conclusion that it is only in the circumstances when the  authority  or the person performs a public function  or discharges a public duty Article 226 of the Constitution can be  invoked.  In the present case, the appellant is  engaged in  the manufacture and sale of cigarettes.  Manufacture and sale  of  cigarettes will not involve any  public  function.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7  

Incidental  to  that activity there is an  obligation  under Section  46  of  the  Act  to set  up  a  canteen  when  the establishment  has more than 250 workmen.  That means, it is a  condition  of service in relation to a workman  providing better  facilities  to  workmen to  discharge  their  duties properly and maintain their own health or welfare.  In other words, it is only a labour welfare device for the benefit of its  work  force unlike a provision where Pollution  Control Act  makes  it obligatory even on a private company  not  to discharge  certain effluents.  In such cases public duty  is owed to the public in general and not specific to any person or  group  of  persons.  Further the damage  that  would  be caused in not observing them is immense.  If merely what can be  considered  a  part of the conditions of  service  of  a workman  is  violated  then  we do not think  there  is  any justification  to  hold  that such activity will  amount  to public  duty.  Thus, we are of the view that the High  Court fell  into  error  that  appellant   is  amenable  to   writ jurisdiction.

     This  Court in Indian Petrochemicals Corporation  Ltd. &  Anr.  vs.  Shramik Sena & Ors., 1999(6) SCC 439, referred to  the  decisions in Parimal Chandra Rahas  case,  Reserve Bank of India vs.  Workmen, 1996 (3) SCC 267, and M.M.R.Khan vs.   Union of India, 1990 Supp.  SCC 191, and held that the workmen  of  a  statutory canteen, as in the  present  case, would be workmen of an establishment for the purposes of the Act only and not for other purposes.  Thereafter, this Court further  examined whether the material on record would  show that  the  workmen are employees of the management  for  all purposes and adopted some of the tests as follows:

     1.   The canteen has been there since the inception of the appellants factory.  2.  The workmen have been employed for  long  years  and despite a change  of  contractors  the workers  have  continued to be employed in the canteen.   3. The   premises,  furniture,   fixture,  fuel,   electricity, utensils, etc.  have been provided for by the appellant.  4. The  wages  of the canteen workers have to be reimbursed  by the  appellant.   5.   The supervision and  control  on  the canteen is exercised by the appellant through its authorised officer,  as  can  be seen from the various clauses  of  the contract  between the appellant and the contractor.  6.  The contractor  is  nothing  but an agent or a  manager  of  the appellant,  who  works  completely  under  the  supervision, control  and  directions of the appellant.  7.  The  workmen have   the  protection  of   continuous  employment  in  the establishment.

     In  the  present  case, the findings recorded  by  the learned  Single Judge on examination of the facts  available is  that there had been a canteen within the premises of the appellant  up  to  the year 1982 and it is  only  from  1982 onwards  the management of the canteen has been entrusted to a  private  contractor;   that  even  after  change  of  the contractor,  the  canteen workers have continued to  be  the same irrespective of the change in the contractors from time to time;  that wages were paid to the workmen in the canteen by   the  management  through   the  contractor;   that  the appellant  has provided the accommodation, furniture,  fuel, electricity,  utensils, etc.;  that the management exercises control  over the standard in quality, quantity and the rate of  the food items supplied to the workmen for whose benefit the  canteen  is  established.   Thus,  these  circumstances clearly  indicate that the appellant has a complete  control

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7  

over  the  activities  in  respect of the  canteen  and  the contractor  has absolutely no discretion either in regard to the  menu, quality and quantity of the food items much  less the  rate  at  which the same are supplied to  the  workmen. When  the  management  of  the appellant  exercises  such  a complete  control, the canteen shall be deemed to be run  by the  management itself.  The appellant in any manner  cannot controvert these facts.

     We do agree that the respondents have a strong case on merits.   Since  we  have held that the High  Court  had  no jurisdiction  to  entertain a petition under Article 226  of the  Constitution, we would have set aside the order made by the  High  Court.  However, in the special features  of  the case,  although  we do not agree with the High Court on  the first  question raised, we feel, after clarifying the  legal position,  that we should not disturb the decision given  by the High Court.

     The  appeal,  therefore, stands dismissed  subject  to what  is stated in regard to writs to be issued by the  High Court in respect of persons or authorities exercising public duty or otherwise.  No costs.

     Civil Appeal Nos.  6533/97 & 6534/97

     In  these appeals, on a reference made on the question whether  certain  persons employed in the canteen should  be treated  as  employees of the appellant and, if so, in  what category they are to be fitted in and to what wages they are entitled   to,   the     Industrial   Tribunal,   Hyderabad, [hereinafter  referred  to as the Tribunal] inquired  into the  matter.  The contesting respondents contended that  the workmen  in  the  canteen had been working  right  from  its inception,  that  is, since 1967;  that from  1976  onwards, after  expiry  of the contract with the Industrial  Catering Services,  they had been directly working with the appellant without any contractor;  that they sought for regularization of  their services by letter dated 28.2.1978;  that the said letter  was corrected and redrafted by the Personnel Manager to  indicate the idea of floating an Association/Society  to run  the  canteen;  that this modified request contained  in Ex.W-49 was stated to be contradictory to the stand taken by the  workmen all through.  The Tribunal concluded that there was no doubt that the Personnel Manager modified Ex.W-50 and obtained  Ex.W-49  in the modified form.  The Tribunal  held against  them,  as  there was no material to show  that  the management  had  discussed on each point and  thereafter  an agreement  had  been  drafted.  The  Tribunal  recorded  the findings  that the canteen had been working for the  benefit of  the workmen within the premises provided by and with the equipment  supplied  by the appellant;  that  the  appellant supplies  the provisions for the preparation of  foodstuffs; that  the  appellant issues token to the employees,  who  on production  of the same obtain foodstuffs from the  canteen; that  the  Committee appointed by the appellant decides  the menu  and  as  per  the directions and  supervision  of  the Catering  Officer, the canteen functions;  that the  quality and  quantity  of the foodstuffs is supervised by  him,  who functions  under the Committee.  The contributions like ESI, Provident  Fund, etc.  had also been categorically specified to  be  provided  by  the appellant and  ESI  code  for  the permanent  establishment and for the present workmen was the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7  

same;   that after the evidence was tendered by the  workmen the  appellant  got  the  code  changed  and  the  appellant transferred  the workmen from one place to another and  that the  amount to be surrendered by way of unpaid salaries  had to  be  remitted back to the management.  Thus the  Tribunal held  that these facts clearly indicated that the  appellant exercised administrative, financial and disciplinary control over  the  workmen in question.  The Tribunal held  that  no other  material is required to hold them to be employees  of the  appellant.  In those circumstances, the Tribunal passed an  award that these workmen should be treated as  employees of  the  appellant  and  they are  entitled  to  payment  of appropriate  scales and designations in terms of Ex.W12  and W14  from  1.4.1979  with all  consequential  and  attendant benefits  of arrears of pay, etc.  together with counting of entire  service  for  the   purpose  of  terminal  benefits. Against  this  award, a writ petition was filed  before  the High  Court.  The High Court dismissed the same stating that it  is  covered  by another matter.  It  is  unnecessary  to examine  the  contention whether the matter is covered by  a subsequent  decision or not as the facts of the present case stand  on  its  own.   The reference had been  made  to  the Tribunal  and adjudication had been made by the Tribunal  as to  the  status  of the workmen, the nature  of  employment, control  exercised by the appellant, which leave no room for doubt that they are the employees of the appellant.

     A  contention is also sought to be made that it is not possible  to  run  a canteen in the refinery  area.   It  is contended  that  under the Petroleum Rules framed under  the Petroleum Act, 1934, there are certain hazardous areas where there  cannot  be a canteen as no fire, furnace,  source  of heat  or light capable of igniting inflammable vapours shall be  allowed  except  in  the firing  spaces  or  stills  and boilers.   However,  there is no material on record to  show that  the canteen is located in such an area where it  would be  hazardous  to  have a fire, furnace, source of  heat  or light  to  cook food.  In the absence of such  material,  we find  no substance in this contention.  It is brought to our notice  that  a fire had taken place on a tank on  14.9.1997 and  that it was extinguished after 14 days, which  severely damaged all the building including the canteen and that food and  beverages being provided to its employees by making  an arrangement  to obtain the same from outside the premises of the  appellant.  These facts are brought to our notice by an affidavit  filed  on 21.11.2000.  But these factors  do  not come  in the way of the award made by the Tribunal, as it is possible to locate the canteen in an appropriate place where there is no hazard of the kind envisaged under the Petroleum Rules.  This contention is also rejected.

     In   the  circumstances   aforesaid,  the   contention vis-Ã -vis  the findings recorded by the Tribunal,  we  find absolutely  no  merit  in these appeals and the  same  shall stand dismissed.  No costs.