AMICUS AI
Citation Codes
Neutral Citations
2003 INSC 384
Equivalent Citations
citation codes
Case Number
Disposition
Attorney(S)
Judges
Acts
  • The Contract Labour (Regulation and Abolition) Act, 1970
  • Articles 14 and 21 of the Constitution of India
  • Section 106 and 107 by the Constitution Bench in Steel Authority of India case
  • Section [not specified], Subsection [not specified] of the [no specific act/article mentioned]
  • the Factories Act, 1948
  • Section 5, Subsection 2 of the 1983 Income Tax Act
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Cites
Cited by
Citation Codes
Neutral Citations
2003 INSC 384
Equivalent Citations
citation codes
Case Number
Disposition
Attorney(S)
Judges
Acts
  • The Contract Labour (Regulation and Abolition) Act, 1970
  • Articles 14 and 21 of the Constitution of India
  • Section 106 and 107 by the Constitution Bench in Steel Authority of India case
  • Section [not specified], Subsection [not specified] of the [no specific act/article mentioned]
  • the Factories Act, 1948
  • Section 5, Subsection 2 of the 1983 Income Tax Act
Smart Summary

Factual and Procedural Background

The judgment concerns four civil appeals arising out of separate writ petitions decided by the High Court of Andhra Pradesh in which canteen workers sought to be absorbed as regular employees of various public sector undertakings and to receive wages and benefits equal to those of regular employees. In each writ petition the High Court, relying upon an earlier Division Bench decision in Writ Appeal No. 385 of 1996 (decided on 27-11-1996), ordered the respective employers to regularise the services of the canteen workers and extend parity of pay. The employers (appellants here) challenged those High Court directions before the Supreme Court.

Legal Issues Presented

  1. Whether canteen workers engaged through contractors in statutory canteens are entitled to absorption/regularisation as employees of the principal employer with pay and service benefits equal to regular staff.
  2. Whether observations in Steel Authority of India Ltd. v. National Union Waterfront Workers (2001) 7 SCC 1 and other cited cases preclude such regularisation when the principal employer is statutorily obliged to run the canteen.

Arguments of the Parties

Appellants’ Arguments

  • Relied on paragraphs 117 and 125(3)-(6) of Steel Authority of India Ltd. v. National Union Waterfront Workers, (2001) 7 SCC 1, to contend that regularisation of contract labour is impermissible.
  • Invoked observations in Indian Petrochemicals Corpn. Ltd. v. Shramik Sena, (1999) 6 SCC 439; Indian Overseas Bank v. IOB Staff Canteen Workers’ Union, (2000) 4 SCC 245; and VST Industries Ltd. v. Workers’ Union, (2001) 1 SCC 298 to reinforce their opposition to regularisation.

Respondents’ Arguments

  • Highlighted portions of the same Supreme Court decisions to show that those authorities actually support the High Court’s view when the canteen is maintained pursuant to a statutory obligation.
  • Urged that no ground for interference with the High Court’s orders existed because the employers are mandatorily required by the Factories Act, 1948 and the Andhra Pradesh Factories Rules, 1950 to run statutory canteens.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Steel Authority of India Ltd. v. National Union Waterfront Workers, (2001) 7 SCC 1 Appellants relied on paras 117 and 125(3)-(6) to argue that contract labour cannot be regularised under the CLRA Act. Distinguished. Court held that the present cases concern canteens maintained under a statutory obligation, not regularisation under the CLRA Act; paras 106-107 of the Constitution Bench judgment support the workers’ position.
Indian Petrochemicals Corpn. Ltd. v. Shramik Sena, (1999) 6 SCC 439 Cited by appellants to resist regularisation. Court found the reliance misplaced; did not alter the result.
Indian Overseas Bank v. IOB Staff Canteen Workers’ Union, (2000) 4 SCC 245 Cited by appellants against regularisation of canteen workers. Not accepted; the case did not negate statutory obligations arising under the Factories Act.
VST Industries Ltd. v. Workers’ Union, (2001) 1 SCC 298 Recognises that where a canteen is statutorily required, canteen workers are employees of the principal employer. Relied upon by the Court to affirm that statutory canteen workers are employees of the principal employer.
M.M.R. Khan v. Union of India, 1990 Supp SCC 191; (1991) 16 ATC 541 Part of the “series of decisions” supporting regularisation of canteen workers independent of the CLRA Act. Cited to demonstrate that regularisation of statutory canteen workers is a settled principle.
National Thermal Power Corpn. Ltd. v. Karri Pothuraju, C.A. No. 5990 of 1997 (decided the same day) Affirmed the very Division Bench judgment (W.A. 385/1996) relied on by the High Court in the present matters. The Court stated that the reasoning in this companion decision “squarely governs” the present appeals in favour of the workers.

Court's Reasoning and Analysis

The Supreme Court rejected the premise that the High Court had granted regularisation by invoking the Contract Labour (Regulation and Abolition) Act, 1970. It clarified that the High Court’s directions flowed from the employers’ statutory obligation, under the Factories Act, 1948 and Rules 65-71 of the Andhra Pradesh Factories Rules, 1950, to maintain canteens for their employees.

Key steps in the Court’s analysis:

  • Observed that the appellants’ reliance on Steel Authority of India was misplaced because that judgment itself recognises (paras 106-107) that where a canteen is run in discharge of a statutory duty, the workers are employees of the principal employer and the question of contract-labour abolition is irrelevant.
  • Noted that earlier Division Bench rulings of the High Court, including W.A. 430/1996 and W.A. 385/1996, had already affirmed the same principle, and this Court had, in VST Industries and in the companion appeal (NTPC v. Karri Pothuraju), upheld those views.
  • Held that the line of authority beginning with M.M.R. Khan supports regularisation of statutory canteen workers independent of the CLRA Act.
  • Concluded that every appellant is “indisputably” obliged to run a canteen and therefore cannot deny employee status and attendant benefits to the canteen workers.

Holding and Implications

All four civil appeals are dismissed; no costs.

Immediate Effect: The High Court’s directions to absorb the canteen workers as regular employees with pay and service benefits stand affirmed.

Broader Implication: The decision reinforces the principle that workers in canteens maintained under a statutory mandate (such as the Factories Act, 1948) are employees of the principal employer irrespective of any intermediary contractor, and their regularisation is not dependent on proceedings under the Contract Labour (Regulation and Abolition) Act, 1970. No new legal doctrine is created, but the judgment consolidates existing precedent.

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    Mishra Dhatu Nigam Ltd. And Others v. M. Venkataiah And Others

    S. Rajendra Babu, J.—

    Civil Appeal No. 5992 of 1997

    1. The above appeal has been filed by the 1st respondent in WP No. 18722 of 1996 before the High Court of Andhra Pradesh, which, in turn, came to be filed by a group of workers seeking for a writ of mandamus declaring the action of the appellant in not absorbing them as its regular employees and not paying the pay and other benefits on a par with the regular employees of the appellant Company as illegal and arbitrary, and to direct the appellant Company: (a) to absorb the workers as its regular employees; (b) to prescribe the appropriate scale of pay and other service conditions for them from the date of their initial appointment together with arrears of salary. A Division Bench of the High Court by a common order dated 24-1-1997 in this and two other writ petitions passed the following order:

    “The above cases, it is stated, are covered by the judgment in Writ Appeal No. 385 of 1996 dated 27-11-1996. Let the petitions, accordingly, be disposed of and directions issued.”

    2. Hence, this appeal.

    Civil Appeal No. 3159 of 1997

    3. The above appeal has been filed by the 1st respondent in WP No. 10967 of 1988, who was the appellant in WA No. 1493 of 1996 before the High Court of Andhra Pradesh. In the writ petition, the Canteen Employees' Union of BHPV, and a worker in the canteen, who was also the General Secretary of the Union at that time, prayed for an appropriate direction to declare the action of the appellant in not regularising the services of the workers in the canteen and paying them wages on a par with other permanent workers of the appellant and withdrawing BHPV dispensary facilities to them, as arbitrary, unreasonable and violative of Articles 14 and 21 of the Constitution of India, and direct the appellant to accord those reliefs. A learned Single Judge allowed the writ petition by following an earlier decision of the same Court dated 30-10-1995, rendered in WP No. 5682 of 1992 — VST Industries Canteen Worker's Union v. Vazir Sultan Tobacco Co. Ltd. (1996) 1 An LD 97 A review filed thereon in WMP No. 19114 of 1996 having also been rejected on 1-10-1996, WA No. 1493 of 1996 came to be filed before a Division Bench. The Division Bench of the High Court adverted to the earlier decisions of the Division Bench rendered in WAs Nos. 430 and 385 of 1996 and in the light of the principles laid down therein, not only confirmed the view taken by the learned Single Judge but also held that in the teeth of Rules 65 to 71 of the Andhra Pradesh Factories Rules, 1950, it requires to be affirmed that the appellant has a statutory duty to provide a canteen for the workmen and consequently, dismissed the appeal, resulting in the filing of the above appeal.

    Civil Appeal No. 5991 of 1997

    4. The above appeal has been filed by the respondents in WP No. 8015 of 1992 before the High Court of Andhra Pradesh, which, in turn, came to be filed by the respondent canteen workers seeking for a writ of mandamus directing the appellants herein (respondents before the High Court) to regularise their services from the date of appointment with all consequential benefits. By an order dated 27-11-1996, the Division Bench adverted to the decision rendered in Writ Appeal No. 385 of 1996 and allowed the claims by passing the following order:

    “This writ petition has to succeed vide judgment in Writ Appeal No. 385 of 1996 delivered by us today as facts are similar to the facts in the said case, except that the petitioners are the employees of the instrumentality of the Government of India i.e Bharath Dynamic Limited. The instant petition is ordered on the same terms as in Writ Appeal No. 385 of 1996.”

    5. Hence, this appeal.

    Civil Appeal No. 6532 of 1997

    6. The above appeal has been filed by Respondents 1 and 2 in WP No. 8113 of 1993 before the High Court of Andhra Pradesh, which, in turn, came to be filed by the canteen workers seeking for a declaration: (a) that the appointment of a contractor for running the industrial canteen (night shift) at HPC Vishakhapatnam Refinery was illegal and arbitrary; (b) declaring the action of the appellants in not treating the said workers as the employees of HPC Ltd., as illegal and arbitrary; and (c) consequently, direct the appellants to treat the canteen workers as the employees of HPC Ltd., and grant appropriate scales of pay to them on a par with the regular employees of the Corporation from the date of their respective appointments with all consequential benefits. The Division Bench by an order dated 24-1-1997 held as follows:

    “The above cases, it is stated, are covered by the judgment in Writ Appeal No. 385 of 1996 dated 27-11-1996. Let the petitions, accordingly, be disposed of and directions issued.”

    7. Hence, this appeal.

    8. Heard the learned Senior Counsel for the appellants and the respondents. On behalf of the appellant in CA No. 5991 of 1997, our attention was invited to paras 125(3) to (6) and 117 in the decision reported in Steel Authority of India Ltd. v. National Union Waterfront Workers (2001) 7 SCC 1 in support of the plea against regularisation of the canteen workers. For the appellant in CA No. 6532 of 1997, our attention was invited to certain observations in the decision in Indian Petrochemicals Corpn. Ltd. v. Shramik Sena (1999) 6 SCC 439, Indian Overseas Bank v. I.O.B Staff Canteen Workers' Union (2000) 4 SCC 245 and VST Industries Ltd. v. Workers' Union (2001) 1 SCC 298 to support the claim against regularisation. The other learned counsel adopted the above submissions. On behalf of the respondents, relevant portions of the very judgments which are claimed to support the stand of the workers were brought to our notice, to contend that no interference is called for in these appeals.

    9. The submissions on behalf of the appellants relying upon certain observations in Steel Authority of India case (2001) 7 SCC 1 proceed upon an erroneous assumption that the regularisation of canteen workers was being allowed and ordered on the basis of the provisions contained in the Contract Labour (Regulation and Abolition) Act, 1970 (for short “the CLRA Act”). The series of decisions commencing from M.M.R Khan v. Union of India 1990 Supp SCC 191, (1991) 16 ATC 541 do not lend any sustenance or credit to such a claim and, therefore, we are not persuaded to countenance the same. The relevant observations made in paras 106 and 107 by the Constitution Bench in Steel Authority of India case (2001) 7 SCC 1, after specifically noticing the decision reported in VST Industries case (2001) 1 SCC 298, also go against any such claims.

    10. Further, the decision of the Division Bench of the Andhra Pradesh High Court dated 27-11-1996 in WA No. 430 of 1996 was the subject-matter of appeal in the decision reported in VST Industries Ltd. case (2001) 1 SCC 298 which, as pointed out supra, was noticed by the Constitution Bench which rendered the decision in Steel Authority of India Ltd. case (2001) 7 SCC 1 and considered such line of cases not only to stand on a different footing than the one which was the subject-matter before the Constitution Bench, but also observed 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 courts have held that the contract labour would indeed be the employees of the principal employer and that such cases do not relate to or depend upon abolition of contract labour. So far as the decision dated 27-11-1996 of the same Division Bench rendered in Writ Appeal No. 385 of 1996 is concerned, the appeal filed against the same in CA No. 5990 of 1997 (National Thermal Power Corpn. Ltd. v. Karri Pothuraju) was considered separately and by our judgment separately delivered today has been affirmed and the appeal by the management has been dismissed. This decision also would squarely govern all these cases in favour of the workers. Consequently, we see no merit whatsoever in the submissions made to the contra by way of challenge in all these appeals, wherein the appellants concerned, indisputably are obliged to run the respective canteens in their establishments on account of the obligation cast upon them under the mandatory provisions of the Factories Act, 1948, and the Rules made thereunder.

    11. For all the reasons stated above, these appeals fail and shall stand dismissed. No costs.

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    Mishra Dhatu Nigam Ltd. And Others v. M. Venkataiah And Others
    (Aug 13, 2003)