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  • Factories Act
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Smart Summary

Factual and Procedural Background

The appellants are canteen workmen employed within the factory premises of the respondent Company. The central dispute concerns their status—whether they are employees of the respondent Company or of an independent contractor who runs the canteen.

The Industrial Tribunal initially decided in favour of the workmen, holding that they were employees of the Company. The respondent Company challenged this outcome before the Calcutta High Court. A learned Single Judge dismissed the writ petition but, in doing so, recorded detailed findings indicating that the workmen were in fact engaged by the contractor rather than the Company. On appeal, a Division Bench reversed the Single Judge’s ultimate conclusion and ruled that the workmen were not employees of the respondent Company. The workmen then filed the present appeal before the Supreme Court by special leave.

Legal Issues Presented

  1. Whether the canteen workers should be legally regarded as employees of the respondent Company or of the independent contractor operating the canteen.
  2. Whether the respondent Company’s statutory duty under the Factories Act to provide a canteen automatically renders the canteen workers its employees.

Arguments of the Parties

Appellants' Arguments

  • The Company has a statutory obligation under the Factories Act to maintain a canteen; therefore, the canteen workers must be treated as employees of the Company.
  • Reliance was placed on several Supreme Court decisions—Hussainbhai v. Alath Factory Thezhilali Union, Basti Sugar Mills Ltd. v. Ram Ujagar, Saraspur Mills Co. Ltd. v. Ramanlal Chimanlal, and J.K. Cotton Spg. & Wvg. Mills Co. Ltd. v. Labour Appellate Tribunal—to support the claim that indirect or statutory control can establish an employer-employee relationship.

Respondent's Position

  • The canteen workers were hired, paid, and supervised by the contractor, not by the Company, and therefore cannot be considered Company employees.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Hussainbhai v. Alath Factory Thezhilali Union (1978) 4 SCC 257 To show that indirect control or statutory obligation may establish employment. The Court held the decision inapplicable given the specific findings that the workers were hired by a contractor and did not fall within the statutory definition of “workman” vis-à-vis the Company.
Basti Sugar Mills Ltd. v. Ram Ujagar AIR 1964 SC 355 Same proposition as above. Considered but found not to assist the appellants in light of contrary factual findings.
Saraspur Mills Co. Ltd. v. Ramanlal Chimanlal (1974) 3 SCC 66 Same proposition as above. Distinguished for the same reasons.
J.K. Cotton Spg. & Wvg. Mills Co. Ltd. v. Labour Appellate Tribunal AIR 1964 SC 737 Same proposition as above. Held irrelevant in view of the present factual matrix.

Court's Reasoning and Analysis

The Supreme Court accepted the factual findings recorded by the Single Judge, noting that:

  • The canteen’s furniture, utensils, and subsidies were supplied by the Company, but operational control—including hiring, wage payment, and attendance registers—rested with the contractor.
  • The workmen were never appointed by the Company, nor did they seek leave or other employment benefits from the Company.
  • All monetary transactions relating to workers’ wages occurred through the contractor and the Canteen Managing Committee, not the Company directly.

The Court concluded that these factors collectively demonstrate an employment relationship with the contractor, not the Company. It further held that the mere statutory requirement under the Factories Act to maintain a canteen does not, by itself, create an employer-employee relationship between the Company and the canteen workers. The precedents cited by the appellants were deemed inapplicable because they did not override the specific factual findings in this case or the statutory definition of “workman” relevant here.

Holding and Implications

The appeal is dismissed.

Consequently, the canteen workers remain employees of the contractor, not of the respondent Company. The decision affirms that statutory obligations to maintain certain facilities do not automatically alter the legal status of individuals employed in those facilities. The judgment turns entirely on factual findings and does not lay down a new legal principle, limiting its implications to the parties involved.

    Workmen Of The Canteen Of Coates Of India Ltd. v. Coates Of India Ltd. And Others

    Order

    1. The appellants are workmen employed in a canteen which is run in the premises of the respondent Company. The dispute involved is about their status. The workmen's claim is that they are employees of the respondent Company which is denied by the respondent. According to the respondent, these workmen are the employees of the contractor who is running the canteen in the premises of the respondent. The dispute was referred to the Industrial Tribunal which held in favour of the workmen. The writ petition was then filed by the respondent Company in the Calcutta High Court which was dismissed by the learned Single Judge. However, the finding of fact recorded by the learned Single Judge is as under:

    “There is a canteen situated within the factory premises of the Company and it started functioning since 21-10-1970 in pursuance of the agreement of the year 1969. The furniture kept in the canteen hall as also the utensils used for the canteen have been provided by the Company. There is a Managing Committee called the Canteen Managing Committee for the purpose of supervision and control over the affairs of the canteen. The Canteen Managing Committee consists of six members — three as the Company's representatives and three as workmen's representatives. The Committee is headed by its Chairman who happens to be the Works Manager of the Company. Every year or at an interval of two or three years agreements are entered into between the Coats of India Ltd. Canteen Managing Committee on the one hand and the respective caterers on the other. At the relevant time the Canteen Managing Committee used to pay to the contractor Rs 2.95 per meal out of which Rs 0.40 was paid by the staff and the balance was subsidised by the Company. The employees get coupons in advance and the amount is adjusted with the salary for the following month according to the list furnished by the Committee to the Company. The caterer is responsible for the supply of meals, snacks and tea to the factory employees. Whatever money is spent by the Company for canteen, is entered into the books of account of the Company. After the contractor submits his bills, the Managing Committee forwards the same to the Company with its recommendation and the Company pays the bills to the Committee for payment to the contractor. The strength of the canteen staff varies between 11 and 15. The Tribunal also found that the canteen employees were not directly appointed by the Company nor had they ever moved the Company for leave or other benefits enjoyed by the regular and direct employees of the Company. The Tribunal also found that the canteen employees got their wages from the respective contractors after signing the registers and they sign the attendance-cum-pay register maintained by the caterers.”

    2. On an appeal by the respondent Company to the Division Bench, the appeal has been allowed taking the view that the workmen are not the employees of the respondent Company. Hence this appeal by special leave by the workmen.

    3. It is clear from the finding of fact which obviously is based primarily on undisputed facts that all the relevant factors indicate that the workmen were employed only by the contractor who is running the canteen, and they were not employees of the respondent Company. The ultimate conclusion arrived at by the learned Single Judge in favour of the workmen was clearly inconsistent with this finding. That obviously is the reason for the Division Bench setting aside the judgment of the learned Single Judge.

    4. 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.

    5. Learned counsel for the appellant referred to the decisions in Hussainbhai v. Alath Factory Thezhilali Union (1978) 4 SCC 257, (1978) 3 SCR 1073, Basti Sugar Mills Ltd. v. Ram Ujagar AIR 1964 SC 355, (1964) 2 SCR 838, Saraspur Mills Co. Ltd. v. Ramanlal Chimanlal (1974) 3 SCC 66, (1973) 3 SCR 967 and J.K Cotton Spg. & Wvg. Mills Co. Ltd. v. Labour Appellate Tribunal AIR 1964 SC 737, (1964) 3 SCR 724. In our opinion, none of these decisions is of any assistance for deciding the present case in view of the finding of fact in the present case and the definition of “workman” which is relevant for the present purpose. No further discussion on this case is, therefore, necessary.

    6. The appeal is dismissed.

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    Comments

    Workmen Of The Canteen Of Coates Of India Ltd. v. Coates Of India Ltd. And Others
    (Aug 28, 1996)