BALWANT RAI SALUJA & ANR. ETC. ETC. v. AIR INDIA LTD. & ORS.

CHANDRAMAULI KR. PRASAD, J. 1. Leave granted.

2Copy pinpoint2. Air India Limited was conktituted under the Air F · Corporations Act, 1953. By virtue of Section 3 of the Air Corporations (Transfer of Undertakings and Repeal) Act, 1994, Air India has vested in Indian Airlines Limited. It has Ground Services Department at Indira Gandhi International Airport, Delhi. Respondent No. 2 is Hotel Corporation of India, which G is a Government Company incorporated under the Companies Act. The authorized share capital of the Hotel Corporation of India, hereinafter referred to as the Corporation, is Rupees 10 . crores, divided into 10 lakhs equity shares of Rs. 100/- each. The Corporation is a wholly owned subsidiary of Air India and H

720 SUPREME COURT REPORTS [2013] 16 S.C.R.

A its entire share capital is held by Air India and its nominee. Excepting 6 shares, 4,99,994 shares have been subscribed by Air India and rest by its nominees. Air India controls the composition of the Board of Directors and appoints Directors in consultation with the Government of India. The power to B remove the Directors from office before the expiry of the term is vested with Air India, in consultation with the Government of India, so also the power to fill up the vacancies caused by death, resignation, retirement or otherwise. General management of the Corporation is vested in the hands of the c Managing Director. Notwithstanding that, Air India is conferred with the power to issue such directions or instructions as it may think fit in regard to the finances and the conduct of the business and affairs of the Corporation. Duty has been cast upon the Corporation to comply with and give effect to such directions D and instructions. The main objects for which the Corporation is incorporated are large and include carrying the business of hotels, motels, restaurants, cafes, kitchens, refreshment rooms, canteens and depots etc. in general and its incidental and ancillary objects are establishment of catering and opening hotels, which would tend to promote or assist in Air India's E business as an international air carrier. Respondent No. 3, Chef Air Flight Catering, hereinafter referred to as 'Chef Air', is one of the units of the Corporation.

3Copy pinpoint3. Section 46 of the Factories Act, inter alia, confers power on the State Government to make rules requiring a specified factory where more than 250 workers are ordinarily employed, to provide and maintain a.canteen for the use of the workers. In exercise of the aforesaid power, Rules 65 to 71 have been incorporated in the Delhi Factory Rules, 1950, hereinafter referred to as 'the Rules:. Rule 65(1) was to come into force in respect of ar:iy class or description of factories on such dates as the Chief Commissioner may by notification in the Official Gazette appoint. Rule 65(2) of the Rules, inter alia, contemplates that the occupier of every factory notified by the H Chief Commissioner, where more than 250 workers are

BALWANT RAI ,SALUJA v. AIR INDIA LTD. & ORS.· 721 [CHANDRAMAULI KR. PRASAD, J.] ordinarily employed, shall provide in or near the factory an A adequate canteen in accordance with the standard prescribed in those Rules. In pursuance of the provisions of sub-rule (1) of Rule 65 of the Rules, the Lieutenant-Governor of the Union Territory of Delhi, by notification in the Official Gazette, dated 21st of January, 1991, directed that Rules 65 to 70 of the Rules B shall apply to the factories specified in the said Rules with effect from the date of publication of the notification in the Official Gazette. It included M/s. Air India Ground Services Department, Indira Gandhi International Airport, Delhi (Engineering Unit).

4Copy pinpoint4. The workmen working in Air India Ground Services c Department Canteen, hereinafter referred to as 'the Canteen', raised an industrial dispute and the competent Government made a reference to the Central Government Industrial Tribun~I as to whether the demand of the workmen employed by Chef Air to provide canteen service to be treated as deemed D employees of the management of Air India is justified and, if so, what relief the workmen are entitled to? The workmen laid their claim and, according to them, they were employed by Air India on casual basis in the Canteen and their employment was through Chef Air, which is a unit of the Corporation. According E to the workmen, the Corporation has entered into a contract with Air India to run and maintain the canteen and for that purpose, they were initially appointed for a period of 40 days and said period used to be extended from time to time and in this way each of them had completed service for 240 days in a year. F According to the workmen, they were called for interview on. several occasions but had not been selected and on the contrary, persons junior to them have been regularized. The workmen have further alleged that Air India had entered into a contract with the Corporation to deny the workmen their G legitimate right by circumventing the various provisions of the Contract Labour (Regulation and Abolition) Act, 1970. According to them, they were performing duties of a permanent and perennial nature required by Air India but were being paid wages less than the regular employees. Case of the workmen H

722 SUPREME COURT REPORTS (2013] 16 S.C.R.

A further is that issuance of letters of appointment for 40 days with artificial break in service is an unfair labour practice and on the aforesaid grounds they sought regularization of the services with back wages in Air India.

5Copy pinpoint5. Air India resisted the claim of the workmen, inter alia, 8 stating that they were not their employees and relationship of employer and employee does not exist between them. According to them, Chef Air is a unit of the Corporation engaged in various businesses including establishing and running of canteens. According to Air India, the Canteen is being run and maintained by the Corporation on the basis of a fixed subsidy per employee provided by them. It is a specific assertion of Air India that they have no control over the workmen and that their conditions of service are governed by the Rules and Regulations of the Corporation. Air India has admitted that the infrastructure of the Canteen was provided by them but its management is in the hands of the Corporation. Air India has further pointed out that letters of appointment, token numbers, ESI cards etc. , .ave been issued to the workmen by the Cprporation and, hence, the prayer for regularizing their services by Air India is misconceived. Air India has denied that the Canteen in question is a statutory canteen and was employing more than 250 workers.

6Copy pinpoint6. On the basis of the materials placed on record, the F Central Government Industrial Tribunal, hereinafter referred to as·"the Tribunal", came to the conclusion that the Corporation is 100% subsidiary of Air India and the Canteen in question is a statutory Canteen established for the welfare of more than 2,000 workers. The Tr,ibunal also came to the conclusion that G the Canteen is established within the premises of Air India and the Corporation carries on its business under the control and administration of Air lndi~. According to the Tribunal, the running of the Canteen by the Corporation in respect of the statutory duty of Air India cannot be said to be its independent act. H Accordingly, the Tribunal observed that hiring of employees for

BALWANT RAI SALUJA v. AIR INDIA LTD. & ORS. 723 [CHANDRAMAULI KR. PRASAD, J.] running the statutory canteen by the Corporation is a A camouflage and the workmen employed in the Canteen are deemed employees of Air India. Thus, the Tribunal held the demand of the workers to be justified and finding that the workmen have been terminated from their services during the pendency of the dispute held that the termination is illegal· and, B accordingly, set aside the termination of their employment and directed reinstatement with 50% back wages.

7Copy pinpoint7. Assailing the aforesaid award af the Tribunal, Air India preferred writ petition before the High Court. c

8Copy pinpoint8. The learned Single Judge held that Air India is the sole holder of the shares of the Corporation but it is a separate legal entity which is independent of its shareholders. The authority to issue ,directions does not merge the identity of the Corporation with the shareholder. The learned Single Judge D accordingly held as follows:

" ...... Thus, in my view the mere fact of HCI being a 100% subsidiary of Air India and the aforesaid peculiar Articles of Association would not be decisive of whether the E employees aforesaid of HCI and working in the canteen · of Air India are to be treated as employees of Air India or not."

9Copy pinpoint9. As regards the grievance of the workmen that Air India had devised to employ the workmen through a unit of the F Corporation to defeat their rights, the learned Single Judge observed as follows:

"19. One thing which emerges is that in the present case, no motive to-defeat any rights of the employees, in Air India G entering into a contract with Chef Air (a unit of HCI) for operating its canteen, even if it be a statutory canteen have been established. It was not as if by employing workmen in HCI instead of in Air India, the workmen were being made employees of a weaker entity against whom they H

724 SUPREME COURT REPORTS [2013] 16 S.C.R.

A can claim no rights. After all HCI is also a Government of India company as Air India is."

10Copy pinpoint10. The learned Single Judge further came to the conclusion that the Corporation was not incorporated for the sole purpOSJ:! of operating the Canteen for Air India but was set 8 up as a legal entity to carry on business in diverse fields. According to the learned Single Judge, Air India engaged the Corporation which has expertise in the field to run and operate the Canteen and that will not make the workmen employees of Air India. The learned Single Judge ultimately held as follows: c "23. HCI in the present case is seen as one such expert. It has been providing flight catering services to Air India and other airlines besides carrying on other allied businesses. As aforesaid, HCI was not incorporated merely to run the canteen of Air India so as to keep the employees of the said canteen, managed through the medium of HCI, at arm's length from Air India. HCI is a business entity in its own right and no mala fides have been established in Air India entrusting the operation and management of the canteen aforesaid to HCI. As aforesaid, in spite of repeated asking, no prejudice is shown to have been caused to the workmen in them being the employees of the HCI instead of Air India. Of my own I can only gauge that may be as employees of Air India F they may be entitled to a free flight once in a while and which they may not be entitled to as an employee of HCI. However, that is hardly determinative of the matter in controversy: Again it is not as if Air India is attaining to offload its canteen employees to an entity which is sick or near the stage of being closed down. HCI is informed to G be a running concern."

11Copy pinpoint11. Accordingly, it set aside the award passed by the Tribunal.

12Copy pinpoint12. The workmen, aggrieved by the same, preferred an

BALWANT RAI SALUJA v. AIR INDIA LTD. & ORS. 725 [CHANDRAMAULI KR. PRASAD, J.]. appeal before .the Division Bench of the High Court. The A Division Bench framed the following question for its consideration:

"11. The core issue that emanates for consideration is whether in the obtaining factual matrix it can be held that the employees of the canteen established by Air India in its premises and run by the HCI be treated as regular employees of Air India. Before we advert to the factual canvas, we think it appropriate to refer to the citations in the field, cull out the principles and analyse whether they are applicable to the material brought on record."

13Copy pinpoint13. The Division Bench of the High Court analysed the facts, referred to the various decisions of this Court and ultimately came to the conclusion. that the Corporation is a separate entity and not a part of Air India as found by the D Tribunal. It endorsed the finding of the learned Single Judge that merely because the Articles of Association confer power on Air India to issue such directions or instructions as it may think fit in regard to conduct of the business and affairs of the Corporation and make it obligatory for the Corporation to carry on the direction of Air India, would not merge the identity of the shareholders with the Corporation. The Division Bench ultimately affirmed the decision of the learned Single Judge and, while doing so, observed as follows:

"20. On the basis of the aforesaid enunciation of law, the factual matrix is required to be tested. As is manifest, there is no material on record to show that the respondent - Air India had any role in the appointment of the employees in the canteen. No administrative or disciplinary action could be taken by the respondent against the canteen workers. G The respondent had itself not undertaken the obligation to run the canteen but had only provided facility so that its employees could avail the canteen facilities. It is not a case where the employees of the canteen were enlisted under a welfare fund scheme, provident fund scheme and H

726 SUPREME COURT REPORTS [2013] 16 S.C.R.

A medical sqheme of the respondent - management. The responsibility to run the canteen was absolutely with the HCI and it was totally a contractual relationship between the two. Air India had no say in the selection or other affairs of the canteen workers." B

14Copy pinpoint14. Mr. Jayant Bhushan, Senior Advocate appearing on behalf of the <:;:;:>Pll;:ints submits that the obligation to provide for the Canteen is with Air India and, therefore, the workmen are entitled to be treated as their employees and Air India their employer. It is further contended that Air India has a large role to play in the operation and management of the Canteen and, in the circumstances, the veil of the contract has to be lifted and this Court is competent to do so to arrive at the truth. In support of the submission reliance has been placed on a large number of decisions of this Court. I do not have the slightest hesitation in accepting this broad submission of Mr. Bhushan and, hence, I deem it unnecessary to refer to all those decisions. It is well settled that the court can lift the veil, look to the conspectus of factors governing employment, discern the naked truth though concealed intelligently. The court has to be astute in piercing the veil to avoid the mischief and achieve the purpose of law. It cannot be swayed by legal appearance. The court's duty is to find out whether contract between the principal employer and the contractor is sham, nominal or merely a camouflage to deny employment benefits to the workmen. F

15Copy pinpoint15. Once the veil is pierced, the control of Air India is writ large over the Corporation, submits Mr. Bhushan. He points out that the Corporation is a wholly owned subsidiary of Air India which controls the composition of the Board of Directors and G appoints and removes Directors in consultation with the Government of India. According to him, the general management of the Corporation is vested in its Managing Director. Notwithstanding that, Air India is conferred with the power to issue directions or instructions as it may think fit in regard to the finances and the conduct of the business and H

BALWANT RAI SALUJA v. AIR INDIA LTIJ. & ORS. 727 [CHANDRAMAULI KR. PRASAD, J.] affairs of the Corporation and, hence, the workmen employed by the Corporation are, in fact, the employees of Air India. Mr . .C.U. Singh, however, submits that notwithstanding the aforesaid power vested in Air India, the Corporation is still a separate legal entity. The fact that its entire share is held by Air India or Air India has the power to appoint the Board of Directors, issue directions etc., will not denude the legal status of the Corporation as a Government company. The fact that the Canteen required to be provided by Air India is being run by the Corporation through one of its units Chef Air will not make Air India its principal employer. He points out that in order to c determine the principal employer one is required to see as to who is paying the salary, who is supervising the work, the role played in selection and appointment of the workmen, disciplinary control over them and whether such employees are covered under the welfare scheme of Air India etc. He points 0 out that the responsibility to run the Canteen is with the Corporation and, hence, Air India cannot be treated as its . principal employer. According to him, the Corporation is a separate legal entity and even though Air India is a holding company, the Corporation shall still be a separate legal entity. E Further, the Corporation is not subservient to Air India but is a servant to its Memorandum of Association and Articles of Association. In support of the submission, reliance has been placed on a decision of this Court in the case of Heavy Engineering Mazdoor Union v. State of Bihar, (1969) 1 SCC

765. Paragraph 5 of the judgment reads as under: F

"5. It is true that besides the Central Government having contributed the entire share capital, extensive powers are conferred on it, including the power to give directions as to how the company should function. the power to appoint G directors and even the power to determine the wages and salaries payable by the company to its employees. But these powers are deriyed from the company's memorandum of association and the articles of association and not by reason of the company being the H

728 SUPREME COURT REPORTS [2013] 16 S.C.R.

A agent of the Central Government. The question whether a corporation is an agent of the State must depend on the facts of each case. Where a statute setting up a corporation so provides, such a corporation can easily be identified as the agent of the State as in Graham v. Public B Works Commissioners, 1901 (2) KB 781, where Phillimore J. said that the Crown does in certain cases establish with the consent of Parliament certain officials or bodies who are to be treated as agents of the Crown even though they have the power of contracting as principals. c In the absence of a statutory provision, however, a commercial corporation acting on its own behalf, even though it is controlled wholly or partially by a Government Department, will be ordinarily presumed not to be a servant or agent of the State. The fact that a minister appoints the members or directors of a corporation and he is entitled D to call for information, to give directions which are binding on the directors and to supervise over the conduct of the business of the corporation does not render the corporation an agent of the Government. (See The State Trading Corporation of India Ltd. v. The Commercial Tax E Officer, Visakhapatnam, 1964 (4) SCR 99 at 188. per Shah, J. and Tamlin v. Hannaford, 1950 (1) KB 18 at 25, 26). Sucli an inference that the corporation is the agent of the Government may be drawn where it is performing in substance governmental and not commercial functions. F (Cf. London County Territorial and Auxiliary Forces Association v. Nichol's., 1948 (2) All ER 432."

(underlining mine)

16Copy pinpoint16. Mr. Singh has also drawn my attention to a Constitution Bench judgment of this Court in the case of Steel Authority of India Ltd. v. National Union Waterfront Workers, (2001) 7 SCC 1, in which it has been held as follows:

"41 ............. The President of India appoints Directors of the Company and the Central Government gives directions

BALWANT RAI SALUJA v. AIR INDIA LTD. & ORS. 729 [CHANDRAMAULI KR. PRASAD, J.]

as regards the functioning of the Company. When disputes arose between the workmen and the management of the Company, the Government of Bihar referred the disputes to the Industrial Tribunal for adjudication. The union of the workmen raised an objection that the appropriate Government in that case was the Central Government, B therefore, reference of the disputes to the Industrial Tribunal for adjudication by the State Government was incompetent. A two-Judge Bench of this Court elaborately dealt with the question of appropriate Government and concluded that the mere fact that the entire share capital was contributed c by the Central Government and the fact that all its shares w~re held by the President of India and certain officers of the Central Government, would not.make any difference. It was held that in the absence of a statutory provision, a commercial corporation acting on its own behalf, even 0 though it was controlled, wholly or partially, by a government department would be ordinarily presumed not to be a servant or agent of the State .......... "

17Copy pinpoint17. I have considered the rival submissions and find substance in the submission of Mr. Singh and the ~uthorities relied on do support his contention. The Corporation undisputedly is a Government Corporation incorporated under the Companies Act. It is a legal entity altogether different from its shareholders. In my opinion, the fact that Air India or its nominee are the shareholders of the Corporation and in the management of business and finances, it is subject to the directions issued by Air India in terms of the Memorandum of Association and Articles of Association shall not merge the Corporation's identity in shareholders. In my opinion, the Corporation is a separate legal entity, not subservient to Air G India but a servant to its Memorandum of Association and Articles of Association.

18Copy pinpoint18. Mr. Bhushan, then submits that the Corporation may be a separate legal entity but Air India's control over the affairs H

730 SUPREME COURT REPORTS [2013] 16 S.C.R.,

A of the Canteen makes it the principal employer. He points out that many of the articles for running the Canteen were purchased by Air India and, in fact, grievances pertaining to running of the Canteen were entertained by it. These, according to the learned counsel, clearly show that Air India is the principal employer.

19Copy pinpoint19. I have bestowed my consideration to the aforesaid submission, but find no substance in the same. Few of the well recognized tests to find out the real relationship are whether the principal employer:

(i) pays the salary to the workmen instead of the contractor,

(ii) controls and supervises the work of the employees,

(iii) has role in selection and appointment of the employees, and

(iv) acts as a disciplinary authority over the conduct and discipline of the employees.

20Copy pinpoint20. Reference in this connection can be made to a decision of this Court in the case of Haldia Refinery Canteen Employees Union and Others v. Indian Oil Corporation Ltd. F & Ors. (2005) 5 SCC 51, wherein it has been held as follows:

"16 ..... lt has nothing to do with either the appointment or taking disciplinarv action or dismissal or removal from service of the workmen working in the canteen. Only because the' management exercises such control does not mean that the employees working in the canteen are the employees of the management. Such supervisorv control is being exercised by the management to ensure that the workers employed are well qualified and capable of rendering proper service to the employees of the management." (underlining mine)

BALWANT RAI SALUJA v. AIR INDIA LTD. & ORS. 731 [CHANDRAMAULI KR. PRASAD, J.]

22Copy pinpoint22. lrt the case of International Airport Authority of India A v. International Air Cargo Workers' Union, (2009) 13 SCC 374, this Court echoed the same view and observed as follows:

"38. The tests that are applied to find out whether a person is an employee or an independent contractor may 8 not automatically apply in finding out whether the contract labour agreement is a sham, nominal and is a mere .camouflage. For example, if the contract is for supply of labour, necessarily, the labour supplied by the contractor will work under the directions, supervision and control of C the principal employer but that would not make the worker a direct employee of the principal employer, if the salary is paid by a contractor, if the right to regulate the employment is with the contractor, and the ultimate supervision and control lies with the contractor. D

39. The principal employer only controls and directs the work to be done by a contract labour, when such labour is assigned/allotted/sent to him. But it is the contractor as employer, who chooses whether the worker is to be assigned/allotted to the principal employer or used otherwise. In short, worker being the employee of the contractor, the ultimate supervision and control lies with the contractor as he decides where the employee will work and how long he will work and subject to what conditions. Only when the contractor assigns/sends the worker to work under the principal employer, the worker works under the supervision and control of the principal employer but that is secondary control. The primary control is with the contractor."

22. This Court has taken the same view in General G Manager, (OSD), Bengal Nagpur Cotton Mills, Rajnandgaon v. Bharat Lal, (2011) 1 SCC 635, in which it has been held as follows:

"10. It is now well settled that if the industrial adjudicator H

732 SUPREME COURT REPORTS [2013] 16 S.C.R.

A finds that the contract between the principal employer and the contractor to be a sham, nominal or merely a camouflage to deny employment benefits to the employee and that there was in fact a direct employment, it can grant relief to the employee by holding that the workman is the B direct employee of the principal employer. Two of the well- recognised tests to find out whether the contract labourers are the direct employees of the principal employer are: (1) whether the principal employer pays the salary instead of the contractor; and (it) whether the principal employer c controls and supervises the work of the employee. In this case, the Industrial Court answered both questions in the affirmative and as a consequence held that the first respondent is a direct employee of the appellant."

23Copy pinpoint23. Bearing in mind the principles aforesaid, when I D proceed to consider the facts of the present case, I find that Air India does not fulfill the test laid down so as to treat it as the principal employer. It is not the case of the workmen that it is Air India which pays their emoluments instead of the Corporation. Air India has neither any role in selection and appointment of the workmen nor it controls and supervises their work. It is further not their case that Air India is their disciplinary authority over their conduct and discipline. In my opinion, Air India, by giving subsidy at a specified rate or for that matter purchasing few articles for the Canteen on its behalf and further bringing to the notice of the Corporation the complaint in regard to the functioning of the Canteen, will not make it the principal employer. As has rightly been observed by the High Court, the Corporation is a Government company like Air India and the workmen in no way will be prejudiced if they continue to be the employees of the Corporation. In my opinion, there does not seem to be any mala fide or oblique motive in Air India entering into a contract with Chef Air, a unit of the Corporation for operating its Canteen. Certainly, it is not to defeat the rights of the workmen. H

BALWANT RAI SALUJA v. AIR INDIA LTD. & ORS. 733 [CHANDRAMAULI KR. PRASAD, J.]

24Copy pinpoint24. Mr. Bhushan, lastly submits that the workmen were engaged in the Canteen provided by Air India in compliance of Rule 65(2) of the Rules framed in exercise of powers under Section 46 of the Factories Act. According to him, the workmen of a statutory canteen have to be treated as employees of such establishment whose obligation is to provide for the Canteen. In the case in hand, according to Mr. Bhushan, the obligation to provide for the Canteen is with Air India and, therefore, the workmen are entitled to be treated as their employees and Air India their employer. In support of the submission reliance has been placed on a decision of this c Court in the case of M.M.R. Khan v. Union of India, 1990 Supp SCC 191, and my attention has been drawn to Paragraph 39 of the judgment which ·reads as follows:

"39. The result, therefore, is that the workers engaged in the statutory canteens as well as those engaged in non- D statutory recognised canteens in the railway establishments are railway employees and they are entitled to be treated as such. The Railway Board has already treated the employees of all statutory and 11 Delhi based non-statutory recognised canteens as railway employees E w.e.f. October 22, 1980. The employees of the other non- statutory recognised canteens will, however, be treated as railway employees w.e.f. April 1, 1990. They would, therefore, be entitled to all benefits as such railway employees with effect from the said date, according to the F service conditions prescribed for them under the relevant rules/orders."

25Copy pinpoint25. Reliance has also been placed on a Constitution Bench decision of this Court in the case of Steel Authority of India G Ltd. (supra) referred to by the learned counsel for Air India also and my attention has been drawn to paragraph 107 thereof, which records as follows:

"107. An analysis of the cases, discussed above, shows H

734 SUPREME COURT REPORTS [2013] 16 S.C.R.

A that they fall in three classes: (1) 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 B 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; (it) where the contract was found to be a sham and nominal, rather a camouflage, in which case the contract c 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 D 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." E

26Copy pinpoint26. According to Mr. Bhushan, the Constitution Bench judgment clinches the issue. I do not find any substance in the submission of Mr. Bhushan and the authorities relied on are clearly distinguishable. In my opinion, the obligation to provide F Canteen is by itself not decisive to determine the status of workmen employed in the Canteen. Reference in this connection can be made to a decision of this Court in Workmen of the Canteen of Coates of India Ltd. v. Coates of India Ltd. & Ors. (2004) 3 SCC 547 wherein it has been held G as follows: "4 ........... lt is sufficient for us to state that some requirement under the Factories Act of providing a canteen in the industrial estabiishment, is by itself not decisive of H

BALWANT RAI SALUJA v. AIR !NOIA LTD. & ORS. 735 [CHANDRAMAULI KR. PRASAD, J.] the question or sufficient to determine the status of the A persons employed in the canteen."

(underlining mine)

· 27. The aforesaid submission has squarely been dealt with by this Court in the case of Hari Shankar Sharma v. B Artificial Limbs Manufacturing Corpn., (2002) 1 SCC 337, and this Court in no uncertain terms has held that as an absolute proposition of law it cannot be said that "whenever in discharge of statutory mandate a canteen is set up or other facilities provided by the establishment, the employee of the canteen or, such other facility become the employee of that establishment". Relevant portion of the judgment reads as follows:

"5. 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 ~,henever 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 H

736 SUPREME COURT REPORTS [2013] 16 S.C.R.

A 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, 8 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." c 28. Now referring to the authority of this Court in the case of M.M.R. Khan (supra}, the same is clearly distinguishable. In this case, it has been held that the workmen engaged in the statutory canteens as well as those engaged in non-statutory recognized canteens are railway employees and they have to be treated as such. This Court came to the aforesaid conclusion as, on fact, it was found that though the workmen were employed in the canteen through the device of a labour contract, they were essentially working under the control and supervision of the railway establishment. Further, the provision for running and operating the canteen was in the Establishment Manual of the Railways. Under these circumstances, this Court came to the conclusion that the workmen engaged in the statutory canteens were, in fact, the railway employees. No such facts exist in the present case. F

29. In the Steel Authority of India Ltd.(supra}, the Constitution Bench observed that the authorities of this Court show that they fall in three classes including the aforesaid class but it has not endorsed the said view. In fact, the decisions which I have referred to in the earlier paragraphs of this G judgment negate this contention. I have tested the case of the workmen on the touchstone of the principles laid down by this Court and find that they do not satisfy those tests so as to hold that Air India is the principal employer.

H 30. Having found no substance in any of the submissions

BALWANT RAI SALUJA v. AIR !NOIA LTD. & ORS. 737

made on behalf of the appellants, I do not find any merit in these A appeals and they are dismissed accordingly, but without any order as to costs.

V. GOPALA GOWDA, J. 1. Leave granted.

2. I have gone through the judgment of my learned brother 8 Judge in these civil appeals, in which my learned brother Judge has concurred with the impugned judgment. However, I am in respectful disagreement with the opinion of my learned brother ·and I am recording my reasons for the same. c These appeals have been filed by the appellants challenging the judgment and order dated 2nd May, 2011 passed in LP.A. ·Nos.388 of 2010, 390 of 2010 and 391 of 2010 confirming the judgment and order dated 8th April, 2010 of the learned single Judge of the Delhi High Court passed in D WP Nos.14178 of 2004, 14181/2004 and 14182 of 2004, wherein the learned single Judge has set aside the common award dated 5th May, 2004 of the Central Government Industrial Tribunal (for short 'CGIT') passed in Industrial Disputes case Nos. 97, 98 and 99 of 1996. The CGIT recorded that the concerned workmen of Chefair, a unit of Hotel Corporation of India (for short HCI) with which Air India had entered into a contract to provide canteen services at its establishment, are entitled to be treated as being employees .of it and consequently held that they are entitled to the relief sought for by them. The said judgment of CGIT was set aside by the Division Bench of the Delhi High Court in LPA Nos.388 of 2010, 390 of 2010 and 391 of 2010 vide its judgment dated 2nd May, 2011 after adverting to certain relevant facts, legal contentions and cases like M.M.R. Khan & Ors. v. Union of India & Ors.1, and some other decisions of this Court and concurred with the finding of facts and reasons recorded by the learned single Judge in setting aside the award and consequently dismissed the appeals of the concerned

1. 1990 (Supp) sec 191. H

738 SUPREME COURT REPORTS [2013] 16 S.C.R.

A workmen. That is how these Civil Appeals are filed by the workmen urging various factual and legal contentions in support of their claims with a request to set aside the impugned judgments and orders of the Division Bench and the learned single Judge of the Delhi High Court in the aforesaid Letter B Patent Appeals and the writ petitions.

3. Since my learned brother Judge has referred to certain facts and legal contentions to decide the points that arose for consideration of this Court, I also refer to certain relevant necessary facts and rival legal contentions urged on behalf of the parties with a view to answer the contentious points that would arise in these appeals to answer the same.

4. Three industrial disputes case Nos. 97, 98 and 99 of 1996 were registered by CGIT pursuant to the order of references made by the Central Government in the Ministry of Labour vide its order No.L-11012/23/96-IR (Coal-I) dated 23.10.96 for adjudication on the points of dispute referred to it in relation to the workmen mentioned in the respective orders of references made by it and in relation to other industrial disputes namely ID Case Nos. 107/96 and 108/96 which are individual cases of industrial disputes filed by the concerned workmen since their services were illegally terminated by the employer Air India during pendency of the industrial disputes referred to supra in relation to the absorption of the services of the concerned workmen by the Management of Air India before the CGIT without obtaining the approval from the CGIT, despite the order dated 04.12.1996 passed by CGIT wherein an undertaking was given by the Management of Air India that neither it will change the contractor Chefair without permission of/intimation to the Tribunal nor will it take any action against the workmen listed in the reference order made to the CGIT for an adjudication of their dispute. Despite the same, the services of the concerned workmen in the Industrial disputes in case ID Nos.97, 98 and 99/1996 were terminated. The action of the Management of Air India in terminating the services of

BALWANT RAI SALUJA v. AIR INDIA LTD. & ORS. 739 [V. GOPALA GOWDA, J.] the concerned workmen in the complaint ID Nos. 107 and 108/ A 1996 is in contravention of Section 33(2)(b) of the Industrial Disputes Act, 1947 (in short 'l.D. Act'). Therefore, the complaints were filed by the said workmen under Section 33(A) of the l.D. Act to adjudicate the existing industrial dispute between the concerned workmen and the Management of Air 8 India regarding their illegal order of termination during the pendency of the industrial disputes referred by the Central . Government which are registered as reference Nos.97, 98 and -

99 of 1996 with regard to the absorption of the services of the contract labour employees, employed by the HCI on behalf of C M/s Air India and made them to work in the Chefair. The aforesaid canteen is the statutory canteen in terms of the definition of Section 46 of the Factories Act, according to the appellants herein and they requested the CGIT for answering the points of dispute which was referred to in the order of references made by the Central Government in ID Nos.97 to 0 99, to treat the111 as the deemed employees of the Management of Air India and also to set aside the orders of termination ·passed against individual concerned workmen and requested the CGIT to pass an order of reinstatement with· all consequential benefits including the award of back-wages. E

5. In support of their respective claims and counter claims on behalf of the workmen and the Management of Air India, they filed their statements respectively in the cases referred to supra before_ the CGIT. In the claim petition, the workmen contended that the canteen which is being run by the Air India through HCI through Chefair has engaged the concerned workmen in these cases as coi:itract employees in various capacities and they have been working in the canteen run by the Management of Air India through Chefair ranging from 3 to 20 years on the date of references made by the Central Government to the CGIT which in turn is run by its subsidiary Company HCI. Delhi State ·Government in exercise of its power under Section 46 of the Factories Act, 1948 •.framed Rules 65 to 70 called Delhi Factories Rules of 1950 (hereinafter referred to as 'the Rules'). H

740 SUPREME COURT REPORTS [2013] 16 S.C.R.

A A Notification was issued by the Lt. Governor of the Union Territory of Delhi under Rule 65(2) of the Rules stating that the Rules of the Factories Act shall apply to the factories specified in the Schedule to the said notification. In the Schedule to the notification, the description of the factory at serial No. 9- M/s. Air India Ground Services Deptt. IGI, Air Port Delhi 8 (Engineering Unit) F.D.1725 is one of the specified factories, the same is mark~J :::::: - Ex.P. 4 in the lndui:;trial dispute cases before the CGIT.

6. Rule 65 states for providing canteen, Rule 66 speaks of Dining Hall, Rule 67 provides Equipment, Rule 68 for fixing the prices to be charged, Rule 69 deals with Accounts and Rule 70 deals with Managing Committee to manage the affairs of the statutory canteen. The relevant Rules will be adverted to in the reasoning portion of my judgment while answering the relevant contentious points that will be framed shortly.

7. Strong reliance was placed upon the Rules and the Notification referred to supra by the learned senior counsel Mr. Jayant Bhushan inter alia contending that the canteen is being run by the Air India through HCI by Chefair where the concerned workmen have been working in different capacities for number of years such as cook, ground cleaning staff, servicing, washing staff etc. etc.

The HCI employed them on contract basis as canteen workers though they have been discharging their duties which are in perennial nature. Then action of the Management of Air India in employing the concerned workmen on contract basis is an unfair labour practice as defined under Section 2(ra) of the l.D. Act enumerated in the Vfh Schedule to the Act, which provision was inserted by way of an amendment by Act No. 46 of 1982 w.e.f. 21.8.1984 at serial No. 10 to the Vth Schedule which states that "to employ workmen as casual or temporary workers and to continue them as such for years with the object to deprive them of the status and privileges of permanent workmen is an unfair labour practice on the part of the

BALWANT RAI SALUJA v. AIR INDIA LTD. & ORS. 741 [V. GOPALA GOWDA, J.] employer". It is further stated that Management of Air India has employed more than 2000 employees in its factory and therefore notification issued by the Lt. Governor of Delhi on 21st January, 1991 applying Rules 65 to 70 of Rules 1950 to the said establishment framed under Section 46 of the Factories Act will be applicable to the canteen in question run by the HCI on behalf of Air India. It is the case pleaded and proved before the CGIT by the concerned workmen and it has recorded the finding in this regard in their favour by placing reliance upon three judge bench decision of this Court in the ca!res of M.M.R. Khan (supra), Parima/ Chandra Raha & Ors. v. Life Insurance c Corporation of India and Ors. 2 , and another decision of this Court in Basti Sugar Mills Ltd. v. Ram Ujagar & Ors3. in support of the legal contention urged o.n behalf of the workmen that employees of statutory canteens i.e. canteens which are required to be compulsorily provided to its workmen in the factory as per Section 46 of the Factories Act are employees of the establishment not only for the purpose of Factories Act but also for all other purp'Jses. In the case of Parimal Chandra Raha referred to supra, this Court has held that for canteen workers of contractor who runs the canteen, it must pass the relevant test to determine on the facts as to whether providing canteen to its workmen by a factory was obligatory on its part. In Basti Sugar Mills Ltd.'s case, this Court has held that the work of removal of press mud was given to the contractor and the workmen in that case were employed by the contractor to do that work, the contractor terminated their services on completion of the work. The stand taken in the said case by the establishment was that they had nothing to do with the workmen. The workmen in the case approached this Court for relief against the termination of their services. This Court held that the workmen were employed in the industry to do manual work for reward and therefore it is held that the Company was their employer, as the workmen were employed by the contractor with whom the Company had contracted in the

2. 1995 suppl. (2) sec 611.

3. AIR 1964 SC 355. H

742 SUPREME COURT REPORTS [2013) 16 S.C.R.

A course of conducting its business for execution of the said work of removal of the press mud which is ordinarily part of the industry. Further reliance was placed by the learned counsel upon the decision of this Court in Union of India & Ors. v. M. Aslam & Ors. 4 wherein this Court has held that for the unit run B canteens of Army, Navy and Air Forces, the employees of such canteens are entitled to service benefits as government servants. Findiny cf fact was recorded by the CGIT in favour of the concerned workmen while answering the points of dispute referred to it by the Central Government with reference c to the factual legal aspects and evidence on record from the aforesaid cases. This finding is found fault with by the Single Judge and Division Bench of the Delhi High Court and they had set aside the finding recorded by CGIT. Strong reliance was placed by the Delhi High Court upon the plea taken by Air India D and HCI with regard to the fact that though HCI is subsidiary Company of the Air India, it is governed by its own Memorandum and Articles of Association as existed in the Companies Act and is governed by the provisions of the said Act. HCI is an independent legal entity from that of the Air India. E The learned single Judge while accepting the factual and legal contentions urged on behalf of Air India, has referred to paragraph 17 of his judgment and stated with reference to the . Memorandum and Articles of Association, and observed that the general management of business of HCI vests with its Board of Directors, no doubt, the same is subject to the directions, if any, that will be issued from time to time from Air India with regard to the finance and conduct of its business affairs. However, the composition of the Board of Directors of HCI is constituted by Air India in consultation with the Government of India. In view of the said reason, it cannot be said that the concerned contract employees employed by HCI to do work in the canteen are employees of Air India in the face of the first principle of Corporate law with reference to Salomon v. Salomon & Co. Ltd. 5, wherein it was held that

4. (2001 > 1 sec 120.

H 5. 1897 AC 22.

BALWANT RAI SALUJA v. AIR INDIA LTD. & ORS. 743 [V. GOPALA GOWDA, J.] Company is a person all together different from its A shareholders though Air India is the sole holder of the shares of the HCI. The HCI is a legal entity independent of its shareholders with reference to Section 46 in Chapter V of the Factories Act under the heading "welfare". The mandatory provision is provided to maintain a canteen in the 8 establishment, which is a measure for the welfare of the workers, the statutory obligation on the part of the industrial establishment to provide and maintain a canteen in the factory. If it is found that the operation of such canteen has been entrusted to such an expert, it cannot be said that the C employees deployed by such expert in such canteen becomes employees of the factory/establishment. Further, it is held by him that HCI was not incorporated merely to run the canteen of Air India so as to keep the employees of the canteen maintained by it at arm's length from Air India. The HCI is a D business entity on its own rights and no malafide have been established by the concerned workmen in the Management of Air India in entrusting the operation and management of its canteen to the HCI and no prejudice is shown to have been caused to the concerned workmen being the employees of the HCI instead of Air India, except that they may be entitled to a E free flight once in a while from it, which they may not be entitled to get as workmen of the HCI. Therefore, he has held that it is hardly determinative of the matter in controversy and thereafter he has referred to the judgments of this Court in Indian Petrochemicals Corporation Ltd. & Anr. v. Shramik Sena & F Ors. 6, Steel Authority of India Ltd. & Ors. v. National Union Waterfront Workers & Ors. 7 , International Airport Authority of India v. International Air Cargo Workers' Union & Anr. 6, in support of his conclusion laid down by applying the test laid down in those cases to the fact situation and held that there is G no relationship of employer and employee and hence no

s. s sec 439. (1999)

1. c2001)1 sec 1 a. c2009)13 sec 374 H

744 SUPREME COURT REPORTS [2013] 16 S.C.R.

A existing industrial dispute would arise within the meaning of Section 2(k) of the l.D. Act between the concerned workmen and the Management of Air India. Therefore, he has quashed the award of the CGIT which was affirmed by the Division Bench of the Delhi High Court in the aforesaid LP.As by accepting the reasons recorded by the learned single Judge 8 and also after extracting certain relevant paragraphs from the decisions of this Court in the cases of M.M.R. Khan, Parimal Chandra Raha, Indian Petrochemicals Corporation Ltd., (all referred to supra) Hari Shanker Sharma and Ors. v. Artificial C Limbs Manufacturing Corporation and Ors 9 • The Division Bench of Delhi High court has concurred with the finding and reasons recorded by the learned single Judge in the impugned judgment and dismissed the letter patent appeals of the concerned workmen. The correctness of the said judgment and order are impugned in these civil appeals by the concerned D workmen reiterating their factual and legal contentions as has been adverted to before the CGIT and the High Court in the writ petition and the appeals. Therefore, the same need not be adverted to once again in this judgment with a view to avoid repetition. E

8. It is contended by the learned senior counsel Mr. Jayant Bhushan on behalf of the concerned workmen, placing strong reliance upon Section 46 of the Factories Act and notification of the year 1991 referred to supra issued by Lt. Governor of the Union Territory of Delhi upon the Rules 65 to 70 of the Rules that the Management of Air India is enumerated at serial No.9 in the Schedule to the said notification. Therefore, the Management of Air India was required to provide a statutory canteen to its workmen in its industrial establishment and the learned senior counsel also placed strong reliance upon the Memorandum and Articles of Association of HCI particularly clause 33 in Chapter XIII to substantiate his contentions that the control and directions that will be issued from time to time with regard to running of the ca11teen and managing the canteen is

H 9. c2002) 1 sec 337.

BALWANT RAI SALUJA v. AIR INDIA LTD. & ORS. 745 [V. GOPALA GOWDA, J.] on the Management of Air India to HCI wherein, the A Management of Air India was the occupier. The learned senior counsel has further placed strong reliance upon the findings recorded by the CGIT in its award in answer to the points of disputes referred to it holding that the concerned workmen were - employed by HCI to work in the statutory canteen of the B Management of Air India and placed strong reliance upon the judgment of this Court in State of UP. & Ors. v. Renusagar Power Co. & Ors. 10 , which is followed by two other judgments of this Court in Delhi Development Authority v. Skipper Construction Co. (P.) Ltd. & Anr. 11 , Kapila Hingorani v. State c of Bihar12, wherein this court has laid down the legal principles by following the judgment of Salomon v. Salomon (supra) with a view to find out as to whether the contract employment of the concerned workmen by the HCI on behalf of the Management of Air India is a sham or a camouflage. The CGIT has pierced , D the veil with reference to the existing factual situation and found that the concerned workmen had been working in the statutory canteen required to be established and managed by the Management of the Air India as per Rule 65(2).of the Rules and the HCI is a subsidiary Company of the Air India as it holds E 100% share holding and therefore, the Air India has got the control and supervision of its business under clause 33 of the Memorandum and Articles of Association. Therefore he has requested this Court to set aside the findings of fact recorded by the learned single judge, which are concurred with by the Division Bench in the impugned judgment and order as it is vitiated not only on account of erroneous finding for non consideration of the proved facts and legal evidence on record but also suffers from error of law as has been laid down by this Court in ·catena of cases referred to supra upon which the learned senior counsel has placed strong reliance in support of the case of the concerned workmen in these appeals.

10. (1988) 4 sec 59.

11. (1996) 4 sec 622.

12. (2003) 6 sec 1. · H

746 SUPREME COURT REPORTS [2013] 16 S.C.R.

A 9. Further he has placed strong reliance upon the judgment of this Court in M.M.R. Khan's case particularly paragraphs 25, 27 and 30 in support of the proposition of law wherein this Court has held that rules framed by the State Government of Delhi under Section 46 of the Factories Act are 8 obligatory on the part of the Railway Administration to provide and maintain statutory canteen. In pursuant to the above rules and notifications, this Court has held that canteens were incidental and connected with the manufacturing process and is subject to the manufacturing process. The nature of the c canteen is deemed to be the statutory, since it is a necessary concomitant·of the manufacturing activity and further railway establishment has recognized the obligation of the Railway Administration .by the Act which makes provision for meeting the cost of the canteen though Railway Administration to employ any staff committee or cooperative society for the management of the canteen. The legal responsibility for the proper management of such canteen rests not with such agency but solely with the Railway Administration. With reference to paragraph 27 of the said decision and also having regard to the undisputed fact of the case in hand that the Chefair unit of the HCI in which canteen is being run is situated in the premises of the Air India and that it is also the statutory duty of the Air India under Rules 65(2) and 65(4) of the Delhi Factories Rules, that the canteen building should be situated not less than fifty feet from any latrine, urinals, boiler house, coal stacks, ash dumps and any other source of dust, smoke or obnoxious fumes etc. and that the manager of the factory shall submit for the approval of Chief Inspector of plans and site plan as provided under sub-rule (3) of Rule 65 and further that the construction of the canteen building is in accordance with Rules 65, 66, 67 G and 70 which would clearly go to show that the said canteen is established by Air India to discharge its welfare statutory obligation to its workmen/employees as provided under the Factories Act and Rules framed under by the State government of Delhi. Also, the managing committee constituted under the H Rules should consult from time to time regarding the quality and

BALWANT RAI SALUJA v. AIR INDIA LTD. & ORS. 747 [V. GOPALA GOWDA, J.] quantity of food stuff to be prepared and served in the canteen to its workmen/employees and for other purposes. Therefore, he has contended that the legal principles laid down by this Court in M.M.R. Khan's case with all fours are applicable to the present fact situation. Hence, it is contended by the learned senior counsel that the findings and reasons recorded by the learned single Judge and the Division Bench in the impugned judgments after setting aside the finding of facts recorded in the award on this aspect of the matter by CGIT in answer to the points referred to it is not only erroneous but also suffers from error in law and is liable to be set aside and the common c award passed by CGIT should be restored.

10. Another ground urged by the learned senior counsel is that the High Court failed to appreciate the fact that the canteen has been in existence since 1945. It is a deemed ·statutory canteen under Section 46 of the Factories Act vide D notification of 1991 referred to supra. Therefore, the CGIT has come to the right conclusion and held that the canteen- is incidental to and running the canteen and the work of the workmen is subject to the supervision and control of Air India. It is further contended that the Division Bench of the Delhi High E Court has erroneously applied the judgments in lndia·n Petrochemicals Corporation Ltd., Parimal Chandra Raha and referred to para 22 of M.M.R. Khan's case, Workmen of Nilgiri Coop. Mkt. Society Ltd. v. State of Tamil Nadu & Ors. 13, Haldia Refinery Canteen Employees Union & Ors. v. Indian Oil F Corporation & Ors. 14, and Hari Shanker Sharma (supra) to set aside the findings of the CGIT and concurred with the finding of learned single Judge. Therefore, the learned senior counsel has urged this Court for quashing of the impugned judgments of both the learned single judge and the Division Bench since G the same are not only based on erroneous reasoning but also suffer from error in law in view of the clear pronouncement of

13. (2004) 3 sec 514.

14. (2005) 5 sec 51. H

748 SUPREME COURT REPORTS [2013] 16 S.C.R.

A law laid down by this Court in the three Judge Bench decision of this Court in the case of M.M.R. Khan (supra) on the question of providing and maintaining statutory canteen to its workmen/ employees in support of his contentions that the employment of contract employees by Air India through HCI to run the B statutory canteen in its premises is a sham and camouflage to deprive the legitimate statutory and fundamental rights of the concerned workmen. Therefore, he submits that the CGIT was justified in lifting the veil or piercing the veil from the nature of employment to provide and maintain the statutory canteen by c Air India through HCI and the finding by CGIT is supported by plethora of judgments of this Court referred to supra. It is further submitted by him that there is direct control and supervision on the functioning of the canteen and its employees by Air India being a statutory canteen 'which is required to be maintained by it in conformity with Rules 65 to 70 of the Delhi Factories Rules 1950 and under Section 46 of the Factories Act and notification has been rightly issued enlisting the Management of Air India in the Schedule to the said notification for providing and maintaining the statutory canteen which notification has not been questioned by Air India. Therefore, the decisions of the Supreme Court referred to supra regarding piercing the veil for the purpose of finding out the real facts and to give effect to the object and intendment of the statute while recruiting the workmen on contract basis which is in violation of the statutory provisions of the Industrial Disputes Act has been rightly arrived at by the CGIT on proper appreciation of pleadings and evidence on record to answer the points in the affirmative. Therefore, the learned senior counsel has requested this Court to interfere with the impugned judgments and for restoration of the award passed by the CGIT. G

11. Mr. C.U. Singh, learned senior counsel for the respondent sought to justify the impugned judgment of the Division Bench of the Delhi High Court in affirming the judgment of the learned single Judge by placing strong reliance upon the decisions of this Court in Dena Nath & Ors. v. National

BALWANT RAI SALUJA v. AIR INDIA LTD. & ORS. 749 [V. GOPALA GOWDA, J.] · Fertilisers & Ors. 15, and Steel Authority of India (supra). It is contended by the learned senior counsel for the respondent that the Division Bench after adverting to the rival legal contentions has elaborately referred to the decision of M.M.R. Khan's case and the various other decisions referred to in the impugned judgment rightly concurred with the findings and reasons recorded by the learned single judge in reversing the findings and reasons recorded in the Award by the CGIT on the points of dispute referred to it by the Central Government for its adjudicatjon'. On appreciation of ta·cts pleaded and evidence on record, keeping in view the fact that the concerned workmen c are employed in the canteen by the HCI which is the statutory Corporation, therefore, the Management of Air India has. no power of recruitment, disciplinary control on the employees and no control and supervision on functioning of the workmen of the canteen. Therefore, the High Court has rightly arrived at the D conclusion and held that there is no relationship of master and servant or employer and employee between the concerned workmen of the canteen and the Air India. The HCI is an independent legal entity which has been carrying on with its business strictly in conformity with the Memorandum and E Articles of Association and therefore he contends that there is no need for this Court to interfere with the impugned judgments. Further, he has urged that the canteen in which the concerned workmen were employed by HCI is not a statutory canteen and the finding recorded by the CGIT on the points of dispute by placing reliance upon the Notification of 1991 and that Air India F has employed more than 2000 employees and that the said canteen is the statutory canteen and that there is an obligation on the part of the Management of Air India to cater the food stuff to its workers and employees, is an erroneous finding and also suffers from error in law. Therefore, the said finding has G been rightly set aside by the learned single Judge, the same is affirmed by the Division Bench of the Delhi High Court by concu~ring with decision of the learned single judge. Hence, he further contends that there is no questions of law mych less the

15. (1992) 1 sec 695. H

750 SUPREME COURT REPORTS [2013] 16 S.C.R.

A questions of law framed by the workmen in the appeals involved which require to be considered and answered by this Court in exercise of its jurisdiction. Hence he has prayed for dismissal of. these appeals.

12. On the basis of rival factual and legal contentions, the 8 following questions of law would arise for consideration:

(1) Whether the canteen which is run through HCI from its Chefair unit by the Management of Air India, is the statutory canteen of it under Rules 65 to 70 c of the Delhi Factories Rules of 1950?

(2) Whether engaging the contract workmen in the canteen situated in the premises of Air India through HCI amounts to sham and camouflage by D Air India to deprive the legitimate statutory and fundamental rights of the concerned workmen as provided under the provisions of the Industrial Disputes Act and the Constitution and can this Court pierce the veil to find out and ascertain the real and correct facts as to whether they are the E workmen of Air India?

(3) Whether the findings and reasons recorded by the CGIT on the points of disputes in the common award dated 5th May, 2004 in ID Nos. 97, 98, 99, F 107 and 108 of 1996 are legal and valid?

(4) Whether the findings recorded by the learned single Judge in CWP No.14178, 14181and14182 of 2004 which are concurred with by the Division G Bench in LPA Nos.388, 390 and 391 of 2010 suffer from erroneous reasoning and error in law and warrant interference by this Court?

(5) What award the concerned workmen are entitled to? H

BALWANT RAI SALUJA v. AIR INDIA LTD. & ORS. 751 [V. GOPALA GOWDA, J.] Answer to Point Nos. 1 and 2: A

13. First two points are answered together by assigning the following reasons since they are inter-related. At the very outset it is critically useful to place on record certain relevant questions of fact which are on record and are not in dispute 8 with a view to determine the nature of dispute between the parties that is referred to by the CGIT for adjudication in exercise of its power and examine the rights and obligations of the parties tp find out as to what relief the concerned workmen in the appeals are entitled to, keeping in view the provisions of Factories Act read with the Delhi Factories Rules C of 1950, The Contract Labour (Regulations and Abolition) Act, 1970 and the Industrial Disputes Act, 1947.

14. It is an undisputed fact that the Labour Department vide its notification dated 21st January, 1991 issued in pursuance D of the provisions of sub-rule (1) of Rule 65 of the Delhi Factories Rules wherein Lt. Governor of Union Terri.tory of Delhi directed that Rules 65 to 70 of the Rules which shall apply to the factories which are mentioned in the Schedule to the said Notification at serial No.9 - M/s. Air India Ground Services E Deptt. IGI, Air Port Delhi (Engineering Unit) ED.1725 is enlisted. In view.of the aforesaid notification, the Air India is statutorily required to maintain and ·provide a canteen in its factory premises to cater the food stuff to its employees/ workmen. It is the case of the concerned workmen that there F are 2000 workmen working in the establishment of Air India which plea is accepted by the CGIT and the finding of fact is 1 recorded on the basis of evidence on record by it, particularly, the admission made by the witness examined on ~ehalf of Air India before CGIT. G

15. Rules_ 65 to 70 of the Rules framed by the Union Territory of Delhi under Section 46 of the Factories Act are applicable in respect of Air India as it is enlisted in the Schedule to the Notification issued by the Labour Department referred to supra, to provide a statutory canteen by a factory where 250 H

752 SUPREME COURT REPORTS [2013] 16 S.C.R.

A workmen are employed by it. The case of the concerned workmen in the industrial disputes raised by them is that Air India has employed more than 2000 workmen and on the basis pf the pleadings and evidence on record has proved the points of dispute referred to it in the Industrial disputes referred to B supra. The Air India has now challenged the applicability of the Notification and the Rules framed by the Delhi Union Territory under Section 46 of the Factories Act. The case pleaded by the workmen on the other hand is that they are working in Chefair which belongs to the HCI which is wholly owned c-subsidiary Company of Air India with expertise in food preparation and catering to the employees/workmen and traveling passengers in their domestic and international Air Crafts, and it is bound by its Memorandum and Articles of Association, which is comprehensive enough to regulate the conduct of its business for Air India including the nature of 0 employer and employee relationship. The service conditions prevailing in the HCI vis-a-vis its employees are comparable to the relation between the workers and Air India and Chefair in terms of monetary benefits and the same are largely similar. The cpst of providing the canteen services to its employees/ E workmen was provided by Air India on the basis of 'per employee subsidy'. The CGIT, with reference to Factories Rules and Notification referred to supra has held that Air India has to provide food stuff to its employees/workmen at the subsidiary rate. The pleadings of Air India in its counter statement filed F before the CGIT are cleverly designed and drafted stating that there were not more than 250 employees/workmen of Air India in order to apply the relevant provisions of the Factories Act and Rules in relation to a statutory canteen run by HCI through Chefair and therefore·the notification is not applicable to the G Air India. The said pleadings of Mis Air India on a jurisdictional fact was demolished by t~e concerned workmen of the canteen by cross examining the witness of Air India, who is its designated officer. He has stated in his evidence unequivocally that the actual number of workmen/employees availing the canteen facilities in the factory premises were in the range of

BALWANT RAI SALUJA v. AIR !NOIA LTD. & ORS. 753 [V. GOPALA GOWDA, J.] 2000 persons - a figure which was at least not less than eight times the number contained in the original pleadings of Air India. Air India, in spite of being the statutory corporation did not consider it necessary to come to the court with clean hands but on the other hand, it has suppressed relevant material fact regarding the number of employees/workmen working in its establishment. Therefore, the CGIT, on the basis of admission made by the witness examined on behalf of the Air India as MW1, has recorded the finding of fact holding that a total figure of 2000 employees/workmen are working in its establishment anct they are availing the canteen facilities, which is run through c the HCI from its Chefair unit in the premise of Air India. The wholly owned subsidiary corporation- HCI has adopted unfair labour practice as defined under Section 2(ra) of the l.D. Act at serial No. 10 entry in the Vth Schedule under the heading of the Unfair Labour Practices practiced by the employer, by keeping workers in employment in the canteen for 40 days at a time and thereafter employing them on contract basis after a break though the nature of work to be performed by them in the canteen have been perennial in nature, for the reason that they were required to provide and maintain the statutory canteen in the factory premises to cater the food stuff to its employees/ workmen. Therefore, they have committed a statutory offence punishable under the provision of Section 25U of the I. D. Act for employing the concerned workmen on contract basis with a break in their service which constitutes unfair labour practice and is prohibited under Section 25T of the l.D. F Act either by the employer or the workmen under the above Schedule to the l.D. Act. The concerned workmen got the Industrial Disputes referred to the CGIT for adjudication on the points of the dispute referred to it by the Central Government in the orders of reference who are covered in the award passed G by the CGIT. They have been discharging the permanent nature of work in different capacities working continuously ranging from 3 years to 20 years with an artificial break after 40 days. of employment by the employer with an oblique motive to deprive them of their legitimate statutory right of regularizing H

754 SUPREME COURT REPORTS [2013] 16 S.C.R

A them as permanent workmen in the statutory canteen which is being run by the Air India in its factory premises through HCI from its Chefair unit.

16. Mr. Jayant Bhushan, the learned senior counsel on behalf of the appellants- concerned workmen with reference to 8 the pleadings of the parties and the evidence on record, has rightly placed strong reliance upon the Notification of 1991 issued by the Labour Department enlisting Air India in the Schedule to the Notification at serial No.9 to provide a statutory canteen to the employees/ workmen of Air India which is being run through HCI from its Chefair unit on its behalf which is its subsidiary company as it has got 100% share holding as per Memorandum and Articles of Association. On the basis of pleadings and evidence on record, the learned senior counsel substantiated the finding of fact recorded by the CGIT, wherein it has held that the concerned workmen are employed by Air India through its subsidiary Corporation- HCI, which is a sham contract and this veil is required to be pierced to find out the real facts involved in the case as to whether they are working for Air India or the HCI. The learned senior counsel has rightly placed strong reliance upon the decision of three Judge Bench decision of this Court in Hussainbhai, Calicut v. Alath Factory Thezhilali Union, Kozhikode and Ors. 16, the relevant paragraph of which reads as under:

F "5. The true test may, with brevity, be indicated once again. Where a worker or group of workers labours to produce goods or services and these goods or services are for the business of another. that other is. in fact, the employer. He has economic control over the workers' subsistence. skill. and G continued employment. If he, for any reason. chokes off. the worker is. virtually, laid off. The presence of intermediate contractors with whom alone the workers have immediate or direct relationship ex contractu is of no consequence when. on lifting the veil or looking at the conspectus of factors H 1e. (1978) 4 sec 257.

BALWANT RAI SALUJA v. AIR INDIA LTD. & ORS. 755 [V. GOPALA GOWDA, J.) governing employment. we discern the naked truth. though A draped in different perfect paper arrangement. that the real employer is the Management. not the immediate contractor. Myriad devices. half-hidden in fold after fold of legal form depending on the degree of concealment needed. the type of industry, the local conditions and the like may be resorted s to when labour legislation casts welfare obligations on the real emplove( based on Articles 38. 39. 42. 43 and 43-A of the Constitution. The court must be astute to avoid the mischief and achieve the purpose of the law and not be misled by the mava .of legal appearances." c (Emphasis laid by this Court)