Employer-employee relationship and corporate separateness defeat regularisation claim for airline canteen workers

Canteen workers engaged through a separate subsidiary to run a canteen in Air India's premises were not treated as Air India employees, because the majority found no employer-employee relationship on the facts: Air India did not appoint, pay, supervise in the relevant sense, or exercise disciplinary control over them, and its shareholding, directions, subsidy, and infrastructure support did not collapse the corporate identity of the two entities. The requirement to maintain a canteen under factory law did not by itself make the workers regular employees of Air India, and the contract was not regarded as a sham or camouflage. The Tribunal's award was therefore set aside, although the dissent treated the canteen as statutory and the contract as camouflage warranting regularisation.

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Issues: Whether the canteen workers engaged through Hotel Corporation of India to run the canteen in Air India's premises were employees of Air India and entitled to regularisation, and whether the contractual arrangement was a sham or camouflage.

Analysis: The majority held that the subsidiary company was a separate legal entity and that Air India's shareholding, power to issue directions, subsidy arrangement, or provision of infrastructure did not by themselves merge the identities of the two entities. The tests relevant to finding an employer-employee relationship were not satisfied because Air India did not pay the workers, select or appoint them, supervise their work in the relevant sense, or exercise disciplinary control over them. The fact that a canteen was required to be provided under the factory law did not, by itself, make the canteen workers employees of Air India. The authorities relied on for statutory canteens and piercing the corporate veil were held distinguishable on facts.

Conclusion: The workmen were not held to be employees of Air India, the contractual arrangement was not treated as a sham, and the award of the Tribunal was rightly set aside.

Dissenting Opinion: V. Gopala Gowda, J. held that the canteen was a statutory canteen, that Air India was the principal employer, that the contract was a camouflage, and that the workmen were entitled to regularisation with consequential benefits.

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