TaxTMI 
TaxTMI 
1990 (2) TMI 267
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....oncerned and the employees working in the said establishments exceed 250; (ii) Non- Statutory Recognised Canteens--These canteens are run in the establishments which may or may not be governed by the Act but which admittedly employ 250 or less than 250 employees, and hence, it is not obligatory on the railways to maintain them. However, they have been set up as a staff-welfare measure where the employees exceed 100 in number. These canteens are established with the prior approval and recognition of the Railway Board as per the procedure detailed in the Railway Establishment Manual; and (iii) Non-Statutory Non-Recognised Canteens--These canteens are run at establishments in category (ii) above but employ 100 or less than 100 employees, and are established without the prior approval or recognition of the Railway Board 3. The present petitions concern employees in all the three types of canteens. It will be convenient to deal separately with the employees in the three types of canteens, because, the history of litigation and the arguments advanced in respect of each of the categories are different. 4.(i) Statutory Canteens: Section 46 of the Act which makes it obligatory on an o....
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....orkshop, Kharagpur had preferred a writ petition in the Calcutta High Court praying for a direction to the Union of India to recognise them as railway employees and grant them a11 service conditions available to the railway employees. A learned Single Judge by his decision dated 7.8. 1973 dismissed the said petition holding that the workers were not entitled to the reliefs claimed by them. Against the said decision, the workers preferred an appeal before the Division Bench of the said Court and the Division Bench by its decision of July 16, 1974, allowed the same and directed the respondent Union of India to recognise the workers as employees of the Railway Administration under the Factories Act, but rejected the demand to pay salary and allowances to them as if they were railway employees. On the other hand, the High Court held that the employment of the workers must be deemed to be on the basis of appointment letters and that they had no statutory or legal right and the Railway Administration had no corresponding statutory or legal obligation to pay salaries etc. above the minimum wages, or dearness allowances as claimed by them. The court held that their service conditions were ....
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.... the staff was reimbursed by the Railway Administration to the Co-operative Society managing committee and that over-all control over the canteen and the staff, vested in the Railway Administration. In fact, the direction under para 2832 of the Railway Establishment Manual was that where even a Co-operative Society was running the canteen, the bye-laws of the Society should be suitably amended to provide for such overall control by the Railway Administration since the legal responsibility for the proper management of the canteen vested not with the agent like the Co-operative Soceity but solely with the Railway Administration. 6. 1t is undoubtedly true, however, that this Court in its Order dated October 22, 1980 had reserved the right to the Union of India to raise the question as to whether the employees of the Statutory canteens were the employees of the Railway Establishment, finder the Factories Act and get a pronouncement on the same. It appears that after the said order of this Court, the Railway Board had issued a letter dated May 22, 1981 to the General Manager, South Eastern Railway, Calcutta Conveying the decision of the Ministry of the Railways that the employees of ....
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....he letter mentioned, among other things, that the canteen employees will be entitled to the dearness allowance, house rent allowance and city compensatory allowance as per the instructions issued by the Railway Ministry; that the age of retirement of employees would be 58 years as in the case of other railway employees; and that the employees of the canteen would be entitled to the benefit of productivity linked bonus on the principles applicable to the stall of the office/establishment to which they were attached from the date of their being declared as railway servants. 8. In a decision of this Court reported in 1988 (4) SCC 478, this Court directed that for the purpose of calculating pensionary benefits, the service rendered by the said employees prior to October 22, 1980 should also be computed. By its letterr dated May 13, 1983 addressed to all the General Managers, the Ministry of Railways placed on record the fact that pursuant to the Order of this Court dated October 22, 1980 the employees of all the statutory and 11 Delhi based nonstatutory canteens had been treated as railway servants w.e.f. October 22, 1980, and the revised pay scale applicable to the employees had been ....
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....teens should be actively associated in their management, and for this purpose a Committee of management of the staff should be formed in accordance with the rules framed by the concerned State Government. The paragraph further states that although the Administration can employ as agent a Staff Committee or a Co-operative Society for management, the legal responsibility for proper management rests not with the agency but solely with the Railway Administration. In case the management is entrusted to a consumer co-operative society the bye-laws of the society are directed by the said paragraph to be amended suitably to provide for an overall control by the Railway Administration. Paragraph 2834 deals with the incidence of cost of the canteens. As regards the statutory canteens, the paragraph directs that in addition to the facilities which are given to the nonstatutory canteens, the Administration will have also to bear the expenditure on the entire paraphernalia including the furniture as well as the salaries of the cook and the canteen staff. Note 2 of the said paragraph then states that where the canteens are being run on co-operative basis either by co-operative society or by Mana....
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....rector of Canteens) (para 1.14). To be entitled to subsidy all the departmental canteens have to get themselves registered centrally with the Director of Canteens and Training (Para 1.15). The canteens are entitled to subsidy on wages and gratuity payable to the workers employed in the canteens and for their uniforms as well as to capital and replacement grants for equipment including utensils, crockeries, cuttlery and furniture and also to interest-free loans. In addition to subsidy for equipment, the canteens are also entitled to other facilities such as accommodation on nominal rent of Rs. 1 electricity, water etc. The Instructions in terms state that since the canteens are run departmentally as a measure of staff welfare, the beverages, snacks and meals etc. have to be made available to the staff at economic rates and for this purpose the Government has to provide necessary accommodation at the nominal rent and provide the necessary grants, subsidy and loans. (Para 1.2). In, addition, the concerned Department/Office has to bear the electricity and water bills. In chapter V which deals with the personnel in the canteens, the Instructions lay down the entitlement of Canteens/Tiff....
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....hairman. Paragraph 6.11 defines the Legal Status of the Managing Committee. It says that the Committee functions in the Deptt./Office/establishment of the Government of India for the welfare of the Govt. employees, under the orders of the Government of India and its functions are connected with the affairs of the Union. The Committee, therefore does not enjoy an autonomous status. With respect to the contractual obligations, it functions "for and on behalf of the the President of India". The proceedings of the Committee will not be conducted or decided on resolutions or voting system, but the official decision will rest with the Chairman of the Managing Commitsee or the Head of the Department/Office. In the case of canteens run by the co-operative societies, this provision is to apply as per the bye-laws of the society and the co-operative law in force. The presence of the Chairman and the Hony. Secretary is necessary to constitute the quorum for holding the meeting of the Managing Committee. The Head of the Department/Office is given power to depute a Government servant of the rank of Section Officer/equivalent or below if he can be spared, for part time or whole time assistanc....
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....r any other purpose. 18. On behalf of the employees, a preliminary objection was raised, namely, that in view of the order of this Court dated October 22, 1980 in Civil Appeal No. 368 of 1978 and another, it is not open to the Railways to agitate the question whether the employees in the statutory canteens are railway employees or not, and further whether they are railway employees for the purposes of the Factories Act. We are not inclined to entertain this objection for it is clear from the said order that the Court had left open even the question as to whether the employees of the statutory canteens were railway employees for the purposes of the said Act. Hence, the question whether they are employees of the railways for all purposes necessarily remains res integra. We may reproduce here the said order which is clear enough on the subject: "The benefits accruing to the workers under the decision of the Calcutta High Court do not require to be interfered with in this appeal. Prima facie we are inclined to agree that the High Court decision is right. Moreover, the learned Attorney General agrees to apply the Act as if it were applicable to canteen employees. In this view a fi....
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....utory canteens. 19. Before us therefore two issues arise for consideration, viz. (a) whether the employees of the statutory canteens are railway employes for the purposes of the said Act? and (b) whether they are railway employees for all other purposes as well? 20. As regards the first contention, namely, whether the said employees are the employees of the Railway Administration for the purposes of the said Act, according to us the view taken by the Calcutta High Court in that behalf is correct. Section 2(1) of the Factories Act defines "worker" as follows: "Worker" means a person employed, directly or through any agency (including a contractor) with or without the knowledge of the principal employer, whether for remuneration or not in any manufacturing process or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to, or connected with, the manufacturing process, or the subject of the manufacturing process but does not include any member of the armed forces of the Union;" Since in terms of the Rules made by the State Governments under Section 46 of the Act, it is obligatory on the Railway Administrat....
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....e rent allowance, city compensatory allowance and productivity bonus, and fixed the age of their superannuation. As also pointed out earlier, this court in its decision reported in 1988 (4) SCC 478, subsequently directed that for the purpose of calculating pensionary benefits the service rendered by the said employees prior to October 22, 1980 would be computed. What is further, the Ministry of Railways by its letter of May 13, 1983 placed on record the fact that not only the employees of all the statutory canteens but the employees of eleven Delhi based non-statutory canteens had been treated as railway servants with effect from October 22, 1980. It must be remembered in this connection that neither the Railway Ministry nor the Railway Board had stated in their letters/orders that the employees of the statutory canteens and of the eleven Delhi based non-statutory canteens were being treated as railway servants only for the purposes of the Factories Act or that they were to be so treated till further decision of this Court. It is possible to place a liberal construction on these letters/ orders and interprete the relevant direction namely, "till further directions from the Gover....
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....cable to the canteens/tiffin rooms run by all the Ministries including the Railway Ministry unless they had previously decided to be exempt from them and had framed their own rules in that behalf. On behalf of the respondents, one Shri Sud, Joint Director of Establishment, Ministry of Railways has filed an affidavit contending that Section F of Chapter XXVIII of the Railway Establishment Manual (to the relevant paragraphs of which we have made a reference earlier) contains the necessary instructions for running the canteens and hence the Railway Administration should be deemed to have been exempted from the operation of the said Administrative Instructions. Although there is nothing expressly on record to show that the railway canteens are exempted from the said Instructions, we will proceed on the assumption that they are so exempted by virtue of the relevant provisions of the Railway Manual. But the fact remains that there are as yet no notifications on the lines of December 11, 1979 and December 23, 1980 issued for the benefit of the employees in the railway canteens. Whatever the differences in the nature of work performed by the order staff in the different Ministries, it cann....
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....overnment has only a general responsibility to see that the labour laws are properly followed and not infringed. He further submitted that an indentical responsibility also devolves on the Railways in regard to contractors who execute works for the Railways with their own labour. In addition, the Railways have nearly 2.3 lakh casual labourers who are normally employed on works which are of seasonal nature, intermitant or extending over short periods. These employees are engaged by the contractor to whom the execution of work is entrusted. In case the employees of the canteens are to be treated as Railway servants, similar demands will be made from such casual labourers. His next contention in this behalf was that the Railways have a primary objective of carrying goods and passengers, and the welfare activities are ancillary to the main objective. Hence, the canteens continue at the discretion of the Railway Administration where there have provided 70% subsidy to the management of the statutory canteens. If at any stage the Government so decides, it can change the form of this welfare measure and may choose to have another set-up which in their view may prove more convenient and fin....
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....ded where the strength of the staff is 100 or more and a scheme for provision of a new canteen should be submitted to the Railway Board for approval indicating financial implications duly vetted by the F.A.C.O. Paragraph 2833 contains provisions for the management of such nonstatutory canteens. Among other things, it states that such canteens can be run either by a Committee of Management to be formed for the purpose or by a Consumer-Cooperative Society. The Committee of Management should consist of the duly elected representatives of the staff and where it is run by a Cooperative Society, it should consist of the representatives of the share-holders of the Society. However, in either of the cases, a representative of the Railway Administration is to be nominated either as a Chairman or a Secretary or as a Member of the Committee. This nominee of the Railway Administration is under an obligation to bring to the notice of the Administration any decision of the Managing Commttee which is likely to affect the interests of the Railway Admn. in its capacity as an owner of the premises and of the furniture, equipment, etc., or if the decision is likely to be of considerable harm to the s....
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...., 1983. The direction of this Court was to the effect that the salary and allowances of the employees of the non-statutory canteens (recognised) should be at the same rate and on the same basis as applicable to the employees of the statutory canteens deemed as railway servants with effect from October 22, 1980. This direction was on the basis of the decision of this Court given on October 22, 1989 (supra). It is further an admitted fact that the Board has made applicable to these employees the scales of pay as recommended by the Fourth Pay Commission with effect from January 1, 1986. 26. The employees in these canteens are also entitled to free medical treatment as out-door patients in railway hospitals, to railway passes/PTO's, one increment as an incentive for adoption of a small family. They are also governed by the provisions of the Employees' Provident Fund Act. The Board has also framed recruitment rules for these employees vide its letter dated June 7, 1978. These rules, among other things, lay down minimum qualifying age for recruitment, and superannuation age, minimum educational qualifications, the mode of recruitment and eligibility for promotion for various posts. Th....
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....he employment is non-Governmental and purely temporary and does not carry any pensionary or gratuity benefits. The employees recruited further are not subjected to rigorous standards as to age limit, educational qualifications, medical fitness, character verification etc. He further submitted that the order dated October 22, 1980 passed by this Court in the case of the employees of the eleven Delhi based non-statutory canteens is expressly subject to the liberty given to the Railway Administration to contend in a future appropriate case that they are not railway employees and hence it cannot act as a precedent. He also contended as he did in the case of the statutory canteen employees, that if the employees engaged in these canteens are treated as Railway servants, the employees engaged in other welfare activities, casual labourers etc. may have also to be treated as such. 29. These arguments can be dealt with together. In the first instance, there is hardly any difference between the statutory canteens and non-statutory recognised canteens. The statutory canteens are established wherever the railway establishments employ more than 250 persons as is mandatory under the provision....
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.... any difference be tween the two so far as their applicability is concerned. In fact these Instructions require that the canteens run by engaging solely part-time daily-wage workers may be converted to departmental canteens (para 1.3). Hence we donot see why any distinction be made between the employees of the two types of canteens so far as their service conditions are concerned. For this very reason, the two notifications of December 11, 1979 and December 23, 1980 (supra) should also be equally applicable to the employees of these canteens. If this is so, then these employees would also be entitled to be treated as railway servants. A classification made between the employees of the two types of canteens would be unreasonable and will have no rational nexus with the purpose of the classification. Surely it cannot be argued that the employees who otherwise do the same work and work under the same conditions and under a similar management have to be treated differently merely because the canteen happens to be run at an establishment which employs 250 or less than 250 members of the staff. The smaller strength of the staff may justify a smaller number of the canteen workers to serve....