TaxTMI 
TaxTMI 
2025 (9) TMI 1712
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....know Bench dated 8- 10-2012 in the Writ Petition Nos. 3932/2000, 3935/2000, 3933/2000, 3937/2000 and 2413/2006 respectively, by which all the Writ Petitions preferred by the appellant Society came to be dismissed, thereby affirming the Award passed by the Labour Court dated 14-9-1999 in favour of the four respondents (workmen) before us. 3. It appears from the materials on record that the appellant before us is a Cooperative Bank registered under the provisions of the Cooperative Societies Act, 1912 (for short, "the Act 1912") sometime in 1959. The employees of the Bank formed a Society registered under the provisions of the Act, 1912 named as the "U.P. Cooperative Bank Employees Society Limited." 4. The object behind the formation of the Society was to provide canteen facility to its members. 5. It appears that the Bank took a policy decision to permit the Society to run a canteen. 6. The necessary modalities were worked out in so far as the grant of subsidies etc. is concerned by the Bank in consultation with the Society including the infrastructure. 7. The respondents before us were appointed by the Society as employees to run the Canteen. There are no formal....
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....ntitled to get the arrears of salary from 31.05.1995 till they are reemployed in the canteen whereas Petitioner Workmen Achchey Lal has not been reemployed, hence he is entitled for reinstatement in canteen service alongwith salary for the period of unemployment." 16. The Bank, being dissatisfied with the award passed by the Labour Court, challenged the same before the High Court. 17. The High Court by a common judgment and order dismissed all the four Writ Petitions filed by the Bank taking the view that no error could be said to have been committed by the Labour Court in passing the Award. 18. The High Court in its impugned Judgment observed thus:- "It was initially decided to set up a canteen and the Bank requested the Society to discuss the matter with D.K. Pandey, Assistant Manager, who was to intimate the Managing Director of the Bank about the running of the canteen on the pattern of the Reserve Bank of India and the facilities provided by it to the customers for running the canteen. The Bank also released subsidy of Rs. 1500/- for purchase of crockery, utensils etc. to run the canteen. Free space was also provided by the Bank to the Society for runnin....
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....se of Employers in Relation to the Management of Reserve Bank of India (supra) and the said case has been distinguished in the case of Indian Overseas Bank (Supra), this Court has to consider as to what test is to be applied in considering the appointment of the workmen, who were working in the canteen for such a long period. In the Indian Overseas Bank (supra) the canteen was being run for one and a half decade and the infrastructure was also provided by the Bank. The financial assistance was also given by the Bank and the working hours and working days of the canteen were also as per Bank's working and so in those very circumstances, it was held that the employees working in the canteen shall be deemed to be employees of the Bank. In the said case the staff required were employed by the promoters, who have been administering the canteen. The amount of contribution of funds and the subsidy was being increased from time-to time depending upon the escalation of the costs of maintenance on the representation of the persons in-charge of the running of the co-operative canteen. In the said case, despite the fact that the subsidy was increased from time to time having regard to the ....
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....een, one of the respondents herein, namely, Vijay Kumar was given the contract to run the Canteen with all facilities. h. Satyaprakash Shrivastava, one of the respondents, was engaged by the Bank as cashier. i. The Bank had the control and supervision over the workers working in the Canteen. It hardly matters whether the Canteen could be termed as statutory canteen. j. The financial assistance was given by the Bank and the working hours and working days of the Canteen were also as per the Bank's regulations. 20. The High Court relied upon the decision of this Court in the Indian Overseas Bank v. I.O.B. Staff Canteen Workers' Union and Another reported in (2000) 4 SCC 245 for the purpose of reaching the conclusion that there was master servant relationship between the employees of the canteen and the Bank. 21. As a result, the award passed by the Labour Court came to be affirmed and the Writ Petitions filed by the Bank were ordered to be dismissed. 22. In such circumstances, referred to above, the Bank is here before us with the present appeals. 23. Ms. Garima Prashad, the learned Senior counsel appearing for the appellant - Bank would vehe....
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.... Society and from the said financial assistance, salaries etc. used to be paid to the employees working in the Canteen. 32. The working hours and the working days of the Canteen were also in accordance with the Bank's rules and regulations. 33. In such circumstances, according to the learned counsel, it is not appropriate for the Bank to say or disown them saying that they are not the employees of the Bank. 34. The learned counsel in support of his submissions placed strong reliance on the decision of this Court in the case of Indian Overseas Bank (supra). 35. In such circumstances, referred to above, the learned counsel prayed that there being no merit in these appeals, those may be dismissed. ANALYSIS 36. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the High Court committed any error in passing the impugned Judgment and Order or not? 37. It is by now well settled that to ascertain or rather the relevant factors to be taken into consideration to establish employer/employee relationship would include, inter alia i.e. (a) who appo....
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....anches, the Tribunal was right in relying upon the decision in RBI case [(1996) 3 SCC 267 : 1996 SCC (L&S) 691]. In that case, three different categories of canteens (canteens run by the Implementation Committee, cooperative societies and contractors) were being run and Reserve Bank of India was making grant by way of subsidy @ 95 per cent of the cost incurred by the canteens for payment of salary, PF contribution, gratuity, uniform etc. besides providing fuel, water, fixtures, utensils, furniture, electricity, premises, etc. free of charge. In the canteen run by the Implementation Committee (Canteen Committee), out of the 12 representatives, 3 of them were from the Bank - the Currency Officer, Personnel Officer and the officer from the Personal Policy Department. The Currency Officer is to be appointed as the Chairman of the Canteen Committee. The Bank relieved four employees who were in the Committee, two for full day and two for half day to supervise the day-to-day affairs of the canteen. Further, the Committee could not increase the strength of the canteen employees without the permission of the Bank. The rates of eatables also could not be revised without the consent ....
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.... if some more cost is incurred in running the canteen, the members of the staff working in that particular branch are required to bear it. The Bank is not employing the canteen workers. The Bank is not supervising or controlling the work or the details regarding the canteen or its employees appointed by the Local Implementation Committee. Auditing the work of the Local Implementation Committee - whether subsidy given by it is properly utilised or not, also would not be a ground for holding that the Bank is having any control in running the canteen. The Bank is not taking any disciplinary action or directing any canteen employee to do a particular work or for that purpose no scheme is laid down by the Bank. Not only this, the other most important aspect is "the recruitment" by the Bank is to be made as per the statutory rules framed by it after giving proper advertisement, test and/or interview. As against this, for appointing a canteen employee there are no rules framed by the Bank." 48. In Parimal Chandra Raha v. LIC of India reported in 1995 Supp (2) SCC 611, this Court after relying upon a large number of decisions of this Court including M.M.R. Khan v. Union of India reporte....
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....is available as a matter of right to all the employees in their capacity as employees and nothing more, the number of employees employed in the establishment and the number of employees who avail of the service, the length of time for which the service has been continuously available, the hours during which it is available, the nature and character of management, the interest taken by the employer in providing, maintaining, supervising and controlling the service, the contribution made by the management in the form of infrastructure and funds for making the service available etc." (emphasis supplied) 49. In Parimal Chandra Raha (supra), the Life Insurance Corpn. of India had questioned the status of workmen in the various canteens run by it in its premises in Calcutta. The question was, whether the canteen workers were regular employees of the Corporation and if so, what should be the pay-scale and their service conditions. While considering that question, the Court took into consideration the conduct of the Corporation to the outside world. From the various documents produced before the court, it was proved that the canteen staff were directly under the control of the Life I....
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....ect approach would be to consider whether having regard to the nature of the work, there was due control and supervision by the employer. The Court quoted the opinion of Flectcher Moulton, L.J., in Simmons v. Heath Landry Co., where the learned Judge has observed as follows: "In my opinion it is impossible to lay down any rule of law distinguishing the one from the other. It is a question of fact to be decided by all the circumstances of the case. The greater the amount of direct control exercised over the person rendering the service by the person contracting for them the stronger the grounds for holding it to be a contract of service, and similarly the greater the degree of independence of such control, the greater the probability that the services rendered are of the nature of professional services and that the contract is not one of service." (emphasis supplied) 51. The Court then observed that the broad distinction between a workman and an independent contractor lies in this that while the former agrees himself to work, the latter agrees to get other persons to work. A person who himself agrees to work and does work and is therefore, a workman, does not cease to....
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.... establishment for the purpose of the Factories Act only and not for all other purposes". (emphasis supplied) 54. A Constitution Bench of this Court, in Steel Authority of India Ltd. v. National Union Waterfront Workers, reported in (2001) 7 SCC 1 noticed the following circumstances under which contract labour could be held to be the workmen of the principal employer: "107. An analysis of the cases, discussed above, shows that they fall in three classes: (i) 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 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; (ii) where the contract was found to be a sham and nominal, rather a camouflage, in which case the contract 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....
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....orted in (2002) 1 SCC 337 this Court, following Barat Fritz Werner Ltd. (supra) opined: "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 whenever 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 provisio....
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.... the employer from any liability or penalty which may be imposed by the Central, State or local authorities by reason of any violation by the contractor of such laws, regulations and also from all claims, suits or proceedings that may be brought against the management arising under or incidental to or by reason of the work provided/assigned under the contract brought by the employees of the contractor, third party or by the Central or State Government authorities." 60. We may now look into the decision of this Court in Indian Overseas Bank(supra) on which strong reliance is placed by the learned counsel appearing for the respondents. 61. In Indian Overseas Bank (supra), this Court in the peculiar facts and circumstances of the said case, relied on M.M.R. Khan (supra)and Parimal Chandra Raha (supra) and distinguished Indian Petrochemicals Corpn. Ltd.(supra) holding: "A cumulative consideration of a few or more of them, by themselves or in combination with any other relevant aspects, may also serve to be a safe and effective method to ultimately decide this of tenagitated question. Expecting similarity or identity of facts in all such variety or class of cases involvin....
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.... non-statutory recognised Railway canteens and the employees in non-statutory, non-recognised canteens. In so far as the Statutory canteens are concerned, the Court took the analogy of Section 46 of the Factories Act and said that it was a statutory obligation on the part of the Railways to provide a canteen. Being a statutory obligation, wherever there is a canteen run by a contractor or a cooperative or other intermediary, that would not make any difference. This Court said that the employees of the Statutory canteens run by the Railways form part of the establishment. In so far as the non-statutory recognised Railway canteens are concerned, this Court said that the Rules of the Railway Manual were similar to the running of statutory canteens, except for the number of the employees in the rolls and, therefore, all the employees of that canteen also form part of the establishment. While considering the non-statutory nonrecognised canteens, the Court said that they cannot form part of the establishment. While considering the statutory as well as non-statutory recognised canteens, the Court gave importance to the control of the Railway Administration over the staff. It was held in t....
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.... case of employment of other drivers may be different." If other materials are available regarding the terms and conditions of service, regarding the direction and control of the drivers and regarding other indicia of employment, the conclusion may be different. We cannot, therefore, dogmatise generally as to the nature of employment of the other driers under this Bank or other industry even where features of allowance may be present. We mention this, because, as Lord Macmilan pointed out in the case we have already referred to, facts vary from case to case. Evidence is shaped in each case and conclusions are reached on the basis of the facts and evidence of each case. There is no invariable proposition where fluid facts are involved". (emphasis supplied) 68. Thus, this Court pointed out that everything would depend upon the facts that are involved in the particular case. 69. In the Employees in relation to Punjab National Bank (supra), V. R. Krishna Iyer, J., speaking for the Bench, considered a similar question. To be a workman, certain guidelines were stated therein. This Court accepted the principle enunciated in Mersey Docks & Harbour Board v. Coggins & Griffith (Live....
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....whether the appraiser was an employee of the Bank. While considering the same in paragraph 5 of the judgment, this Court said thus: "... It stands established that Industrial Law revolves on the axis of master and servant relationship and by a catena of precedents it stands established that the prima facie test of relationship of master and servant is the existence of the right in the master to supervise and control the work done by the servant (the measure of supervision and control apart) not only in the matter of directing what work the servant is to do, but also the manner in which he shall do his work ..." (emphasis supplied) 72. Considering the control of the employer, this Court said that appraiser was not an employee of the Bank. 73. In Ahmedabad Mfg. and Calico Ptg. Co. Ltd. v. Ram Tahel Ramanand reported in (1972-II-LLJ-165)(SC), the question that arose for consideration was, whether a gardener employed in a textile mill could be treated as an employee and considered as part of the establishment. This Court relied on the decision reported in J. K. Cotton Spg. and Wvg. Mills Co. Ltd. v. Labour Appellate Tribunal of India reported in (1963-II-LLJ-436)(SC),....
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....ack of evidence on this point and what the Bank discharged was only an obligation to provide a facility, under no stretch of imagination can it be said that the canteen staff is also part of the establishment, i.e., the Bank. FEW TESTS TO DETERMINE EMPLOYER EMPLOYEE RELATIONSHIP TO BE KEPT IN MIND WHILE DECIDING MATTERS ARISING FROM LEGISLATIONS LIKE INDUSTRIAL DISPUTES ACT, 1947, THE FACTORIES ACT, 1948 ETC: 1. Control Test (i) The control test postulates that when the hirer has control over the work assigned and the manner in which it is to be done, an employer-employee relationship is established. The control test is derived from common law application in vicarious liability claims. (ii) The earliest instance of applying the control test in India is in Shivanandan Sharma v. Punjab National Bank Ltd. reported in AIR 1955 SC 404. Here, a claim under the Industrial Disputes Act arose as to whether a head cashier was the bank's employee. The bank had an agreement with a contracted treasurer who nominated people to work for discharging function of the bank under the agreement, including the cashier in question. The court held that although the treasurer ....
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....ther having regard to the nature of the work there was due control and supervision by the employer" (emphasis added) (vi) Thus, the control test was expanded to mean due control and supervision. In numerous cases, the control test adopted in Dharangadhara (supra) remained the sole factor determining employer-employee relationship. The degree and level of control required would depend on the facts and circumstances of each case. 2. Organisation/Integration Test (i) The first instance of the shift from the control test as a sole determinative factor was in Silver Jubilee Tailoring House v. Chief Inspector of Shops and Establishments reported in (1974) 3 SCC 498. This Court observed that the earlier reliance on the control test was attributed to the agrarian economy, where masters often exercised control over workers. This occurred due to masters having more knowledge, skill and experience. The shift to a multifactor test is due to modern work being conducted by professionals where masters lack the technical expertise to direct the manner in which the work is undertaken. The court arrived at these conclusions relying on judgements in the Market Inve....
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.... and integration to determine whether the workers are employees or independent contractors was brought out. The court examined the following factors: a) who is the appointing authority? b) who is the paymaster? c) who can dismiss? d) the duration of an "alternative service"; e) the extent of control and supervision; f) the nature of the job, e.g. whether it is professional or skilled work; g) nature of establishment; h) the right to reject. (iv) This Court in Bengal Nagpur Cotton Mills v. Bharat Lal reported in (2011) 1 SCC 635 laid down two factors to be considered to determine the true nature of the hiring entity, i.e., whether it is the principal employer or contractor: (i) Whether the principal employer pays the salary instead of the contractor; and (ii) Whether the principal employer controls and supervises the work of the employee? 4. Refinement of the multifactor test (i) The courts, over the years, have refined the scope of the multifactor test by adding various factors based on the facts and circumstances. This Court, in many cases, has applied the refinemen....