Supreme Court of India
KANPUR SURAKSHA KARAMCHARI UNION (REGD.)versusUNION OF INDIA & ORS.
- Citation
- 1988 INSC 242
- Decided
- 26 August 1988
- Disposal
- Case Allowed
- Bench
- E S VENKATARAMIAH
Holding
Canteen workers in defence factories were employees of the occupier (the factory) and their service prior to 22‑Oct‑1980 must be counted as qualifying service for pension.
Summary
The petitioners, canteen workers in three defence establishments at Kanpur, retired after 22‑Oct‑1980 and claimed that their service in the canteens prior to that date should count as qualifying service for pension. The Union of India contended that before 22‑Oct‑1980 the canteens were managed by Canteen Managing Committees, which appointed and paid the workers, and therefore the workers were not government employees. The Court examined the definition of "occupier" under section 2(n) of the Factories Act, 1948 and held that the occupier – the defence establishment – is the employer of the canteen staff, irrespective of the advisory role of the Managing Committee. It noted that the Ministry of Defence’s 1965 letter subsidised canteen staff costs and that the canteen facilities are integral parts of the factories. Consequently, the workers were deemed employees of the factories, and their pre‑22‑Oct‑1980 service must be counted for pension qualification. The Court ordered the government to recompute and pay pension arrears accordingly and allowed the petitions.
Issues considered
- Whether canteen workers in defence factories prior to 22‑Oct‑1980 were employees of the factories for purposes of qualifying service under the pension scheme.
- Whether the Canteen Managing Committee could be considered the employer of the canteen workers.
- Interpretation of the term "occupier" under section 2(n) of the Factories Act, 1948 in the context of government‑owned factories.
Legislation cited
- Constitution of Indias. Article 32
- Factories Act, 1948s. 2(n), s. 46
- U.P. Factories Rules, 1950s. Rule 68
Subjects
Factories ActSection 46Government employeePension qualificationDefence establishmentsCanteen workersOccupier definitionArticle 32Employment law
Judgment
A KANPUR SURAKSHA KARAMCHARI UNION (REGD.)
v.
UNION OF INDIA & ORS.
AUGUST 26, 1988
B [E.S. VENKATARAMIAH AND MURARI MOHON
DUTT, JJ.)
Factories Act, 1948: Section 46-Canteens maintained in Defence
Industrial Installations-Employees working in such canteens-
Employees of the factories in which canteens have been established.
c The President of India, by order dated July 25, 1981 accorded
sanction to treat all employees of canteens established in Defence In-
dustrial Installations under section 46 of the Factories Act, 1948, as
Government employees. The order was given effect from 22.12.1980.
D The petitioners were working in the canteens of the three Defence
establishments at Kanpur, forming part of the Defence Department of
the Union of India. On their retirement after 22.10.1980 the petitioners
claimed that the period of service rendered by them prior to 22.10.1980
canteens be counted towards their q'!alifylng service for the purposes of
pension. 'Their claim was not 11cceP,ted. The respondents' contention
E was that prior to 22.10.1980 the canteens in Ordnance factories were
supervise\I and controlled by the Canteen Managing Committee consist-
ing of equal number of elected representatives of the factory workers
and nominees of management, and these Committees were the appoint·
Ing authority of the Canteen workers and paid.their salaries.
F Allowing the petitions, It was,
HELD: (1) It was admltied by the respondents that by the letter
dated 24.5.1965 of the Ministry of Defence, provision had been made
for subsidising the canteens maintained in Defence Industrial Installa·
tions under section 46 of the Act. The letter ·aiso contained directions
G. regarding pay-scales, conditions of service, etc. of the employees. The
cost of supervisory and clerical staff and cooks etc. was to be
reimburstld by the Government and the canteen buildings formed part
of the industrial establishment concerned. [595A-B)
(2) The expression 'occupier' of a factory ls defined In section
» 2fn) of the Factories Act, 1948 as the person who has ultimate control
590
KANPUR SURAKSHA UNION v. U.0.1. 591
over the affairs of the factory. Under clause (iii) of section 2(n), in t,he A
case of a factory owned or controlled by the Central Government, lihe
person or persons appointed to manage the affairs of-the. factory by the
Central Government shall be deemed to be the occupier; [596C-FJ
(3) A canteen is an integral part of the Defence establishment
belonging to the Union of India. There cannot be a canteen without B
sufficient number of workers working in the canteen. They have to be
appointed by the occupier. Otherwise he would not be fully complying
with section 46 of the Factories Act. The Managing Committee can~Ot
be the employer of those workmen in the true sense of the terms.
The Managing Committee constituted under section 46 of the Act
which is not an incorporated body and whose financial position is C
uncertain cannot be considered to be the employer who has to bear
the legal responsibilities under the several labour ·1aws in force in
India. [597C-D]
(4) The basic requirements of the canteen, such as buildings,
utensils, crockery, cutlery, furniture, etc. are to be supplied by the D
occupier. [597B-C]
(5) In this situation it is difficult to hold that the employees in
canteens established under section 46 of the Act would not be employees
of the occupier, even though for purposes of management a Canteen
Managing Committee, whose functions are advisory, has to be cons- E
tituted under the Rules. [597F] ·
(6) It Is also not shown that the workers in the canteens becoming
the Government employees ·on 22.10.1980. They were paid by the pre-
vious management, namely, the Canteen Managing Committee cons-
tituted under rule 68 of the U.P. Factories Rules, 1950 any compensa- F
lion In lieu of services rendered by them prior to 22.10.1980. [597F -G]
(7) It is, therefore, difficult to hold that the employees working in
such canteens were not employees of the factories in which the canteen
had been established. If they are employees of the factories in which the
canteen is established, the service rendered by them in these factories G
should be counted as part of the qualifying service for pension. [597G-H]
ORIGINAL JURISDICTION: Writ Petition (Civil) Nos. 5187-
89 of 1985 etc.
(Under Article 32 of the Constitution of India) H
592 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.
A P.S. Khera and Mrs. Sushma Suri for the Petitioners.
Kuldip Singh, Additional Solicitor General, C. V.S. Rao, Ms.
A. Subhashini, Girish Chandra and N .S.D. Behl for the Respondents.
The Judgment of the Court was delivered by
B
VENKATARAMIAH, J. The question involved in these peti-
tions is whether the workmen who were working in canteens estab-
lished under section 46 of the Factories Act, 1948 (hereinafter referred
to as 'the.Act') in Ordnance Equipment Factory, Kanpur, Central
Ordnance Depot, Kanpur and Air Force Station, Kanpur are entitled
to claim the period of service in such canteens prior to 22.10.1980 as
c part of the qualifying service for claiming pension.
The three industrial establishments, referred to above, namely;
,Ordnance Equipment Factory, Central Ordnance Depot and Air
Force Station, Kanpur are defence establishment forming part of the
D Defence Department of the Union oflndia. By the Order No. 18(1)80/
D(JCM) dated the 25th Jul:>;, 1981 sanction was accorded by the Presi-
dent of India_ to treat all employees of canteens established in Defence
Industrial Installations under section 46 of the Act as Government
employees with immediate effect. By an amendment, the said Govern-
ment Order was given effect from 22.10.1980. The Government Order
E further provided that it would be applicable to all employees of the
statutory canteens irrespective of the type and management of the
canteens and till the Government decided otherwise the employees of
the said canteens would continue to be governed ·by the terms and
conditions of service laid down in their appointment letters and con-
tracts of employment already subsisting. It was further stated that they
F would be continued to be paid such emoluments to which they were
entitled then. When some of the employees retired after 22.10.1980
they applied for payment of pension. The Defence Department
declined to treat the period of servic~ rendered by them prior to
22.10.1980 in such canteens as part of qualifying service for purposes
Gf. pension on the ground that it was only with effect from 22.10.1980
G from which date they had become Government employees their quali-
fying service could be counted. Aggrieved by the rejection of the claim
of the workers in "those canteens, the petitioners herein, have filed
these petitions in this Court for declaration that the service rendered
by the employees of such canteens prior to 22.10.1980 should be treated
as qualifying service for purposes of pension. On behalf of the Union
H of India counter-affidavits were filed resisting the claim of the peti-
•j(.ANPUR SURAKSHA UNION v. U.0.1. IVENKATARAMIAH, J.) 593
tioners. As the information furnished in the counter-affidavits was A
inadequate for purposes of disposing of the cases, the Court by its
. order dated 22.3.1988 directed the Union of India to file a fuller
affidavit giving information about the following matters, namely; the
authority which· had the power to appoint workers in such canteens
prior to 22.10.1980, the authority which was paying salary to the work-
.ers in the said canteens prior to 22.10.1980, the authority which was .B
controlling such canteens prior to 22.10.1980, the particulars of fhe
persons who were consumers of the service rendered by the said can-
teens prior to 22 .10 .1980 and other relevant matters in order to decide
· the status of the workers in the said canteens prior to. 22.10.1980.
Thereupon a further affidavit has been filed by Shri N. Sivasubra-
manian, Joint Secretary (Ordnance Factories) to the Government of C
India, Ministry of Defence, New Delhi. In the said affidavit it is stated
that (a) prior to being declared as Government servants w.e.f.
' 22.10.1980 the canteens workers in Ordnance Factories were under the
/ canteen pianaging committees constituted as per provisions of section
46 of the Act; (b) the supervision and control of such canteens were
exercised by the Canteen Managing Committee consisting of equal D
number of elected representatives of the factory workers and nominees
of the management and the Canteen Managing Committee was the
'appointing authority of the canteen workers; and (c) that the Canteen
Managing Committee was paying the salary to the workers and also
controlling the canteens. It was further admitted that by the letter
.,, dated 24.5.1965 of the Ministry of Defence it had been ordered thus: E
"The question of subsidising the canteens maintained
in Defence Industrial Installations with reference to provi-
sions of Section 46 of the Factories Act 1948 has been
under the consideraton of Government for som~ time.
After a detailed examination of the matter it has been F
decided that in order to reduce the cost of meals and snacks
served by the canteen to the personnel of the Defence
Industrial Installation registered as factories and subject to
the conditions indicated in the succeeding paras, the cost of
supervisory and clerical_staff and cooks, bearers, helpers,
vendors etc. employed in these canteen should. be reim- G
bursed by the Govt. to the Managing Committee of such
canteens ....... .
. The Commandants of the installation will simultane-
ously ensure that the cost of the meals/snacks provided by
these canieeris ·is recfllced proportionate to the subsidy re- H
594 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.
A celved from Govt. for the cost of the staff .......... .
In order to ensure that uniform standards for employ-
ment of staff and payment of salaries as far as possible ~nd
the subsidy paid by the Government is related to total
number of personnel served by the canteens the number
B and grades of supervisory clerical and working staff and the
scales of pay that should be allowed to them are given iii
Appendix 'A' to this office Memorandum for the guidance
of the installation Commanders and the Managing Com-
mittee. These scales of staff and salaries are the maximum
outer limits within which the local Management may
c engage the staff and workers actually required. Where staff
can be engaged on more economical rates it may be emp-
loyed on such rates. The existing supervisory clerical and
working personnel may be brought over to those pay scales
to the extent necessary by taking into account their existing
emoluments and thereafter annual increments may be
allowed after one year from the date of switch over to these
scales. Other concessions or allowances of any kind should
be allowed to the staff in addition to these consolidated pay
scales. Other terms and conditions of service may continue
to be regulated by the Managing Committee as here-to-fore
..... Reimbursement of the cost of staff will be limited to
the scales indicated in the appendix .....
These orders are not applicable to the canteens which
are at present run by contractors. Such canteens can, how-
ever, be switched over to this scheme after the terms of the
contract with the contractor have expired or by terminating
F the contract, in accordance with the existing clauses thereof
if any. This scheme will also be applicable to new canteens
organised by cooperative societies of the staff of Managing
Committee appointed under the guidance of the adminis-
tration in pursuance of secton 46 of the Factories Act in
other Defence Industrial Installations which are registered
G as "factories" and where canteens have not so far been
opened".
It is seen from the above letter of the Ministry of Defence that
prior to 24.5.1965 there were three kinds of canteens, namely; (i)
canteens run by contractors, (ii) canteens run by co-operative societies
H. of the staff, and (iii) canteens which had been established under sec-
- -.
KANPUR SURAK~HA UNION v. U.0.1. IVENKATARAMIAH, J.] 595
tion 46' of the Act. We are. not concerned with the first two categories
A
of the canteens but only with the last category of canteens in this case.
The above Ministry of Defence letter provides for subsidising the can-
teens maintained in Defence Industrial Installations under section 45
of the Act. It also gives directions regarding pay-scales, conditions of
.service 'eic. -The consumers of the services rendered by such canteens
were the'factory employees for whose benefit they had been estab- B
lished. It is also not disputed that the building or buildings in which
such canteens had been established formed part of the industrial
-- establishment concerned.
The Act is applicable both to the factories run by Government
and the factories run by other private companies, organisations,
persons etc. It was enacted for the purpose of improving the conditions C
of the workers in the factories. Section 46 of the Act reads thus:
~46. Canteens.-(1) The State Government may make
rulies requiring that in any-Specified factory wherein more
than two hundred and fifty workers are ordinarily emp- D
Joyed, a canteen or canteens shall be provided and
maintained by the occupier for the use of the workers.
(2) Without prejudice to the generality of the fore-
going power, such rules may provide for-
E
(a) the date by which such canteen shall be provided;
(b) the standards in respect of construction, accom-
modation, furniture and other equipment of the.canteen;
· · (c) the foodstuffs to be served therein and the p
charges which may be made thereof;
(d) the constitution of a managing committee for the
canteen and representation of the workers in the manage-
ment of the canteen;
.G
(dd) the items of expe,nditure in the running of the
canteen which are nor-to-be taken into account in fixing the
· cost of foodstuff _and which shall be borne by the employer;
(e) . the delegation to -the Chieflnspector, subject to
such conditions as may be prescribed, of the power to make H
rules under clause (c ). "
596 SUPREME COURT REPORTS
Rule 68 of the U.P. Factories Rules, 1950 (hereinafter referred
A to as 'the Rules') framed under sections 46 and 112 of the Act gives
particulars regarding the type of building that should be made avail-
able for running a canteen and the manner in which accounts should be
maintained in such canteens. It further provides that a canteen manag-
ing committee should be established under clause (20) of rule 68 of the
B Rules. The Managing Committee shall consist of an equal number of
persons nominated by the occupier and elected by workers. The
number of elected workers shall be in the proportion of 1 for every
1,000 workers employed in the factory, provided that in no case shall
there be more than 5 or less than 2 workers on the Committee. The
object of providing for the establishment of Canteen Managing
Committee is to see that the employees of the factories have some
C amount of say in the management of the affairs of the canteens but the
obligation to establish a canteen under section 46 of the Act is imposed
on the occupier. The expression 'occupier' of a factory is defined in
section 2(n) of the Act as the person who has ultimate control over the
affairs of the factory, provided that (i) in the case of a firm or other
D association of individuals, any one of the individual partners or mem-
bers thereof shall be deemed to be the occupier; (ii) in the case of a
company, any one of the directors shall be deemed to be the occupier;
and (iii) in the case of a factory owned or controlled by the Central
Government or any State Government, or any local authority, the
person or persons appointed to manage the affairs of the factory by the
R Central Government, the State Government or the local authority, as
the case may be, shall be deemed to be the occupier. Under clause (iii)
of section 2(n) of the Act, in the case of a factory owned or controlled
by the Central Government, the person or persons appointed to
manage the affairs of the factory by the Central Government shall be
deemed to be the occupier. The person so appointed to manage the
F affairs of the factory of the Central Government is under an obligation
to comply with section 46 of the Act by establishing a canteen for the
benefit of workers. The Canteen Managing Committee, as stated
above, has to be established under rule 66 of the Rules to manage the
affairs of the canteen. The functions of the Canteen Managment Com-
mittee are merely advisory. It is appointed by the Manager appointed
G under section 7 of the Act and the Manager is required to consult the
Canteen Managing Committee from time to time as to the quality and
quantity of foodstuff served in the canteen, the arrangement of the
menus, times of meals in the canteen etc. The food, drink and other
items served in the canteen are required to be sold on 'no profit' basis
and the prices charged are subject to the approval of the Managing
H Committee. The accounts pertaining to a canteen in a Government
KANPUR SURAKSHA UNION v. U.0.1. [VENKATARAMIAH, J.i 597
factory may be audited by its departmental Accounts Officers.
A
The building for the canteen has to be provided by the occupier.
Under sub-rule ( 13) of rule 68 of the Rules there shall be provided and
maintained sufficient utensils, crockery, cutlery, furniture and any
other equipment necessary for the efficient running of the canteen.
Suitable clean clothes for the employees serving in the canteen shall B
also be provided and maintained. Thus the basic requirements of the
canteen, such as buildings, utensils, crockery, cuilery, furniture etc.
should be supplied by the occupier. Under the Ministry of Defence
letter dated 24.5.1965 the prices of food, drink and articles supplied
for the canteens are to be subsidised. A canteen is an integral part of
the Defence establishment belonging to ·the Union of India. There
cannot be a canteen without sufficient number of workers working in c
the canteen.- They have to be appointed by the occupier. Otherwise he
would not be fully complying with section 46 of the Act. The Managing
Committee cannot be the employer of those workmen in the true sense
of the term. The Managing Committee constituted under section 46 of
the Act which is not an incorporated body and whose financial position D
is uncertain cannot be considered to be the employer who has to bear
the legal responsibilities under the several labour laws in force in
India. We may, however, add that in the case of a canteen run by a
contractor or a co-operative society or some other body the position
may be different. But even then there has to be a Managing Commit-
tee, if such a canteen is treated as a canteen established for purposes of E
satisfying the requirements of section 46 of the Act. Even in this case
the contractor ··or the co-operative society or some other body will be
the employer but not the Managing Committee. In this situation it is
difficult to hold that the employees in canteens established under
section 46 of the Act would not be employees of the occupier, even
though for purposes of management a Canteen Managing Committee, F
whose functions are advisory as pointed out above, has. to be con-
stituted under the Rules. It is also not shown that on the workers in the
canteens becoming the Government employees on 22.10.1980 they
were paid by the previous management, namely, the Canteen Manag-
ing Committees constituted under rule 68 of the Rules any compensa-
tion in lieu of the services rendered by them prior to 22.10.1980. We G
find it, therefore, difficult to hold that the employe'es working in such
canteens were not employees of the factories.in which the canteen had
been established. If they are employees of tfieiactories in which the
canteen is established, the service rendered by them in these factories
should be counted as part of the qualifying service for pension. Hence,
the plea of the Union Government that the service rendered by the H
598 SUPREME COURT REPORTS (1988] Supp. 2 S.C.R.
A workers in canteens established under section 46 of .the Act on and
after 22.10.1980 alone can be included in the qualifying service for
pension cannot be accepted. The period prior to 22.10..1980 also
should be counted for purposes of pension.
We, therefore, direct the Union Government to treat the period
B during which the workers had served in the canteens established under
section 46 of the Act in the Defence_ establishments at Kanpur with
which we are concerned in these cases prior to 22.10.1980 also as part
of the qualifying service for purposes of pension. We further direct
that the pension payable to those emplGyees who_ have retired from
service on or after 22.10.1980 shall be recomputed by taking the period
of service during which they had worked prior to 22.10.1980 in such
C canteens into consideration. Such computation shall be made within
six months from today. The arrears of pension payable to those who
have retired from service shall be disbursed to them within three
months afti:r such computation.
I) The petitions are accordingly allowed. No-costs.
R.S.S. Petitions allowed.
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