PublicationsIMPACT ON CANTEEN AND CONTRACT LABOUR: AN ANALYSIS OF THE SUPREME COURT JUDGEMENT IN THE CASE OF INDIAN PETROCHEMICALS CORPORATION LTD. AND ANOTHER VS. SHRAMIK SENA AND OTHERS

September 20, 20210
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INTRODUCTION

Indian Petrochemicals Corporation Ltd. and Another vs. Shramik Sena and Others is a judgment that was decided by the Hon’ble Supreme Court of India. The main cause of action, in this case, was to determine whether workmen of a statutory canteen were workmen of the establishment for the limited purpose of the Factories Act, or whether they were to be considered as workmen of the management for all other purposes as well (purposes such as those enjoyed by regular employees – continuity of service, seniority, pension, and other benefits).

The parties’ names, in this case, were Indian Petrochemicals Corporation Ltd (Appellants/Management) and Shramik Sena and Others (Respondents/Workmen). This judgment was pronounced on 4 August 1999 and served to settle the dispute between the workmen and management which had arisen due to the Bombay High Court order dated 29-08-1997 in W.P. No. 2206 of 1997. This case analysis shall be dealing with the facts of the case, the issues which were raised, the rationale employed by the court, and the decision. In conclusion to the case brief, the author shall provide critical analysis of the case.

PROCEDURAL HISTORY OF THE CASE

The Supreme Court judgment disposes of the clubbed appeals of the M/s. Indian Petrochemicals Corporation Limited and another (hereinafter referred to as the appellant-management), and the Shramik Sena and others (hereinafter referred to as the respondent-workmen). Both of these appeals have been filed against the Bombay High Court order.[2]

The workmen’s contention before the Bombay High Court was that workmen whose names were contained in Ex. ‘A’were working in the statutory canteen and should be absorbed as regular workmen of the management. The management’s contention was that the absorption of the said workmen would violate Article 16(4) of the Constitution as it would contravene the reservation policy of their recruitment process.

The Bombay High Court ruled on the basis of Parimal ChandraRaha& Ors. vs. Life Insurance Corporation of India & Ors.,[3]that in all establishments where canteens are maintained as a statutory requirement (Section 46 of Factories Act), the workmen working in the said canteen ipso facto become the regular workmen of the management; thus all workmen of Ex. ‘A’ who were working in the statutory canteen were entitled to be regularized. It also laid down certain conditions which the workmen of Ex. ‘A’ was obliged to fulfill in order to be absorbed as employees.[4]

The management was aggrieved by this judgment while the workmen were aggrieved by the conditions, thus their cross-appeals were preferred before the Supreme Court.

FACTS

The respondent-workmen were employed in the statutory canteen of the appellant management, and the canteen was managed by a contractor.

In the case before the Supreme Court, the appellant-management contended that the Bombay High Court erred in applying Raha’s[5] case because that case did not hold that every workman of a statutory canteen automatically gets absorbed as a regular workman of the management and that it was liable to be re-considered in the light of M.M.R. Khan & Ors. vs. Union of India & Ors.[6] The appellant management also contended that in the case of statutory canteens, further evidence is required to establish that the contractor’s workmen are in reality the workmen of the management.

The respondent-workmen contended that since the appellant-management was statutorily required to provide canteen facilities to factory staff under Section 46 of the Factories Act, that itself was sufficient to conclude that the canteen workmen would become regular employees of the principal employer, i.e. the appellant-management. The respondent-workmen further contended that in view of Raha’s case,[7] every workman of a statutory canteen is an employee of the management even if he was employed through a contractor and that there is no further need for any inquiry to establish the factual matrix with regard to the relationship between the workmen and the management.

ISSUES
  1. Whether workmen employed in statutory canteens under the Factories Act 1948 are deemed as employees for the purposes of the Factories Act alone; or whether their deemed employment extends for all other purposes including continuity of service, seniority, pension, and other benefits which a regular employee enjoys?
  2. Whether workmen working in a statutory canteen are permanent employees of the establishment’s canteen?
  • Whether the High Court can impose conditions regarding the absorption of workmen as regular employees?

RATIONALE
ISSUE I

The appellant management had conceded that the workmen were employees of the management for the purpose of the Factories Act, by virtue of the definition of ‘workmen’ under Section 2(l).

However, since the Factories Act does not govern the rights of employees with reference to recruitment, seniority, promotion, retirement benefits, etc, as these rights are governed by other rules and statutes; the Supreme Court ruled that the respondent-workmen’s contention that the workmen of statutory canteens become the employees of the management for all purposes, cannot be accepted.

The Supreme Court then considered the application of Raha’s case.[8] The respondent-workmen were applying Paragraph 54 of Raha’s[9] case to contend that the workmen should become employees of the management for all purposes, while the appellant management argued that they would become employees only for the limited purpose of the Factories Act. However, the Supreme Court observed that Raha’s[10] case did not specifically answer this question of whether the deemed employment of the workers was for all purposes or only for purposes of the Factories Act. Hence, the Supreme Court proceeded to read the Raha[11] judgment in its entirety and ruled that the deemed employment is only for the purposes of the Factories Act; because Paragraph 5 of the Khan[12] judgment which was referred to in the Raha[13] case said that “the employees of the statutory canteens were railway employees for the purposes of the Factories Act” – and therefore, if the argument of the respondent-workmen was to be accepted, then it would be contrary to the law laid down in Khan’s[14] case.

The Supreme Court applied the case of Management of Reserve Bank of India vs. Workmen[15] along with the Khan[16] case to hold that the workmen of a statutory canteen would be the workmen of the establishment only for the purpose of the Factories Act and not for all other purposes.

ISSUE II

The Supreme Court said that although the question of whether the respondent-workmen are employees of the appellant-management should normally be determined by a fact-finding tribunal, it had sufficient material to decide the question without the need for oral evidence. It noted that the Industrial Court’s order accepted the workmen’s contention that: (i)the management was indulging in an unfair labour practice, and (ii)the workmen were in fact employed by the management and were entitled to continue their employment in the company irrespective of change in contractors.

The Supreme Court ruled that the appellant-management’s acceptance of this final order of the Industrial Court showed that the nature of respondent-workmen’s employment in the management’s canteen was permanent. Moreover, since the canteen was a statutory canteen; and a perusal of the management and contractor’s contract clearly established that the contractor is nothing but an agent who works completely under the control of the management; the respondent-workmen were held to be the workmen of the appellant-management.

ISSUE III

The Supreme Court held that it is necessary for courts to lay down suitable guidelines/conditions during the process of regularisation of workmen. This is because: (i) the appointment of these workmen is not in accordance with the recruitment and reservation policy of the management; (ii) the respondent-management being an instrumentality of the State has an obligation to conform to Articles 14 and 16 of the Constitution; and (iii) the services of the workmen are being regularized by the Court not as a matter of right of the workmen arising under any statute but with a view to eradicating unfair labour practices, undo social injustice and facilitate labour welfare.

DECISION OF THE SUPREME COURT

The deemed employment of workmen in a statutory canteen is only for the purposes of the Factories Act and not for all other purposes. The respondent-workmen were employees of the appellant management. The High Court can impose conditions regarding the absorption of workmen as regular employees. The cross-appeals of the appellant management and the respondent-workmen were dismissed.

ANALYSIS

This case is extremely important because it addresses the issue of absorption of contract workers, and it has also been upheld in the updated decision of Steel Authority of India Ltd. vs. National Union Water Front Workers.[17] The SAIL[18] case is a controversial landmark judgment that prospectively overruled the Air India Statutory Corporation vs Labour Union case;[19] and held that contract labour had no right to be absorbed as regular workers by the principal employer on the abolition of the contract labour system. However, the SAIL[20] case retained the position settled in the Indian Petrochemicals case,[21] by saying that cases wherein the contractor are required to discharge the statutory obligation of the principal employer (e.g. statutory canteens) stand on a “different footing” and thus they shall be absorbed as regular employees of the establishment. The fact that this case has been upheld by a subsequent judgment lends strength to its accuracy of decision regarding the question of law. The author is in agreement with the decision of the court in the Indian Petrochemicals case.

Moreover, Indian Petrochemicals[22] is relevant for settling the position with regard to canteen employees because it provides a “new gloss”[23] to the earlier Raha[24] judgment which used to be the leading case on this topic. The Raha[25] case had ruled that workers employed in a statutory canteen become employees of the management; Indian Petrochemicals[26] went a step further and expanded upon this by ruling that this is applicable only for the purposes of the Factories Act and no further. Thus, it served the important role of clarifying the law laid down in the Raha[27] case. By limiting the absorption of employees for the purposes of the Factories Act only, it ensures that it does not cause conflict with any other laws or statutes which might be governing matters of regular employees; thereby ensuring that it does not give excessive legislative protection to regularized workmen.[28] Herein, the author appreciates the consonance of the judgment with the different labour laws of India.

This case also holds relevance for all future rulings on the matter of canteen workers because the subsequent decision of Indian Overseas Bank vs. I.O.B. Staff Canteen Workers’ Union and another,[29]embellished it further by adding that in cases of non-statutory-recognized-canteens, the court would have to find out whether the management’s obligation to run it was implicit or explicit using the facts of the case and the ordinary test of control to find out whether the employees were of the main establishment. The issue of statutory canteens is relevant for contemporary India because numerous factories and establishments employ canteen labour for their daily operational activities. This judgment serves the role of clarifying their status so that there is no confusion regarding their employment in the workplace. With the onset of the COVID-19 pandemic, wherein many workers lost their jobs, this judgment can prove to be helpful for canteen workers to establish their rights.

CONCLUSION

Contract workers have to suffer through unequal wage structures, lack of social security benefits, job insecurity, discrimination, and longer working hours than regular workmen.[30] This is why the IndianPetrochemicals[31] judgment is important, as it enables the regularization of statutory canteen workers, thus providing them with the benefits of regular workers. This provides much-needed relief to workers employed in a statutory canteen under a contractor. Such judgments are necessary to uplift the social and economic condition of workers, especially in today’s times of the COVID-19 crisis where contract workers are facing the brunt and magnitude of minimum wages and lack of social security even more than usual.

REFERENCES

[1]Indian Petrochemicals Corporation Ltd. And Another vs. Shramik Sena and Others, AIR 1999 SC 2577

[2] Dated 29.8.1997 in W.P. No. 2206/97.

[3]Parimal Chandra Raha & Ors. vs. Life Insurance Corporation of India & Ors, 1995 Indlaw SC 183

[4] (a) workmen should be complying with the minimum and the maximum age limits prescribed under the policy of the Corporation; (b) medically fit, (c) must have three years’ minimum service to their credit on the date of the present judgment; etc.

[5]Parimal Chandra Raha & Ors. vs. Life Insurance Corporation of India & Ors, 1995 Indlaw SC 183

[6]M.M.R. Khan & Ors. vs. Union of India & Ors, 1990 Indlaw SC 729

[7]Parimal Chandra Raha & Ors. vs. Life Insurance Corporation of India & Ors, 1995 Indlaw SC 183

[8]Parimal Chandra Raha & Ors. vs. Life Insurance Corporation of India & Ors, 1995 Indlaw SC 183

[9]“Whereas under the provisions of the Factories Act, it is statutorily obligatory on the employer to provide and

maintain canteen for the use of his employees, the canteen becomes a part of the establishment and,

therefore, the workers employed in such canteen are the employees of the management.” – Parimal Chandra Raha & Ors. vs. Life Insurance Corporation of India & Ors, 1995 Indlaw SC 183

[10]Parimal Chandra Raha & Ors. vs. Life Insurance Corporation of India & Ors, 1995 Indlaw SC 183

[11]Parimal Chandra Raha & Ors. vs. Life Insurance Corporation of India & Ors, 1995 Indlaw SC 183

[12]“The Act referred to in the aforesaid order obviously means the Factories Act. Therefore, what was

confirmed by this Court was the declaration given by the Calcutta High Court that the employees of the

statutory canteens were railway employees for the purposes of the Factories Act…..” – M.M.R. Khan & Ors. vs. Union of India & Ors, 1990 Indlaw SC 729

[13]Parimal Chandra Raha & Ors. vs. Life Insurance Corporation of India & Ors, 1995 Indlaw SC 183

[14]M.M.R. Khan & Ors. vs. Union of India & Ors, 1990 Indlaw SC 729

[15]Management of Reserve Bank of India vs. Workmen, [1996] 3 SCC 267

[16]M.M.R. Khan & Ors. vs. Union of India & Ors, 1990 Indlaw SC 729

[17]Steel Authority of India Ltd. Vs. National Union Water Front Workers, 2001 LLR 961

[18]Steel Authority of India Ltd. Vs. National Union Water Front Workers, 2001 LLR 961

[19]Air India Statutory Corporation vs Labour Union, 1997 LLR 288

[20]Steel Authority of India Ltd. Vs. National Union Water Front Workers, 2001 LLR 961

[21]Indian Petrochemicals Corporation Ltd. And Another vs. Shramik Sena and Others, AIR 1999 SC 2577

[22]Indian Petrochemicals Corporation Ltd. And Another vs. Shramik Sena and Others, AIR 1999 SC 2577

[23] Suresh C. Srivastava, IMPACT OF THE SUPREME COURT DECISION ON CONTRACT LABOUR: (Steel Authority of India Ltd. v. National Union Water Front Workers), Journal of the Indian Law Institute , October-December 2001, Vol. 43, No. 4 (October-December 2001), pp. 531-549, <https://www.jstor.org/stable/43953398> accessed 17 October 2020

[24]Parimal Chandra Raha & Ors. vs. Life Insurance Corporation of India & Ors, 1995 Indlaw SC 183

[25]Parimal Chandra Raha & Ors. vs. Life Insurance Corporation of India & Ors, 1995 Indlaw SC 183

[26]Indian Petrochemicals Corporation Ltd. And Another vs. Shramik Sena and Others, AIR 1999 SC 2577

[27]Parimal Chandra Raha & Ors. vs. Life Insurance Corporation of India & Ors, 1995 Indlaw SC 183

[28] B.D. Singh, ‘Contract Labour Issue: A Balanced Appraoch’, Indian Journal of Industrial Relations , Apr., 1999, Vol. 34, No. 4 (Apr., 1999), pp. 515-524, <https://www.jstor.org/stable/27767621> accessed 17 October 2020

[29]Indian Overseas Bank vs. I.O.B. Staff Canteen Workers’ Union and another, 2000(4) SCC 245

[30] Ashis Das and Dhananjay Pandey, ‘Contract Workers in India: Emerging Economic and Social Issues’, Indian Journal of Industrial Relations , Oct., 2004, Vol. 40, No. 2 (Oct., 2004), pp. 242-26, Published by: Shri Ram Centre for Industrial Relations and Human Resources, <https://www.jstor.org/stable/27767954> accessed 17 October 2020

[31]Indian Petrochemicals Corporation Ltd. And Another vs. Shramik Sena and Others, AIR 1999 SC 2577

CITE THIS WORK

Legal Maxim (October 26, 2021) IMPACT ON CANTEEN AND CONTRACT LABOUR: AN ANALYSIS OF THE SUPREME COURT JUDGEMENT IN THE CASE OF INDIAN PETROCHEMICALS CORPORATION LTD. AND ANOTHER VS. SHRAMIK SENA AND OTHERS. Retrieved from https://www.legalmaxim.in/impact-on-canteen-and-contract-labour-an-analysis-of-the-supreme-court-judgement-in-the-case-of-indian-petrochemicals-corporation-ltd-and-another-vs-shramik-sena-and-others/.
IMPACT ON CANTEEN AND CONTRACT LABOUR: AN ANALYSIS OF THE SUPREME COURT JUDGEMENT IN THE CASE OF INDIAN PETROCHEMICALS CORPORATION LTD. AND ANOTHER VS. SHRAMIK SENA AND OTHERS.” Legal Maxim – October 26, 2021, https://www.legalmaxim.in/impact-on-canteen-and-contract-labour-an-analysis-of-the-supreme-court-judgement-in-the-case-of-indian-petrochemicals-corporation-ltd-and-another-vs-shramik-sena-and-others/
Legal Maxim September 20, 2021 IMPACT ON CANTEEN AND CONTRACT LABOUR: AN ANALYSIS OF THE SUPREME COURT JUDGEMENT IN THE CASE OF INDIAN PETROCHEMICALS CORPORATION LTD. AND ANOTHER VS. SHRAMIK SENA AND OTHERS., viewed October 26, 2021,<https://www.legalmaxim.in/impact-on-canteen-and-contract-labour-an-analysis-of-the-supreme-court-judgement-in-the-case-of-indian-petrochemicals-corporation-ltd-and-another-vs-shramik-sena-and-others/>
Legal Maxim – IMPACT ON CANTEEN AND CONTRACT LABOUR: AN ANALYSIS OF THE SUPREME COURT JUDGEMENT IN THE CASE OF INDIAN PETROCHEMICALS CORPORATION LTD. AND ANOTHER VS. SHRAMIK SENA AND OTHERS. [Internet]. [Accessed October 26, 2021]. Available from: https://www.legalmaxim.in/impact-on-canteen-and-contract-labour-an-analysis-of-the-supreme-court-judgement-in-the-case-of-indian-petrochemicals-corporation-ltd-and-another-vs-shramik-sena-and-others/
IMPACT ON CANTEEN AND CONTRACT LABOUR: AN ANALYSIS OF THE SUPREME COURT JUDGEMENT IN THE CASE OF INDIAN PETROCHEMICALS CORPORATION LTD. AND ANOTHER VS. SHRAMIK SENA AND OTHERS.” Legal Maxim – Accessed October 26, 2021. https://www.legalmaxim.in/impact-on-canteen-and-contract-labour-an-analysis-of-the-supreme-court-judgement-in-the-case-of-indian-petrochemicals-corporation-ltd-and-another-vs-shramik-sena-and-others/
IMPACT ON CANTEEN AND CONTRACT LABOUR: AN ANALYSIS OF THE SUPREME COURT JUDGEMENT IN THE CASE OF INDIAN PETROCHEMICALS CORPORATION LTD. AND ANOTHER VS. SHRAMIK SENA AND OTHERS.” Legal Maxim [Online]. Available: https://www.legalmaxim.in/impact-on-canteen-and-contract-labour-an-analysis-of-the-supreme-court-judgement-in-the-case-of-indian-petrochemicals-corporation-ltd-and-another-vs-shramik-sena-and-others/. [Accessed: October 26, 2021]
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Author: Nayan Prakash

Designation: Final Year Law Student

University: Jindal Global Law School

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