In Haldia Refinery Canteen Employees Union V/s Indian Oil Corporation [2005 AIR (SCW) 2653], the question of under what circumstances an employer may be bound to absorb canteen workers has been answered by the Hon’ble Supreme Court.
In the present case, the Appellant workmen were working in the statutory canteen run by the Respondent Company through contractor in its factory at Haldia, West Bengal. The Respondent was treating the appellant workmen as the workmen of the contractor. Aggrieved by this, the workmen filed writ petitions in the High Court contending that the factory of the Respondent where the workmen are employed is governed by the provisions of Indian Factories Act 1948 (for short “the Factories Act”) and the canteen where the said workman are employed is a statutory canteen established by the Respondent as required under Section 46 of the Act. It is averred in the petition that the canteen is maintained for the benefit of the workmen employed in the factory and the Respondent has direct control over them. Contractor though shown as a contractor has no control over the management, administration and functioning of the canteen. That the canteen is a part of the establishment of the management and the workers in the canteen are the employees of the management. That the work carried on is perennial in nature and the canteen is incidental to and is connected with the establishment of the management.
The Hon’ble Court, relying upon a number of its previous decisions, observed that the answer to such a question lay entirely in the terms of agreement, nature and performance of work and relationship between the canteen contractor and the employer. If the performance of work in the canteen is supervised by the employer or his executives and the allotment of work and preparation of food is directed by the employer and the wages paid to the workers are reimbursed by the employer, it may be held that they are directly employed workers of the employer. However, in the event the canteen is run by a contractor who looks after the entire workings of the canteen and if there is no or little interference in the management of the canteen by the employer, the workers therein may be treated as contract workmen.
In the present case, a free hand had been given to the contractor with regard to the engagement of the employees working in the canteen. There was no stipulation of the contract, that the employees working in the canteen at the time of the commencement of the contract must be retained by the contractor, the management was not reimbursing the wages of the workmen engaged in the canteen, the contractor was made liable to pay provident fund contribution, leave salary, medical benefits to his employees and to observe statutory working hours etc., the contractor had been made responsible for the proper maintenance of registers, records and accounts so far as compliance of any statutory provisions/obligations are concerned and a duty was cast on the contractor to keep proper records pertaining to payment of wages etc., and also for depositing the provident fund contributions with authorities concerned. Further, the Contractor has been made liable to defend, indemnify and hold harmless 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 employees of the contractor, third party or by Central or State Government Authorities. As opposed to this, the management only kept a check over the quality of service provided to its employees by the canteen. The management had nothing to do with either the appointment or taking disciplinary action or dismissal or removal from service of the workmen working in the canteen. The Hon’ble Court observed that, only because the management exercised such control did not mean that the employees working in the canteen were the employees of the management. It was therefore concluded by the Hon’ble Court that the appellant workmen did not become the workers of the management.