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Thursday, November 14, 2013

Whether the workers appointed on temporary basis in the canteens of AIR INDIA are employees of AIR INDIA or not and are entitled for the benefits – CONTROVERSIAL JUDGMENTS AROSE BETWEEN DIVISION BENCH OF APEX COURT = BALWANT RAI SALUJA & ANR. ETC. ETC. … APPELLANTS VERSUS AIR INDIA LTD. & ORS. …RESPONDENTS = published in

Whether the workers appointed on temporary basis in the canteens of AIR INDIA are employees of AIR INDIA or not and are entitled for the benefits  - CONTROVERSIAL JUDGMENTS AROSE BETWEEN DIVISION BENCH OF APEX COURT =

Confirmed the single judge and Division Bench judgment and dismissed the appeal.
whether the demand  of  the  workmen  employed  by
Chef Air to provide canteen service to be treated  as  deemed  employees  of the management of Air India  is  justified  and,  if  so,  what  relief  the workmen are entitled to?

V. GOPALA GOWDA, J. – set aside the judgments of single and Division Bench of High court and confirmed  Award passed by Tribunal 

1) Whether the canteen which is run through HCI  from  its  Chefair
           unit by the Management of Air India, is the statutory canteen of
           it under Rules 65 to 70 of the Delhi Factories Rules of 1950?
        2) Whether engaging the contract workmen in the canteen situated in
           the premises of Air  India  through  HCI  amounts  to  sham  and
           camouflage by Air India to deprive the legitimate statutory  and
           fundamental rights of the concerned workmen  as  provided  under
           the  provisions  of  the  Industrial  Disputes   Act   and   the
           Constitution and can this Court pierce the veil to find out  and
           ascertain the real and correct facts as to whether they are  the
           workmen of Air India?
        3) Whether the findings and reasons recorded by  the  CGIT  on  the
           points of disputes in the common award dated 5th May, 2004 in ID
           Nos. 97, 98, 99, 107 and 108 of 1996 are legal and valid?
  4) Whether the findings recorded by the learned single Judge in CWP
           No.14178, 14181 and 14182 of 2004 which are  concurred  with  by
           the Division Bench in LPA Nos.388, 390 and 391  of  2010  suffer
           from  erroneous  reasoning  and  error  in   law   and   warrant
           interference by this Court?
        5) What award the concerned workmen are entitled to?


                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                    CIVIL APPEAL Nos.10264-10266 OF 2013
(@SPECIAL LEAVE PETITION (C) NOS. 24946-24948 OF 2011)

& ANR. ETC. ETC.                  … APPELLANTS



                               J U D G M E N T


      Leave granted.
      Air India Limited was constituted  under  the  Air  Corporations  Act,
1953.  By  virtue  of  Section  3  of  the  Air  Corporations  (Transfer  of
Undertakings and Repeal) Act, 1994, Air India has vested in Indian  Airlines
Limited.  It has Ground Services Department at Indira  Gandhi  International
Airport, Delhi.  Respondent No. 2 is Hotel Corporation of India, which is  a
Government Company incorporated under the  Companies  Act.   The  authorized
share capital of the Hotel Corporation of India, hereinafter referred to  as
the Corporation, is Rupees 10 crores, divided into 10  lakhs  equity  shares
of Rs. 100/- each.  The Corporation is a  wholly  owned  subsidiary  of  Air
India and its entire share capital is held by Air  India  and  its  nominee.
Excepting 6 shares, 4,99,994 shares have been subscribed by  Air  India  and
rest by its nominees. Air India controls the composition  of  the  Board  of
Directors and appoints Directors in  consultation  with  the  Government  of
India.  The power to remove the Directors from office before the  expiry  of
the term is vested with Air India, in consultation with  the  Government  of
India, so also  the  power  to  fill  up  the  vacancies  caused  by  death,
resignation,  retirement  or   otherwise.    General   management   of   the
Corporation  is  vested   in   the   hands   of   the   Managing   Director.
Notwithstanding that, Air India is conferred with the power  to  issue  such
directions or instructions as it may think fit in  regard  to  the  finances
and the conduct of the business and affairs of  the  Corporation.  Duty  has
been cast upon the Corporation to  comply  with  and  give  effect  to  such
directions and instructions.  The main objects for which the Corporation  is
incorporated are large and include carrying the business of hotels,  motels,
restaurants, cafés, kitchens, refreshment rooms, canteens  and  depots  etc.
in general and its incidental and ancillary  objects  are  establishment  of
catering and opening hotels, which would tend to promote or  assist  in  Air
India’s business as an international air carrier.  Respondent  No.  3,  Chef
Air Flight Catering, hereinafter referred to as ‘Chef Air’, is  one  of  the
units of the Corporation.

      Section 46 of the Factories Act, inter  alia,  confers  power  on  the
State Government to make rules requiring  a  specified  factory  where  more
than 250 workers are ordinarily employed, to provide and maintain a  canteen
for the use of the workers.  In exercise of the aforesaid  power,  Rules  65
to 71 have been incorporated in the Delhi Factory Rules,  1950,  hereinafter
referred to as ‘the Rules’.  Rule 65(1) was to come into  force  in  respect
of any class or  description  of  factories  on  such  dates  as  the  Chief
Commissioner may by notification in  the  Official  Gazette  appoint.   Rule
65(2) of the Rules, inter alia, contemplates  that  the  occupier  of  every
factory notified by the Chief Commissioner, where more than 250 workers  are
ordinarily employed, shall provide  in  or  near  the  factory  an  adequate
canteen in accordance with the  standard  prescribed  in  those  Rules.   In
pursuance of the provisions of sub-rule (1) of Rule 65  of  the  Rules,  the
Lieutenant-Governor of the Union Territory of Delhi, by notification in  the
Official Gazette, dated 21st of January, 1991, directed that Rules 65 to  70
of the Rules shall apply to the factories specified in the said  Rules  with
effect from the date of publication of  the  notification  in  the  Official
Gazette. It included M/s.  Air  India  Ground  Services  Department,  Indira
Gandhi International Airport, Delhi (Engineering Unit).

      The workmen working in Air India Ground Services  Department  Canteen,
hereinafter referred to as ‘the Canteen’, raised an industrial  dispute  and
the  competent  Government  made  a  reference  to  the  Central  Government
Industrial Tribunal as to whether the demand  of  the  workmen  employed  by
Chef Air to provide canteen service to be treated  as  deemed  employees  of
the management of Air India  is  justified  and,  if  so,  what  relief  the
workmen are entitled to?  The workmen laid their  claim  and,  according  to
them, they were employed by Air India on casual basis  in  the  Canteen  and
their employment was through Chef Air, which is a unit of  the  Corporation.
According to the workmen, the Corporation has entered into a  contract  with
Air India to run and maintain the canteen and for that  purpose,  they  were
initially appointed for a period of 40 days  and  said  period  used  to  be
extended from time to time and in  this  way  each  of  them  had  completed
service for 240 days in a year.  According to the workmen, they were  called
for interview on several occasions but had not  been  selected  and  on  the
contrary, persons junior to them have been regularized.   The  workmen  have
further alleged that  Air  India  had  entered  into  a  contract  with  the
Corporation to deny the workmen their legitimate right by circumventing  the
various provisions of the Contract Labour (Regulation  and  Abolition)  Act,
1970.  According to them, they were performing duties  of  a  permanent  and
perennial nature required by Air India but were being paid wages  less  than
the regular employees.  Case of the workmen  further  is  that  issuance  of
letters of appointment for 40 days with artificial break in  service  is  an
unfair  labour  practice  and  on  the   aforesaid   grounds   they   sought
regularization of the services with back wages in  Air India.

      Air India resisted the claim of the workmen, inter alia, stating  that
they were not their employees and  relationship  of  employer  and  employee
does not exist between them.  According to them, Chef Air is a unit  of  the
Corporation  engaged  in  various  businesses  including  establishing   and
running of canteens.  According to Air India, the Canteen is being  run  and
maintained by the Corporation on the basis of a fixed subsidy  per  employee
provided by them.  It is a specific assertion of Air India  that  they  have
no control over the  workmen  and  that  their  conditions  of  service  are
governed by the Rules and Regulations of the  Corporation.   Air  India  has
admitted that the infrastructure of the Canteen was  provided  by  them  but
its management is in the hands of the Corporation.  Air  India  has  further
pointed out that letters of appointment, token numbers, ESI cards etc.  have
been issued to the workmen by the Corporation and,  hence,  the  prayer  for
regularizing their services by Air India is  misconceived.   Air  India  has
denied that  the  Canteen  in  question  is  a  statutory  canteen  and  was
employing more than 250 workers.

       On  the  basis  of  the  materials  placed  on  record,  the  Central
Government Industrial Tribunal, hereinafter referred to as  “the  Tribunal”,
came to the conclusion that the Corporation is 100% subsidiary of Air  India
and the Canteen in question is  a  statutory  Canteen  established  for  the
welfare of  more  than  2,000  workers.   The  Tribunal  also  came  to  the
conclusion that the Canteen is established within the premises of Air  India
and  the  Corporation  carries  on  its  business  under  the  control   and
administration of Air India.  According to the Tribunal, the running of  the
Canteen by the Corporation in respect of the statutory  duty  of  Air  India
cannot be  said  to  be  its  independent  act.  Accordingly,  the  Tribunal
observed that hiring of employees for running the statutory canteen  by  the
Corporation is a camouflage and the workmen  employed  in  the  Canteen  are
deemed employees of Air India.  Thus, the Tribunal held the  demand  of  the
workers to be justified and finding that the workmen  have  been  terminated
from their services during  the  pendency  of  the  dispute  held  that  the
termination is illegal and, accordingly, set aside the termination of  their
employment and directed reinstatement with 50% back wages.

      Assailing the aforesaid award of the  Tribunal,  Air  India  preferred
writ petition before the      High Court.

      The learned Single Judge held that Air India is  the  sole  holder  of
the shares of the Corporation but it is a separate  legal  entity  which  is
independent of its shareholders.  The authority  to  issue  directions  does
not merge the  identity  of  the  Corporation  with  the  shareholder.   The
learned Single Judge accordingly held as follows:

           “……Thus, in my view the mere fact of HCI being a 100% subsidiary
           of Air India and the aforesaid peculiar Articles of  Association
           would not be decisive of whether the employees aforesaid of  HCI
           and working in the canteen of Air India are  to  be  treated  as
           employees of Air India or not.”

      As regards the grievance of the workmen that Air India had devised  to
employ the workmen through  a  unit  of  the  Corporation  to  defeat  their
rights, the learned Single Judge observed as follows:

           “19. One thing which emerges is that in  the  present  case,  no
           motive to defeat any rights  of  the  employees,  in  Air  India
           entering into a contract with Chef  Air  (a  unit  of  HCI)  for
           operating its canteen, even if it be a  statutory  canteen  have
           been established.  It was not as if by employing workmen in  HCI
           instead of in Air India, the workmen were being  made  employees
           of a weaker entity against whom they can claim no rights.  After
           all HCI is also a Government of India company as Air India is.”

      The learned Single Judge further  came  to  the  conclusion  that  the
Corporation was not incorporated for  the  sole  purpose  of  operating  the
Canteen for Air India but was set up as a legal entity to carry on  business
in diverse fields.   According  to  the  learned  Single  Judge,  Air  India
engaged the Corporation which has expertise in the field to run and  operate
the Canteen and that will not make the workmen employees of Air India.   The
learned Single Judge ultimately held as follows:

           “23. HCI in the present case is seen as one such expert. It  has
           been providing flight catering services to Air India  and  other
           airlines  besides  carrying  on  other  allied  businesses.   As
           aforesaid, HCI was not incorporated merely to run the canteen of
           Air India so as to keep  the  employees  of  the  said  canteen,
           managed through the medium of HCI,  at  arm’s  length  from  Air
           India. HCI is a business entity in its own  right  and  no  mala
           fides  have  been  established  in  Air  India  entrusting   the
           operation and management of the canteen  aforesaid  to  HCI.  As
           aforesaid, in spite of repeated asking, no prejudice is shown to
           have been caused to the workmen in them being the  employees  of
           the HCI instead of Air India. Of my own I can  only  gauge  that
           may be as employees of Air India they may be entitled to a  free
           flight once in a while and which they may not be entitled to  as
           an employee of HCI. However, that is hardly determinative of the
           matter in controversy. Again it  is  not  as  if  Air  India  is
           attaining to offload its canteen employees to an entity which is
           sick or near the stage of being closed down. HCI is informed  to
           be a running concern.”

      Accordingly, it set aside the award passed by the Tribunal.

      The workmen, aggrieved by the same, preferred  an  appeal  before  the
Division Bench of the High Court.  The Division Bench framed  the  following
question for its consideration:

           “11. The core issue that emanates for consideration  is  whether
           in the  obtaining  factual  matrix  it  can  be  held  that  the
           employees of  the  canteen  established  by  Air  India  in  its
           premises and run by the HCI be treated as regular  employees  of
           Air India. Before we advert to the factual canvas, we  think  it
           appropriate to refer to the citations in the field, cull out the
           principles and  analyse  whether  they  are  applicable  to  the
           material brought on record.”

      The Division Bench of the High Court analysed the facts,  referred  to
the various decisions of this Court and ultimately came  to  the  conclusion
that the Corporation is a separate entity and not a part  of  Air  India  as
found by the Tribunal.  It endorsed the finding of the learned Single  Judge
that merely because the Articles of Association confer power  on  Air  India
to issue such directions or instructions as it may think fit  in  regard  to
conduct of  the  business  and  affairs  of  the  Corporation  and  make  it
obligatory for the Corporation to carry  on  the  direction  of  Air  India,
would not merge the identity of the shareholders with the Corporation.   The
Division Bench ultimately affirmed the decision of the learned Single  Judge
and, while doing so, observed          as follows:
           “20. On the basis of  the  aforesaid  enunciation  of  law,  the
           factual matrix is required to be tested. As is  manifest,  there
           is no material on record to show that the respondent - Air India
           had any role in the appointment of the employees in the canteen.
           No administrative or disciplinary action could be taken  by  the
           respondent against  the  canteen  workers.  The  respondent  had
           itself not undertaken the obligation to run the canteen but  had
           only provided facility so that its  employees  could  avail  the
           canteen facilities. It is not a case where the employees of  the
           canteen were enlisted under a  welfare  fund  scheme,  provident
           fund scheme and medical scheme of the respondent  –  management.
           The responsibility to run the canteen was  absolutely  with  the
           HCI and it was totally a contractual  relationship  between  the
           two. Air India had no say in the selection or other  affairs  of
           the canteen workers.”

     Mr.  Jayant  Bhushan,  Senior  Advocate  appearing  on  behalf  of  the
appellants submits that the obligation to provide for the  Canteen  is  with
Air India and, therefore, the workmen are entitled to be  treated  as  their
employees and Air India their employer.  It is further  contended  that  Air
India has a large role to play  in  the  operation  and  management  of  the
Canteen and, in the circumstances, the  veil  of  the  contract  has  to  be
lifted and this Court is competent to do so to  arrive  at  the  truth.   In
support of the submission reliance has been placed  on  a  large  number  of
decisions of  this  Court.  I  do  not  have  the  slightest  hesitation  in
accepting this broad submission  of  Mr.  Bhushan  and,  hence,  I  deem  it
unnecessary to refer to all those decisions.  It is well  settled  that  the
court can lift the  veil,  look  to  the  conspectus  of  factors  governing
employment, discern the naked truth  though  concealed  intelligently.   The
court has to be astute in piercing  the  veil  to  avoid  the  mischief  and
achieve the purpose of law. It cannot be swayed  by  legal  appearance.  The
court’s duty is to find out whether contract between the principal  employer
and the  contractor  is  sham,  nominal  or  merely  a  camouflage  to  deny
employment benefits to           the workmen.

      Once the veil is pierced, the control of Air India is writ large  over
the Corporation, submits   Mr. Bhushan.  He points out that the  Corporation
is a wholly owned subsidiary of Air India which controls the composition  of
the Board of Directors and appoints and removes  Directors  in  consultation
with the Government of India.  According to him, the general  management  of
the Corporation is vested in its Managing Director.   Notwithstanding  that,
Air India is conferred with the power to issue  directions  or  instructions
as it may think fit in regard  to  the  finances  and  the  conduct  of  the
business and affairs of the Corporation and, hence, the workmen employed  by
the Corporation are, in fact, the employees of Air India.  Mr.  C.U.  Singh,
however, submits that notwithstanding the  aforesaid  power  vested  in  Air
India, the Corporation is still a separate legal entity.  The fact that  its
entire share is held by Air India or Air India has the power to appoint  the
Board of Directors, issue directions etc., will not denude the legal  status
of the Corporation as a Government  company.   The  fact  that  the  Canteen
required to be provided by  Air  India  is  being  run  by  the  Corporation
through one of its units Chef Air will not  make  Air  India  its  principal
employer.  He points out that in order to determine the  principal  employer
one is required to see as to who is paying the salary,  who  is  supervising
the work, the role played in  selection  and  appointment  of  the  workmen,
disciplinary control over them and whether such employees are covered  under
the welfare scheme of Air India etc.  He points out that the  responsibility
to run the Canteen is with the Corporation and, hence, Air India  cannot  be
treated as its principal employer.  According to him, the Corporation  is  a
separate legal entity and even though Air India is a  holding  company,  the
Corporation  shall  still  be  a  separate  legal  entity.    Further,   the
Corporation is not subservient  to  Air  India  but  is  a  servant  to  its
Memorandum of Association and Articles of Association.  In  support  of  the
submission, reliance has been placed on a decision  of  this  Court  in  the
case of Heavy Engineering Mazdoor Union v. State  of  Bihar,  (1969)  1  SCC
765.  Paragraph 5 of the judgment reads as under:

           “5. It is  true  that  besides  the  Central  Government  having
           contributed the  entire  share  capital,  extensive  powers  are
           conferred on it, including the power to give  directions  as  to
           how the company should function, the power to appoint  directors
           and even the power to determine the wages and  salaries  payable
           by the company to its employees. But these  powers  are  derived
           from the company's memorandum of association and the articles of
           association and not by reason of the company being the agent  of
           the Central Government. The question whether a corporation is an
           agent of the State must depend on the facts of each case.  Where
           a  statute  setting  up  a  corporation  so  provides,  such   a
           corporation can easily be identified as the agent of  the  State
           as in Graham v. Public Works Commissioners,  1901  (2)  KB  781,
           where Phillimore J. said that the Crown does  in  certain  cases
           establish with the consent of Parliament  certain  officials  or
           bodies who are to be treated as agents of the Crown even  though
           they have the power of contracting as principals. In the absence
           of a statutory  provision,  however,  a  commercial  corporation
           acting on its own behalf, even though it is controlled wholly or
           partially  by  a  Government  Department,  will  be   ordinarily
           presumed not to be a servant or agent of  the  State.  The  fact
           that  a  minister  appoints  the  members  or  directors  of   a
           corporation and he is entitled to call for information, to  give
           directions which are binding on the directors and  to  supervise
           over the conduct of the business of  the  corporation  does  not
           render the corporation an agent  of  the  Government.  (See  The
           State Trading Corporation of India Ltd. v.  The  Commercial  Tax
           Officer, Visakhapatnam, 1964 (4) SCR 99 at 188, per Shah, J. and
           Tamlin v. Hannaford,  1950  (1)  KB  18  at  25,  26).  Such  an
           inference that the corporation is the agent  of  the  Government
           may be drawn where it is performing  in  substance  governmental
           and not commercial functions. (Cf. London County Territorial and
           Auxiliary Forces Association v. Nichol's., 1948 (2) All ER 432.”

                                        (underlining mine)

      Mr. Singh has also drawn my attention to a Constitution Bench judgment
of this Court in the case of Steel  Authority  of  India  Ltd.  v.  National
Union Waterfront Workers, (2001) 7 SCC 1, in  which  it  has  been  held  as

        “41. …………The President of India appoints Directors of  the  Company
        and  the  Central  Government  gives  directions  as  regards   the
        functioning of the Company. When disputes arose between the workmen
        and the management of the Company, the Government of Bihar referred
        the disputes to the Industrial Tribunal for adjudication. The union
        of the workmen raised an objection that the appropriate  Government
        in that case was the Central Government,  therefore,  reference  of
        the disputes to the Industrial Tribunal  for  adjudication  by  the
        State Government was incompetent. A two-Judge Bench of  this  Court
        elaborately dealt with the question of appropriate  Government  and
        concluded that the mere fact that  the  entire  share  capital  was
        contributed by the Central Government and the  fact  that  all  its
        shares were held by the President of India and certain officers  of
        the Central Government, would not make any difference. It was  held
        that  in  the  absence  of  a  statutory  provision,  a  commercial
        corporation  acting  on  its  own  behalf,  even  though   it   was
        controlled, wholly or partially, by a government  department  would
        be ordinarily presumed  not  to  be  a  servant  or  agent  of  the

      I have considered the rival submissions  and  find  substance  in  the
submission of Mr. Singh  and  the  authorities  relied  on  do  support  his
contention.   The  Corporation  undisputedly  is  a  Government  Corporation
incorporated under the Companies Act.   It  is  a  legal  entity  altogether
different from its shareholders.  In my opinion, the fact that Air India  or
its nominee are the shareholders of the Corporation and  in  the  management
of business and finances, it is subject to  the  directions  issued  by  Air
India in terms of the Memorandum of Association and Articles of  Association
shall not merge the Corporation’s identity in shareholders.  In my  opinion,
the Corporation is a separate legal entity, not  subservient  to  Air  India
but a servant to its Memorandum of Association and Articles of  Association.

      Mr. Bhushan, then submits that the Corporation may be a separate legal
entity but Air India’s control over the affairs of the Canteen makes it  the
principal employer.  He points out that many of  the  articles  for  running
the Canteen were purchased by Air India and, in fact, grievances  pertaining
to running of the Canteen were entertained by it.  These, according  to  the
learned counsel, clearly show that Air India is the principal employer.

      I have bestowed my consideration to the aforesaid submission, but find
no substance in the same.  Few of the well recognized tests to find out  the
real relationship are whether the principal employer:

       1) pays the salary to the workmen instead of the contractor,
       2) controls and supervises the work of the employees,
       3) has role in selection and appointment of the employees, and
       4) acts as a disciplinary authority over the conduct  and  discipline
          of the employees.

      Reference in this connection can be made to a decision of  this  Court
in the case of Haldia Refinery Canteen Employees Union and Others v.  Indian
Oil Corporation Ltd. & Ors. (2005) 5 SCC 51, wherein it  has  been  held  as

           “16…..It has nothing to do with either the appointment or taking
           disciplinary action or dismissal or removal from service of  the
           workmen working in the canteen.   Only  because  the  management
           exercises such control does not mean that the employees  working
           in the canteen  are  the  employees  of  the  management.   Such
           supervisory control is being  exercised  by  the  management  to
           ensure that the workers employed are well qualified and  capable
           of rendering proper service to the employees of the management.”

                                     (underlining mine)

      In  the  case  of  International  Airport  Authority   of   India   v.
International Air Cargo Workers'  Union,  (2009)  13  SCC  374,  this  Court
echoed the same view and observed as follows:
           “38. The tests that are applied to find out whether a person  is
           an employee or an independent contractor may  not  automatically
           apply in finding out whether the contract labour agreement is  a
           sham, nominal and is a mere  camouflage.  For  example,  if  the
           contract is  for  supply  of  labour,  necessarily,  the  labour
           supplied by the  contractor  will  work  under  the  directions,
           supervision and control of the principal employer but that would
           not make the worker a direct employee of the principal employer,
           if the salary is paid by a contractor, if the right to  regulate
           the  employment  is  with  the  contractor,  and  the   ultimate
           supervision and control lies with the contractor.

           39. The principal employer only controls and directs the work to
           be  done  by  a   contract   labour,   when   such   labour   is
           assigned/allotted/sent to him.  But  it  is  the  contractor  as
           employer,  who   chooses   whether   the   worker   is   to   be
           assigned/allotted to the principal employer or  used  otherwise.
           In short, worker being  the  employee  of  the  contractor,  the
           ultimate supervision and control lies with the contractor as  he
           decides where the employee will work and how long he  will  work
           and  subject  to  what  conditions.  Only  when  the  contractor
           assigns/sends the worker to work under the  principal  employer,
           the worker works  under  the  supervision  and  control  of  the
           principal employer but that is secondary  control.  The  primary
           control is with the contractor.”

      This Court has taken the same view in General Manager,  (OSD),  Bengal
Nagpur Cotton Mills, Rajnandgaon v. Bharat Lal, (2011) 1 SCC 635,  in  which
it has been held as follows:
           “10. It is now well settled that if the  industrial  adjudicator
           finds that the contract between the principal employer  and  the
           contractor to be a sham, nominal or merely a camouflage to  deny
           employment benefits to the employee and that there was in fact a
           direct employment, it  can  grant  relief  to  the  employee  by
           holding that the workman is the direct employee of the principal
           employer. Two of the well-recognised tests to find  out  whether
           the contract labourers are the direct employees of the principal
           employer are: (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.  In
           this case, the Industrial Court answered both questions  in  the
           affirmative and as a consequence held that the first  respondent
           is a direct employee of the appellant.”

      Bearing in mind the principles aforesaid, when I proceed  to  consider
the facts of the present case, I find that Air India does  not  fulfill  the
test laid down so as to treat it as the principal employer.  It is  not  the
case of the workmen that  it  is  Air  India  which  pays  their  emoluments
instead of the Corporation.  Air India has neither  any  role  in  selection
and appointment of the workmen nor it controls and  supervises  their  work.
It is further not their case that Air India is their disciplinary  authority
over their conduct and discipline.  In my  opinion,  Air  India,  by  giving
subsidy at a specified rate or for that matter purchasing few  articles  for
the Canteen on its  behalf  and  further  bringing  to  the  notice  of  the
Corporation the complaint in regard to the functioning of the Canteen,  will
not make it the principal employer.  As has rightly  been  observed  by  the
High Court, the Corporation is a Government company like Air India  and  the
workmen in no way will be prejudiced if they continue to be   the  employees
of the Corporation.  In my opinion, there does not seem to be any mala  fide
or oblique motive in Air India entering into a contract  with  Chef  Air,  a
unit of the Corporation for operating its Canteen.  Certainly, it is not  to
defeat the rights of the workmen.

      Mr. Bhushan, lastly submits that  the  workmen  were  engaged  in  the
Canteen provided by Air India in compliance  of  Rule  65(2)  of  the  Rules
framed in exercise  of  powers  under  Section  46  of  the  Factories  Act.
According to him, the workmen of a statutory canteen have to be  treated  as
employees of such establishment whose  obligation  is  to  provide  for  the
Canteen.  In  the  case  in  hand,  according  to         Mr.  Bhushan,  the
obligation to provide for the Canteen is with Air India and, therefore,  the
workmen are entitled to be treated as their employees and  Air  India  their
employer.  In support of the  submission  reliance  has  been  placed  on  a
decision of this Court in the case of M.M.R. Khan v. Union  of  India,  1990
Supp SCC 191, and my attention  has  been  drawn  to  Paragraph  39  of  the
judgment which reads as follows:

           “39. The result, therefore, is that the workers engaged  in  the
           statutory canteens as well as  those  engaged  in  non-statutory
           recognised canteens in the railway  establishments  are  railway
           employees and they are entitled  to  be  treated  as  such.  The
           Railway Board has already treated the employees of all statutory
           and 11 Delhi based         non-statutory recognised canteens  as
           railway employees w.e.f. October 22, 1980. The employees of  the
           other    non-statutory recognised  canteens  will,  however,  be
           treated as railway employees w.e.f. April 1, 1990.  They  would,
           therefore, be entitled to all benefits as such railway employees
           with effect  from  the  said  date,  according  to  the  service
           conditions prescribed for them under the relevant rules/orders.”

      Reliance has also been placed on  a  Constitution  Bench  decision  of
this Court in the case of Steel Authority of India Ltd. (supra) referred  to
by the learned counsel for Air India also and my attention  has  been  drawn
to paragraph 107 thereof, which records as follows:

           “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 but present instances wherein the Court  pierced
           the veil and declared the correct position  as  a  fact  at  the
           stage after employment  of  contract  labour  stood  prohibited;
           (iii)  where  in  discharge  of  a   statutory   obligation   of
           maintaining a canteen in an establishment the principal employer
           availed the services of a contractor the courts have  held  that
           the contract  labour  would  indeed  be  the  employees  of  the
           principal employer.”

      According to Mr. Bhushan, the  Constitution  Bench  judgment  clinches
the issue.  I do not find any substance in the  submission  of  Mr.  Bhushan
and the authorities relied on are clearly distinguishable.  In  my  opinion,
the obligation to provide Canteen is by itself  not  decisive  to  determine
the  status  of  workmen  employed  in  the  Canteen.   Reference  in   this
connection can be made to a  decision  of  this  Court  in  Workmen  of  the
Canteen of Coates of India Ltd. v. Coates of India Ltd. & Ors. (2004) 3  SCC
547 wherein it has been held as follows:

           “4………..It is sufficient for us to state  that  some  requirement
           under the Factories Act of providing a canteen in the industrial
           establishment, is by itself not  decisive  of  the  question  or
           sufficient to determine the status of the  persons  employed  in
           the canteen.”

                                        (underlining mine)

      The aforesaid submission has squarely been dealt with  by  this  Court
in the case  of  Hari  Shankar  Sharma  v.  Artificial  Limbs  Manufacturing
Corpn., (2002) 1 SCC 337, and this Court in  no  uncertain  terms  has  held
that as an absolute proposition of law it cannot be said that  “whenever  in
discharge of statutory mandate a canteen  is  set  up  or  other  facilities
provided by the establishment, the employee of the  canteen  or  such  other
facility become the employee of that establishment”.   Relevant  portion  of
the judgment reads as follows:

           “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 provision of any other  statute  been
           pointed out to us by the appellants, which provides for the mode
           in which the specified establishment  must  set  up  a  canteen.
           Where  it  is  left  to  the  discretion  of  the  establishment
           concerned to discharge its obligation of setting  up  a  canteen
           either by way of  direct  recruitment  or  by  employment  of  a
           contractor, it cannot be postulated that in  the  latter  event,
           the persons working in the canteen would be the employees of the
           establishment. Therefore, even assuming that Respondent 1  is  a
           specified industry within the  meaning  of  Section  46  of  the
           Factories Act, 1946, this  by  itself  would  not  lead  to  the
           inevitable conclusion that the employees in the canteen are  the
           employees of Respondent 1.”

      Now referring to the authority of this Court in  the  case  of  M.M.R.
Khan (supra), the same is clearly distinguishable.  In  this  case,  it  has
been held that the workmen engaged in the  statutory  canteens  as  well  as
those engaged in non-statutory recognized  canteens  are  railway  employees
and they have to be treated as such.   This  Court  came  to  the  aforesaid
conclusion as, on fact, it was found that though the workmen  were  employed
in  the  canteen  through  the  device  of  a  labour  contract,  they  were
essentially working  under  the  control  and  supervision  of  the  railway
establishment.   Further,  the  provision  for  running  and  operating  the
canteen was in  the  Establishment  Manual  of  the  Railways.  Under  these
circumstances, this Court came to the conclusion that  the  workmen  engaged
in the statutory canteens were, in fact, the  railway  employees.   No  such
facts exist in the present case.

      In the Steel Authority of India Ltd.(supra),  the  Constitution  Bench
observed that the authorities of this Court show that  they  fall  in  three
classes including the aforesaid class but  it  has  not  endorsed  the  said
view.  In fact, the decisions which  I  have  referred  to  in  the  earlier
paragraphs of this judgment negate this contention.  I have tested the  case
of the workmen on the touchstone of the principles laid down by  this  Court
and find that they do not satisfy those tests so as to hold that  Air  India
is the principal employer.

      Having found no substance in any of the submissions made on behalf  of
the appellants, I do not find any  merit  in  these  appeals  and  they  are
dismissed accordingly, but without any order as      to costs.


                                                   (CHANDRAMAULI KR. PRASAD)

NOVEMBER 13, 2013

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                    CIVIL APPEAL NOS.10264-10266 OF 2013
              (Arising out of SLP (C) Nos. 24946-24948 of 2011)



AIR INDIA LTD. & ORS.                      … RESPONDENTS

                               J U D G M E N T


      Leave granted.

2.    I have gone through the judgment of my learned brother Judge in  these
civil appeals, in which my learned brother  Judge  has  concurred  with  the
impugned judgment.  However,  I  am  in  respectful  disagreement  with  the
opinion of my learned brother and I am recording my reasons for the same.

      These appeals have  been  filed  by  the  appellants  challenging  the
judgment and order dated 2nd May, 2011 passed in  L.P.A.  Nos.388  of  2010,
390 of 2010 and 391 of 2010 confirming the  judgment  and  order  dated  8th
April, 2010 of the learned single Judge of the Delhi High  Court  passed  in
WP Nos.14178 of 2004, 14181/2004 and 14182  of  2004,  wherein  the  learned
single Judge has set aside the common award  dated  5th  May,  2004  of  the
Central  Government  Industrial  Tribunal  (for  short  ‘CGIT’)  passed   in
Industrial Disputes case Nos. 97, 98 and 99 of 1996. The CGIT recorded  that
the concerned workmen of Chefair, a unit of Hotel Corporation of India  (for
short HCI) with which Air India had  entered  into  a  contract  to  provide
canteen services at its establishment, are entitled to be treated  as  being
employees of it and consequently held that they are entitled to  the  relief
sought for by them. The said judgment of CGIT was set aside by the  Division
Bench of the Delhi High Court in LPA Nos.388 of 2010, 390 of  2010  and  391
of 2010 vide its judgment dated 2nd May, 2011  after  adverting  to  certain
relevant facts, legal contentions and cases  like  M.M.R.  Khan  &  Ors.  v.
Union of India & Ors.[1],  and  some  other  decisions  of  this  Court  and
concurred with the finding of facts and  reasons  recorded  by  the  learned
single Judge in setting aside  the  award  and  consequently  dismissed  the
appeals of the concerned workmen.  That  is  how  these  Civil  Appeals  are
filed by the  workmen  urging  various  factual  and  legal  contentions  in
support of their claims with a request to set aside the  impugned  judgments
and orders of the Division Bench and the learned single Judge of  the  Delhi
High Court in the aforesaid Letter Patent Appeals and the writ petitions.
3.    Since my learned brother Judge  has  referred  to  certain  facts  and
legal contentions to decide the points that arose for consideration of  this
Court, I also refer to certain relevant  necessary  facts  and  rival  legal
contentions urged on behalf of  the  parties  with  a  view  to  answer  the
contentious points that would arise in these appeals to answer the same.

4.    Three industrial disputes case  Nos.  97,  98  and  99  of  1996  were
registered by CGIT pursuant to the order of references made by  the  Central
Government in the Ministry of  Labour  vide  its  order  No.L-11012/23/96-IR
(Coal-I) dated 23.10.96 for adjudication on the points of  dispute  referred
to it in relation to the workmen  mentioned  in  the  respective  orders  of
references made by it and in relation to other  industrial  disputes  namely
ID Case Nos. 107/96 and 108/96 which  are  individual  cases  of  industrial
disputes filed by the concerned workmen since their services were  illegally
terminated by the employer Air  India  during  pendency  of  the  industrial
disputes referred to supra in relation to the absorption of the services  of
the concerned workmen by  the  Management  of  Air  India  before  the  CGIT
without obtaining the approval  from  the  CGIT,  despite  the  order  dated
04.12.1996  passed  by  CGIT  wherein  an  undertaking  was  given  by   the
Management of Air India that neither it will change the  contractor  Chefair
without permission of/intimation to  the  Tribunal  nor  will  it  take  any
action against the workmen listed in the reference order made  to  the  CGIT
for an adjudication of their dispute.  Despite the  same,  the  services  of
the concerned workmen in the Industrial disputes in case ID Nos.97,  98  and
99/1996 were terminated. The action  of  the  Management  of  Air  India  in
terminating the services of the concerned workmen in the complaint  ID  Nos.
107 and 108/1996 is in contravention of Section 33(2)(b) of  the  Industrial
Disputes Act, 1947 (in short ‘I.D. Act’).  Therefore,  the  complaints  were
filed by the said workmen under Section 33(A) of the I.D. Act to  adjudicate
the existing industrial  dispute  between  the  concerned  workmen  and  the
Management of Air India regarding their illegal order of termination  during
the pendency of the industrial disputes referred by the  Central  Government
which are registered as reference Nos.97, 98 and 99 of 1996 with  regard  to
the absorption of the services of the contract  labour  employees,  employed
by the HCI on behalf of M/s  Air  India   and  made  them  to  work  in  the
Chefair.  The aforesaid canteen is the statutory canteen  in  terms  of  the
definition of Section  46 of the Factories Act, according to the  appellants
herein and they requested the CGIT  for  answering  the  points  of  dispute
which was referred to  in the  order  of  references  made  by  the  Central
Government in ID Nos.97 to 99, to treat them as the deemed employees of  the
Management of Air India and also to set  aside  the  orders  of  termination
passed against individual concerned workmen and requested the CGIT  to  pass
an order of reinstatement with  all  consequential  benefits  including  the
award of back-wages.

5.    In support of their respective claims and counter claims on behalf  of
the workmen and the Management of Air India,  they  filed  their  statements
respectively in the cases referred to supra before the CGIT.  In  the  claim
petition, the workmen contended that the canteen which is being run  by  the
Air India through HCI through Chefair has engaged the concerned  workmen  in
these cases as contract employees in various capacities and they  have  been
working in the canteen run by the Management of Air  India  through  Chefair
ranging from 3 to 20 years on the date of references  made  by  the  Central
Government to the CGIT which in turn is run by its subsidiary  Company  HCI.
Delhi State Government in exercise of its power  under  Section  46  of  the
Factories Act, 1948 framed Rules 65 to 70 called Delhi  Factories  Rules  of
1950 (hereinafter referred to as ‘the Rules’). A Notification was issued  by
the Lt. Governor of the Union Territory of Delhi under  Rule  65(2)  of  the
Rules stating that the Rules  of  the  Factories  Act  shall  apply  to  the
factories specified in the  Schedule  to  the  said  notification.   In  the
Schedule to the notification, the description of the factory at  serial  No.
9- M/s. Air India Ground Services Deptt. IGI, Air  Port  Delhi  (Engineering
Unit) F.D.1725 is one of the specified factories, the same is  marked  as  –
Ex.P. 4 in the Industrial dispute cases before the CGIT.

6.    Rule 65 states for providing canteen, Rule 66 speaks of  Dining  Hall,
Rule 67 provides Equipment, Rule 68 for fixing the  prices  to  be  charged,
Rule 69 deals with Accounts and Rule 70 deals  with  Managing  Committee  to
manage the affairs of the statutory canteen.  The  relevant  Rules  will  be
adverted to in the reasoning portion of  my  judgment  while  answering  the
relevant contentious points that will be framed shortly.

7.    Strong reliance  was  placed  upon  the  Rules  and  the  Notification
referred to supra by the learned senior counsel  Mr.  Jayant  Bhushan  inter
alia contending that the canteen is being run by the Air India  through  HCI
by Chefair where the  concerned  workmen  have  been  working  in  different
capacities for  number  of  years  such  as  cook,  ground  cleaning  staff,
servicing, washing staff etc. etc.

      The HCI employed them on contract basis as canteen workers though they
have been discharging their duties  which  are  in  perennial  nature.  Then
action of the Management of Air India in employing the concerned workmen  on
contract basis is an unfair labour practice as defined under  Section  2(ra)
of the I.D. Act  enumerated in the Vth Schedule to the Act, which  provision
was inserted by way of an amendment by Act No. 46 of 1982  w.e.f.  21.8.1984
at serial No. 10 to the Vth Schedule which states that  “to  employ  workmen
as casual or temporary workers and to continue them as such for  years  with
the object to deprive  them  of  the  status  and  privileges  of  permanent
workmen is an unfair labour practice on the part of the  employer”.   It  is
further stated that Management of Air India  has  employed  more  than  2000
employees in its factory  and  therefore  notification  issued  by  the  Lt.
Governor of Delhi on 21st January, 1991 applying Rules 65  to  70  of  Rules
1950 to the said establishment framed under Section  46  of   the  Factories
Act will be applicable to the canteen in question run by the HCI  on  behalf
of Air India.  It is the case pleaded and proved  before  the  CGIT  by  the
concerned workmen and it has recorded the finding in this  regard  in  their
favour by placing reliance upon three judge bench decision of this Court  in
the cases of M.M.R. Khan (supra), Parimal  Chandra   Raha  &  Ors.  v.  Life
Insurance Corporation of India and Ors.[2], and  another  decision  of  this
Court in Basti Sugar Mills Ltd. v. Ram Ujagar & Ors.[3] in  support  of  the
legal contention urged on behalf of the workmen that employees of  statutory
canteens i.e. canteens which are required to  be  compulsorily  provided  to
its workmen in the factory as per  Section  46  of  the  Factories  Act  are
employees of the establishment not only for the  purpose  of  Factories  Act
but also for all other  purposes.  In  the  case  of  Parimal  Chandra  Raha
referred to  supra,  this  Court  has  held  that  for  canteen  workers  of
contractor who  runs  the  canteen,  it  must  pass  the  relevant  test  to
determine on the facts as to whether providing canteen to its workmen  by  a
factory was obligatory on its part. In Basti Sugar Mills Ltd.'s  case,  this
Court has held that the work of removal  of  press  mud  was  given  to  the
contractor and the workmen in that case were employed by the  contractor  to
do that work, the contractor terminated their services on completion of  the
work. The stand taken in the said case by the establishment  was  that  they
had nothing to do with the workmen. The workmen in the case approached  this
Court for relief against the termination  of  their  services.   This  Court
held that the workmen were employed in the industry to do  manual  work  for
reward and therefore it is held that the Company was their employer, as  the
workmen  were  employed  by  the  contractor  with  whom  the  Company   had
contracted in the course of conducting its business  for  execution  of  the
said work of removal of the press  mud  which  is  ordinarily  part  of  the
industry. Further reliance was placed  by  the  learned  counsel   upon  the
decision of this Court in Union of India  &  Ors.  v.  M.  Aslam  &  Ors.[4]
wherein this Court has held that for the unit run  canteens  of  Army,  Navy
and Air Forces, the employees of  such  canteens  are  entitled  to  service
benefits as government servants.  Finding of fact was recorded by  the  CGIT
in favour of the concerned workmen while answering  the  points  of  dispute
referred to it by the Central  Government  with  reference  to  the  factual
legal aspects and evidence on record from the aforesaid cases. This  finding
is found fault with by the Single Judge and  Division  Bench  of  the  Delhi
High Court and they had set aside  the  finding  recorded  by  CGIT.  Strong
reliance was placed by the Delhi High Court  upon  the  plea  taken  by  Air
India and HCI with regard to the fact that though HCI is subsidiary  Company
of the Air India, it is governed by  its  own  Memorandum  and  Articles  of
Association as existed  in  the  Companies  Act  and  is  governed  by   the
provisions of the said Act.  HCI is an independent legal  entity  from  that
of the Air India.  The learned single Judge while accepting the factual  and
legal contentions urged on behalf of Air India, has  referred  to  paragraph
17 of his judgment and stated with reference to the Memorandum and  Articles
of Association, and observed that the general management of business of  HCI
vests with its Board of Directors, no doubt, the  same  is  subject  to  the
directions, if any, that will be issued from time to  time  from  Air  India
with regard to the finance and conduct of  its  business  affairs.  However,
the composition of the Board of Directors  of  HCI  is  constituted  by  Air
India in consultation with the Government of India.  In  view  of  the  said
reason, it cannot be said that the concerned contract employees employed  by
HCI to do work in the canteen are employees of Air India in the face of  the
first principle of Corporate law with reference to Salomon v. Salomon &  Co.
Ltd.[5], wherein  it  was  held  that  Company  is  a  person  all  together
different from its shareholders though Air India is the sole holder  of  the
shares  of  the  HCI.   The  HCI  is  a  legal  entity  independent  of  its
shareholders with reference to Section 46 in Chapter V of the Factories  Act
under  the  heading  “welfare”.  The  mandatory  provision  is  provided  to
maintain a canteen in the establishment, which is a measure for the  welfare
of the workers, the statutory obligation  on  the  part  of  the  industrial
establishment to provide and maintain a canteen in the  factory.  If  it  is
found that the operation of such canteen  has  been  entrusted  to  such  an
expert, it cannot be said that the employees  deployed  by  such  expert  in
such canteen becomes employees of the factory/establishment. Further, it  is
held by him that HCI was not incorporated merely to run the canteen  of  Air
India so as to keep the employees of the canteen maintained by it  at  arm's
length from Air India.  The HCI is a business entity on its own  rights  and
no  malafide  have  been  established  by  the  concerned  workmen  in   the
Management of Air India in entrusting the operation and  management  of  its
canteen to the HCI and no prejudice is shown to  have  been  caused  to  the
concerned workmen being the employees of  the  HCI  instead  of  Air  India,
except that they may be entitled to a free flight once in a while  from  it,
which they may not be entitled to get as workmen of the HCI.  Therefore,  he
has held that it is hardly determinative of the matter  in  controversy  and
thereafter he has referred  to  the  judgments  of  this  Court  in   Indian
Petrochemicals Corporation Ltd. & Anr. v.  Shramik  Sena  &  Ors.[6],  Steel
Authority of India Ltd. &  Ors.  v.  National  Union  Waterfront  Workers  &
Ors.[7], International Airport  Authority  of  India  v.  International  Air
Cargo Workers' Union & Anr.[8], in support of his conclusion  laid  down  by
applying the test laid down in those cases to the fact  situation  and  held
that there is  no  relationship  of  employer  and  employee  and  hence  no
existing industrial dispute would arise within the meaning of  Section  2(k)
of the I.D. Act between the concerned workmen  and  the  Management  of  Air
India. Therefore, he has quashed the award of the CGIT  which  was  affirmed
by the Division Bench of the Delhi High Court in  the  aforesaid  L.P.As  by
accepting the reasons recorded by the learned single Judge  and  also  after
extracting certain relevant paragraphs from the decisions of this  Court  in
the cases of  M.M.R.  Khan,  Parimal  Chandra  Raha,  Indian  Petrochemicals
Corporation Ltd., (all referred to supra) Hari Shanker Sharma  and  Ors.  v.
Artificial Limbs Manufacturing Corporation and Ors[9].  The  Division  Bench
of Delhi High court has concurred with the finding and reasons  recorded  by
the learned single Judge in the impugned judgment and dismissed  the  letter
patent appeals of the  concerned  workmen.   The  correctness  of  the  said
judgment and order are impugned in these  civil  appeals  by  the  concerned
workmen  reiterating  their  factual  and  legal  contentions  as  has  been
adverted to before the CGIT and the High Court in the writ petition and  the
appeals. Therefore, the same need not be adverted  to  once  again  in  this
judgment with a view to avoid repetition.

8.    It is contended by the learned senior counsel Mr.  Jayant  Bhushan  on
behalf of the concerned workmen, placing strong reliance upon Section 46  of
the Factories Act and notification  of  the  year  1991  referred  to  supra
issued by Lt. Governor of the Union Territory of Delhi upon the Rules 65  to
70 of the Rules that the Management of Air India  is  enumerated  at  serial
No.9 in the Schedule to the said notification. Therefore, the Management  of
Air India was required to provide a statutory canteen to its workmen in  its
industrial establishment  and the learned senior counsel also placed  strong
reliance  upon  the  Memorandum  and  Articles   of   Association   of   HCI
particularly clause 33 in Chapter XIII to substantiate his contentions  that
the control and directions that will  be  issued  from  time  to  time  with
regard to running of  the  canteen  and  managing  the  canteen  is  on  the
Management of Air India to HCI wherein, the Management of Air India was  the
occupier. The learned senior counsel  has  further  placed  strong  reliance
upon the findings recorded by the CGIT in its award in answer to the  points
of disputes referred to it holding that the concerned workmen were  employed
by HCI to work in the statutory canteen of the Management of Air  India  and
placed strong reliance upon the judgment of this Court in State  of  U.P.  &
Ors. v. Renusagar Power Co. & Ors.[10],  which  is  followed  by  two  other
judgments  of  this  Court  in  Delhi  Development  Authority   v.   Skipper
Construction Co.  (P.)  Ltd.  &  Anr.[11],  Kapila  Hingorani  v.  State  of
Bihar[12], wherein  this  court  has  laid  down  the  legal  principles  by
following the judgment of Salomon v. Salomon (supra) with  a  view  to  find
out as to whether the contract employment of the concerned  workmen  by  the
HCI on behalf of the Management of Air India is a sham or a camouflage.  The
CGIT has pierced the veil with reference to the existing  factual  situation
and found that the concerned workmen  had  been  working  in  the  statutory
canteen required to be established and managed by the Management of the  Air
India as per Rule 65(2) of the Rules and the HCI is a subsidiary Company  of
the Air India as it holds 100% share holding and therefore,  the  Air  India
has got the control and supervision of its business under clause 33  of  the
Memorandum and Articles of Association.  Therefore  he  has  requested  this
Court to set aside the findings of  fact  recorded  by  the  learned  single
judge, which are concurred with  by  the  Division  Bench  in  the  impugned
judgment and order as it is  vitiated  not  only  on  account  of  erroneous
finding for non consideration of the proved  facts  and  legal  evidence  on
record but also suffers from error of law as has  been  laid  down  by  this
Court in catena of cases referred to supra upon  which  the  learned  senior
counsel has placed strong reliance in support of the case of  the  concerned
workmen in these appeals.

9.    Further he has placed strong reliance upon the judgment of this  Court
in M.M.R. Khan’s case particularly paragraphs 25, 27 and 30  in  support  of
the proposition of law   wherein this Court has held that  rules  framed  by
the State Government of Delhi under Section 46  of  the  Factories  Act  are
obligatory on  the  part  of  the  Railway  Administration  to  provide  and
maintain  statutory  canteen.  In  pursuant   to   the   above   rules   and
notifications, this  Court  has  held  that  canteens  were  incidental  and
connected  with  the  manufacturing  process   and   is   subject   to   the
manufacturing process. The nature  of  the  canteen  is  deemed  to  be  the
statutory,  since  it  is  a  necessary  concomitant  of  the  manufacturing
activity and further railway establishment has recognized the obligation  of
the Railway Administration by the Act which makes provision for meeting  the
cost of the canteen  though  Railway  Administration  to  employ  any  staff
committee or cooperative society for the  management  of  the  canteen.  The
legal responsibility for the proper management of  such  canteen  rests  not
with such agency but solely with the Railway Administration. With  reference
to paragraph 27  of  the  said  decision  and  also  having  regard  to  the
undisputed fact of the case in hand that the Chefair  unit  of  the  HCI  in
which canteen is being run is situated in the premises of the Air India  and
that it is also the statutory duty of the Air India under  Rules  65(2)  and
65(4) of the Delhi Factories Rules, that  the  canteen  building  should  be
situated not less than fifty feet from any  latrine, urinals, boiler  house,
coal stacks, ash dumps and any other source of  dust,  smoke   or  obnoxious
fumes etc. and that  the  manager  of  the  factory  shall  submit  for  the
approval of Chief Inspector of plans and site plan as  provided  under  sub-
rule (3) of Rule 65  and  further  that  the  construction  of  the  canteen
building is in accordance with Rules 65, 66, 67 and 70 which  would  clearly
go to show that the said canteen is established by Air  India  to  discharge
its welfare statutory obligation to its workmen/employees as provided  under
the Factories Act and Rules framed under by the State government  of  Delhi.
Also, the managing committee constituted  under  the  Rules  should  consult
from time to time regarding the quality and quantity of  food  stuff  to  be
prepared and served in the canteen to its workmen/employees  and  for  other
purposes. Therefore, he has contended that the legal  principles  laid  down
by this Court in M.M.R. Khan’s case with all fours  are  applicable  to  the
present fact situation.  Hence,  it  is  contended  by  the  learned  senior
counsel that the findings and reasons recorded by the learned  single  Judge
and the Division Bench in the impugned judgments  after  setting  aside  the
finding of facts recorded in the award on this aspect of the matter by  CGIT
in answer to the points referred to  it  is  not  only  erroneous  but  also
suffers from error in law and is liable to  be  set  aside  and  the  common
award passed by CGIT should be restored.

10.   Another ground urged by the learned senior counsel is  that  the  High
Court failed to appreciate the fact that the canteen has been  in  existence
since 1945.  It is a deemed  statutory  canteen  under  Section  46  of  the
Factories Act vide notification of 1991 referred to  supra.  Therefore,  the
CGIT has come  to  the  right  conclusion  and  held  that  the  canteen  is
incidental to and running the  canteen  and  the  work  of  the  workmen  is
subject to  the  supervision  and  control  of  Air  India.  It  is  further
contended that the Division Bench of the Delhi High  Court  has  erroneously
applied the judgments in Indian  Petrochemicals  Corporation  Ltd.,  Parimal
Chandra Raha and referred to para 22  of  M.M.R.  Khan’s  case,  Workmen  of
Nilgiri Coop. Mkt. Society Ltd. v. State of Tamil Nadu  &  Ors.[13],  Haldia
Refinery Canteen  Employees  Union  &  Ors.  v.  Indian  Oil  Corporation  &
Ors.[14], and Hari Shanker Sharma (supra) to set aside the findings  of  the
CGIT and concurred with the finding of learned single Judge. Therefore,  the
learned senior counsel has urged this Court for  quashing  of  the  impugned
judgments of both the learned single judge and the Division Bench since  the
same are not only based on erroneous reasoning but also  suffer  from  error
in law in view of the clear pronouncement of law laid down by this Court  in
the three Judge Bench decision of this Court in  the  case  of  M.M.R.  Khan
(supra) on the question of providing and maintaining  statutory  canteen  to
its workmen/employees in support of his contentions that the  employment  of
contract employees by Air India through HCI to run the statutory canteen  in
its premises is a sham and camouflage to deprive  the  legitimate  statutory
and fundamental rights of the concerned workmen. Therefore, he submits  that
the CGIT was justified in lifting the veil or piercing  the  veil  from  the
nature of employment to provide and maintain the statutory  canteen  by  Air
India through HCI and the finding  by  CGIT  is  supported  by  plethora  of
judgments of this Court referred to supra.  It is further submitted  by  him
that there is direct control and  supervision  on  the  functioning  of  the
canteen and its employees by Air India being a statutory  canteen  which  is
required to be maintained by it in conformity with Rules 65  to  70  of  the
Delhi Factories Rules 1950 and under Section 46 of  the  Factories  Act  and
notification has been rightly issued enlisting the Management of  Air  India
in the Schedule to the said notification for providing and  maintaining  the
statutory canteen which notification has not been questioned by  Air  India.
Therefore, the decisions of the Supreme Court referred  to  supra  regarding
piercing the veil for the purpose of finding out the real facts and to  give
effect to the object and intendment of  the  statute  while  recruiting  the
workmen on contract basis which is in violation of the statutory  provisions
of the Industrial Disputes Act has been rightly arrived at by  the  CGIT  on
proper appreciation of pleadings  and  evidence  on  record  to  answer  the
points in the  affirmative.   Therefore,  the  learned  senior  counsel  has
requested this Court to  interfere  with  the  impugned  judgments  and  for
restoration of the award passed by the CGIT.

11.   Mr. C.U. Singh, learned senior counsel for the  respondent  sought  to
justify the impugned judgment of the Division Bench of the Delhi High  Court
in affirming the judgment of the learned  single  Judge  by  placing  strong
reliance upon the decisions of this Court in Dena Nath &  Ors.  v.  National
Fertilisers &  Ors.[15],  and  Steel  Authority  of  India  (supra).  It  is
contended by  the  learned  senior  counsel  for  the  respondent  that  the
Division  Bench  after  adverting  to  the  rival  legal   contentions   has
elaborately referred to the decision of M.M.R. Khan’s case and  the  various
other decisions referred to in the impugned judgment rightly concurred  with
the findings and reasons recorded by the learned single judge  in  reversing
the findings and reasons recorded in the Award by the CGIT on the points  of
dispute referred to it by the Central Government for  its  adjudication.  On
appreciation of facts pleaded and evidence on record, keeping  in  view  the
fact that the concerned workmen are employed  in  the  canteen  by  the  HCI
which is the statutory Corporation, therefore, the Management of  Air  India
has no power of recruitment, disciplinary control on the  employees  and  no
control and supervision on  functioning  of  the  workmen  of  the  canteen.
Therefore, the High Court has rightly arrived at  the  conclusion  and  held
that there is  no  relationship  of  master  and  servant  or  employer  and
employee between the concerned workmen of the canteen  and  the  Air  India.
The HCI is an independent legal entity which has been carrying on  with  its
business  strictly  in  conformity  with  the  Memorandum  and  Articles  of
Association and therefore he contends that there is no need for  this  Court
to interfere with the impugned judgments. Further, he  has  urged  that  the
canteen in which the concerned  workmen  were  employed  by  HCI  is  not  a
statutory canteen and the finding recorded by the  CGIT  on  the  points  of
dispute by placing reliance upon the  Notification  of  1991  and  that  Air
India has employed more than 2000 employees and that  the  said  canteen  is
the statutory canteen and that there is an obligation on  the  part  of  the
Management of Air  India  to  cater  the  food  stuff  to  its  workers  and
employees, is an erroneous finding and  also  suffers  from  error  in  law.
Therefore, the said finding has  been  rightly  set  aside  by  the  learned
single Judge, the same is affirmed by the Division Bench of the  Delhi  High
Court by concurring with decision of the learned  single  judge.  Hence,  he
further contends that there is no questions of law much less  the  questions
of law framed by the workmen in the appeals involved  which  require  to  be
considered and answered by this  Court  in  exercise  of  its  jurisdiction.
Hence he has prayed for dismissal of these appeals.

12.   On the basis of rival factual and  legal  contentions,  the  following
questions of law would arise for consideration:
        1) Whether the canteen which is run through HCI  from  its  Chefair
           unit by the Management of Air India, is the statutory canteen of
           it under Rules 65 to 70 of the Delhi Factories Rules of 1950?
        2) Whether engaging the contract workmen in the canteen situated in
           the premises of Air  India  through  HCI  amounts  to  sham  and
           camouflage by Air India to deprive the legitimate statutory  and
           fundamental rights of the concerned workmen  as  provided  under
           the  provisions  of  the  Industrial  Disputes   Act   and   the
           Constitution and can this Court pierce the veil to find out  and
           ascertain the real and correct facts as to whether they are  the
           workmen of Air India?
        3) Whether the findings and reasons recorded by  the  CGIT  on  the
           points of disputes in the common award dated 5th May, 2004 in ID
           Nos. 97, 98, 99, 107 and 108 of 1996 are legal and valid?
        4) Whether the findings recorded by the learned single Judge in CWP
           No.14178, 14181 and 14182 of 2004 which are  concurred  with  by
           the Division Bench in LPA Nos.388, 390 and 391  of  2010  suffer
           from  erroneous  reasoning  and  error  in   law   and   warrant
           interference by this Court?
        5) What award the concerned workmen are entitled to?

Answer to Point Nos. 1 and 2:

13. First two points  are  answered  together  by  assigning  the  following
reasons since they are inter-related.  At the very outset it  is  critically
useful to place on record certain relevant questions of fact  which  are  on
record and are not in dispute  with  a  view  to  determine  the  nature  of
dispute  between  the  parties  that  is  referred  to  by  the   CGIT   for
adjudication  in  exercise  of  its  power  and  examine  the   rights   and
obligations of the parties to find out  as  to  what  relief  the  concerned
workmen in the appeals are entitled to, keeping in view  the  provisions  of
Factories Act read with the Delhi Factories  Rules  of  1950,  The  Contract
Labour (Regulations and Abolition) Act, 1970  and  the  Industrial  Disputes
Act, 1947.

14.  It  is  an  undisputed  fact  that  the  Labour  Department  vide   its
notification dated 21st January, 1991 issued in pursuance of the  provisions
of sub-rule (1) of  Rule  65  of  the  Delhi  Factories  Rules  wherein  Lt.
Governor of Union Territory of Delhi directed that Rules 65  to  70  of  the
Rules which shall  apply  to  the  factories  which  are  mentioned  in  the
Schedule to the said Notification at serial No.9 –  M/s.  Air  India  Ground
Services  Deptt.  IGI,  Air  Port  Delhi  (Engineering  Unit)  F.D.1725   is
enlisted.   In  view  of  the  aforesaid  notification,  the  Air  India  is
statutorily required to maintain  and  provide  a  canteen  in  its  factory
premises to cater the food stuff to its employees/ workmen.  It is the  case
of the concerned  workmen  that  there  are  2000  workmen  working  in  the
establishment of Air India which plea  is  accepted  by  the  CGIT  and  the
finding of fact is recorded on the  basis  of  evidence  on  record  by  it,
particularly, the admission made by the witness examined on  behalf  of  Air
India before CGIT.

15.   Rules 65 to 70 of the Rules framed by the  Union  Territory  of  Delhi
under Section 46 of the Factories Act  are  applicable  in  respect  of  Air
India as it is enlisted in the Schedule to the Notification  issued  by  the
Labour Department referred to supra, to provide a  statutory  canteen  by  a
factory where 250 workmen are employed by it.  The  case  of  the  concerned
workmen in the industrial disputes raised by them  is  that  Air  India  has
employed more than 2000 workmen and  on  the  basis  of  the  pleadings  and
evidence on record has proved the points of dispute referred to  it  in  the
Industrial disputes referred to supra. The Air India has now challenged  the
applicability of the Notification and the Rules framed by  the  Delhi  Union
Territory under Section 46 of the Factories Act.  The case  pleaded  by  the
workmen on the other hand is that they are working in Chefair which  belongs
to the HCI which is wholly  owned  subsidiary  Company  of  Air  India  with
expertise in food preparation and  catering  to  the  employees/workmen  and
traveling passengers in their domestic and international Air Crafts, and  it
is  bound  by  its  Memorandum  and  Articles  of  Association,   which   is
comprehensive enough to regulate the conduct of its business for  Air  India
including the nature of employer  and  employee  relationship.  The  service
conditions prevailing in the HCI vis-a-vis its employees are  comparable  to
the relation between the workers and Air  India  and  Chefair  in  terms  of
monetary benefits and the same are largely similar.  The cost  of  providing
the canteen services to its employees/workmen was provided by Air  India  on
the basis of ‘per employee subsidy’.  The CGIT, with reference to  Factories
Rules and Notification referred to supra has held  that  Air  India  has  to
provide food stuff to its employees/workmen at  the  subsidiary  rate.   The
pleadings of Air India in its counter statement filed before  the  CGIT  are
cleverly designed and drafted stating that there  were  not  more  than  250
employees/workmen of Air India in order to apply the relevant provisions  of
the Factories Act and Rules in relation to a statutory canteen  run  by  HCI
through Chefair and therefore the notification is not applicable to the  Air
India. The said pleadings of M/s Air India  on  a  jurisdictional  fact  was
demolished by the concerned workmen of the canteen by  cross  examining  the
witness of Air India, who is its designated officer. He has  stated  in  his
evidence  unequivocally   that  the  actual  number   of   workmen/employees
availing the canteen facilities in the factory premises were  in  the  range
of 2000 persons - a figure which was at least not less than eight times  the
number contained in the original pleadings of  Air  India.   Air  India,  in
spite of being the statutory corporation did not consider  it  necessary  to
come to the court with clean hands but on the other hand, it has  suppressed
relevant material fact regarding the number of employees/workmen working  in
its establishment.  Therefore, the CGIT, on the basis of admission  made  by
the witness examined on behalf of the Air India as  MW1,  has  recorded  the
finding of fact holding that a total figure of  2000  employees/workmen  are
working in its establishment and they are availing the  canteen  facilities,
which is run through the HCI from its Chefair unit in  the  premise  of  Air
India.  The wholly owned subsidiary  corporation-  HCI  has  adopted  unfair
labour practice as defined under Section 2(ra) of the  I.D.  Act  at  serial
No. 10 entry in the Vth Schedule under the  heading  of  the  Unfair  Labour
Practices practiced by the employer, by keeping  workers  in  employment  in
the canteen for 40 days at a time and thereafter employing them on  contract
basis after a break though the nature of work to be  performed  by  them  in
the canteen have been perennial in nature, for the  reason  that  they  were
required to provide and  maintain  the  statutory  canteen  in  the  factory
premises to cater the food stuff to its employees/ workmen. Therefore,  they
have committed  a  statutory  offence  punishable  under  the  provision  of
Section 25U of the I.D. Act for employing the concerned workmen on  contract
basis with  a  break  in  their  service  which  constitutes  unfair  labour
practice and is prohibited  under Section 25T of the I.D. Act either by  the
employer or the workmen under the  above  Schedule  to  the  I.D.  Act.  The
concerned workmen got the Industrial  Disputes  referred  to  the  CGIT  for
adjudication on the points of the dispute referred  to  it  by  the  Central
Government in the orders of reference who are covered in  the  award  passed
by the CGIT. They have been discharging the  permanent  nature  of  work  in
different capacities working continuously ranging from 3 years to  20  years
with an artificial break after 40 days of employment by  the  employer  with
an oblique motive to deprive them of their  legitimate  statutory  right  of
regularizing them as permanent workmen in the  statutory  canteen  which  is
being run by the Air India in its factory  premises  through  HCI  from  its
Chefair unit.

16.  Mr. Jayant Bhushan,  the  learned  senior  counsel  on  behalf  of  the
appellants- concerned  workmen  with  reference  to  the  pleadings  of  the
parties and the evidence on record, has rightly placed strong reliance  upon
the Notification of 1991 issued  by  the  Labour  Department  enlisting  Air
India in the Schedule to the  Notification  at  serial  No.9  to  provide  a
statutory canteen to the employees/ workmen of Air India which is being  run
through HCI from its Chefair unit on its  behalf  which  is  its  subsidiary
company as it has got 100% share holding as per Memorandum and  Articles  of
Association. On the basis of pleadings and evidence on record,  the  learned
senior counsel substantiated the finding  of  fact  recorded  by  the  CGIT,
wherein it has held that the concerned workmen are  employed  by  Air  India
through its subsidiary Corporation- HCI, which is a sham contract  and  this
veil is required to be pierced to find out the real facts  involved  in  the
case as to whether they are working for Air India or the HCI.   The  learned
senior counsel has rightly placed  strong  reliance  upon  the  decision  of
three Judge Bench decision of this Court in Hussainbhai,  Calicut  v.  Alath
Factory Thezhilali Union, Kozhikode and Ors.[16], the relevant paragraph  of
which reads as under:

        “5. The true test may, with brevity, be indicated once again. Where
      a worker or group of workers labours to produce goods or services  and
      these goods or services are for the business of  another,  that  other
      is, in fact, the employer. He has economic control over  the  workers’
      subsistence, skill, and continued employment. If he, for  any  reason,
      chokes off, the worker  is,  virtually,  laid  off.  The  presence  of
      intermediate contractors with whom alone the workers have immediate or
      direct relationship ex contractu is of no consequence when, on lifting
      the veil or looking at the conspectus of factors governing employment,
      we discern the naked truth, though draped in different  perfect  paper
      arrangement, that  the  real  employer  is  the  Management,  not  the
      immediate contractor. Myriad devices, half-hidden in fold  after  fold
      of legal form depending on the degree of concealment needed, the  type
      of industry, the local conditions and the like may be resorted to when
      labour legislation casts welfare obligations  on  the  real  employer,
      based on Articles 38, 39, 42, 43 and 43-A  of  the  Constitution.  The
      court must be astute to avoid the mischief and achieve the purpose  of
      the law and not be misled by the maya of legal appearances.”
                                               (Emphasis laid by this Court)

17. He has further very rightly placed reliance upon the three  Judge  Bench
decision of this Court in the case of Kanpur Suraksha  Karamchari  Union  v.
Union of India & Ors.[17] wherein this Court  has  held  with  reference  to
interpreting Section 2(n) and Section 46 of  the  Factories  Act  read  with
Rules of UP Factories Rules 1950 -Rule 1968, Section 7 and  after  adverting
to the Government of India  Notification  order  No.  18/(1)80/D(JCM)  dated
25th July, 1981 accorded sanction to treat  all  employees  of  the  canteen
established in defence industrial establishments under  Section  46  of  the
Act as the government employees  with  immediate  effect  and  further  made
observations in the said case that in certain cases,  canteens  are  run  by
either contractors or co-operative societies or some other bodies.

18. The legal question that arose for consideration of this  Court  in  that
case was whether the services of the workers, before they were  declared  to
be government employees should be taken into consideration for  purposes  of
calculating their pension dues on retirement. E.S. Venkataramiah J.,  as  he
then was, in Kanpur Suraksha Karamchari  Union  (supra),  speaking  for  the
Court observed as under:
      “4. 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 of the
      workers in the factories. Section 46 of the Act reads thus:
          ‘46. Canteens.—(1) The State Government may make  rules  requiring
          that in any specified factory wherein more than  two  hundred  and
          fifty workers are ordinarily employed, a canteen or canteens shall
          be provided and maintained by the occupier  for  the  use  of  the
             (2) Without prejudice to the generality of the foregoing power,
          such rules may provide for—
             (a) the date by which such canteen shall be provided;
             (b) the standards in respect  of  construction,  accommodation,
          furniture and other equipment of the canteen;
             (c) the foodstuffs to be served therein and the  charges  which
          may be made therefor;
             (d) the constitution of a managing committee  for  the  canteen
          and representation  of  the  workers  in  the  management  of  the
             (dd) the items of expenditure in the  running  of  the  canteen
          which are not to be taken into  account  in  fixing  the  cost  of
          foodstuffs and which shall be borne by the employer;
             (e) the delegation to the  Chief  Inspector,  subject  to  such
          conditions as may be prescribed, of the power to make rules  under
          clause (c).’

      5………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
      association of individuals, any one  of  the  individual  partners  or
      members 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 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  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
      68 of the Rules to manage the affairs of the canteen. The functions of
      the Canteen Managing Committee are merely advisory. It is appointed by
      the Manager appointed 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 Committee. The accounts pertaining to a canteen  in  a
      government  factory  may  be  audited  by  its  departmental  Accounts

Rule 67, sub-rules (1), (2) and (3), is traceable in this case  which  reads
“67. Equipment:

       5) There  shall  be  provided  and  maintained  sufficient  utensils,
          crockery, cutlery, furniture and any other equipment necessary for
          efficient running of the  canteen.   Suitable  clean  clothes  for
          employees serving in  the  canteen  shall  also  be  provided  and
       6) The furniture utensils and other equipment shall be maintained  in
          a class and hygienic condition.  A service counter,  if  provided,
          shall have a top of  smooth  and  impervious  material.   Suitable
          facilities including an adequate supply  of  hot  water  shall  be
          provided for the cleaning of utensils and equipment.
       7) Where the canteen is managed by a co-operative society, registered
          under the Bombay Co-operative Societies Act, 1952, as in force  in
          the Union Territory of  Delhi,  the  occupier  shall  provide  and
          maintain the equipment as required under  sub-rule  (1)  for  such

19. In the case in hand, it is an undisputed  fact  that  the  building  for
running the canteen is situated in  the  Air  India  premises.  It  has  got
statutory obligation under aforesaid rules read  with  the  Notification  of
1991  referred  to  supra   to   provide   for   necessary   furniture   and
infrastructure to run the statutory canteen in the premises  of  Air  India.
In the case of Kanpur Suraksha Karmachari Union referred to  supra,  it  was
urged on behalf of the management that before  the  government  orders  were
passed, the number of years of service rendered by  the  workmen  under  the
managing Committee before government officially absorbed them, could not  be
counted as years of service rendered by them.  The Court  had  rejected  the
said contention urged on behalf of the management and held that even  though
the management of the canteen may be by the Managing Committee, the  workers
were employees of the  factory  and  their  services  for  the  purposes  of
pension would have to be calculated with effect from the date  they  started
working in the  canteen.   Further,  in  the  said  case  on  the  basis  of
pleadings and legal contentions urged on behalf of the parties  it  is  held
that the management of the canteen could be with the certain  committee  for
determining the rights of the workers, it was the occupier  of  the  factory
who is responsible for them. The said conclusion  was  arrived  at  by  this
Court in that case after  noticing  the  rights  conferred  on  the  workers
though the  interpretation  was  not  confined  to  the  provisions  of  the
Factories Act but also regarding retirement benefits payable to the  workmen
employed in the canteen in the said case.  It was further observed  by  this
Court that one test which is derived is in relation to the  question  as  to
who is the occupier of the relevant factory and whose responsibility  is  it
to see whether the canteen is provided and is  running  in  accordance  with
the provisions of the Factories Act?

20. Learned senior  counsel  on  behalf  of  the  workmen  has  also  placed
reliance upon another  judgment  of  this  Court  in  Parimal  Chandra  Raha
(supra) upon which the  CGIT  placed  reliance  in  arriving  at  the  right
conclusion to hold that the concerned workmen are entitled  for  absorption.
In the above said case, this Court held that the appellant  workmen  working
in the canteens at different offices of LIC across  the  country  were  like
regular employees of the  LIC  as  the  canteens  are  run  and  managed  by
different entities like  Canteen  Committees,  Cooperative  Society  of  the
employees and even contractors and directions about how to run  the  canteen
were issued by the LIC. In the said case, the infrastructure, the  premises,
the furniture, electricity,  water  etc.  were  supplied  by  the  LIC.  The
working hours were also fixed by the LIC.  Though LIC was  obviously  not  a
factory, and the canteen established and run  by  it  was  not  a  statutory
canteen, still this Court held that whether the canteen was to be run  under
an obligatory provision of  the  Factories  Act  or  under  a  non-statutory
obligation to provide a canteen, the position  is  the  same  and  that  the
canteen workers become a part of  the  establishment.    Therefore,  in  the
said case it is held that the workmen were entitled to  the  same  wages  as
Class-IV employees of the LIC.

21.   In another decision rendered by three judge Bench  of  this  Court  in
the M.M.R.Khan’s case, demands were made by  the  canteen  workers  in  many
manufacturing establishments like textiles, sugar mills, rope factories  and
also in service establishments like  RBI,  LIC,  Railways  and  Airways  for
establishment of a statutory canteen where there are more than  250  workmen
working in such factory.  In public sector undertaking like  Airways,  there
are different types of situations. One of  them  is  the  statutory  canteen
which must be provided  by such Industrial establishment which is a  factory
in terms of  the  definition  of  the  Factories  Act,  since  manufacturing
activities are involved. In the instant case the Air India falls  under  the
category of factory where the occupier is defined under Section 2(n) of  the
Factories Act and therefore, it is duty bound to provide a  canteen  to  its
employees/ workmen which is known  as  the  statutory  canteen.  It  is  the
statutory obligation on the  part  of  Air  India  to  provide  a  statutory
canteen under the provisions of Factories Act and Rules  and  therefore,  it
is one more strong circumstance in  favour  of  the  concerned  workmen  for
regularization in their services as permanent workmen by the Air India.  The
most important legal aspect of the case which is required to  be  considered
by me in this case is that the law stipulates statutory  obligation  on  the
part of Air India to provide and maintain statutory  canteen  to  cater  the
food stuff to its employees/ workmen as per notification referred to  supra.
Therefore, the canteen facility to be provided  to  the  employees/  workmen
cannot  be  withdrawn  by  the  owner  of  the  establishment,  namely,  the
principal employer.  Therefore, the necessary corollary  to  this  condition
is the fact that in such a situation the nature of  employment  involved  in
the canteen in question is perennial in nature.  The  need  for  workers  to
run the canteen by the Management of Air India is permanent.  The  vacancies
of various posts in the canteen are permanent in nature.

22.  From the review of case law on this aspect,  two  kinds  of  situations
arise, one in which the contractor is changed but not the workers  employed.
 In the Parimal Chandra Raha and the Indian  Petrochemicals  cases  referred
to supra, such were the situations, upon which strong reliance is placed  by
the learned single Judge and the Division Bench of the  High  Court  to  set
aside the finding of fact recorded by the CGIT in its award  on  the  points
of disputes referred to it.  This Court has taken a note  of  this  relevant
fact and considered the same in the instant case to  decide  as  to  whether
the canteen workers should be regularized by the  principal  employer?   The
other situation is where the contractor is changed and along  with  him  the
workers also get the boot.  The effect of this situation  appears  that  the
workers have been temporary. In reality they are kept temporary in order  to
perpetuate  ‘unfair  labour  practice  by  the  employer,   which   is   not
permissible in view of Section 25T of  the  I.D.  Act  read  with  entry  at
Serial No. 10 in the Vth Schedule of the I.D. Act  regarding  unfair  labour
practices on the part of the employer.  In the case in  hand,  I  hold  that
Air India is the principal employer and Chefair - an unit under HCI  is  the
contractor, on the basis of the pleadings of the parties and law  laid  down
by this Court referred to supra in the earlier paragraph of  this  judgment.
The CGIT has rightly arrived at the finding that Chefair is the unit of  HCI
which  renews  the  contract  of   canteen   workers   every   forty   days.
Unfortunately, the said workers, have been continued as contract workers  in
the canteen though they have completed 240 days of continuous service  in  a
year as defined under Section 25B of the I.D. Act which action  of  the  Air
India is unfair labour practice and is prohibited under Section 25T  of  the
I.D. Act. In spite of  statutory  prohibition  of  employing  the  concerned
workmen in the canteen on contract basis in permanent nature  of  work,  the
Chefair - a unit of HCI  and  Air  India  have  indulged  in  unfair  labour
practices as defined under Section 2(ra) read with Section 25T and  the  Vth
Schedule of the I.D.  Act,  with  a  deliberate  intention  to  deprive  the
statutory rights  of  the  concerned  workmen  which  is  a  glaring  patent
illegality committed by them for which they are liable to be punished  under
Section 25U of the I.D. Act read with the Rules.

23. If the case pleaded by Air India and  HCI  is  accepted  by  the  single
Judge and the Division Bench of the High  Court,  it  amounts  to  giving  a
reward to Air India, who is the  principal  employer.  It  also  amounts  to
holding that the concerned workmen are contract employees of the  contractor
and they are not put in the continuous service which amounts  to  conferring
reward upon the HCI and AIR India who have committed  illegality.  Both  the
learned single  Judge  and  the  Division  Bench  of  the  High  Court  have
erroneously accepted the case pleaded by Air India  and  HCI  which  suffers
from error in law as  it  goes  against  the  statutory  provisions  of  the
Factories Act, Rules and the  I.D.  Act.   The  concerned  workmen  who  are
working in the canteen at  the  relevant  time  have  been  working  in  the
vacancies which are permanent in nature. Therefore, they are required to  be
regularized by the principal employer as  permanent  workmen  and  they  are
also entitled to the consequential benefits since they have  rendered  their
services for more than 3 to 20  years  continuously  saving  the  artificial
breaks imposed on them by the employer from time to  time  to  deprive  them
from regularization as permanent employees of the establishment as has  been
held by the CGIT in its award by accepting the claim of the workmen.

24.   Further, it is clear from the Rules of 1950 and  the  Notification  of
1991 referred to supra that Air India is the occupier under Section 2(n)  of
the Factories Act and it must provide and maintain a statutory  canteen  for
its employees/ workmen. The  vacancies  in  various  posts  that  exist  for
canteen workers are permanent in nature but the Management of HCI on  behalf
of Air India has continued them as contract workers for a long  period  with
a break after 40 days, which is an unfair  labour  practice  on  their  part
though it is prohibited under Section 25T of the  I.D.  Act.  The  temporary
rotation of concerned workers in the vacancies of the canteen  by  the  HCI,
which is an instrumentality of the  state  is  to  countenance  a  situation
where two statutory  entities  of  the  above  nature  collude  together  to
perpetuate ‘unfair labour practices’ as defined under  Section  2(ra)  which
is enumerated  at  serial  no.  10  under  the  heading  of  ‘unfair  labour
practice’ on the part of the employer in the Vth Schedule to the  I.D.  Act.
Therefore, this Court is bound to ensure the implementation of all  relevant
laws,  especially  those  enacted  by  the   Legislature   to   fulfil   the
constitutional obligations under the Directive Principles  of  State  Policy
and bring this unholy alliance between Air  India  and  HCI  to  an  end  by
declaring the canteen workers as employees of the principal employer.

25.   The M.M.R. Khan’s case referred to supra, fully supports  the  finding
recorded by the CGIT on the points of dispute in  favour  of  the  concerned
workmen by directing the Air India to regularize them  as  canteen  workers.
At Para 25 of the said judgment the observations made by  this  Court  which
are very relevant for our purpose read thus:
      “25. Since in terms of the Rules made by the State  Governments  under
      Section 46 of the Act, it is obligatory on the railway  administration
      to  provide  a  canteen,  and  the  canteens  in  question  have  been
      established pursuant to the said provision there is no  difficulty  in
      holding that the canteens are incidental  to  or  connected  with  the
      manufacturing process or the subject of the manufacturing process. The
      provision of the canteen is deemed  by  the  statute  as  a  necessary
      concomitant of the  manufacturing  activity.  Paragraph  2829  of  the
      Railway Establishment Manual recognises the obligation on the  railway
      Administration created by the Act and as pointed out earlier paragraph
      2834 makes provision for meeting the cost of the  canteens.  Paragraph
      2832 acknowledges that although the railway administration may  employ
      anyone such as a staff committee or a  co-operative  society  for  the
      management of the canteens, the legal responsibility  for  the  proper
      management rests not with such agency  but  solely  with  the  railway
      administration. If the management of the canteen is handed over  to  a
      consumer cooperative society the bye-laws of such society have  to  be
      amended suitably to provide for an  overall  control  by  the  railway

26. Before applying the legal principles laid down in  the  above  paragraph
of the case to the case in hand, it is pertinent to note that  at  the  very
outset three kinds  of  canteens  exist  in  the  Railways.  They  are:  (i)
Statutory canteens as required under Section 46 of the Factories  Act,  1948
where  more  than  250  employees  are  working,  (ii)  Non-statutory   non-
recognized canteens which employ 250 or less than 250  employees  and  hence
there is no statutory obligation on the part of  the  employer  to  maintain
them, where workers exceed hundred and such canteens are set up  with  prior
approval of  the  Railway  Board,  and  (iii)  Non-Statutory  non-recognized
canteens where 100 or less than hundred workers work and are set up  without
prior approval of the Railway Board.

27. In the decision  of  this  Court  in  M.M.R.  Khan(supra),  the  workers
engaged in the first and second category of canteens  mentioned  above  were
treated as Railway  employees  after  considering  the  relevant  facts  and
statutory provisions of the Factories Act and the Rules.  Thus,  this  Court
held  that  the  workmen  would  be  entitled  to  all  service   conditions
prescribed for them under  relevant  rules/orders.  The  relevant  paragraph
from the said decision reads as under:

      ”30. While discussing above the contention that the employees  in  the
      statutory canteens cannot be treated as railway employees even for the
      purposes  of  the  said  Act,  we  have  referred   to   the   various
      developments, and documents on record including the  court  decisions.
      It is not necessary to repeat them here. In  view  of  the  same,  the
      contention advanced by Mr Ramaswamy that the railway administration is
      engaged in varied welfare activities, and  the  employees  engaged  in
      these activities will also have to be treated as railway employees, in
      case, the canteen employees are 2recognized as railway employees  does
      not appeal to us. We express no opinion on the subject as  to  whether
      the employees engaged in other welfare activities will or will not  be
      entitled to the status of the railway employees,  since  neither  they
      nor the facts pertaining to them are before us.  Our  conclusion  that
      the employees in the statutory canteens are  entitled  to  succeed  in
      their claim is based purely on facts peculiar  to  them  as  discussed
      above. If by virtue of all these facts they are entitled to the status
      of railway employees and they cannot be deprived of that status merely
      because some other employees similarly or  dissimilarly  situated  may
      also claim the same status. The argument to say the least can only  be
      described as one in terrorem, and as any other argument  of  the  kind
      has to be disregarded.”
                                                (Emphasis laid by the Court)

28. I have carefully analysed the law enunciated by  this  Court  in  M.M.R.
Khan’s case which throws interesting light on the  history  of  the  canteen
workers’ litigation which I have carefully considered and applied the  legal
principle laid down in that case to the fact situation of the case in  hand.
The canteen workers of the canteen of Railways in Kharagpur  approached  the
High Court of Calcutta praying that they be recognized  as  Railway  workers
and that all  service  conditions  available  to  railway  workers  be  made
available to them. The learned single  Judge  dismissed  the  petition.  The
Division Bench directed the respondents to recognize the workers as  Railway
employees but rejected  their  plea  for  similar  service  conditions.  The
matter came before this Court and the Court was inclined to agree  with  the
Division Bench decision of the Calcutta High Court and left it open  to  the
Union of India.  The railway board acted on the  initiative  of  this  Court
and declared that all  Kharagpur  canteen  workers,  soon  followed  by  all
statutory canteen workers across India would be deemed railway workers,  but
governed by their earlier service conditions.   The  prime  mover  therefore
was  not  the  Railway   Establishment   Manual   (REM)   but   a   judicial
interpretation clubbed with judicial nudging, to achieve the  constitutional
goals for canteen workers.  Therefore  the  contention  urged  by  Mr.  C.U.
Singh, learned senior counsel on behalf  of  Air  India  that  the  decision
rendered by this Court in M.M.R. Khan’s case  is  distinguishable  from  the
facts of the instant case, as this Court placed reliance upon  the  REM  and
the circulars issued by the Railway Board in  the  above  referred  case  is
wholly untenable in law, for the reason that REM  is  also  invoked  by  the
Railways.  I have to state that this Court has not given relief  to  railway
canteen workers because of the REM.  On the contrary, it  is  the  statutory
status of one type of canteen  that  was  the  prime  mover,  not  only  for
workers to claim their rights, but also for the railways  to  find  a  basis
for classification and then  create  a  suitable  administrative  system  to
govern  all  kinds  of  canteen  workers  using  a  reasonable   basis   for
classification.  Indeed the distinguishing feature adopted by  the  Railways
in the above referred case is primarily the one provided  by  the  Factories
Act and the Rules.  The relevant fact  has  been  duly  recognized  by  this
Court in the aforesaid case without in any way watering down the  importance
of a statutory canteen to be provided  to  the  employees/  workmen  by  the
occupier of a factory. The learned single  Judge  and  Division  Bench  have
unjustly  refused  the  claim  of  the  canteen  workmen  by  accepting  the
untenable arguments advanced by the learned senior counsel on behalf of  the
Air India that  the  canteen  run  through  HCI  from  Chefair  is  not  the
statutory canteen  and  Air  India  is  not  the  principal  employer.  This
conclusion is not only erroneous but is also contrary to the law  laid  down
by this Court in the cases referred to supra which are binding upon it.

29. The presence of a statutory obligation on the part of Air India  to  run
a canteen must always be seen as one more  strong  circumstance  for  me  to
determine the wider question of  regularization  of  the  concerned  workmen
involved in this case.  In Indian Petrochemicals Corpn.’s case, referred  to
supra we noticed the facts of that case which are quite similar to the  case
in hand. This Court was greatly  influenced  in  determinative  way  of  the
finding of fact and recorded that the workers were in continuous  employment
in the canteen for a considerable length of time.  The  underlying  test  is
what is the nature of employment of the concerned workmen  in  the  case  in
hand?  Is it a temporary or casual vacancy or is it perennial and  permanent
in nature?  The answer to the  aforesaid  queries  by  me  is  that  in  all
statutory canteens, the nature of employment, of vacancies, is indeed  of  a
permanent nature and those who deploy  the  workmen  on  contract  basis  to
discharge  statutory  duties  of  an  employer  amounts  to  unfair   labour
practice. In the nature of rotational hire and fire, policy adopted  by  the
employer must not be rewarded for  the  illegalities  perpetuated  by  them.
This is more so when the  principal  employer  is  a  statutory  corporation
coupled with the fact that the contractor also is one such  entity  and  the
two should not be allowed to  continue  their  unfair  labour  practices  to
employ the workmen on  contract  basis  in  the  canteen  to  discharge  the
statutory duty by the occupier to provide and maintain a  statutory  canteen
for its employees/workmen in its factory.   Both  Air  India  and  HCI  have
colluded with each other to perpetuate unfair labour practices  by  engaging
the concerned workmen in the statutory canteen of  the  principal  employer-
Air India.

30. Another important angle is examined by me in relation to the  nature  of
test to be used to  determine  employment  relations  between  the  parties.
Classically  jurists  like  Salmond  and   others   while   developing   the
jurisprudence relating to Torts have laid down the  test  to  determine  the
relationships  between  ‘master  and  servant’.   In  such  situations   the
predominant test deployed was the test of control and  supervision.   It  is
needless to state that post constitutional jurisprudence in  India  must  no
longer  be  allowing  practice  of  the  traditional  master   and   servant
relationship but  should  be  facilitating  employer-employee  relationships
mediated by constitutional jurisprudence which is relevant to  the  area  of
labour law jurisprudence in our  country  in  the  interest  of  maintaining
industrial peace and harmony which is in larger public interest.

31.  Further  there  has  been  considerable  discussion  in  the  area   of
determining the relevant test relating to  the  jurisprudence  of  employer-
employee relationship. Sometimes, we have fallen back on the old  principles
of master and servant and quite often when  we  find  that  these  were  not
capable of delivering justice to the workers  keeping  with  the  principles
contained in our Directive Principles of State Policy as enshrined  in  Part
IV of the  Constitution,  this  Court  has  taken  note  of  this  difficult
situation and has devised new tests  to  meet  the  challenges  of  the  new

32. That is why the legal principle has been enunciated by this Court  right
from  the  Hussainbhai  Calicut,  M.M.R.  Khan,  Parimal  Chandra  Raha   to
Harjinder Singh v. Punjab  State  Warehousing  Corporation[18]  establishing
the trend of healthy constitutional jurisprudence  and  its  application  to
labour law keeping in mind the basic feature of the constitution  namely  to
render social justice to the weaker sections of  the  society  as  has  been
held by this Court  in  Kesvananda  Bharati  v.  State  of  Kerala[19].  The
concept of social  justice  has  been  vividly  explained  in  the  case  of
Harjinder Singh, the relevant paragraph of which is extracted hereunder:

      “30. Of late, there has been a visible shift in the  courts’  approach
      in dealing with the  cases  involving  the  interpretation  of  social
      welfare legislations. The  attractive  mantras  of  globalisation  and
      liberalisation are fast becoming the raison  d’être  of  the  judicial
      process and an impression has been  created  that  the  constitutional
      courts are no longer sympathetic towards the plight of industrial  and
      unorganised workers. In large number of cases like  the  present  one,
      relief has been denied to the employees falling  in  the  category  of
      workmen, who are illegally retrenched from  service  by  creating  by-
      lanes and side-lanes in the jurisprudence developed by this  Court  in
      three decades. The stock plea raised by the public  employer  in  such
      cases   is   that   the   initial   employment/engagement    of    the
      workman/employee was contrary to some or the  other  statute  or  that
      reinstatement of  the  workman  will  put  unbearable  burden  on  the
      financial  health  of  the  establishment.  The  courts  have  readily
      accepted such plea unmindful of the accountability of the  wrong  doer
      and indirectly punished the tiny beneficiary of the wrong ignoring the
      fact that he may have continued in the employment for  years  together
      and that micro wages earned by him may  be  the  only  source  of  his

33.   Courts in this country have been faced with  the  problem  to  resolve
the dilemma as to who is really independent contractor and who is  not?   In
the light of the Constitution Bench decision in Steel Authority  of  India’s
case (supra) on the subject, the crucial test is to  determine  whether  the
nature  of  the  contractual  relationship  between  the  parties  that   is
juristically introduced is a genuine one or a  sham  contract.  It  must  be
noted that employers and their  organizations  and  indeed  all  parties  to
labour litigation keep close watch on the evolving jurisprudence and  tailor
legal agreement and paper contracts  accordingly  to  suit  the  purpose  of
finding the cheapest and most exploitable labour with honourable  exceptions
as we have seen in the case of  the  railway  management.   This  craze  for
facilitating ‘flexible labour’ which is another phrase for ‘hire  and  fire’
deserves no constitutional sympathy.

34.   Two broad judicial approaches have manifested themselves in the  above
background - one that responds to constitutional jurisprudence,  as  pointed
out in Harjinder Singh’s case (supra) and the other that abides by  the  new
dogmas of globalisation and liberalisation. It is my considered view that  I
must abide by the former jurisprudence keeping in view the mandate  we  find
in the judgments of this Court referred to supra.

35.   The test which I come across is almost universal  in  its  application
to address the wide range of fact situations which has been discussed by  me
in this judgment. In the case of Hussainbhai (supra), this  Court  has  held
that the test of economic control in contrast to the  test  of  control  and
supervision is the test to ascertain the employer-employee  relationship.  I
am inclined to apply the above test to the fact situation  of  the  case  in
hand to determine the fact as to  whether  a  genuine  contract  or  a  sham
contract exists between Air  India  and  the  Hotel  Corporation  of  India.
Indeed if I pierce the veil of legal appearances that is  contained  in  the
contractual arrangement between the two  public  sector  corporations  named
above, I must come to the conclusion that what I  see  is  a  sham  contract
between them behind which many unfair labour  practices  like  the  40  days
contract of employment of the concerned workmen  in  the  canteen  has  been
perpetuated by them in order to deny permanent employment to the workmen  in
the canteen which is of permanent and  statutory  in  nature  and  therefore
carries with it permanent vacancies.

36.   The learned senior counsel on behalf of Air  India,  placing  reliance
upon the decision of this Court referred to supra urged that  the  concerned
workmen in the canteen are ‘workmen’ only for the purpose of Factories  Act.
 I disagree with the said contention and the view point for the reason  that
the same workers are also 'workers' as defined under  Section  2(s)  of  the
I.D. Act and permanently keeping them  on  a  temporary  status  is  against
entries at serial numbers 5 and 10 of the Vth   Schedule  of  the  I.D.  Act
pertains to “Unfair Labour Practices” under the  I.D.  Act  which  prohibits
employers from committing such illegalities, for which the  statutory  penal
action is prescribed under Section 25U of the I.D. Act on such persons.  The
existing practice that is followed by either the Hotel Corporation of  India
or  Air  India  independent  of  each  other  or  in  collusion  thereof  is
unbecoming of a model employer. Interestingly, this  position  would  remain
the same irrespective of whether the canteen worker is an  employee  of  the
'independent contractor' or the 'principal employer'.

37.    Further  question  is  whether  the  above  two  legal  entities  are
independent of each other or not, has become central focus  to  stay  within
the confines of the test of 'control and supervision'.   I  am  prompted  to
find out whether the wholly owned subsidiary,  the  HCI  is  acting  at  the
behest of Air India and if so to what extent. If, however, I have  to  apply
the other tests already laid down by this Court as, I propose to do in  this
case in Hussainbhai’s case, then the  independence  of  the  separate  legal
personalities and the interpretation made in Salomon v.  Salomon,  on  which
the learned single judge relies, pales  into  insignificance.  The  relevant
paragraph reads as under:
      “Then,  if  the  company  was  a  real  company,  fulfilling  all  the
      requirements of the Legislature, it must be treated as a  company,  as
      an entity, consisting indeed of certain corporators,  but  a  distinct
      and independent corporation. The Court of Appeal  seem  to  treat  the
      company sometimes as substantial and sometimes as shadowy and  unreal:
      it must be one or the other, it cannot be both. A Court cannot  impose
      conditions  not  imposed  by  the  Legislature,  and  say   that   the
      shareholders must not be related to each other, or that they must hold
      more than one share each. There is nothing to prevent one  shareholder
      or all the shareholders holding the  shares  in  trust  for  some  one
      person. What is prohibited is the entry of a trust on the register: s.
      30 . If all the shares were held in trust  that  would  not  make  the
      company a trustee.”

38.   The said principle has been followed by this Court in catena of  cases
namely,  Kanpur  Suraksha  Karamchari  Union  and  Basti  Sugar  Mills  Ltd.
referred to supra.  In the case of  State  of  UP  v.  Renusagar  Power  Co.
(supra), this Court held as under:
      “55. ……On the other hand these English cases have  often  pierced  the
      veil to serve the real aim of the parties and for public purposes. See
      in this connection the observations of the Court of appeal in DHN Food
      Distributors Ltd. v. London  Borough  of  Tower  Hamlets.  It  is  not
      necessary to take into  account  the  facts  of  that  case.  We  may,
      however, note that in that case  the  corporate  veil  was  lifted  to
      confer benefit upon a group of companies under the provisions  of  the
      Land Compensation Act, 1961 of England. Lord Denning at p. 467 of  the
      report has made  certain  interesting  observations  which  are  worth
      repeating in the context of the instant case. The Master of the  Rolls
      said at p. 467 as follows:

         ‘Third, lifting the corporate veil.  A  further  very  interesting
         point was raised by counsel for the claimants on company  law.  We
         all know that in many respects a group of  companies  are  treated
         together for the purpose of general accounts,  balance  sheet  and
         profit  and  loss  account.  They  are  treated  as  one  concern.
         Professor Gower in  his  book  on  company  law  says:  ‘there  is
         evidence of a  general  tendency  to  ignore  the  separate  legal
         entities of various companies within a group, and to look  instead
         at the economic entity of the whole group’. This is especially the
         case  when  a  parent  company  owns  all  the   shares   of   the
         subsidiaries, so much so that it can control every movement of the
         subsidiaries. These subsidiaries are bound hand and  foot  to  the
         parent company and must do just what the parent  company  says.  A
         striking instance is the decision of the House of Lords in  Harold
         Holdsworth & Co. (Wakefield) Ltd. v. Caddies. So here. This  group
         is virtually the same as a partnership  in  which  all  the  three
         companies are partners. They should not be treated  separately  so
         as to be defeated  on  a  technical  point.  They  should  not  be
         deprived of the compensation which should justly  be  payable  for
         disturbance. The three companies should, for present purposes,  be
         treated as one, and the parent company, DHN, should be treated  as
         that  one.  So  that  DHN  are  entitled  to  claim   compensation
         accordingly. It was  not  necessary  for  them  to  go  through  a
         conveyancing device to get it……’

            XXX             XXX              XXX

            XXX             XXX              XXX

      65. Mr. Justice O. Chinnappa Reddy speaking for this Court in  LIC  v.
      Escorts Ltd. had emphasised that the corporate veil should  be  lifted
      where the associated companies are inextricably connected as to be, in
      reality, part of one concern. It is neither necessary nor desirable to
      enumerate the classes of cases where lifting the veil is  permissible,
      since that must necessarily depend on the relevant statutory or  other
      provisions, the object sought to be achieved,  the  impugned  conduct,
      the involvement of the element of the public interest, the  effect  on
      parties who may be affected. After referring to  several  English  and
      Indian cases, this Court observed that ever since  A.  Salomon  &  Co.
      Ltd. case a company has a legal independent  existence  distinct  from
      individual members. It has since been held that the corporate veil may
      be lifted and corporate personality may be looked  in.  Reference  was
      made to Pennington and Palmer’s Company Laws.

      66. It is high time to reiterate that  in  the  expanding  horizon  of
      modern jurisprudence, lifting of corporate veil  is  permissible.  Its
      frontiers are unlimited. It must, however,  depend  primarily  on  the
      realities of the situation. The  aim  of  the  legislation  is  to  do
      justice to all the parties. The horizon of the doctrine of lifting  of
      corporate veil is expanding. Here, indubitably, we are of the  opinion
      that it is correct  that  Renusagar  was  brought  into  existence  by
      Hindalco in order to fulfil the condition  of  industrial  licence  of
      Hindalco through production of aluminium. It is also manifest from the
      facts that the model of the setting up of power  station  through  the
      agency of Renusagar was adopted by Hindalco to avoid complications  in
      case of take over of the power station by the State or the Electricity
      Board. As the facts make it abundantly clear that all  the  steps  for
      establishing and expanding the power station were taken  by  Hindalco,
      Renusagar is wholly owned subsidiary of  Hindalco  and  is  completely
      controlled by Hindalco. Even the day-to-day affairs of  Renusagar  are
      controlled by Hindalco. Renusagar has at no point  of  time  indicated
      any independent volition. Whenever felt necessary, the  State  or  the
      Board have themselves lifted  the  corporate  veil  and  have  treated
      Renusagar and Hindalco as one concern and the generation in  Renusagar
      as the own source of generation of Hindalco. In the impugned order the
      profits of Renusagar have been treated as the profits of Hindalco.

         XXX                XXX              XXX

      68.  The  veil  on  corporate  personality  even  though  not   lifted
      sometimes, is becoming more and more  transparent  in  modern  company
      jurisprudence. The ghost of Salomon case still visits  frequently  the
      hounds of Company Law but the veil has been  pierced  in  many  cases.
      Some of these have been noted by Justice  P.B.  Mukharji  in  the  New
                                                (Emphasis laid by the Court)

39.   The above said judgment  is  followed  by  this  Court  in  D.D.A.  v.
Skipper Construction Co.(supra). The relevant paragraphs read as under:
      “26. The law as stated by Palmer and Gower has been approved  by  this
      Court in TELCO v. State of  Bihar.  The  following  passage  from  the
      decision is apposite:

        ‘… Gower has classified seven categories of cases where the veil  of
        a corporate body has been lifted. But, it would not be  possible  to
        evolve a rational, consistent and inflexible principle which can  be
        invoked in determining the question as to whether the  veil  of  the
        corporation should be lifted or not. Broadly stated, where fraud  is
        intended to be prevented, or trading with an enemy is sought  to  be
        defeated, the veil of a corporation is lifted by judicial  decisions
        and the shareholders are held to be the persons  who  actually  work
        for the corporation.’

      27. In DHN Food Distributors Ltd. v. London Borough of  Tower  Hamlets
      the court of appeal dealt with a  group  of  companies.  Lord  Denning
      quoted with approval the statement in Gower’s Company Law that
      “there is evidence of a general tendency to ignore the separate  legal
      entities of various companies within a group, and to look  instead  at
      the economic entity of the whole group”.
      The learned Master of Rolls observed that “this group is virtually the
      same as a partnership in which all the three companies are  partners”.
      He called it a case of “three in one” — and, alternatively, as “one in

      28. The concept of corporate  entity  was  evolved  to  encourage  and
      promote trade and commerce  but  not  to  commit  illegalities  or  to
      defraud people. Where, therefore, the corporate character is  employed
      for the purpose of committing illegality or for defrauding others, the
      court would ignore the  corporate  character  and  will  look  at  the
      reality behind  the  corporate  veil  so  as  to  enable  it  to  pass
      appropriate orders to do justice between the  parties  concerned.  The
      fact that Tejwant Singh and members of his family have created several
      corporate bodies does not prevent this Court from treating all of them
      as one entity belonging to and controlled by Tejwant Singh and  family
      if it is found that these corporate bodies are  merely  cloaks  behind
      which lurks Tejwant Singh and/or members of his family  and  that  the
      device of incorporation was  really  a  ploy  adopted  for  committing
      illegalities and/or to defraud people.
      The concept of resulting trust and equity”
                                                (Emphasis laid by the Court)

40.   In Kapila Hingorani v. State of Bihar  (supra),  this  Court  held  as
      “26. The proposition  that  a  company  although  may  have  only  one
      shareholder will be  a  distinct  juristic  person  as  adumbrated  in
      Salomon v. Salomon and Co., has time and again  been  visited  by  the
      application of doctrine of lifting the corporate veil in  revenue  and
      taxation matters. (See Dal Chand and Sons v. CIT and Juggilal Kamlapat
      v. CIT.)

      27. The corporate veil indisputably can be pierced when the  corporate
      personality is  found  to  be  opposed  to  justice,  convenience  and
      interest of the revenue or workman or against  public  interest.  (See
      CIT v. Sri Meenakshi Mills Ltd., Workmen v. Associated Rubber Industry
      Ltd., New Horizons Ltd. v. Union of India, State of U.P. v.  Renusagar
      Power Co., Hussainbhai v. Alath Factory Thezhilali  Union  and  Secy.,
      H.S.E.B. v. Suresh.)”
                                                (Emphasis laid by the Court)

41. This Court in Secretary, HSEB v. Suresh & Ors.[20] has held as under:
      “6. In order to keep the said plants and stations clean and  hygienic,
      the appellant-Board, upon tenders being floated, awards  contracts  to
      contractors who undertake the work  of  keeping  the  same  clean  and
      hygienic. One such contract was awarded  to  one  Kashmir  Singh,  for
      “proper, complete and  hygienic  cleaning,  sweeping  and  removal  of
      garbage from the Main Plant Building” at Panipat, at the  rate  of  Rs
      33,000 per month  with  a  stipulation  to  engage  minimum  42  Safai
      Karamcharis with effect from 15-5-1987 for a period of one year and in
      terms therewith the contractor took over the work  and  performed  the
      said work through the above-stated Safai Karamcharis.

         XXX                XXX              XXX

      9. The High Court did in fact note with care and caution the  doctrine
      of “lifting of the veil” in industrial jurisprudence and recorded that
      in the contextual facts and upon lifting  of  the  veil,  question  of
      having any contra opinion as regards the  exact  relationship  between
      the  contesting  parties  would  not  arise  and  as   such   directed
      reinstatement though, however, without any back  wages.  While  it  is
      true that the doctrine enunciated in Saloman v.  Saloman  &  Co.  Ltd.
      came  to  be  recognised  in  the  corporate  jurisprudence  but   its
      applicability in the present context cannot be doubted, since the  law
      court invariably has to rise up to the occasion to do justice  between
      the parties in a manner as it deems fit. Roscoe Pound stated that  the
      greatest virtue of the law court is flexibility and as  and  when  the
      situation so demands, the law court ought  to  administer  justice  in
      accordance therewith and as per the need of the situation.

         XXX                XXX              XXX

      13. There is, however, a total unanimity of judicial pronouncements to
      the effect that in the event the contract labour  is  employed  in  an
      establishment for seasonal workings, question of abolition  would  not
      arise but in the event of the same being perennial in nature, that  is
      to say, in the event of the engagement  of  labour  force  through  an
      intermediary which is otherwise in the ordinary course of  events  and
      involves continuity in the work, the legislature is candid  enough  to
      record its abolition since involvement of the contractor may have  its
      social evil of labour exploitation and thus the contractor ought to go
      out of the scene bringing together  the  principal  employer  and  the
      contract labourers rendering the employment as direct, and resultantly
      a direct employee. This aspect of the matter has been dealt with great
      lucidity, by one of us (Majmudar, J.) in Air India Statutory Corpn. v.
      United Labour Union.

         XXX                XXX              XXX

      17. Needless to  note  at  this  juncture  that  the  Contract  Labour
      (Regulation and Abolition) Act being a beneficial piece of legislation
      as engrafted in the statute-book, ought to receive the widest possible
      interpretation in regard to the words used and unless words are  taken
      to their maximum amplitude, it would be a  violent  injustice  to  the
      framers of the law. As a matter of fact the law  is  well  settled  by
      this Court and we need not dilate  much  by  reason  therefor  to  the
      effect that the law courts exist for the society and in the  event  of
      there being a question posed in the  matter  of  interpretation  of  a
      beneficial piece of legislation, question  of  interpreting  the  same
      with a narrow  pedantic  approach  would  not  be  justified.  On  the
      contrary, the widest  possible  meaning  and  amplitude  ought  to  be
      offered to the expressions used as otherwise  the  entire  legislation
      would lose its efficacy and contract labour would be left at the mercy
      of the intermediary.

         XXX                XXX              XXX

      20. It has to be kept in view that this is not a case in which  it  is
      found that there was any genuine  contract  labour  system  prevailing
      with the Board. If it was a genuine contract system, then obviously it
      had to  be  abolished  as  per  Section  10  of  the  Contract  Labour
      Regulation and Abolition Act after following the procedure  laid  down
      therein. However, on the facts of the present case, it  was  found  by
      the Labour Court and as confirmed by the High Court that the so-called
      contractor Kashmir Singh was a  mere  name  lender  and  had  procured
      labour for the Board from the open market. He was almost a  broker  or
      an agent of the Board for that purpose. The Labour  Court  also  noted
      that the management witness Shri A.K. Chaudhary also  could  not  tell
      whether Shri Kashmir Singh was a  licensed  contractor  or  not.  That
      workman had made a  statement  that  Shri  Kashmir  Singh  was  not  a
      licensed contractor. Under these circumstances, it has to be held that
      factually there was no  genuine  contract  system  prevailing  at  the
      relevant time wherein the Board could have acted as only the principal
      employer and Kashmir Singh as a licensed contractor  employing  labour
      on his own account. It is also pertinent  to  note  that  nothing  was
      brought on record to indicate that even the Board at the relevant time
      was registered as the principal employer  under  the  Contract  Labour
      Regulation and Abolition Act. Once  the  Board  was  not  a  principal
      employer and the so-called contractor Kashmir Singh was not a licensed
      contractor under the Act, the inevitable conclusion  that  had  to  be
      reached was to the effect that the so-called  contract  system  was  a
      mere camouflage,  smoke  and  a  screen  and  disguised  in  almost  a
      transparent  veil  which  could  easily  be  pierced  and   the   real
      contractual relationship between the Board, on the one hand,  and  the
      employees, on the other, could be clearly visualised.”
                                                (Emphasis laid by the Court)

42.   The  legal  principle  laid  down  by  this  Court  by  following  the
exposition of law for lifting the veil to find out real facts is  very  much
necessary to the facts of the case in hand having the law laid down  in  the
case of Salomon v.  Salomon  (supra)  to  examine  the  correctness  of  the
findings of the High Court in reversing the  finding  of  fact  recorded  in
favour of the concerned workmen by the CGIT in its  award  with  a  view  to
find out whether the arrangement with or without the consent  of  the  owner
company  facilitated  the  violation  of  the  basic  principles  of  labour
jurisprudence established in this country over a period  of  more  than  six
decades,   especially   principles   relating   to   security   of   tenure,
retrenchment, natural justice, and many other standards relating to  "decent
conditions at work". If two statutory corporations owned by  the  Government
of India are governed by Rule of law, namely Factories  Act  and  Industrial
Disputes Act, in the manner in which they contended, it would be opposed  to
the labour jurisprudence and  constitute  a  clear  case  of  unfair  labour
practice which is against the law enunciated by this Court  in  plethora  of
cases referred to supra whose relevant paragraphs are extracted as above  in
support of my conclusion to hold that the finding in the impugned  judgments
of the High Court that is, the HCI, though it is  a  subsidiary  company  of
Air India, yet it is a separate and  distinct  legal  entity  and  that  the
concerned workmen have been employed by  the  HCI  and  not  Air  India  and
hence, there is no relationship of employer and  employee  and  disciplinary
control upon them by Air India, which has been reached at by the High  Court
and setting aside the findings  recorded  by  the  CGIT  in  favour  of  the
concerned workmen, is not only erroneous but also suffers from error in  law
as the same is opposed to the law laid down  by  this  Court  in  catena  of
cases referred to supra.

43.   Any other test required to be applied to the  question  of  the  legal
entity of the so called  'independent  contractor',  is  irrelevant  to  the
critical issues which arise in this case. The view taken by the  Delhi  High
Court regarding the separate legal identity of both these corporations,  and
erroneously setting aside the findings of the CGIT is  not  the  determining
factor in this case. There have been varying  practices  in  vogue  in  this
regard. In the Parimal Chandra Raha’s  case  (supra),  it  is  noticed  that
there were 'Managing Committees’, and 'Cooperative  Societies'  which  could
not exist without a separate legal personality that is, 'Contractors',  many
of them also create convenient legal personalities under garb  of  different
legal  entities.  The  presence  of  a  contractor  clothed  with  a   legal
personality or not as in the case of the defence establishments referred  to
above in the Suraksha Karamchari Union’s case (supra) also has  hardly  ever
been considered to be a determinative test pertaining to canteen workers  on

44.   For the  reasons  recorded  by  me  on  the  contentious  points  with
reference to the facts, legal evidence and law laid down by  this  Court  in
plethora of cases, I am in agreement with the CGIT on the finding  of  facts
recorded by it on the question of the  relationship  between  the  concerned
workmen and the Air India on proper appreciation of pleadings and the  legal
evidence on record and piercing the veil to the fact situation to  find  out
true facts which is rightly answered by CGIT on the points of  disputes  and
the said finding is in conformity with the law laid down by  this  Court  in
Hussainbhai’ case and M.M.R. Khan and other cases referred to supra for  the
reason that the contract with the HCI which is a subsidiary Company  of  Air
India and employing the contract workers to work in the  statutory  canteen,
is a sham contract. They have been  engaged  in  permanent  nature  of  work
continuously for number of years. The finding of fact recorded by  the  CGIT
on the points of dispute holding that they are entitled  for  regularization
and to be absorbed as employees of  Air  India,  without  prejudice  to  any
managerial arrangement to avail the expertise of the HCI  of  India  through
existing arrangements. Indeed that would be a win-win situation for all  the
stake holders  concerned  in  this  case-  the  corporates,  the  Air  India
employees numbering more  than  2000  in  this  case  and  the  disempowered
canteen workers and that would also be in harmony  with  our  constitutional

45.   However it must be clarified that the requirement  of  reservation  as
provided for in Articles 14 and 16 of  the  Constitution  must  be  complied
with while regularizing the canteen workers as employees of Air India.  This
can be achieved by complying with relevant provisions of  the  I.D.  Act  in
contrast to the action taken by the HCI in violation of  the  said  statute.
It is also further relevant to note that the only relief  the  workers  have
sought is one of regularization on the rolls of Air  India.  This  does  not
itself impose any additional expenditure for it. Therefore, the  concern  of
the learned single Judge of the High Court, on this count is  not  attracted
in the context of the relief sought for by the concerned workmen.

46. The  special  facts  which  are  intermingled  with  questions  of  fact
relevant to the case at hand may once again be noticed by me  to  hold  that
the concerned workmen  have  completed  240  days  despite  attempt  of  the
contractor by giving break in  service  of  the  concerned  workmen  by  the
statutory corporation which is an instrumentality of  the  state   which  is
not permissible in law.

47. The wages of the canteen workers and other costs are  paid  through  the
arrangement of per head subsidy @ of Rs.340/- for over  2000  employees,  to
the contractor that is, HCI  by  the  principal  employer  -Air  India.  The
supervision and control of the  establishment  is  adequately  provided  for
through the 'Memorandum and Articles of Association' which  binds  both  the
'sole owner' and the 'wholly owned subsidiary'. The service of  running  the
statutory canteen is provided for  the  benefit  of  the  employees  of  Air
India. The statutory obligation on the part of Air India to run the  canteen
is squarely placed on the shoulders of the occupier of the  factory  as  per
Section 2(n) of the Factories  Act,  because  they  employ  more  than  2000
employees despite resorting to pleadings stating  that  it  did  not  employ
more than 250 workers, thus seeking to escape  from  the  consequences  that
may follow  in  case  of  a  'statutory  canteen'  without  challenging  the
Notification of the Labour Department issued by the Lt.  Governor  of  Delhi
under  Rules 65 to 70 of the Rules.

48.   For the above reasons, in addition to the test  of  economic  control,
as held by this Court in Hussainbhai’s case, I  am  of  the  view  that  the
relief sought for by the concerned workmen which is accepted by the CGIT  is
legal and valid.  Therefore, I  have  to  accept  the  finding  and  reasons
recorded by the CGIT though the reasons which I have assigned  are  not  the
reasons assigned by it but the conclusions arrived  at  by  the  CGIT  while
determining the points of dispute  referred  to  it  are  legal  and  valid.
Therefore, the reasons assigned by me in this judgment  must  be  read  into
the reasons of the award of the CGIT.  The aforesaid  reasons  are  assigned
by me in  this  judgment  after  careful  examination  of  the  rival  legal
contentions urged by the learned senior counsel on  behalf  of  the  parties
with reference to the provisions  of  the  Factories  Act,  Rules,  Contract
Labour Act and Industrial Disputes Act and law laid down by  this  Court  in
catena of cases. These points are accordingly  answered  in  favour  of  the

Answer to point No. 3:

49. In view of the foregoing reasons recorded by me in answering  the  point
Nos. 1 and 2 after adverting to the relevant  facts  and  interpretation  of
certain provisions of the Factories Act, Rules and the  Industrial  Disputes
Act, particularly Sections 2(k), 2(s) read with the  provisions  of  Section
25(T) and Section 25(U) of the Industrial Disputes Act and  Entry  No.10  in
the Vth  Schedule  under  the  definition  of  unfair  labour  practices  as
defined in  Section  2(ra)  regarding  the  employment  of  the  workmen  on
contract basis against the permanent nature of employment in  the  statutory
canteen I have held that this  practice  by  Air  India  constitutes  unfair
labour practice. The decisions  rendered  by  this  Court  which  have  been
extensively referred to by me and some of the cases referred to by the  CGIT
have rightly answered the points of  dispute  in  favour  of  the  concerned
workmen, on proper appreciation of the  facts  pleaded,  legal  evidence  on
record and I have applied the legal principles laid down by  this  Court  in
the cases of Basti Sugar Mills Ltd., Parimal Chandra Raha,  Kanpur  Suraksha
Karamchari Union and M.M.R.  Khan  (all  referred  to  supra)  to  the  fact
situation of the case on hand to restore the award of  the  CGIT.  The  CGIT
has rightly come  to  the  conclusion  and  recorded  the  finding  of  fact
assigning valid and cogent reasons. Therefore, I have  to  answer  that  the
findings and reasons recorded by CGIT on the points of dispute  in  relation
to the concerned employees declaring that the concerned contract workers  of
the canteen are deemed employees of Air India is a right decision which  has
been reached after appreciation of evidence on record and  adhering  to  the
legal principles laid down by  this  Court  in  catena  of  cases.  Further,
setting aside the termination orders passed against some  of  the  concerned
workmen covered in the industrial dispute case Nos.97 to 99 of 1996 is  also
justified for the reason that the services of the concerned workmen  in  the
above cases were terminated  during  pendency  of  the  industrial  disputes
before CGIT regarding absorption  of  the  concerned  workmen  as  permanent
employees, without obtaining  approval  from  the  CGIT  as  required  under
Section 33(2)(b)  of  the  I.D.  Act.  Apart  from  the  above  reason,  the
termination of services of the workmen  involved  in  the  above  industrial
dispute cases is unsustainable in law for the  reason  that  they  have  not
complied with the mandatory provisions of Section 25F, clauses (a)  and  (b)
of the I.D. Act and have  not  obtained  the  permission  from  the  Central
Government as required under Section 25N of Chapter  VB  of  the  I.D.  Act.
Therefore, the orders of termination passed against  the  concerned  workmen
are void ab initio in law and the same are liable to be set  aside.  I  have
to hold that the CGIT has rightly passed an  award  in  favour  of  all  the
workmen in all the Industrial Disputes on the file of CGIT on  findings  and
reasons recorded on the points of dispute referred  to  it  by  the  Central
Government upon which adjudication is made by the CGIT. The same  cannot  be
termed either as erroneous or error in law. Accordingly, I answer the  point
No.3 in favour the concerned workmen.

Answer to point No.4:

50.   The findings and reasons recorded on the contentious  points  by  both
the learned single Judge and the Division Bench of the Delhi High  Court  in
the impugned judgment that no better service conditions than the  Management
of HCI would be provided to the canteen  workers  except  to  get  free  air
tickets which apparently some employees of Air India  are  entitled  to,  is
untenable in law.  Incidentally this is another  aspect  which  may  have  a
bearing on the question of viability in  terms  of  prevailing  practice  in
industry.  Perhaps, Air India must explore the significance  of  the  region
cum industry principle so well developed in our labour jurisprudence. It  is
seriously concerned about competition and viability  rather  than  focus  on
the handful of canteen workers.

51. The learned single Judge and the Division  Bench  have  interfered  with
the finding of fact recorded in the common  award  passed  by  the  CGIT  by
disagreeing with the findings and reasons recorded by the CGIT  and  holding
that the HCI is a subsidiary corporation of Air India and it  has  got  100%
share holding and power to appoint  the  Directors  of  the  HCI  and  after
referring to the decisions of  this  Court  in  Kanpur  Suraksha  Karamchari
Union case (supra), it held  that  it  is  a  separate  legal  entity  which
finding of fact and reason has been concurred with by the Division Bench  by
assigning the similar reasons placing  reliance  on  the  decision  of  this
Court in M.M.R.  Khan’s  case  which  decision  supports  the  case  of  the
concerned workmen. The said decision is distinguished by the Division  Bench
of the High Court after adverting to certain paragraphs without  considering
the relevant paragraph Nos.  25  and  30  which  has  laid  down  the  legal
principle and also referred to other judgments namely Indian  Petrochemicals
Corporation Ltd. and Hari Shanker Sharma referred to supra without  piercing
the veil to the real facts of the case.

52.   Both the learned single Judge and the Division Bench have exceeded  in
their  jurisdiction  in  exercising  their  extraordinary  and   supervisory
jurisdiction in the Writ Petitions and  the  Letter  Patent  Appeals,  while
examining the correctness and findings recorded by the CGIT  in  the  common
award which the High Court has disagreed with and has set aside  the  common
award impugned in the Writ Petitions filed by Air India.  Both  the  learned
single Judge and the Division Bench  have  exceeded  their  jurisdiction  in
interfering with findings of fact recorded by the  CGIT  on  the  points  of
dispute and the contentious issues  on  proper  appreciation  of  pleadings,
evidence on record and law laid down by this Court in the cases referred  to
in the award I have referred to  the  relevant  factual  aspects  and  legal
evidence and the statutory provisions of the Factories Act,  Rules  and  the
Industrial Disputes Act, while answering to Point Nos.1, 2 and 3  in  favour
of  the  concerned  workmen  by  recording  my  reasons  in  this  judgment.
Therefore, I have to hold that the learned single  Judge  and  the  Division
Bench exceeded in their jurisdiction to interfere with the finding  of  fact
recorded by the CGIT on the points of dispute which were referred to by  the
Central Government. For the reasons recorded by me on point Nos. 1 and 2  in
this judgment and further answering the point No.3 in affirmative in  favour
of the concerned workmen holding that findings and reasons recorded  by  the
CGIT on the point of dispute referred to it by the  Central  government  are
neither erroneous nor suffers from error in law. Also I have to  hold  while
answering to point No. 4 that both the learned single  Judge  and  the  High
Court have disagreed with the correct finding of fact recorded by  the  CGIT
in its award.   The  findings  recorded  by  the  learned  Singh  Judge  and
Division Bench in the impugned judgment are not only erroneous  but  suffers
from error in law as the same is contrary to the  statutory  provisions  and
law laid down by this Court which have been extensively referred  to  by  me
in   the reasoning portion of this judgment in answer to point  Nos.  1  and
2.  Hence, I have  to  hold  that  findings  and  reasons  recorded  in  the
impugned judgment is wholly  untenable  and  liable  to  be  set  aside  and
accordingly set aside by answering point         no.  4  in  affirmative  in
favour of the concerned workmen.

Answer to Point No.5:

53. Since I have answered point No. 4 in favour  of  the  concerned  workmen
and against Air India, the  appellants  are  entitled  for  the  reliefs  as
prayed for in these appeals. Accordingly,  these  appeals  are  allowed  and
common award dated 5.5.2004 passed in I.D. Nos.97 to 99 of  1996  in  favour
of the workmen is restored.  Further, I direct the Management of  Air  India
to absorb all the concerned workmen covered in the  I.D.  Nos.97  to  99  of
1996 as permanent workmen on its rolls from the date  of  their  appointment
and grant all the consequential benefits  such as salary for which they  are
entitled for after computing properly, taking  into  consideration  the  pay
scale and periodical wage revision that has taken place and  are  applicable
to the respective posts of the concerned workmen  as  per  the  notification
issued by the Lt. Governor, Union Territory of Delhi and  on  the  basis  of
similar notifications applicable for them.

54. Since I have allowed I.D. Nos. 97 to 99 of 1996, the Industrial  Dispute
case Nos. 107 and 108 of 1996 involving  the  workmen  whose  services  were
terminated during the  pendency  of  petition  before  CGIT,  must  also  be
treated as permanent workmen at par with the concerned workmen  involved  in
the instant case. The award for their reinstatement to their posts shall  be
passed with all consequential benefits with full back wages.

55.   Accordingly, I allow the appeals  of  the  concerned  workmen  in  the
above said terms.

                                  ……………………………………………………………J.     [V. GOPALA

New Delhi,
November 13, 2013

[1]    1990 (Supp) SCC 191
[2]    1995 suppl. (2) SCC 611
[3]    AIR 1964 SC 355
[4]    (2001) 1 SCC 720
[5]    1897 AC 22
[6]    (1999) 6 SCC 439,
[7]    (2001)7 SCC 1
[8]    (2009)13 SCC 374
[9]    (2002) 1 SCC 337
[10]   (1988) 4 SCC 59,
[11]   (1996) 4 SCC 622
[12]   (2003) 6 SCC 1
[13]   (2004) 3 SCC 514
[14]   (2005) 5 SCC 51
[15]   (1992) 1 SCC 695
[16]   (1978) 4 SCC 257
[17]   (1988) 4 SCC 478
[18]   (2010)3 SCC 192
[19]    (1973)4 SCC2 25
[20]   (1999) 3 SCC 601


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