Holding

When the principal employer retains control, provides premises, utilities and pays wages, the contractor is a façade and the workers are deemed employees of the principal employer, making the Industrial Court’s direction to absorb them proper.

Summary

The Association of Engineering Workers filed a complaint under Item 9 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971, alleging that Hindalco Industries treated its canteen staff as contract workers to avoid granting permanency and benefits. The Industrial Court found that despite the formal contractor arrangement, Hindalco exercised complete control over the canteen, provided premises, utilities, wages and supervision, and therefore the workers were de facto employees, constituting an unfair labour practice. The High Court affirmed the Industrial Court’s order directing Hindalco to absorb the 27 canteen workers as permanent unskilled employees with appropriate wages and benefits. On appeal, the Supreme Court upheld both the Industrial Court’s finding and the High Court’s affirmation, holding that the contractor was a mere façade and the workers were employees of the principal employer for purposes of the Act. The Court dismissed the appeal and ordered Hindalco to implement the absorption within three months.

Issues considered

Whether the Industrial Court was justified in directing Hindalco to absorb the canteen workers as permanent employees and grant them wages and benefits of the last category of unskilled workmen.
Whether the High Court was correct in affirming the Industrial Court’s order.
Whether workers employed in a statutory canteen run through a contractor are deemed employees of the principal employer under the Maharashtra Unfair Labour Practices Act, 1971.
Which forum (Industrial Court vs. Industrial Disputes Act) has jurisdiction to adjudicate the dispute.

Legislation cited

Bombay Industrial Relations Act, 1946
Factories Act, 1948s. Section 46
Industrial Disputes Act, 1947
Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971s. Schedule IV Item 9, s. Section 26, s. Section 27, s. Section 28, s. Section 30, s. Section 3(16), s. Section 32, s. Section 59, s. Section 60

Subjects

unfair labour practicecontract labourstatutory canteenemployee statusabsorptionindustrial court jurisdictionMaharashtra labour lawpermanent employmentsham contract

Judgment

[2008) 5 S.C.R. 111

~
HINDALCO INDUSTRIES LTD. A
v.
ASSOCIATION OF ENGINEERING WORKERS
(Civil Appeal No. 6410 of 2000)
MARCH 14, 2008
B
! (TARUN CHATTERJEE AND P. SATHASIVAM, JJ.)

Maharashtra Recognition of Trade Unions and
Prevention of Unfair Labour Practices Act, 1971:
Schedule IV- Item 9- Unfair labour practice by Company c
-Complaint that Company treating its canteen workmen as
contract workmen - Workmen of statutory canteen run by
Company through contractor- Continuing for tong time inspite
of change of several contractors - No fr.esh appointment letters
issued by successive contractors - Activities of canteen D
workmen, their suitability to work, physical fitness etc. controlled
..,1 by Company - Company providing rent free premises with
free water, electricity, furniture, crockery, cooking utensils for
canteen - Payment of wages, PF contribution etc. of canteen
workmen reimbursed/paid by Company - .Quality, quantity, E
rates and manner of supply of food articles laid down by
Company - HELD: Industrial Court rightly concluded that
contract was nothing but paper agreement - Even though
canteen was shown to be run by contractor, ultimate control
and supervision was of Company - Company committed F
.., unfair labour practice - Industrial Court rightly directed the
J.- Company to absorb and make canteen employees as
employees of Company and grant them wages and benefits
as admissible to the last category of unskilled workmen of the ·
Company - Direction of Industrial Court to be complied with :
G
expeditiously.
The respondent-Workers Union filed a complaint
before the Industrial Court alleging unfair Labour practice
by the appellant-Company in terms of Item 9 of SchedUle
111 H
112 SUPREME COURT REPORTS [2008] 5 S.C.R.

A IV to the Maharashtra Recognition of Trade Unions and
Prevention of Unfair Labour Practices Act, 1971. It was
stated in the complaint that the workmen working in the
canteen maintained by the Company in terms of s.46 of
the Factories Act were deprived by the Company of
B permanency and other benefits as applicable to other
permanent workmen of the Company; that the company y
was illegally treating the 27 workmen working in the
canteen for a long period as contract workmen; that the
contracts were sham, arranged from time to time merely
c for the purpose of avoiding to give the canteen workmen
the benefits of permanency and other benefits; that the
contractors kept on changing, but most of the workmen
of the canteen were continuing for more than 10 years
without fresh appointment orders on change of
contractors. It was thus stated that the company had been
0
engaging in unfair labour practice by treating its workers
1
as workmen on contract. The stand of the company was ....
that the complaint was time barred; that the workmen
concerned being workmEm of the contractor, could not
claim permanent status a:s workers of the company; that
E dispute being related to contract labour and since the
complainant-Union had approached the appropriate
authority under the Contract Labour (Regulation and
Abolition) Act, 1991, the complaint under the 1971 Act
before the Industrial Court was liable to be dismissed on
F the principle of res judicata. It was further contended on
behalf of the Company that the dispute could be resolved
under the Industrial Disputes Act, 1947 and the complaint
under the 1971 Act, was not maintainable.
G The Industrial Court held that the Company
committed unfair labour practice under Item 9 of Schedule
IV to the Maharashtra Recognition of Trade Unions
Prevention of Unfair Labour Practices Act, 1971. It directed
the company to absorb and make the canteen employees
as permanent employees of the company and grant them
H
~
t ... ~
HINDALCO INDUSTRIES LTD. v. ASSOCIATION OF
ENGINEERING WORKERS
113

wages and benefits as admissible to the last category of A
unskilled workmen. The Company approached the High
Court which declined to interfere. On the petition for
special leave filed by the Company, the Supreme Court
directed the High Court to decide the matter on merits.
The High Court accordingly heard the matter afresh and B
'y confirmed the order passed by the Industrial Court.
In the instant appeal filed by the Company, the
questions for consideration before the Court were: (i)
whether the Industrial Court was justified in issuing
direction to absorb all the employees of the canteen in c
the company's employment and pay them wages and
other benefits to the extent of last category of unskilled
workers in the company; and (ii) whether the High Court
was right in affirming the said order?
D
,.., Dismissing the appeal, the Court
HELD: 1.1 Taking note of all the relevant materials,
special circumstances, the fact that most of the canteen
employees were working for more than 10-15 years and
finding that there is no valid reason for the company to E
deny them permanency, the Industrial Court rightly
concluded that the Company has committed unfair labour
practice under Item 9 of Schedule IV of the MRTU and
PULP Act, 1971 and issued appropriate directions. The
Industrial Court is perfectly right in arriving at the F
.. conclusion that the evidence coupled with the terms of
>-- agreement show that the contract is nothing but paper
agreement. With the material placed before this Court also,
it is clear that even though the record shows that canteen
is being run by the contractor, ultimate control and
G
supervision over the canteen is of the Company. [para 25]
[135-0, E, F]
Indian Petrochemicals Corporation Ltd. and Another vs.
Shramik Sena and Others, (1999) 6 SCC 439; Parimal
Chandra Raha vs. UC, 1995 Supp (2) SCC 611 - relied on. H
114 SUPREME COURT REPORTS [2008] 5 S.C.R.

.~·
A General Labour Union (Red Flag}, Bombay vs.
. Ahmedabad Mfg. & Calico Printing Co. Ltd. and Others, 1995
Supp (1) SCC 175; Vividh Kamgar Sabha vs. Kalyani Steels
Ltd. and Another, (2001) 2 SC:C 381; Cipla Ltd. vs. Maharashtra
General Kamgar Union and Others, (2001) 3 SCC 101; Sarva
B Shramik Sangh vs. Indian Smelting & Refining Co. Ltd. and
Others, (2003) 1O SCC 455; Oswal Petrochemicals vs. Govt.
of Maharashtra and Others, (2005) 12 SCC 433 - referred to
M.M.R. Khan vs. Union of India, 1990 Supp SCC 191
and Reserve Bank of India vs. 'v't/orkmen, (1996) 3 SCC 267,
c
1.2 The Industrial CoLilrt has found that the workmen
joined the service in different years between 1978 and
1992. Most of them have worked for more than 10 years
and their dates of joining lhave not been disputed by the
Company. It is also not disputed that in spite of change of
D
several contractors, neithm the workmen were replaced
nor fresh appointments were made. On the other hand, ...
1

same workmen were continuing even on the date of filing
of the complaint. From the evidence and the materials, it
is also clear that the activities of the workmen in the
E canteen, their suitability to work and physical fitness
are ultimately controlled by the company. [para 23, 25]
[132-F-H; 133-A, 135-C,D]
1.3 Apart from the evidence let in on both the sides,
F as rightly pointed by the Industrial Court, the relevant
terms of the agreements as reproduced in the order of
the Industrial Court clearly show that it is the duty of the ....,•
company to provide cante1rn premises free of rent along
with free water, electricity, fuel, furniture, fixtures, crockery
and all cooking utensils. It further shows that the company
G
has laid down the quality, quantity of food articles and
fixed the rates and the manner of supplying meals,
eatables, snacks, tea and beverages etc. After adverting
to clause (d) (1)(2) of the agreement, the Industrial Court
· has concluded that though responsibility is cast upon the
H
HINDALCO INDUSTRIES LTD. v. ASSOCIATION OF 115
ENGINEERING WORKERS
·-~
contractor to make payment of wages, P.F. contribution A
etc. on submission of the bills, the amounts are to be paid/
reimbursed by the company. This clearly shows that
-
though certain amounts are being paid by the contractor,
in the real sense, ultimately, it is the company which pays
all the amounts. [para 25] [134-F, G, 135-A,B] B
'Y
2 The High Court was conscious about the
observation of this Court made in the earlier petition for
special leave wherein the High Court was directed to
decide the matter on merits afresh. The order of the High
Court further shows that it has adverted to the relevant c
details furnished before the Industrial Court and analysed
=i the same and finally, after recording that the finding of
fact arrived by the Industrial Court cannot be termed as
perverse and they are based on proper appreciation of
evidence and sound reasoning, dismissed the Letters D
--{ \ Patent Appeal. There is no error or infirmity in arriving at
... such conclusion. On the other hand, the conclusion
arrived by the Industrial Court and affirmed by the High
Court are correct. [para 26] [136-A, B, C]
3. In the light of what has been stated in the judgment E
and in view of abundant factual details as mentioned in

-
para 24 of the judgment as well as the reasonings as laid
down in Indian Petrochemicals Corpn. Ltd.* the stand
taken by the appellant-Company is rejected. Inasmuch as
'
the Industrial Court has issued directions as early as on F
... 15.10.1998 which were not implemented due to court
)... proceedings, the appellant-Company is directed to
implement the same within a period of three months. [para
27] [136-D-E]
* Indian Petrochemicals Corporation Ltd. and Another G
vs. Shramik Sena and Others, (1999) 6 SCC 439 - relied on.
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 6410
of 2000.
From the final Judgment and Order dated 20.01.2000 of H
116 SUPREME COURT REPORTS [2008] 5 S.C.R.

).'..
A the High Court of Judicature at Bombay in Letters Patent Appeal
No. 58of1999 in Writ Petition No. 6181 of 1998.

L.N. Rao, R.K. Sanghi, Narendra M. Sharma, Vanita Mehta
and Rajesh Prasad Singh for the Appellant.

B S.F. Deshmuk and PK. Manohar for the Respondent.
y
The Judgment of the Court was delivered by

P. SATHASIVAM, J. 1) Hindalco Industries ltd., aggrieved
by the judgment and order dated 20.01.2000 of the High Court
c of Bombay in LP.A. No. 58 of 1999 confirming the order of the
Industrial Court accepting the case of the Association of
Engineering Workers' Union, has filed the above appeal.

2) The respondent herein namely, Association of
Engineering Workers' Union (hereinafter referred to as "the
D Union") filed a complaint of unfair labour practice under Item 9
of Schedule IV of the Maharashtra Recognition of Trade Unions
and Prevention of Unfair Labour Practices Act, 1971 (hereinafter
.,,
referred to as "the MRTU and PULP Act, 1971") against Hindalco
Industries ltd. - appellant herein (hereinafter referred to as "the
E Company") before the Industrial Court at Thane. According to
the Union, the complainant is a trade union recognized as a
representative union of the! appellant-company. The Company
has engaged employees in unfair labour practices on and from
1971 on a continuous basis from month to month, therefore, the
F period of limitation is not applicable. However, as a measure of
abundant precaution, the Union has filed a separate application
for condonation of delay. The Company has engaged about 500
•
......
workmen in the manufacture of aluminium and aluminium
products. The complainant-Union (respondent herein) is a
recognized Union for the! establishment of the appellant-
G
Company. In terms of Section 46 of the Factories Act, 1948, the
Company is duty bound to maintain a canteen for the benefits
of workmen working in an establishment. Accordingly, the
Company is maintaining a Canteen at its Kalwa establishment.
In order to avoid giving the workmen working in the canteen,
H
;

HINDALCO INDUSTRIES LTD. v. ASSOCIATION OF 117
ENGINEERING WORKERS [P. SATHASIVAM, J.]
....
• permanency and benefits which are applicable to permanent A
workmen of the Company, the Company is illegally treating the
workmen working the canteen as contract workmen. It is the
specific case of the complainant-Union that the contract is sham
and is a mere arrangement made for the purpose of avoiding
permanency and giving wages and benefits as are applicable B
to permanent workmen of the company.
3) On the date of filing of the complaint, out of 27 workmen
who have worked for various periods, 23 workmen have worked
for more than ten years continuously the maximum being for 25
years. The remaining four workmen have also worked for more c
than 3 Yi years and as such are permanent workmen of the
Company. The Company has been making arrangement
showing on papers that the contract is being given to someone
or the other whereas in fact, the canteen is engaged and run by
the Company itself. It is, therefore, the case of the Union that 27 D
~
' workmen whose names are mentioned in the complaint are, in
fact, the workmen of the Company. As per the various decisions
of this Court, the workmen who are working in the statutory
canteen are treated as workmen of the principal employer. On
the same analogy, all the 27 workmen are workers of the E
Company.
4) The Company has engaged and is engaging in unfair
labour practices by treating its own workmen as workmen on
contract. The workmen are entitled for a declaration that they
are the workmen of the Company. In order to comply with the F
technicalities that are required to be done, the Union is
simultaneously making an application to the State Contract
Labour Advisory Board to abolish the contract system as far as
the canteen is concerned in the appellant-Company. The Union
is also raising a demand that all the 27 workmen should be G
absorbed in the Company from the initial date of their
employment in the Company and pay them wages and other

' "' benefits that are applicable to permanent workmen of the
Company.
H
~

118 SUPREME COURT REPORTS [2008] 5 S.C.R.

A 5) The Company filed the reply in the Industrial Court stating
...·-'
that the complaint is time barred since filed beyond the
prescribed time limit laid down under the provisions of the MRTU
& PULP Act, 1971, hence the same is to be dismissed in limine.
Further thei dispute under reference is pertaining to employees
B employed under the contract i.e., contract labour, there is a
specific remedy and relief available under the Contract Labour
(Regulation & Abolition) Act, 1971, which is a specific forum
available to redress the grievances, if any. Inasmuch as the
Complainant-Union has already approached the appropriate
c authority for abolition of contract labour, the present complaint
before the Industrial Court is liable to be dismissed on the
principle of res judicata. With regard to the merits, it is stated
that the practice of giving contract to run the canteen is in vogue
right from inception. The complainant is very well aware of the
contract and the canteen contractor who is managing the
D
canteen. There are several decisions of this Court holding that ;
employing contract labour cannot be agitated within the forum
under MRTU & PULP Act 1971, when there is specific remedy "
available in Contract Labour (Regulation & Abolition) Act, 1971.
Moreover, since it is a disputable point such dispute is required
E to be resolved through the machinery provided under the
Industrial DisputesAct, ·1947, hence, anycomplainttothateffect
under MRTU & PULP Act, 1971 is not maintainable. It is further
reiterated that working of the canteen is distinct and separate
which is neither incidental nor connected with the manufacturing
F process of the factory. The canteen is exclusively run and
managed by the contractor which is an outside agency. ....•
6) On the above pleadings and on the basis of the oral
and documentary evidence, the Industrial Court, by order dated
15.10.1998, allowed the complaint and declared that the
G
Company has committed unfair labour practice under Item 9 of
Schedule IV of the MRTU & PULP Act, 1971 and further directed
the Company to cease and desist such unfair labour practice.
In the same order, the Industrial Court directed the Company to ), '
absorb and make the canteen employees referred to in the
H
HINDALCO INDUSTRIES LTD. v. ASSOCIATION OF 119
ENGINEERING WORKERS [P. SATHASIVAM, J.]

)..,.( Annexure as permanent employees of the Company from the A
date of its order. In addition to the same, the Industrial Court
directed the Company to pay them the wages and other benefits
like the last category of unskilled workmen in the Company.

7) Aggrieved by the aforesaid order of the Industrial Court,
the Company preferred Writ Petition No. 6181 of 1998 before B
the High Court of Bombay. The learned single Judge, by order
dated 25.01.1999, confirmed the order of the Industrial Court
and dismissed the writ petition. The said order of the learned
single Judge was challenged before the Division Bench of the
High Court in LP.A. No. 58of1999. By order dated 22.03.1999, c
the said LP.A. was summarily dismissed. Questioning the same,
the Company filed an appeal before this Court in Civil Appeal
No.6120 of 1999 (@ S.LP.(C) No. 9244 of 1999). By order
dated 25.10.1999, this Court allowed the appeal of the
Company, set aside the order passed by the High Court and D
remitted the matter to the High Court for deciding the same on
• .... merits. Pursuant to the said direction, LP.A. No. 58 of 1999
was restored on its file and heard afresh and the Division Bench
by the impugned order dismissed the Letters Patent Appeal
and confirmed the order of the Industrial Court. Aggrieved by E
the aforesaid order of the Division Bench of the High Court dated
20.01.2000, the Company has filed the present appeal.

8) Heard Mr. P.P. Rao, learned senior counsel for the
appellant-Company and Mr. S.F. Deshmuk, learned counsel for
the respondent-Union. F

... 9) The points for consideration in this appeal are (i) whether
the Industrial Court is justified in issuing direction to absorb all
the employees of the canteen in the company's employment
and pay them wages and other benefits to the extent of last
G
category of unskilled workers in the company; (ii) whether the
High Court is right in affirming the said order?
10) Since, the Union has filed a complaint under item 9 of
..... Schedule IV of the MRTU and PULP Act, 1971, before going
into the merits, let us referthe Preamble and relevant provisions H
120 SUPREME COURT REPORTS [2008] 5 S.C.R.

A of the Act. The preamble of the MRTU and PULP Act, 1971 '}..J,
reads as under:-
"An Act to provide for the recognition of trade unions for
facilitating collective bargaining for certain undertakings;
to state their rights and obligations; to confercertain powers
B on unrecognized unions; to provide for declaring certain
strikes and lock-outs as illegal strikes and lock-outs; to
define and provide for the prevention of certain unfair labour
practices; to constitute courts (as independent machinery)
for carrying out the purposes of according recognition to
c trade unions and for enforcing the provisions relating to
unfair practices; and to provide for matters connected with
the purposes aforesaid.
WHEREAS, by Government Resolution, Industries and
Labour Department, No. IDA.1367-LAB-ll, dated the 14th
D
February, 1968, the Government of Maharashtra appointed
a Committee called "the Committee on Unfair Labour
Practices" for defining certain activities of employers and
workers and their organizations which should be treated
'
'r

as unfair labour practices and for suggesting action which
E should be taken against employers or workers, or their
organizations, for engaging in such unfair labour practices;
AND WHEREAS, after taking into consideration the report
of the Committee the Government is of opinion that it is
F expedient to provide for the recognition of trade unions for
facilitating collective bargaining for certain undertakings;
to state their rights and obligations; to confer certain powers
on unrecognized unions; to provide for declaring certain
strikes and lock-outs as illegal strikes and lock-out; to
define and provide for the prevention of certain unfair labour
G
practices; to constitute courts (as independent machinery)
for carrying out the purposes or according recognition to
trade unions and for enforcing provisions relating to unfair
practices; and to provide for matters connected with the ·~
purposes aforesaid; It is hereby enacted in the Twenty-
HI
HINDALCO INDUSTRIES LTD. v. ASSOCIATION OF 121
ENGINEERING WORKERS [P. SATHASIVAM, J.]
),....;_ second Year of the Republic of India as follows:-" A
Among the various definitions, we are concerned about
Section 3(16) which refers to "unfair labour practices" means
unfair labour practices as defined in section 26. Chapter-VI,
Section 26 speaks about Unfair labour practices. It reads:
B
'r
"26. Unfair labour practices
In this Act, unless the context requires otherwise, 'unfair
labour practices' mean any of the practices listed in
Schedules II, Ill and IV."
c
Sections 4 and 5 refer Industrial Court and its duties. As
per Section 27, no employer or union and no employees shall
engage in any unfair labour practice. Section 28 provides
elaborate procedure for dealing with complaints relating to unfair
labour practices. Section 30 speaks about powers of Industrial
D
and Labour Courts. Section 32 mandates the Court shall have
the power to decide all matters arising out of any application or
'.., a complaint referred to it for the decision under any of the
provisions of the Act. Section 59 makes it clear that if any
proceeding is initiated under the the MRTU and PULP Act, 1971,
no proceeding shall be entertained by any authority in respect E
of those matters under the Bombay Industrial RelationsAct, 1946
(Bombay Act) and Industrial Disputes Act, 194'7 (in short "the
l.D. Act"). Section 60 prohibits filing of suits in any civil court in
respect of the subject-matter of a complaint or application to
the Industrial Court or Labour Court under this Act. F

11) Though an objection was raised as to limitation in filing
complaint before the Industrial Court in view of reasons adduced
and accepted by the Industrial Court and the High Court, we are
of the view that there is no need to elaborate the same. We also G
reject the supplementary objection, namely, the complaint is hit
by the principle of res judicata since according to the Industrial
Court, no sufficient material was placed to throw the complaint
._... on the ground of earlier/parallel proceeding in any other forum .
12) Coming to the main issue, according to the Union, the H
122 SUPREME COURT REPORTS [2008] 5 S.C.R.

A Company is having 500 employees working in the ~-"'
manufacturing and other activities. It is their specific case that
there is a canteen inside the campus of the manufacturing unit
and it is a statutory cantieen and, therefore, the employees
working in the canteen numbering 27 are the employees of the
B company. It is not in dispute that the provisions of Factories Act,
1948 are applicable to the! Company. Section 46(1) mandates
that the State Government may make rules requiring that in any
specified factory wherein more than 250 workers are ordinarily
employed, a canteen or canteens shall be provided and
c maintained by the occupier for the use of the workers. The
presence of a canteen within the Company premises and
statutory provision as referred above are not disputed. However,
it is the case of the Company that the employees in the canteen
are working through a contractor and, therefore, they are not
D entitl~d for status of permanent employees of the Company. Mr.
P.P.Rao, learned senior counsel appearing for the appellant-
Company, by drawing our attention to various. decisions of this ,
Court would submit that unless relationship of employer and r
employee exists, the present issue/claim cannot be gone into
by the Industrial Court under the provisions of the MRTU and
E PULP Act, 1971. In other words, according to him, iri view of the
objection/stand taken in the reply statement before the Industrial
Court, the issue raised by the Union cannot be adjudicated and
it is for the Union or workmen to get an order under the provisions
of the l.D. Act and thereafter, approach the Industrial Court for
F necessary relief, if any. On the other hand, Mr. Deshmuk, learned
counsel appearing for the respondent-Union vehemently
contended that in view of the object of the enactment and all J
other details such as existence of a canteen from several years,
control and supervision by the company, the contractor is only a
G name-lender and the Industrial Court has jurisdiction to go into
the issue raised in the complaint. He further contended that
based on the relevant acceptable materials, the Industrial Court
granted relief in favour of the Union which was rightly affirmed
by the High Court and thB same cannot be lightly interfered under ""
H Article 136 of the Constitution of India.
HINDALCO INDUSTRIES LTD. v. ASSOCIATION OF 123
i
., ,.I.
ENGINEERING WORKERS [P. SATHASIVAM, J.]

13) In the earlier part of our judgment, we have referred!'.) /\.
>\
the claim of both parties as well as relevant provisions of th2
the MRTU and PULP Act, 1971. Now let us consider various
pronouncements on the point in issue. The earliest decision
relied on by the Company is General Labour Union (Red
Flag), Bombay vs. Ahmedabad Mfg. & Calico Printing Co. B
' 'r' Ltd. and Others, 1995 Supp (1) SCC 175. In that decision,
General Labour Union (Red Flag}, Bombay had filed a complaint
before the Industrial Court under the MRTU and PULP Act, 1971
complaining of the breach of Items 1(a), (b), 4(a), (f) and 6 of
Schedule II and Items 7, 9 and 10 of Schedule IV of the said Act. c
The case of the complainant-union was that the 21 workmen
who were working in one of the canteens of the respondent-
company, were not given the service conditions as were
available to the other workmen of the company and there was
also a threat of termination of their services. It is an admitted
fact that these workmen were employed by a contractor who
n
'
"I' was given a contract to run the canteen in question. The
complaint was filed on the footing that the workmen were the
employees of the company and, therefore, the breach committed
and the threats of retrenchments were cognizable by the
"-4 Industrial Court, under the said Act. The complaint proceeded E
on the basis as if the workmen were a part of the work-force of
the company. The facts on record reveal that the workmen were
never recognised by the respondent-company as its workmen
and it was the contention of the company that they were not its
employees. The Industrial Court dismissed the complaint holding F
that since the workmen were not the workmen of the respondent-
l company, the complaint was not maintainable under the said
Act. The High Court in writ petition confirmed the said finding
and dismissed the petition on the same ground. Hence, the
Labour Union approached this Court by filing appeal. This Court G
has concluded as under:-
"2. As pointed out both by the Industrial Court and the
_,
High Court, it was not established that the workmen in
question were the workmen of the respondent-company.
H
•
124 SUPREME COURT REPORTS [2008] 5 S.C.R.
,,.
)._ -i
A In the circumstances, no complaint could lie under the Act
as is held by the two courts below. We, therefore, find
nothing wrong in the d1ecision impugned before us. The
workmen have first to establish that they are the workmen
of the respondent-company before they can file any
B complaint under the Act. Admittedly, this has not been
done. It is open for the workmen to raise an appropriate y
industrial dispute in that behalf if they are entitled to do so
before they resort to the provisions of the present Act."
14) In Vividh Kamgar Sabha vs. Kalyani Steels Ltd. and
c Another, (2001) 2 SCC 381, similar claim under the MRTU
and PULP .Act, 1971 was considered. The two-Judge Bench
following the General Labour Union (Red Flag), Bombay
case (supra) dismissed the appeal filed by the workers-Union
on the ground that the complaint was not maintainable. Similar
D direction as issued in General Labour Union (Red Flag),
Bombay case (supra) has been issued in this case also. (

15) The next decision which is also under the MRTU and
r '
~

PULP Act, 1971 is Cipla Ltd. vs. Maharashtra General
Kamgar Union and Others, (2001) 3 SCC 101. When similar
E claim was made by the trad1e-Union against the Management - .....
Cipla Ltd., the same was negatived by the Labour Court.
However, the Division Bench of the High Court took a different
view of the matter and allowed the complaint. While considering
the appeal filed by Cipla, the two-Judge Bench accepted the
F case of the Management and rejected the stand taken by the
trade-Union. The argument of learned senior counsel appearing f
1
for the Union that in view of Section 32 of the Act incidental
question can be considerE~d by the Industrial Court was not
acceptable and this Court concluded:
G
"11. Next decision relied upon by Shri Singhvi is Central
Bank of India Ltd. v. PS. Rajagopalan AIR 1964 SC 743
to contend that even in cases arising under Section 33-
·~
C(2) of the Industrial Disputes Act the scope, though very
limited, certain incidental questions can be gone into like
H
HINDALCO INDUSTRIES LTD. v. ASSOCIATION OF 125
ENGINEERING WORKERS [P. SATHASIVAM, J.]
\•
..<, a claim for special allowance for operating adding machine A
which may not be based on the Sastry Award made under
the provisions of Chapter V-A. The learned counsel pointed
out that in the event we were to hold that it-is only in clear
cases or undisputed cases the Labour Court or the
Industrial Tribunal under the Act can examine the B
complaints made thereunder, the whole provision would
be rendered otiose and in each of those cases provisions
of the Bombay Industrial Relations Act, 1946 or the
Industrial Disputes Act will have to be invoked. We are
afraid that this argument cannot be sustained for the fact c
that even in respect of claims arising under Section 33-
C(2) appropriate dispute can be raised in terms of Section
10 of the Industrial Disputes Act and that has not been the
position in the present case. Nor can we say that even in
cases where employer-employee relationship is
D
,-.- undisputed or indisputably referring to the history of
relationship between the parties, dispute can be settled
and not in a case of the present nature where it is clear
that the workmen are working under a contract. But it is
only a veil and that will have to be lifted to establish the
relationship between the parties. That exercise, we are E
' afraid, can also be done by the Industrial Tribunal under
the Bombay Industrial Relations Act, 1946 or under the
Industrial Disputes Act. Therefore, we are afraid that the
contention advanced very ably by Shri Singhvi on behalf
of the respondents cannot be accepted. Therefore, we F
hold that the High Court went far beyond the scope of the
l provisions of the Act and did not correctly understand the
decisions of this Court in Gujarat Electricity Board,
Thermal Power Station v. Hind Mazdoor Sabha (1995) 5
SCC 27 and General Labour Union (Red Flag) v. G
Ahmedabad Mfg. & Calico Printing Co. Ltd. 1995 Supp
(1) SCC 175. The correct interpretation of these decisions
will lead to the result, which we have stated in the course
of this order."
H
126 SUPREME COURT REPORTS [2008] 5 S.C.R.

A By saying so, allowed the appeal filed by Cipla Ltd. ).

15) The next decision heavily relied on the side of the
appellant-Company is Sarva Shramik Sangh vs. Indian
Smelting & Refining Co. L.td. and Others, (2003) 10 SCC
455. Here again, this Court considered the very same provisions
B of the MRTU and PULP Act, 1971. Similar contentions were
raised by the Union and the Management. Basing reliance on
General Labour Union (Red Flag) Bombay (supra) and Cipla
Ltd. (supra), this Court concluded:

c "24 ........ In order to entertain a complaint under the
Maharashtra Act it has to be established that the claimant
was an employee of the employer against whom complaint
is made under the ID Act. When there is no dispute about
such relationship, as noted in para 9 of Gip/a case the
Maharashtra Act would have full application. When that
D
basic claim is disputed obviously the issue has to be
(
adjudicated by the forum which is competent to adjudicate. .,...
The sine qua non for application of the concept of unfair
labour practice is the e!xistence of a direct relationship of
employer and employee. Until that basic question is
E decided, the forum receides to the background in the sense
that first that question has to be got separately adjudicated. ~

\
Even if it is accepted for the sake of arguments that two
forums are available, the court certainly can say which is
the more appropriate forum to effectively get it adjudicated
F and that is what has been precisely said in the three
decisions. Once the existence of a contractor is accepted, '
~
it leads to an inevitable conclusion that a relationship exists
between the contractor and the complainant. According to
them, the contract was a facade and sham one which has
G no real effectiveness. As rightly observed in Gip/a case it
is the relationship existing by contractual arrangement
which is sought to be abandoned and negated and in its
place the complainant's claim is to the effect that there )-
was in reality a relationship between the employer and the
i
H complainant directly. It is the establishment of the existence
HINDALCO INDUSTRIES LTD. v. ASSOCIATION OF 127
ENGINEERING WORKERS [P. SATHASIVAM, J.]

of such an arrangement which decides the jurisdiction. A
That being the position, Gip/a case rightly held that an
industrial dispute has to be raised before the Tribunal
under the ID Act to have the issue relating to actual nature
of employment sorted out. That being the position, we find
that there is no scope for reconsidering Cipla case the B
view which really echoed the one taken about almost a
decade back."
16) In Oswal Petrochemicals vs. Govt. of Maharashtra
and Others, (2005) 12 SCC 433 which is also a two-Judge
Bench, while considering the very same Act, namely, the MRTU C
and PULP Act, 1971 following the judgment of this Court in Cipla
Ltd. (supra) disposed of the appeal on the same terms.
17) Though Mr. Deshmuk, learned counsel for the Union
relied on several decisions and also highlighted that all the
0
above referred decisions are distinguishable, it is useful to refer
\
to a three-Judge Bench decision of this Court in Indian
Petrochemicals Corporation Ltd. and Another vs. Shramik
Sena and Others, (1999) 6 SCC 439. This is an appeal
preferred by Mis Indian Petrochemicals Corporation Limited
and another (Management) against an order dated 29-8-1997 E
made by the High Court of Judicature at Bombay in W.P. No.
2206of1997 filed by the Shramik Sena and another (workmen).
Against the very same judgment, the workmen also filed appeal
being C.A. No. 1855of1998. Both the appeals clubbed together,
heard and disposed of by the said common judgment. The F
workmen therein filed a writ petition before the High Couri of
Bombay for a declaration that the workmen yvhose names are
shown in Ex. 'A' annexed to the said petition. are the regular
workmen of the Management and are entitled to have the same
pay scales and service conditions as are applicable to regular G
workmen of the Management. It was further prayed that a
direction be given to the Management to absorb the workr,-ien
listed in the said Ex. 'A' with effect from the actual date of their
entering into the service of the canteen of the Management ar.d
to pay them all consequenti81 benefits including arrears of H
128 SUPREME COURT REPORTS [2008] 5 S.C.R.

A wages etc.
,...

18) According to the workmen, the workers listed in Ex. 'A'
to the petition are working in the canteen of the Management in
its factory at Nagothane, District Raigad in the State of
Maharashtra, and the Management was treating them as
B persons emplqyed on contract basis through a contractor named '-('
M/s Rashmi Caterers, who was impleaded in the writ petition
as Respondent 5. It was contended on behalf of the above
workmen that the factory of the Management where the
workmen are employed, is governed by the provisions of the
c Indian Factories Act, 1948 and the canteen where the said
workmen are employed is a statutory canteen established by
the Management as requiried under the said provisions of the
Act. It was further contended that the said canteen is maintained
for the benefit ofthe workmen employed in the factory and the
D Management had direct control over the said workmen and that
Respondent 5, though shown as a contractor, has no control
over the Management, administration and functioning of the said r '
canteen. The canteen is a part of the establishment of the
Management and the workers working in the canteen are the
E workmen of the said Mana1;:iement. The further contention of the
workmen was that the work carried on by them in the said
canteen is perennial in nature and the canteen is incidental to
and is connected with the establishment of the Management. It
is their further case that the Management is denying the said
F workmen the status of its regular employees and was treating
them as contract employees contrary to the statutory provisions
and judicial pronouncemErnts of this Court. ....
19) On behalf of the Management, it was contended before
the High Court that it was a public sector undertaking and it
G cannot appoint any person in contravention of the recruitment
policy which requires the Management to follow a roster system.
Therefore, apart from the fact that the workmen were not in the
regular employment of the said Management, the absorption or
regularisation of the services of the said workmen would
H contravene Article 16(4) of the Constitution, and would also
HINDALCO INDUSTRIES LTD. v. ASSOCIATION OF 129
ENGINEERING WORKERS [P. SATHASIVAM, J.]

·- .... contravene the reservation policy which is applicable for A
recruitment in the establishment managed by it.
20) The High Court, following the decision in Parimal
Chandra Raha vs. LIC, 1995 Supp (2) SCC 611 allowed the
writ petition holding that since the workmen whose names were
found in Annexure 'A' to the petition are working in the statutory B
' ,...
canteen of the Management, they are entitled to be absorbed
in the employment of the said Management and also issued
directions in regard to absorption of the employees.
21) Being aggrieved by the said judgment and order of ·c
the High Court, the Management has preferred C.A No. 1854
of 1998 and being aggrieved by the conditions imposed while
directing the absorption of the employees, on behalf of the
workmen C.A. No. 1855 of 1998 has been preferred before
this Court.
D
... 22) Para 10 of the said decision shows that while
-... considering at the SLP stage for granting leave, a two-Judge
Bench of this Court observed that the questions involved in these
appeals are of considerable importance and it will be desirable
if the same is decided by a Bench of three Judges. E
Consequently, both the appeals were heard by a three-Judge
Bench. Similar contentions as raised in the case on hand were
raised on behalf of the Management and Workmen. No doubt,
taking note of the definition 2(1) of the Factories Act which defines
"worker'', did not accept the workmen's contention that F
employees of a statutory canteen ipso facto become the
~
...... employees of the establishment for all purposes. After
considering Parimal Chandra Raha's case (supra) and
M.M.R. Khan vs. Union of India, 1990 Supp SCC 191 and
Reserve Bank of India VS. Workmen, (1996) 3 sec 267,
G
this Court concluded that the workmen of a statutory canteen
would be the workmen of the establishment for the purpose of
the Factories Act only and not for all other purposes. Had the
three-Judge Bench stopped therein, we have no other option
except to apply the principle as stated in General Labour
H
130 SUPREME COURT REPORTS (2008] 5 S.C.R.

..;
J,._
A Union (Red Flag) case (supra), Vividh Kamgar Sabha case
(supra), Cipla Ltd. case (supra), Sarva Shramik Sangh case
(supra) and Oswal Petrochemicals. However, from para 23
onwards, the three-Judge Bench discussed the main issue with
which we are concerned, namely, "whether from the material on
B record it could be held that the workmen are, in fact, the
employees of the Management for all purposes". Since the "'!

factual details that arose in the Indian Petrochemicals case
(supra) are identical to the case on hand, we reproduce the
following discussion and the ultimate conclusion:
c "25. Though the canteen in the appellant's establishment
is being managed by engaging a contractor, it is also an
admitted fact that the canteen has been in existence from
the inception of the establishment. It is also an admitted
fact that all the employees who were initially employed
D and those inducted from time to time in the canteen have
continued to work in the said canteen uninterruptedly. The "
'r
employer contends that this continuity of employment of
the employees, in spite of there being a change of .
j,
I

contractors, was due to an order made by the Industrial
E Court, Thane, on 10-11--1994 wherein the Industrial Court
held that these workmen are entitled to continuity of service
in the same canteen irrespective of the change in the t

contractor. Consequently, a direction was issued to the
Management herein to incorporate appropriate clauses
F in the contract that may be entered into with any outside
contractor to ensure the continuity of employment of these
workmen. The Management, therefore, contends that the _...f
continuous employment of these workmen is not voluntary.
A perusal of the said order of the Industrial Court shows
that these workmen had contended before the said Court
G
that the Management was indulging in an unfair labour
practice and in fact they were employed by the Company.
They specifically contended therein that they are entitled
to continue in the employment of the Company irrespective
of the change in the contractor. The Industrial Court
H
HINDALCO INDUSTRIES LTD. v. ASSOCIATION OF 131
ENGINEERING WORKERS [P. SATHASIVAM, J.]

·- "' accepted their contention as against the plea put forth by A
the Management herein. The employer did not think it
appropriate to challenge this decision of the Industrial Court
which has become final. This clearly suggests that the
Management accepted as a matter of fact that the
respondent workmen are permanent employees of the B
'y Management's canteen. This is a very significant fact to
show the true nature of the respondents' employment. That
apart, a perusal of the affidavits filed in this Court and the
contract entered into between the Management and the
contractor clearly establishes: c
(a) The canteen has been there since the inception of the
appellant's factory.
(b) The workmen have been employed for long years and
despite a change of contractors the workers have
D
continued to be employed in the canteen.
"
-(
(c) The premises, furniture, fixture, fuel, electricity, utensils
etc. have been provided for by the appellant.
(d) The wages of the canteen workers have to be
reimbursed by the appellant. E

(e) The supervision and control on the canteen is exercised
by the appellant through its authorised officer, as can be
seen from the various clauses of the contract between the
appellant and the contractor. F
'l (f) The contractor is nothing but an agent or a manager of
4.
the appellant, who works completely under the supervision,
control and directions of the appellant.
(g) The workmen have the protection of continuous G
employment in the establishment.
26. Considering these factors cumulatively, in acdition to
the fact that the canteen in the establishment of the
Management is a statutory canteen, we are of the upinion
that in the instant case. the respondent workmen are in H
132 SUPREME COURT REPORTS [2008] 5 S.C.R.

A fact the workmen of the appellant Management. ,._ ,,

27. At this stage, it is necessary to note another argument
of Mr Andhyarujina that in view of the fact that there is no
abolition of contract labour in the canteen of the appellant's
establishment, it is open to the Management to manage
B its canteen through a contractor. Hence, he contends that ..,.,.
by virtue of the contract entered into by the Management
with the contractor, the respondent workmen cannot be
treated as the employees of the Management. This
argument would have had some substance if in reality the
c Management had e'ngaged a contractor who was wholly
independent of the Management, but we have come to
the conclusion on facts that the contractor in the present
case is engaged only for the purpose of record and for all
purposes the workmen in this case are in fact the workmen
D of the Management. In the background of this finding, the
last argument of Mr Andhyarujina should also fail." .
r
23) In the light of above background, let us consider the
factual details available and as asserted in the complaint of the
Union filed in our case. In order to establish the specific plea
E raised in the complaint, the complainant has examined one
Dagdu Deshmukh and Shankar Nam Patil. Both of them are
working in the canteen. According to Deshmukh, he joined the
Company on 22.02.1982'. and according to Shankar he is in the
service of the Company from 01.11.1989. The Complainant has
F enclosed a list of the employees working in the canteen in the
Annexure to the complaint. The Industrial Court, on perusal of (

the said list, found that they joined the service in different years -"-

since 1978 till 1992. Most of them have worked for more than
10 years. The Industrial Court has also concluded that their dates
G of joining mentioned in Annexure to the complaint have not been
disputed by the Company. It is also demonstrated before the
Court that there were number of contractors since 1971 till the
contract was taken by IM/s Gambhir Caterers, since 1965 to '>-
1968 one Mehra was the canteen contractor. Thereafter, in 1968,
H one S.S.Shetty worked as a Canteen Contractor. He was running
HINDALCO INDUSTRIES LTD. v. ASSOCIATION OF 133
ENGINEERING WORKERS [P. SATHASIVAM, J.]
... -< the said canteen for 14 years. Thereafter, the Unive~sal Caterer A
was the Canteen Contractor from 1981 to 1995. After 1995,
Gambhir Caterer is the Canteen Contractor. It is relevant to
mention and in fact not disputed that in spite of the changes in
the Canteen Contractor the service of the canteen employees
continued and they were not issued fresh appointment orders B
by any of the canteen contractors including the last one, namely,
Gambhir Caterer.
24) The Industrial Court analysed the evidence of
Complainant's witness and also the evidence of the Company.
From the evidence and other materials, the Court noted the c
following information:
(a) Canteen has been in existence since 1965.
(b) Canteen employees were working in four shifts.
D
(c) Canteen is situated in the company premises.
"...,
(d) The company has provided utensils, gas and other
articles like chair, table, etc.
(e) The company has als.o provided room to the canteen
E
employees for their residential complex.
(f) Seven to Eight employees who are bachelors are
residing in the said room.
(g) The company has provided electricity and water.
Respective charges are not being deducted from F
t the wages of the employees.
~

(h) The company has also supplied umbrellas for the
rainy season.
(i) The company is paying maintenance charge and G
electricity charge and other expenses of the canteen.
0) All the facilities including premises to the canteen
are provided by the company.
(k) The wages of employees of the canteen are H
134 SUPREME COURT REPORTS [2008] 5 S.C.R.

,,.._
A reimbursed by the company.
(I) The company is purchasing the food items.

(m) When ever there is rise in the wages of the employees,
it is the company who is to pay the same.
B (n) The company is providing three sets of uniforms to "'<'
the employees and also providing service
washermen.

(o) The employer's contribution P.F. is reimbursed by
c the company.

(p) In the past the company has regularized some of the
employees working in the canteen.

From the above, it is clear that all the facilities to the canteen
are provided by the company.
D
25) It is true that Sridhar Bhandari, the Manager of Gambhir
Caterer, in his evidence has stated that the workers are keeping
the attendance card, muster roll (Ex.C-12 and C-13) and
payment details of Gambhir Caterer. In view of the above
E statement, the Industrial Court ventured to find legitimate control
over the activities of the canteen employees. While considering
the said issue, the Court verified various terms of agreement
dated 28.11.1995. The relevant terms have been reproduced
in para 49 of the order of the Industrial Court which clearly show
F that it is the duty of the company to provide canteen premises
free of rent along with free water, electricity, fuel, furniture, fixtures,
crockery and all cookin~~ utensils. It further shows that the
company has fixed the rate of meals, eatables, snacks, tea and
beverages etc. As rightly pointed out by the Industrial Court, apart
G from the evidence let in on the side of the union and the company
from the terms of contract, it is clear that it is the duty of the
company to provide sufficient premises, furniture, fuel, gas,
electricity, water and also laid down several procedure as to
how food items to be supplied As rightly concluded by the
H Industrial Court. the company has clearly laid down the quality,
HINDALCO INDUSTRIES LTD. v. ASSOCIATION OF 135
ENGINEERING WORKERS [P. SATHASIVAM, J.]
.. .... quantity, the rates and manner of supplying food articles. After A
adverting to clause (d) (1 )(2) of the agreement, the Industrial
Court has concluded that though responsibility is cast upon the
contractor to make payment of wages, P.F. contribution etc. on
submission of the bills, the amounts are to be paid/reimbursed
by the company. The above details clearly show that though B
certain amounts are being paid by the contractor, in the real
sense, ultimately, it is the company which pays all the amounts.
From the evidence and the materials, it is also clear that the
activities of the workmen in the canteen, their suitability to work,
physical fitness are ultimately controlled by the company. In those c
circumstances, the Industrial Court is perfectly right in arriving
the conclusion that the evidence coupled with the terms of
agreement show that the contract is nothing but paper
agreement. As stated earlier, in spite of change of several
contractors, neither the workmen were replaced nor fresh
D
., appointments were made. On the other hand, same workmen
-'(
were continuing even on the date of filing of the complaint. Taking
note of all the above-mentioned relevant materials, special
circumstances and most of the employees are working for more
than 10-15 years and finding that there is no valid reason for the
company to deny their permanency, the Industrial Court rightly E
concluded that the company has committed unfair labour
practice under Item 9 of Schedule IV of the MRTU and PULP
Act, 1971 and issued appropriate directions. With the materials
placed, we are also of the opinion that even though the record
shows that canteen is being run by the contractor, ultimate control F
and supervision over the canteen is of the Company. Inasmuch
as the facts on hand are identical to the decision in Indian
Petrochemicals Corpn. Ltd. case (supra) which is a three-
Judge Bench decision which was not cited before any of the
decisions relied on by the company, in view of the circumstances G
narrated in the earlier paras, we accept the conclusion arrived
by the Industrial Tribunal.
26) Coming to the impugned order of the High Court, it is
argued that in spite of the earlier direction of this Court in SLP
H
136 SUPREME COURT REPORTS [2008] 5 S.C.R.

A (C) No. 9244 of 1999, the High Court has not adverted to the
relevant aspects and committed the same error in confirming
the order of the Industrial Court. In the light of the said contention,
we have gone through the impugned decision of the High Court,
which clearly shows that th'~ High Court was conscious about
B the observation of this Court. The High Court order further shows
that it has adverted to the re~levant details furnished before the
Industrial Court and analysed the same and finally after recording
that the finding of fact arrivE!d by the Industrial Court cannot be
termed as perverse and the:y are based on proper appreciation
c of evidence and sound reasoning dismissed the Letters Patent
Appeal. We do not see any error or infirmity in arriving such
conclusion. On the other hand, as discussed above, we are in
entire agreement with the conclusion arrived by the Industrial
Court and affirmed by the High Court.
D 27) In the light of what has been stated above and in view
of abundant factual details as mentioned in para 24 of this
judgment as well as the reasonings ·as laid down in Indian
Petrochemicals Corpn. Ltd. case (supra), we reject the stand
taken by the appellant-Company. Accordingly, the appeal fails
E and the same is dismissed. Inasmuch as the Industrial Court
has issued directions as early as on 15.10.1998 and not
implemented due to court proceedings, we direct the appellant-
Company to implement the! same within a period of three months
from the date of receipt of copy of this judgment. No costs.
F R.P. Appeal dismissed.
,
.....