TMI Blog2013 (11) TMI 1799X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with 50% back wages. 7. Assailing the aforesaid award of the Tribunal, Air India preferred writ petition before the High Court. 8. 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. 9. 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 be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 13. 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) 16. 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 follows: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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) 21. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 24. 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 Cante ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyment 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. 26. 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. and 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) 27. The aforesaid submission has squarely been dealt with by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 29. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid Letter Patent Appeals and the writ petitions. 33. 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. 34. 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 Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 36. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 mala fide 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. and A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions 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. and Ors. v. Renusagar Power Co. and Ors. (1988) 4 SCC 59, which is followed by two other judgments of this Court in Delhi Development Authority v. Skipper Construction Co. (P.) Ltd. and Anr. (1996) 4 SCC 622, Kapila Hingorani v. State of Bihar (2003) 6 SCC 1, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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. 42. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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- -vis its employees are co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nial 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt 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) 47. 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 and Ors. (1988) 4 SCC 478 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. 48. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ointed 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 Officers. Rule 67, sub-rules (1), (2) and (3), is traceable in this case which reads thus: 67. Equipment: (5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irement 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? 50. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... run the canteen by the Management of Air India is permanent. The vacancies of various posts in the canteen are permanent in nature. 52. 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial 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. 54. 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess 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. 57. 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 Ramaswa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een the parties. Classically jurists like Salmond and Ors. 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. 61. 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 ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ship 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. 64. 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. 65. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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: Section 30. If all the shares were held in trust that would not make the company a trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o go through a conveyancing device to get it.... 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 Co. 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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Co. 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 three . 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 bet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 and 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 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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) 72. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eate 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 contract. 74. 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 78. 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned 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: 80. The findings and reasons recorded on the contentious points by both the learned single ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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