Shipping Corporation of India Ltd. vs Seventh Industrial Tribunal

T.K. Basu, J.—The Petitioner is a Government company incorporated under the provisions of the Companies Act, 1956. The principal business of the Petitioner is that of a ship owner and consists in plying the Petitioner''s vessels and carrying passengers and cargo between various ports of India and other parts of the world. The Petitioner has two types of employees, viz. those who are employees on board its vessels and those who are employees at its various shore establishments who are normally referred to as its ''shore employees''.

Clause 15 of the Service Rules applicable to shores staff Other than officers provides that the Petitioner maintains a dispensary and a canteen in the office premises and further, that all employees will be supplied free of charge tea and/or snacks from the office canteen costing 50 paise per day of attendance and in addition, each employee would also be paid in cash an amount of 50 P. per day of attendance. Similarly, Clause 34 of the Shore Officers Service Rules provides that officer will be supplied free of charge tea and/or snacks from the office canteen costing Re. 1 per day of attendance.

In fulfilment of the above obligations, the Petitioner has maintained a canteen at its office premises at all material times. According to the Petitioner, the running of the canteen always carried on by independent caterers. The persons employed in the canteen were consequently employees of the caterers. At first, there was an outside caterer of the name of Sri S.K. Mukherjee. It may be mentioned at this stage that a copy of the agreement with regard to the running of the canteens by Sri S.K. Mukherjee was tendered in evidence before the Tribunal as Ex. 3 and is also annexed to the petition. The agreement dated October 23/24, 1967, clearly shows that the employees of the canteen were to be the employees of Sri S.K. Mukherjee.

To go back to the narrative, however, after sometime the trade union of the Petitioner''s employees, viz. the Shipping Corporation Employees Union at its own desire and request took over the activity of running the canteen upon terms agreed between the Petitioners and the union. This agreement is also annexed to the present petition. According to the petition, the persons employed in the canteen became thereafter the employees of the union. In or about October 1973 the union did not want to continue the running the canteen and a co-operative society of the Petitioner''s employees called the Shipping Corporation Consumers Co-operative Society Ltd. started running the canteen at the Petitioner''s office at 13 Strand Road and is still running the same.

By an order of Reference dated March 12, 1974, the Government of West Bengal purported to refer to the Seventh Industrial Tribunal an industrial dispute alleged to exist between the Petitioners and its workmen represented by the Shipping Corporation Canteen Staff Association on the following issue:

Whether the workmen of the canteen of M/s The Shipping Corporation of India Ltd. are workmen of M/s The Shipping Corporation of India Ltd.? If so, what should be the grade and scales of pay of those workmen?

After the written statements were filed before the Tribunal the Petitioner contended that the purported reference was ultra vires, invalid and conferred no jurisdiction on the Tribunal to adjudicate the same. Thereupon the following issue was framed by the Tribunal as a preliminary issue:

Whether the Reference is maintainable and/or the Tribunal has any jurisdiction to entertain and adjudicate the dispute in view of the statement made by the management in para. 1 including its subparagraphs of the written statement of the company.

Both oral and documentary evidence were led before the Tribunal on this preliminary issue. This was followed by arguments by the learned lawyers on both sides. By its order dated March 19, 1976, the learned Judge, Seventh industrial Tribunal answered this preliminary issue against the Petitioner

It is this order dated March 19, 1976, which is challenged before me in this application.

Mr. Ginwalla, Learned Counsel on behalf of the Petitioner, raises before me two-fold submissions. The first submission of Mr. Ginwalla raises a rather interesting question of Industrial law which does not appear to have been considered by any decided case so far. It is submitted by Mr. Ginwalla that before the State Government can refer an industrial dispute to a Tribunal for adjudication it must form the opinion that an industrial dispute either exists or is apprehended. In other words, the formation of such an opinion is a condition precedent to the exercise of power u/s 10 of the Industrial Disputes Act, 1947 (hereinafter referred to as the Act). With reference to Section 2(k) of the Act which defines ''industrial dispute'', it is submitted that the definition, in so far as is material for our purpose, must mean a dispute between an employer and its workmen. In other words, before there can be an industrial dispute of this type there must exist a relationship of employer and employee between the two parties to the dispute. From this it must necessarily follow that the State Government must form an opinion that there exists a relationship of employer and employee between the two parties to a dispute before such a dispute can be referred to a Tribunal for adjudication.

Relying on this proposition of law, Mr. Ginwalla submits that the question whether there is a relationship of employer and employee between the two parties to a dispute cannot be the subject-matter of adjudication by a Tribunal.

My attention is next drawn to the first sentence of the order of Reference which reads

whether the workmen of the canteen of M/s Shipping Corporation of India Ltd. are workmen of M/s Shipping Corporation of India Ltd.

According to Mr. Ginwalla, this clearly shows that the State Government did not form any opinion that the employees of the canteen were the workmen of the Petitioner. Because; if it had done so, it would not have referred the question to the Tribunal for jurisdiction. According to the submission this type of reference is ab initio void as it does not comply With the condition precedent of the formation of an opinion by the State Government.

I might mention that the Tribunal in its impugned order records the contention fairly clearly. It, however, deals with the same in a somewhat oblique manner. As submitted by Mr. Ginwalla, a Conciliation Officer may call for and inspect any document which he may consider relevant to the question u/s 11(4) of the Act. The learned Tribunal does not, however, advert to this question whether the Conciliation Officer in the instant case had made any enquiries or asked for any document to show whether there existed any contract of employment between the Petitioner and the workmen of the canteen. It proceeds on the basis that the Conciliation Officer must have submitted a report on the failure of the conciliation proceedings as a presumption raised u/s 114 of the Evidence Act, 1872 and concludes on the basis thereof that the State Government must have had some material before it on this question.

In any view, the approach of the Tribunal to this question is totally erroneous. Undoubtedly it is true that the State Government could not form any opinion unless there was some material in support thereof. But the important question is not whether any material was there before the State Government on this question. The important question is whether the State Government did in fact forms such an opinion. As I have indicated Mr. Ginwalla submits that the very act of delegating this question to the Tribunal for adjudication clearly shows that the State Government could not have possibly formed such an opinion.

Mr. Rathin Bhattacharjee, learned Advocate appearing for the workmen, submitted before me that the Government had no jurisdiction to adjudicate this question of master and servant relationship between the Petitioner on the one hand and the employees of the canteen on the other. He submitted that the existence of, such a relationship was entirely a question of fact and the State Government had no machinery for adjudicating this particular question of fact. According to this submission, the Reference in the instant case could only be in the form that it is. He also drew my attention to the usual recital in the order of Reference to the effect that an industrial dispute exists between the Petitioner and its workmen. This, according to Mr. Bhattacharyya, amounted to a formation of an opinion by the State Government on the employer and employee relationship between the Petitioner and the employees of the canteen.

In my view, this contention of Mr. Bhattacharyya is somewhat contradictory. He argues in the first place that the State Government could not form such an opinion and in the same breath. He argues that the State Government had formed such an opinion.

In my view, the contention of Mr. Ginwalla on this point is of substance. In cannot be disputed that the formation of an opinion about the existence or apprehension of an industrial dispute is a necessary precondition for making a valid order of Reference. It is also indisputable that before there can be an industrial dispute of this type there must be a subsisting relationship of employer and employee between the two parties to a dispute. That being so, I do not see how this question, namely, whether such a relationship of employer and employee exists can be delegated to the Tribunal for adjudication. In my view, the first sentence in the impugned order of Reference clearly proves that the State Government could not have formed its opinion on the question of the existence of employer and employee relationship between the Petitioner and the employees of the canteen. I also accept the contention of Mr. Ginwalla that the records do not indicate any material whatsoever on the basis of which the State Government could have formed such an opinion. The State Government could have called upon the company to produce the relevant employment register and other records for the purpose of showing whether the names of the employees of the canteen were borne on their rolls. It does not appear that the State Government or any of its officers called for any such records. As such, it must be concluded that there could have been no material before the State Government for the formation of such an opinion. This contention of Mr. Ginwalla therefore succeeds.

The above discussion would have been sufficient to dispose of the present Rule. Mr. Ginwalla, however, invited me to go into the other question, namely, whether on the evidence before the Tribunal, it could come to the conclusion that there was the relationship of employer and employee between the Petitioners and the canteen workers. In other words, whether the conclusion of the Tribunal on this point can be called, perverse or not.

On this point Mr. Ginwalla took me through a plethora of evidence led by the Petitioner before the Tribunal both oral and documentary. My attention was drawn in particular to a letter dated May 31, 1973, by the Administrative Officer of the Petitioner to the Secretary of the Shipping Corporation Canteen Staff Association wherein the company was categorically stating that the canteen staff were the direct employees of the union and the Corporation had nothing whatsoever to do in matters relating to the terms of their employment. Similarly, when the Labour Secretary wrote to the Petitioner suggesting a Reference to the Tribunal for adjudication the question whether the workers of the canteen are employees of the Petitioner, the Petitioner in its letter categorically stated that these workers are not the Petitioner''s employees and therefore there cannot arise any industrial dispute between those employees and the Petitioner which can be referred to an Industrial Tribunal for adjudication.

My attention; was also drawn to the various letters written by the Petitioner to S.K. Mukherjee who was the first caterer then to the union and lastly, to the Consumers Co-operative who are now running the canteen. In those letters, it is made clear, either expressly or by necessary implication, that the canteen staff will be the employees of the caterer and not of the Petitioner.

Lastly strong reliance was placed on the minutes of the meeting held in Bombay, from August 7 to 13, 1973, which was tendered before the Tribunal as Ex. 15. In those minutes it is stated, inter alia, as follows:

The union representatives insisted that the canteen should be run departmentally and all existing boys should be put on the permanent roll of the Shipping Corporation. Administrative Director stated that the management cannot agree to do so.

It is to be noted that these minutes are signed by Debranjan Mazumdar, General Secretary of the Employees Union.

It is submitted by Mr. Ginwalla that the evidence led by the workmen, on the others hand, could not even circumstantially suggest, that they were the employees of the Petitioner. In other words, there was no direct evidence in the form of any document which could suggest an employer and employee relationship between the Petitioner and those workmen. For instance, Ex. 1 before the Tribunal was a note addressed by the Assistant Personnel Officer to the Manager Bata Shoe Stores, 15/1 Chowringhee Road, Calcutta, requesting him to supply to one S.K. Dhar one pair of Bata shoes. Admittedly, this Dhar is an employee of the canteen. But it was submitted that this document cannot even remotely suggest that he was an employee of the Corporation. It is strongly commented by Mr. Ginwalla that the Tribunal does not even advert to the various documents tendered by the Petitioner in coming to its finding.

In my view, this contention of Mr. Ginwalla is also of substance. The Tribunal appears to proceed on the basis that under the service conditions it is the duty of the Petitioner to run the canteen. But it fails to appreciate that this duty is cast on the Petitioner in the passive voice, viz. that a canteen shall be maintained. In other words, it does not cast an obligation on the Petitioner to run the canteen itself. I may quote a passage from the Tribunal''s order on this aspect of the matter.

In the instant case, this Tribunal finds that it is a duty and or responsibility of the Corporation to maintain and run the canteen. This Tribunal holds that, that duty is inseparable from the activities of its establishment and/or undertaking. In other words, the canteen is a part and parcel of the undertaking.

Even assuming this finding to be correct, this does not establish an employer and employee relationship between the Petitioner and the staff of the canteen. In other words, it does not prevent the Petitioner from running the canteen which is managed by independent caterers. In fact, on the evidence the conclusion on this point is inescapable that the canteen was in fact being run by independent caterers. On this question, the Tribunal''s finding must be held to be based on no evidence and perverse. As Mr. Ginwalla pointed out the documentary evidence on this point is all one way. This contention of Mr. Ginwalla therefore succeeds.

Lastly, it remains to deal with the cases cited by the parties some of which were also considered by the Tribunal,

Mr. Ginwalla relied on a decision of, this Court in the case of Bengal Waterproof Works v. State of West Bengal 1970 L.I.C. 71 (para. 36) in which the judgment was delivered by D. Basu J. That was the case where the union contended that the canteen managing committee there, was nothing but an agent of the company discharging the liability of the company itself. In that case it was held that the Factories Act, 1948, was applicable and the managing committee of the canteen was a statutory body. Notwithstanding the above, it was held that the employees of the canteen were not employees of the company. D. Basu J. observed as follows:

The provisions of the joint resolution as aforesaid cannot be said to be contrary to the provisions of the statute. The liability of the company under the Act is only to set up and maintain a canteen so that the workers may have the benefit of its existence. The terms and conditions of service of the staff of the canteen do not come under that liability as has been rightly contended on behalf of the company. The company has ensured the continuance of the canteen by agreeing to provide a clerk to the canteen with his expenses and to contribute Rs. 100 per month towards the running expenses of the canteen.

Mr. Ginwalla pointed out that, in the instant case, there was no question of the application of the Factories Act, 1948 and as such, this case stood on a stronger footing from the Petitioner''s point of view.

Mr. Rathin Bhattacharyya appearing for the workmen of the canteen relied ON decision of the English. Court in the case of Market Investigations Ltd. v. Minister of Social Security 1969 L.I.C. 1040 (para 17). Cook J. observed as follows:

The observations of Lord Wright, of Denning L.J. and of the Judges of the Supreme Court suggest that the fundamental test to be applied is this: ''Is the person who has engaged himself to perform these services performing them as a person in business on his own account?'' If the answer to that question is yes then the contract is a contract for services. If the answer is no then the contract is a contract of service. No exhaustive list has been complied and perhaps no exhaustive list can be complied of the considerations which, are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, an opportunity of profiting from sound management in the performance of his task. These propositions of law were not disputed by Mr. Ginwalla who contended on the strength of the documents and the other circumstances that it was still a contract for services and not a contract of service.

Mr. Bhattacharyya relied on a decision of the Kerala High Court in the case of Madan Beedi Depot v. The Industrial Tribunal, Calcutta and Anr. 1974 L.I.C. 270 (para. 15). Isaac J. observed as follows:

It is, therefore, clear that no decision can be authority for determining the question whether in a given case an employer employee relationship exists. It is one to be decided on its own facts bearing in mind the various principles and the tests to be applied for deciding such a question. There is no universal principle or test. The essence of the enquiry should be the Supreme Court of America stated in (1946) 331 U.S. 704 whether the men were employees as a matter of economic reality, or as Denning L.J. stated in (1952) 1 T.L.R 101 whether the person who has been engaged to do a work is doing it as a person in business on his own account.

This proposition once again is not only wholesome but indisputable and indeed was not disputed by Mr. Ginwalla. I am in entire respectful agreement with the above observations that whether an employer and employee relationship exist or not is entirely a question of fact depending on the circumstances of each case and no authority can be of any assistance in this matter.

Lastly, Mr. Bhattacharyya relied on a decision of this Court which has been referred to in the impugned order of the Tribunal in the case of N. Jagga Rao and Ors. v. Union of India and Ors 1975 L.I.C. 1574. In that case, on a construction of the Factories Act and the various Rules made thereunder, their Lordships came to the conclusion that the employees of the canteen management committee of the Loco, Carriage and Electrical Workshop, South-Eastern Railway, Kharagpur, were employees of the South-Eastern Railway. But as rightly pointed out by Mr. Ginwalla that case turned on the provisions of the Factories Act and the Rules framed thereunder which admittedly have no application in the present case. In my view, the above decision is of no assistance to the workmen in the present case.

Lastly, reference was made to the decision of the Supreme Court in The Saraspur Mills Co. Ltd. Vs. Ramanlal Chimanlal and Others, . This case also, in my view, is on the Factories Act and of no assistance to the Respondent workmen in the present case.

That disposes of all the contentions raised on behalf of the parties.

For the reasons given above, this application succeeds and the Rule is made absolute.

There will be a writ in the nature of mandamus directing the Respondents to forthwith recall, cancel and withdraw the impugned order of Reference dated March 12, 1974 and to forbear from giving effect thereto in any manner whatsoever. There will also be a writ in the nature of certiorari quashing the impugned order No. 40 dated March 19, 1976 and a writ in the nature of mandamus directing the Respondents to forbear from giving effect thereto in any manner whatsoever.

There will be no order as to costs.