The Jharkhand High Court has clarified that workers engaged by contractors in statutory canteens are considered employees of the principal establishment only for the purposes of compliance with the Factories Act, 1948, and not for all other purposes such as reinstatement or service benefits. The judgment strictly follows the Supreme Court’s decision in Balwant Rai Saluja v. Air India (2014), providing clear, binding precedent for industrial and service law disputes involving statutory canteens.
Summary
| Category | Data |
|---|---|
| Case Name |
WPC/1716/2009 of BOKARO STEEL PLANT Vs THEIR WORKMAN REP.BY BOKARO PR CNR JHHC010007202009 |
| Date of Registration | 09-04-2009 |
| Decision Date | 30-10-2025 |
| Disposal Nature | Allowed |
| Judgment Author | HON’BLE THE CHIEF JUSTICE |
| Court | High Court of Jharkhand |
| Precedent Value | Binding authority for subordinate courts and persuasive for other High Courts |
| Overrules / Affirms |
|
| Type of Law |
|
| Questions of Law |
|
| Ratio Decidendi | The High Court held that mere employment in a statutory canteen run by a contractor does not create an employer-employee relationship with the principal employer for all legal purposes. Instead, such workers are deemed employees of the principal employer only for limited compliance under the Factories Act, 1948, and do not gain rights to reinstatement or back wages unless clear evidence establishes that the management exercised absolute and effective control over their service. The court emphasized multiple factual tests to determine the relationship, and found the Tribunal’s contrary conclusion to be perverse. The decision strictly follows and applies the Supreme Court’s interpretation in Balwant Rai Saluja. The Tribunal’s award granting reinstatement and back wages was thus unsustainable. |
| Judgments Relied Upon |
|
| Logic / Jurisprudence / Authorities Relied Upon by the Court | Applied the “control and supervision” test as laid down by the Supreme Court, examining who appoints, pays, disciplines, and supervises the workers; Reasoned that statutory obligations under Section 46 of the Factories Act do not extend to confer full employment status or service benefits beyond the Act’s requirements. |
| Facts as Summarised by the Court | Workmen engaged through contractors in the canteen of Bokaro Steel Plant claimed permanent and continuous employment, and challenged their termination by the management. Tribunal had ordered their reinstatement with back wages, treating them as employees of the management. Management contested that workmen were employees of the contractors. Multiple rounds of litigation preceded the High Court writ petitions. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts in Jharkhand |
| Persuasive For | Other High Courts and the Supreme Court, especially in cases involving similar statutory canteen and contractor scenarios |
| Overrules | Sets aside the Industrial Tribunal’s award in Reference Case No. 5 of 1997; Does not overrule Supreme Court law |
| Follows |
|
What’s New / What Lawyers Should Note
- Reinforces that workers in statutory canteens engaged via contractors are not considered employees of the principal employer for all service law purposes.
- Restates the Supreme Court’s multi-factor “control and supervision test” for determining employer-employee relationships, requiring evidence of management’s absolute and effective control.
- Clarifies that compliance with Section 46 of the Factories Act does not automatically confer regularization or service benefits.
- Tribunal findings based solely on statutory canteen obligations, and without application of detailed factual tests, are vulnerable to being set aside.
- Writs seeking enforcement of Tribunal awards must independently demonstrate maintainability.
Summary of Legal Reasoning
- The High Court noted that while exercising jurisdiction under Article 226, it cannot re-appreciate evidence unless there is manifest perversity or lack of jurisdiction.
- The Court emphasized the settled law that the burden of proving employer-employee relationship is on the workman, and such relationship must be established through concrete evidence, not mere assertions.
- Applied the Supreme Court’s tests (from Balwant Rai Saluja): who appoints, who pays, who dismisses, who takes disciplinary action, continuity of service, and the extent of control and supervision.
- Found that in the present case, all these tests pointed to the contractors, not the management, as the real employers.
- Rejected the Tribunal’s approach in relying solely on statutory canteen obligations under the Factories Act to infer employment with the management.
- Cited directly from Balwant Rai Saluja and Indian Petrochemicals to underline that such workers are employees of the establishment only for Factories Act compliance, not for broader service benefits.
- Concluded the Tribunal’s findings were perverse, set aside the award, and allowed the management’s writ.
Arguments by the Parties
Petitioner (Management):
- Workmen were appointed, managed, and paid by contractors, not by the management.
- No direct control or supervision was exercised by the management over individual workmen.
- Statutory canteen obligations do not create full employment rights.
- Tribunal relied solely on Factories Act obligations without applying the control/supervision test.
Respondent (Workman-Union):
- Claimed continuous and direct employment in the canteen run by the management.
- Asserted control and supervision by management, including appointments after medical examination by the management.
- Sought reinstatement and back wages.
Factual Background
The dispute arose when workmen engaged in the canteen at Bokaro Steel Plant, operated through various contractors, were terminated. The workmen, through their union, argued they performed permanent and continuous work and were under the management’s direct control and supervision. The Tribunal found in favor of the workmen and ordered reinstatement with back wages. The management contested this, maintaining the workers were employees of the contractors. Multiple petitions and rounds of review followed, including earlier High Court and Supreme Court proceedings on specific procedural orders.
Statutory Analysis
- Section 46 of the Factories Act, 1948: Mandates that factories employing more than 250 workers must provide canteens.
- The Court noted there is no provision mandating mode of operation or employer-employee status beyond statutory compliance.
- Section 46 creates social/liability obligations but does not confer rights of regular employment, seniority, or service benefits.
- The Tribunal’s reliance on Section 46 and related rules was found to be insufficient to deduce a full employment relationship.
Procedural Innovations
- The High Court reiterated that writ petitions seeking enforcement of Tribunal awards must satisfy maintainability standards.
- The judgment clarified the limits of High Court review over factual findings of industrial forums, underscoring intervention only in cases of perversity.
Alert Indicators
- ✔ Precedent Followed – The judgment strictly follows the established Supreme Court precedent (Balwant Rai Saluja).
- 🚨 Sets Aside Lower Court/Tribunal Award – Tribunal award granting broad employment rights to canteen workers under contract is set aside.