The Jharkhand High Court reaffirms that workmen engaged by contractors to run statutory canteens are not ipso facto employees of the principal employer for all purposes under industrial law; employer-employee relationship must be proved by satisfying specific legal tests. The judgment closely follows and applies the Supreme Court’s ratio in ‘Balwant Rai Saluja’, upholding binding precedent for industrial employment disputes, especially in large PSUs and manufacturing enterprises.
Summary
| Category | Data |
|---|---|
| Case Name | WPC/3585/2009 of BOKARO PROGRESSIVE FRONT PRES Vs EMPLOYER IN RELATION TO THE MA |
| CNR | JHHC010005592009 |
| Date of Registration | 05-08-2009 |
| Decision Date | 30-10-2025 |
| Disposal Nature | Dismissed As Not Maintainable |
| Judgment Author | HON’BLE THE CHIEF JUSTICE |
| Court | High Court of Jharkhand |
| Bench | Single (Coram: Hon’ble The Chief Justice) |
| Precedent Value | Binding on subordinate courts within Jharkhand; persuasive elsewhere |
| Overrules / Affirms |
|
| Type of Law | Labour Law / Industrial Law / Service Law |
| Questions of Law |
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| Ratio Decidendi |
The judgment holds that contract labourers engaged for the management of statutory canteens are not automatically employees of the principal employer for all purposes merely by virtue of the Factories Act. The employer-employee relationship must be specifically proved by satisfying recognized legal tests: who appoints, pays, controls, and can dismiss, as well as the degree of control and supervision. The Tribunal’s finding that the arrangement was a sham was found perverse, as evidence failed to support any direct employment or effective control by the principal management. The Court notes that the statutory obligation to run a canteen under the Factories Act creates relationship only for limited statutory purposes and not for broader service law entitlements such as reinstatement or regularization. The High Court’s power of judicial review under Article 226 does not usually extend to reappreciation of facts unless findings are perverse or lacking basis in evidence, as found here. |
| Judgments Relied Upon |
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| Logic / Jurisprudence / Authorities Relied Upon by the Court |
The judgment reiterates the legal principles that statutory canteen workmen are the employees of the establishment only for the limited purposes of the Factories Act, unless substantive tests of employer-employee relationship as laid down in ‘Balwant Rai Saluja’ are satisfied. The Court systematically applies the six-fold test (who appoints, pays, dismisses, etc.), determines that the management failed none of these, and discusses the limits of judicial review and evidence required to prove employment relationship. |
| Facts as Summarised by the Court |
The case arose when workmen, engaged through various contractors for the canteens of Bokaro Steel Plant, challenged their termination and sought reinstatement and back-wages, claiming status as direct employees of the management. The Industrial Tribunal found for the workmen, holding the contracting arrangement a sham and directing reinstatement. The management contested this, leading to writ petitions by both sides. The High Court found that evidence did not establish direct employment, overturned the Tribunal’s finding as perverse, and held that the Factories Act obligation did not suffice to grant broader employment status. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts and tribunals within the jurisdiction of the Jharkhand High Court |
| Persuasive For | Other High Courts; Labour Courts and Industrial Tribunals; can be cited before the Supreme Court and in similar industrial/employment matters in other states |
| Follows |
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What’s New / What Lawyers Should Note
- Reiterates that statutory obligations to operate canteens (under the Factories Act) do not themselves create a comprehensive employer-employee relationship for all purposes.
- Employer-employee relationship must be proved using concrete evidence and accepted legal tests, not presumed from statutory obligation or operation.
- Clarifies that High Courts may intervene under Article 226 if a tribunal’s finding is perverse or unsupported by evidence, especially regarding findings of employment relationship.
- Affirms and applies the Supreme Court’s six-fold test for determining real employment relationships in contract labour and statutory canteen cases.
- Counters reliance on perceived “sham” contracting merely from statutory canteen requirements; rights under Factories Act are limited.
Summary of Legal Reasoning
- The High Court first reiterates the principle that, under Article 226, it cannot re-appreciate facts unless the findings are perverse or lack any evidentiary foundation.
- The burden of proving employer-employee relationship rests on the claimant, and this must be established by evidence such as appointment letters, salary records, leave registers, PF/ESI contributions, not merely by self-serving statements.
- The Tribunal’s finding that the contract system was a sham, and that the workmen were employees of the principal management, was found by the High Court to be unsupported by the evidence, particularly as the six key “tests” (appointment, payment, discipline, dismissal, continuity, control) were not met.
- The judgment extensively relies on the Supreme Court’s decision in Balwant Rai Saluja, which held that canteen workers are employees of the establishment only for limited purposes under the Factories Act, and not for regularization, service or labour law benefits, unless a full employer-employee relationship is established on facts.
- The Court finds that the Tribunal wrongly disregarded sample agreements and lease documents and placed excessive weight on the statutory nature of the canteen without sufficient proof of managerial control by the principal employer.
- As such, the Tribunal’s finding is set aside as perverse, and the statutory status does not grant general employment rights.
Arguments by the Parties
Petitioner
- Claimed that the workmen were engaged in permanent, continuous canteen jobs under the direct control and supervision of the management.
- Alleged that termination was illegal and challenged their removal.
- Argued that provision of facilities (furniture, water, electricity) and the canteen being for plant employees meant existence of employer-employee relationship.
Respondent
- Argued that the workmen were appointed and paid by the individual canteen contractors, not by the management.
- Maintained that management provided space, equipment, and utilities, but had no control over appointments, salary, or dismissal.
- Asserted that statutory canteen operation alone does not create direct employment status; cited Supreme Court precedent.
- Emphasized that contracts were genuine and arm’s length, not a sham arrangement.
Factual Background
The dispute arose after 128 workmen, engaged through various contractors in canteens at Bokaro Steel Plant, were terminated with effect from 29.07.1979. The workmen, represented by their union, alleged that they were in fact employees of the management, given the nature of their work and the direct involvement of Bokaro Steel Plant in running the canteens. The original reference proceeded before the Labour Court and then the Industrial Tribunal after impleading the management. The Tribunal ruled in favour of the workmen, holding their termination unjust and ordering reinstatement with back-wages. The management challenged this decision by writ petition, while the workmen sought enforcement of the award through a separate writ.
Statutory Analysis
- The Court discussed Section 46 of the Factories Act, 1948, which mandates canteen facilities in factories with more than 250 workers but leaves the manner of implementation to the occupier (direct hiring or third-party contract).
- The judgment clarifies, following Supreme Court precedent, that this section creates obligations limited to the welfare and facility for workers, not extending to confer general employment status or labour rights outside the Act unless employer-employee tests are satisfied.
- The decision refers to Rule 65–70 of the applicable rules, explaining how they reinforce statutory welfare obligations without determining employment relationship for all legal purposes.
- The Court also referred to earlier judicial approaches to the meaning of “worker” and the obligations under the Act.
Dissenting / Concurring Opinion Summary
No dissenting or concurring opinions are reported in the judgment.
Procedural Innovations
- The Court expressly discusses the maintainability of writ petitions seeking enforcement of an industrial award, stating that such petitions are not maintainable in the form presented.
- Highlights the evidentiary standards and burden of proof for demonstrating employer-employee relationship in the context of contract labour and canteen employment disputes.
Alert Indicators
- ✔ Precedent Followed – The judgment closely follows and applies the established Supreme Court precedent in ‘Balwant Rai Saluja and Another v. Air India Limited and Others’.