Persons Employed in Statutory Canteens (Maintained by a Contractor) are not Principal Employer's Employees

In a recent three-judge bench decision (Balwat Rai Saluja & Anr. v. Air India Ltd. & Ors.; Civil Appeals No. 10264-10266 of 2013), the Supreme Court of India (“Supreme Court”) has dealt with an important question under Labour Law jurisprudence – “whether the workmen engaged in statutory canteens, through a contractor, could be treated as employees of the principal establishment”? The question was with respect to the obligation of the occupier of a factory, under § 46 of the Factories Act, 1948 (“Factories Act”), to provide a canteen in case more than 250 workmen are ordinarily employed.

In the appeal, Hotel Corporation of India (“HCI or Respondent No. 2”), a wholly owned subsidiary of Air India (“Respondent No.1”) to establish refreshment rooms, canteen etc., had employed appellants-workmen on a ‘causal or temporary basis’ for rendering canteen services on Air India’s premises. Both HCI and Air India are companies registered under Companies Act, 1956 (“Companies Act”). In 1996, the Central Government referred an industrial dispute between Air India and the appellants-workmen (“Appellants”) to the Central Government Industrial Tribunal (“CGIT”). It was Appellants’ contention that by virtue of them being employed in a statutory canteen established on the premises of Air India, they are its ‘deemed employees’. The contention was sought to be substantiated by reference to the applicability of Rules 65-70 of Delhi Factory Rules, 1950 (“Delhi Rules”) to Air India’s Ground Services Department. CIGT accepted the plea of the workmen and held that they are Air India’s employees. However, on appeal, a single-judge bench of the High Court of Delhi (“High Court”) reversed the CGIT’s order and held that workmen could not be treated as Air India’s deemed employees. It was held that the responsibility to run canteen was that of HCI, and its relationship with Air India was contractual. On second appeal, judgment of the single-judge bench was affirmed by a division bench of the High Court.

SC issues directions to the High Court(s) for Appointing Employees

Recognising the importance of a transparent procedure to be adopted by the High Courts in appointing employees, the Supreme Court of India (“Supreme Court”) has recently issued certain directions regarding the same (Renu & Ors. v. District & Sessions Judge, Tis Hazari & Anr.)

In the judgment delivered by Justice B.S. Chauhan (for three –judge bench which also included Justice J. Chelameswar and M.Y. Eqbal), it has been emphasised that the administrative power exercised by the Chief Justice of a High Court under Article 229 Constitution of India, 1950 (“Constitution”) should be in conformity with Articles 14 and 16. That is, Chief Justice cannot make appointments in contravention with Statutory Rules, and has to be in consonance with the Constitution.

Article 229 of the Constitution provides that ‘officers and servants’ of the High Court shall be made by the Chief Justice of that Court or such Judge or officer of the Court as he may direct. Article 235 of the Constitution confers power upon the concerned High Court to exercise administrative control over subordinate courts. Emphasising that employment (of all the classes) in the High Court or courts subordinate to it falls within the definition of ‘public employment’, it was held that the same should be carried through in a constitutional manner.

Following are the directions which were issued by the court in this judgment:

i)             All High Courts are requested to re-examine the statutory rules dealing with the appointment of staff in the High Court as well as in the subordinate courts and in case any of the rule is not in conformity and consonance with the provisions of Articles 14 and 16 of the Constitution, the same may be modified.

Earlier "Adverse Remarks" can be considered for Compulsory Retirement

Even if the adverse remarks/record were made in the past, it can be taken into account for determining the 'overall performance' of an employee. This view has been taken by the Supreme Court of India (“Supreme Court”) in the case of Rajasthan State Road Transport Corp. & Ors. v. Babu Lal Jangir, decided on 16^th September, 2013. In this case, the pertinent question which arose for consideration was – whether the adverse entries/record of an employee, being not made in ‘immediate paste’, can be taken into consideration for ordering a premature/compulsory retirement? Answering the question in affirmative, the Supreme Court noted that while considering the premature retirement of an employee, it is the entire service record which is taken into consideration.

(Image Source: Thomas Carroll Group Website)

Facts: The respondent, Babu Lal Jangir, joined the services of the appellant, Rajasthan State Road Transport Corporation (“Corporation”), on the post of driver. On the recommendation of Screening Committee and Review Committee, an order was passed against the respondent thereby ‘compulsory retiring’ him from the service. Against this order, respondent filed a writ petition before the High Court of Judicature for Rajasthan (“High Court”). Through counter-affidavit, it was submitted by the appellant (appellant before the Supreme Court, i.e., Corporation) that the service record of the respondent showed a dismal performance, and hence, the order of compulsory retirement was justified. However, The single judge of the High Court held the order of compulsory retirement arbitrary on the ground that the impugned acts of misconduct, which showed dismal picture of performance, pertained the period 12 years prior to the order of retirement. This view of the single judge was upheld by the division bench of the High Court. Hence, the matter came before the Supreme Court.

Regularisation of Co-terminus employment: Voilative of Article 14 and 16 of the Constitution

Co-terminus employment, in its essence, can be understood as the continuance of an employment contingent upon the employment tenure of any other person.[1]The question, whether such employees have a right to claim permanent employment, has recently been dealt by the Supreme Court of India (“Supreme Court”) in The Chief Executive Officer, Pondicherry Khadi and Village Industries Board & Ors v. K. Aroquia Radja & Ors.

In this case, after being persuaded by the Chairman, Pondicherry Khadi and Village Industries Board (“Board”), Government of Pondicherry (“Government”) appointed respondents on a co-terminus basis and their employment was to coincide with the tenure of the Chairman of the Board. The said condition was mentioned both in the approval order by the government and the terms of employment formulated by the Board. However, Chairman of the Board sent a proposal to the government for receiving Governor’s approval for the absorption of these employees (“respondents”) against certain vacant posts; but, the proposal was rejected by the government. Another similar proposal, this time directly to the Lt. Governor of Puducherry (“Governor”), was sent by Chairman of the Board. This time, proposal was approved by the Governor. In the meantime, Chairman of the Board resigned from the post. Since the Board did not complied with the approval of the Governor for the absorption of the respondents, the latter filed a writ petition before the High Court of Madras (“High Court”). Single judge Bench of the High Court decided the petition in favour of the employees, which was then confirmed by the Division Bench. Hence, this matter came before the Supreme Court.

While deciding this case, Supreme Court opined that the respondent (“respondents before the Supreme Court”) have been selected through the Employment Exchange or through any procedure in which they were required to compete against other eligible candidates.[2]Further, Supreme Court held that, factual position as regards co-terminus employment could not be placed before the Governor since proposal was not sent to him via government.[3] Supreme Court also emphasised the fact that Governor is supposed to act on the advice of the Council of Ministers.

Supreme Court referred to its judgment in State of Karnataka and Ors. Vs. Umadevi (3) and Ors. 2006 (4) SCC 1, wherein it held that lower bargaining power is not a sufficient ground for a deviation from constitutional scheme of appointment. Supreme Court, in this case, held that:

“Absorption, regularization or permanent continuance of temporary, contractual, casual, daily-wage or adhoc employees appointed/recruited and continued for long in public employment dehors the constitutional scheme of public employment is impermissible and violative of Article 14 and 16 of the Constitution of India”

Supreme Court also referred to the judgment in the case of State of Gujarat and Anr. Vs. P.J. Kampavat and Ors., 1992 (3) SCC 226, wherein court dealt with the similar situation of nature of a temporary employment.

Having considered above positions of law, Supreme Court, in The Chief Executive Officer, Pondicherry Khadi and Village Industries Board & Ors v. K. Aroquia Radja & Ors., allowed the appeals, i.e., which is against the co-terminus employees. It is because of the fact that their employment was co-terminus with the tenure of the Chairman of the Board. And since, Chairman has resigned from the post, the employment of the respondents can be terminated.

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[1] It should also be the form of employment which can be in existence as long as a given “fact” is in existence, irrespective of whether such “fact” is the employment of another person or not. For example, an employment that is co-terminus with the existence of a project work.

[2] See Excise Superintendent Malkapatnam, Krishna District, A.P. Vs. K.B.N. Visweshwara Rao and Ors., 1996 (6) SCC 216 (which recognises the recruitment through the employment exchanges as the principle mode of recruitment)

[3] In Union of India Vs. Dharam Pal reported in  2009 (4) SCC 170, this court held that the requirement of being employed through proper channel could not be relaxed in an  arbitrary and cavalier manner for the benefit of a few persons.

Madras High Court granted maternity leave to a “Surrogate Mother”

In an interesting move, Madras High Court (“High Court”), in K. Kalaiselvi v. Chennai Port Trust (W.P.No.8188 of 2012), has allowed a writ petition whereby it held that even a “surrogate mother” is entitled for a maternity leave under Rule 3-A of the Madras Port Trust (Leave) Regulations, 1987 (“Regulations”).

Facts:

Petitioner (K. Kalaiselvi), who was working as an Assistant Superintendent (Traffic Department) at Chennai Port Trust (“Trust”), entered into an arrangement with a multispecialty hospital for having a baby through surrogate procedure. Following the birth of the child, she applied for maternity leave and for the inclusion of the child in FMI card. However, in the absence of any provision relating to surrogate mother under the Rules, her application for maternity leave and inclusion of child in FMI card was rejected. Hence, she filed the petition before the High Court for directing the trust to grant her leave on equal footing under Rule 3-A of the Regulations, which provides leave benefit to adoptive parents.

It is also to be noted that the petitioner had removed her uterus due to some problem (she also lost her 20 year old son in an accident)

Issues before the High Court:

In the absence of any provision, whether a woman employee, working in the Chennai Port Trust, is entitled to avail maternity leave even in case where she gets the child through arrangement by “Surrogate parents”?

What is “Surrogacy”?

High Court, while deciding this case, referred to the judgment of the Supreme Court in Baby Manji Yamada v. Union of India wherin the scope of the term “surrogacy” has been defined.[1] Supreme Court, in this case, defined surrogacy as:

“Surrogacy is a well-known method of reproduction whereby a woman agrees to become pregnant for the purpose of gestating and giving birth to a child she will not raise but hand over to a contracted party. She may be the child's genetic mother (the more traditional form for surrogacy) or she may be, as a gestational carrier, carry the pregnancy to delivery after having been implanted with an embryo. In some cases surrogacy is the only available option for parents who wish to have a child that is biologically related to them.”

Further, Supreme Court, in this case, also defined several forms of surrogacy:

(i)                 Traditional Surrogacy (also known as “Straight Method”) – In this form of surrogacy, child is conceived with the intention of relinquishing the child to be raised by others.

(ii)               Gestational Surrogacy (also known as “Host Method”) – In this form of surrogacy, surrogate becomes pregnant via embryo transfer with a child of which she is not the biological mother.

(iii)             Altruistic Surrogacy – In this form of surrogacy, surrogate receives no financial reward for her pregnancy or the relinquishment of the child.

(iv)             Commercial Surrogacy – In this form of surrogacy, gestational carrier is paid to carry a child to maturity in her womb and is usually resorted to by well-off infertile couples who can afford the cost involved. This medical procedure is legal in several countries including in India

Apart from this judgment of the Supreme Court, counsel for the petitioner also referred to the judgment of Anna Johnson Vs. Mark Calvert et al (“Supreme Court of California, 5 Cal 4^th 84), Article 25(2) of Universal Declaration of Human Rights, Article 17 and 33 of the Beijing Declaration and Platform for Action Fourth World Conference on Women, 1995 an Article 6 of the Convention on the Rights of the Child by United Nations General Assembly (“by a resolution on 20.11.1989”)

Can relief be provided to a “Surrogate Mother” in the absence of an express provision?

It is not disputed that no provision under the Regulations provides maternity to a “surrogate mother”. However, High Court, while relating a surrogate mother to an adoptive parent, held that the purpose of Rule 3-A of the Regulations is for proper bonding between the child and his/her parents. In both the situations (surrogate mother an adoptive parents), mother does not give birth to the child, yet the necessity of bonding with the child in the latter case has been recognise by the Central Government. Hence, in the opinion of the High Court, there is no reason why such benefit should not be provided to a surrogate mother as well.

While allowing the petition, reference was also made to the judgment of Supreme Court in Laxmi Video Theatres v. State of Haryana reported in (1993) 3 SCC 715[2]. In this case, Supreme Court held that a legislation, though may not include a particular word, should nonetheless be interpreted in a manner so as to accommodate the technological advancement. Reference was made with respect to Rule 3-A of the Regulations which provides benefit to the adoptive parents.

In the present case before the High Court, though leave for “surrogate mother” was not provided under the Regulations, it would be unjustifiable if maternity leave is not granted to her. This is because of the fact that reason for granting leave under Rule 3-A is to create a proper bond between mother and the child, which is applicable in the situation of surrogate mother as well. Consequently, High Court directed the respondent Trust to grant leave to the petitioner in terms of Rule 3-A of the Regulations.

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[1] (2008) 13 SCC 518

[2] Reference was also made to The Senior Electric Inspector and others Vs. Laxmi Narayan Chopra, AIR 1962 SC 159