Facts
The employees of the UP Cooperative Bank Ltd formed an employees’ society called the UP Cooperative Bank Employees Society. The UP Cooperative Bank was established under the Cooperative Societies Act, 1912. The Society wanted to set up a canteen for its members. This idea was proposed to the Bank Management, and the Bank Management passed a policy accepting the same. It provided a subsidy to set up the canteen and to run it. The Bank was to pay 75% towards the wages, and the remaining 25% was borne by the society. The bank was involved only in providing financial assistance and was not involved in the management or appointment of employees to the canteen.
After a certain time, the bank was not able to provide subsidies to run the canteen and ultimately, the canteen was shut, and the four respondents who were employed in the canteen were terminated from their jobs. They approached the Labor Court, stating that they had been terminated unlawfully. The Labor Court held that the bank is liable to reinstate and reemploy the respondents and give them the salary which they had lost during the time they were not employed. The High Court also upheld this order of the Labor Court, and therefore, the Bank has approached the Supreme Court through a civil appeal petition.
Issues
- The main issue before the court was in regards to whether the bank was to take responsibility for the termination of employees and reemploy them and provide them with the pending salary.
- Whether there is a master servant relationship between the bank and the canteen employees.
Legal Provisions
- The Industrial Disputes Act, 1947: The concept of workman and employer-employee relationship was analysed.
- The Factories Act, 1948: Cited concerning statutory canteen obligations, but again, not determinative in this case.
Arguments
Petitioners (General Manager, UP Cooperative Bank Ltd.)
Ms. Garima Prasad, the counsel for the petitioners, stated that the High Court and Labor Court have committed an error in their decision. She said that the Bank had nothing to do with the employees. The canteen was set up by the society, and it was in control of the administration, and the bank was only involved in setting it up, providing it with the necessary infrastructure required and providing subsidies. There was no master servant relationship between the bank and the canteen employees. The petitioners also relied on the cases of Balwant Rai Saluja and Another v. Air India Ltd. and Others (2014) 9 SCC 407, Employers in relation to the Management of Reserve Bank of India v. Workmen, (1996) 3 SCC 267, State Bank of India and Others v. State Bank of India Canteen Employees’ Union (Bengal Circle) and Others, (2000) 5 SCC 531, to strengthen their argument.
Respondent (Achchey Lal &Anr)
Mr. Pradeep Kant, the counsel for the respondents, submitted that there was no error in the judgments given by the High Court and the Labor Courts. The respondents claimed that there was direct control and supervision by the Bank over the employees working in the canteen. They said that the financial assistance which was given to the society was the one used to pay their wages. The working hours and the working days of the canteen were in sync with the working time and day of the Bank. The respondents relied on the case of Indian Overseas Bank v. I.O.B. Staff Canteen Workers’ Union and Another (2000) 4 SCC 245 to support their argument.
Analysis
The court assessed the facts concerning the functioning of the canteen, which was initially established by the Bank but was run and staffed by the Employees’ Society. The Bank paid for the infrastructure and offered some subsidies, but was not directly involved in the hiring, supervision, or control of the employees. The Labor Court and High Court had found, on the other hand, that the canteen employees were under the control of the Bank and a determination was made that they were therefore employees of the Bank, because of the reliance on the control test and past instances where the employer-employee relationship had been established by other factors, including the Bank funding the cost of the canteen., and because misc. operational control.
On the other hand, the Supreme Court highlighted that the crucial factors were who has the authority to appoint workers and pay them, who has the right to dismiss workers or take disciplinary action, who is responsible for providing an elemental and consistent service, and to what level the alleged employer has control and supervision.
The Court found that the Bank paid for some subsidies and infrastructure, but it did not run the daily aspects of the cafeteria or exercise direct control over the workers. The Society hired employees and paid them; therefore, there was no evidence that there was anything whatsoever establishing quality control authority or employment rules over the workers by the Bank.
Judgment
The Supreme Court, after looking into the facts and the arguments presented, held that the petitioner is not to reemploy or pay the pending salary and overruled the judgment and order given by the High Court and Labor Court. The Court’s reasoning for the judgment of the absence of a master-servant relationship.
Conclusion
In this case, the Supreme Court examined what constitutes a master-servant relationship to hold the employer responsible for their actions. The Court specified that mere financial support does not mean there is the existence of a master-servant relationship. There should be involvement in the appointment of employees, and looking after the administration and the management.
Click here to read more: GENERAL MANAGER, U.P. COOPERATIVE BANK LTD v. ACHCHEY LAL & ANR.
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WRITTEN BY I Sharan
