{"id":90968,"date":"1995-12-15T00:00:00","date_gmt":"1995-12-14T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/union-of-india-railway-board-vs-j-v-subhaiah-ors-etc-etc-on-15-december-1995"},"modified":"2016-07-09T18:44:05","modified_gmt":"2016-07-09T13:14:05","slug":"union-of-india-railway-board-vs-j-v-subhaiah-ors-etc-etc-on-15-december-1995","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/union-of-india-railway-board-vs-j-v-subhaiah-ors-etc-etc-on-15-december-1995","title":{"rendered":"Union Of India [Railway Board] & … vs J.V. Subhaiah & Ors. Etc. Etc on 15 December, 1995"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Union Of India [Railway Board] & … vs J.V. Subhaiah & Ors. Etc. Etc on 15 December, 1995<\/div>\n
Equivalent citations: 1996 SCC (2) 258, \t JT 1995 (9)\t488<\/div>\n
Author: K Ramaswamy<\/div>\n
Bench: Ramaswamy, K.<\/div>\n
           PETITIONER:\nUNION OF INDIA [RAILWAY BOARD] & ORS.\n\n\tVs.\n\nRESPONDENT:\nJ.V. SUBHAIAH & ORS. ETC. ETC.\n\nDATE OF JUDGMENT15\/12\/1995\n\nBENCH:\nRAMASWAMY, K.\nBENCH:\nRAMASWAMY, K.\nFAIZAN UDDIN (J)\nKIRPAL B.N. (J)\n\nCITATION:\n 1996 SCC  (2) 258\t  JT 1995 (9)\t488\n 1996 SCALE  (1)193\n\n\nACT:\n\n\n\nHEADNOTE:\n\n\n\nJUDGMENT:\n<\/pre>\n
\t\t      J U D G M E N T
\nRamaswamy, J.\n<\/p>\n
     Leave granted in all the special leave petitions.
\n     The respondents  were admittedly  appointed in  Railway
\nEmployees’  Consumer  Co-operative  Stores  at\tRajahmundry,
\nVisakhapatnam, Vijianagaram and Dharmavaram in South-Central
\nRailway. They  filed  different\t O.As.\tbefore\tthe  Central
\nAdministrative\tTribunal   [CAT],  Hyderabad  Bench  seeking
\ndeclaration that  they are  “regular  Railway  employees  in
\nClass III  posts” and entitled to be paid regular salary for
\ncontinuous  service   from  the\t  date\tof   the  respective
\nappointments  in   the\tSocieties   and\t also  consequential
\npromotion, increments  and payment of arrears of salary. The
\nCAT, Hyderabad\tBench following\t the decision  of the Madras
\nBench delivered\t on June  29, 1990  in O.A.No.305\/88 allowed
\nthe O.As.  and gave  the directions for grant of the reliefs
\nreferred to earlier but payment of salary was directed to be
\nmade from  the date  on which  respective applications\twere
\nfiled. By  the time the present Special Leave Petitions came
\nto be  filed, a two-Judge Bench of this Court by order dated
\nSeptember 7,  1994 made\t in C.A.  No.2932\/91  confirmed\t the
\norder of  the CAT,  Madras Bench but the review petition was
\npending. When  these appeals  had come\tup  for\t hearing  on
\nOctober 16,  1995 it was pointed out to another Bench by the
\nAdditional Solicitor  General that despite the dismissal the
\nmatter required\t examination and  for that reason notice was
\nalready issued\tin another  case, viz., C.A. @ SLP 24287\/95.
\nAll the\t matters were accordingly tagged together. After the
\ndismissal of  the review petition a two-Judge Bench by order
\ndated November\t13, 1995  referred the matter to this Bench.
\nThus these appeals by special leave.\n<\/p>\n
     The  admitted  facts  are\tthat  the  respondents\twere
\nappointed by  the  respective  Railway\tCo-operative  Stores
\nregistered under  the Andhra  Pradesh Co-operative Societies
\nAct, 1964  as amended  from time  to time.  The Co-operative
\nStores were  organised\tby  the\t Railway  Administration  as
\nsocial welfare\tmeasure to  inculcate thrift and cooperative
\nspirit in  the management  of the societies, distribution of
\nessential commodities  and lending of credit facilities etc.
\nto  the\t members  of  the  societies.  Under  the  bye-laws,
\nrespective societies  consist  of  serving  members  of\t the
\nRailway Administration\tat the\trespective places.  Normally
\nthese societies\t are formed  at railway\t junctions. They are
\norganised under\t the  instructions  issued  by\tthe  Railway
\nAdministration in  the Railway\tEstablishment  Manual  [non-
\nstatutory orders].  Working of\tthe societies are supervised
\nby  the\t  welfare  officers   appointed\t  by   the   Railway
\nAdministration. It  is in  dispute as to whether salaries to
\nwelfare officers  are paid  by the societies concerned or by
\nthe Railway  Administration but\t that is  not  material\t for
\ndisposal of  these appeals.  It is  also not in dispute that
\none third  of the  members of the societies are nominated by
\nthe Railway Administration.\n<\/p>\n
     Shri  Tulsi,   learned  Additional\t  Solicitor  General
\ncontended, on the facts, that Co-operative Stores registered
\nunder the  Co-operative Societies  Act, a  State Act and the
\narticles of association or the bye-laws of the societies are
\nsanctioned by  the Registrar  of Co-operative Societies [for
\nshort, “the  Registrar”] of the concerned State appointed by
\nthe State  Government under  the respective  State Acts. The
\nconstitution of\t the societies\tis regulated  and registered
\nunder the  State Act.  Appropriate law,\t rules and  bye-laws
\nprovide that  the General  Body of  the society periodically
\nelects the members of the committee which in turn elects the
\nPresident or general body itself elects the President, for a
\nspecified term. The President and the committee, as the case
\nmay be,\t is empowered to appoint the officers, employees and
\nservants of  the  Stores  according  to\t its  bye-laws.\t The
\nRegistrar under\t the respective\t Acts, has  supervision\t and
\ncontrol over the working of the societies and its employees.
\nIn case\t of dispute  between the  society and its members or
\nthe society  and its  officers or  employees,  the  same  is
\nresolved  by   an  arbitrator\tunder  the  Act\t and  appeal
\nthereunder is  provided to  a  Tribunal\t constituted  or  an
\nappellate forum specified. The jurisdiction of a civil court
\nstands excluded in respect of the said disputes. Salaries to
\nthe staff  are paid  by the  society. Railway  Establishment
\nManual prescribes  procedure for organisation of the welfare
\nactivities, one of which is establishment of consumer credit
\nco-operative societies\tor  house  building  societies.\t The
\nshare capital,\tthough\tdeducted  from\tthe  salary  of\t the
\nmember-employees, is  only by  way of  an amenity  to enable
\nthem to\t organise, as a co-operative movement, for self-help
\nand  thrift.   The  Administration   has  no   control\tover
\nselection, appointment\tand payment of salaries to the staff
\nof the\tsociety. No  qualifications are\t prescribed in\tthat
\nbehalf. It  is\tdue  to\t administrative\t exigencies  of\t the
\nconcerned  Stores  or  the  Societies  that  appointment  or
\ndismissal can  be made by the President\/committee as per the
\nprocedure prescribed  under the respective Acts or the Rules
\nor   bye-laws\tmade   thereunder.   Thereby   the   Railway
\nAdministration has  no managerial  or administrative control
\nover the  staff of  the Stores\/Societies.  The conditions of
\nservice of  the officers  of the  Railway Administration are
\nnot applicable\tto them. If the Society is liquidated by the
\nRegistrar  for\t its  mismanagement  the  employees  of\t the
\nSocieties seek\tthe remedy  only against  the Societies. The
\nsocieties have\tnot been impleaded as respondents. The ratio
\nin M.M.Khan  & Ors.  v. Union  of India & Ors.<\/a> [(1990) Supp.
\nSCC  191]   cannot  be\tapplied\t to  the  employees  of\t the
\nSocieties\/Stores. The  rent-free accommodation and provision
\nof electricity\tto the\tStores and medical facilities to the
\nemployees are  extended as  a part  of the  welfare  measure
\nwithout creating  an obligation\t on the\t part of the Railway
\nAdministration\tto  treat  them\t as  Railway  employees.  In
\nM.M.Khan’s  case   recognised  cooperative   canteens\twere
\norganised as  a part  of the statutory duty under Section 46
\nof the\tFactories Act  where employees\tare 100\t or above in
\nnumber but  below  250.\t The  ratio  laid  down\t therein  is
\ninapplicable to\t the facts of these appeals. Shri K. Madhava
\nReddy, learned\tsenior counsel\tand Mrs. Chandan Ramamurthy,
\nlearned counsel for the respondents contended that the ratio
\nof M.M.Khan’s  case applies  on all  fours to  the facts  of
\nthese  appeals.\t  Co-operative\tStores\/Societies  have\tbeen
\norganised at  the instance  of the  Railway  Administration.
\nTheir work  is controlled  and\tsupervised  by\tthe  Welfare
\nOfficer appointed  by the Railway Administration and subsidy
\nis being  paid by the Railway Administration. The society is
\nmerely an  intervening agency  or veil\tbetween the  Railway
\nAdministration\tand   the  employees   of  the\t Cooperative
\nStores\/Societies.  The\t Railway  Administration  admittedly
\ngives facilities  like railway\tpasses, quarters  on nominal
\nrent, free  medical aid\t and other  amenities given  to\t the
\nregular officers  and servants of the Railway Administration
\nfrom time  to time.  The Railway Board issues circulars from
\ntime to\t time to control, organise and supervise the working
\nof the\tStores. The Railway Establishment Manual itself is a
\ncomplete code  in that\tbehalf. Merely\tbecause the  Railway
\nAdministration\tkept  its  arms\t as  an\t intervening  agency
\nbetween the  Stores and\t the employees, it cannot disown its
\nliability  to\ttreat  the   employees\tappointed   by\t the
\nStores\/Societies [like\tcanteen cases] as its employees. The
\ndecision of the Madras Bench of the CAT since upheld by this
\nCourt in  an appeal  and review\t petition also\thaving\tbeen
\ndismissed, the\temployees appointed by the respective Stores
\nin Southern  Railway and  South-Central Railway form a class
\ndischarging the\t same  duties.\tTherefore,  the\t respondents
\ncannot be  denied their\t Constitutional right  to have equal
\ntreatment as  had by  the regular  Railway  employees.\tSmt.
\nChandan Ramamurthy  placed strong  reliance on\tyet  another
\ndecision of  a two-Judge  Bench of  this  Court\t in  Parimal
\nChandra Raha & Ors. v. Life Insurance Corporation of India &
\nOrs.<\/a> [(1995) Supp. 2 SCC 611].\n<\/p>\n
     In view of the respective contentions a question giving
\nrise to\t far-reaching consequences  emerges for\t decision in
\nthese  appeals.\t  The  question\t is  whether  the  officers,
\nemployees  and\t servants  appointed   by   a\tCo-operative
\nSociety\/Stores registered  under the  Co-operative Societies
\nAct of\ta State\t or Societies  Registration Act\t (for short,
\n`the  Society’)\t and  organised\t as  a\twelfare\t measure  to
\ninculcate co-operative\tmovement, self-help and thrift among
\nthe officers  and servants of Railway Administration, can be
\ndeclared  to   be  regularly  appointed\t Railway  employees?
\nWhether they are Railway employees defined under the Railway
\nEstablishment Manual  and entitled  to all the consequential
\nbenefits?  Before  adverting  to  the  instructions  in\t the
\nRailway Establishment  Manual, it  would  be  profitable  to
\nconsider the  legal  setting  of  the  appointments  of\t the
\nemployees and  servants of  the Society.  In this case since
\nadmittedly the\tA.P. Co-operative  Societies Act [7 of 1964]
\n(for short  `the Act’)\tis applicable, its provisions and of
\nthe predecessor\t Acts repealed\tthereunder and\tof the Rules
\nmade thereunder as amended from time to time and bye laws of
\nthe society are required to be examined. The Act was enacted
\nwith a\tview to\t encourage co-operative\t movement, inculcate
\nthrift and  self-help  and  to\torganise  the  societies  on
\ndemocratic lines. The right to form a society is a statutory
\nright and  is not  a fundamental right, a Society registered
\nunder Section  7, on  compliance with  and conforming to the
\nrequirements  laid   down  therein   and  the\trules\tmade
\nthereunder,  is\t a  body  corporate  under  Section  9.\t The
\nRegistrar is  empowered under  Section 15 to divide the area
\nof operation  of the  Society or  amalgamate  Societies\t for
\ntheir day  to day  better working. The amendment to the bye-
\nlaws shall be approved by the Registrar and registered under
\nSection 16.  The rights\t and liabilities  of the members are
\nregulated in  Chapter III  subject to Section 21. Section 19
\nregulates  the\t eligibility   of   a\tmember\t and   other
\nqualifications. Section\t 21 prescribes\tdisqualification for
\nmembership  of\t the  Society.\t Section   21-A\t  prescribes
\ndisqualification for  membership of  the  committee  of\t the
\nsociety. Section  21-AA envisages cessation of membership of
\na  committee  and  the\treinstatement  under  Section  21-B.
\nElection and  the right\t to vote is regulated by Section 25.
\nManagement of the society is regulated by Section 30.\n<\/p>\n
     The ultimate  authority of\t the Society  vests  in\t its
\ngeneral body vide Section 30 (1) (a). It would be subject to
\nthe other  provisions of  the Act and the Rules and bye-laws
\nmade thereunder.  Section 31  prescribes the  procedure\t for
\nconstitution  of   a  committee\t  and\ttheir\tduties\t and
\nresponsibilities etc.  Section 32  prescribes procedure\t for
\nholding\t general   body\t meeting  of  the  Society  and\t the
\ncommittee and sub-section (4) thereof empowers the Registrar
\nto appoint  a Special  Officer\twith  remuneration  for\t the
\nmanagement of  the  committee.\tSection\t 37,  with  an\tnon-
\nobstante  clause   and\tsubject\t  to  the  execution  of  an
\nagreement, empowers  the Society to deduct the share capital
\nor any\tamount from  monthly salary  or wages  payable to  a
\nmember of  the Society. The duration of elected body is five
\nyears. Chapter\tVII consists of Sections 50 to 60 for audit,
\nenquiry, inspection  and surcharge for the mismanagement and
\nrecovery of  the amounts found mismanaged or defalcated from
\nthe members  of the committee or the officers or servants of
\nthe Society. Chapter VIII deals with settlement of disputes.
\nIt consists  of Section 61 to 63. Sub-section (1) of Section
\n61 with\t a non-obstante\t clause provides  that\tany  dispute
\ntouching upon  the constitution,  management or the business
\nof the\tSociety other  than a dispute regarding disciplinary
\naction taken  by the Society or its committee against a paid
\nemployee of the Society, shall be resolved by arbitration on
\na reference  under Section 62 and recovery of the monies due
\nto it.\tChapter IX deals with winding up of and cancellation
\nof the\tregistered Societies.  Liquidator gets\tappointed to
\nwind up\t the Society.  Chapter X deals with execution of the
\ndecisions,  decrees  or\t orders.  Chapter  XI  provides\t for
\nconstitution of\t a Co-operative Tribunal, appointment of the
\nmembers of  the Tribunal,  appeal thereto,  revision to\t the
\nRegistrar and  review of  the orders  had been\tprovided  in
\nSections 76,77\tand 78.\t Chapter XII deals with offences and
\npenalties.\n<\/p>\n
     Section 79\t (1) (a)  provides  that  “it  shall  be  an
\noffence under  the Act, if a committee, an officer, employee
\nor any\tmember of the society willfully makes a false return
\nor  furnishes  false  information,  on\ta  lawful  order  or
\ndirection issued”  under the  Act. Clause (aa) provides that
\n“if the committee, an officer, employee or any member of the
\nsociety furnishes  false information to gain admission or to
\ncontinue as  member of a society etc., it\/he shall be liable
\nfor prosecution\t as envisaged  under the Act. Special Courts
\nare empowered to take congnizance and try an offence against
\nthe officers etc. constituted under Section 83-A.\n<\/p>\n
     Section 116-A with a non-obstante clause gives power in
\nChapter IVX  to the  Registrar to  constitute a common cadre
\nfor  the  categories  of  employees  for  certain  societies
\nenumerated thereunder. Section 116-AA equally gives power to
\nhim  to\t  abolish  the\t centralised  services\tfor  certain
\ncategories  of\t employees.  Section   116-C  empowers\t the
\nsocieties with\tprior  approval\t of  the  Registrar  to\t fix
\nstaffing  pattern,   qualifications,  pay-scales  and  other
\nallowances. In\tcase of\t a society  receiving financial\t aid
\nfrom the  Government, appointment  or removal  of the  Chief
\nExecutive of  the society  by whatever\tname called  of\t any
\nsociety should\tbe made\t only with the prior approval of the
\nRegistrar as  per sub-section  (2) of Section 116-C. Section
\n121 bars  the jurisdiction  of courts  and provides  that no
\norder, decision\t or action  taken or  direction issued under
\nthe Act\t by an arbitrator, liquidator, Registrar or Tribunal
\netc, shall  be liable to be called in question in any court.
\nThe rights  and liabilities  are subject  to  the  bye-laws,
\nRules and  the Act.  The  Society  owes\t its  existence\t and
\ncontinuance by\tits efficient  and proper  management by the
\nCommittee assisted  in\tits  day-to-day\t management  by\t its
\nstaff.\n<\/p>\n
     Rules 28  and 29 of the Co-operative Societies Rules of
\n1964 [for short, “the Rules”] provide as under:\n<\/p>\n
     “28. Officers and servants of societies:\n<\/p><\/blockquote>\n
     –\t(1)  No\t society  shall\t appoint  any
\n     person as its paid officer or servant in
\n     any  category   of\t service,  unless  he
\n     possesses\t  the\t qualification\t  and
\n     furnishes the  security as\t specified by
\n     the Registrar,  from time\tto time,  for
\n     such category  of service in the society
\n     or for  the class\tof societies to which
\n     it belongs.\n<\/p><\/blockquote>\n
     (2) No  society shall  retain in service
\n     any paid  officer or servant, if he does
\n     not, acquire  qualifications, or furnish
\n     the security, as is referred to sub rule
\n     (1) within\t such time  as the  Registrar
\n     may direct.<\/p><\/blockquote>\n
     (3)  The\tRegistrar  may,\t for  special
\n     reasons, relax  in respect\t of any\t paid
\n     officer or\t servant, the  provisions  of
\n     this   rule    in\t  regard    to\t  the
\n     qualifications he\tshould possess or the
\n     security he should furnish.
\n     (4) No society shall appoint as its paid
\n     officer or\t servant in  any category  of
\n     service any person who is related to any
\n     director or member of the committee of a
\n     financing bank  to which  the society is
\n     affiliated\t  except   with\t  the\tprior
\n     approval of the Registrar.\n<\/p><\/blockquote>\n
     (5) Notwithstanding  anything  contained
\n     in\t  the\t bye-laws\/special   bye-laws,
\n     service  regulations   or\tcommon\tcadre
\n     regulations    of\t  the\t co-operative
\n     societies,\t every\t paid\tservant\t  and
\n     officer of\t a society,  other than those
\n     in the  last grade service, shall retire
\n     from service  on the  afternoon  of  the
\n     last date\tof  the\t month\tin  which  he
\n     attains the age of 58 years.\n<\/p><\/blockquote>\n
     29.  Appointment  of  Secretary:-\tEvery
\n     financing\tbank,  every  credit  society
\n     with limited  liability  and  a  working
\n     capital of not less than Rupees one lakh
\n     shall appoint a paid secretary. The paid
\n     secretary\tshall\tbe  disqualified  for
\n     being appointed  as,  and\tfor  being  a
\n     member of the committee of the financing
\n     bank, the society or the mortgaged bank,
\n     as the case may be:”<\/p><\/blockquote>\n
     A conspectus of these provisions would clearly indicate
\nthat registration of the society, election to the committee,
\nthe term  thereof, rights and liabilities of the members and
\noffice bearers are regulated under the Act. Power to appoint
\nofficers, employees  and servants of the society is given to
\nthe President  or the  committee, as  the case may. They are
\nregulated by  the bye-laws, Rules and the Act. Their service
\nconditions are\tregulated by  those  provisions\t with  prior
\napproval of  the Registrar. A sample bye-laws of the society
\nrelating to  the Consumer  Stores at  Rajahmundry  has\tbeen
\nplaced before  us. It  shows  that  under  bye-law  19,\t the
\nmanagement of  the affairs  of the  society, subject  to the
\nresolutions passed  from time to time by the general body or
\nthe committee from time to time, “shall vest in the managing
\ncommittee”. Under  bye-law  20,\t the  general  body  elects,
\namongst themselves,  a President,  a Secretary, an Assistant
\nSecretary. Under  bye-laws 23,\tsubject to  the\t resolutions
\npassed by  the managing committee from time to time, several
\nofficers of  the society shall have the powers to manage the
\nsociety as  enumerated thereunder.  Sub-bye-law (2)  thereof
\nprovides that  Society shall  appoint a\t paid  Manager\twho,
\namong other things, shall be responsible to carry on day-to-
\nday work  of the  society on sound lines. Under sub-law (3),
\nthe managing  committee is  empowered to prescribe from time
\nto time the strength of the establishment of the society and
\nthe scales  of pay  and allowances admissible to each member
\nappointed by  the President.  Under  sub-law  (3)  (c),\t the
\nPresident shall\t have the  power to fine, suspend or dismiss
\nthe members  of the  establishment. Except  in the  case  of
\nfine, an  appeal shall\tlie to\tthe Committee  against every
\norder awarding\ta punishment by the President. Under bye-law
\n27 (2),\t no officer  or servant shall remain in any category
\nof service  in the  Society, if he does not furnish security
\nas prescribed  by the  Registrar. The other bye-laws are not
\nrelevant for the purpose of these cases.\n<\/p>\n
     It would  thereby be  clear that the power to prescribe
\nstrength of  the establishment\tappointment of\tthe staff of
\nthe Society, its officers, employees and servants, and their
\nscale of  pay are  regulated by bye-laws, Rules and the Act.
\nDisciplinary  control\tlies  with  the\t President  and\t the
\nCommittee. The\tdisciplinary action against its employees is
\nexcluded from  the arbitration\tproceedings, by operation of
\nSection 60.  For offences etc. are prosecuted under the Act,
\nthe jurisdiction of the civil court is excluded. Appointment
\nof the\tofficers, employees  and servants  of the Society is
\nregulated by  the provisions  of the Act, Rules and the bye-
\nlaws as\t self-contained scheme\tand code. The Society enjoys
\nautonomy as  a body  corporate subject\tto the provisions of
\nthe Act,  Rules and  bye-laws. It  enjoys exclusive power to
\nappoint and  keep disciplinary control over the staff in its
\nestablishment. The  tenure is subject to bye-laws, Rules and
\nAct and\t law so long as the Society is not liquidated as per
\nlaw. In\t Co-operative Central  Bank  Ltd.  &  Ors.  etc.  v.
\nAdditional Industrial  Tribunal, Andhra\t Pradesh,  Hyderabad
\n[(1969) 2  SCC 43]  this  Court\t had  held  that  Industrial
\nDisputes Act  would apply  to the  employees appointed under
\nthe Act by the Co-operative Central Bank. It would, thereby,
\nbe  clear   that  appointments\t of   the   staff   of\t the
\nestablishment,\tcontrol\t  and\tdisciplinary   actions\t are
\nregulated under the provisions of the Act, the Rules and the
\nremedies provided under law.\n<\/p>\n
     The question,  therefore, emerges whether the officers,
\nemployees and  servants appointed  by  Co-operative  Society
\norganised under\t the Railway  Establishment Manual  could be
\ntreated as  Railway servants.  Paragraph 10B  of the  Indian
\nRailway Establishment Code defines “Railway Servant” to mean
\n“a person  who is  a member of a service or who holds a post
\nunder the  administrative control  of the  Railway Board and
\nincludes a  post in  the Railway  Board”. In  other words, a
\nperson must  be appointed to a service or a holder of a post
\nunder  the  administrative  control  of\t the  Railway  Board
\nincluding a  post in  the Railway  Board itself. Admittedly,
\nrespondents are\t not members of the service nor do they hold
\npost under  the administrative control of the Railway Board.
\nThey seek  party only  on the basis of the rule laid down by
\nthis Court in M.M. Khan’s case [supra].\n<\/p>\n
     Before dealing  with the  effect of  the ratio  of M.M.
\nKhan’s case,  it would\tbe  appropriate\t to  deal  with\t yet
\nanother decision  rendered on the same day by the same Bench
\nwhich was  argued in  the same batch but a separate Judgment
\nwas rendered,  viz., All  India Railway Institute Employees’
\nAssociation v. Union of India through the Chairman [(1990) 2
\nSCC 542] to which one of us, K. Ramaswamy, J., was a member.
\nTherein the  question was whether the employees appointed in
\nthe institutes\tor clubs maintained by the Railway employees
\nas welfare  measure could be treated as Railway employees on
\npar  with  Railway  canteen  employees\t[statutory  or\tnon-
\nstatutory recognised  canteens]. This Court recognising that
\nthe  establishment   of\t the  institutes  or  clubs,  though
\nrecognised by  the Railway,  was only a welfare measure, had
\nheld that  formation of\t the institutes\t or  clubs  was\t not
\nmandatory. They\t are established  as a\tpart of\t the welfare
\nmeasure for  the Railway  staff and  the kind  of activities
\nthey conduct,  depends, among  other things,  on  the  funds
\navailable to  them. The\t activities have  to conform  to the
\nobjects since  by their\t very nature  the funds are not only
\nlimited but keep on fluctuating. The institutes or clubs and
\nthe benefits  that would  flow on  them will depend upon the
\nbudgetary provisions  for the  institutes and clubs and keep
\nflowing from  time to  time. If the employees working in the
\ninstitutes or  clubs are  recognised as Railway employees it
\nwill have  snow-balling effect\ton other  welfare activities
\ncarried out  by the  Railway and  similar activities carried
\n“on by\tall other  organisations”. In  the  light  of  those
\nfactual matrices, it was held that there was no relationship
\nof employer  and employee between the Railway Administration
\nand the\t employees engaged  in\tthe  institutes\t and  clubs.
\nNeither law nor facts spell out such relationship.\n<\/p>\n
     In M.M.Khan’s  case [supra], establishment of a canteen
\nwas one of the mandatory requirements as a part of efficient
\nRailway Administration.\t Where the  employees  are  250\t and
\nabove,\tSection\t  46  of  the  Factories  Act  mandates\t the
\nindustrial establishment to establish and maintain canteens.
\nIf the\temployees are  100 and\tabove,\tthough\tit  was\t not
\nmandatory but  maintenance of  a canteen  under the  Railway
\nEstablishment\tManual\t  is   a   part\t  of   the   Railway
\nAdministration. In  that factual  and  legal  setting,\tthis
\nCourt was to consider the effect of non-statutory recognised
\ncanteens registered under the Co-operative Societies Act and
\nthe staff appointed in those societies. It was held that the
\nmanagement of  the Societies  was controlled  by the Railway
\nAdministration by  appointing a\t Chairman or  Secretary as a
\nmember\tof   the  Society.   The  nominees  of\tthe  Railway
\nAdministration are  statutorily obligated  to bring  to\t the
\nnotice of  the Railway Administration all the management and
\naffairs of  the committee  which is  likely  to\t affect\t the
\ninterests of  the Railway  Administration in its capacity as
\nthe owner  of the  premises and furniture equipments etc. If
\nthe  decision  of  the\tcommittee  is  likely  to  be  of  a
\nconsiderable magnitude\tit is  required to be brought to the
\nnotice of the Railway Administration. The General Manager of
\nthe Railway  has supervisory  control over the management of
\nthe committee as per the provisions contained in the Railway
\nManual. For  the purpose  of giving  subsidy for  wages, the
\nrates of  pay and  allowances to the staff canteen employees
\nare regulated  by the  Manual. Revision of the scales of pay
\nand dearness  allowance to  the managing  committee was also
\nregulated therein.  The\t Railway  Administration  had  given
\ndirections from\t time to  time to ensure compliance of those
\nrequirements.  This   Court  also   intervened\tand  pending
\nappeals, gave  directions to  pay to  the canteen  employees
\nequal pay  on par  with regular\t employees  of\tthe  Railway
\nAdministration and compliance was enforced by orders of this
\nCourt.\tTheir\tservice\t conditions  are  regulated  by\t the
\ninstructions.  The   employees\tin  the\t canteens  are\talso
\nentitled to  free medical  treatment as out-door patients in
\nRailway hospitals  etc. In  the backdrop  of those facts and
\nthe Rules, this Court had held that the employees appointed,
\neven in\t non-statutory recognised  canteens registered under
\nCo-operative Societies Act or the recognised canteens, would
\nbe entitled to claim the status of Railway servants.\n<\/p>\n
     Shri Madhava  Reddy, in  all  frankness  admitted\tthat
\nthere is  a dichotomy  of  dual\t control  exercised  by\t the
\nRegistrar under\t the Act  and the  control  by\tthe  Railway
\nAdministration.\t But   he  contends  that  since  the  staff
\nappointed by the Co-operative Societies running canteens are
\ntreated\t as  Railway  servants\tthe  same  ratio  should  be
\nextended to  the employees  appointed  by  the\tCo-operative
\nStores\/Society since  this is also a welfare amenity totally
\ncontrolled by  the Railway  Administration and\t10 per\tcent
\nsubsidy is also regularly given.\n<\/p>\n
     It\t is   not  necessary   to  embark  upon\t a  detailed
\nexamination into the instructions given in various paragraph
\nNos.2901 to  2909 in  chapter 29  of Railway  Manual (placed
\nbefore us)  dealt with\tby the\tCAT,  Madras  Bench  in\t its
\njudgment. Suffice  it to  state that admittedly instructions
\nhave been issued to regulate the systematic organisation and
\nmanagement of  the Stores\/Societies.  The Government,  as  a
\nwelfare measure,  gives 10  per cent  subsidy to  enable the
\nSociety to  manage its\taffairs supervised  by\tthe  Welfare
\nOfficer of  the Railway Department. Employees become members
\nof the\tSocieties by  contributing  towards  share  capital.
\nInitial amount\tis paid by the Railway Administration and is
\nlater  deducted\t from  their  salary.  It  also\t gives\tfree
\naccommodation for  housing  the\t Stores,  electricity,\tfree
\nmedical aid  in its  hospitals\tto  those  employed  by\t the
\nStores. In  the Manual\tit is  specifically stated that they
\nare entitled  to traveling passes when they go to attend the
\ncommittee meetings.  Even otherwise  the facilities extended
\nare optional  and  are\tonly  a\t part  of  on-going  welfare
\nmeasure.\n<\/p>\n
     It is  seen that  service conditions  of the employees,
\nofficers  and  servants\t of  the  Stores\/Societies  are\t not
\nregulated by  the Railway  Administration. They are governed
\nby the\tbye-laws of  the Societies  subject to\tcontrol\t and
\nsanction by  the  Registrar  under  the\t State\tAct  or\t the
\nrelevant provisions.  There is\tno obligation on the part of
\nthe Railway  Administration to\tprovide security  for  those
\nemployees. The disciplinary control by the Society concerned
\nis subject  to other  laws and\tis exclusively\tdomestic  in
\ncharacter. The\tRailway Establishment Code is not applicable
\nto them.  Their appointment is subject to bond prescribed by
\nthe Registrar.\tThe  arrears  of  funds\t or  misappropriated
\namounts etc.  are recoverable  under the  provisions of\t the
\nState Act and the Rules made thereunder. The services of the
\nstaff are  liable to  termination in terms of the State Act,
\nRules and bye-laws.\n<\/p>\n
     In other  words, there is a dual control over the staff
\nby the\tSociety and  the  Registrar.  In  that\tbehalf,\t the
\nRailway Administration\thas no\trole to play. If the subsidy
\nis  considered\t to  be\t  a  controlling   factor  and\t the
\nSocieties\/Stores as  an intervening  agency or\tveil between
\nthe Railway  Administration  and  the  employees,  the\tsame
\nprinciple  would   equally  be\t extendible  to\t the  staff,
\nteachers,  professors\tappointed  in\tprivate\t educational
\ninstitutions   receiving    aid\t  from\t  the\t appropriate
\nState\/Central Government  to claim  the status of Government
\nemployees. Equally,  other employees  appointed in other Co-
\noperative   Stores\/Societies\torganised   by\t appropriate
\nGovernment would  also be  entitled to\tthe same  status  as
\nGovernment servants.  Appointment to  a post  or  an  office
\nunder the  State is  regulated\tunder  the  statutory  rules
\neither by  direct recruitment  or appointment  by  promotion
\nfrom lower  ladder  to\thigher\tservice\t or  appointment  by
\ntransfer in accordance with the procedure prescribed and the
\nqualifications specified. Any appointment otherwise would be
\nvertical transplantation  into services\t de hors  the rules.
\nAppointment through  those institutions becomes gate-way for
\nback  door  entry  into\t Government  service  and  would  be
\ncontrary  to   the  prescribed\t qualifications\t and   other
\nconditions and\trecruitment by\tPublic Service Commission or
\nappropriate agencies.  As contended, if the employees of the
\nsocieties like\tco-operative canteens  are  declared  to  be
\nrailway servants,  there would\tarise dual control over them
\nby the Registrar and Railway Administration but the same was
\nnot brought  to the  attention of the court when M.M. Khan’s
\ncase was decided.\n<\/p>\n
     It is  true that  the order  of the  two-Judge Bench of
\nthis Court  had upheld\tthe order  of the  CAT, Madras Bench
\nwhich had  become final.  With due  and great respect to our
\nlearned brethren  constituting\tthe  Bench,  these  features
\nnoted by  us do\t not appear  to have  been put\tup for their
\nconsideration and  so they did not have occasion to consider
\nthe impact  as\tenvisaged  hereinbefore.  The  Bench  merely
\nstated thus:\n<\/p>\n
     “… The Tribunal has examined in detail
\n     Chapter  XXIX   of\t the  Indian  Railway
\n     Establishment Manual  and has  preferred
\n     to paras  2901 to\t2909.  Based  on  the
\n     provisions of  the\t Railway  Manual  and
\n     taking  into  consideration  the  actual
\n     working of\t the Stores, the Tribunal has
\n     come  to\tthe   conclusion   that\t  the
\n     employees working\tin  the\t Co-operative
\n     Stores are\t in  fact  and\tin  law,  the
\n     employees of  the Railway Establishment.
\n     We have  been taken through the judgment
\n     of\t the   Tribunal\t and  other  relevant
\n     material on  record. We  so no ground to
\n     interfere with  the  reasoning  and  the
\n     conclusion reached by the Tribunal..”.<\/p><\/blockquote>\n
     In view  of the  above discussion\tand in\tview of\t the
\nlegal setting  referred\t to  hereinbefore,  we\tare  of\t the
\nconsidered view\t that the  Bench had  not laid\tdown any law
\nexcept approving the reasoning and conclusion reached by the
\nMadras Bench  of  the  CAT.  The  Madras  Bench\t had  merely
\nreferred to  the provisions  in the  Manual and proceeded on
\nthe premise that they gave rise to a legal base to treat the
\nemployees of  the  Stores  as  the  Railway  employees.\t The
\nreasoning  is  wholly  illegal\tand  unsustainable  for\t the
\nreasons stated above.\n<\/p>\n
     The principle of equality enshrined under Article 14 of
\nthe Constitution, as contended for the respondents, does not
\napply since  we have already held that the order of the CAT,
\nMadras Bench  is clearly  unsustainable in  law and  illegal
\nwhich can  never form basis to hold that the other employees
\nare invidiously\t discriminated\toffending  Article  14.\t The
\nemployees covered  by the  order of  the Madras Bench may be
\ndealt with  by the  Railway Administration appropriately but
\nthat could  not\t form  foundation  to  plead  discrimination
\nviolating Article 14 of the Constitution.\n<\/p>\n
     We, therefore,  have no  hesitation to  hold  that\t the
\nofficers, employees  and servants  appointed by\t the Railway
\nCo-operative Stores\/Societies  cannot be treated on par with
\nRailway\t servants   under  paragraph   10B  of\tthe  Railway
\nEstablishment Code  nor they  can be given parity of status,
\npromotions, scales of pay, increments etc. as ordered by the
\nCAT, Hyderabad Bench.\n<\/p>\n
     The appeals  are accordingly  allowed and the OAs stand
\ndismissed but, in the circumstances, without costs.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Union Of India [Railway Board] & … vs J.V. Subhaiah & Ors. Etc. Etc on 15 December, 1995 Equivalent citations: 1996 SCC (2) 258, JT 1995 (9) 488 Author: K Ramaswamy Bench: Ramaswamy, K. PETITIONER: UNION OF INDIA [RAILWAY BOARD] & ORS. Vs. RESPONDENT: J.V. SUBHAIAH & ORS. ETC. ETC. DATE […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-90968","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nUnion Of India [Railway Board] & ... vs J.V. Subhaiah & Ors. Etc. 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