IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE THURSDAY, THE12H DAY OF SEPTEMBER201321ST BHADRA, 1935 WP(C).No. 32100 of 2011 (J) --------------------------------------- PETITIONERS: --------------------- 1. INDIAN NAVAL CANTEEN SERVICE EMPLOYEES' UNION (REG.NO.07-62 OF1990 REPRESENTED BY ITS GENERAL SECRETARY THOMAS K.E, SENIOR RETAIL- EXECUTIVE (ACCOUNTS), INDIAN NAVAL CANTEEN SERVICE, NAVAL BASE, KOCHI-4.
2. M.K.PRAKASAHN, ASSISTANT MANAGER (ACCOUNTS), INDIAN NAVAL CANTEEN SERVICE, NAVAL BASE, KOCHI-4.
3. G.RADHAKRISHNAN, SENIOR RETAIL- EXECUTIVE (ACCOUNTS),INDIAN NAVAL CANTEEN SERVICE, NAVAL BASE, KOCHI-4.
4. P.A.ALEXANDER,SENIOR RETAIL EXECUTIVE (ACCOUNTS) INDIAN NAVAL CANTEEN SERVICE, NAVAL BASE, KOCHI-4. BY ADVS.SRI.S.RADHAKRISHNAN, SRI.S.RAJ MOHAN, SMT.LATHIKA MOHAN, KUM.SARITHA.K. RESPONDENTS: ------------------------ 1. UNION OF INDIA, REPRESENTED BY SECRETAY, GOVERNMENT OF INDIA, MINISTRY OFDEFENCE, NEW DELHI-110 011.
2. THE CHIEF OF NAVAL STAFF, INTEGRATED HEAD QUARTERS, MINISTRY OF DEFENCE, NEW DELHI-110 011. Prv. W.P.(C).NO.32100/2011-J:
3. THE CHAIRMAN, I.N.C.C.B, INTEGERATED HEAD- QUARTERS, SENA BHAVAN, NEW DELHI-110 011.
4. THE GENERAL MANAGER, INDIAN NAVAL- CANTEEN SERVICE, NAVY NAGAR, COLABA, MUMBAI-400 005.
5. THE REGIONAL MANAGER, INDIAN NAVAL- CANTEEN SERVICE, NAVAL BASE, COHIN- 682 004. BY SRI.P.PARAMESWARAN NAIR,A.S.G OF INDIA. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON1103-2013, THE COURT ON1209-2013 DELIVERED THE FOLLOWING: Prv. W.P.(C).NO.32100/2011-J: APPENDIX PETITIONERS' EXHIBITS: EXHIBIT P1. ATRUE COPY OF THE NAVY INSTRUCTIONS NO.60/1947. EXHIBIT P2. ATRUE COPY OF THE NAVY INSTRUCTION NO.14/1975. EXHIBIT P3. ATRUE COPY OF THE NAVY
ORDERNO.12/1991. EXHIBIT P4. ATRUE COPY OF THE RELEVANT EXTRACT OF INCS REGULATION1976 EXHIBIT P4A. ATRUE COPY OF THE RELEVANT CONTRACT OF INCS REGULATION1976AMENDED W.E.F.11/4/1988. EXHIBIT P4B. ATRUE COPY OF THE
ORDERAPPOINTING THE PRESENT GENERAL MANAGER OF INCS ISSUED TO THE CHIEF OF NAVAL STAFF DATED123/2010. EXHIBIT P5. ATRUE COPY OF THE
JUDGMENTPASSED BY THE BOMBAYHIGH COURT IN WPC22212003 DATED244/2003 DATED244/2008. EXHIBIT P6. ATRUE COPY OF THE REPRESENTATION NO.HO/181 DATED309/1994. EXHIBIT P6A. ATRUE COPY OF THE
JUDGMENTPASSED BY THE ADMINISTRATIVE TRIBUNAL, GOA, IN STA NOS.2/94 DATED72/1997. EXHIBIT P6B. ATRUE COPY OF THE RELEVANT EXTRACTS OF THE NAVY
ORDERNO.5/77. EXHIBIT P7. ATRUE COPY OF THE
ORDERNO.HO/101/P DATED46/1998 IMPLEMENEITNG THE5H CPC. EXHIBIT P8. ATRUE COPY OF THE PRESCRIPTION OF REVISED SCALE OF PAY OF INCS EMPLOYEES IN TUNE WITH5H CPC. EXHIBIT P9. ATRUE COPY OF THE
ORDERDATED243/2008 ISSUED BY THE INCS HEAD OFFICE ALONG WITH ITS ANNEXURE GRANTING THE D.A ALLOWED BY MOF TO THE INCS EMPLOYEES. EXHIBIT P10. ATRUE COPY OF THE LETTER NO.HO/320 DATED81/2009 GRANTING DA. EXHIBIT P11. ATRUE RELEVANT EXTRACTS OF THE INDIAN NAVAL CANTEEN SERVICE REGULATIONS2008 EXHIBIT P12. ATRUE COPY OF THE MINUTES OF THE INCCB HELD ON225/1998 DATED116/1998. Prv. W.P.(C).NO.32100/2011-J: EXHIBIT P13. ATRUE COPY OF THE APPENDIX B TO MINUTES OF INCCB MEETING HELD ON225/1998. EXHIBIT P14. ATRUE COPY OF THE LETTER NO.NHQ/CT/0157/1674/D (MED) ISSUED BY THE MINISTRY OF DEFENCE DATED134/1971. EXHIBIT P15. ATRUE COPY OF THE OM NO.7/23/08-E-III(A) DATED3009/2008 ISSUED BY THE MINISTRY OF FINANCE. EXHIBIT P16. ATRUE COPY OF THE OM NO.7/23/08-E-111(A) DATED710/2008. EXHIBIT P17. ATRUE COPY OF THE SECTION I AND II OF PART AOF THE1T SCHEDULE OF THE CCS (RP) RULES2008 EXHIBIT P18. ATRUE RELEVANT EXTRACT OF THE MINUTES OF THE ANNUAL MEETING OF THE INCCB DATED1112/2007. EXHIBIT P19. ATRUE COPY OF THE LETTER NO.HO/320 DATED2511/2008. EXHIBIT P20. ATRUE COPY OF THE
ORDERNO.CT/0608/IV DATED1212/2008. EXHIBIT P21. ATRUE COPY OF THE REPRESENTATION DATED1512/2008 SUBMITTED BY THE1T APPLICANT. EXHIBIT22 ATRUE COPY OF THE LETTER NO.CT/0608/IV DATED42/2009. EXHIBIT P23. ATRUE COPY OF THE LETTER NO.CT/0608/IV DATED304/2009. EXHIBIT P24. ATRUE RELEVANT EXTRACT OF THE MINUTES OF THE ANNUAL MEETING OF THE INCCB HELD ON311/2009. EXHIBIT P25. ATRUE COPY OF THE
ORDERPASSED BY THE CAT ERNAKULAM BENCH IN OA NO.331/2010 DATED018/2011. EXHIBIT P26. ATRUE COPY OF THE
ORDERNO.HO/109 DATED76/1984. EXHIBIT P27. ATRUE COPY OF THE LETTER NO.HO/320 (I) DATED293/2010. EXHIBIT P28. ATRUE COPY OF THE REPRESENTATION DATED175/2010. EXHIBIT P29. ATRUE COPY OF THE COUNTER AFFIDAVIT FILED BY THE CHIEF OF THE NAVAL STAFF & OS. IN W.P.(C).NO.18496/2008. EXHIBIT P30. ATRUE COPY OF THE LETTER NO.2120/10/19 DTD. 31/10/1991. RESPONDENTS' EXHIBITS: EXT.R5.A: COPY OF THE NAVAL CANTEEN SERVICE INSTRUCTION60 EXT.R5.B: CHAPTER28OF REGULATIONS OF NAVY PART I (REGS NAVY) (RELEVANT PAGES). Prv. W.P.(C).NO.32100/2011-J: EXT.R5.C: COPY OF THE
JUDGMENTIN CIVIL APPEAL NO.3495 OF2005 EXT.R5.D: COPY OF THE ABOVE
ORDERDTD. 04/10/2002 IN O.A. NO.1253 OF2001 EXT.R5.E: COPY OF THE DECISIONS OF THE CENTRAL INFORMATION COMMISSION DTD. 29/01/2010. EXT.R5.F: COPY OF THE DECISIONS OF THE CENTRAL INFORMATION COMMISSION DTD. 12/03/2010. EXT.R5.G: COPY OF THE INCS CONSTITUTION, WAS PUBLISHED ON3D MARCH1976 EXT.R5.H: COPY OF THE AMENDED CONSTITUTION (INCSR). EXT.R5.I: COPY OF THE LETTER NO.NHQ/CT/0157/1674/D (MED) DTD. 13/04/1971. EXT.R5.J: COPY OF THE LETTER OF APPOINTMENT DTD. 28/08/1991. //TRUE COPY// P.A. TO JUDGE. Prv. A.M.SHAFFIQUE, J * * * * * * * * * * * * * W.P.C.No.32100 of 2011 ---------------------------------------- Dated this the 12th day of September 2013
JUDGMENT
The first petitioner is the Union of employees of the Indian Naval Canteen Service and petitioners 2 to 4 are employees of the Naval Canteen working at Cochin. They inter alia seek for a direction that they are entitled to receive their salary and other pecuniary benefits in accordance with the recommendation of the 6th Central Pay Commission Report (for short 'CPC Report') and further seeks a direction to the respondents to revise the pay structure and pay scales of Indian Naval Canteen Services (for short 'INCS') Employees in tune with Part A of Section (1) of the First Schedule to the Central Civil Services (Revised pay) Rules 2008 with effect from 01/01/2006, and further to restore the incentives for small family which was granted to the employees of INCS from 1984 to 2010, continuously. W.P.C.No.32100/11 2 2. The facts involved in the above case would disclose that INCS is an establishment, which caters to the requirements of Indian Navy and they are bound by regulations known as Indian Naval Canteen Service Regulations 1976 (for short 'INCS Regulation') which is produced as Ext.P4. According to the petitioners, the employees of INCS is part and parcel of Indian Navy and they were given revision of scale of pay and other perquisites on the basis of 3rd, 4thand 5th CPC Report. However, when the 6th CPC Report was published, they were not treated on par with Central Government employees and they were not given the benefits of the 6th CPC Report. The petitioners submit that the 1976 INCS Regulation was amended by the Indian Naval Canteen Control Board (for short 'INCCB') in 2008 after the implementation of the 6th CPC Report. According to the petitioners, the intention behind the amendment was to extract maximum output from the civilian employees of INCS and to deny the service W.P.C.No.32100/11 3 benefits granted to the employees by treating them on par with Central Government employees. According to them, by deletion of Clause 5 of the 1976 INCS Regulations, the protection given to the civilian employees of the organisation by treating them as naval force was conspicuously avoided. It is, therefore, their contention that it was only by virtue of the amendment that they are not treated on par with Central Government employees.
3. The petitioners contend that when they are included within the definition of Naval Force and are working under Naval Establishment in INCS and by virtue of the amendment made to the INCS Regulations, INCCB had implemented a pay scale of its own which has no connection whatsoever with the pay scale of Central Government employees. Hence it is contended that this action of INCCB is arbitrary, illegal and violative of Article 14 of the Constitution of India. It is also contended that INCS is an authority constituted and established by the Government of W.P.C.No.32100/11 4 India and the Bombay High Court has admitted that INCS is a naval establishment by the Government of India and it is coming under the direct control of Indian Navy and hence amenable to the jurisdiction of this Court under Article 226 of the Constitution of India. It is also contended that INCS is to be treated as an instrumentality of the State coming under Article 12 of the Constitution of India.
4. Another argument raised is that all along the employees of the INCS were granted all the service benefits of Central Government employees when it was revised or modified from time to time and thus they have acquired a legitimate right and legitimate expectation to continue to receive the same salary and other benefits as that of Central Government employees. Petitioners also rely upon Ext.P15, a clarification issued by the Ministry of Finance stating that the 6th CPC recommendation can be extended to the employees of Autonomous organisation, quasi Governmental Organisation etc. whose pattern of emoluments, structure W.P.C.No.32100/11 5 etc. are identical to those of Central Government employees. Therefore, it is the contention of the petitioners that if the autonomous bodies are in a position to bear the additional expenditure on account of upgradation of pay scales, nothing prevents the INCCB to provide the very same perks to the INCS employees as well.
5. Counter affidavit is filed by the 5th respondent inter alia contending that the writ petition is not maintainable as INCS is not a State or other authority within the meaning of Article 12 of the Constitution of India and as long as the respondent authorities are not carrying out any public function, the petitioners are not entitled to invoke the jurisdiction of this Court under Article 226 of the Constitution of India. Further the respondent narrates the constitution and formation of INCS. It is stated that INCS, was established in 1947 by the Government of India as a business concern vide Navy Instruction 60/47 so as to supply house-hold items to ships and establishments, defence personnel and their W.P.C.No.32100/11 6 families including ex-servicemen and civilians paid from Defence Estimates. The Government of India is not having any responsibility for its business as there is no statutory obligation on the part of Government of India to provide canteen facilities to its employees. All the three Defence Forces of the Nation have Non-Public Fund Organisations for general welfare of the troops which are managed internally by the respective service. INCS is one among such Non- Public Fund Organisation under the control of Indian Navy. The five INCS canteens in the Navy, including the one at Kochi are registered as Unit Run Canteens (URCs) with CSD in line with over 3900 canteens of the Defence Services. URCs, including the INCS are purely private ventures of the Services and their employees are not Government Servants as these employees are neither paid from Defence Estimates nor from the consolidated fund of India but from its profit, which is a non-public fund in nature called Indian Navy Amenities Funds. The Government has no liability in its W.P.C.No.32100/11 7 financial loss as a business concern. Profits generated from Unit Run Canteens, including INCS are not credited to consolidated fund of India but distributed to Non-Public Fund which is used for the welfare of the troops. Reliance is placed to the judgment in Civil Appeal No.3495 of 2005 which is produced as Exhibit R5(c). Further INCS is directly controlled by Naval Headquarters, now Integrated headquarters of Ministry of Defence (Navy) and the policy regarding day-to-day functioning of INCS is framed and promulgated by the INCCB. Therefore according to them INCCB is having absolute powers with regard to the administration and control of INCS. It is in order to administer the functioning of INCS, that INCS Constitution, was published on 3rd March 1976, and the regulations have been modified by the Board from time to time depending on the need of the organisation. The regulation of the business including the recruitment, promotion and terms and conditions of the employees of INCS are regulated by INCS W.P.C.No.32100/11 8 Regulations, which has since been superseded by INCS Regulation, 2008 produced as Exhibit R5(h). The terms and conditions for the service in INCS have been promulgated in the INCS Regulation and the petitioners have given necessary undertaking to the effect that they have read and understood those service conditions. The employees of INCS are being paid from the profits of the business made by the Organisation and there is no provision for payment on par with the Government Servants or adopting the pay structure as recommended by the 6th Central Pay Commission. The 6th Central Pay Commission Report has no reference to the INCS staff as they are not Government Servants. Since the service conditions of INCS employees are governed by the regulations framed by the INCCB and the employees are not governed by the Fundamental Rules, they are not entitled to the status of Government Servants. The pay and allowances of the staffs of INCS have been revised with retrospective effect from 01/01/2006 vide Ext.P20 order dated 12/12/2008. W.P.C.No.32100/11 9 As per Exhibit P20 order, the arrears of pay and allowances were worked out to Rs.2.73 crores and the monthly expenditure to Rs.14 lakhs. Therefore there was a reasonable revision in the pay scales of the petitioners.
6. It is further contended that with reference to the earlier pay revisions for the INCS staff, the same was considered by INCCB and had approved the recommendations made by the said Board. It never adopted the identical pay scales as that of the Government service. Only fixation of pay has been adopted from CCS (Revised Pay) Rules. It is also contended that since most of the posts in INCS are not in the Central Government cadres, it cannot be said that the scales were identical. Further, it is contended that pay revision of every 10 years have been implemented by INCCB and it is not based on the recommendations of the pay commission or the Government. As per INCS Regulations, pay revisions are to be made whenever Pay Commission Reports are W.P.C.No.32100/11 10 implemented by the Government. Therefore, it is open for the INCCB to decide upon the pay revision of INCS staff. There is no question of adoption of the Pay Commission reports. INCCB was following the procedure contained in Swamy's hand book fixing the pay scale of the concerned employees and further it is contended that the amendment to the Regulations is not having any relation with the 6th CPC report or pay revision for INCS staff. The different classes of employees can also be distinguished by pay scales as has been done in the past and it is contended that it is not mandatory to accept the concept of grade pay and pay backs in the case of INCS staff as they were not controlled by the Central Government. Further, it is contended that INCS is not a naval establishment under the control of the Government of India whereas it is a business concern establishment by the Indian Navy Amenities Fund.
7. The learned counsel for the petitioners placed strong reliance on the judgment of the Supreme Court in W.P.C.No.32100/11 11 M.M.R.Khan and Others v. Union of India and Others [AIR1990SC937 and [1990 Suppl. SCC191. That was a case in which a three Judge Bench of the Supreme Court considered the question as to whether statutory canteens, non-statutory recognised canteens and non-statutory un- recognised canteens of Railway establishment were under the direct control of railway administration and whether employees of such establishments could be treated as Railway employees. The Supreme Court held that the employees of statutory canteens as well as non-statutory recognised canteens have to be treated as employees of railway establishment whereas employees of non-statutory non-recognised canteens cannot be treated as employees of railway administration. While considering the said issue, the Supreme Court had occasion to evaluate the manner in which the employees of such canteens were employed, their terms and conditions of service as well as the extent of control the railway establishment had on such employees W.P.C.No.32100/11 12 and it is held as under: "25. Since in terms of the Rules made by the State Governments under Section 46 of the Act, it is obligatory on the railway administration to provide a canteen, and the canteens in question have been established pursuant to the said provision there is no difficulty in holding that the canteens are incidental to or connected with the manufacturing process or the subject of the manufacturing process. The provision of the canteen is deemed by the statute as a necessary concomitant of the manufacturing activity. Paragraph 2829 of the Railway Establishment Manual recognises the obligation on the railway Administration created by the Act and as pointed out earlier paragraph 2834 makes provision for meeting the cost of the canteens. Paragraph 2832 acknowledges that although the railway administration may employ anyone such as a staff committee or a co-operative society for the management of the canteens, the legal responsibility for the proper management rests not with such agency but solely with the railway W.P.C.No.32100/11 13 administration. If the management of the canteen is handed over to a consumer cooperative society the bye-laws of such society have to be amended suitably to provide for an overall control by the railway administration." 8. Further, with reference to non-statutory recognised canteens also, it was held that taking into consideration the control of the railway administration of such employees, they were also to be treated as employees of railway establishment and it is held as under: "36. These arguments can be dealt with together. In the first instance, there is hardly any difference between the statutory canteens and non-statutory recognised canteens. The statutory canteens are established wherever the railway establishments employ more than 250 persons as is mandatory under the provisions of Section 46 of the Act while non-statutory canteens are required to be established under paragraph 2831 of the Railway Establishment Manual where the strength of the staff is 100 or more. In terms of the said paragraph, the non-statutory canteens to be W.P.C.No.32100/11 14 recognised have to be approved of by the Railway Board in advance. Every railway administration seeking to set up such canteens is required to approach the Railway Board for their prior approval/recognition indicating financial implications involved duly vetted by the Financial Advisor and Chief Accounts Officer of the railway concerned. It is only when the the approval is accorded by the Railway Board that the canteen is treated as a recognised non-statutory canteen. By the sanction, the details in regard to the number of staff to be employed in the canteen, recurring and non-recurring expenditure etc. are regulated. The only material difference between the statutory canteen and non-statutory recognised canteen is that while one is obligatory under the said Act the other is not. However, there is no difference in the management of the two types of canteens as is evident from the provisions of paragraphs 2832 and 2833 which respectively provide for their management. Regarding the incidence of cost to be borne by the railways again, as far as the Manual is concerned, the only additional obligation cast on the administration, in W.P.C.No.32100/11 15 the case of the statutory canteens is that in addition to the facilities given to the non-statutory canteens, the administration has also to meet the statutory obligations in respect of the expenditure for providing and maintaining canteens arising from the said Act and the rules framed thereunder. A perusal of the relevant provisions shows that the said Act and the rules made thereunder do not make demands on the administration for more expenditure than what is provided for in the Railway Manual for the non- statutory canteens. We have already referred to the service conditions applicable to the employees of the statutory and non-statutory canteens. Besides, while discussing the case of the employees in statutory canteens we have pointed out the relevant provisions of the Administrative Instructions on Departmental Canteens in Government Offices and Government Industrial Establishments. These Instructions are applicable to both statutory and non-statutory recognised canteens. The Instructions do not make any difference between the two so far as their applicability is concerned. In fact these W.P.C.No.32100/11 16 Instructions require that the canteens run by engaging solely part time daily wage workers may be converted to departmental canteens (para 1.3). Hence we do not see why any distinction be made between the employees of the two types of canteens so far as their service conditions are concerned. For this very reason, the two notifications of December 11, 1979 and December 23, 1980 (supra) should also be equally applicable to the employees of these canteens. If this is so, then these employees would also be entitled to be treated as railway servants. A classification made between the employees of the two types of canteens would be unreasonable and will have no rational nexus with the purpose of the classification. Surely it cannot be argued that the employees who otherwise do the same work and work under the same conditions and under a similar management have to be treated differently merely because the canteen happens to be run at an establishment which employs 250 or less than 250 members of the staff. The smaller strength of the staff may justify a smaller number of the canteen workers to serve them. But that does not W.P.C.No.32100/11 17 make any difference to the working conditions of such workers." 9. On the basis of the aforesaid law laid down by the Supreme Court, it was argued that the employees of INCS also stands in the same footing.
10. The learned counsel for the petitioner relied upon the following facts in order to substantiate his arguments. a) During 1947, a proposal was submitted to Government of India to set up INCS on an experimental basis and it was based on Navy instruction No.60/1947 that INCS has been formed. Ext.P1 is a portion of the said instruction constituting a Central Board of Control consisting of various officers of Navy. b) In 1975, the Government of India in consultation with Navy issued Navy instruction No.14/1975 approving INCS on a permanent basis. c) The Assistant Chief of Personnel (P & C), Navy issued order No.12/91 regulating the administration and W.P.C.No.32100/11 18 general control of INCS. Ext.P3 is the said document which inter alia indicates that INCS is directly controlled by Navy Head Quarters and the policy regarding day to day functioning of INCS is framed and promulgated by the INCCB on behalf of Navy Head Quarters. d) In 1976, INCS Regulations were framed. Ext.P4 is the extract of the said regulation. Ext.P4 regulations were amended with effect from 11/04/1988 and the amended Regulation is Ext.P4(a). e) Section 3(12A) of the Navy Act 1957 defines Naval Establishment as meaning, an establishment belonging to or under the control of Indian Navy whether within or without India. f) Chapter 28 of INCS Regulations especially sub Clause (2) of Clause 2802 indicates that "the canteen shall operate as a business concern only, subject to such instructions as may be issued by the Chief of Naval Staff from time to time." W.P.C.No.32100/11 19 11. Therefore the argument is that INCS is a naval establishment. The main argument is based on INCS Regulations which inter alia indicates that INCS is being administered by a Board constituted by Navy Headquarters consisting of high ranking officers. The INCS is bound to submit periodical reports to the Board and the profit of INCS is to be utilised in accordance with guidelines issued by the Chief of Naval Staff. The stores in the INCS is supplied by Canteen Stores Department (for short 'CSD') and INCS is constituted for the purpose of catering the needs of serving, retired defence personnel and their family members. The central Government is exercising deep and pervasive control over INCS.
12. Reference is made to judgment of the Bombay High Court in Writ Petition No.2221/03 and produced as Ext.P5 wherein according to the petitioner the Bombay High Court has held that naval canteen service is established and functioning under the control of the Central Government. W.P.C.No.32100/11 20 13. Petitioner relies upon Ext.P6, a representation submitted by the General Manager, INCS to the Chief Minister of Goa requesting for exemption from payment of sales tax indicating that INCS is a wing of Defence Ministry and controlled by the Union of India.
14. The order passed by the Administrative Tribunal, Goa in Sales Tax 2nd Appeal No.02/94 is also produced to prove the said facts.
15. In regard to the claim made by the employees of INCS it is contended that when the regulation of business of the Board which includes recruitment and promotion and terms and conditions of employees are regulated by the INCS regulations they form part of Naval Force as defined under Section 3(10) of the Navy Act 1957. In so far as INCS had been constituted and formed to promote the comfort and well being of the officers and soldiers of armed forces they have to be considered as part of the Naval Force. W.P.C.No.32100/11 21 16. Reference is made to clause 2801 of Chapter 28 of the Regulations which inter alia provides that the canteen shall be established in each of the Indian naval ships for the use of its personnel. The canteens were established not only in ships but also in different commands of Navy. INCS is formed as a naval establishment with head office at Mumbai with five branches. As per the regulations, the funds of INCS shall be "non-public funds". Petitioner further refers to Navy order No.(special) 5/77 issued by the Indian Naval Headquarters, conveying that canteen stores department and INCS are not treated as non-public fund organisation by the Navy itself.
17. Further reference is made to Navy Order No.90/2002 in supersession of Ext.P3 which deals with the activities of INCS and it is stated at clause No.16 that INCS have to purchase all their required items from Canteen Stores Department (for short 'CSD') and those things which are not available with CSD can be obtained from other W.P.C.No.32100/11 22 sources. It is also contended that since the regulations have been framed by virtue of the powers conferred under Section 184 of the Navy Act, the INCS is a statutory canteen under the Indian Navy.
18. Having regard to these factual situations, the mooting question is whether the employees of INCS are entitled to claim their revision in salary and other benefits on par with Central Government employees or other naval staff as the case may be. Before proceeding further, I shall consider the defence taken by the 5th respondent, especially regarding the scope of interference that is possible in the matter. It is not in dispute that as per Chapter XXVIII of the INCS Regulations provides for the establishment of canteens. Clause 2802 (1) clearly provides that Government of India does not accept responsibility for the business conducted by canteens and the Captain shall ensure that the same is understood by all with whom the canteen conducts business. It is further provided under sub Clause (2) of W.P.C.No.32100/11 23 Regulation 2802 that the canteen shall operate as a business concern only subject to such instructions as may be issued by the Chief of the Naval staff from time to time. Regulation 2804 deals with INCS run canteens. It is inter alia provided that INCS is established under the orders of Chief of Naval Staff and the funds of INCS shall be non-public funds.
19. Regulation 2811 specifically deals with non-public funds and the manner of utilisation, accounting, audit etc.
20. Therefore, even admitting the fact that the Board constituting officers of the Navy has administrative control over the Unit Run Canteens or INCS as the case may be, the fact remains that these are operated out of non-public fund.
21. At this juncture, it will be useful to refer to the judgment of the Supreme Court in Union of India v. Chotelay [1999(1) SCC554. The question that was considered in that case was whether dhobies engaged for the purpose of washing clothes of the cadets were entitled W.P.C.No.32100/11 24 for regularisation in defence service. The Supreme Court observed that the terms of appointment indicates that the Commandant of the Army had control over such Dhobies, but nonetheless such control cannot impress the post of dhobies with the character of a civil post. After referring to paragraph 801 of the Defence Service Regulations, the Supreme court found that since the payment is not made to the dhobies out of the public funds but from regimental fund, merely for the reason that the Commanding Officer exercised some control cannot be a reason to conclude that the posts are civil posts and payment to the holders of such posts is made out of the consolidated fund of India or of any public fund under the control of the Ministry of Finance. Paragraphs 5 and 6 are relevant which reads as under: "5. Para 820 provides for administration of such Regimental Fund and para 820(a) clearly indicates that all funds other than public funds as defined in para 801 maintained by a unit, which are financed either wholly or partly from public W.P.C.No.32100/11 25 money. The Regulation further provides that the Commanding Officer acts as a trustee in relation to the "Regimental Fund" and is responsible that the Funds are properly applied with special reference to the object of the Fund and for the benefit of the personnel or unit as a whole.
6. In view of the characters of the Regimental Fund as discussed above, we have no hesitation to come to the conclusion that the said Fund cannot be held to be a public fund by any stretch of imagination and the dhobis paid out of such Fund cannot be held to be holders of civil posts within the Ministry of Defence so as to confer jurisdiction of the Central Administrative Tribunal to issue directions relating to their service conditions. It is of course true that the Commanding Officer exercises some control over such dhobis but on that score alone it cannot be concluded that the posts are civil posts and that payments to the holders of such posts is made from out of the Consolidated Fund of India or of any public fund under the control of the Ministry of Defence." W.P.C.No.32100/11 26 22. In another case, Union of India. v. M.Aslam (2001(1) SCC720 a two Judge Bench of the Supreme Court while considering the question as to whether employees of Unit Run Canteens of Army, Navy and Air Force were Government servants and whether Central Administrative Tribunal has jurisdiction over them under the Administrative Tribunals Act 1985 held that though the funding of Unit Run Canteens is not made out of the consolidated fund of India but it is made by the Canteen Stores Department and the said department in its turn is formed as part of Ministry of Defence, applying the principles laid down in Parimal Chandra Raha v. L.I.C [1995 Suppl 2 SCC611 held that the employees working in the Unit Run Canteens are Government Servants and therefore Central Administrative Tribunal has jurisdiction to entertain the applications of such employees under the provisions of the Administrative Tribunal Act. Further it is held that though they are treated as Government servants by itself would not entitle them to W.P.C.No.32100/11 27 get all the service benefits as is available to Government servants or even their counter parts serving in the CSD canteens which would depend upon the nature of duty discharged by them as well as on the rules and regulations and administrative instructions issued by the employer.
23. The judgment in Aslam's case was partly overruled by a three Judge Bench of the Supreme Court in R.R.Pillai v. Southern Air Commandant, Indian Air Force [2009(13)SCC311. It is held that Aslam's case proceeded on an incorrect factual premises after noticing that URCs are not funded from consolidated fund of India. It is also observed that the factual consideration in Aslam's case regarding supply was also not correct in view of the fact that URCs purchase articles from CSD depots and it is not an automatic supply, and relation between URCs and CSDs is that of buyer and seller and not of principal and agent. It is also held that URCs are purely private ventures and their employees are at no stretch of imagination W.P.C.No.32100/11 28 employees of the Government or CSD. It is also observed that there was no statutory obligation on the part of the Central Government to provide canteen services to its employees. The profit generated from URCs are not credited to the consolidated fund but are distributed to the non-public funds which are used by the units for the welfare of the troops.
24. Having regard to the law laid down by the Supreme Court in Pillai's case (supra) the question to be considered can be narrowed upon. The learned counsel for the petitioner relies upon the judgment in M.M.R.Khan's case. Having regard to the fact that INCS is admittedly conducted out of non-public funds and not from the consolidated fund of India, whether such a consideration has been made in M.M.R.Khan's case has to be considered first. In M.M.R.Khan's case the railway establishment was under statutory obligation to conduct canteens and they had established statutory canteens as well as non-statutory W.P.C.No.32100/11 29 canteens. As far as statutory canteens are concerned, the occupier of a factory was liable under the Factories Act to provide a canteen or canteens to its workers and the entire expenditure is to be met by the employer. The Railway Establishment Manual also provides the statutory obligation on the railway administration to set up canteens. Apart from the control, the entire expenses were being met by railways. But, in that case, the employees so engaged were not treated as the employees of the railway administration. The Supreme Court held that since in terms of the rules made by the State Governments under Section 46 of the Factories Act it is obligatory on the railway administration to provide a canteen, and the canteens have been established pursuant to the said provision, there is no difficulty in holding that the canteens are incidental to or connected with the manufacturing process or the subject of the manufacturing process. In regard to non-statutory recognised canteens Supreme Court came to the conclusion that by virtue of W.P.C.No.32100/11 30 various Railway Board orders the employees of non- statutory canteens were directed to be treated on par with the employees of statutory canteens. It is held by the Supreme court that there is hardly any difference between statutory canteen and non-statutory recognised canteens. It is held that the only material difference between statutory canteen and non-statutory recognised canteens is that while one is the statutory obligation under the Factories Act, the other is not so. It is also held that there is no difference in the management of the two types of canteens as evident from the various regulations. In regard to the incidence of cost to be borne by the Railways, the only additional obligation cast on the administration in the case of statutory canteens is that in addition to the facilities given to the non- statutory canteens, the administration has also to meet the statutory obligations in respect of the expenditure for providing and maintaining canteens arising from the Factories Act and Rules framed thereunder. It is also found W.P.C.No.32100/11 31 on a perusal of the relevant provisions shows that the Factories Act and the Rules framed thereunder do not make any demand on the administration for more expenditure than what is provided for in the Railway Manual for non- statutory canteens.
25. In that view of the matter, the Supreme Court found that the cost implication as far as the railway administration is concerned in respect of statutory canteen and non-statutory recognised canteens is the same or almost similar. Therefore, it is not possible to treat INCS and the statutory and non-statutory recognised canteens of railway establishment as similar organisations. The very fact that INCS is not being run out of the consolidated fund of India by itself differentiates it with the factual consideration in M.M.R.Khan's case and for that reason itself M.M.R.Khan's case will have no application to the factual situation of the present case. W.P.C.No.32100/11 32 26. On a perusal of the terms of appointment of the employees of INCS it is not in dispute that their appointments are made on the basis of INCS Regulations which are not statutory regulations. Those Regulations have been framed only for the purpose of streamlining canteen services and providing various facilities to the employees concerned. Ext.R5(g) indicates that INCS is established under the orders of the Government of India. The object of the organisation is to carry on business of purchasing and providing foodstuff, provisions of all kinds etc. in order to promote the comfort and well being of the officers and Sailors of the Navy and to sell the same to the members of the Naval Forces. In the Regulations Chapter IV deals with finance and stores. Regulation 401 indicates that the funds of the organisation shall be divided into three main heads as determined by the Board namely Indian Naval Canteen Service Trading Fund, Indian Naval Canteen Reserve Fund and Building Maintenance Fund. Regulation 407 indicates W.P.C.No.32100/11 33 that INCS will purchase from CSD (India) all articles included in the price list and will resort to the open market for obtaining such articles which cannot be supplied by CSD. Chapter V deals with recruitment and promotion and Chapter VI deals with the terms and conditions of INCS employees. Regulations 601 indicates that all employees will be governed by the terms and conditions of service contained in the Rules subject to alterations by the Board. In regard to pay and allowances, it is indicated that the same will be laid down by the Board from time to time. Provisions are made for annual increment, leave, commuted leave and other benefits. Chapter VII deals with the conduct and discipline. The appointing authority in respect of the various posts are specifically described. The Board is the appointing authority as far as the post of General Manager, Deputy General Manager and Group I posts are concerned. General Manager is the appointing authority in respect of Group II, III and IV. The appointing authority is the W.P.C.No.32100/11 34 disciplinary authority as well.
27. Having regard to the Regulations, it is clear that the formation of INCS is based on Government orders and is not statutory in nature. Therefore, they cannot claim any benefit by contending that it is a statutory organisation. It is apparently an autonomous organisation formed at the instance of the Government of India for the purpose of sale of commodities to the Naval staff. Their terms of employment are covered by the Regulations. They do not carry out any work with reference to or in connection with Navy and their expenditure is not met out of the consolidated fund of India. Therefore, by no stretch of imagination can such employees of INCS claim parity with that of Central Government employees.
28. True that employees of INCS are also entitled for various benefits as provided in the Regulations or as decided by the Board from time to time. True that their scale of pay and other benefits are also increased from time to time W.P.C.No.32100/11 35 based on the prevailing rates as and when Pay Commission Reports are being submitted. But the same is purely within the discretion of the Board. If the Board decides to accept the parameters laid down for payment of salary and other perks on par with Central Government employees that does not mean that the employees of INCS will have a legal right to demand the same at all times. In that view of the matter, I am of the view that the control exercised by members of INCCB on the employees and staff of INCS by itself will not give them a legal right to demand the salary and other perks on the basis of the 6th Pay Commission Report as there is no legal obligation on the part of INCCB to rely upon the said recommendation of 6th CPC Report and extend the said benefits to the members of the petitioners organisation.
29. That apart, having come to a conclusion that the appointment of the officers of the petitioner organisation is made by a Board constituted by way of Regulations which has no force of law but based on executive orders, I do not W.P.C.No.32100/11 36 think that the petitioners can claim any benefits against the 5th respondent by invoking the jurisdiction of this Court under Article 226 of the Constitution of India. INCCB is neither a State or other authority coming under Article 12 of the Constitution of India and it does not carry on any public function in order to be amenable to the jurisdiction of this Court. In the result, this writ petition is dismissed. (sd/-) (A.M.SHAFFIQUE, JUDGE) jsr