BALWANT RAI SALUJA & ANR. ETC. ETC. versus AIR INDIA LTD. & ORS.

Citation: [2013] 16 S.C.R. 706 · Decided: 13-11-2013 · Supreme Court of India · Bench: C.K. PRASAD · Disposal: Matter referred to larger bench

Judgment (excerpt)

A 
B 
[2013] 16 S.C.R. 706 
BALWANT RAI SALUJA & ANR. ETC. ETC. 
v. 
AIR INDIA LTD. & ORS. 
(Civil Appeal Nos.10264-66 of 2013) 
NOVEMBER 13, 2013 
[CHANDRAMAULI KR. PRASAD AND 
V. GOPALA GOWDA, JJ.] 
Industrial Disputes Act, 1947 - ss.2(k), 2(ra), 2(s), 25T 
C and 25U - Vth Schedule, Entry No.10 - Factories Act, 1948 
-
Delhi Factories Rules of 1950 -
Contract Labour 
(Regulations and Abolition) Act, 1970 - Industrial Disputes 
Act, 1947 - Whether the concerned workmen of Chefair, a unit 
of Hotel Corporation of India (HCI) with which Air India had 
D entered into a contract to provide canteen services at its 
establishment, were entitled to be treated as being regular 
employees of Air India - And whether e.1gaging the contract 
workmen in the canteen situated in the premises of Air India 
through HCI amounted to sham and camouflage by Air India 
E to deprive the legitimate statutory and fundamental rights of 
the concerned workmen as provided under the provisions of 
the Industrial Disputes Act and the Constitution - Difference 
of opinion between Hon'ble Judges of the Division Bench -
Matter referred to Hon'ble the Chief Justice of India for placing 
F the same before an appropriate Bench. 
Dispute arose as to whether the concerned workmen 
of Chefair, a unit of Hotel Corporation of India (HCI) with 
which Air India had entered into a contract to provide 
canteen services at its establishment, were entitled to be 
G treated as being regular employees of Air India. 
The appellants contended before this Court that the 
obligation to provide for the Canteen was with Air India 
and, therefore, the workmen were entitled to be treated 
H 
706 
BALWANT RAI SALUJA v. AIR INDIA LTD. & ORS. 
707 
as their employees and Air India their employer; that Air A 
India had a large role to play in the operation and 
management of the Canteen and, in the circumstances, 
once the veil of the contract was lifted, the control of Air 
India was writ large over the Corporation. It was 
contended that the Corporation was a wholly owned 
B 
subsidiary of Air India which controlled the composition 
of the Board of Directors and ·appointed and removed 
Directors in consultation with the Government of India; 
and notwithstanding that the general management of the 
Corporation was vested in its Managing Director, Air India c 
was conferred with the power to issue directions or 
instructions as it thought fit in regard to the financeS- and 
the conduct of the business and affairs of the 
Corporation and, hence, the workmen employed by the 
Corporation were, in fact, the employees of Air India. 
0 
The appellants further submitted that the 
Corporation may be a separate legal entity but Air India's 
control over the affairs of the Canteen made it the 
principal employer. The appellants also submitted that the 
workmen were engaged in the Canteen provided by Air 
E 
India in compliance of Rule 65(2) of the Rules framed by 
the Union Territory of Delhi in exercise of powers under 
Section 46 of the Factories Act; that the workmen of a 
statutory canteen have to be treated as employees of 
such establishment whose obligation is to provide for the 
F 
Canteen; and since in the case in hand, the obligation to 
provide for the Canteen was with Air India, therefore, the 
workmen were entitled to be treated as their employees 
and Air India their employer. 
G 
Referring the matter to Hon'ble the Chief Justice of 
India for placing the same before an appropriate Bench, 
the Court 
Per Chandramauli Kr. Prasad. J. 
H 
708 
SUPREME COURT REPORTS 
[2013] 16 S.C.R. 
A 
HELD:1. It is well settled that the Court can lift the veil, 
look to the conspectus of factors governin~ employment, 
discern the naked truth though concealed intelligently. 
The Court has to be astute in piercing the veil to avoid 
the mischief and achieve the purpose of law. It cannot be 
B swayed by legal appearance. The court's duty is to find 
out whether contract between the principal employer and 
. the contractor ::: i::h~m. nominal or merely a camouflage 
to deny employment benefits to the workmen. [Para 14] 
[726-D-F] 
c 
2. The Hotel Corporation of India (HCI) is a 
Government Corporation incorporated under the 
Companies Act. It is a legal entity altogether different from 
its shareholders. The fact that Air India or its nominee are 
the shareholders of the Corporation and in the 
D management of business and finances, it is subject to the 
directions issued by Air India in terms 

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