Are Civilian Employees Of Armed Forces Unit Run Canteens Government Servants? Supreme Court Refers To Larger Bench

The Supreme Court on Thursday(Sep 14) referred a significant case regarding the employment status of civilian employees working in Unit Run Canteens (URCs) within the Armed Forces to a larger bench. This decision comes in light of conflicting judgments in previous cases, specifically the Mohd. Aslam (2001) and R.R. Pillai's case (2009).

In ‘Union of India vs. Mohd Aslam’ reported in [2001] 1 SCC 720, a two-judge bench declared that the status of the employees in the URCs must be held to be that of a government employee. Whereas in ‘R.R. Pillai (Dead) through LRs. Vs. Commanding Officer, HQS, Southern Air Command(U) & Others.’ reported in [2009] 13 SCC 311, a 3-judge bench held that the employees of URCs are not government servants.

The Court observed “Learned counsel for the respondent submits that there being a conflict between two Three Judge Bench judgments of the Court; one affirming Mohd. Aslam judgment’s view and the other disapproving the same, the matter requires to be considered by a Larger Bench In that view of the matter, we find ourselves in difficulty and accordingly, we are of the view that the matter requires consideration by a Larger Bench.”

The  bench comprising Justices Vikram Nath and Justice Ahsanuddin Amanullah was hearing an appeal against a Delhi HC judgment affirming the tribunal’s decision to treat the respondent as a government servant in view of a 2 Judge Bench judgment of this court in Union of India v. Mohd Aslam(2001).

The facts of the present case date back to 1996 when the Commandant & MD, 510, Army Base Workshop had invited applicants to appear for an interview for “temporary posts of Sales Persons‟. The respondent was selected and appointed as Assistant Salesperson in 1997.

It is pertinent to note that the Ministry of Defence had come up with “Rules Regulating the Terms and Conditions of Service of Civilian employees of Unit Run Canteen paid out of Non-Public Funds, 2003 (Rules) in compliance with the directions contained in the Supreme Court judgment in Mohd Alam’s case. The respondent therefore requested for regularization of his services and to treat him as a permanent employee which was refused.

Then, he approached the tribunal held that he was deemed to be a Government servant. The HC also affirmed the order in view of Mohd Alam’s judgment.

In Mohd Alam’s case, the court noted that in the defense Services, there are two types of canteens- Canteen Stores Department(CSD), and URCs. While the CSD serves as a wholesale outlet it is the URCs that serve as a retail outlet.

The Court observed that “if the Canteen Stores Department(CSD) forms a part of the Ministry of Defence and if their funds form a part of the Consolidated Fund of India and it is said that CSD provides fund as well as different articles through the retail outlets of URC, then the employees who discharge the duties of salesmen in such retail outlets must be held to be employees under the Government. The officers of the Defence Services have all-pervasive control over the URCs as well as the employees serving therein.”

It accordingly held that the status of the employees in the Unit-Run Canteens must be held to be that of a government employee.

Coming back to the present case, the counsel for the appellant(Union of India) relied on ‘R.R. Pillai (Dead)' which in specific terms held that Mohd. Aslam’s case referred to above was not correctly decided.

In RR Pillai’s case, the Supreme Court clarified that URCs are purely private ventures, and their employees cannot be considered employees of the Government or CSD by any stretch of imagination. It was emphasized that there is no statutory obligation on the part of the Central Government to provide canteen services to its employees. The profits generated from URCs are not credited to the Consolidated Funds but are instead distributed to Non-Public Funds, which are utilized for the welfare of the troops.

It added “In Aslam’s case, this court proceeded on incorrect factual premises inasmuch as after noticing that the URCs are not funded from the Consolidated Fund of India, it went wrong in concluding that the URCs are funded by CSD as well as the articles were supplied by the CSD. Unfortunately, it did not notice that no such funding is made by the CSD.

On the other hand, counsel for the respondent relied upon an order dated 5th February 2001 passed in (Civil Appeal No. 5795 of 2000) by a Three Judge Bench approving and following the judgment in the case of Mohd. Aslam which read as follows- “The respondents are the employees of the Unit Run Canteen at Jodhpur. The question involved in this case is fully covered by the judgment of this Court in Union of India & Ors. V. M. Aslam & Ors”.

In view of the conflicting judgments, the court deemed it fit to be considered by a larger bench and ordered “Let the matter be placed before Hon’ble the Chief Justice of India for passing appropriate orders.”

Case title: Union of India v. Vinod Kumar

Citation: 2023 LiveLaw (SC) 795

For Appellants: Mr. Vikramjeet Banerjee, A.S.G. and AOR Mr. Arvind Kumar Sharma along with Advocates Ms. Vaishali Verma, Adv. Ms. Kiran Suri, Adv. Mr. Rajan Kumar Chourasia, Adv. Mr. Ayush Anand, Adv. Mr. V V V Pattabhiram, Adv. Mr. Surendra Kumar Gupta.

For Respondents: Sr Adv. Mr. R.Basant along with Adv. Mr. Arvind Kumar Shukla, Adv. Ms. Reetu Sharma, AOR Mr. Nihal Ahmad, Adv. Mr. Mannu Krishnan, Adv. Mr. Shantanu Shukla, Adv. Ms. Susmita Devi Ghimiray, Adv. Ms. Siddhi Singhal.

Click here to read the order