SC upholds HC order allowing outsourcing canteens in Karnataka factories with 250 or more workers

The Supreme Court on Thursday upheld the Karnataka High Court's order allowing employers in factories with 250 or more workers, to outsource the running of the canteen by engaging contractors or service providers. 

A bench of Justices P S Narasimha and Manoj Misra dismissed a special leave petition filed against the High Court's decision of March 24, 2011.

With the decision, managements of establishment are permitted to engage contract labourers in the  canteen provided and maintained at the factories employing 250 or more workers.  

According to Section 46 of the Factories Act, a factory employing 250 or more workers shall provide and maintain canteen at the factory.  Majority of the employers had outsourced to the contractors or other service providers for running the canteen in the factory premises on contract basis.  

In 1997, the Karnataka government issued a notification, prohibiting employment of contract labour in industrial canteens.

More than 700 factories in the state had to discontinue the arrangement of running the canteen through the contractor.  The impact in essence was that the management were to provide and maintain the canteen at the factory directly. 

 Upon a challenge to the notification, a division bench in March 1998 dismissed all the writ petitions by the managements of some of the factories. A special leave petition as well as review petition was also dismissed by the Supreme Court in 2011.

Subsequently, on a representation by the Karnataka Employers Association, the state government rescinded the previous notification, which affected the investment in the state as in the neighbouring states there was no prohibition for outsourcing canteen at the factory.

Trade Unions challenged validity of the subsequent notification before a single judge bench which allowed their writ petition. However, division bench upheld the action of the state government.