Rahimuddin & Ors. vs Gossini Fashions Ltd.
2011 Latest Caselaw 503 Del

          IN THE HIGH COURT OF DELHI AT NEW DELHI


                    WRIT PETITION(C) NO.526/2011

                                 Date of Decision : 28th January, 2011

      RAHIMUDDIN & ORS.                              ..... Petitioners
               Through         Mr. M. A. Khan, Advocate.

                    versus


      GOSSINI FASHIONS LTD.                            .....Respondent
                Through  None.


      CORAM:
      HON'BLE MR. JUSTICE SUDERSHAN KUMAR MISRA


1.    Whether Reporters of local papers may be allowed to see the
      judgment? Yes
2.    To be referred to the Reporter or not? Yes
3.    Whether the judgment should be reported in the Digest? Yes


SUDERSHAN KUMAR MISRA, J. (Oral)

CM No. 1119/2011 (Exemption)

Exemption, as prayed for, is allowed, subject to all just exceptions.

This application stands disposed of.

WP(C) No.526/2011

1. The instant writ petition has been preferred against the

impugned award dated 26th February, 2010, wherein the Labour

Court held that the petitioners are not entitled to any relief since

they failed to establish the relationship of master and servant with

the respondent management.

2. It is the case of the petitioners/workmen that they were

working as tailors with the respondent till their services were

terminated on 18th April, 2000. They allege, inter alia, that the

respondent neither issued appointment letters nor did it maintain any

record of their service.

3. The case of the respondent through out has been that there is

no relationship of employer and employee between the parties and,

as such, there is no question of granting legal facilities to them or of

any illegal termination of the petitioners‟ service by the respondent.

Counsel for the respondent also submitted that the name of the

company in the order of reference was described as M/s GIP Leather

(India) Limited whereas the correct name of the company was M/s

AN GIP Leather (India) Limited. He further contended that the

petitioners were, in fact, the employees of M/s Star Fashions,

through whom the respondent was getting the work of stitching

done. Even the machines on which the petitioners worked were not

the property of the respondent. The respondent was only providing

raw material to M/s Star Fashions to stitch the garments. Thus, the

said M/s Star Fashions was getting the work of stitching done

through its own workers, on its own machines, in its own premises

and the respondent was only paying the money on the bills raised by

it.

4. The petitioners also applied to the Labour Court seeking

direction to the respondent to produce some documents and records,

including the attendance register. In reply, the respondent alleged

that since the petitioner workmen were not its employees, and were

actually the employees of its contractor, M/s Star Fashions, therefore

it is not liable to produce the documents. The Labour Court, however,

allowed the application and directed the respondent to produce the

records sought by the workmen.

5. Ultimately, the Labour Court concluded that not a single

document was filed by any of the workmen to prove the relationship

of employer and employee. Further, the service records produced by

the management did not show the name of any of the workmen. The

workmen relied on the cross examination of Mr. T. Ravindran,

Assistant Manager (personnel) of the management, wherein he

stated that whatever production work was being carried out by the

workmen employed under the contractors was finally checked and

approved by the production staff of the management and that they

even had a right to reject the work. However, the Labour Court

construed this as merely indicating that the end product was finally

checked and approved by the management through its own staff and

nothing more. There is also no evidence that the premises in which

the manufacturing was carried out belonged to the management or

that it is the management who was providing the tools to the

workmen for the purposes of manufacturing of garments. Hence, the

element of supervision and control essential for establishing a

relationship of employer and employee was missing. Consequently,

the Labour Court held that since the workmen failed to prove any

relationship with the management, there can be no question of any

illegal termination by the management and they are, therefore, not

entitled to any relief.

6. Before this Court, counsel for the petitioners submitted that in

order to defeat the legal rights of the petitioners, and to avoid its

liabilities, the respondent had adopted a modus operandi of

frequently changing the name of the establishment, and maintaining

a different name on record and in the books of the establishment,

aimed at confusing and misleading the petitioners. The respondent

was initially named as M/s Goetze India Ltd., which was later

changed to GIP Leather (India) Ltd. and then to AN GIP Leather

(India) Ltd. and presently it is M/s Gossini Fashions Ltd.

7. Counsel further states that the plea of the respondent

that the petitioners were the employees of its contractor, M/s Star

Fashions, is false and fabricated. He submits that the respondent

had, in fact, moved applications dated 21st February, 2002 and 17th

October,2002 to implead the said M/s Star Fashions as a necessary

party to the dispute, which was allowed. However, notices issued to

M/s Star Fashions were returned back with the remarks that it was

not in existence at the given address. Even the notice issued to Mr.

Ajay Rathore, alleged to be the proprietor of M/s Star Fashions, was

received back with the remarks that no such firm was available at

the given address. Finally, the Labour Court ordered that M/s Star

Fashions be dropped from the array of parties. Counsel further states

that the respondent had itself admitted that the petitioners were

working for it through the said contractor, M/s Star Fashions, and

since it failed to prove the existence of the above said contractor, it

is clear that there was no one between the petitioners and the

respondent and that they were under the direct control and

supervision of the respondent.

8. He also submits that the Labour Court erred in law in as

much as it failed to appreciate the fact that the respondent was

providing the raw material and machines on which the petitioners did

the work and the respondent had the right to reject the end product

if it did not conform to its instructions and direct the petitioners to

restitch the product.

9. Counsel for the petitioners further states that in a similar

matter, which was referred by a separate reference, the same Labour

Court concluded that the workmen‟s services were illegally

terminated by the management and granted compensation of Rs.

50,000 each in lieu of reinstatement. He, therefore, contends that

even though the facts and circumstances in both the cases are same

and the matter relates to the same group of workmen, the Labour

Court granted relief in one case and denied the same in another.

10. A perusal of all the above facts shows that the only

evidence the petitioners have managed to produce is an admission

by the respondent that the petitioners were employed by a

contractor with whom the respondent had an agreement. The

petitioners state that the Tribunal should have held that in case the

contractor was not traceable, the petitioners should be treated as

direct employees of the management. In support of their proposition,

the petitioners have relied on the case of Silver Jubilee Tailoring

House and Ors. v. Chief Inspector of Shops and

Establishments and Anr. (1974) 3 SCC 498. Paragraph 33 of the

aforesaid judgment states:

"That the workers work on the machines supplied by the proprietor of the shop is an important consideration in determining the nature of the relationship. If the employer provides the equipment,

this is some indication that the contract is a contract of service, whereas if the other party provides the equipment, this is some evidence that he is an independent contractor. "

11. A perusal of this paragraph discloses that it has no

relevance to the proposition raised. Further, in the aforesaid case,

the premises and the shop in which the work was carried on

belonged to the proprietor of the shop and the machines installed in

the shop also belonged to him. On the other hand, in the instant case

there is no evidence that the premises where the petitioners worked

belonged to the respondent or that it was the respondent who

provided the tools to the workmen for the purpose of manufacturing

the garments.

12. The second point raised by counsel for the petitioners is

that since the management had a right to accept or reject the „end

product‟, it was sufficient to hold that the petitioners were the

employees of the management. I do not agree. The mere right of

acceptance or rejection of the „end product‟ does not, and cannot,

ipso facto place the parties in a master and servant relationship. It

was put to the petitioners that the acceptance or rejection of the „end

product‟ is very often available even to the person who is intending

to purchase the product from the management. If the petitioners‟

proposition is held to be correct, then it would mean that the

petitioners can claim to be the employees of that purchaser of the

„end product‟ as well. Right to accept or reject an „end product‟ can

also be reserved in case of an independent buyer, where also the

producer manufactures the product on its own, and the buyer looks

at it and accepts or rejects it. For example, whenever a suit is

ordered by a gentleman from his tailor. Therefore, this fact cannot

be taken as an indication of a master and servant relationship.

13. Another plea taken by the counsel for the petitioner is

that, on the same ground, i.e. of the management reserving the right

of accepting or rejecting the „end product‟, in another case pertaining

to the same management, the Labour Court concluded that this is

sufficient to establish the relationship of master and servant. This

plea cannot be accepted as the Labour Court is not a Court of Record

and its decisions do not form precedent. It is upto the aggrieved

party to challenge the same if it is erroneous in law or facts or some

miscarriage of justice has been occasioned.

14. According to counsel for the petitioner, in its cross

examination, the respondent had admitted that the petitioners were

their employees. To support this contention, he relies on the cross

examination of Mr. T. Ravindran, Assistant Manager (personnel) of

the respondent. Counsel has referred to the statement of the said

witness to the effect that he did not have any direct connection with

the production activity of the company. The said witness further

stated that, " whatever production was being carried by the workman

employed under the contractor were finally checked and approved by

our own production staff", and that the management, "also used to

give work on piece rate basis". To my mind, this does not constitute

an admission with respect to the relationship of master and servant.

Not only that, it appears that it was also the petitioners‟ own case

that production personnel from the company used to go to the

fabricators/contractors/piece rate workers to verify that the goods

were being conformed to the standards prescribed by the overseas

buyers. Therefore, I am afraid there is nothing in the said cross

examination that would amount to an admission of the relationship of

employer and employee between the respondent and the petitioners.

15. The Supreme Court in Workmen of Nilgiri Coop. Mkt.

Society Ltd. v. State of T.N.,(2004) 3 SCC 514, held that:

"question whether the relationship between the parties is one of employer and employee is a pure question of fact and ordinarily the High Court while exercising its power of judicial review shall not interfere therewith unless the finding is manifestly or obviously erroneous or perverse."

16. In the instant case, the petitioners failed to produce the

relevant documents such as appointment letter, PF, etc. in support

of their contention that they were employees of the respondent. The

petitioners contented that they were unable to produce the

documents since the same was not provided by the respondent

although they are the employees of the respondent. The service

record produced by the respondent also does not show the name of

any of the workmen. It was further contended that since the

respondent failed to prove the existence of the said contractor, M/s

Star Fashions, or its proprietor, there was no need for the

petitioners to produce any direct documentary evidence such as

appointment letters, identity cards, deduction of PF, etc. to prove

their relationship with the respondent. It was urged that under the

circumstances, it may be presumed that the respondent had neither

maintained a proper employment record of the petitioners, nor

issued them any documentary proof, with the mala fide intention of

depriving the petitioners of their lawful employment rights and

benefits. I do not agree. In N.C. John v. Secy., Thodupuzha

Taluk Shop and Commercial Establishment Workers' Union

(1973) I LLJ 366 Ker, the Kerala High Court held that the Tribunal

was wrong in drawing an inference against the petitioner for not

producing his books of accounts, which, according to the Tribunal,

would have shown that these persons were his employees. It further

held that the burden of proof is on the workmen to establish the

employer-employee relationship, and in attempting to discharge that

burden, the books of account and other records of the petitioner

may be called, and then if the management refuses to produce

them, an inference may be drawn against it to the effect that if the

said documents were produced, they would have borne out the

claimants case. Here, it was the petitioners own case that they

were not shown as employees in the respondent‟s records. The

respondent admitted this fact. There was thus no need to produce

the records to prove this fact. The other, relevant fact, which was in

issue was, whether the respondent had deliberately omitted the

name of the petitioners from those records. That could only have

been proved by some independent evidence by the petitioners.

They have failed to do so.

17. In view of the above facts, it is clear that the petitioners

failed to discharge the burden and prove that they were, in fact, the

employees of the respondent. Under the circumstances, I do not

consider the conclusions reached by the Labour Court manifestly

perverse. Nor do I not find any infirmity in the impugned Award,

necessitating the interference by this Court in the exercise of its writ

jurisdiction under Article 226 of the Constitution of India.

18. The writ petition is, therefore, dismissed.

SUDERSHAN KUMAR MISRA, J.

January 28, 2011