Ram Ratan Singh & Ors. vs Gossini Fashion Ltd.
2011 Latest Caselaw 509 Del

             IN THE HIGH COURT OF DELHI AT NEW DELHI

                      WRIT PETITION(C) NO.525/2011

                                       Date of Decision : 28th January, 2011

        RAM RATAN SINGH & ORS.                   ..... Petitioners
                 Through   Mr. M. A. Khan, Advocate.

                      versus

        GOSSINI FASHION 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)

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 20th May, 2000. They allege, inter alia, that the

respondent neither issued appointment letters nor did it maintain any

record of their service. It is their case that the respondent illegally

terminated their service because they had complained to the labour

authorities.

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 was 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 also submitted that in

response to the demand notice, the respondent had, in fact, filed a

reply dated 19th August, 2000 specifically pointing out that the

claimants were never engaged by the respondent. And that the

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

whom the respondent was getting the work of stitching done.

Moreover, the premises at S-99, Okhla Industrial Area, Phase-II, New

Delhi- 110020 were in the possession of M/s Star Fashions, who were

carrying on their independent business from the aforesaid premises.

Even the machines on which the petitioners worked did not belong to

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. TDS was also

deducted by the respondent on the payment made to M/s Star

Fashions, as per the provisions of the Income Tax Act, 1961. The

persons engaged by M/s Star Fashions worked directly under their

supervision and control and the wages and other benefits of the

persons so engaged were also paid by M/s Star Fashions.

4. The Labour Court observed 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.

5. 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.

6. 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 & 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, on 19th February, 2004, the Labour Court

dropped M/s Star Fashions 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.

7. 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.

8. 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 inexplicably denied the same in another.

9. 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. "

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.

10. 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.

11. 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.

12. Counsel for the petitioner thereafter submits that, in fact,

in the cross examination, the respondent had admitted that the

petitioners were their employees, and in support of this, counsel relies

on the cross examination of Mr. T. Ravindran, Assistant Manager

(personnel) of the respondent. The only fact admitted by him in his

cross examination is that in addition to their regular employees, the

respondent used to get its work done through fabricators and

contractors, and the manufactured material from the contractors was

brought to the respondent‟s factory to be checked by their quality

control personnel. 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.

13. 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."

14. 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.

15. 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.

16. The writ petition is, therefore, dismissed.

SUDERSHAN KUMAR MISRA, J.

January 28, 2011