Delhi High Court
Hindustan Paper Corporation vs Roshan Lal And Ors. on 25 July, 2006
Equivalent citations: 132(2006)DLT36, (2007)ILLJ273DEL
Author: Shiv Narayan Dhingra
Bench: Shiv Narayan Dhingra
JUDGMENT Shiv Narayan Dhingra, J.
1. This writ petition has been directed against the Award dated 18.5.1996 of Industrial Tribunal whereby the Tribunal directed the reinstatement of respondent No. 1, Roshan Lal with full back wages.
2. The factual matrix is that India Paper Pulp Company Ltd. (for short 'IPPCL') was incurring heavy losses and the amount of creditors was in jeopardize. In order to help the revival of this Company, the petitioner company was asked by Government to provide technical and financial help. The petitioner company started overseeing the operation of IPPCL as directed by Government of India. Several winding up petitions filed by the creditors of IPPCL, were pending before Calcutta High Court. Petitioner Company after studying all aspects of the operations and Mill of IPPCL, submitted a report to the Government. From October 1976 petitioner company also started looking after marketing of the paper products of IPPCL and deputed its officers to help in marketing of paper stock. Respondent No. 1 was working as a Peon in the IPPCL. He was promoted from Peon to a Clerk and posted in the Sales Office, Nai Sarak by IPPCL with effect from 1.4.1978. IPPCL could not revive and went into liquidation. Winding up order of the IPPCL was passed by Calcutta High Court on 4.5.1979. This order was stayed till 31.10.1979 and the stay was later vacated and final winding up order was passed by Calcutta High Court. The company went into liquidation finally on 27.1.1981. On 2.3.1981, the Area Manager of the petitioner Company who was looking after Marketing Operations of IPPCL also, intimated to respondent No. 1 that IPPCL has gone into liquidation and he ceases to be on the roll of the company. In the meantime, the Calcutta High Court on 29.4.1981 directed West Bengal Industrial Development Corporation Limited to run the business of IPPCL on license basis. On 12.7.1981 respondent No. 1 sent a representation to Chief Executive of IPPCL that since the company was being revived, he should also be reinstated in the service.
3. The respondent No. 1 on 26.6.1982 sent a notice to the petitioner company alleging that while he was earlier working with IPPCL, in 1979 he was directly taken on the rolls of petitioner company and he was posted as a Godown Clerk at the godown of petitioner company at Delhi and he was paid wages directly by petitioner. His services were wrongfully terminated by the Area Manager of petitioner on 2.3.1981. He claimed reinstatement with all consequential benefits. The petitioner took the stand that respondent No. 1 was not its employee, so it did not reinstate him. He raised an industrial dispute and a reference was made to the Industrial Tribunal and the impugned award was passed.
4. In his statement of claim, respondent No. 1 had taken the stand that petitioner had taken over IPPCL in the year 1976. IPPCL had a Sales Office in Delhi where he was working. He was promoted from Peon to Clerk on 1.4.1978 and continued to work in the Sales Office, Delhi of IPPCL with the condition that his pay and allowances would be proportionately shared by IPPCL and Mandya National Paper Mill, another company which was taken over by HPCL and he would be eligible to same pay and allowances as applicable to the staff of petitioner. In 1979 he was taken on the roll of petitioner and posted in the godowns of petitioner. His services were terminated on 2.3.1981 illegally without any notice to him and without following the procedure established by law. He sent letters to the petitioner, but to no effect.
5. In the written statement, HPCL gave the history as to how HPCL was directed to oversee the operation of IPPCL and took the stand that respondent No. 1 had never been the employee of petitioner. It was denied that respondent No. 1 was ever taken on roll of petitioner. ; It was also denied that petitioner had taken over IPPCL in 1976.
6. The learned Industrial Tribunal framed three issues:
(1) Whether the workman was not an employee of the management as alleged in para 1 of the written statement. If so, its effect?
(2) Whether the reference was not maintainable?
(3) Whether the services of respondent were terminated illegally, unjustifiably and if so, to what relief was entitled?
7. After recording the evidence of the workman and management, the learned Tribunal held that the respondent No. 1 was an employee of the petitioner and his services were illegally terminated. This decision of the Tribunal has been challenged on the ground of perversity and that the award was contrary to the evidence on record.
8. The facts of this case are undisputed except the contention of the respondent No. 1 that he had become direct employee of the petitioner. Respondent No. 1 had relied upon few documents which were issued by the petitioner company to show that he had become direct employee of the petitioner in 1979. These documents are office orders/inter-office memos of the petitioner company issued to respondent No. 1. These inter-office memos show that instructions were given from time to time by the Area Manager of petitioner to respondent No. 1. Memo dated 19.9.1979 gives directions that he should deliver 1000 rim of duplicate papers to the holder of the letter. Vide letter is of 30.1.1980, he was asked to operate godowns at Shakti Nagar and Singh Sabha Road. He was supposed to open these godowns and be responsible for all receipts and stock register. Another letter shows that the instructions were given to him regarding handling of stock and godown. There is undated letter asking him to allow lifting of weighing machines to the holder of the letter to whom the weighing machines belonged. He was also given directions to ensure opening and closing of the godown at scheduled time, to open godown for half day on Saturdays and to render cooperation to Surveyors for smooth work. One letter was about claiming over time by the staff. Another letter is an office order directing the employees to send their applications for leave, over time etc. through reporting officer.
9. From these letters/inter office memos, the Tribunal observed that there was an employer-employee relationship between the petitioner and respondent No. 1. Tribunal observed that if respondent had been an employee of IPPCL, IPPCL being a separate entity, these memos & office orders would not have been given by petitioner to respondent No. 1. It was also observed that admittedly petitioner had been paying salary to workman and this fact coupled with the letters show that respondent No. 1 was an employee of petitioner. The letter written by the respondent No. 1 to IPPCL on 12.7.1981 that he was an employee of IPPCL, and since IPPCL was being revived he should also be given employment, was considered of no consequence.
10. It is argued by counsel for petitioner that order of Tribunal was perverse and contrary to entire evidence. The letters could not have been looked into isolation from other proved facts.
11. It is undisputed that in 1978 the petitioner was an employee of IPPCL. He was promoted by IPPCL in 1978. It has been admitted by the workman in his cross-examination that there were only three employees of IPPCL working in Delhi godown, and of the three employees; one had retired & other had left the company in order to take job in some other company and respondent No. 1 was the sole employee left to look after the work of IPPCL. It is also undisputed that under Government orders petitioner was overseeing the operations of IPPCL and was looking after the sales of stock of Delhi godown of IPPCL. It is obvious that since respondent No. 1 was the only employee of IPPCL left in Delhi, the petitioner became in charge of godowns and of respondent No. 1. Respondent No. 1 was aware of all this and he started taking instructions only from petitioner. Letters show that petitioner started instructing respondent No. 1 from September 1979. On 4.5.1979 Calcutta High Court had ordered liquidation of IPPCL and stayed it till 31.10.1979. Since process of liquidation of IPPCL was going on and IPPCL management had become defunct, under responsibility given to it, started giving instructions to respondent No. 1 so that stock of IPPCL lying in godown is managed till liquidation was over. It seems that since the petitioner was managing the affairs of IPPCL in Delhi, the petitioner also started assigning some of its own work to the respondent. The inter office memos placed by respondent show that respondent was receiving instructions about the work from petitioner. The petitioner was extending financial help to IPPCL. The annual report and accounts of IPPCL for year ending 31.3.1976 record as under:
The Board considered the report dated 30.1.1976 of the HPC Technical Team, the report dated 1.3.1976 of the Chief Internal Auditor, HPC and the letters written by Chairman to Government regarding rehabilitation of IPP Mill. The Chairman informed that HPC had made available since October, 1976 technical expertise and guidance in the operation of the mill without any cost to IPP. HPC had also released the entire amount of Rs. 20 lacs. It could not give any more funds without Government's approval.
12. As there was no other employee of IPPCL and petitioner was overseeing the operations of IPPCL, including selling its stock, the responsibility of paying salary to respondent No. 1 on behalf of IPPCL was also being discharged by petitioner. Petitioner's witness who was looking after Marketing Division had deposed that he was overseeing the functions of IPPCL office at Nai Sarak and was also over-seeing the working of respondent No. 1 who was initially working as a Peon with IPPCL and he used to be deputed for various jobs of IPPCL's Sales Office. When IPPCL got liquidated, the services of respondent No. 1 also came to an end. To same effect is the testimony of other management's witnesses. In cross-examination of Mr.Banga, Deputy Manager (Marketing), no suggestion has been given to him that respondent had at any time become employee of the petitioner. Same is the case in respect of other witnesses.
13. Respondent No. 1 appeared as WW-1, had testified that he joined service with IPPCL in 1973 and he was working in Sales Office at Delhi and godown at Delhi. He stated that management of IPPCL was taken over by petitioner. He denied that the salary which was being paid to him, was being debited to the account of IPPCL. He admitted that he never received any medical benefit from the petitioner but said he never claimed the same. He admitted that he was the only employee of the IPPCL because another employee had retired and one had left the employment and joined M/s Karam Chand Thapar. He admitted that he was never paid bonus and leave encasement by petitioner.
14. Although Tribunal concluded that the contention of respondent No. 1 that petitioner had taken over IPPCL was wrong and petitioner was only over-seeing the operation of IPPCL, however, Tribunal observed:
In my view, just because the workman has admitted that he was initially employed by IPPCL in 1973 and that no appointment letter was issued by HPCL it cannot be said that the relationship of employer-employee between him and HPCL could not be claimed by him under any circumstances. It cannot be disputed that for bringing into existence the relationship of employer-employee a form appointment letter need not be there.
15. The conclusion arrived at by the Tribunal suffers from inherent contradictions and is not based on the evidence and material on record. The respondent No. 1 had been working with IPPCL initially as a Peon. He was promoted in 1978 as a Clerk by IPPCL. Even when the respondent was promoted as a Clerk, petitioner was overseeing operation of IPPCL and was trying to bring out IPPCL from the red so that it may start earning profit. At that time, IPPCL was incurring losses of Rs. 15 lacs to Rs. 20 lacs per month. IPPCL was having Mill in West Bengal and a godown in Delhi where respondent No. 1 was working. With IPPCL falling sick, one of its employee left the service, one retired and the respondent remained the only employee. Respondent No. 1 continued to look after the work of IPPCL under the guidance of petitioner. There is no resignation letter given by the respondent resigning from the service of IPPCL. The respondent No. 1 was only a Clerk, he was not involved in the management, he was bound to look towards the petitioner for his day to day working. In January 1981 when the IPPCL was liquidated, respondent No. 1 was informed by the petitioner about its liquidation and closure and the services of respondent with IPPCL came to an end. He was paid salary up to February 1981. In July 1981 when he learnt that West Bengal Government was running the Mill of IPPCL, he wrote a letter to the Chief Executive, IPPCL on 12.7.1981 that he had become jobless due to company having gone into the liquidation and since now the Mill has been revived, he should be brought back on the rolls. If he had been an employee of the petitioner as he later claimed, he would have written a letter to the petitioner that he was their employee and his services were wrongfully terminated. The stand of the respondent till July 1981 had been that he was an employee of IPPCL. After February 1981, when his services with IPPCL came to an end on its liquidation, he did not consider himself an employee of petitioner. Had there been an employer-employee relationship between petitioner and respondent No. 1, it would not have been there without the knowledge of respondent No. 1. As per knowledge and conduct of respondent No. 1, the employer-employee relationship was there between IPPCL and him all along till the company went into liquidation. In July 1981 he confirmed this relationship by his letter to IPPCL. Thereafter in June 1982 he changed his stand and asserted that petitioner had taken over IPPCL in 1976 and he had become an employee of petitioner in 1979. The conclusion arrived at by the Tribunal that respondent No. 1 had become employee of petitioner is therefore, perverse. Inter office memos as already observed by me, were written to the respondent No. 1 because respondent No. 1 though an employee of IPPCL was working under the supervision of petitioner. Payment of salary by petitioner to the respondent did not create relationship of employee and employer because petitioner was financially helping IPPCL and petitioner had given help of Rs. 20 lacs at one time and more help was given by the petitioner. The petitioner's stand that the salary being paid to the respondent was being credited to the account of IPPCL is not without merits and could not have been brushed aside so lightly in view of the facts and circumstances.
16. There is a gap of one year and four months between respondent No. 1 losing job and making claims against petitioner. The respondent No. 1 lost service due to closure of IPPCL in February 1981. He gave first notice to petitioner in June 1982. In Chief Engineer (Construction) v. Keshava Rao (D) 2005-II LLJ 479, Supreme Court observed as under:
We have carefully perused the notice given by the respondent and the reply thereto given by the appellant. No doubt, about a year and 5 months after the alleged termination of service, such a notice was served upon the appellant by the respondent. The High Court has observed that within a reasonable time the respondent had claimed reinstatement on the ground that his service had been illegally terminated. In the first instance the period of 1 year and 5 months does not appear reasonable time for asserting the factum of termination of employment....
17. The sudden change in stand by respondent No. 1 about his employer after about one year and four months was not without motive. The learned Tribunal failed to see the motive behind this change of stand.
18. I consider that the conclusion arrived at by the Tribunal about the respondent being an employee of petitioner was contrary to the facts placed & proved on record and was perverse. There was no relationship between petitioner and respondent No. 1 of employer & employee. I therefore, allow this writ petition and set aside the impugned award.