Partly allowed

M/S. Hallmark Diamonds Thr. Parnter v. State of Maha. Thr. Prin. Sec. and Ors.

Bombay HC6 Jul 2023WP/390/2023

Case brief

AI extract

What is this about?

In a writ petition challenging an ex parte award of the Labour Court, the High Court quashed the award and order for the reason that the fundamental issue of establishing an employer-employee relationship was not convincingly addressed. The petitioner was citing as owner while the respondent claimed different owners, necessitating a remission for fresh adjudication. The court also set aside prior

What did the court decide?

Impugned award quashed and set aside; Reference remitted to Labour Court for afresh determination; Orders restricting petitioner from advocate and ex parte proceedings set aside.

M/S. Hallmark Diamonds Thr. Parnter Vs State… — Pension and Retirement Benefits | Bombay HC (2023)

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WP390-2023.DOC

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Santosh

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION

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SANTOSH SUBHASH KULKARNI

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Digitally signed by SANTOSH SUBHASH KULKARNI Date: 2023.07.06 18:28:09 +0530

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WRIT PETITION NO. 390 OF 2023

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M/s. Hallmark Diamonds, through its Partners, Mr. Prabhakar Vishnu Girkar, Haing address at: 9, Vachha Gandhi Road, Gamdevi, Grant Road, Mumbai 400 007 ... Petitioner

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Versus

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1 State of Maharashtra, Through Principal Secretary, Labour Department, Room No.129, Mantralaya, Mumbai

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2 Shri Babu7 Purushothaman, 9, Shivam, Shree Jai Om CHS Ltd. Near Madhavi Schoo, Rajaji Path, Dombivli (E) 421 201, Thane (Dist.)

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3 The Assistant Commissioner of Labour D-Ward, Office of Commissioner of Labour, Kamgar Bhavan, C-20, E- Block, Bandra Kurla Complex, Bandra (E), Mumbai – 400 051

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4 The Collector of Mumbai City Recovery Branch, Old Custom House, Shahid Bhagatsingh Marg, Mumbai … Respondents

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400 001

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Mr. Zia Syed, i/b Md. Mohammed Asim, for the Petitioner. Mrs. V. S. Nimbalkar, AGP for the State/Respondent No.1. Mr. Babu Purushothaman, Respondent No.2-in-person.

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CORAM: N. J. JAMADAR, J. RESERVED ON: 20^th JUNE, 2023 PRONOUNCED ON: 6^th JULY, 2023

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WP390-2023.DOC

JUDGMENT:-

Rule. Rule made returnable forthwith and, with the consent of the parties, heard finally.

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This petition calls in question the legality, propriety and correctness of an ex parte award dated 23^rd May, 2022 passed by the learned Presiding Officer, Labour Court, Mumbai, in Reference (IDA) No.12 of 2020. Under the said award, the termination of the service of respondent No.2 – second party by M/s. Hallmark Dimonds – first party/petitioner has been declared illegal and the petitioner has been directed to reinstate respondent No.2 in service with full back-wages from the date of termination, i.e. 25^th August, 2018.

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Background facts can be stated in brief as under:

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(a) Respondent No.2 – employee claimed that he was appointed as, “Steno-Typist” in the Legal Department of the Companies, of which Mr. Kishor Mehta and Mrs. Charu Mehta were the owners/partners, namely; Hallmark Diamonds, Beautiful Realtors, Crystal Gems, Splendour Gems Ltd. Respondent No.2 continuously worked as Steno-Typist from 5^th September, 2017 to 25^th August, 2018. Taking undue advantage of the fact that on 25^th August, 2018, respondent No.2 had taken a days off, respondent No.2’s services were terminated illegally

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in gross violation of the principles of natural justice. The said illegal act was in retaliation to the grievance raised by respondent No.2 about the unlawful deduction of amount from the salary of respondent No.2. Neither any notice nor memo was served on respondent No.2. Nor the compliance of the provisions contained in Section 25-F of the Industrial Disputes Act, 1947 was made before unlawfully terminating the services of respondent No.2.

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(b) Respondent No.2 raised an industrial dispute. Upon failure of conciliation in exercise of the power under Section 12(5) of the Act, 1947, the appropriate Government made a reference to the Labour Court for adjudication of industrial dispute.

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(c) Respondent No.2 filed a statement of claim. Since none appeared for the first party, by an order dated 2^nd September, 2021, the learned Presiding Officer, Labour Court, directed that the reference shall proceed ex parte against the first party.

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(d) An application was preferred on behalf of the petitioner (Exhibit-C2) purportedly under Order IX Rule 13 of the Code of Civil Procedure, 1908 (“the Code”) to set aside the ex parte order dated 17^th September, 2021. Respondent

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No.2/second party filed an application (Exhibit-U11) seeking to restrain the first party from being represented by a practicing Advocate. By an order dated 15^th November, 2022, the learned Presiding Officer allowed the said application and restrained the first party from being represented by a legal practitioner as the second party – employee did not give the consent as envisaged by Sub-section (4) of Section 34 of the Act, 1947. By an order of even date, the application (Exhibit-C2) preferred on behalf of the first party to set aside an ex parte order came to be rejected on

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the ground that the said application was filed under the signature of the legal practitioner for the first party, as the first party had already been restrained from being represented through a legal practitioner. Resultantly, the reference proceeded ex parte.

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(e) Eventually, by the impugned award, the learned Presiding Officer was persuaded to answer the reference in the affirmative holding, inter alia, that the services of the second party were illegally terminated by the first party with effect from 25^th August, 2018 and that the second party was entitled to be reinstated in service with full back-wages and continuity of service from that date. It was observed that the first party failed to appear and adduce evidence.

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(f) The petitioner has invoked the writ jurisdiction asserting that respondent No.2 never worked with the petitioner. Respondent No.2 has not specifically named his employer. The learned Presiding Officer committed a gross error in law in fastening the liability without cogent evidence to establish employer – employee relationship, on the basis of omnibus statements on the part of respondent No.2.

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I have heard Mr. Syed, the learned Counsel for the petitioner, Mrs. Nimbalkar, the learned AGP for the State/Respondent No.1 and Mr. Purushothaman, Respondent No.2-in-person. With the assistance of the learned Counsel and respondent No.2-in-person I have perused the material on record including the affidavit-in-reply filed by respondent No.2 and the documents annexed thereto.

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Evidently, an ex parte award came to be passed. Had the matter been restricted to examining the legality and correctness of the ex parte award on the touchstone as to whether the Labour Court was justified in proceeding ex parte against the petitioner and whether the uncontroverted material warranted ex parte award, considerations would have been different. In the case at hand, apart from the alleged defect in procedure adopted by the learned Presiding Officer in passing ex parte

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award, there is a fundamental issue of the identity of the first party as the employer of respondent No.2. That question goes to the root of the controversy.

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The circumstances which attended the raising and reference of the industrial dispute to the industrial adjudicator bear upon the aforesaid issue. A copy of the justification statement-cum-intervention letter addressed by respondent No.2 to the Deputy Labour Commissioner dated 9^th April, 2019, which preceded the reference by the appropriate Government is of critical significance. It incorporates the industrial dispute sought to be raised by respondent No.2 and was accompanied by the demand letter dated 22^nd March, 2019.

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It would be suffice to refer to the unnumbered opening paragraph and the relevant part of the first paragraph of the said letter. It reads as under:

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“Please find attached herewith a copy of my demand letter dated 22.3.2019 addressed to Mr. Kishor Mehta/Mrs. Charu Mehta, owners/partners of Companies comprising of Hallmark Diamonds, Beautiful Realtors, Crystal Gems, Splendour Gems Ltd. and Trustees of Lilavati Hospital and LKMMT Trust, Diamnd House 9, Vachha Gandhi Raod, Gamdevi, Grant Road, Mumbai – 400 007 with a copy to yourselves. I have not received any response from them even after 15 days, hence, I have to submit following justifications in support of my demand for reinstatement and to this end I beg your intervention for my reinstatement with full back wages and continuity of service since my demand has not yet been considered by the Management.

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I was working continuously as “Steno typist” in the Legal Department of Companies as mentioned above from 5.9.2017 till 25.8.2018. During the tenure of my service, I

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have worked sincerely and faithfully till the Management has abruptly terminated my service over phone without any notice of reasons whatsoever when I was a day’s off after prior permission from them on 24.8.2018. …..”

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The aforesaid communication addressed to the Deputy Labour Commissioner indicates that respondent No.2 claimed that he was working with a group of companies comprising of Hallmark Diamonds, Beautiful Realtor, Crystal Gems, Splendour Gems Ltd. of which Mr. Kishor Mehta and Mrs. Charu Mehta, were the owners/partners, and they were also trustees of Lilavati Hospital and LKMMT Trust. Interestingly, the order of reference made by the appropriate Government records that the industrial dispute had arisen between M/s. Hallmark Diamond, Mumbai and respondent No.2 and, accordingly, the dispute was referred to for adjudication to the Labour Court. It is pertinent to note that in the affidavits-inreply filed by respondent No.2 it was categorically stated that Mr. Prabhakar Vishnu Girkar, who claimed to be a partner of the Hallmark Diamonds Pvt. Ltd. was a proxy and M/s. Hallmark Diamond was in fact owned by Mr. Kishor Mehta and Mrs. Charu Mehta.

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The case of respondent No.2, as asserted in the justification statement-cum-intervention letter, referred above essentially seems to be that he was employed with a

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conglomerate comprising different entities. In this backdrop, the Labour Court was enjoined to delve into the core issue as to whether there was employer – employee relationship between the first party and the second party. The correspondence, which is annexed to the affidavit-in-reply of respondent No.2 (pages No.126 to 132) emanating from Prashant Mehta and Hallmark Diamond, indicates that the employer – employee relationship was put in contest.

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In the aforesaid view of the matter, the impugned award deserves to be quashed and set aside and the reference is required to be remitted for afresh determination to the Labour Court. Hence, the following order.

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: O R D E R :

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(i) The petition stands partly allowed.

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(ii) The impugned award stands quashed and set aside.

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(iii) The Reference (IDA) No.12 of 2020 stands restored to the file of First Labour Court, Mumbai.

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(iv) By way of abundant caution, order dated 2^nd September, 2021 setting the reference ex parte and the order dated 15^th November, 2021 rejecting the application to set aside the ex parte order also stand set aside.

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(v) The Labour Court is requested to adjudicate the reference afresh after providing an effective opportunity of hearing to the parties, as expeditiously as possible, and preferably within eight months from the date scheduled for the appearance of the parties.

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(vi) Second party shall file its written statement within a period of two weeks from the scheduled date of appearance.

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(vii) The parties shall appear before the Labour Court on 24^th July, 2023.

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(viii) No separate notice need be issued to the parties.

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(ix) The petitioner shall pay the costs of Rs.25,000/- to respondent No.2 or deposit the same in the Labour Court within two weeks from today and in that event respondent No.2 be permitted to withdraw the same.

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(x) Rule made absolute to the aforesaid extent.

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[ N. J. JAMADAR, J. ]

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M/S. Hallmark Diamonds Thr. Parnter v. State of Maha. Thr. Prin. Sec. and Ors.

Case brief

What is this about?

What did the court decide?

M/S. Hallmark Diamonds Thr. Parnter v. State of Maha. Thr. Prin. Sec. and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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