The transfer of ownership or management of an undertaking under Section 25-FF of the Industrial Disputes Act, 1947, as amended, results in the termination of employment of the workmen engaged by the undertaking, and the workmen are entitled to claim compensation from their employers. The workmen cannot make any claim for re-employment against the transferee of the undertaking.

Judgment

GAJENDRAGADKAR, J. : The principal question which arises in this appeal has relation to the scope and effect of Section - 25-FF of the Industrial Disputes Act, 1947 (No. 14 of 1947) (hereinafter called the Act). An industrial dispute between the appellant, Anakapalle Co-operative Agricultural and Industrial Society, and the respondents, its workmen, was referred by the Governor of Andhra Pradesh for adjudication to the Industrial Tribunal, Hyderabad, under Section 10(1) (d) of the Act on December 7 1960. The respondents who were in the employment of Vizagapatnam Sugar and Refinery Ltd. (hereinafter called the company) claimed that they were entitled to re-employment in the said concern which had been purchased by the appellant, and since their demand for re-employment by the appellant was not accepted by it, they represented to the State Government that the said demand should be adjudicated upon by an Industrial Tribunal. That is how their demand for re-employment came to be referred under Section 10 (1) (d).

2. It appears that the Company was an old Co., which manufactured sugar. Its business, however did not result in profits, because the supply oft sugarcane was insufficient and the management apprehended that it could not face the losses from year to year, and so, it thought of shifting Yerravaram in East Godavari where it anticipated that the supply of sugarcane was assured. This attempt of the management, however, did not succeed because of the local cane growers. The local cane growers decided to form a co-operative society themselves and to purchase the concern of the Company. Accordingly, the appellant Society was formed and the sale transaction was effected between the said concern and the appellant on October 7, 1959. It was agreed between the appellant and the Company that the Company should pay retrenchment compensation to its employees and terminate their services leaving the appellant full freedom to choose its own employees. Accordingly, Rs. 1,90,000/- were paid by the Co., to its employees by way of retrenchment compensation. Before the completion of this transaction, however, the employees had suggested that their Union would itself purchase the concern, but the Union could not manage to effect the proposed sale transaction. It, however, suggested that the compensation of Rs.1,90,000/- which the Company had to pay to its employees may be credited to the account of the Society and the employees paid the said amount by instalments, but this suggestion was not accepted and as a result of the sale transaction, the appellant took over the concern and employed such persons as it needed according to the recommendations of the Committee appointed by the appellant in that behalf. It appears that on the rolls of the Company, there used to be 800 workmen in all, of these 329 were permanent workmen, whereas 471 workmen joined the Company as seasonal workmen. The appellant has employed 678 employees in all, 248 of whom are permanent and the rest seasonal employees. Out of 248 employees who are engaged on a permanent basis, 220 are from amongst the employees of the Company and about 28 have been newly appointed. In the result, about 49 permanent employees and 103 seasonal employees of the Company have not been absorbed by the appellant and the demand which has been referred for adjudication in the present proceedings is that these permanent and seasonal employees should be absorbed by the appellant.

3. The appellant disputed this claim on three grounds. It urged that the dispute referred to the adjudication of the Tribunal was not an industrial dispute and so, the reference was incompetent. This argument was based on the allegation that the Thummapala Sugar Workers Union which had sponsored the present demand was not a representative Union. On its roll, a very small number of the appellant s present employees were shown as members. The bulk of its membership consisted of the previous employees of the Company. The ap