Section 25FF of the Industrial Disputes Act, 1947, applies only to the transfer of the ownership or management of an entire undertaking.

Judgment

GAJENDRAGADKAR, J.: The short question of law which arises in this appeal by special leave relates to the construction of S. 25FF of the Industrial Disputes Act, 1947 (No. 14 of 1947) (hereinafter called "The Act ). This question arises in this way. Between the appellant, the Management of B. S. Madhoram and Sons (Agencies) (P) Ltd., and the respondents, its workmen, an industrial dispute arose in regard to the transfer of 57 employees from the Management of R. S. Madhoram and Sons, which was their original employer, to the appellant. This dispute was referred for adjudication by the Delhi Administration to the Industrial Tribunal, New Delhi.

2. The case of the respondents was that the impugned transfer is invalid, whereas the appellant contended that the said transfer was fully valid and justified under S. 25FF of the Act. Certain other pleas were raised by the parties before the Tribunal and they have been considered by it, but it is not necessary for the purpose of the present appeal to refer to them, since the only point which has been urged before us by Mr. Setalvad on behalf of the appellant is in relation to the finding of the Tribunal that S. 25FF does not apply to the present case.

3. R. S. Madhoram and Sons and R. S. Madhoram and Sons (Agencies) (P) Ltd. are the two concerns involved in this dispute. The first is a firm consisting of the members of a joint Hindu family and the second is a company formed by the said members. The firm has been in existence since April 1, 1946, whereas the company came into existence on August 29, 1961. The head-office of the firm is at Dehra Dun and it runs branches at Delhi, New Delhi, Mussoorie and Amritsar. The firm acts as selling representatives of Obeetee (Private) Ltd., Mirzapur; Commonwealth Trust Ltd., Calicut and United Coffee Supply Co. Ltd., Coimbatore. It also acts as Government contractors as well as stockists of the Elgin Mills Co. Ltd., Kanpur. The 57 employees whose transfer from the firm to the company has given rise to the present dispute were originally employed by the firm. On the muster roll of the firm, 92 employees were entered. Out of these, 57 have been transferred by the firm to the company as a result of the agreement between the two concerns. The company was formed as a separate and different concern, and in accordance with its memorandum and articles of association and in pursuance of the agreement between it and the firm, it has taken over the retail business of the firm together with the staff employed by the firm in the said retail business as from September 15, 1961. The agreement shows that when the staff was taken over by the company from the firm, continuity of service was guaranteed to the staff and the terms and conditions of service enjoyed by them before the taking over also remained unaffected.

4. The appellant contends that it is the successor-in-interest of the firm in regard to the retail business which was one of the businesses carried on by the firm, and it argues that since the conditions prescribed by the proviso to S. 25FF have been complied with, the grievance made by the respondents that the transfer of the 57 workmen in question is unjustified cannot be sustained. On the other hand, the respondents contend that S. 25FF is inapplicable to their case, because the ownership or management of the undertaking has not been transferred by the firm to the company within the meaning of the said section. If the said section does not apply then there is no scope for applying the provisions of the proviso. The Tribunal has upheld the plea raised by the respondents, and Mr. Setalvad contends that the finding of the Tribunal is based on a misconstruction of S. 25 FF of the Act.

5. Before dealing with this point, it would be useful to refer to the relevant facts which preceded the transfer of 57 employees. It appears that on September 14, 1961, there was an agreement between the transferor and the transferee as a result of which the employees en