The main legal point established in the judgment is that the retrenchment of employees must comply with the provisions of S. 25F and S. 25G of the Industrial Disputes Act, and the employer's right to retrench employees can only be validly exercised when it is shown that an employee has become surplus in the undertaking.

Judgment

GAJENERGADKAR, J. : The industrial dispute which has given rise to this appeal arose between the appellants, the workmen of Snbong Tea Estate, and the management of Subong Tea Estate represented by respondents 1 and 2. Respondent No. 1, M/s. Macneill and Barry Ltd., who managed the Subong Tea Estate, has transferred the said estate to respondent No. 2, M/s. Gungaram Tarachand otherwise known as Hindustan Tea Company. On the occasion of the retrenchment of the 8 employees in question respondent No. 1 has paid adequate retrenchment compensation to them. The appellants, however, contended that at the relevant date when the 8 workmen were retrenched, respondent No. 2 was their employer, and so, respondent No. 1 had no authority to pass the orders of retrenchment. It was further their case that the impugned retrenchment is invalid and illegal inasmuch as it is not justified under S. 25F of the Industrial Disputes Act, 1947 (No. 14 of 1947) (hereinafter called the Act), and has not been carried out according to the principles prescribed by S. 25G of the said Act. That is how the dispute in regard to the impugned retrenchment came to be referred by the Governor of Assam for industrial adjudication to the Industrial Tribunal Assam, under S. 10 (1) (d) of the Act. Four issues were referred to the Tribunal for its adjudication. The first issue was whether the impugned retrenchment of the 8 workmen was justified, the second was whether respondent No. 2 the transferee Company was justified in refusing to maintain the continuity of service and original terms and conditions of the workmen concerned; under the third issue, the Tribunal was required to consider whether the workmen concerned were entitled to reinstatement and any other relief; the fourth issue which was added some time later, required the Tribunal to decide whether the retrenched workmen were entitled to any further relief in case their retrenchment was held to be valid. The Tribunal has answered ail these questions against the appellants, except in regard to two employees Mr. G. C. Bhattacharjee and Mr. P. K. Sarma Chowdhury in whose cases the Tribunal has recommended that respondent No. 1 should pay them gratuity gratia in such sums as respondent No. 1 may consider reasonable with due regard to compensation already paid to them. It is the award which is challenged before us by the appellants in the present appeal which has been brought to this Court by special leave.

2. Before dealing with the points of law raised in the present appeal by Mr. Sen Gupta on behalf of the appellants, it is Necessary to state the material facts in some detail. The agreement of transfer between respondent No. 1 and respondent No. 9 (hereinafter called the Vendor and the Vendee respectively) was reached on January 12, 1959. It was agreed between the parties that when the agreement was completed, it would take effect from January 1, 1959. This agreement was subject to the approval of the Reserve Bank of India. The said approval was accorded on July 15, 1959, and the conveyance was actually executed on December 28, 1959. Pending the execution of the conveyance, on February 17, 1959, the Vendee was put in possession of the tea garden. These facts are not in dispute.

3. On August 31, 1959, Mr. Hammond, the Manager of the Vendor Company served notices on the 8 employees in question intimating to them that their services would be terminated with effect from October 1. 1959. The said employees were told that they would be paid the salary for the month of September, tent would not be required to work. They were also informed that retrenchment compensation under Section 25F of the Act as well as pro-rata dues on account of leave wages earned on August 31, 1959 would he paid to them and their claims for Provident Fund dues would like wise be settled. In pursuance of these notices, the eight employees were paid retrenchment compensation due to them on August 31, 1959. On September 1, 1959. the Union r