A transfer of services with the consent of the employee terminates the employment relationship between the employee and the original employer.

Headnote:
INDUSTRIAL DISPUTES - Reinstatement - Retrenchment - Jurisdiction of Industrial Tribunal - Transfer of Services - Termination of Employment.
Fact of the Case:

The appellant, Sindhu Resettlement Corporation Ltd., employed respondent No. 3, A. S. Ambwaney, as an Accounts Clerk in 1950. In 1953, the appellant formed a subsidiary company, Sindhu Hotchief (India) Ltd., and respondent No. 3 was transferred to the subsidiary company with his consent. He served Sindhu Hotchief for 41/2 years and was confirmed in his appointment. In 1958, Sindhu Hotchief retrenched respondent No. 3 and paid him retrenchment compensation. Respondent No. 3 demanded reinstatement in the appellant's service, but the appellant refused. The dispute was referred to the Industrial Tribunal, which directed the appellant to reinstate respondent No. 3 and pay him back wages from 21st February 1958. The appellant challenged the award before the High Court, which dismissed the petition.
Finding of the Court:

The Supreme Court held that the Industrial Tribunal erred in directing reinstatement of respondent No. 3. The court found that respondent No. 3's services with the appellant had come to an end when he was transferred to Sindhu Hotchief with his consent. The court also held that the State Government had no jurisdiction to refer the demand for reinstatement to the Industrial Tribunal, as no such dispute had been raised by the respondents with the appellant.
Issues: 1. Whether respondent No. 3 continued to be in the service of the appellant Corporation after he had received permanent appointment in Sindhu Hotchief? 2. Whether the State Government had jurisdiction to refer the demand for reinstatement for adjudication to the Tribunal?
Ratio Decidendi: 1. The court held that respondent No. 3's services with the appellant had come to an end when he was transferred to Sindhu Hotchief with his consent. The court reasoned that respondent No. 3 was not entitled to any retrenchment compensation when he left the service of the appellant willingly. The non-payment of retrenchment compensation by the appellant at that stage does not, therefore, indicate that the services of respondent No. 3 with the appellant had not come to an end. 2. The court held that the State Government had no jurisdiction to refer the demand for reinstatement to the Industrial Tribunal, as no such dispute had been raised by the respondents with the appellant. The court reasoned that a mere demand to a Government, without a dispute being raised by the workmen with their employer, cannot become an industrial dispute.
Final Decision: The appeal was allowed and the award of the Tribunal was quashed.

Judgement Key Points

The employee's services with the original employer were never terminated, as there was no formal order ending employment, no retrenchment compensation paid by the original employer at transfer, and the order merely placed services "at the disposal" of the subsidiary (a related entity), indicating deputation rather than termination, preserving the employee's lien and permanent status in the original company. (!) [1000132640002] The employee joined the subsidiary immediately after leave granted by the original employer, on higher pay but without explicit consent to end original employment, and served continuously in a group context without evidence of a new independent contract supplanting the old one. (!) [1000132640002] Confirmation in the subsidiary after probation does not automatically sever ties with the original employer absent clear mutual agreement to terminate, especially since the subsidiary appointment order was not formally proved as received or accepted as a full replacement, and strict evidence rules do not apply in Tribunal proceedings where parties relied on documents.[1000132640002] Upon retrenchment from the subsidiary (with compensation only from there), the employee promptly reported for duty to the original employer, asserting continued lien, which was refused without justification, entitling him to reinstatement and back wages as a permanent employee facing effective retrenchment without compliance. (!) (!) (!) The demand for reinstatement was explicitly raised on 21st February 1958, pursued via union representation, conciliation proceedings under the Act, and directly referenced by Government order, constituting a valid industrial dispute over non-reinstatement post-retrenchment from deputation, within Tribunal jurisdiction under relevant provisions; subsequent compensation demands were alternative reliefs, not abandonment. (!) (!) (!) [1000132640003] The Tribunal correctly directed reinstatement with back wages, as the High Court upheld, reflecting proper adjudication of the dispute's substance

Judgement

BHARGAVA, J. :- A. S. Ambwaney respondent No. 3, was employed by the Sindhu Resettlement Corporation Ltd., the appellant, as an Accounts Clerk bow Gandhidham on 13th December, 1950 in the payscale of Rs. 150-10-250 on a salary of Rs. 200 plus 20 per cent, as site allowance. This site allowance was discontinued in March, 1952. In the year 1953, the Government of India decided to develop Kandla as a port and a subsidiary company was formed by the appellant under the name of Makenzies Heinrich Bulzer (India) Ltd., in which one of the principal share-holders was the appellant. This Company later came to be known as Sindhu Hotchief (India) Ltd. For convenience, both Makenzies Heinrich Bulzer (India) Ltd. and Sindhu Hotchief (India) Ltd. shall hereinafter be referred to as "Sindhu Hotchief". This subsidiary Company, Sindhu Hotchief, wanted some trained employees and, amongst others, the services of respondent No.3 were placed at its disposal by the appellant. The case of respondent No. 3 was that he was told orally by the officers of the appellant on 2nd September, 1953 that he was to work in the subsidiary company. Respondent No. 3 was appointed in Sindhu Hotchief by its order dated 5th September, 1953 on a salary of Rs. 240 p.m. as an Accounts Clerk on the conditions of service laid down in that order. It appears that, just about this time, the father of respondent No. 3 died and he was granted leave by the appellant for the period from 2nd September to 17th September, 1953. With effect from 18th September 1953, his service were placed at the disposal of Sindhu Hotchief and an order to that effect was issued in writing on behalf of the appellant on 24th September, 1953. Respondent No.3 worked with Sindhu Hotchief up to 20th February, 1958 when his services were terminated after payment of retrenchment compensation and all other dues payable to him. On 21st February, 1958, respondent No. 3 went to the office of the appellant, reported himself for duty and requested that he might be given posting order in the appellant Corporation. The appellant informed respondent No. 3 of its inability to re-employ him on the ground that the post, which he had been occupying in 1953, had been permanently filled up. Thereupon, respondent No. 3 demanded retrenchment compensation from the appellant also. This was also refused. His case was taken up by Mazdoor Mahajan Sangh, Gandhidham, Kutch, respondent No. 2. The Secretary of respondent No.2 also wrote a letter to management of the appellant asking for payment of retrenchment compensation to respondent No. 3 on the ground that the appellant had refused to take him back in its employment. It seems that, thereafter, there were some conciliation proceedings and, subsequently, on the report of the Conciliation Officer, the Government of the State of Gujarat by its, notification dated 15th November, 1960, referred the dispute to the Industrial Tribunal, Gujarat for adjudication. The matter referred for adjudication was described in the notification as follows :-

"Demand No. 1: Shri R. S. Ambwaney should be reinstated in the service of M/s. Sindhu Resettlement Corporation Ltd. and he should be paid his wages from 21st February, 1958."

The Tribunal, after hearing the parties, gave its Award on 10th August. 1961, directing reinstatement of respondent No. 3 and payment of back wages from 21st February, 1958. The appellant challenged this award before the High Court of Gujarat by a petition under Articles 226 and 227 of the Constitution, but the petition was dismissed. Consequently, the appellant has come up to this Court in this appeal by special leave.

2. In this appeal, three points have been urged on behalf of the appellant to challenge the orders of the Industrial Tribunal and the High Court. The points are :

(1) that respondent No. 3, having been given permanent appointment in Sindhu Hotchief and having obtained retrenchment compensation from that Company, could not claim that he was still holding

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