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2008 Supreme(Kar) 569
High Court of Karnataka
THE HONOURABLE MR. JUSTICE MANJULA CHELLUR & THE HONOURABLE MR. JUSTICE A. N. VENUGOPALA GOWDA
M. Shashikumar
Versus
Management of Bpl Ltd.
Writ Appeal No. 1082 of 2007 (L) C/w Writ Appeal No. 1219 of 2007 (L)
Decided on : 12-09-2008
For the Appearing Parties:B.C. Prabhakar, Kasturi, T.S. Anantharam, Advocates.
Headnote:INDUSTRIAL DISPUTES ACT, 1947 - Section 25-FF: [Manjula Chellur & A.N. Venugopala Gowda,JJ] Re-employment -compensation to workman in case of Transfer of undertaking - Whether employee of the transferor company entitled for re-employment with the transferee company as of right? - Held, No. Under Section 25-FF of the Act, whenever industrial undertakings are transferred, the employees of such undertakings are entitled to compensation. In order to apply the benefits available to the workmen under Section 25-FF of the Act, one has to consider the underlying intent of the transfer, i.e., whether it is a fictitious or a benami one, whether the vendee of the industrial concern can be called as transferee-in-interest, whether the nature of business is the same or not whether the form and appearance of the new concern is different though it is managed by the same set of people, whether a portion of the business is transferred or entire concern is transferred, whether there is continuity of service of employees without any break in their work. The compensation payable under Section 25FF of the Act would be treated as retrenchment compensation. However, the employees of the former company have no right to claim re-employment from the successor company except in exceptional circumstances.
In the present case, BPL Limited sold the undertaking to Sanyo BPL Pvt. Ltd. After receiving all the benefits under Section 25FF of the Act, the employees of "BPL wanted to join fresh employment in Sanyo BPL Pvt. Ltd. to do so, they were called upon to produce ’no due certificate’ from the former employer. Held, the Single Judge should not have directed the transferee company to appoint the petitioners.
INDUSTRIAL DISPUTES ACT, 1947 - Section 25-FF: [Mrs. Manjula Chellur & A.N.Venugopala Gowda,JJ] Transfer of undertaking - Compensation to workmen - Re-employment cannot be claimed as a matter of right by employees of transferred unit or undertaking - Compensation to workmen-Re-employment cannot be claimed as a matter of right by employees of transferred unit or undertaking-Only legal claim they can have access to, is retrenchment compensation. With the introduction of Section 25-FF with effect from 28.11.1956, the entire scenario has changed. In other words, there is a sea change in the law. As a matter of fact, reading of principal Section would indicate by fiction of law, the compensation payable under Section 25FF would be treated as retrenchment compensation. Of course, the foundation is fair play and social justice but within the framework of the law. If one looks at the law evolved on this provision of law, ultimately one would accept that the employees of the predecessor had no right to claim re-employment from the successor in business except in exceptional circumstances. Even if employment was available, as a matter of right, one cannot have access to that as it is only a discretion. However said discretion has to be exercised properly depending upon the facts and circumstances of each case. The important and foremost condition precedent to apply Section 25FF is the transfer of ownership or management of an undertaking from one employer to another employer. Unless the entire undertaking or the ownership is handed over from one employer to another employer, Section 25FF does not come into operation.
INDUSTRIAL DISPUTES ACT, 1947 - Section 25FF: [Mrs. Manjula Chellur & A.N.Venugopala Gowda,JJ] Retrenchment compensation - Benefits available to workman under - Held, In order to apply the benefits available to the workmen under Section 25FF, one has to consider the underlying intent of the transfer i.e. Whether it is a fictitious or a benami one, whether the vendee of the Industrial concern can be called as transferee -in-interest, whether the nature of business is the same or not, whether the form and appearance of the new concern is different though it is managed by the same set of people, whether a portion of the business is transferred or entire concern is transferred, whether there is continuity of service of employees without any break in their work.
INDUSTRIAL DISPUTES ACT, 1947 - Section 25FF, Proviso: [Mrs. Manjula Chellur & A.N. Venugopala Gowda,JJ] Transfer of undertaking - Mere fact of having 50% of status in transferee corporation by Transferor company does not attract any conditions of proviso. Offering of fresh employment by transferee corporation by virtue of Business Transfer Agreement between transferor company and transferee corporation will not attract any of terms and conditions of proviso to Section 25FF. Fresh employment in transferee company, at the instance of transferor corporation can be termed only as an extended benefit or concern of a loyal employer to its employees-. Acceptance of fresh employment was under control of employees, i.e. option of employee concerned. Proviso to Section 25FF is not attracted.
Manjula Chellur, J.
(1) THE appellants in W. A. 1082/07 were the workmen of the first respondent- (BPL Limited) working in one of the units wherein the unit was engaged in the manufacture of components of electronic products connected with colour television business.
(2) THE first respondent said to have entered into transfer agreement with the second respondent M/s. Sanyo BPL Private Limited on 14-12-2005. The relevant clause 5. 1 of the business Transfer Agreement (hereinafter referred to as "bta") pertaining to employee's matters indicates "parties agree that the employees of the BPL Ltd. (transferor or seller)shall become the employees of the Sanyo BPL (transferee or purchaser) on and from the closing date subject to terms and conditions set out in the employment contract to be executed between such employee and the transferee/ purchaser. In advance, a notice came to be displayed by transferor dated 9-12-05 advising employees to accept the employment with the second respondent. If not, such employee would be given such service benefits applicable along with the gratuity etc. available as on 14-12-2005. As per the offer of employment in the respondent purchaser company, it was subject to condition that the employee concerned should settle the accounts with the seller or previous employer and seller should deliver to the purchaser a letter to that effect that accounts of such employee whoever was willing to join the service of second respondent were settled. It is not in dispute that the details of all the names of employees who were working for first respondent were set out at Annexure No. 2 to the BTA. Most of the employees accepted such offer except appellants 1 to 37. The compensation payable under S. 25ff of Industrial Disputes Act (for short, referred to as 'the Act') sent to appellant employees was returned to the management.
(3) AGGRIEVED by the same, the appellants approached the Labour Court which was contested by the management. It is not in dispute that only 37 employees neither accepted the employment nor the compensation offered by the management in terms of Sec. 25-FF of the act.
(4) IN the dispute before the Labour Court, these 37 employees contended that all of a sudden, first respondent-BPL refused to give work to them from 15th December, 2005 onwards without assigning any valid and genuine reasons. It is further contended that the first respondent had obtained resignation letters from majority of the employees on 14-12-2005 by using coercion, undue influence and duress on the ground that business of the first respondent company has been transferred to second respondent-Sanyo BPL.
(5) THE workers who were under the threat of losing their jobs after discontinuing their services with first respondent have taken fresh employment at second respondent Company. Some of the workmen protested and refused to tender resignation by not accepting the new terms and conditions of the employment. According to the appellants, this was nothing but a clear case of unfair labour practice by pressurising the employees who were in despair. According to them, as the first respondent BPL is still functioning having its several units at various places, the first respondent could have transferred the services of first respondent employees to various other units. According to them, both the first respondent bpl and second respondent Sanyo BPL are one and the same for the purposes of business transactions. There is no question of any of the employees discontinuing the services under the first respondent and therefore, they claimed reinstatement with continuity of service with full back wages and other consequential benefits contending that their termination is illegal and injustifiable.
(6) THE first and second respondent management contested the matter before the labour Court on the ground that the dispute under S. 10 of the Act is not maintainable. Because of the transfer of undertaking by the first respondent, the
