2008 Supreme(Kar) 572
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:Labour and Industrial Law — Re-employment — INDUSTRIAL DISPUTES ACT, 1947 — Section 25FF — Protection of Section 25 FF — Employees of such industrial undertakings which are transferred, are entitled to get compensation — However, real intention behind such transfer has to be culled out by piercing the veil — Compensation which is paid under Section 25 FF is nothing but retrenchment compensation — In normal circumstances, employees of former company have no right to claim reemployment from successor company except in exceptional circumstances — Appeals partly allowed.
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 se