The main legal point established in the judgment is the interpretation and application of section 25-FF of the Industrial Disputes Act, 1947, and the principles regarding the lifting of the corporate veil in cases of fraudulent or sham transactions.

JUDGMENT - CHANDRACHUD D.Y. (Dr.), J.:—Rule, returnable forthwith. Learned Counsel for the respondents waive service. By consent taken up for hearing and final disposal.

2. On 16th August, 1999 the petitioners instituted a complaint before the Industrial Court under section 28 of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971, complaining of unfair labour practices under Item 5 of Schedule II and Items 9 and 10 of Schedule IV. The first petitioner is a registered trade union which claims to have a membership of all the 142 workmen engaged by the first respondent in its Permacel Division at Andheri. The Union had entered into seven settlements with the employer since 1981, the last of them on 21st July, 1999. On 13th August, 1999 a press note appeared in the daily edition of the Economic Times stating that the first respondent had sold and transferred its Permacel Division at Andheri to a company forming part of the Premchand Group headed by Mr. Susheel Premchand. The Union stated that it was kept in the dark about the proposed transaction even as late as 21st July, 1999 when the last settlement was signed. From the office of the Registrar of companies, it was found that a company by the name of Permacel Pvt. Ltd., had been incorporated on 22nd June, 1999 by the Premchand Group. The Union thereupon addressed a letter to the first respondent on 14th August, 1999. It was allegedly sought to be delivered to the Executive Vice President who refused to accept it stating that the Andheri Division now belonged to a new company. At a meeting held on 14th August, 1999 the office bearers of the Union were stated to have been informed that the Andheri Division had been sold, though no further information was disclosed. The gravamen of the complaint is that 142 employees represented by the first respondent were given job security by the first respondent and were required to serve as workmen of that company. The Union submitted that the transfer of the Andheri Division without taking the Union into confidence, attracted Item 5 of Schedule II and in the event that the sale was complete, there was an unfair labour practice under Items 9 and 10 of Schedule IV. The relief which was sought was a declaration that the employees continued to be workmen of the first respondent; a direction to the first respondent to continue the workmen in service in accordance with the terms and conditions of service in the last settlement; an injunction restraining the first respondent from transferring or selling the Andheri Plant and a direction to continue the employees on the roll.

3. The first respondent filed its written statement on 20th September, 1999 and set up a plea that the Permacel business together with the factory establishment came to be sold to the second respondent under an agreement of sale dated 10th August, 1999. The transferee company, the second respondent is said to be owned by the Premchand family, the original promoter of Johnson and Johnson in India and it was averred that the second respondent belonged to a group of Industrial Companies known as the Premchand Roychand Group. The first respondent stated that the terms of the agreement for sale provided that all the workmen and staff employed in the Permacel Division factory establishment would continue in the employment of the second respondent without any interruption of service and the conditions of service would not be less favourable than those applicable immediately before the transfer. Under the terms of the transfer, it was averred, the second respondent would be liable to pay compensation in the event of retrenchment as if their services were continuous and had not been disrupted on transfer. According to the first respondent, the conditions of service spelt out in the last settlement would be implemented by the second respondent and accordingly letters were delivered to the individual workmen of 16th August, 1999. Effective from 11

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