The transfer of an undertaking from one employer to another results in the termination of the employment of the employees of the previous employer, and they are entitled to compensation under Section 25-FF of the Industrial Disputes Act.

JUDGMENT

Jahagirdar, J.

This is a petition under Article 227 of the Constitution, challenging the order dated July 31, 1984 passed by the Industrial Court at Pune in Appeal (BIR/IC) No. 10 of 1983. The said appeal had been filed by the 1st respondent in this petition, which is a limited company, carrying on the business of the manufacture of sugar in Malinagar of Malshiras Taluka in Solapur District. The petitioner is a union being the representative union for the sugar industry in the area in which the factory of the 1st respondent is working. The second respondent is this petition is the State of Maharashtra through the Additional Registrar under the Bombay Industrial Relations Act, 1946 for Pune Region. The significance of adding the Additional Registrar as party respondent will be clear when we proceed to narrate the facts of this case.

2. As already mentioned above, the appeal had been preferred before the Industrial Court by the 1st respondent. For the sake of convenience, we will refer to the said respondent as 'the company' because in the course of this judgment we will have an occasion to refer to a co-operative sugar karkhana which will be referred to by us as 'the co-operative factory'. The appeal had been preferred against the refusal of the Additional Registrar appointed under the Bombay Industrial Relations Act or register an agreement dated August 25, 1981 arrived at between the petitioner and the company.

3. Now, some facts must necessarily be stated in order to understand and appreciate the points involved in this petition. The company was originally running a sugar manufacturing unit which was leased out to the Saswad Mall Sahakari Sakhar Karkhana Ltd., hereinafter referred to as 'the co-operative factory', under an agreement dated March 31, 1971, which was to come into effect from August 1, 1971. The agreement was originally to be in operation for a period of two years, but subsequently, it was extended by another year. In other words, the arrangement under what has been described as the lease-deed by the company in favour of the co-operative factory was upto August 1, 1974. Subsequently, however, by another agreement dated July 30, 1976, it was agreed between the company and the co-operative factory that the co-operative factory shall continue to be the lessee of the factory for a further period of 30 years with retrospective effect from August 1, 1974. Some of the terms of these two agreements have been mentioned in the memo of the petition. Under the 1971 agreement, it had been provided that the company shall give on loan services and make available to the lessee the lessor's entire or such permanent, seasonal and temporary staff as would be mutually agreed upon between the two parties, provided however that the terms and conditions of service and the emoluments which they were drawing on July 31, 1971 would not be altered to their disadvantage. It was also provided that the co-operative factory shall contribute the employer's share to the provident fund as per the rules and regulations and also recover from the employee's salaries their provident fund contribution in the usual way. The co-operative factory also undertook to pay gratuity to the employees retiring during the term of the lease, as if such gratuity would have been payable by the company had there been no lease. Broadly speaking, these terms and conditions provided for the continuity of service under the new employer, namely, the co-operative factory.

4. Under the agreement of 1976, it was provided that the co-operative factory agreed that all members of the staff and workmen formerly in the employment of the company, whose services had been taken over by the co-operative factory with effect from August 1, 1971, had become the employees of the co-operative factory for all purposes. The co-operative factory also agreed to bear all responsibilities under the various industrial laws in respect of such employees. The co-operative factory also undertoo