The transfer of an undertaking from one entity to another, pursuant to a nationalisation act, does not extinguish the employees' right to gratuity payments. The liability for gratuity payments transfers to the new employer, and the employees' service is considered continuous, entitling them to gratuity based on their total years of service.

( 1 ) THIS appeal is directed against a judgment and order dated 24. 7. 96 passed by a learned single Judge of this court in C. R. No. 143 (W) of 1987, whereby and whereunder the writ application filed by the writ petitioners was allowed. The writ petitioners/respondents filed the aforementioned writ application claiming, inter alia, the following reliefs :" (A) as to why declaratory order should not issue on the respondents, their agents, subordinates and employees namely, the petitioners, are in continuous service with the company, namely, Aluminium Corporation of India Limited, entitling them even after the Aluminium Corporation of India Limited (Acquisition and Transfer of Aluminium undertaking) Act, 1981 and to the continuity of service by the payment of notional gratuity under section 4 of the Payment of Gratuity Act, 1972; (B) as to why an order in nature of Prohibition should not be issued on the respondents for non exercise of powers under section 4 of the Payment of Gratuity Act, 1972 for not paying notional gratuity to the petitioners; (C) as to why an order in nature of Mandamus should not issue on the respondent No. 5 his/their agents and subordinates to cancel/rescind the claims of diverse amounts as paid by respondent No. 5 with particulars given in paragraphs 23 to 42 of this petition with verdict under section 20 (4) of the Aluminium Corporation of India Limited (Acquisition and Transfer of Aluminium Undertaking) Act, 1984 and on such cancellation being made to pay notional gratuity under section 4 of the Payment of Gratuity Act, 1972 in accordance with law to the petitioner;the basic facts of the matter and not in dispute.

( 2 ) THE employees concerned were working under Aluminium Corporation of India. A lock out was declared by the said company. On or about 1. 5. 78, the management of the said undertaking was taken over by the appellant company in terms of section 18aa of the Industries (Development and Regulation) Act, 1951. Parliament there after enacted The Aluminium Corporation of India Limited (Acquisition and Transfer of Aluminium Undertaking) Act, 1984 (hereinafter referred to as the said Act), whereby and whereunder the undertaking of the Aluminium Corporation of India Limited (hereinafter called as Aluminium Corporation) was nationalised. The aforementioned nationalisation was made for giving effect to the policy decision as laid down under Article 39 (6) of the Constitution of India. According to the writ petitioners, they were asked by the erstwhile employer to go on leave without pay. After the management was taken over by the appellant with effect from 1. 5. 78, their services were taken back. In terms of the provisions of the said Act, some of the writ petitioners filed applications for payment of the amount of gratuity before the Commissioner of payments, constituted under section 14 of the said act. Some orders had been passed by the Commissioner of payments who was arrayed as respondents No. 5 in the writ application without taking into consideration the period of service rendered by the writ petitioners in the Aluminium Corporation. In the aforementioned premises, the writ petitioners filed the writ application.

( 3 ) THE learned trial Judge upon taking into consideration the contentions made before him, inter alia, held that the writ petitioners had been discriminated against. It was further held that the petitioners were presumed to be in continuous service in terms of section 12 of the said Act, and on that ground the writ petition was allowed.

( 4 ) MR. Banerjee appearing on behalf of the appellants, inter alia, submitted that keeping in view the purport and object of the said Act, and further keeping in view the fact that a bi-partite settlement had been entered into by and between the appellant and the workmen, the same is a clear pointer to show that the service of the writ petitioners were to be treated as new services. Learned counsel contended that in that view