Consent of the workmen is not necessary for validating the transfer of ownership or management of an undertaking, within the meaning of Section 25-FF of the Industrial Disputes Act, 1947.

Headnote:
Industrial Disputes Act, 1947 - Section 25-FF - Transfer of undertaking - Consent of workmen - Whether necessary - Scope of Section 25-FF - Applicability - Conditions for transfer of undertaking - Whether transfer was bonafide or benami - Change in conditions of service - Liability of transferor and transferee.
Fact of the Case:

Spencer Consumer Products and Services Ltd. (the Company) transferred its aerated water factory at Rajakulam to Vishwadarshan Distributors Pvt. Ltd. (the Purchaser) on July 10, 1991. The workers of the factory raised a dispute questioning the transfer and the validity of the transfer of workers to the Purchaser. The Government referred the dispute to the Industrial Tribunal for adjudication. The Tribunal found that the transfer of the factory was not illegal, but the transfer of the workers was without their consent. The Company and the Purchaser filed writ petitions challenging the award of the Tribunal. The High Court set aside the award and remanded the case to the Tribunal to record its findings on the question whether the aerated water factory constituted an 'undertaking' for the purpose of Section 25 FF(1) of the Industrial Disputes Act, 1947.
Finding of the Court:

The High Court held that: (i) Consent of the workmen is not necessary for validating the transfer of ownership or management of an undertaking, within the meaning of Section 25-FF of the Industrial Disputes Act, 1947. (ii) The transfer of the aerated water factory at Rajakulam along with the workers employed therein from the Company to the Purchaser as per document dated July 10, 1991 is perfectly justified. The workers are not entitled to any relief as against the Company. (iii) The stoppage of work in the third respondent Company from December, 1991 is not justified. The workmen are entitled to all the benefits under any law for the time being in force as if the undertaking had not been closed down by the third respondent in accordance with Section 25-O(6) of the Industrial Disputes Act, 1947.
Issues: 1. Whether consent of the workmen is necessary for validating the transfer of ownership or management of an undertaking, within the meaning of Section 25-FF of the Industrial Disputes Act, 1947? 2. Whether the transfer of the aerated water factory at Rajakulam along with the workers employed therein from the Company to the Purchaser as per document dated July 10, 1991 is justified? 3. Whether the stoppage of work in the third respondent Company from December, 1991 is justified?
Ratio Decidendi: 1. Section 25-FF of the Industrial Disputes Act, 1947 does not require the consent of the workmen for validating the transfer of ownership or management of an undertaking. 2. The transfer of the aerated water factory at Rajakulam along with the workers employed therein from the Company to the Purchaser as per document dated July 10, 1991 is justified as it satisfies the conditions laid down in Section 25-FF of the Industrial Disputes Act, 1947. 3. The stoppage of work in the third respondent Company from December, 1991 is not justified as the permission for closure of the factory was refused by the Commissioner of Labour.
Final Decision: The High Court allowed the writ appeals and set aside the award of the Tribunal. The Court held that the transfer of the aerated water factory at Rajakulam along with the workers employed therein from the Company to the Purchaser as per document dated July 10, 1991 is perfectly justified. The workers are not entitled to any relief as against the Company. The Court also held that the stoppage of work in the third respondent Company from December, 1991 is not justified. The workmen are entitled to all the benefits under any law for the time being in force as if the undertaking had not been closed down by the third respondent in accordance with Section 25-O(6) of the Industrial Disputes Act, 1947.

Judgment :-

KANAKARAJ, J.

The Spencer Consumer Products and Services Limited (hereinafter called "the Company") is a Company incorporated under the Companies Act, 1956, as and from November 28, 1979. It had a factory within the premises of the well-known Spencer and Company at No. 769, Anna Salai, Madras. The Company was engaged in the manufacture of Bakery Products and aerated waters. Due to shortage of water and non-availability of space in the Spencer Complex which was undertaking a huge expansion programme in the name of Spencer Plaza, a decision was taken to shift the aerated water factory to Rajakulam, Chengleputtu for the M.G.R. District. There is a settlement under Section 18(1) of the Industrial Disputes Act (I.D. Act) dated September 18, 1989 and pursuant to the terms of the settlement, the company had put up a notice on May 29, 1991 asking the employees of the aerated water factory to report for work at Rajakulam with effect from June 1, 1991. Accordingly, the employees of the aerated water factory reported at Rajakulam with effect from June 1, 1991. On July 10, 1991 the Company entered into an agreement with one Vishwadarshan Distributors Pvt. Ltd. (hereinafter called "the Purchaser") agreeing to sell the business in the manufacture of aerated water as a going concern including the plant and machinery. The sale agreement provided for the absorption of the employees in the Purchaser Company on the same terms and conditions and also provided for continuity of employment in an uninterrupted manner. It is the case of the Company that as and from July 10, 1991 the employees in the aerated water factory became the employees of the Purchaser. It is not disputed that the employees were receiving salary from the Purchaser and the relationship was smooth until the workmen raised a dispute that there was a change in the conditions of the service. Thereafter, the Purchaser filed an application under Section 25 (O) of the I.D. Act seeking permission to close the aerated water factory at Rajakulam. By an order dated December 30, 1991 the Commissioner of Labour refused to grant permission for the closure of the aerated water factory. It so transpired that notwithstanding the above order, the Purchaser refused to provide work to the workmen and did not also pay their wages from December, 1991. A dispute was raised by the workmen and the is Government by G.O. Ms. No. 262 dated April 8, 1993 referred the following issues for adjudication to the Industrial Tribunal.

"Whether the stoppage of work in Vishwadarshan Distributors Pvt. Ltd., Rajakulam from December, 1991 is justified and to what relief the workers are entitled ?" *

This dispute was taken up as I.D. No. 37 Of 1993 by the Industrial Tribunal, Madras. It is significant to note that both the company as well as the Purchaser are shown as respondents to the above dispute.

2. The workers had raised another dispute questioning the transfer of aerated water factory by the company to the Purchaser as well as the validity of the transfer of workers to the Purchaser. The Government had rejected the request for the reference in G.O. (D) 315, dated April 3, 1992. After the Government had made the reference in respect of the stoppage of work by the Purchaser, under G.O. (D) No. 262 dated April 8, 1993, the workers represented by their Union again made a request for reference by way of amplifying earlier references so that they could question the transfer of the workers from the company to the Purchaser. This time the Government came to the conclusion that there was a dispute between the parties and therefore made the following reference in G.O. (D) 702, dated October 7, 1993 :

"Whether the transfer of Aerated Water Factory at Rajakulam along with the workers employed therein involving change of conditions of service of the workmen, by the Management of Spencer Consumer Products and Services Ltd., Madras - 2 to the management of Vishwadarshan Distributors Pvt. Ltd. from July 10, 1991 is just

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