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1976 DIGILAW 267 (KER)

BINNY LTD. COCHIN v. THOMAS PAUL

1976-12-09

GEORGE VADAKKEL

body1976
Judgment :- 1. The first respondent preferred before the 3rd respondent-Tribunal Ext. P1 complaint under S.33-A of the Industrial Disputes Act, 1947 alleging that termination of bis service was illegal on account of the pendency of I. D. No. 139 of 1964 in which, according to him, he was concerned. In Ext. P2 counter-statement the management contended that the first respondent's service was terminated for the reason that the 2nd respondent to whom the undertaking, the Feroke Tile Works, was sold wanted to make their own arrangements as regards certain posts. Both Exts. P1 and P2 show that the 2nd respondent assumed control and management of the undertaking from 28-4-1967 The first respondent alleged that the sale has not been completed and the management contended that the sale was with effect from 28-4-1967 itself. The Sale Deed itself was executed sometime later but with effect from 28-4-1967. 2. The 3rd respondent in Ext P6award found that the first respondent's service was terminated from the close of business on 27-4-1967 for misconduct and that the same amounted to victimisation and colourable exercise of power. For that reason it held that Ext. P1 complaint was maintainable, meaning thereby that S.33 of the Act was attracted to the instant case and that the termination was in contravention of that provision since no permission was obtained in that behalf. The Tribunal further said that no show cause notice was issued and no inquiry held, and that, therefore, the impugned termination was unjust and illegal. According to the third respondent though the first respondent was entitled to be re-instated the same could not be ordered since the factory was closed on 20-5-1969. Therefore it held that the petitioner is liable to pay him wages till 20-5-1969. As regards the sale itself the Tribunal said in Para.12 of Ext. P6 as follows: "Ext. M8 is the sale deed. From this it is seen that the transfer was effected as a going concern with effect from the midnight of 27/28th April, 1967." 3. The facts admitted or found are: The first respondent's service in the Feroke Tile Works was terminated from the close of business on 27-4-1967; the said undertaking stood sold to the 2nd respondent from 28-4-1967; the 2nd respondent assumed control and management of it on 28-4-1967. The facts admitted or found are: The first respondent's service in the Feroke Tile Works was terminated from the close of business on 27-4-1967; the said undertaking stood sold to the 2nd respondent from 28-4-1967; the 2nd respondent assumed control and management of it on 28-4-1967. On these facts the question arises whether the case on hand is one where the workman's (first respondent's) service was interrupted on account of sale of the undertaking in which he was employed or one where he was discharged from service for misconduct, or both. 4. No law prohibits transfer of an undertaking. In fact S.25FF of the Act recognises the right of the employer to transfer the undertaking. On such transfer the employer-employee relationship existing between the transferor-employer and an employes of the undertaking comes to an end. The transferee may or may not re-employ him. However, the transferee cannot be compelled to re-employ him. In such a case the only right the employee has is as against the transferor and that right is for compensation in accordance with S.25 F of the Act as if be had been retrenched. That this is so is clear from the decision of the Supreme Court in Anakappalla Co-operative Agricultural and Industrial Society v. Its Workmen and others (1962 (2) LLJ 621), where that Court said: "Therefore, reading S.25-FF as a whole, it does appear that unless the transfer falls under the proviso, the employees of the transferred concern are entitled to claim compensation against the transferor and they cannot make any claim for re-employment against the transferee of the undertaking." (Extracted from Supreme Court Labour Judgments 1950-67, Vol. IV-Page 2457 at 2466-underline by me). The transfer in question does not fall under the proviso since the first respondents's service was interrupted that is to say, he was not re-employed by the transferee from 28-4-1967. Since the first respondent was in service till the close of business on 27-4-1967, that is to say, so long as the transferor was the employer and he ceased to be in service from 28-4-1967, the date on which the undertaking was transferred, this, it appears to me, is a case of interruption of service as contemplated by S.25FF of the Act. 5. The further question is: Is it also a case of discharge for misconduct as envisaged by S.33 of the Act. 5. The further question is: Is it also a case of discharge for misconduct as envisaged by S.33 of the Act. For this part of the case I am assuming without deciding that the first respondent was concerned in I. D. No. 139 of 1964 and that the misconduct was connected with that dispute-no findings have been entered by the Tribunal on these points. 6. The word 'discharge' as employed in S.33 of the Act in relation to an employee, in my view, means to deprive him of his right to continue in service; this presupposes that the person discharged or deprived of his right to continue in service, is entitled to and has a right to continue in service. It he is not so entitled and has no right to continue in service, even if his service comes to an end the same cannot be said to be discharge from service. In other words, the word 'discharge' means discharge of a person who but for such discharge could and would have continued in service and can, as of right claim that he is entitled to continue in the same employment under the same or successor employer. Where the workman is not entitled to claim continued employment in the undertaking in which he was working and the employer-employee relationship comes to an end automatically as in the case of transfer of the undertaking, I do not think that it could be said that the employees of the undertaking were 'discharged' in the sense that word is used in S.33 of the Act. In short, 'interruption' of service of an employee on transfer of an undertaking will not be 'discharge' of that employee as contemplated by S.33 of the Act. That the transferor-employer by persuasion or otherwise could have avoided interruption of service of the workman, but he did not do so, or that at some stage in the negotiations the transferee was willing to re-employ the workman but he later changed his mind for whatever reason it might be, are all irrelevant considerations so far as this aspect is concerned. 7. 7. In Banaras Ice Factory Limited v. Its Workmen (AIR, 1957 S.C.168 (172) the Supreme Court with reference to the word 'discharge' in the latter portion of S.2(s) of the Act defining the word 'workman said: "In the said definition clause also, the word 'discharge' means discharge of a person in a running or continuing business - not discharge of all workmen when the industry itself ceases to exist on a bona fide closure of business." And discussing the object of S.22 and 23 of the Industrial Disputes (Appellate Tribunal) Act, 1950 which are analogous to S.33 and 33A of the Industrial Disputes Act, 1947, that Court said in Para.9 of the same decision as follows: "It was pointed out there that the object of S 22 was to protect the workmen concerned in disputes which form the subject-matter of pending proceedings against victimisation" and the further object was "to ensure 'that proceedings in connection with industrial disputes already pending should be brought to a termination in a peaceful atmosphere and that no employer should during the pendency of those proceedings take any action of the kind mentioned in the sections which may give rise to fresh disputes likely to further exacerbate the already strained relations between the employer and the workmen". Those objects are capable of fulfilment in a running or continuing industry only, and not in a dead industry There is hardly any occasion for praying for permission to lift the ban imposed by S.22, when the employer has the right to close his business and bona fide does so, with the result that the industry itself ceases to exist. It there is no real closure but a mere pretence of a closure or it is mala fide, there is no closure in the eye of law and the workmen can raise an industrial dispute and may even complain under S.23 of the Act." This passage was explained in Tea Districts Labour Association, Calcutta v. Ex-employees of Tea Districts Labour Association and another (AIR. 1960 SC. 815 (817) as follows: "With respect we do not read the observations as laying down an unqualified and categorical proposition of law that wherever a closure is mala fide it must be deemed to be unreal and non-existent. 1960 SC. 815 (817) as follows: "With respect we do not read the observations as laying down an unqualified and categorical proposition of law that wherever a closure is mala fide it must be deemed to be unreal and non-existent. What this Court has said is that in cases of pretence of closure no closure in fact has taken place and for the purpose of S.23 of the Act with which the Court was dealing a mala fide closure may conceivably be treated as falling in the same class as a pretence of closure." No doubt, these two cases were instances of closure, and not transfer, of the undertaking. But, it appears to me that these decisions to a certain extent support the view I have taken in the preceding paragraph. Adapting the language employed by the Supreme Court in Mohammad Afral Khan's case it could very well be said of the case on hand which is one of transfer of the undertaking that there was hardly any occasion for praying for permission to lift the ban imposed by S.33, when the employer has the right to transfer the undertaking and bonafide does so, with the result that the employees of the undertaking are deprived of their right to continue in service of that undertaking. 8. The award, Ext. P6, proceeds on the basis that S.33 of the Act was contravened and that therefore the petitioner has to pay the first respondent wages till 20-5-1969 when the factory was closed by the second respondent. In view of what is said above the same cannot be sustained. I quash it. In the circumstances of the case there will be no order as regards costs. Allowed.