BHOLA NATH MUKHERJEE AND ORS. versus GOVERNMENT OF WEST BENGAL AND ORS.

Citation: [1996] SUPP. 9 S.C.R. 116 · Decided: 22-11-1996 · Supreme Court of India · Bench: J.S. VERMA · Disposal: Dismissed

Judgment (excerpt)

A 
B 
BHOLA NATH MUKHERJEE AND ORS. 
v. 
GOVERNMENT OF WEST BENGAL AND ORS. 
NOVEMBER 22, 1996 
[J.S. VERMA AND S.C. SEN, JJ.] 
Indian Electricity Act, 19 JIJ-Sections 3, 4, 5, 6, 7-A and 7- 13-Com-
pani es Licence revoked-taken over by Board-Purchase price 
C paid--Employees continued ill se1vice--Fresh terms and conditions of 
Employmenr-High Court directing the Board to pay retrenchment compe11-
sation to the Employees-Whether Board is liable to pay retrenchment com-
pensation? Held-No, if the purchase price paid by the Board is sufficiently 
large to pay the claims of the workmen, then the dues of the workman should 
be paid out of the purchase money. 
D 
E 
Industrial Disputes Act, 1947-Section 25-FF, Held, Employees of 
private company purchased by Electricity Board-Purchased money 
paid-Such employees have no right to claim any compensation from the 
Board nor any right to claim continuous employment on same temis and 
conditions. 
The Asansol Electricity Company's licence was revoked and the 
nndertaking was taken over by the West Bengal State Electricity Board. 
The Employees of the Company were allowed to continue in the service of 
the Board. The Board asked the Employees to execnte fresh terms and 
f 
conditions of service. The Employees challenged the decisions of the Board 
by filling a writ petition in the High Court. The High Court held that the 
Employees were entitled to continne in service. The writ petition was 
disposed of certain directions to the Board. The Board preferred an 
appeal. The appeal was allo:wed holding that there would be no continuity 
in service but employees were entitled to retrenchment compensation in 
G accordance with the provisions or Section 25-FF of the Industrial Disputes 
Act, 1947. Aggrieved by the said order of the High Court, the Board as well 
as the employees have come up in appeal before this Court. 
Allowing the appeal or the Board and dismissing the appeal or the 
H employees, this Court 
116 
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. .. 
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B.N. MUKHERJEE v. GOVf. OF W.B. 
117 
HELD: 1. Where an undertaking is sold, upon completion of the sale A 
or on the date on which the undertaking is delivered to the purchaser, the 
undertaking shall vest in the purchaser free any debt, mortgage or similar 
\ybligation of licencee. The debt shall be attached to the purchase money 
which was paid by the Board for the undertaking of the company. If the 
purchase price paid by the Board is sufficiently large to pay the claims of B 
the workmen, then the dues of the workmen should be paid out of the 
purchase money. It is not the case of the workmen that the money paid by 
the board was not sullicient to pay the erstwhile Employees of the com-
pany. It cannot be said that the board bas any liability to pay the workmen 
any amount on account of retrenchment compensation. 
[120-D-E; 122-A-B] c 
2. The services of the workmen have been interrupted. Fresh Employ-
ment has been offered by the transferee. The workmen, who had previously 
been permanently employed, were offered temporary employment by the 
Board. The workmen accepted the offer. There is no legal obligation cast D 
upon the Board under the terms of the transfer or otherwise to pay any . 
retrenchment compensation to the workmen. The employees have no right 
under Sec. 25-FF to claim any compensation from the Board. Nor do they 
have any right to claim to be in continuous employment on the same terms 
and conditions even after the purchase of the undertaking by the Board. 
The High Court in appeal was right in holding that the employees were 
entitled to retrenchment compensation under the provisions of Section 
25-FF. But the High Court was in error in holding that Board even after 
payment of the purchase price to the transferor-company was liable to pay 
retrenchment compensation to the employees. [123-FH; 124-A-B] 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 10219 of 
1995. 
From the Judgment and Order dated 27.2.91 of the Calcutta High 
Court in R.M.A.T. No. 1382 of 1988. 
V.R. Reddy, Additional Solicitor General, S. Hegde, (Dr. Surnant 
Bharadwaj for Ms. Mridula Ray Bharadwaj, H.K. Puri, Rajesh Srivastava, 
Ujjwal Banerjee, Dilip Sinha, D. Krishnan for the the appearing parties. 
The Judgment of the Court was delivered by\ 
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F 
G 
H 
A 
B 
118 
SUPREME COURT REPORTS [1996] SUPP. 9 S.C.R. 
SEN, J. Asansol Electricity Supply Co. Ltd. (hereinafter described 
as 'the Company') was a licensee under the Indian Electricity Act, 1910 
and was engaged 

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