BOARD OF DIRECTORS OF THE SOUTH ARCOT ELECTRICITY DISTRIBUTION CO. LTD. versus N. K. MOHAMMAD KHAN, ETC.

Citation: [1969] 2 S.C.R. 902 · Decided: 25-11-1968 · Supreme Court of India · Bench: J.M. SHELAT · Disposal: Dismissed

Cited by 2 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

BOARD OF DIRECTORS OF THE SOUTH ARCOT ELEC· 
A 
TRICITY DISTRIBUTION CO. LTD. 
v. 
N. K. MOHAMMAD KHAN, ETC. 
November 25, 1968 
[J. M. SHELAT AND V. BHARGAVA, JJ.] 
The Madras Electricity Supply Undertakings (Acquisition) Act 29 
of 1954, and Rules thereunder; s. 15 and r. 17-The Industrial DispUll$ 
A.ct 14 of 1947 ss. 25F, 25FF, ·33C(2)-Electricity company taken over 
by State Government of Madras-Employees continued in 
employment 
under s. 15 and r. 17 under Madras A.ct-Retrenchment compensation 
to employees, whether payable-Applicability of proviso to s. 25FF of 
Industrial Disputes Act-Jurisdiction of Labour Court under s, 33C(2). 
The appellant Company was taken over by the Government of Madras 
in exercise of the powers conferred on it by the Madras Electricity Supply 
Undertakings (Acquisition) Act 1954. All the property and assets of 
B 
c 
the company became vested in the Madras Government. Under r. 17 
D 
of the Madras. Government Undertakings (Acquisition) Rules, 1954 all 
the staff of the Company employed immediately before the vesting date 
were retained by the Government and were continued provision.ally for a 
period of 12 months from the date of vesting on the same terms and 
conditions of service as were applicable to them under the Company 
immediately before the date of vesting. 1n respect of the future' employ-
ment of the workmen by the Madras Government, their conditions of 
service were to be regulated by s. 15 of the Madras Act and the variouo 
E 
condition. laid down in r. 17 of the Rules. 
Subsequently the workmen 
claimed that they had become entitled to retrenchment 
compensation 
under s. 25F read with s. 25FF of the Industrial Disputes Act, 
1947 
and filed application for computation of the compensation payable to 
them under s. 33C of the Act, before the Labour Court. Initially the 
Company was the only opposite party to the applications but later the 
State of Madras and the Electricity Board of Madras to which the Stale 
F 
had transferred the undertaking, were also made parties. The Company 
and the Electricity Board raised certain preliminary 
objections to 
the 
jurisdiction of the Labour Court which did not find favour 
with that 
Court. 
On merits the Labour Court held that the workmen were en-
titled to retrenchment compensation 
under s. 25FF and directed 
the 
Company to pay the ' amount. The High Court upheld the 
Tribunal's 
orders on merits as well as on the question of jurisdiction. The Com~ 
pany appealed to this Court. The submissions on behalf of the appellant 
G 
were : (i) That the Labour Court as well as the High Court were not 
right in· holding that the conditions laid down in !he' proviso to s. 25FF 
were not satisfied; (ii) that the applications under s. 33C(2) of the Act 
were not maintainable because the question whether the workmen were 
entitled to retrenchment compensation was outside the jurisdiction of the 
Labour Court which was not competent to decide such a disputed queo-
. tion; (iii) That the High Comt was wrong in holding that the question 
H 
whether the liability to pay tpe retrenchment compensation fell on the 
Company or the State of Madras or the Electricity Board could not be 
decided by the Labour Court under s. 33C(2) of the Act and had to be 
decided ·in other appropriate proceedings. 
• • 
• 
:~ ' 
, 
A 
B 
• 
c 
D 
E 
.. 
F 
. . 
G 
H 
SOUTH ARCOT ELECT. CO. v. N. K. KHAN 
903 
HELD : (i) The conditions of service of the workmen under s. 15 of 
the Madras Act and under r. 17 were less favourable than their condi-
tions of service had been under the company. In the circumstances the re-
quirements of cl. (b) 
of the proviso to s. 
25FF were obviously 
not satisfied 
and 
that proviso 
could not be 
invoked by the Com-
pany for the purpose of defeating the claim made by the workmen nnder 
the principal clause of that section. 
Under the principal clause the work-
men. became entitled to receive retrenchment compensation in accordance 
with s. 25F of the Act on fue basis of the legal fiction envisaged that 
those rights would accrue to them as if the workmen had been retrenched. 
The Labour Court and the High Court were therefore right in holdin~ 
thst the workmen were entitled to claim retrenchment compensation in 
accordance with the provisions of s. 25F of the Act because of the right 
accruing to them under •· 25FF of the Act. [910 A-CJ 
Tue employment under the new employer could only commei;ce 
from the time when the ownership or t

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