MANAGEMENT, METTUR BEARDSELL LTD. versus WORKMEN OF METTUR BEARDSELL. LTD. & ANR.

Citation: [2006] SUPP. 1 S.C.R. 359 · Decided: 26-04-2006 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Disposed off

Judgment (excerpt)

MANAGEMENT, METIUR BEARDSELL LTD. 
A 
v. 
WORKMEN OF METTUR BEARDSELL. LTD. & ANR. 
: ·~ ; : . 
APRIL 26, 2006 
[ARIJIT PASAYAT AND TARUN CHATIERJEE, JJ.] 
B 
Labour Laws: 
Industrial Disputes Act, I 947: 
c 
Section 25FF-Transfer of undertaking-Consent of employees-
Requirement of-Plea of fraud-Specific averments-Adducing of-Company 
after successfully conducting operations faced financial problems-A resolution 
was, therefore, passed to hive off its textile operation by entrusting it to its 
wholly owned subsidiary Textile Company-The workers were informed about D 
the transfer-The employees of the Integrated Textile Division were informed 
individually about the arrangement and their absorption without c.hange in 
the conditions of service-Several unions entered into a settlement under S 
12(3) agreeing to continue as employees of subsidiary Textile Company and 
not of the Company-The workmen filed a case before the Industrial Tribunal 
asserting that they continued to be the workmen of the Company-Industrial E 
Tribunal rejected the claims of the workmen-However, High Court held that 
the workmen should be treated as employees of the Company with all 
consequential benefits and that the entire! arrangement of transfer was with 
oblique motives-Correctness of-Held: The underlying purpose of S. 25FF 
is to establish a continuity of service and to secure benefits otherwise not p 
available to a workman if a break in service to another employer was 
accepted-Therefore, consent of employees is not a pre-requisite of transfer 
of undertaking-In order to establish fraud there has to be specific averments 
or materials adduced to establish the same-In the instant case there was no 
specific averment in that regard and in any event no evidence was led--
Hence, transfer is not vitiated hy fraud. 
G 
Words & Phrases: 
"Transfer of undertaking"-Meaning of-In the context of S 25FF of 
the Industrial Disputes Act, 1947. 
359 
H 
360 
SUPREME COURT REPORTS (2006] SUPP. I S.C.R. 
A 
The appellant started business in 1936 and conducted operations 
successfully till 1970, when it faced financial problems. A resolution was, 
therefore, passed to hive off its textile operation by entrusting it to its 
wholly owned subsidiary Textile Company. The workers were informed 
about the transfer. An agreement was entered into amongst the appellant, 
B Textile and one investment company. The employees of the Integrated 
Textile Division were informed individually about the arrangement and 
their absorption without change in the conditions of service. Several unions 
entered into a settlement under Section 12(3) of the Industrial Disputes 
Act, 1947 agreeing to continue as employees of Textile and not of the 
appellant. 
c 
D 
The respondents-workmen filed a case before the Industrial Tribunal 
asserting that they continued to be the workmen of the appellant. The 
Tribunal rejected the claims of the workmen. The High Court held that 
the respondents-workmen should be treated as employees of the appellant 
with all consequential benefits. However, a letter was sent by Textile 
Company intimating each respondent-workman that he was being 
retrenched. The respondents-workmen challenged the retrenchment before 
the Industrial Tribunal, which was rejected. However, the High Court 
allowed the writ petition holding that the respondents-workmen continued 
to be the employees of the appellant and that the entire arrangement of 
E transfer was with oblique motives. Hence the appeal. 
F 
G 
The following questions arose before the Court:-
(1) Whether was there a transfer of undertaking under Section 25FF 
of the Industrial Disputes Act, 1947? 
(2) Whether this transfer was vitiated by fraud? 
(3) Whether consent of the employees was required in a case of 
transfer of undertaking under Section 25FF of the Industrial Disputes Act, 
1947? 
Disposing of the appeal, the Court 
HELD: t. There is nothing in the wordings of Section 25FF of the 
Industrial Disputes Act, 1947 even remotely to suggest that the consent 
of the employees is a pre-requisite for transfer. The underlying purpose 
H of Section 25FF is to establish a continuity of service and to secure benefits 
MANAG., METrtJR BEARDSELLL ID. 1•. WORKMEN OFMETIUR BEARDSELL LID. 
J 61 
otherwise not available to a workman if a break in service to another A 
employer was accepted. Therefore, absence of the letter of consent of the 
individual employee cannot be a ground to invalidate the action. 
(368-A-BI

Excerpt shown. Read the full judgment & AI analysis in Lexace.