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Judgment
The Punjab Government granted a licence to M/s. B. R. Harman and Mohatta Ltd., The Mall Lahore, for the generation and distribution of electric energy in certain areas within the limits of Ambala Cantt. For a period of 30 years in 1935. u/s 6 of the Indian Electricity Act, 1910, the State Government had the option to purchase the undertaking on the expiry of the period of licence and if the option was not exercised on the expiry of the first period of 30 years, it could be exercised at the expiry of every 20 years thereafter. By a subsequent amendment of the Indian Electricity Board was given the option to purchase the undertaking instead of the State Government. In 1946, the present petitioner, which is a company incorporated under the Indian Companies Act purchased the undertaking from the original licensees.
According to the terms of the licence the Punjab State Electricity Board, respondent 2 (hereinafter referred to as the Board), gave a notice to the petitioner-Company on December 24, 1963, exercising the option for the purchase of the undertaking given to it u/s 6(1) of the Indian Electricity Act, 1910 read with clause (9) of the licence. By this notice, respondent 2 required the petitioner-company to sell the undertaking covered by its licence to the Board on the expiry of the period of licence on April 23, 1965 (mid-night between the 23rd and 24th April, 1965. The petitioner-company was further required to deliver its undertaking including lands, buildings works, materials, equipment, machinery and plant etc. suitable to and used by the Company for the purposes of its undertaking to the Board on the expiration of the period given above, pending determination and payment of the purchase-price of the aforesaid undertaking in accordance with the law. The petitioner Company was further informed that from the date of taking over, as mentioned above, the Company''s undertaking would vest in the Board as its absolute property as laid down in Section 6 of the Indian Electricity Act, 1910 (as amended) and the Company''s licence would cease to have further operation.
The Chief Engineer of the Board, by Memo, dated June 1, 1964, requested the Company to supply the service particulars of the staff in its employ at that time in the form indicated. On receipt of this Memo, from the Board, the Company issued a notice to its employees on June 11, 1964, informing them that the Company''s undertaking would be taken over by the Board on the mid-night of 23rd/24th April, 1965, and asking them to furnish the particulars of their service as desired by the Board. These particulars were in due course, forwarded by the Company to the Board. Since the Board did not take any decision with regard to the employees of the petitioner-Company, that is, whether they were to be taken over by the Board or not, the workmen of the petitioner-Company on February 24, 1965, in which the following demands were made:-
"1. To afford continuity of service to every employee after taking over the Ambala Cantt. Electric Supply Corporation Ltd., Ambala Cantt., in accordance with the operation of the mandatory provisions of the Indian Electricity Act, 1910 (as amended) for the purpose of seniority and other benefits while being in your employ.
To keep fully protected the prevalent wages and other conditions of service and benefits of each employee of the above Electric Undertaking when all the employees would be under your employ after taking over the complete charge of the Ambala Cantt. Electricity Supply Corporation Ltd., Ambala Cantt."
It was further stated in the letter that-
"You will certainly appreciate that the instant problems should be desirably settled amicably at this stage so that happy and healthier relations may prevail. We are confident that a better counsel shall prevail and we shall be favoured with your most justified and conscientious agreement to the aforesaid demands at an early date."
A copy of this notice is annexure ''B'' to the writ petition. On March 18, 1965, the petitioner-Company served a notice on all its employees to the effect that the Board would take over the undertaking on the mid-night of 23rd /24th of April, 1965, and that they could collect their wages up to the time of the taking over of the undertaking from the petitioner''s office.
The Board did not agree to take into its service all the employees of the petitioners undertaking as a part of the purchase but asked every employee to appear for an interview before an Officer of the Board, and the Board made offers of appointment to such workmen as it chose to employ in terms of the letter, a coy of which is annexure R. 2/B to the written statement of the Board. The employees, who were taken in to service by the Board were recruited as fresh entrants to Board''s service and neither the continuity of their service nor the pay drawn by them was protected. The result was that the workmen served a notice on the petitioner-Company on April 26, 1965, demanding retrenchment compensation in accordance with Section 25FF of the Industrial Disputes Act, 1947, as under:-
"1. One month''s wages in lieu of the one month''s notice for the termination of service;
Retrenchment compensation equivalent to fifteen days wages for every completed year of service or any part thereof in excess of six months; and
Wages in lieu of unavailed earned leave."
The petitioner-Company repudiated this claim of the workmen.
According to the petition, conciliation proceedings u/s 12 of the Industrial Disputes Act were held by the Labour Commissioner, Punjab, only in respect of the demand notice of the workmen dated February 24, 1965, and not in respect of the notice dated April 26, 1965. This allegation has been denied by all the respondents and it has been stated that conciliation proceedings were held in respect of both the demand notices. The conciliation proceedings did not bear any fruit, with the result that the State Government referred the following dispute for adjudication to the Industrial Tribunal, Punjab, Chandigarh, by Notification No. 664-SF-III-Lab-1-65, dated October 20, 1965:-
"Whether the workmen transferred from Ambala Cantt. Electric Supply Corporation to the Punjab State Electricity Board are entitled to continuity of their services and protection of their wages and other conditions of service applicable to them before this transfer of Undertaking to the Board? If not, what other relief/compensation they were entitled to."
A copy of this notification was sent to the Presiding Officer, Industrial Tribunal, Punjab, with a copy of the demand notice dated February 24, 1965, and similarly copies of this notification together with a copy of the demand notice dated February 24, 1965, were sent to the petitioner-Company and the Board, while only a copy of the notification was sent to the Workmen''s Union. The copy of this notification was received in the office of the Industrial Tribunal, Punjab, on November 1, 1965, and was registered on that date. Notices were issued to the parties for December 1, 965. Before the Industrial Tribunal, a statement of claims was filed on behalf of the workmen on November 16, 1965, along with some documents. The petitioner-Company filed its written statement to the statement of claims of the workmen on December 1, 1965. The Board also filed a written statement to which a rejoinder was filed by the petitioner-Company.
A preliminary objection was raised by the petitioner-Company challenging the jurisdiction of the Tribunal to proceed with the case. This objection was decided by the Presiding Officer of the Industrial Tribunal, Punjab, on September 3, 1966, against the Company and the award on merits was made on September 12, 1966. By this award the petitioner-Company was held liable to pay retrenchment compensation equivalent to 15 days'' average pay for every completed year of service or any part thereof in excess of six months and wages in lieu of unavailed earned leave as provided in Section 79 of the Indian Factories Act, 1948. The petitioner-Company has filed the present petitioner challenging the award of the Industrial Tribunal. Written statements have been filed by respondents 1, 2 and 3.
The first point argued by the learned counsel for the petitioner is that the Industrial Tribunal, Punjab, Chandigarh, had never been constituted and, therefore, no reference of any dispute to that Tribunal could be made for adjudication. I do not find any merit in this submission. By notification NO. 4194-C-Lab-57/661-RA, published in the Punjab Government Gazette Extraordinary dated April, 19, 1957, an Industrial Tribunal with headquarters at Jullundur was constituted by the Governor of Punjab and Shri Avtar Narain Gujral was appointed its Presiding Officer. Another Tribunal had also been appointed known as the Second Industrial Tribunal, Punjab, Amritsar, consisting of three members, which ceased to exist some time later. The one-man Tribunal constituted under the notification referred to above, however, continued. The Headquarters of the Tribunal remained at Jullunder as long as Shri Vtar Narain was its Presiding Officer.
Thereafter, Shri Kesho Ram Passey, a retired Judge of this Court, was appointed as the Presiding Officer of that Tribunal by notification dated June 3, 1959, and during his time the head-quarters of the Tribunal were located at Patiala. When Shri K. L. Gosain was appointed as the Presiding Officer of that Tribunal, the headquarters of the Tribunal came to be located at Chandigarh. It is apparent that the Industrial Tribunal constituted by notification dated April 19, 1957, continued for the whole of Punjab and the headquarters of that Tribunal changed when the Presiding Officer changed. The change of the location of the headquarters did not mean that one Tribunal was abolished and another was constituted. The Industrial Tribunal, as originally constituted, continued and only the vacancies in the office of the Presiding Officer were filled in the later on . There was, thus, in existence a properly constituted Industrial Tribunal, Punjab, at Chandigarh, when the reference of the industrial dispute between the petitioner and respondents 1 and 2 was made on October 20, 1965. I, therefore, repeal this submission of the learned counsel.
The learned counsel for the petitioner has then challenged the vires of Section 25FF of the Industrial Disputes Act, 1947, on the ground that in the case of voluntary transfer of the ownership or management of an undertaking by an agreement, it is open to the parties to the contract to stipulate in respect of the employees of the understanding transfer of the undertaking is by operating of law as in the present case. I find no substance in this submission.
Section 6 of the Indian Electricity Act, 1910, only provides that the State Electricity Board shall have the option of purchasing the undertaking of a licensee is giving him a notice in writing of not less than one year requiring the licensee to sell the undertaking to it at the expiry of the relevant period of the licence, and under the proviso to sub-section (6) of the said section the undertaking vests in the Electricity Board free from any debt, mortgage or similar obligation of the licensee or attaching to the undertaking; and the rights, powers, authorities, duties and obligations of the licensee under his licence are transferred to the purchaser and the purchaser becomes the licensee with regard to that undertaking, in case the purchaser is not the State Electricity Board, in whose case the licence ceases to have further operation. Section 7A of the said Act makes provision as to how the market value of an undertaking has to be determined. There is no provision in the said Act with regard to taking over the services of the employees of the undertaking by the State Electricity Board when exercising the option u/s 6 thereof There is, however, no bar to the parties making an agreement with regard to the employees. There is, thus no discrimination. Moreover, the two modes of transfer-one by mutual agreement and the other by operation of law-cannot be equated with each other but in spite of that, Section 25FF makes the same provision with regard to the payment of retrenchment compensation to the workmen. There is, thus, no question of discrimination, or denial of equality before law as guaranteed by Art. 14 of the Constitution. In my opinion, therefore, Section 25FF of the Industrial Disputes Act, 1947, is a perfectly valid piece of legislation.
The learned counsel for the petitioner then argued that the reference made to the Tribunal by the Government did not include the claims of the workmen to retrenchment compensation and wages in lieu of earned leave which were contained in the notice of the Workmen''s Union dated April 26, 1965, and, therefore, this matter could not be adjudicated upon by the Tribunal. In support of this submission, the learned counsel has relied on Rule 10-A and 10-B of the Industrial Disputes (Punjab) Rules, 1958, which read as under:-
"10-A. Parties to submit, statements,-(1) The party representing workmen involved in an industrial dispute in a public utility service shall forward a statement of its demands along with a copy of the notice prescribed under R. 71 to the Conciliation Officer concerned. The statement shall be accompanied by as many spare copies thereof as there are opposite parties.
(2) The party representing workmen involved in a dispute in a non-public utility service shall forward a statement of its demands to the Conciliation Officer concerned before such date as may be specified by him for commencing conciliation proceedings. The statement shall be accompanied by as many spare copies thereof as there are opposite parties.
(3) The statement of demands submitted by the party representing the workmen under sub-rule (1) or sub-rule (2) shall be transmitted to the State Government by the Conciliation Officer concerned with his report under sub-section (4) of S. 12.
(4) Where an employer, or a party representing workmen, applies to the State Government for reference of an industrial dispute to a Labour Court or Tribunal, such application shall be accompanied by a statement of the demands or matters in dispute with as many spare copies thereof as there are opposite parties.
(5) The statement referred to in sub-rules (1), (2) and (4) and every copy thereof required under the said sub-rules to accompany the said statement shall be duly signed, on behalf of the party, by the person making it.
10-B. Proceedings before the Labour Court or Tribunal - (1) Where the State Government refers any case for adjudication to the Labour Court or Tribunal, it shall send to the Labour Court or Tribunal concerned, and to the opposite party concerned in the industrial dispute, a copy of every such order of reference together with a copy of the statement received by the State Government under sub-rule (3) or sub-rule (4) of R. 10-A.
(2) Within two weeks of the receipt of the statement referred to in sub-rule (1), the opposite party shall file its rejoinder with the Labour Court or Tribunal, as the case may be, and simultaneously forward a copy thereof to the other party;
Provided that such rejoinder shall relate only to such on the issues as are included in the order for reference:
Provided further that where the Labour Court or Tribunal, as the case may be, considers it necessary, it may be, considers it necessary, it may extend the time-limit for the filling of rejoinder.
(3) The Labour Court or Tribunal, as the case may be , shall ordinarily fix the date for the first hearing of the dispute within six weeks of he date on which it was referred for adjudication.
Provided that the Labour Court or Tribunal, as the case may be, may, for reasons to be recorded in writing, fix a later date for the first hearing of the dispute
(4) The hearing shall ordinarily be continued from day to day and arguments shall follow immediately after the closing the evidence:
Provided that no case shall be adjourned for arguments for more than a week.
(5) The Labour Court or Tribunal, as the case may be, shall not ordinarily grant an adjournment for a period exceeding a week at a time, nor more than three adjournments in all at the instance of any one of the parties to the dispute.
Provided that the Labour Court or Tribunal, as the case may be, may for reasons to be recorded in writing, grant an adjournment exceeding a week or more than three adjournments at the instance of any one of the parties to the dispute."
According to the learned counsel, the statement of the demands by the workmen has to be sent to the Conciliation Officer along with a copy of the notice prescribed under Rule 71, which statement has to be accompanied by as many spare copies thereof as there are opposite parties. This statement of demands has to be transmitted to the State Government by the Conciliation Officer with his report under sub-section (4) of S. 12 of the Industrial Disputes Act. Similarly, where an employer or a party representing workmen applies to the State Government for references of an industrial dispute to a Labour Court or Tribunal, such application has to be accompanied by a statement of the demands or matters in dispute with as many spare copies thereof as there are opposite parties.
When the State Government refers any case for adjudication to a Labour Court or a Tribunal, it has to send to that Court or Tribunal and to the opposite party concerned in the industrial dispute a copy of every such reference together with a copy of the statement received by the State Government either from the Conciliation Officer or from the party seeking reference. The opposite party has then to file a rejoinder to that statement before the Labour Court or Tribunal and the party seeking reference or applying for conciliation proceedings cannot submit any fresh statement of claims to the Labour Court or Tribunal. In the present case, the workmen filed their statement of claims before the Industrial Tribunal on November 16, 1965, in respect of their demands contained in their notices dated February 24, 1965, and April 26, 1965, although the demands contained in the letter dated April 26, 1965, were not referred to the Industrial Tribunal for adjudication inasmuch as no copy of that notice was sent to the Tribunal or the opposite parties, that is, the petitioner and the Board. On this basis, it is argued that it has to be presumed that the State Government never referred the disputes or claims mentioned in the notice of the workmen dated April 26, 1965, to the Industrial Tribunal for adjudication. If the claims contained in that notice had been referred to the Industrial Tribunal for adjudication, a copy of that notice would also have been sent to the Tribunal as well as to the petitioner and respondent 2, who were the opposite parties. Admittedly, the copy of that notice was not sent either to the tribunal or to the petitioner or to respondent 2 along with the copy of the notification making a reference to the tribunal. The petitioner and respondent 2 were, therefore, not called upon to file any rejoinder to the claims mentioned in the notice of the workmen dated April 26, 1965, and these claims could not be adjudicated upon by the Tribunal on the basis of the fresh statement of claims filed by the workmen before it on November 16,1965.
In reply the workmen have stated in their written statement that conciliation proceedings in this case were held by Shri Harbans Raj Singh, chief Conciliation Officer, Punjab, Chandigarh, in respect of both the demand notices dated February 24, 1965, and April 26, 1965, and if he did not transmit the second notice to the Government with his report, the workmen cannot be made to suffer. Shri Harbans Raj Singh was examined as a witness before the Tribunal as A. W. 8. He had brought the record with him and he stated that at the initial stage the conciliation proceedings were conducted by the Conciliation Officer, Chandigarh, and later on the witness conducted those proceedings. He admitted the receipt of the notice dated April 26, 1965, from the Workmen''s Union. He, however, did not state whether he conducted conciliation proceedings with regard to that notice. All that he stated is that he recommended the reference in question. He did not even state whether this notice was sent to the Government along with his report. In cross-examination be stated that he took over the Conciliation Officer, Chandigarh, because he felt that the proceedings had not been properly taken. He received a copy of the notice dated April 26, 1965, from the Conciliation Officer as an annexure to his report.
In the return filed by Shri D. A. Karan, Deputy Labour Commissioner, Haryana, it has been denied that no conciliation proceedings were ever held in respect of the demand notice of the workmen dated April 26, 1965. He could not have any knowledge of this fact as the conciliation proceedings had been taken before the reorganisation of the State of Punjab by Shri Harbans Raj Singh. He has nowhere stated that the notice dated April 26, 1965, was sent by the Chief Conciliation Officer to the Government with his report while recommending a reference. In view of these facts, the learned counsel for the petitioner is right in stating that there is no evidence on the record to show that the notice dated April 26, 1965, was ever sent by the Chief Conciliation Officer to the Government alone with his report. If that notice had been set to the petitioner and respondent 2 by the Government along with the copy of the notification making reference of the dispute for adjudication to the Industrial Tribunal and the copy of the notice dated February 24, 1965.
The conclusion, therefore, is inevitable that while making the reference of the dispute between the workmen on the one side and the petitioner and respondent 2 on the other the State Government did not have the notice of the workmen dated April 26, 1965, before it and did not apply its mind to its contents. It, however, appears that the Government, while making the reference, visualised that the answer to the main dispute referred, that is, whether the workmen were entitled to continuity of service and protection of their prevalent wages and other conditions of service could be in the affirmative or in the negative. If the answer to it by the Industrial Tribunal was in the affirmative, there would have arisen no liability of the petitioner-company, but, in case the answer to that question was in the negative, the liability of the petitioner-Company was to be determined with regard to any relief that the workmen were entitled to under the statutes applicable to them. Rule 10-A and 10-B apply where the reference is made on the report of the Conciliation Officer or on an application by the employer or the workmen, but there is no bar to the Government making a reference of the consequential matters arising as a result of the decision of the Industrial Tribunal or Labour Court one way or the other. In the present case the State Government referred the major industrial dispute as stated in the workmen''s notice dated February 24, 1965, for adjudication to the Tribunal and the second part of the dispute referred was by way of consequential relief depending on the answer to the first part of the matter referred. It cannot, therefore, be said it was not within the competence of the Industrial Tribunal to determine whether the workmen were entitled to any other relief in case they were held not entitled to continuity of service and protection of their wages etc., as stated in the first part of the dispute mentioned in the notification. The adjudication of the matter by the Tribunal cannot, therefore, be held to be without jurisdiction.
There is also no substance in the plea of the learned counsel for the petitioner that the workmen were not entitled to file a statement of their claims before the Tribunal. For the determination of the second part of the matter referred to the Tribunal, the Tribunal had to ascertain from the parties the nature and quantum of the relief admissible to the workmen in case the answer to the first part of the dispute referred was against the workmen. The petitioner-Company was given due time to submit its reply to that statement of claims. There is no doubt that the petitioner-Company objected to this procedure and also to the jurisdiction of matter, but no issue was framed with regard to this plea. Apart from the fact that there is no substance in this plea, it cannot be entertained in this petition.
The learned counsel for the petitioner has then contended that the award as published is not complete as the interim order made on September 3, 1966, was not made a part of that award. That interim order dealt with the preliminary objection of the petitioner-Company that no Industrial Tribunal, Punjab, Chandigarh, had been constituted by the State Government and, therefore, the Industrial Tribunal could not proceed with the reference. Award has been defined in Section 2(b) of the Industrial Disputes Act as under:
"''award'' means an interim or a final determination of any industrial dispute or of any question relating thereto by any Labour Court, Industrial Tribunal or National Industrial Tribunal and includes an arbitration award made u/s 10A."
The interim order dated September 3, 1966, did not determine any party of the industrial dispute or any other question relating thereto. It only determined whether the Industrial Tribunal had been properly constituted to which the industrial dispute could be referred for adjudication. That order cannot, therefore, be said to been award as defined in Section 2(b) of the Industrial Disputes Act and was not necessary to be published. This plea is also repelled.
The next question that arises is whether the workmen were entitled to retrenchment compensation u/s 25FF or Section 25FFF of the Industrial Disputes Act. The learned Tribunal has held that the workmen were entitled to retrenchment compensation as provided in Section 25FF of the said Act, and while making the award in respect thereto held that the workmen were not entitled to any wages in lieu of one month''s notice as provided in Section 25F(a) of the said Act as such a notice had been given by the petitioner-Company to the workmen on March 18, 1965. The Tribunal, therefore, awarded compensation to the workmen in accordance with Clause (b) of Section 25F of the said Act. It was not argued before the learned Tribunal that Section 25FFF applied and not Section 25FF, but I have permitted the learned counsel on both sides to argue this matter as it relates to the interpretation of Sections 25FF and 25FFF and can be decided on the material on the record.
In order to decide which of the two sections applies, it has to be determined whether the transaction of the purchase between the petitioner-Company and respondent 2 amounted to transfer of ownership or the management of the undertaking by operation of law from one employer to another, or that the undertaking was closed as a consequence of the expiry of the period of licence before April 1, 1967. The matter is not res integra. It was held but their Lordships of the Supreme Court in Anakapalla Co-operative Agricultural and Industrial Society Limited Vs. Workmen, , that the purchaser of a going concern is a successor-in-interest of the previous employer but the employees have no right to claim re-employment under the successor and that the employees are entitled to retrenchment compensation in accordance with Section 25FF of the Industrial Disputes Act. On the parity of reasoning, it has to be held in the present case that the compulsory purchase of the undertaking of the petitioner-company by respondent 2 without taking over the employees of that undertaking s a part of that transaction did amount to transfer of the ownership or management of the undertaking from one employer to another. The transfer contemplated u/s 25FF is of the undertaking and not of its employees necessarily. Nevertheless, the Board took the previous employees of the petitioner-Company into its employment by giving them fresh offers of appointment but without continuity of service and without th protection of the wages they were already drawing. The workmen had no choice in the matter and they agreed to serve the Board as its employees on condition that they were to be considered the employees of the Board having been employed on April 24, 1965, and they had to forego to creditor or benefit of their previous service with the petitioner-Company. It is also in evidence that they were given less emoluments by the Board than they were drawing under the petitioner-Company. It is, thus apparent that the case is not covered by the proviso to Section 25FF of the Industrial Disputes Act as the conditions of service on which the workmen were employed by the Board were less advantageous to them the terms under which they were serving the petitioner-company.
Section 25FFF cannot be said to apply to the facts of the present case as by the expiry of the period of licence of the petitioner-Company the business of generating and distributing electricity, which was being carried on by it up to April 23, 1965, did not close down but was continued by the Board without any interruption with effect from April 24, 1965, in the same manner as was being done by the petitioner-Company. Section 25FFF applied where the undertaking is closed down and is not taken over or continued by another person or body of persons. Reference may be made to a judgment of their Lordships of the Supreme Court in Workmen of Uttar Pradesh State Electricity Board v. Upper Ganges Valley Electricity Supply, Co. (1966) I LLJ 730 (SC), wherein it was held that in the case of an electric undertaking being taken over by the State Electricity Board, it cannot be said that the undertaking was closed down and, therefore, Section 25FFF did not apply. Following this judgment, a Division Bench of the Madhya Pradesh High Court in Central India Electric Supply Co. Ltd. Vs. Presiding Officer, District Labour Court and Others, ) held that-
"the power-house at Katni which was previously run by the petitioner-Company has not closed down. It has been taken over by the Madhya Pradesh Electricity Board on expiration of the petitioner''s licence and is now being run by the Board. Section 25FFF(1) and the proviso apply where an understanding "is closed down'' and as in the instant case the undertaking has merely changed hands but is still running, it cannot said that the case falls u/s 25FFF(1) or the proviso."
The latest judgment of their Lordships of the Supreme Court on the subject is contained in The Board of Directors of the South Arcot Electricity Distribution Co., Ltd. Vs. N.K. Mohammed Khan etc., . In that case a company carrying on the business of distribution of electricity as a licensee under the Government was taken over by the Government in exercise of the powers under the Madras Sate Electricity Supply Undertakings (Acquisition) Act, 1954. The employees compensation u/s 25FF and filed an application before the Labour Court u/s 33C(2) of the Industrial Disputes Act, which was allowed by the Labour Court. The company filed a writ petition in the High Court, which was dismissed and an appeal against Judge was also dismissed by a Division Bench. In the appeal by the company to the Supreme Court, it was to the employees under the principal because of the conditions laid down in the proviso and that the Labour Court had no jurisdiction to decide the disputed question whether two workers were entitled to retrenchment compensation and that the Labour Court had no jurisdiction to decide whether the liability to pay retrenchment compensation fell on the State Electricity Board. Navigating the contentions raised by the company and dismissing the appeal the Supreme Court held that-
"there are instances of a number of conditions of service which became less favourable to the workers on their becoming employees of the State Government when the undertaking vested in the Government by transfer from the company. In these circumstances the requirements of the proviso to Section 25FF of the Act are obviously not satisfied and the proviso cannot be invoked by the company for the purpose of defeating the claim made by the workers under the principal clause of that section. Under that principal clause of that section. Under that principal clause, the workers became entitled to receiver retrenchment compensation in accordance with the provisions of Section 25FF of the Act on the basis of legal fiction envisaged that these rights would accrue to them as if the workers had been retrenched."
I, therefore, hold that the workmen were entitled to retrenchment compensation as provided in S. 25FF of the Industrial Disputes Act and the award of the Tribunal with respect thereto is legal and proper and cannot be quashed.
The learned counsel for the petitioner has then argued that the Board, being a successor-in-interest of the petitioner-Company, was under a legal obligation to take all the workmen into its employment, particularly because the undertaking was continued by the Board as before. On this point, the learned counsel for the workmen has also sought to support the petitioner-Company because, according to the workmen, if the Board is held to be legally under an obligation to take them into its employment, they would be entitled to continuity of service and protection of the wages that they were already drawing and the other conditions of service. This relief was refused to the workmen by the Industrial Tribunal and they have not filed any writ petition challenging that part of the award. Moreover, no provision of any law has been brought to my notice obliging the transferee to take over the employees with the undertaking. If that were the position, there was no necessity of enacting Section 25FF. Under the operative part of this section, the transfer of ownership or management of an undertaking from one employer to another has the effect of retrenchment of the workmen entitled them to retrenchment compensation in accordance with Section 25F for which the liability has been laid on the previous employer. The liability of the previous employer only vanishes if the case of the employees is covered by the proviso to that section. It cannot, therefore, be held s a proposition of law that the transfer of an undertaking as a going concern necessarily obliges the transferee to take the employees into its employment. Moreover, their Lordships of the Supreme Court also held in Anakapalla Co-operative Agricultural and Industrial Society Limited Vs. Workmen, that the employees have no right to claim reemployment under the successor and they are entitled to retrenchment compensation in accordance with Section 25FF of the Industrial Disputes Act. This submission of the learned counsel is therefore, repelled.
Learned counsel for the petitioner filed a Civil Miscellaneous Application NO. 903 of 1970, seeking permission to amend the writ petition by adding Clause (ee) in para 24 of the petition as under:-
"That the respondents Punjab State Electricity Board and Haryana State Electricity Board by reason of its having adjusted a sum of Rs. 82,428-06, the entire amount of the ''Contingencies Reserve'' towards the sale price are liable to pay retrenchment compensation etc. at least to the extent of the amount of the contingencies reserve so adjusted by them, and on which such compensation is the first charge under law."
This application was rejected by me on July 17, 1970, on the ground that this plea was not taken before the Industrial Tribunal and cannot be permitted to be taken in this writ petition. Moreover, u/s 6 of the Indian Electricity Act, the undertaking vests in the Board free from any debt, mortgage or similar obligation of the licensee or attaching to the undertaking. The proviso to sub-section (6) (i) of S. 6 makes it further clear that an such debt, mortgage or similar obligation shall attach to the purchase money in substitution for the undertaking. In view of that provision, the liability to pay retrenchment compensation lies on the petitioner-Company and not the Board. Their Lordships of the Supreme Court in U.P. Electric Supply Co. Ltd. Vs. R.K. Shukla and Another, etc., , held to this effect by observing as under:-
"It is clear that when the undertaking vests in the purchasers, any debt, mortgage or similar obligation attaches to the purchase money in substitution of the undertaking. The liability to pay retrenchment compensation is a debt: if it arises on transfer, it will attach to the purchase money payable to the Company ''in substitution for the undertaking''. Sections 6 and 7 of the Indian Electricity Act do not support the case of the Company that the liability is enforceable against the Board after it takes over the undertaking."
It is open to the petitioner-Company to claim the contingencies reserve from the Board in the sale price for the undertaking and it cannot be held that the liability to pay the retrenchment compensation attaches to the Board to the extent of the contingencies reserve.
The last argument urged by the learned counsel for the petitioner is that the workmen were not entitled to compensation in lieu of unavailed earned leave and the learned Industrial Tribunal committed an error of law in awarding that compensation to the workmen. The only observation of the Tribunal on this point is-
"it is also not disputed that the workmen are also entitled to wages in lieu of the earned leave. Accordingly they are entitled to these wages as provided u/s 79 of the Indian Factories Act, 1948."
The petitioner did not state in the petition that this part of the award was factually wrong. In any case the learned counsel submits that it is a question of law which can be determined in the present petition. Reliance has been placed on the judgment of their Lordships of the Supreme Court in U.P. Electric Supply Co. Ltd. Vs. R.K. Shukla and Another, etc., para 23 of which reads as under:-
"Finally it was contended-and that contention relates only to the cases of 56 workmen in the Lucknow undertaking-that the workmen who had not availed themselves of earned leave were entitled to compensation equal to thirty days'' wages. But we do not think that any such compensation is statutorily payable. So long as the Company was carrying on its business, it was obliged to give facility for enjoying earned leave to its workmen. But after the Company closed its business, it could not obviously give any earned leave to those workmen, nor could the workmen claim any compensation is not availing themselves of the leave. In the absence of any provision in the statute governing the right to compensation for earned leave not availed of by the workmen before closure or transfer of an undertaking, we do not think that any such compensation is payable."
Section 79(2) of the Factories Act, 1948, does not provide for any right to compensation for earned leave not availed of by the workmen before closure of transfer of an undertaking and, therefore, following the decision of their Lordships referred to above, I hold that the workmen were not entitled to any compensation in lieu of earned leave not availed of by them before undertaking was purchased by respondent 2. Moreover, the workmen had enough time from June 19, 1964, to April 23, 1965, to avail themselves of the earned leave due to them. They had been informed well in time that the undertaking would be taken over by the Board with effect from April 24, 1965. If they did not avail themselves of the earned leave due to them they are themselves to blame.
The result is that this petition is accepted in part and the award of the learned Industrial Tribunal is modified to the extent that the workmen shall not be entitled to any compensation in lieu of earned leave not availed of by them before the undertaking was purchased by respondent 2. In view of partial success, I leave the parties to bear their own costs.
Petition partly allowed.