Sundarajan (A.R.) vs A.P. Challiappan and Another

K. Veeraswami, J.—The order sought to be quashed was made u/s 33C(2) of the Industrial Disputes Act, 1947. Respondent 1 was

employed as a conductor from 10 February 1951 to 20 July 1961 on a basic wage of Rs. 45 and dearness allowance of Rs. 29 per mensem in the

transport business of a firm of partnership with the name and style of Sundaram Transports, sivakasi. On 3 January 1961, there was a dissolution

of the partnership and the assets and liabilities were divided between the two partner, one of them being the petitioner. It appears that the buses

were apportioned between the two partners and with them also the staff. On that basis respondent 1 happened to be allotted to the other partner.

Respondent 1 applied to the labour court, Madurai, for determination of his retrenchment compensation on the footing that the dissolution of the

partnership involved a change of ownership or of management of the undertaking. The labour court does not appear to have addressed itself to the

question as to whether at all the facts would attract the application of Section 25FF. On the other hand, the labour court proceeded on the

assumption that the section would apply and it was of the opinion that inasmuch as the third condition in the proviso to the section was not satisfied,

respondent 1 was entitled to retrenchment compensation as computed by it. This petition is to quash its order.

A firm of partnership, as far as I can find, has never been held to be a legal entity like a company. It is true that for certain purpose under the

CPC a firm is treated as legal entity. But the legal fiction goes no further. A firm of partnership is but a convenient and compendious device by wish

two or more individuals join together, pool the their resources or labour on a Joint venture of business. In a firm each partner is deemed to act for

the other, though in a sense the firm owns the assets and is responsible for the firm''s liabilities. In law the assets of the firm are owned by the

members of the firm and the liabilities are owing by them. It flows from these propositions that when a firm is dissolved, no transfer of ownership as

such is involved. All that follows from the process of dissolution is that what is owned in common is defined in severality and each member takes

his share of the property subject to his share of the liability. That being the case, dissolution of partnership neither involves a transfer of ownership

nor involves transfer of management of the undertaking. This principle appears to have been recognized by the Calcutta High Court in Alex. A.

Apcar (Jr.) and Co. Vs. M.N. Gan and Others, with which I am in agreement. There the firm consisted of two partners but by an arrangement

between them one of the two took over the entire assets and liabilities and continued the undertaking. It was held that when plural proprietors

became a single proprietor there is no change in the employer within the meaning of Ss 25F and 25FF of the Industrial Disputes Act. When the

firm in the instant case was running the business, respondent 1 was employed under it. That meant that he was employed under its partners. After

its dissolution, respondent 1 still continued to be employed under one of the erstwhile partners. In that sense there is no change in the employment

or the employer.

I hold, therefore, that Section 25FF is not applicable to the facts of the case. The order of the labour court is quashed and the petition is allowed

but without cost.