D.Y. Chandrachud, J.
1. Rule, by consent of Counsel returnable forthwith. Counsel appearing on behalf of the respondents waive service. By consent of Counsel and at their request taken up for hearing and final disposal.
2. The challenge in these proceedings is to an order dated 14th February, 2008 of the Industrial Court at Satara by which, pending the hearing and final disposal of a complaint of Unfair Labour Practices, the petitioner was restrained from giving effect to an order dated 28th January, 2008 by which the employees of the factory at Satara were transferred to the factory at Sinnar. The petitioner conducts a factory at Satara which is engaged in the business of manufacturing luggage and about 171 employees have been employed at the unit. In April, 2007, a scheme of arrangement was formulated under Section 391 to 394 of the Companies Act, 1956 by and as a result of which the industrial unit belonging to a company by the name of Artistocrat Luggage Limited came to be transferred to and vested in the petitioner. By an order of the learned Company Judge of 14th December, 2007, sanction was granted to the scheme of amalgamation and arrangement. On 19th December, 2007, a notice was put up by the petitioner intimating that in view of worsening business conditions, the petitioner had decided to 'presently stop' the manufacturing activities at Satara until a reorganization of manufacturing activities took place. The employees were directed that they were not required to report but they would be paid full wages and other benefits. On 28th January, 2008, a communication was addressed to the respondent - Union by which it was stated that the plant at Satara had been rendered unviable. Consequently, the petitioner transferred all the workers of the plant at Satara to the plant at Sinnar. This was followed by a further notice dated 25th January, 2008 under which the petitioner agreed to pay to the employees who were transferred a 10% rise of existing wages, two days special leave per month within a span of three months and an additional amount of Rs. 1,000/- for house rent allowance for a period of three months.
3. A complaint of unfair labour practice was instituted by the Union, the respondent to these proceedings under Items 3, 9 and 10 of Schedule IV of the M.R.T.U. and P.U.L.P. Act, 1971. The Industrial Court by an interim order dated 14th February, 2008 stayed the operation of the order of transfer holding that:
(i) The transfer of the services of the employees from Satara to Sinnar had changed their work place so as to constitute an adverse change in the conditions of service;
(ii) When the employees were engaged at the factory at Satara, there was no branch at Sinnar and the workers had worked only at the Satara plant. No transfer had taken place previously;
(iii) The Plant at Sinnar came to vest in the employer as a result of the scheme of amalgamation and as a consequence, the transfer of the employees from the plant at Satara to Sinnar constituted a change in the conditions of service;
(iv) Immediately after the scheme of amalgamation was allowed by this Court on 14th December, 2007, notices were displayed on 19th December, 2007 and 28th January, 2008 by the petitioner. Such a decision would not have been taken within a short period of the order of amalgamation and it would therefore appear to have been the intention even at the time of the amalgamation to transfer the employees from Satara to Sinnar.
4. Counsel appearing on behalf of the petitioner stated that in the case of 55 of the 171 employees to whom the order of transfer applies, the letters of appointment expressly include transferability as a condition of service. The learned Counsel submitted that the reasons which have weighed with the Industrial Court in restraining the employer from implementing the order of transfer are ex-facie perverse. The Industrial Court, it is submitted had no justification whatsoever in holding that a mere change in the work place would amount to an adverse change in the conditions of service. Moreover, it was urged that once the orders of appointment of 55 employees contain a clause on transferability, the Industrial Court was not justified in restraining the implementation of the orders of transfer for the reason that on the date on which the orders of appointment were issued, there was no branch at Sinnar. Finally it is submitted that the interpretation of the scheme of amalgamation and the inference which has been drawn by the Industrial Court is erroneous. Even assuming that the employer had intended, at the time when the scheme was drawn up, to transfer the employees from Satara to Sinnar that will not justify an inference of mala fides and the employer was entitled to enforce a clause relating to transfer. Hence, it was urged that the order of the Industrial Court would have to be modified so as to permit the petitioner to effect transfers of 55 employees.
5. On the other hand it has been asserted on behalf of the respondents that the orders of transfers in the present case were only intended to obviate compliance with the requirement of closure permission under Chapter V(B) of the Industrial Disputes Act, 1947. It was urged that at an earlier point in time, a complaint of unfair labour practices was instituted by the union when the petitioner commenced shifting of machinery from Satara to Haridwar. At that stage, in the order of Industrial Court declining interim relief on 13th April, 2006, the specific stand of the management was referred to whereby a representation was held out that there was no possibility of a reduction of the work of employees as apprehended by the union. Firstly, immediately after the order of this Court sanctioning the scheme of amalgamation, a notice was issued on 19th December, 2007 stating that the management was stopping manufacturing activities at Satara and on 28th January, 2008, transfer orders came to be issued. Hence, it was submitted that the order of transfers in the present case were not of an administrative nature but were designed to obviate the requirement of applying for permission to close down the undertaking under Chapter VB. Secondly, it was urged that the plant at Sinnar came to be acquired for the first time in pursuance of the scheme of amalgamation which was sanctioned on 14th December, 2007. Reliance was sought to be placed on the judgment of the Supreme Court in Kundan Sugar Mills v. Ziya Uddin : (1960)ILLJ266SC , and it is urged that a condition of transferability cannot apply in respect of those units which were not owned by the employer when letters of appointment were originally issued to the workmen in question.
6. While considering the rival submissions, the first issue which requires to be addressed prima facie at the interlocutory stage is as to whether transferability in the present case was a condition of service. It has been stated on behalf of the management that transferability, as condition of service, was reflected in the orders of appointment of 55 of the 171 workmen to whom the complaint relates. Therefore, it has been urged on behalf of the management that the order of stay passed by the Industrial Court would have to be modified with reference to 55 workmen in whose letters of appointment there was a condition as regards transferability.
7. At this stage, it would be necessary to advert to the judgment of the Supreme Court in Kundan Sugar Mills v. Ziys Uddin : (1960)ILLJ266SC . In the case before the Supreme Court, the partners of a Sugar Mill at Amroha became proprietors of the mill in 1946. Subsequently, in 1951, they acquired a sugar mill at Bulandshahr. Respondents 1 to 4 were employed by the owners of the mill at Amroha at the time when they were not proprietors of the sugar mill at Bulandshahar. It was conceded that it was not an express term of the contract of service that the workmen would serve with any future concern which the employer might start. It had also come in evidence that though the same person owned both the mills, they were two different concerns. The service conditions of the workmen of the two mills were different. In this context, the Supreme Court held that when the workmen were employed by the employer, who was running only one factory at Amroha, there was nothing on the record to indicate that at that time it was intended to purchase a factories at other places or to extend activities in the same line at different places. It was conceded before the Supreme Court that there was no express agreement whereunder the employer had a right to transfer the workmen to any of its concerns. In these circumstances, it was held that it would not be right to imply any such term between the contracting parties. In the case before the Supreme Court, the two factories were distinct entities, situated at different places and, to import a term conferring a right on the employer to transfer the workmen to the new concern was held to make a new contract between the parties. The Supreme Court held that none of the decided cases had gone as far as to hold that every employer had the inherent right to transfer his employees to another place where he chooses to start a business subsequent to the date of the employment.
8. The judgment of the Supreme Court in Kundan Sugar Mills would show that this was a case where the contract of employment had no express condition empowering the employer to transfer the workman to any other place. The argument before the Supreme Court was that the right to transfer was implicit in the contract of service but that, the Supreme Court held was not a universally correct preposition. Though the two factories were owned by the same employer, they were distinct entities situated at different places and even the service conditions that were prevailing therein were different. This distinction on facts in the Judgment of the Supreme Court in Kundan Sugar Mills have been adverted to in an unreported judgment of Hon'ble Mr. Justice S.H. Kapadia (as the learned Judge then was) dated 21st July, 1994 in Associated Breweries and Distilleries v. Shri Purshottam Govindji Patel, Writ Petition 1570/1994.
9. In the present case, both the establishment at Sinnar as well as the establishment at Satara belong to one and the same employer. The service conditions of the workmen are not to be adversely by the order of transfer. On the contrary, the petitioner has agreed to provide additional payments to the workmen, as already noted in the earlier part of the judgment. It is an admitted position that transferability is a condition of service in the letters of appointment of 55 workmen. The fact that in the case of some of them, the clause may be more widely worded would make no difference. Once transferability is a condition of service, and the conditions of service are not being adversely affected by the order of transfer, the action of the employer in exercising the right to transfer the employee cannot be faulted except for mala fides or where there is a statutory violation. In a judgment of a learned Single Judge of the Delhi High Court (Hon'ble Mr. Justice A.K. Sikri) in General Marketing and . v. Presiding Officer 2000(III) LLJ 1171, it has been held as follows:
According to the aforesaid stipulation in the appointment letter and conditions of appointment, it is clear that the services of the petitioner workman were liable to be transferred to anywhere in India or any department. It is further stipulated in these conditions that the management is at liberty to utilize service from time to time in any department or any section/branch of the company in India. Once these are the service conditions, relating to transfer it cannot be said that workman could not be transferred to particular branch which was opened after the appointment of the workman, If the contention of the workman is accepted it would mean that workman can be transferred to any of the branches/departments anywhere in India which were in existence as on the date of her appointment only but not to those branches or departments which were opened by the management after her appointment. Such a position cannot be accepted in law and it would make the very condition of service regarding transferability to any department/section/branch anywhere in India as redundant.
10. I am in respectful agreement with the view formulated in the judgment. This view is consistent with the law laid down by the Supreme Court in a line of authority, and reference may be made to the judgment in Pearlite Liners Pvt. Ltd. v. Manorama Sirsi : (2004)ILLJ1041SC .
11. However, it has been sought to be urged on behalf of the respondent that the order of transfer is mala fide and was therefore correctly interfered with by an interim order of stay of the Industrial Court. Now, it is a well settled principle of law that a case of mala fides has to be established on the basis of clear and cogent material. The Industrial Court has relied upon certain circumstances in support of its interference with the order of transfer. Prima-facie, none of those circumstances can in law be regarded as leading to an inference of mala fides. The Industrial Court has held that the change in the work place from Satara to Sinnar constituted an adverse change and that the existing work place had become a matter of usage. The Industrial Court has totally failed to appreciate that in the case of those employees whose orders of appointment contain a clause relating to transferability, it cannot possibly be held that a prohibition against transfer is a matter of usage. Where transferability is a part of the contract of service, a change of the work place cannot be regarded as a matter of adverse effect. The Industrial Court has observed in paragraph 15 of the judgment that there was no specific condition in the order of initial appointment that the services of the workmen were subject to transfer. This finding, is ex-facie erroneous since it is now an undisputed position before the Court that a condition of transfer exists in respect of the services of 55 of the 171 workers employed in the plant at Satara. The Industrial Court held that the plant at Sinnar came to be vested in the petitioner as a consequence of a scheme of amalgamation and the transfer of the employees of the plant at Satara to Sinnar would constitute a change. This line of reasoning cannot be accepted because once the workmen were at the time of appointment placed on notice of the fact that their services were liable to be transferred that would comprehend any establishment of the same employer so long as there was no adverse impact on the existing conditions of service. Again, the finding of the Industrial Court to the effect that the decision to effect the transfers could not have taken place within a short period of time after the order of amalgamation and must have been within the contemplation of the employer when the scheme of amalgamation was being processed cannot be suggestive of mala fides. An additional circumstance which has been placed in aid on behalf of the respondent is that a complaint of unfair labour practices was instituted on behalf of the union when the company had attempted to shift the machinery from the plant at Sinnar to the plant at Haridwar. Interim relief was declined by the Industrial Court on 13th April, 2006. At that stage, the management had undertaken that there would be no adverse impact on the work of the employees. That prima facie cannot operate as a bar on the management giving effect to its prerogative to effect transfers in accordance with a clause contained in the conditions of service.
12. For all these reasons, I am of the view that the order passed by the Industrial Court staying the operation of the order dated 28th January, 2008 cannot be sustained and would have to be modified so as to permit transfers of those employees in whose letters of appointment, transferability is a condition of service. At the same time, it would be necessary to identify those cases where the individual letters of appointment contain a condition in regard to transferability. The petitioner shall, within a period of four weeks from today place on the record of the Industrial Court an affidavit certifying and annexing copies of the original letters of appointment in respect of all the employees to whom the complaint relates. The names of the employees in whose letters of appointment a clause in regard to transferability exists shall be listed out separately. The management would be at liberty thereafter to give effect to the orders of transfer in respect of those employees in whose letters of appointment a clause on transferability exists. The impugned order of the Industrial Court shall stand modified in these terms. The Industrial Court is directed to dispose of the matter expeditiously within a period of six months from today.
13. The petition is allowed accordingly to this extent. No order as to costs.