K.N. Cheluvaiah Vs. Management, Bharat Heavy Electricals Ltd. - Court Judgment

Excerpt:
service - transfer - managerial right subject to contract to the contrary - management best judge to distribute manpower - transfer incident of service - questionable if transfer punishment, victimisation or non-observance of conditions in relation to office bearers or protected employees.;the question of transfer of an employee has been the subject matter of industrial adjudication. employment being primarily a creature of contract its terms are modified only to the extent they are superseded by law, contract or award. the rights and obligations of the employer and employees in matters of transfer would, therefore, be governed by this position that unless proved to the contrary and unless the transfer changes the identity of employment or breaches employment conditions an employer has always a right to transfer his employee. transfer of an employee is considered to be a managerial right which however is subject to contract to the contrary. however, if the transfer is effected as punishment or as a consequence of victimisation or made not observing the relevant conditions in relation to transfer of union office bearers or protected employees such transfers can be questioned. subject to these limitations the employers have a right to distribute work as they think fit and transfer is an incident of service. the management is the best judge to distribute manpower and whether a transfer can be avoided or not. a transfer can be successfully challenged on the following grounds : (i) transfer is in violation of the rules or standing orders or contract; (ii) it is actuated by malafides as a result of unfair labour practice or some other ulterior motive not connected with the business establishment; (iii) the transfer effects a change in the conditions of service in subjecting the employee to more onerous work. - indian contract act (9 of 1872) section 20: [arali nagaraj, j] void agreement - defendant, under belief that virtue of allotment order itself he had authority to sell away property, which he got allotted from development authority-allotment order showed by defendant to plaintiff and the latter believed that defendant had authority to sell away said property in her favour and under that belief she agreed to purchase same-both plaintiff and defendant proceeded with transaction under amistake as to fact that defendant had authority under said allotment order to sell property and, therefore, they entered into said agreement of sale-said mistake of fact was mutual between both parties besides being essential for said agreement by virtue of provisions of section 20 said agreement of sale became void and unenforceable in law. - that the officers of the 1st respondent-company are not well disposed towards him and that therefore he has now been transferred to its jagadishpur unit by the 1st respondent. that the same has not been finalised inasmuch as an appeal is still pending against the said standing orders that in the absence of centralised service the transfer is bad as per the decision of the supreme court in general officer commanding-in-chief and anr. that whatever may have been the service conditions at the time of employment of the petitioner, consequent upon the taking over of the said unit by the bhel and settlement having been entered into in 1977 which empowers the management to transfer an employee from one place to another as part of the settlement giving better benefits resulting in rationalisation of service conditions in all its units, the employee cannot now turn round and contend that the management has no such power to transfer. the management is the best judge to distribute manpower and whether a transfer can be avoided or not. ' this clause was sought to be incorporated in the standing orders as well. i do not think that contention is well founded.orderrajendra babu, j.1. the petitioner is an employee of the 1st respondent which is a public sector undertaking. years ago there was an industrial establishment known as government porcelains factory which was run under the direct control of the government of karnataka. later, in the year 1967, it was converted into a limited company and known as mysore porcelains limited which was taken over as a subsidiary unit of the first respondent and thereafter it became a unit of the said 1st respondent-company.2. it is the case of the petitioner that he had been in the service even prior to the taking over of the unit by the 1st respondent having been employed in the year 1958; that the petitioner was a member of the executive committee of the government porcelains factory employees' association, that association ceased to function in the year 1980; that a union known as bhel (epd) employees' association came into existence owing to the unceasing efforts of the petitioner in its promotion and in all its other activities; that he is a very popular member of the said union having been elected to represent the union in bhel provident fund trust; that he had been very vociferous in the meetings held by the trust and in pointing out several lapses in the administration and scope for improvement in working of the trust; that the officers of the 1st respondent-company are not well disposed towards him and that therefore he has now been transferred to its jagadishpur unit by the 1st respondent. it is submitted on behalf of the petitioner that the whole action of the 1st respondent management is mala fide; that he is a protected workman as contemplated under the industrial disputes act, 1947; that when the petitioner joined the porcelains unit there was only one establishment and transfer was not one of the conditions of service inasmuch as there was only one unit and therefore such a power could not be availed of by the management either on account of express or implied conditions. the learned counsel for the petitioner in this context relies upon a decision of the supreme court in kundan sugar mills v. ziya uddin and ors., : (1960)illj266sc and also on another decision of the supreme court in s.a.e. distribution co. ltd. v. n.k. mohd. khan, 1970(21) flr 174. it is also submitted that there has been a settlement between the management and the association of which the petitioner is a member and that settlement though provides for transfer from one place to another, is not part of the standing orders; that the same has not been finalised inasmuch as an appeal is still pending against the said standing orders that in the absence of centralised service the transfer is bad as per the decision of the supreme court in general officer commanding-in-chief and anr. v. dr. subhash chandra yadav and anr., 1988 (2) llj 345; that the transfer effected results in victimisation as the same was made mala fide and referred to decisions in the state of punjab and anr. v. gurdial singh and ors., : [1980]1scr1071 ; p. pushpakaran v. coir board and anr., 1979(1) llj 139; and p. krishna rao v. apccad bank ltd., 1984 li.c. 1313. the learned counsel for the 1st respondent submitted that the bhel acquired the unit in the year 1976 as its subsidiary and became fully owned in the year 1980; that in the year 1976 a settlement was reached and in fact a standing orders was also made to that effect; that whatever may have been the service conditions at the time of employment of the petitioner, consequent upon the taking over of the said unit by the bhel and settlement having been entered into in 1977 which empowers the management to transfer an employee from one place to another as part of the settlement giving better benefits resulting in rationalisation of service conditions in all its units, the employee cannot now turn round and contend that the management has no such power to transfer. an elaborate statement of objections has been filed to demonstrate that there are no mala fides on the part of the management in transferring the petitioner from bangalore unit to jagadishpur unit and all these units being under one employer the question of centralised service does not arise to give effect to transfers from one place to another. it is also pointed out that transfer is an incident of service and therefore the management has full and complete powers in this regard; that whatever disciplinary action and other steps taken earlier have not influenced the management in transferring the petitioner but only in the interests of the organisation the petitioner has been transferred and he relied upon the following decisions:i. (1977) 50 fjr 197 caravan goods carriers private ltd. v. labour court, madras; ii. 28 fjr 275 syndicate bank v. their workmen iii. (1991)(1) kar. l.j. 30 syndicate bank v. sunder k. paniyadi; iv. 1985(1) llj 198 c.e. (pers) t.n.e.b. v. k. raman; v. 1986(1) llj 464 shanmugam v. mysore mineral ltd; vi. : (1989)iillj470sc gujarat electricity board and anr. v. atmaram sungomal poshani vii. 76 fjr 73 indian oil corporation v. jt. chief labour commissioner;4. the question of transfer of an employee has been the subject matter of industrial adjudication. employment being primarily a creature of contract its terms are modified only to the extent they are superseded by law, contract or award. the rights and obligations of the employer and the employees in matters of transfer would, therefore, be governed by this position that unless proved to the contrary and unless the transfer changes the identity of employment or breaches employment conditions an employer has always a right to transfer his employee. transfer of an employee is considered to be a managerial right which however is subject to contract to the contrary. however, if the transfer is effected as punishment or as a consequence of victimisation or made not observing the relevant conditions in relation to transfer of union office bearers or protected employees such transfers can be questioned. subject to these limitations the employers have a right to distribute work as they think fit and transfer is an incident of service. the management is the best judge to distribute manpower and whether a transfer can be avoided or not.5. a transfer can be successfully challenged on the following grounds:-i) transfer is in violation of the rules or standing orders or contract; ii) it is actuated by mala fides as a result of unfair labour practice or some other ulterior motive not connected with the business establishment; iii) the transfer effects a change in the conditions of service in subjecting the employee to more onerous work. the existence of a power to transfer and its scope or exercise thereof are entirely different questions. a catena of decisions are cited on either side to support their respective stands and an analysis of the said decisions would not lead to any conclusion other than what has been stated above. to sum up, the position is that normally the right to transfer an employee is a prerogative of the management subject to some limitations. an employer has no inherent right to transfer a workman from one place to another if he starts a new, business subsequent to the date of employment of the workman unless either it is an express or an implied condition of service at the time of employment. if however such transfer is permissible an order thereto cannot be called in question unless it is mala fide or made under other circumstances adverted to above.6. in this case there can be no cavil that when the petitioner had been employed in the mysore porcelains factory he could have been transferred to any other unit or place except inter-department transfer within the factory. on being taken over by the 1st respondent of the mysore porcelains factory, section 25ff of the industrial disputes act got attracted and the management would have had to pay retrenchment compensation amongst other conditions. the terms and conditions of service applicable to the workman after the take over cannot be in any way less favourable than those applicable to him prior to such transfer. but does it mean that at no time later the conditions of service could be changed even by agreement of parties, in the present case, admittedly there is a memorandum of settlement made on 7th march 1977. clause 19 thereof provided for transfer of its employees and the said clause reads as follows:'19. transferability:employees shall be liable to be transferred from one work, department, section or job to another provided in doing so the management shall keep in view the suitability of the employees for the particular work and also that the pay, grade and seniority of the employees concerned is protected. similarly employees shall be liable to be transferred to any unit of bhel or to its subsidiaries.' this clause was sought to be incorporated in the standing orders as well. the certifying officer incorporated the same in the standing orders and the matter is carried in appeal and the appeal is pending and therefore i do not wish to make any reference to the standing orders. i proceed on the basis that the management has no power empowering under the standing orders to effect transfers. even so, on the basis of the settlement that is in force at the relevant time the petitioner could be transferred under clause 19. the petitioner is undisputably a member of the union which was a party to the settlement. therefore it must be accepted that there is contract empowering the management to transfer its employees from one unit to another.7. it is contended that in the event the petitioner going over to jagadishpur and if in that unit any retrenchment taking place and if petitioner's services are retrenched on the basis that he joined that unit later or there are certain seniors to him whose services will be retained and his services retrenched, but these questions fall in the region of speculation and i would not 'cross bridge until i reach it'. if and when the petitioner is retrenched it is certainly open to him to agitate such questions when all these contentions can be considered. at this stage it is unnecessary to consider the same.8. the contention that there should have been centralised service on the basis of the decision of the supreme court in cantonment board's case cited supra, is not tenable inasmuch as in the present case there is only one employer and he is not being transferred from one independent unit to another independent unit under two different employers which was the position in that case. then the question of maintaining a centralised service also does not arise.9. nextly what is to be considered is whether the petitioner's transfer is actuated by mala fides or is otherwise a case of victimisation adopting unfair labour practice. it is elaborately set out in the statement of objections that the petitioner is working as an artisan in the assembly division and is engaged in assembling disc insulators. he is experienced in the field being the senior-most in the department. the plant at jagadishpur needed the services of such an artisan and in that background he is being transferred and not on any other ground or motive. although the learned counsel for the petitioner stated that some disciplinary proceedings had been initiated against the petitioner and petitioner not having been terminated from service the management is resorting to this method to transfer him by way of punishment. i do not think that contention is well founded. whatever may have been the circumstances in which the disciplinary inquiry was initiated or those proceedings could not be concluded, one thing is clear that petitioner's workmanship has been recognised and it is only in the interest of the organisation the petitioner is being transferred from bangalore to jagadishpur. the decision relied upon by the learned counsel for the petitioner in kerala case has no relevance at all and the principles laid down therein cannot be made applicable. hence, i find that there is no merit in this petition. it is, therefore, dismissed. rule discharged.

Judgment:
ORDER

Rajendra Babu, J.

1. The petitioner is an employee of the 1st respondent which is a Public Sector undertaking. Years ago there was an industrial establishment known as Government Porcelains Factory which was run under the direct control of the Government of Karnataka. Later, in the year 1967, it was converted into a limited company and known as Mysore Porcelains Limited which was taken over as a subsidiary unit of the first respondent and thereafter it became a unit of the said 1st respondent-Company.

2. It is the case of the petitioner that he had been in the service even prior to the taking over of the unit by the 1st respondent having been employed in the year 1958; that the petitioner was a member of the Executive Committee of the Government Porcelains Factory Employees' Association, that Association ceased to function in the year 1980; that a Union known as BHEL (EPD) Employees' Association came into existence owing to the unceasing efforts of the petitioner in its promotion and in all its other activities; that he is a very popular member of the said Union having been elected to represent the Union in BHEL Provident Fund Trust; that he had been very vociferous in the meetings held by the Trust and in pointing out several lapses in the administration and scope for improvement in working of the Trust; that the officers of the 1st respondent-Company are not well disposed towards him and that therefore he has now been transferred to its Jagadishpur unit by the 1st respondent. It is submitted on behalf of the petitioner that the whole action of the 1st respondent management is mala fide; that he is a protected workman as contemplated under the Industrial Disputes Act, 1947; that when the petitioner joined the Porcelains unit there was only one establishment and transfer was not one of the conditions of service inasmuch as there was only one unit and therefore such a power could not be availed of by the management either on account of express or implied conditions. The learned Counsel for the petitioner in this context relies upon a Decision of the Supreme Court in Kundan Sugar Mills v. Ziya Uddin and Ors., : (1960)ILLJ266SC and also on another decision of the Supreme Court in S.A.E. Distribution Co. Ltd. v. N.K. Mohd. Khan, 1970(21) FLR 174. It is also submitted that there has been a settlement between the management and the Association of which the petitioner is a member and that settlement though provides for transfer from one place to another, is not part of the Standing Orders; that the same has not been finalised inasmuch as an appeal is still pending against the said Standing Orders that in the absence of centralised service the transfer is bad as per the Decision of the Supreme Court in General Officer Commanding-In-Chief and Anr. v. DR. Subhash Chandra Yadav and Anr., 1988 (2) LLJ 345; that the transfer effected results in victimisation as the same was made mala fide and referred to Decisions in The State of Punjab and Anr. v. Gurdial Singh And Ors., : [1980]1SCR1071 ; P. Pushpakaran v. Coir Board and Anr., 1979(1) LLJ 139; and P. Krishna Rao v. Apccad Bank Ltd., 1984 LI.C. 131

3. The learned Counsel for the 1st respondent submitted that the BHEL acquired the unit in the year 1976 as its subsidiary and became fully owned in the year 1980; that in the year 1976 a settlement was reached and in fact a Standing Orders was also made to that effect; that whatever may have been the service conditions at the time of employment of the petitioner, consequent upon the taking over of the said unit by the BHEL and settlement having been entered into in 1977 which empowers the management to transfer an employee from one place to another as part of the settlement giving better benefits resulting in rationalisation of service conditions in all its units, the employee cannot now turn round and contend that the management has no such power to transfer. An elaborate Statement of Objections has been filed to demonstrate that there are no mala fides on the part of the management in transferring the petitioner from Bangalore unit to Jagadishpur unit and all these units being under one employer the question of centralised service does not arise to give effect to transfers from one place to another. It is also pointed out that transfer is an incident of service and therefore the management has full and complete powers in this regard; that whatever disciplinary action and other steps taken earlier have not influenced the management in transferring the petitioner but only in the interests of the organisation the petitioner has been transferred and he relied upon the following Decisions:

i. (1977) 50 FJR 197 Caravan Goods Carriers Private Ltd. v. Labour Court, Madras;

ii. 28 FJR 275 Syndicate Bank v. Their Workmen

iii. (1991)(1) KAR. L.J. 30 Syndicate Bank v. Sunder K. Paniyadi;

iv. 1985(1) LLJ 198 C.E. (Pers) T.N.E.B. v. K. Raman;

v. 1986(1) LLJ 464 Shanmugam v. Mysore Mineral Ltd;

vi. : (1989)IILLJ470SC Gujarat Electricity Board and Anr. v. Atmaram Sungomal Poshani

vii. 76 FJR 73 Indian Oil Corporation v. Jt. Chief Labour Commissioner;

4. The question of transfer of an employee has been the subject matter of industrial adjudication. Employment being primarily a creature of contract its terms are modified only to the extent they are superseded by law, contract or award. The rights and obligations of the employer and the employees in matters of transfer would, therefore, be governed by this position that unless proved to the contrary and unless the transfer changes the identity of employment or breaches employment conditions an employer has always a right to transfer his employee. Transfer of an employee is considered to be a managerial right which however is subject to contract to the contrary. However, if the transfer is effected as punishment or as a consequence of victimisation or made not observing the relevant conditions in relation to transfer of Union office bearers or protected employees such transfers can be questioned. Subject to these limitations the employers have a right to distribute work as they think fit and transfer is an incident of service. The management is the best judge to distribute manpower and whether a transfer can be avoided or not.

5. A transfer can be successfully challenged on the following grounds:-

i) Transfer is in violation of the Rules or Standing Orders or Contract;

ii) It is actuated by mala fides as a result of unfair labour practice or some other ulterior motive not connected with the business establishment;

iii) The transfer effects a change in the conditions of service in subjecting the employee to more onerous work.

The existence of a power to transfer and its scope or exercise thereof are entirely different questions. A catena of Decisions are cited on either side to support their respective stands and an analysis of the said Decisions would not lead to any conclusion other than what has been stated above. To sum up, the position is that normally the right to transfer an employee is a prerogative of the management subject to some limitations. An employer has no inherent right to transfer a workman from one place to another if he starts a new, business subsequent to the date of employment of the workman unless either it is an express or an implied condition of service at the time of employment. If however such transfer is permissible an order thereto cannot be called in question unless it is mala fide or made under other circumstances adverted to above.

6. In this case there can be no cavil that when the petitioner had been employed in the Mysore Porcelains Factory he could have been transferred to any other unit or place except inter-department transfer within the factory. On being taken over by the 1st respondent of the Mysore Porcelains Factory, Section 25FF of the Industrial Disputes Act got attracted and the management would have had to pay retrenchment compensation amongst other conditions. The terms and conditions of service applicable to the workman after the take over cannot be in any way less favourable than those applicable to him prior to such transfer. But does it mean that at no time later the conditions of service could be changed even by agreement of parties, in the present case, admittedly there is a Memorandum of Settlement made on 7th March 1977. Clause 19 thereof provided for transfer of its employees and the said clause reads as follows:

'19. TRANSFERABILITY:Employees shall be liable to be transferred from one work, department, section or job to another provided in doing so the management shall keep in view the suitability of the employees for the particular work and also that the pay, grade and seniority of the employees concerned is protected. Similarly employees shall be liable to be transferred to any unit of BHEL or to its subsidiaries.'

This clause was sought to be incorporated in the Standing Orders as well. The Certifying Officer incorporated the same in the Standing Orders and the matter is carried in appeal and the appeal is pending and therefore I do not wish to make any reference to the Standing Orders. I proceed on the basis that the management has no power empowering under the Standing Orders to effect transfers. Even so, on the basis of the settlement that is in force at the relevant time the petitioner could be transferred under Clause 19. The petitioner is undisputably a member of the Union which was a party to the settlement. Therefore it must be accepted that there is contract empowering the management to transfer its employees from one unit to another.

7. It is contended that in the event the petitioner going over to Jagadishpur and if in that unit any retrenchment taking place and if petitioner's services are retrenched on the basis that he joined that unit later or there are certain seniors to him whose services will be retained and his services retrenched, but these questions fall in the region of speculation and I would not 'cross bridge until I reach it'. If and when the petitioner is retrenched it is certainly open to him to agitate such questions when all these contentions can be considered. At this stage it is unnecessary to consider the same.

8. The contention that there should have been centralised service on the basis of the Decision of the Supreme Court in Cantonment Board's case cited supra, is not tenable inasmuch as in the present case there is only one employer and he is not being transferred from one independent unit to another independent unit under two different employers which was the position in that case. Then the question of maintaining a centralised service also does not arise.9. Nextly what is to be considered is whether the petitioner's transfer is actuated by mala fides or is otherwise a case of victimisation adopting unfair labour practice. It is elaborately set out in the Statement of Objections that the petitioner is working as an Artisan in the assembly division and is engaged in assembling disc insulators. He is experienced in the field being the senior-most in the department. The plant at Jagadishpur needed the services of such an Artisan and in that background he is being transferred and not on any other ground or motive. Although the learned Counsel for the petitioner stated that some disciplinary proceedings had been initiated against the petitioner and petitioner not having been terminated from service the management is resorting to this method to transfer him by way of punishment. I do not think that contention is well founded. Whatever may have been the circumstances in which the disciplinary inquiry was initiated or those proceedings could not be concluded, one thing is clear that petitioner's workmanship has been recognised and it is only in the interest of the organisation the petitioner is being transferred from Bangalore to Jagadishpur. The Decision relied upon by the learned Counsel for the petitioner in Kerala case has no relevance at all and the principles laid down therein cannot be made applicable. Hence, I find that there is no merit in this Petition. It is, therefore, dismissed. Rule discharged.