Cement Corporation of India Ltd., New Delhi and Others Vs. B.B.V. Krishnam Raju - Court Judgment

Excerpt:
sica - transfer of employees - section 18 of sick industrial companies (special provisions) act, 1985, section 25-ff of industrial disputes act, 1947 and articles 14 and 23 of constitution of india - writ appeal against allowing writ of employees - order declares transfer of employees with transfer of company without their consent as unreasonable and arbitrary - employees of sick industries do not becomes employees of transferee company as result of rehabilitation scheme as decided by bifr - respondents not workmen and thus cannot be transferred without their consent. - cantonments act[c.a. no. 41/2006]. section 346 & cantonment fund (servants rules, 1937, rules 13, 14 & 15: [h.l. gokhale, ag. cj, p.v. hardas, naresh h. patil, r.m. borde & r.m. savant, jj] jurisdiction of school.....orderv.v.s. rao, j.1. this judgment will dispose of all the writ appeals. the appeals are filed by the cement corporation of indiaand two others against the common judgment of the learned single judge dated 6-7-1999 made in wp nos.10228, 19901, 22122, 23256, 23257, 24811, 26039 and 32845 of 1998.2. for the purpose of convenience we take up the writ appeal no.1351 of 1999 arising against the order in wp no.32845 of 1998. the parties are referred to as per their status in the writ petition. we shall state the facts necessary for the disposal of all the appeals as follows:the cement corporation of india (hereinafter referred to as the corporation) is fully owned government of india company. it is engaged in the manufacture and sale of cement. it has cement factories (units) in various parts.....

Judgment:
ORDER

V.V.S. Rao, J.

1. This judgment will dispose of all the writ appeals. The appeals are filed by the Cement Corporation of Indiaand two others against the common judgment of the learned single Judge dated 6-7-1999 made in WP Nos.10228, 19901, 22122, 23256, 23257, 24811, 26039 and 32845 of 1998.

2. For the purpose of convenience we take up the writ appeal No.1351 of 1999 arising against the order in WP No.32845 of 1998. The parties are referred to as per their status in the writ petition. We shall state the facts necessary for the disposal of all the appeals as follows:

The Cement Corporation of India (hereinafter referred to as the Corporation) is fully owned Government of India Company. It is engaged in the manufacture and sale of cement. It has Cement Factories (Units) in various parts of the country. One such cement factory/unit is situated at Yerraguntla village in Cuddapah District, which is managed by the third respondent.The petitioner was appointed as a Sales Supervisor in the Corporation by orders bearing No.PDR/3/2/94/6472 dated 8-7-1994 issued by the Manager (Personnel) on behalf of the Corporation. The order of appointment inter alia provides that the petitioner is liable to be transferred anywhere in India in the service of the Corporation including the subsidiaries of the Corporation at the discretion of the management. The petitioner is also liable to be transferred for work in any Section/Department/Plant/Unit of the Corporation or its subsidiaries with any designation at any time or from one shift to another shift at the discretion of the management. He was placed on probation for a period of one year. After completion of his probation in the Corporation, the petitioner was transferred from Mandhar Cement Factory in Madhya Pradesh to Yerraguntla Cement Factory under the management of the third respondent vide orders of the Corporation office No.PDR/ CO/MKTG/97/2240, dated 5-5-1997. Consequent upon his transfer, the Mandhar Unit by its reference dated 19-9-1997 relieved the petitioner with effect from19-9-1997 afternoon advising him to report to the third respondent. The petitioner, thereafter, joined the third respondent and since then he is working in the Corporation at Yerraguntla.

3. In the year 1997, the Corporation asked for option of the employees to work outside the Corporation under any private employer. The petitioner did not give option. Those employees, according to the petitioner, who did not opt to work under any private employer were transferred during December, 1997 and January, 1998 to some other units of the Corporation. While so, the second respondent, the Director (Operations) of the Corporation issued a Circular No.D(O)/YRO/7/98, dated20-1-1998 stating that consequent on the sale of Yerraguntla Cement factory/unit of the Corporation, the petitioner's services stand transferred to India Cements Limited(hereinafter called ICL). Immediately, on 21-9-1998 the petitioner filed objections by way of representations inter alia stating that as he is recruited only by the Corporation, his services are not liable for transfer to a new employer without his consent. Again on 12-2-1998, the petitioner made another representation to the same effect. The petitioner also states that one J.N. Talwar who is also working in the Corporation, on coming to know of the Circular dated 20-1-1998 issued by the second respondent, approached the High Court of Delhi and obtained stay of operation of the Circular dated 20-1-1998 by order dated 5-2-1998. Having not received any reply to his two representations dated 21-1-1998 and 12-2-1998, the petitioner filed WP 1028 of 1998. In the writ petition the petitioner prayed for a writ in the nature of mandamus declaring the action of the second respondent in issuing the Circular No.D(O)/YRO/7/98, dated 20-1-1998 (the impugned Circular) seeking to transfer the services of the petitioner to a new employer as illegal arbitrary being contrary to the well settled position of law to the effect that a contract of employment cannot be transferred to a new employer.

4. In all the other writ appeals arising out of the respective writ petitions, the petitioners are non-workmen category employees occupying various positions in the Corporation. They also filed the writ petitions for a similar relief.

5. The Corporation through its zonal manager filed a similar counter affidavit in all the writ petitions. The averments in the counter affidavit in WP No. 10228 of 1998 (out of which WA 1351 arises) are as follows:

The Cement Corporation of India which is having units throughout India for the last so many years is running with losses. It became sick company as contemplated under Section 3(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as SICA). A reference was made to the Board for Industrial and Finance Reconstruction (BIFR) and the said reference was registered with BIFR and the BIFR declared the respondent-Corporation as a sick company. The Corporation as a part of rehabilitation scheme submitted proposal to sell four unviable units namely Yerraguntla Cement Factory, Chakri Dadri Cement Factory, Akaltara Cement Factory and Mandhar Cement Factory. On 23-5-1997 when the BIFR considered the proposal submitted by the Corporation, the representatives of CCI Employees Union, Yerraguntla submitted that they have no objection for privatisation and sale of the Unit provided the interests of the employees are not adversely affected.

6. The Corporation has invited global bids for sale/joint ventures for the Yerraguntla Cement Unit through a press notification dated 17-10-1995. It is further averred in the counter affidavit that on 17-10-1997, the CCI employees Union has also requested that ICL alone should be allowed to take over the Unit and that the employees would be happy if the same is taken over by ICL. After completion of sate transaction of Yerraguntla Cement Factory in favour of the ICL pursuant to the sanctioned scheme approved by the BIFR, the sale is binding on the sick industries company, a transferee company, shareholders and guarantors and also the employees of the said company. As the sale is a part of the rehabilitation scheme approved by the BIFR, the ICL also signed the indenture for sale on 21-9-1998 and also confirmed that ICL has absorbed all the employees on the rolls of CCI, Yerrangutla as on the date of Memorandum of Understanding dated 28-10-1997. As per the communication of ICL, there shall be no break in the service of the employees for the purpose of benefits and there will be no retrenchment of employees. The terms and conditions ofemployment of all the employees including all the emoluments and perquisites shall be protected. The BIFR in its order dated 1-12-1997 confirmed the sale of the Unit clearly recording that as per the terms and conditions of MOU between CCI and ICL all the employees of the Corporation at the Yerraguntla Unit will be transferred to ICL on existing terms and conditions without any break in service, without retrenchment and that no prejudice will be caused to the employees of the Yerraguntla Unit.

7. It is further stated that the question of giving any option to the employees does not arise as no employee including the petitioner has ever filed any objections before the BIFR, which has approved the sale on 1-12-1997. No employee was ever given option as to the transfer to ICL. As per MOU dated 28-10-1997, ICL is required to absorb only 37 Executives, 37 Supervisors and 414 Workmen totaling to 488 employees and other employees/workmen were transferred to other units depending upon requirement and need of the Corporation. As the employees including the petitioner are well protected under the terms and conditions of MOU and the indenture of sale which are approved by BIFR, the petitioner cannot have any objection. The impugned Circular is bona fide and the same does not amount to termination of the services of the petitioner. The petitioner worked for some time with the ICL and having done so and having allowed the parties to act upon the MOU, cannot be permitted to make an objection after a long lapse of time. The Corporation or its Yerraguntla Unit have not received any representations from any employees including the petitioner. It is also stated that the interim orders passed by the High Court of Delhi in favour of Shri J.N. Talwar in WP No.532 of 1998 were modified giving liberty to the Corporation to enforce the Circular dated 20-1-1998 with reference to the persons other than the petitioner Mr. J.N. Talwar. Therefore, the Corporationprayed for the dismissal of the writ petition.

8. In the reply affidavit filed by the petitioner, it is denied that the Corporation is running in losses. It has got several units/ factories and only some of them are running in losses. The Company as such has not become a sick company. The Corporation accepted the recommendations of the Fifth Pay Commission and increased the salaries of all its employees with effect from January, 1998 and all the employees were getting 10% interim relief along with arrears. The petitioner was not appointed at Yerraguntla Cement Factory or for Yerraguntla Cement Factory. He was appointed as an employee in the Cement Corporation of India liable to be transferred to other units of the Corporation. Merely because the Corporation sold the Unit to a Private Company, the Services of the petitioner cannot be transferred to a private company as the petitioner is not bound by any agreement alleged to have been made between the Union and the Management. So far as the workers (employees belonging to workmen category) are concerned, they may have agreed to work at Yerraguntla Unit. The petitioner is not a workman and not the member of the Union. Even in 1997 he addressed a letter to the Corporation requesting to be transferred and posted anywhere in India as he came to know that Yerraguntla Cement Factory is liable to be sold to ICL. As an officer of the Corporation the petitioner cannot be transferred to a private Company and being an officer he can be transferred to any Unit of the Corporation. If he is transferred to ICL he would be denied the benefit of 5th Pay Commission and other benefits like education of his children in Central School, LTC, Medical benefits etc.

9. Having regard to the pleadings learned single Judge considered the only question whether the action of the Corporation in transferring the employeesof Yerraguntla Unit to the fold of ICL is valid in law or arbitrary. Before the learned single Judge the respondent contended that a writ petition is not maintainable against the Corporation as it is not a 'State' within the meaning of the Constitution of India. The impugned Circular being an administrative order not affecting the service of the petitioner, a writ petition challenging the same is not maintainable. Thirdly, it is purely a contractual obligation and the petitioner if aggrieved has to approach the civil Court or the industrial Court for redressal of the grievance and the same cannot be agitated in a petition under Article 226 of the Constitution of India. Fourthly, it was contended that the petitioner is estopped from challenging the transfer by principles of acquiescence or waiver especially having worked in the transferee company for several months and hence the petitioner is barred from approaching this Court in view of the approval of the sale by the BIFR on 12-10-1997. It is lastly contended that it shall be presumed that the transfer of the employee is deemed to have been permitted by the BIFR and petitioner cannot maintain a writ petition subsequent to the orders of BIFR.

10. Following the dicta of the Supreme Court in Rajasthan Electricity Board v. Mohanlal, AIR 1967 SC 1856, Sukhdev v. Bhagathram, : (1975)ILLJ399SC , Ramana v. I.A.A.I., : (1979)IILLJ217SC , Central Inland Water Corporation v. Brojo, AIR 1986 SC 1371, Bhandari v. ITDC, : (1986)IILLJ509SC and Ajay Hazia v. Khalid, AIR 1987 SC 487, the learned single Judge held that the Corporation is a 'State' amenable to jurisdiction of this Court under Article 226 of the Constitution of India and, therefore, though the employees of the Corporation are not entitled for the protection under Article 311 of the Constitution of India, yet they can claim protection under Articles 14 and 16 of the Constitution of India if the acts of the Corporation are arbitrary and unfair.

11. The learned Judge also adverted to the question whether the conditions of service of the Corporation employees regarding transfer can be unilaterally changed by the Corporation and held that the Union never committed any wrong for the transfer of all the employees of Yerraguntla to ICL. As the transfer of the employees to ICL has been effected without consent of the employees the same has to be held as arbitrary and contrary to conditions of service available to the employees at the time of appointment. The fact that some other employees have accepted the transfer io ICL or the fact that the employees in the writ petitions also worked for some time in Yerraguntla Unit under ICL does not by itself be sufficient to pre-empt the petitioners on the ground of acquiescence and waiver especially when the petitioners had objected to transfer even by the time the impugned Circular was issued and it was specifically stated by them that they are not interested to go to the fold of ICL. Adverting to the provisions of SICA the learned single Judge has held that the final scheme for the transfer of the Unit by CCI to ICL has not been approved by the BIFR and what is approved is only the sale of one Unit in favour of ICL and, therefore, the provisions of subsection (8) of Section 18 of SICA are not at all attracted. The learned single Judge, thus, allowed the writ petitions holding that the petitioners shall be treated as if they are the employees of the CCI until CCI takes a decision with regard to the transfer of the petitioners in accordance with the service rules applicable to them prior to their transfer to the fold of ICL. Aggrieved by this judgment of the learned single Judge the present appeals are filed.

12. The learned Counsel Shri A. Krishna Murthy has contended that as the petitioners have acquiesced in the transfer and worked for some time under ICL, they shall be deemed to have waived their right if any and, therefore, they cannot be permitted to question the same. Secondly itis contended that when the entire unit is transferred, there is no question of obtaining consent of the employees because the concept of transfer of employees does not arise when the Unit itself is transferred by virtue of privity of the contract between the vendor-transferor Unit and transferee Unit to transfer the undertaking as a going concern. In support of his contention, the learned Counsel draws anology from the provisions of Section 25FF of the Industrial Disputes Act, 1947 (hereinafter referred to as the ID Act) and submits that the necessity of a tripartite agreement in a case like this is irrelevant. Lastly it is submitted that in view of sub-section (8) of Section 18 of SICA, when the Unit is transferred as per the Scheme approved by the BIFR, the same is binding on the sick industrial company, the transferee company, shareholders, guarantors, financial institutions and the employees and, therefore, by virtue of the provisions of the SICA the petitioners are bound by the terms of MOU between the CCI and ICL.

13. Shri Panduaranga Rao learned Counsel for the writ petitioners refuted the contentions of the Corporation and submits that even till today there is no proper approval of the final scheme by the BIFR and hence the Corporation cannot rely on the provisions of SICA without consent of the employees. The services cannot be transferred to new employer which means the change of master bringing in change in the terms of contract of service. The transfer of the petitioners to the ICL without their consent is arbitrary and violates the fundamental rights under Article 14 of the Constitution of India. Any agreement entered into between the workers Union and the management of the Corporation is totally irrelevant consideration for the purpose of deciding the question whether officers/ employees can be validly transferred to the Transferee Company, which amounts to forcing the petitioners to join another master which is impermissible in law.

14. Having regard to the various rival contentions, the points that arise for consideration before us are:

(i) Whether by virtue of the impugned Circular the petitioners are deemed to have been transferred to the India Cements Limited (ICL) from the'Cement Corporation of India without obtaining any consent or the option from the employees to be transferred to transferee company?;

(ii) Whether under the Sick Industrial Companies (Special Provision) Act, 1985, the employees of a sick company automatically become the employees of the other Company to which the sick company is transferred after the final scheme is approved by the BIFR?; and

(iii) To what

relief? In Re Point No. 2:

15. Admittedly CCI is running in losses due to the fact that four of its units are not able to post profits. Therefore, the Corporation decided to sell the four units/ factories situated at Yerraguntla, Chakri Dadri, Akaltara and Mandhar. The proposal was submitted to the Government of India. Having obtained approval from the Government, a global bid was floated on 17-10-1995. While the bids were under consideration, the Corporation filed case No.501 of 1996 before the BIFR under the SICA in which a proposal was submitted to sell the four unviable Units including Yerraguntla. The proposal was heard and by order dated 1-12-1997 the first Bench of BIFR considered the question of granting permission for sale of the Yerraguntla Unit with expansion to M/s. India Cements Limited in accordance with the approval of the Government of India dated 24-10-1997. The BIFR conveyed the approval in the following terms:

'We have carefully considered the matter. Having regard to the circumstances of the case, we consider it expedient and in public interest as also in the interest of rehabilitation of the CCIL, to convey our no objection to the proposed sale for a sum of Rs.198 crores by CCIL of the Yerraguntla Unit to ICL subject to the following conditions:

(a) The sale proceeds of Rs.198 crores or any additional amount accruing to CCIL in respect of the sale of the unit shall for the time being, be kept with the leader of the consortium, i.e., SBI in a no lien account. No expenditure out of the foregoing shall be incurred or undertaken to be incurred by CCIL, without obtaining prior permission of BIFR through application submitted through the OA, 1FCI.

(b) As regards, the CCI's request for utilisation of Rs.64 crores out of sale proceeds for the purpose of liquidating the liabilities of the unit towards meeting the pressing operational and inescapable statutory liabilities of CCIL, pending final sanction of rehabilitation scheme by BIFR, CCIL are directed to approach, the OA, IFCI who shall examine the justification for the concerned item(s) of expenditure arising out of these liabilities and submit a report to the Board at the earliest possible. Appropriate orders in the matter would be passed by BIFR after submission of the said report.'

16. Therefore, from the order dated 1-12-1997 passed by the BIFR it cannot be said that the BIFR has also approved the transfer of employees/officers of CCI to the ICL. The said approval cannot be treated as the approval of the final scheme as per the provisions of Section 18 of the SICA.

17. The SICA is an Act aimed at timely detection of sick companies owning industrial undertakings, the speedy determination by a board of experts of the preventive, ameliorative, remedial and oilier measures which need to be taken with respect to such companies and the expeditious enforcement of the measures as determined by the board of experts. Chapter III deals with References Inquiries and preparation of Schemes for prevention amelioration and remedial measures for preventing sickness in industrial undertakings owned by companies and corporations. Under Section 15 of the said Act the Board of Directors of a sick company shall make a reference to the BIFR (constituted under Section 4 of this Act) for determination of the measures which shall be adopted with respect to the sick company. Such a reference also be made by the Central Government, Reserve Bank of India, State Government or Public Finance Institution or a Bank if there are several reasons to believe that the industrial company has become a sick industry. Section 16 prescribes a procedure for inquiry into the working of the sick industrial companies which inter alia provides that the Board may take the assistance of any Agency for submitting reports with reference to the terms of reference fixed by the BIFR. After receipt of an enquiry report as per Section 16, the BIFR, under Section 17 shall consider the same and decide whether it is practicable for the sick company to make its net worth exceed the accumulated losses within a reasonable time. If such a decision is taken, the BIFR may give specific time to the company to make its net worth posilive i.e., to make its net worth exceed the accumulated losses. In case the BIFR decides that it is not practicable for the sick company to make its net worth positive within a reasonable time, and that it is necessary and expedient in public interest, then the BIFR may direct an operating agency to prepare a scheme providing for any of the measures specified in Section 18 in relation to such sick company. Aftersuch order is passed under Section 17(3) when the BIFR comes to the conclusion that is not practicable to make the net worth of sick company positive, the operating agency shall prepare & scheme for the purpose of financial reconstruction of sick industrial company, for the proper management of sick industrial company by change or take over of the management of the sick industrial company, and for the purpose of amalgamation of the sick industrial company with another company or any other company with the sick industrial company. It is to be noted that sub-section (2) of Section 18 deals with matters to be provided for in the scheme prepared under sub-section (1). The scheme prepared by an agency at the instance of/orders of BIFR shall be submitted to the BIFR which shall examine and publish the draft scheme in brief in the newspapers and the same will be modified by the Board after receipt of the suggestions or objections to the draft scheme from any shareholders or any creditors or employees of such company. Clause (b) of sub-section (3) of Section 18 is relevant and the same is extracted here undcr:

'(b) The board may make such modifications, if any, in the draft scheme as it may consider necessary in the light of the suggestions and objections received from the sick industrial company and the operating agency and also from the transferee company and any other company concerned in the amalgamation and from any shareholder or any creditors or employees of such companies.'

18. After finalisation of the scheme following the procedure under subsection (3), the BIFR on the recommendation of the operating agency (Operating agency as defined in Section 3(1 )(i) means any financial institution or a person specified by the BIFR) if the sanctioned/approved scheme is revised and a fresh scheme isprepared under sub-section (5), again the BIFR has to follow the provisions of subsection (3) and (4) that is to say calling for objections from shareholders, creditors and employees by publishing the fresh scheme. Then only sub-section (7) of Section 18 gives finality to the scheme sanctioned by BIFR' and shall be a conclusive evidence that all the requirements of this scheme relating to the reconstruction or amalgamation or any other measure specified therein have been complied with and a copy of the sanctioned scheme certified in writing by an- officer of the Board to be a true copy thereof, shall, in all legal proceedings whether in appeal or otherwise be admitted as evidence. Till the procedure contemplated under sub-sections (3) to (7) of Section 18 is followed, it cannot be said that a final scheme is approved or sanctioned by the BIFR. The effect of an approved/ sanctioned scheme is postulated by subsection (8) of Section 18, which reads as follows:

'On and from the date of the coming into operation of the sanctioned scheme or any provision thereof, the scheme or such provision shall be binding on the sick industrial company and the transferee company or, as the case may be, the other company and also on the shareholders, creditors and guarantors and employees of the said companies.'

19. The CC1 filed case No.501 of 1996 before BIFR and pending any fresh steps as contemplated under Sections 16, 17 and 18 of the SICA, on 1-12-1997, the BIFR only approved the sale of Yerraguntla Unit subject to the conditions as extracted above. There is no scheme/fresh scheme sanctioned either under sub-section (4) or sub-section (5) of Section 18 and no draft scheme has been published inviting objections. Therefore, the contention of the learned Counsel for the appellant that thesale of the unit in question has been approved by BIFR and, therefore, under provisions of sub-section (8) of Section 18 of the SICA, the employees have been deemed to have transferred to the transferee company has to be rejected. We have dealt with the relevant provisions of the SICA to show that even while approving final scheme for the purpose of remedial measures to enable the sick company to make its net worth positive, the statute contemplates putting among other employees of the sick company on notice and hear their objections before finalising the scheme or refraining a fresh scheme. As noticed above, the case of the CCI before the BIFR has not reached that stage. Therefore the contention of the learned Counsel for the appellant is liable to be rejected.

20. The learned Counsel for the appellant also contends that when a company is transferred as a going concern, the employees automatically gets transferred to the transferee and in such a situation there is no concept of transfer of employees involved warranting obtaining prior consent of the employees. This submission is presumably made drawing strength from Section 25FF of the Industrial Disputes Act. In fact, the learned Counsel has drawn our attention to a Division Bench judgment of the Madras High Court in Spencer Group Aerated Water Factory Employees' Union and another v. The Presiding Officer, Industrial Tribunal, 1997 (1) LU 168. Dealing with the scope of Section 25-FF of the ID Act, the Madras High Court held that after the advent of Section 25FF there is no scope for invalidating the transfer of the ownership or management of an undertaking whether by agreement or by operation of law, on the ground that consent of the workmen had not been obtained. Further, it was held that all that the workmen are entitled to, is notice and compensation in accordance with the provisions of Section 25-F of the Act.

21. It is not denied that all the petitioners in these cases are employees belonging to non-workman category not covered by the provisions of ID Act. Therefore, we have no hesitation to hold that the provisions of Section 25FF of the ID Act are not attracted to non-workman category employees of the Corporation. The impugned notice is issued to all employees and says that the employment and service with CCI stands transferred and taken over by ICL, Chennai. While considering point No.2 with reference to the effect of provisions of SICA we need to examine whether the appellant-Corporation itself is entirely transferred to ICL. Admittedly the Corporation is still carrying on its operations and only one unit is sold to ICL. Therefore it is not a case of a sick company/corporation as such getting transferred to a new company or an existing company within the meaning of the provisions of SICA. Therefore, the employees do not lose their status as employees of CCI. Accordingly point No.2 is answered against the appellant-company and in favour of the writ petitioners.

In Re Point No. 1:

22. The impugned Circular dated 20-1-1998 reads as follows:

'Please take notice with effect from 21-1-1998 the entire Cement Manufacturing Unit at Yerraguntla is being transferred to and vested in [he India Cements Limited, Chennai as a going concern.

Consequent to the above sale and transfer of the Yerraguntla Unit effective from 21-2-1998:

(i) Your employment and service with CCI would stand transferred and be taken over by the India Cements Ltd., Chennai;

(ii) Your services will not be interrupted by such take over and your serviceafter take over shall be treated as continuous from the date of your joining with CCI;

(iii) The terms and conditions of your services on such take over shall not in any way be less favourable than those presently applicable toyou.

In respect of the period commencing from 21-1-1998, ICL will discharge all statutory liabilities in respect of your service on the basis of continuity of your employment and service reckoned from the date of your joining in CCI as if it is not interrupted by such takeover of service.

for Cement Corporation of India

Sd/- A.K, Sinha

Director (Operations)

23. The appellant issued the impugned Circular unilaterally transferring the services of employees without taking their option or without putting them on notice. The submission made by the learned Counsel for the appellant is that the concept of transfer of employees does not arise when the unit is transferred and, therefore, there is no question of asking for option of employee in each individual case. We are afraid, we cannot accept this contention. Acceptance of such submission is fraught with lot of complications and injustice. As on the relevant date of transfer, there may be number of employees who are expecting promotions--as such posts are All India posts--to higher category posts. Or there may be employees who are entitled to the age of super annuation at the age of sixty years. In such circumstances all the employees who may by accident of service or by fortuitous circumstances got posted at Yerraguntla Unit will stand to lose their service benefits in the CCI. For example the respondent-employee in WA 1351 of 1999 as noticed above, was transferred from CCI Mandhar Cementfactory. As on today Mandhar Cement Factory has not been sold to any private party. If only the employee had continued in Mandhar Cement factory he would not have faced the situation. Therefore giving a notice to the employee and also obtaining the option is a mandatory requirement of law. The employee has a contract of service with CCI which has resulted in a master and servant relationship between the employee and Corporation. By virtue of the unilateral action, the contract of service is being determined and put an end to overnight, and the employee is being forced to have a new employer. Such a course of action in our opinion, would be grossly arbitrary and violative of Article 14 of the Constitution of India and may also amount to violation of Article 23 of the Constitution of India for it amounts to forced labour which is prohibited under Article 23. Article 23 though permits the State to impose compulsory service for public purposes, it shall not permit to force an employee to work with another employer contrary to his wishes. Such a course of action is not authorised by any law as in the case of workmen.

24. The learned Counsel for the writ petitioners has brought to our notice the judgment of the Supreme Court in Kundan Sugar Mills v. Ziauddm, : (1960)ILLJ266SC , Jawaharlal Nehru University v. Dr. K.S. Jawalkar, 1989 (3) SLR 730, Manager, M/s. Pyarechandkesarimal Porwal Bidi Factory v. Onkar Laxman Thenge, 1973 (1) SLR 946, Orissa Electrical Engineers' Service Association v. State of Orissa, : (2000)ILLJ1093SC and Nizam Sugars Officers Welfare Association v. Government of A.P., : 1998(6)ALD538 , in support of the submission that the contract of service cannot be changed or altered without the willingness/option of the employee. Now we shall consider these judgments:

In the absence of any express term in the contract of service to the effect that theemployer has a right to compel the employeeto serve in any future concern of theemployer can the employer compel theemployee serve in any future concern wasthe question which came up before theSupreme Court in Kundan Sugar Mills case(supra). After referring to the relevant caselaw, the Supreme Court held that anemployer has no inherent right to transferhis employee to another place where hechooses to start a business subsequent to thedate of employment and that right of theemployer to transfer the employee to thenew concent cannot be implied as a conditionof service of employment because such apower of the employer can only flow froman express term of the contract.

25. In Onkar's case (supra), the facts areas follows:

The appellant had a number of beedi factories in Vidarbha including the one at Kamptee. The Head office of the Kamptee Unit and the factory at Kamptee were treated as separate entities owned by the same firm. Even the Registration of the establishment of the two units was under the separate Acts. The respondent was an employee at Kamptee Unit who was directed at the relevant time to work at the head office. After working in the head office for six years he was dismissed from service. It was challenged in an application under Section 16 of the CP and Berar Industrial Disputes Settlement Act. The original authority dismissed the application holding that the employee at the material time was not the employee in the factory and he was employed in the head office relying on the fact that respondent was signing the attendance register at head office and was paid salary by the head office. Against the order of the original authority the employee filed a revision before the Industrial Court Nagpur which was also dismissed. In the subsequent writ petition filed in the High Court of Bombay (Nagpur Bench) the matter was remanded to the original authority fordisposal according to law. The High Court also observed that unless it is established that he was legally transferred to the head office, the termination of service of the employee from the factory cannot be upheld. Aggrieved by the order of the High Court, the matter was carried to Supreme Court by the management. While dismissing the appeal filed by the management, the Honourable Supreme Court reiterated the general rule in respect of relationship of master and servant to the effect that the subsisting contract of service with one master is a bar to service with any other-master unless the contract otherwise provides for or the master consents and that a contract of employment involving personal service is incapable of transfer. If a businessman joins a partnership firm and takes his personal staff with him into the firm, his staff cannot be made the staff of the firm without the consent of the other partners. In certain cases, the Supreme Court observed, that it is possible to say that an employee has different employers, as when the employer, in pursuance of a contract between him and a third party, lends or hires out the services of his employee to that third party for a particular work. But such an arrangement does not effect a transfer of the contract of service between the employer and his employee, but only amounts to a transfer of the benefit or his services. The Apex Court further observed as follows:

'The contract of service being thus incapable of transfer unilaterally, such a transfer of service from one employer to another can only be effected by a tripartite agreement between the employer, the employee and the third party, the effect of which would be to terminate the original contract of service by mutual consent and to make a new contract between the employee and the third party. Therefore, so long as the contract of service is not terminated, a new contract is not made as aforesaidand the employee continues to be in theemployment of the employer. Therefore when an employer orders him to do a certain work for another person, the employee still continues to be in his employment.'

26. In Jawaharlal Nehru University (for brevity JNU) case (supra), the said University set up a Post-graduate Centre at Imphal in the State of Manipur. Teachers and other staff members were appointed at that centre and all of them were treated as employees of the University. However, after some time the Centre at Imphal was transferred by the JNU to Manipur University along with the staff. The petitioner challenged his transfer to Manipur University before the Delhi High Court by way of a writ petition which was allowed by a learned single Judge and subsequently confirmed by the Division Bench in Letter Patent appeal declaring that the respondent continues to be in the service of JNU. The matter was carried to the Supreme Court. While dismissing the appeal of the University the Supreme Court observed as follows:

'Inasmuch as the transfer of the centre of Post-graduate Studies from the appellant University to the Manipur University could not result in a transfer of the employment of the respondent from the one to other, it must be concluded that the respondent continues in the employment of the appellant University. The transfer of the Centre of Post-graduate Studies to the Manipur University may be regarded as resulting in the abolition of the post held by the respondent in the Appellant University. In that event, if the post held by the respondent is regarded as one of a number of posts in a group, the principle 'last come, first go' will apply, and someone junior to the respondent must go. If the post held by him constitutes a class by itself it is possible to say that he issurplus to the requirements of the appellant University and is liable to be retrenched.'

27. Before considering the judgment of a learned single Judge of this Court in Nizam Sugars Officers case (supra), we may sum up the legal position as laid down by the Honourable Supreme Court in the above three judgments:

(a) An employer has no inherent right to transfer his employee to another place where he chooses to start a business subsequent to the date of employment in the absence of express term of contract of service and such a power cannot be implied as a condition of service of employment;

(b) The transfer of a branch/unit/factory/ place of business activity by one employer/ owner to another employer/owner would not automatically result in the transfer of employment of the employee from one to another;

(c) The general principle that a subsisting contract of service under one master is a bar to serve any other master, leads to a conclusion that the services of an employee cannot be transferred without an express and explicit consent of the employee to serve the new master/ employer;

(d) Even where an employee works with another employer on being lent by the original employer to the hiring employer, for a particular work such arrangement does not result in the transfer of the contract of service between the employer and his employee but only amounts to transfer of benefit of service;

(e) In view of the principles 'a' to 'd' above, a contract of service is incapable of transfer unilaterally unless it is a result of valid and binding tripartite agreement between the employer, employee and the third party in which even the original contractof service stands terminated by mutual consent and a new contract of service between the new employer and the employee comes into force; and

(f) when an employer unilaterallytransfers the services of the employee to the new employer, even if the employee discharges services with the new employer it shall not amount to acquiescence or waiver to act as a bar for the employee to question his transfer to the new employer.

28. Now we may refer to Nizam SugarsOfficers case (supra):

Nizam Sugars Limited (NSL for brevity) had a number of sugar manufacturing factories/units in Andhra Pradesh. As one of its units namely Nizam Sugar Factory at Sudhanagar, Hindupur in Anantapur District was running in losses it was decided by the Board of Directors to transfer the Unit at Sudhanagar, Hindupur along with machinery and staff to a third party. The Officers Association has challenged the same as being arbitrary and violative of Articles 14 and 16 of the Constitution of India. The respondents justified the transfer contending that in view of the contract of employment of petitioners and NSL, the petitioners are liable to be transferred to the new employer/third party that as the service conditions of petitioners are protected and the third respondent agreed to absorb all the petitioners, the staff members and officers are bound to work with the new employer. B.S. Raikote, J, after referring to Onkar's case, (supra), JNU's case (supra) and also the Orissa Engineers case (supra), held that in the absence of any tripartite agreement, the officers cannot be transferred to third party and that if by any reason the Unit at Hindupur is required to be closed or transferred to some third party, the petitioners could be transferred to other units, if they are not willing to go under the employment of a third party.

29. The learned Judge further held that:

'..... it is clear that, even in case whereeither a department or a wing or unit is transferred to a third party, unless the employee consents to it, his services cannot be 'transferred to the third party and notwithstanding such transfer of the unit or department, such employee continues to be the employee of the organisation and he is entitled to be absorbed in the other department or unit if the organisation finds that by such transfer of the unit or wing to some third party, a surplus staff is resulted, it is open to such employer to terminate the services of the employee or employees on the basis of the 'last come first go' principle. In the instant case, the statement of the petitioners that some of the employees who were juniors to them in their cadre working in other units, are continued in service, and if that is so, transferring the petitioners to respondent No,3, by retaining the juniors to the petitioners would be discriminatory and violative of Article 14 of the Constitution.'

30. We respectfully affirm the view of the learned single Judge and following the judgment of the Supreme Court in various decisions cited above, we have to hold on point No.1 against the respondent-Corporation and in favour of the writ petitioners.

In Re Point No. 3:

31. The impugned notice No.D(O)/ YRO/7/98 dated 20-1-1998 inter alia informs all the employees of the Yerraguntla Unit that the employment and services of each employee with CCI stands transferred and be taken over by the ICL, that the services will not be interrupted by such take over and they will be given continuity of service and that the condition of service of theemployees on such take over shall not in any way be less favourable than those presently applicable to the employees of CCI. Relying on this condition, the learned Counsel for the appellant submits that in the event of the conditions and transfer not being accepted by the writ petitioners, it would result in detriment to themselves. We are afraid, we cannot agree with this. It is not the case of the CCI that the petitioners are junior employees in the All India seniority and, therefore, when Yerraguntla Unit is being transferred to ICL they will have to be retrenched or ousted from service treating their posts in CCI abolished. As mentioned earlier but for the transfer orders, t the petitioners would not have been got posted in Yerraguntla Unit which alone is sold to ICL. Admittedly, there are number of cement factories/units run under the CCI and the services of the petitioners being liable to be transferred anywhere in India to any of the Units under the control and management of the CCI, the contention of the learned Counsel for the appellants is liable to be rejected and accordingly it is rejected. In fact similar contentions made by the learned Advocate-General in Nizam Sugars Officers case (supra), were rejected by this Court and we fully endorse the reasoning in the said judgment and follow the same.

32. The learned single Judge has allowed the writ petitions rejecting all the contentions of the CCI. For the reasons given herein above, we find no error in the judgment of the learned single Judge and while affirming the impugned judgment, we dismiss the writ appeals with costs by fixing one set of hearing fee at Rs.5,000/- in all the writ appeals.