In the High Court of Judicature at Madras Dated:-12-01-2009 Coram: The Honourable Mr.Justice D.MURUGESAN and The Honourable Mr.Justice M.SATHYANARAYANAN Writ Appeal No.286 of 2003 1. Indian Oxygen Employees Union (Regd No.1554) rep. by its General Secretary, 75, Vaidyanathan Street, Tondiarpet, Chennai - 600 001. 2. V.Srinivasan, Flat No.6, Krishna Apartments, 52, T.M.Maistry Street, Tiruvanmiyur, Chennai - 600 041. .. Appellants/Petitioners Versus 1. Union of India rep. by the Secretary, Ministry of Labour, Shram Shakti Bhavan, New Delhi. 2. B.O.C. India Ltd., rep. by its Operations Manager, 75, Vaidyanathan Street, Tondiarpet, Chennai - 600 001. 3. Datex Ohmeda India (P) Ltd., rep. by its Zonal Manager, 75, Vaidyanathan Street, Tondiarpet, Chennai - 600 001. .. Respondents/Respondents Writ Appeal filed under Clause 15 of the Letters Patent against the order of the learned single Judge dated 28.10.2002, made in W.P.No.17633 of 1998. This WP filed under Article 226 of the constitution of India praying to issue a writ of declaration that Sec 25-FF of the Industrial Disputes Act 1947 is unconstitutional, to the extent it does not require the consent of a workmen for transfer of his services on the Transfer of an undertaking and consequently https://hcservices.ecourts.gov.in/hcservices/ direct the 2nd respondent to continue the 2nd petitioner in service from 1.10.1998 and pay him all the wages and other dues as before 1.10.1998 OR (in the alternative) issue a writ of declaration that the sale by the 2nd respondent to the 3rd Respondent vide the 2nd Respondent's notice No. PD/ID/002 dated 30.9.98 does not constitute a transfer of undertaking as per the proviso to Section 25FF of the Industrial Disputes Act, 1947 and consequently direct the 2nd respondent to continue the 2nd petitioner in its services in the same manner as before 1.10.1998 without any interruption, pay all his arrears of wages and other benefits. For appellants .. Mr.N.G.R.Prasad for M/s. Row & Reddy. For Respondents .. Mr.K.Mohanamurali (SCGSC) for R1. Mr.A.L.Somayaji, S.C. for M/s. Gupta and Ravi for R2. Mr.V.Karthik for M/s T.S.Gopalan VOC for R3. ******* JUDGMENT M.SATHYANARAYANAN, J The appellants are the writ petitioners and aggrieved by the dismissal of the writ petition, had preferred this appeal. 2. The facts which are necessary for the disposal of this writ appeal are as follows:- The second appellants herein joined the services of Indian Oxygen Limited (in short IOL) as Typist on 08.11.1965. IOL was a Public Limited Company with its head office at Calcutta and it was manufacturing Industrial Compressed Oxygen, Medical Oxygen, Dissolved Acetylene, Anaesthesia gas, Liquid Oxygen, Argon Gas, Hydrogen Gas and various other high speciality gases. IOL besides manufacturing various kinds of Industrial and medical gases, was also manufacturing Electrodes, Welding Equipments, Medical apparatus like Boyle's and other medical accessories. 3. In the year 1995, the name of IOL was changed to B.O.C India Limited (Second Respondent). The second appellants was posted to work at Trichy as Clerk-cum-Typist in the Sales Office of the second respondent. On 3.11.1978, the second appellants was promoted as Stenographer Grade II and posted to Accounts Department at Chennai. On 07.01.1988, he was promoted as Stenographer Grade I and posted to Health Care Products Division. The Welding Division of the second https://hcservices.ecourts.gov.in/hcservices/ appellants was sold to ESAB India Limited on 21.05.1991 and some employees were transferred on account of the said sale. 4. The first appellants Union objected to the transfer of some employees as they did not want to serve under the new employer on the ground that they were not working in any separate undertaking, but in the Office/Establishment situated at Chennai which was not a separate undertaking. The first appellants Union also filed a suit in C.S.No.741 of 1991 on the file of this Court and obtained an order of ad-interim injunction in O.A.No.483 of 1991 against transfer of employees. The said interim order was also made absolute on 25.10.1991. Consequently, the second respondent continued to engage their services. Even though, the manufacturing of Medical Equipments existed in the form of a separate factory at Calcutta, it ceased to exist after 1991 and the second respondent company called the business of handling medical equipments etc., as "MEDISHIELD". According to the appellants herein, there was no separate undertaking called medical division run by the second respondent company. 5. It is further contended by the appellants/writ petitioners that the employees are transferred from one post to other anywhere in the establishment and there is a common seniority list maintained for all the sections and hence, OHMEDA is not an independent division in the nature of an undertaking and the employees posted at a particular time in that division do not belong to that division. 6. The order of appointment pertaining to the second appellants does not contain the name of a particular department and thereby his service could be utilised in all the departments of the second respondent. The second appellants is also an active member of IOL Employees' Union and is holding the post of Joint Secretary and therefore, he is the protected workmen under the ID Act. 7. The appellants/ writ petitioners further averred in their affidavit that All of a sudden, the second appellants has published a letter dated 30.9.1998 in the Company's Notice Board on 7.10.1998 stating that OHMEDA Division has been sold to one DATEX OHMEDA INDIA PVT LTD., - third respondent and that simultaneously, the staff who are working in the said division are transferred to the third respondent. The second appellants neither sought the consent of the affected employees nor hold any discussion with the first appellants Union before transferring their services to the third respondent and the decision of the second appellants was an unilateral one and it has been exercised in an arbitrary manner affecting the rights and privileges enjoyed by the employees. The appellants/writ petitioners further contended that the second appellants in all fairness, should have resorted to the benevolent provision contained under Section 25- N of the Industrial Disputes Act and thereby they should have drawn https://hcservices.ecourts.gov.in/hcservices/ up a seniority list and the second appellants being the senior most, ought not to have been retrenched. The second respondent in order to circumvent the said provision, had resorted to Section 25-FF of the Industrial Disputes Act and hence the said provision is in violation of Article 14 and 21 of the Constitution of India. The services of the second appellants with the second respondent entitled him with pension and higher rates of bonus etc., which will not be available in the event of the transfer of his services to the third appellants. Since the second appellants is a large establishment more than 100 workers, they are entitled to the protection of Chapter V-B of the Industrial Disputes Act, which prohibits lay off, retrenchment and closure without prior permission of the Government. The second respondent who is the public limited company of repute, whereas the third respondent company is a private limited company, whose credentials are not known to the appellants/writ petitioners. All workers who were former members of the appellants Union and who were transferred to the services of the third respondent have not been paid Rs.160/- per month towards health and hygiene and prosperity sharing amount for the month of October 1998 and they were also denied canteen facility. 8. Therefore, the appellants/writ petitioners filed a writ of declaration to declare that Section 25-FF of the Industrial disputes Act, 1947 is unconstitutional to the extent that it does not require the consent of workmen for transfer of his services and the transfer of an undertaking and consequently direct the second respondent to continue the services of the second appellants/second writ petitioner in service from 1.10.1990 and pay him all the wages etc., or in the alternative, prayed for the issuance of the writ of declaration to declare that the sale effected by the second respondent in favour of the third respondent vide notice dated 30.9.1998 does not constitute the transfer of undertaking as per the proviso to Section 25-FF of the Industrial Disputes Act 1947 and consequently directed the second respondent to continue the services of the second appellants in the same manner as before 1.10.1998 without any interruption and pay the arrears of wages and other benefits. 9. The interim orders sought for by the appellants/writ petitioners were not granted. The second appellants agreed to join the services of the third respondent without prejudice to his contentions raised in the writ petition. The third respondent sent a communication dated 8.6.1999 to the second appellants herein refusing him to join duty as he had forfeited the right to be in employment with them. 10. This Court vide order dated 1.10.1999 by way of an interim measure directed the second respondent herein to pay the second appellants a sum of Rs.6,400/- per month from 1.11.1999 for the https://hcservices.ecourts.gov.in/hcservices/ reason that the third respondent herein had refused to provide him with employment. The appeal preferred by the management against the said order in writ appeal No.2314 of 1999 was dismissed on 21.1.2000 and thereby confirming the above said interim order. 11. The second respondent has filed its counter affidavit. It is contended in the counter affidavit that a writ is not maintainable against the second respondent as it is only a public limited company and not performing any public duty. Since the issues raised by the appellants herein require adjudication of disputed questions of fact, they are not entitled to invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. 12. As regards the transfer of undertaking in favour of the third respondent is concerned, the second respondent contended that it has a separate division to look after the sale of Health Care Equipments under the name and style of " OHMEDA" and its activities are totally different and is severable from other units of the shops or undertaking. The employees engaged in "OHMEDA" division are exclusively doing work which are related with sales and service of the products of "OHMEDA" division and the said division is dealing with Health Care products in a separate business establishment. It is stressed by the second respondent that "OHMEDA" division is a separate undertaking and its activities are severable from other units of the shops and sale of the said division will not affect the working of the main activities of the second respondent which manufacturing industrial and medical gas. 13. The second respondent further contended that the "OHMEDA" Health Care product division has been transferred from the second respondent to the third respondent not only in India, but through out the world and in this country, the transfer of undertaking took place under the agreement dated 24.9.1998 with effect from 1.10.1998. In pursuant to the said decision, the staff belong to the first appellants union including the second appellants stood transferred to the third respondent and in all, 15 officials became employees of the third respondent in the entire South Zone and all of them, have been exclusively work in the "OHMEDA" division and they have been continuous service carrying out of the work of the said division immediately before such transfer. 14. The second respondent also contended in the counter that the services of the second appellants and other officials were agreed to be taken by the third respondent without any break or interruption in their service on the same terms and conditions including retirement benefits and it is not in any way less favourable than those applicable to them immediately before the transfer of undertaking. On and from 7.10.1998 onwards, the second appellants became employees of the third respondent by virtue of transfer of undertaking. https://hcservices.ecourts.gov.in/hcservices/ 15. With regard to the Constitutional validity of Section 25-FF of the Industrial Disputes Act, 1947, the second respondent contended that the Legislature does not curb the right of the employer to retrench, terminate or close an undertaking but on the contrary, has imposed certain restrictions which are reasonable and as contemplated under Article 19(6) of the Constitution of India. A provision has also been made for payment of compensation to workmen as and when they are retrenched in the event of transfer of undertaking. In the case on hand, the service of the second appellants and others have not been terminated but their service conditions have been protected by the third respondent. 16. The second respondent contended that there has been a bona fide transfer of undertaking by "OHMEDA" division and such transfer of undertaking or sale of undertaking is recognised in law and Section 25-FF came to be incorporated in the Industrial Disputes Act, taking into consideration the interest of the workmen. That apart, sale or transfer of an undertaking, cannot be questioned on the ground it amounts to change in service conditions as contemplated under Section 9A of the Industrial Disputes Act. Therefore, for the said reasons, the second respondent prayed for the dismissal of the writ petition. 17. The learned Judge, after taking into consideration the averments made in the writ petition and the counter affidavit of the second respondent and also the judgments reported in : (1) R.S.Madho Ram & Sons (Agencies) v. ITS Workmen 1964 (1) L.L.J. page 213) (2) P.K.P. Bidi Factory v. O.L.Thenge (A.I.R.1970 S.C. page 823), (3) J.N.U. v. DR.K.S.J. Awatkar & others (A.I.R.1989 S.C. 1577 = 1989 (2) L.L.J. page 586) and (4) Voltal Volkart Employees Union v. Voltas Ltd., (1999 (4) L.L.N. page 1107), held that Section 25-FF safeguards the interest of the workmen and that the consequential relief of directing the second respondent to continue the services as it had been prior to 1.10.1998 and that consequential reliefs cannot be granted. The learned Judge for the said reasons, has dismissed the writ petition and the writ petitioners aggrieved by the same, had preferred this writ appeal. 18. Heard Mr.N.G.R.Prasad, learned counsel appearing for the appellants and Mr.K.Mohanamurali, learned Senior Central Government Standing Counsel appearing for the first respondent and https://hcservices.ecourts.gov.in/hcservices/ Mr.A.L.Somayaji, learned senior counsel appearing for M/s. Gupta and Ravi, for the second respondent and Mr.V.Karthik, for Mr. T.S.Gopalan, and Co., learned counsel appearing for the third respondent. 19. As regards the maintainability of the writ petition, it has been contended that the writ petition was filed in the year 1998 and the second appellants herein had superannuated in August 2003, had he been continued in the service of the second respondent and now the second appellants is aged about 65 years. Therefore, at this distance of time, it would be wholly unjustifiable to direct the second appellants to avail the alternative remedy. 20. The learned counsel appearing for the appellants heavily placed reliance upon the judgment of the Hon'ble Supreme Court of India, reported in 2008(1) L.L.N. 1(SC) - BCPP Mazdoor Sangh and another v. N.T.P.C. and others. 21. The facts of the said case are:- that the members of BCPP Mazdoor Sangh are employees recruited by National Thermal Power Corporation (NTPC) by calling for list of names from the Employment Exchange and were appointed by following the procedure. Steps were being taken for transferring them to Bharat Aluminium Company Limited (BALCO) which was originally a public sector undertaking under the Government of India. Subsequently, in pursuant to the policy of disinvestment, the entire management became vested with M/s. Sterlite under agreement dated 20.6.2002, with effect from 1.7.2002. The Union aggrieved by the said decision of transfer from public sector undertaking to private management, had challenged the same by filing writ petition before the High Court of Chhattisgarh and they mainly prayed for an order declaring that Clause 8.2 and 16.3 of the agreement with Sterlite is illegal, arbitrary and unenforceable against them who are non-executive workers as it unilaterally changes the service conditions of all those employees who are not party to the agreement. The Union also sought for an order of injunction restraining the management from enforcing the above said clauses. The respondents filed counter stating among other things raising the maintainability of the writ petition as it involves interpretation of contractual rights between the parties. It is further contended that NTPC is merely an agent of BALCO on a specific power of attorney given to them and the ownership of BCPP belongs to BALCO. Recruitment was given pursuant to an agreement exclusively for BCPP with specific undertaking from the non-executive employees and they know pretty well the meaning of undertaking and therefore, have no right to question the agreement between BALCO and NTPC. The offer of appointment as well as the undertaking given by the employees specifically bring out the above fact and besides, the operation and maintenance agreement signed between the NTPC and BALCO makes it https://hcservices.ecourts.gov.in/hcservices/ clear that the recruitment made by NTPC is specifically for BCPP and in the event of transfer of operation and maintenance of BCPP to any other agency, the services of such employees will be transferable to the successor agency. Based on the said agreement, various administrative actions were taken and which were taken only on behalf of BALCO and not for NTPC. It is further contended by the management in the said case that once BCPP owned by BALCO is taken over by BALCO, the entire non-executive staff of BCPP will continue to remain in BCPP under the management of BALCO in terms of Clauses 8.0 and 16.3 of the agreement and once the plant is taken over, if the non-executive employees are not going to BALCO, they will become surplus in the hands of NTPC and therefore, NTPC will left with no other option except to retrench their services. 22. The High Court of Chhattisgarh after taking into consideration the rival contentions, held that the writ petition filed by the employees are maintainable and the terms and conditions, more particularly, Clauses 8.0 and 16.3, are accepted by the employees and adhered the stand taken by the management. Therefore, it dismissed all the writ petitions. Hence, the matter was taken by way of appeal to the Hon'ble Supreme Court of India. The Hon'ble Supreme Court of India uphold the view of the High Court of Chhattisgarh in so far as the maintainability of the writ petition, On the factual aspects, the Hon'ble Supreme Court of India held that the bipartite agreement between NTPC and BALCO was entered into on 22.05.1990 and that the appointments of 236 employees were made prior to the said date and at the time of recruitment and appointment made by NTPC, no agreement between NTPC and BALCO was in existence empowering NTPC to make recruitment and appointment on behalf of BALCO. Hence, the Hon'ble Supreme Court of India held that as per Clause No.21.0 of the agreement, the effective date and duration of agreement with effect from 29.6.1987, is contrary to the provisions of Section 23 of the Indian Contract Act and also in violation of Article 14 of the Constitution of India. 23. The Hon'ble Supreme Court of India, further held that Clause 14.0 of the above said agreement is also against the public policy and contrary to the provisions of Section 23 of the Indian Contract Act as well as violation of Article 14 of the Constitution of India for the reason that undue influence was exercised by NTPC management and the selected candidates exhaust the terms and conditions stipulated therein. As regards the absence of tripartite agreement, it was held in the said decision that in order to appoint the appellants, there must be a tripartite agreement and in the absence of the same, the transfer from one employment to another cannot be effected. It has been further found by the Hon'ble Supreme Court of India that prior to such decision, the employees have not been heard also and therefore the action of the management is an infringement of https://hcservices.ecourts.gov.in/hcservices/ Article 14 of the Constitution of India. Therefore, for the said reasons, the Hon'ble Supreme Court of India had set aside the decision of the High Court of Chhattisgarh and allowed the appeal filed by the Union. 24. The learned counsel appearing for the appellants submitted that the transfer of the second appellants from the service of the second respondent to third respondent was not on the same terms and conditions as he will not get pension in the new employer namely third respondent and that he will lose the benefit of profit sharing scheme, which the second appellants was getting while he was in service of the second respondent as the third appellants is not a manufacturing concern. Moreover, the second appellants will lose the canteen facility available in the second respondent and also lose the benefit of educational scholarship for his wards. The second appellants will also to be deprived of medical reimbursement of Rs.600/- per year for himself and his wife and also Mediclaim policy benefit available till life time. 25. The learned counsel appearing for the appellants further contended that the consent of the second appellants has not been taken prior to his transfer. In support of his submissions, the learned counsel appearing for the appellants has drawn the attention of this Court to the transfer agreement dated 24.9.1998 and more particularly, to clause No.10.01 which specifically provides that the purchaser will take into services all the employees, who have accepted employment with the new employer. Reliance was also placed upon the judgment of the Industrial Tribunal Mumbai, in Complaint (ULP) No.645 of 1998 between IOL Employees' Union, Mumbai v. BOC India Limited (second respondent), wherein it has been held that the four concerned workmen whose services is transferred to Datex Ohmeda cannot be said legal and proper and the Tribunal ultimately held that the second respondent herein is guilty of unfair labour practice and further directed not to transfer any of the four concerned workmen working in Ohmeda division of the second respondent to other new company Datex Ohmeda India Limited (third respondent) and that in the event of failure to continue their services, the second respondent management is liable to pay retrenchment compensation as stipulated under Section 25F of the Industrial Disputes Act. 26. The learned counsel appearing for the appellants also contended that the transfer of Ohmeda division in favour of the third respondent by the second respondent in any event cannot be construed as a transfer of entire undertaking and only such an event, Section 25FF of the Industrial Disputes Act will apply. Ohmeda division has been transferred by the second respondent in favour of the third respondent and admittedly, the petitioner was originally appointed as a typist in IOL, it later became BOC in the year 1995 and till https://hcservices.ecourts.gov.in/hcservices/ December 1998 was in the services of the second respondent and after the formation of the Health Care products division, promoted and posted as Stenographer Grade I in the said division and in the year 1995, the Health Care division was renamed as Ohmeda division and in the year 1996 the second appellants was classified as Assistant. The above facts according to the learned counsel appearing for the appellants, would imply that the employees are transferable from one post to another and a common seniority was maintained for all the sections. It is once again stressed by the learned counsel appearing for the appellants that the Ohmeda division is not an independent division and it forms part of the second respondent and admittedly not the entire management and affairs of the second respondent company was transferred in favour of the third respondent but only Ohmeda division. It is vehemently contended by the learned counsel appearing for the appellants that the second appellants was not exclusively appointed in Health Care division and later became Ohmeda division and merely he happen to work at the relevant point of time, it cannot mean that he is in permanent service of the Ohmeda division. There is no factual disputes involved as the second respondent failed to produce any material before this Court to substantiate their claim that Health Care division was a separate undertaking. 27. As regards the validity of Section 25FF of the Industrial Disputes