Case: Shankar Textile Mills Vs. Its Workmen

Gajendragadkar, J.1. This appeal by special leave arises out of an industrial dispute between the appellant, Shankar Textile Mills and the respondents its workmen. The said dispute was the result of five demands made by the respondents against the appellant. It is one of these demands with which the present appeal is concerned. This demand was demand 2 and the reference in respect of it was made in these words :"whether the date of joining service as shown against the undermentioned workmen is correct, and if not, from what date the workmen should be considered to have joined the establishment."2. The workmen concerned are 13 in number and against their several names are shown the months in which they claimed to have joined the service of the undertaking respectively. All the items in dispute were referred by the Governor of Punjab for adjudication to the labour court at Amritsar on 14 February, 1959. The labour court considered the dispute and made its award on 9 May, 1959. In respect of the demand with which we are concerned, the labour court held that the dates of joining service of the workmen shown against their respective names in the reference were correct, except in regard to Ram Samad and Chander Bhan who should be taken to have joined the mills on 1 October, 1955 and 14 March, 1952 respectively. It is against this part of the award that the appellant has come to this Court.3. The only point which Mr. Lal urged before us in support of the appeal was that the labour court was wrong in holding that the appellant is the successor of the Hindustan Development, Ltd.., which was the original owner of the undertaking. It appears that on 30 April, 1954 the appellant took a lease of the undertaking and began to manage it as a lessee. Subsequently, from 11 May, 1955, the appellant purchased the undertaking and since then, the undertaking has been in its management as a purchaser. The argument is that the concern had been closed before the purchase took place and since the subject-matter of the purchase was not a going concern, the appellant cannot be held to be a successor-in-interest of the Hindustan Development, Ltd. This argument has been rejected by the labour court, and we think, rightly. A number of workmen have given evidence to show that they had joined the service of the mills which was managed by the Hindustan Development, Ltd., and they had been working in the mills continuously without any break. Rattan Chand, one of the partners of the appellant-firm, did no doubt suggest that when the purchase took place, the factory was closed. But that statement has been treated by the labour court to be unreliable and the labour court has believed the evidence led by the respondents. Therefore, the finding that the concern was a going concern at the time when it was sold to the appellant, cannot be disputed in the present appeal.Then it is urged that when the appellant took up the factory as a lessee, the workmen who continued to work in the factory must be deemed to have been reappointed by the appellant, and so, continuity of employment which has been assumed by the labour court is not established. This argument is clearly misconceived. On the record, there is no evidence to show that after the lessee took up the management of the factory, the employees services were terminated and the lessee re-employed them; no documents have been produced in that behalf and no oral evidence has been led in support of the plea either. In fact, it is extremely unlikely that the lessee who took on the management of the factory could have purported to re-employ the workmen; on the other hand, as a lessee, he continued the factory as it was conducted by the lessor without effecting a break in the services of the employees or in the continuity of the operation of the factory. In fact, it appears that the appellant took a lease because there was a difficulty in obtaining a sale-deed straightaway without a permit. Therefore, the position is that the appellant has purchased the undertaking and there is no term in the agreement of purchase which would take the case of the appellant outside the principles laid down by industrial adjudication in that behalf prior to the enactment of S. 25FF in 1956. Besides, it is not even suggested that any compensation has been paid to the employees by the vendor Hindustan Development, Ltd. All the facts clearly show that when the appellant took the transfer deed from the Hindustan Development, Ltd., it agreed to continue the services of the employee on the same terms and conditions as before. That, in substance, is the view taken by the labour court and we see no reason to interfere with it.

Decision reasoning: 0[ds]The argument is that the concern had been closed before the purchase took place and since theof the purchase was not a going concern, the appellant cannot be held to be aof the Hindustan Development, Ltd. This argument has been rejected by the labour court, and we think, rightly. A number of workmen have given evidence to show that they had joined the service of the mills which was managed by the Hindustan Development, Ltd., and they had been working in the mills continuously without any break. Rattan Chand, one of the partners of thedid no doubt suggest that when the purchase took place, the factory was closed. But that statement has been treated by the labour court to be unreliable and the labour court has believed the evidence led by the respondents. Therefore, the finding that the concern was a going concern at the time when it was sold to the appellant, cannot be disputed in the presentit is urged that when the appellant took up the factory as a lessee, the workmen who continued to work in the factory must be deemed to have been reappointed by the appellant, and so, continuity of employment which has been assumed by the labour court is not established. This argument is clearly misconceived. On the record, there is no evidence to show that after the lessee took up the management of the factory, the employees services were terminated and the lesseethem; no documents have been produced in that behalf and no oral evidence has been led in support of the pleafact, it is extremely unlikely that the lessee who took on the management of the factory could have purported tothe workmen; on the other hand, as a lessee, he continued the factory as it was conducted by the lessor without effecting a break in the services of the employees or in the continuity of the operation of the factory. In fact, it appears that the appellant took a lease because there was a difficulty in obtaining astraightaway without a permit. Therefore, the position is that the appellant has purchased the undertaking and there is no term in the agreement of purchase which would take the case of the appellant outside the principles laid down by industrial adjudication in that behalf prior to the enactment of S. 25FF in 1956. Besides, it is not even suggested that any compensation has been paid to the employees by the vendor Hindustan Development, Ltd. All the facts clearly show that when the appellant took the transfer deed from the Hindustan Development, Ltd., it agreed to continue the services of the employee on the same terms and conditions as before. That, in substance, is the view taken by the labour court and we see no reason to interfere with it.