M.D.,M/S T.Nadu Magnesite Ltd vs S.Manickam & Ors

3. The appellant herein, TANMAG, is a company fully owned by the Government of Tamil Nadu. By G.O.Ms.No.41 Industries Department, dated 10.1.1979, it was decided to implement the policy decision taken by the Government of Tamil Nadu to reserve the mineral prone areas of magnesite for State exploitation. TANMAG was accordingly formed for implementing the policy. It is the common case of the parties that the respondents were duly selected and appointed, on the respective posts, in the aforesaid company. They were appointed as Assistant Project Engineer (Mechanical), Junior Foreman (Mechanical) and Deputy Manager (Mechanical) respectively by orders dated 12.9.1983, 23.11.1988 and 18.8.1989. At the time of joining, the respondents executed bonds to serve in TANMAG for a minimum period of three years. The TANMAG confirmed the services of the respondents through its proceedings dated 25.10.1985, 30.4.1991 and 24.8.1989 respectively. The respondents were paid the revised pay by the TANMAG as per the Pay Commission's recommendations made by the Government of Tamil Nadu.

4. In the year 1990, through G.O.Ms.No.855 Industries (MME.II) Department, dated 16.8.1990 the Government of Tamil Nadu decided to implement the Chemical Beneficiation Project in joint venture with M/s. Kaitan Supermag Limited. The share holding pattern of the joint venture was as follows:

5. The appellant through letter dated 18.3.1991 conveyed to the respondents that they are in excess of the cadre strength in TANMAG and called upon them to express their willingness to work in the Joint Venture Company with the then existing pay and other facilities without any disadvantage. It was also mentioned in the said communication that if no option is given, the appellant will have no option but to terminate their services under Clause 2.14 of the Service Rules of the Tamil Nadu Magnesite Limited (hereinafter referred to as the Service Rules). The respondents were reluctant to leave the service of TANMAG. However, after prolonged correspondence, the appellant transferred the respondents to the JVC, without any monetary loss and alteration of service conditions with seniority and other benefits; by orders dated 20.06.1991 and 31.07.1991 respectively.

7. By G.O.Ms No 140 dated 11.5.98 it was decided to close the JVC. A joint request was made by six employees in the letter dated 31.10.1998 including the three respondents herein seeking reversion back to TANMAG. By letter dated 26.11.98 the respondents and the other employees were informed that they were permanently transferred to the JVC, namely, M/s. India Magnesia Products Limited (hereinafter referred to as IMPL). Accordingly, they were relieved from the service of the company from the afternoon of 31.7.1991. As such they have no lien in TANMAG and no right to claim a reversion of their services from M/s. IMPL to TANMAG. Thus their request was rejected.

10. The learned single Judge after considering the rival submissions held that the respondents have lost the lien in TANMAG due to their transfer to the JVC. On transfer, they became the staff of the JVC. The claim of the respondents for being sent on deputation, under Clause 2.17 of the Service Rules having been rejected they cannot claim that they should be reverted back to TANMAG. Consequently the writ petitions were dismissed.

8. The order dated 26.11.1998 was challenged by the respondents in the respective writ petitions contending that the respondents were 4 recruited by TANMAG and were transferred with all service benefits, pay protection, etc., to M/s. IMPL (the JVC) when it was formed. When it was closed all its assets were transferred back to TANMAG. The employees transferred from TANMAG to the JVC should also be automatically reverted back to TANMAG. The action of TANMAG in not re-transferring the respondents to its service is erroneous. They, therefore, prayed for quashing the said order dated 26.11.1998 with a consequential direction to TANMAG to re-transfer/absorb the respondents in the service of TANMAG with all benefits such as seniority on par with their immediate juniors, arrears of pay and allowances with service benefits that would have been accrued in favour of the respondents if they had continued in the service of TANMAG.

13. The Division Bench upon consideration of the submissions of the parties concluded that the respondents are entitled to be taken back by TANMAG in terms of the earlier transfer order, which protects the service conditions of the respondents. It was further held that TANMAG is not justified in contending that appellants having lost their lien in TANMAG cannot be retransferred. The assurance given in the letter dated 11.5.1991 clearly states that the transfer of service is without any disadvantage. It was, therefore, held that the stand taken by TANMAG is contrary to the assurance given to the respondents when they were compulsorily transferred to the JVC. It is noticed that all the assets of JVC on its closure have been taken over by TANMAG. There is no 7 justification in denying absorption of the respondents who are unable to seek any other employment at this age of above 50 years. It is held that TANMAG is bound by the assurance given to the respondents while seeking their consent for transfer to JVC. This is particularly so, as it was stated that the terms and conditions of employment enjoyed by them in TANMAG are protected. It is further held that since JVC was closed at the instance of TANMAG, the appellant has put the respondents in a disadvantageous position. Therefore, TANMAG is estopped from contending that the respondents will not be absorbed. With these observations the judgment of the learned Single judge has been set aside. The appellant has been directed to absorb the respondents with continuity of service and other attendant benefits without back wages.

In our opinion, on the basis of facts on record in this case, the claim of the respondents would not be covered by the principles enunciated above. In view of the facts narrated above, the Division Bench clearly committed an error of law in concluding that there has been a breach of principles of promissory/ equitable estoppel. Therefore, the High Court erred in issuing the direction/writ in the nature of mandamus directing the appellants to reabsorb the appellants in the service of TANMAG.

21. In view of the above, the appeals are allowed. The impugned judgment of the Division Bench under appeal is set aside. There will be no order as to costs.