Case: Kundan Sugar Mills Vs. Ziyauddin &amp; Others

In 1951 the partners of the appellant-Mills purchased the building machinery and other equipment of another sugar mill at Kiccha in the district of Nainital. They closed the said mill at Kiccha and started it at Bulandshahr. The new factory was named Pannijee Sugar and General Mills, Bulandshahr. On January 19, 1955, the General Manager of the appellant-Mills ordered the transfer of the respondents 1 to 4 from the appellant-Mills to the new mill at Bulandshahr. The said respondents through their representative, the fifth respondent, protested to the General Manager against the said transfer. But the General Manager, by his letter dated January 22/24, 1955, insisted upon their joining the new mill at Bulandshahr. But the said respondents did not accede to his request. On January 28, 1955, the General Manager served a notice on the respondents 1 to 4 stating that they had disobeyed his orders and thereby committed misconduct under Standing Order No. L(a). They were asked to submit their explanation as to why action should not be taken against them under the Standing Order. The Labour Union, by its letter dated January 31, 1955, denied the charges. On February 2, 1955, the General Manager made an order dismissing the respondents 1 to 4 from service on the ground that they had disobeyed his order of transfer and thus they were guilty of misconduct under Standing Order No. LI(a). The Labour Union thereafter raised an industrial dispute and the Government of U.P. by its notification dated November 7, 1955, referred the following issue for decision to the State Industrial Tribunal for U.P. at Allahabad :"Where the employers have wrongfully and / or unjustifiably terminated the services of Sarva Shri Zia Uddin, Raisuddin, Shafiquddin and Ahmed Bux for refusal to obey the orders of transfer to M/s. Pannijee Sugar and General Mills Co., Bulandshahr. If so, to what relief are the workmen entitled."The State Industrial Tribunal by its order dated February 6, 1956, made its award holding that the management was within its rights and that, as the respondents 1 to 4 had disobeyed the order of the manager, they were properly dismissed by the management. The said respondents through their Union, respondent No. 5, preferred an appeal to the Labour Appellate Tribunal of India and the said Appellate Tribunal held that the management had no right to transfer the respondents 1 to 4 to the new factory and therefore the order dismissing them was illegal. The management has preferred the present appeal against the said order of the Labour Appellate Tribunal.

Court's reasoning:
It is true that the partners of the Sugar Mills at Amroha own also the Sugar Mills at Bulandshahr; but they were proprietors of the former Mills in 1946 whereas they purchased the latter mills only in the year 1951 and started the same in Bulandshahr in or about 1955. The respondents 1 to 4 were employed by the owners of the appellant-Mills at the Sugar Mills at Amroha at a time when they were not proprietors of the Sugar Mills at Bulandshahr. It is conceded that it was not an express term of the contract of service between the appellant and the respondents 1 to 4 that the latter should serve in any future concerns which the appellant might acquire or start. It is also in evidence that though the same persons owned both the Mills they were two different concerns. In the words of the Appellate Tribunal, the only connection between the two is in the identity of ownership and, but for it, one has nothing to do with the other. It is also in evidence that an imported workmen at Amroha is entitled to house-rent, fuel light and travelling expenses both ways, while at Bulandshahr the workmen are not entitled to any of these amenities. The workmen at Amroha are entitled to benefits under the Kaul Award while those at Bulandshahr are not so entitled. The General Manager, E. W. 1, in his evidence stated that "the interim bonus of the Bulandshahr factory as ordered by the Government in November 1955 was Rs. 11,000 while for Amroha it was nearly 1 1/2 lacs". He also stated that "the bonus for last year at Amroha would be probably equal to 1 1/2 months wages and at Bulandshahr equal to about 4 or 5 days wages". It is also in evidence that apart from the disparity in the payment of bonus the accounts are separately made up for the two mills. It is clear that the two mills are situated at different places with accounts separately maintained and governed by different service conditions, though they happened to be under the common management; therefore, they are treated as two different entities4. The question of law raised in this case must be considered in relation to the said facts. The argument of the learned counsel for the appellant that the right to transfer is implicit in every contract of service is too wide the mark. Apart from any statutory provision, the rights of an employer and an employee are governed by the terms of contracts between them or by the terms necessarily implied therefrom. It is conceded that there is no express agreement between the appellant and the respondents whereunder the appellant has the right to transfer the respondents to any of its concerns in any place and the respondents the duty to join the concerns to which they may be transferred. If so, can it be said that such a term has to be necessarily implied between the parties? When the respondents 1 to 4 were employed by the appellant the latter was running only one factory at Amroha. There is nothing on record to indicate that at that time it was intended to purchase factories at other places or to extend its activities in the same line at different places. It is also not suggested that even if the appellant had such an intention, the respondents 1 to 4 had knowledge of the same. Under such circumstances, without more, it would not be right to imply any such term between the contracting parties when the idea of starting new factories at different places was no in contemplation. Ordinarily the employees would have agreed only to serve in the factory then in existence and the employer would have employed them only in respect of that factory. The matter does not stop there. In the instant case, as we have indicated, the two factories are distinct entitled, situated at different places and, to import a term conferring a right on the employer to transfer respondents 1 to 4 to a different concerns is really to make a new contract between them6. It is not necessary to multiply the citation, for the other decisions relied on by the learned counsel for the appellant pursue the same reasoning followed in the aforesaid cases7. We have referred to the decisions only to distinguish them from the present case, and not to express our opinion as to the correctness of the decisions therein. It would be enough to point out that in all the said decisions the workers had been employed in a business or a concern and the question that arose was whether in the circumstances of each case the transfer from one branch to another was valid or amounted to victimization.None of these decisions deals with a case similar to that presented in this appeal, namely, whether a person employed in a factory can be transferred to some other independent concern started by the same employer at a stage subsequent to the date of his employment. None of these cases holds, as it is suggested by the learned counsel for the appellant, that every employer has the inherent right to transfer his employee to another place where he chooses to start a business subsequent to the date of the employment. We, therefore, hold that it was not a condition of service of employment of the respondent either express or implied that the employer has the right to transfer them to a new concern started by him subsequent to the date of their employment9. Lastly it is said that the Appellate Tribunal had no jurisdiction to set aside the finding of the State Industrial Tribunal, as it did not give rise to any substantial question of law within the meaning of S. 7(1) of the Industrial Disputes (Appellate Tribunal) Act, 1950. The question raised was one of law, namely, whether the appellant had the right to transfer the respondents 1 to 4 from one concern to another.A substantial question of law was involved between the parties and that raised also an important principle governing the right of an employer to transfer his employees from one concern to another of his in the circumstances of this case. We, therefore, hold that a substantial question of law arose in the case and that it was well within the power of the Labour Appellate Tribunal to entertain the appeal.