Case: Manager, M/S. Pyarchand Kesarimal Ponwal Bidi Factory Vs. Omkar Laxman Thange &amp; Ors

2. The appellant-firm conducts a number of bidi factories at various places in Vidharba including the one at Kamptee. Its head office is also situate there. The factory at Kamptee and the head office have always been treated as separate entities though owned by the same firm. Consequently, the head office was registered under the Central Provinces and Berar Shops and Establishments Act, 1947 and the factory at Kamptee was registered under the Factories Act. The factory has also its own standing orders certified under the Central Provinces and Berar Industrial Disputes Settlement Act, 1947. Respondent 1 was originally employed in the factory at Kamptee. Two or three years thereafter he was directed to work at the head office and worked therein for about six years prior to the impugned order of dismissal passed against him by the munim of the head office. Aggrieved by the order he filed an application under Section 16 of the C. P. and Berar Industrial Disputes Settlement Act alleging that the said order was incompetent and illegal. The appellant-firm contended that at the material time Respondent 1 was employed as a clerk in the head office that the head office was a separate entity, that the dismissal order had not been passed by the appellant-firm as the owner of the said factory, that the firm, as such owner, was wrongly impleaded and that the application was misconceived.3. The Assistant Commissioner dismissed the application holding that Respondent 1 at the material time was not the employee in the factory, but was employed in the firms head office. He relied on the fact that the head office and the factory had separate rules, that Respondent 1 used to sign his attendance in the register of the head office, that he was being paid his salary by the head office, and lastly, that his name was not on the muster roll of the factory. He also found that whereas the staff of the head office was governed by the C. P. and Berar Shops and Establishments Act, the factory was governed by the C. P. and Berar Industrial Disputes Settlement Act. Against the dismissal of his application Respondent 1 filed a revision application before the Industrial Court, Nagpur. The Industrial Court dismissed the application holding that the only question raised before it was whether Respondent 1 was the employee of the head office and that being purely a question of fact, he could not interfere with the finding of fact arrived at by the Assistant Commissioner. Respondent 1 thereafter filed a writ petition in the High Court challenging the said orders. The High Court held that it was possible in law for an employer to have various establishment where different kinds of work would be done, in which case an employee in one establishment would be liable to be transferred to another establishment. But the High Court observed that unless it was established that the employment of Respondent 1 in the factory was legally terminated it could not be assumed merely because he was directed to work in the head office, that his employment was changed and the head office was substituted as his employer in place of the said factory. As the order passed by the Assistant Commissioner was not clear on this question, the High Court remanded the case for disposal according to law.

Court's reasoning:
5. As to the first contention, it would not be correct to say that the High Court made out a new case for the first time for Respondent 1 which was not pleaded by him before the Assistant Commissioner. In Para 1 of his application he had expressly averred that about three years after his employment in the factory he had been ordered to work in the head office. In reply to the application the appellants conceded that though Respondent 1 was first employed in the factory and had worked there for about three years, he had thereafter been transferred to and been working as a clerk in the head office. There was, however, no averment in that reply that the contract of service of Respondent 1 with the said factory was at any time put an end to or that when he was directed to work in the head office a fresh contract of service was entered into between him and the head office. The Assistant Commissioner in his said order held that the head office and the factory were two separate establishments registered under two different Acts, and, therefore, subject to different provisions of law. He further held that since Respondent 1 was not actually working in the factory and his name did not figure in the factorys muster roll and was not paid his wages by the factory, the applicant could not be said to be an employee of the said factory. In his revision application before the Industrial Court, Respondent 1 made an express plea that when he was directed to work in the Head office, he had received no notice from the factory that his services were terminated there or that he had henceforth become the employee of the head office. It is clear from these pleadings that it was not for the first time in the High Court that Respondent 1 contended as to the incompetence of the head office to take disciplinary action against him and to pass the order of dismissal. The first contention of Mr. Phadke, therefore, cannot be accepted.6. As regard the second and the third contentions, there is no dispute that though the head office and the said factory belong to the same proprietors, they were always treated as two distinct entities registered under two different Acts, that Respondent 1 was employed first in the factory where he worked for 2 or 3 years and was thereafter ordered to work at the head office where admittedly he worked for about six years before the impugned order terminating his services was passed. The question, therefore, which the Assistant Commissioner and the Industrial Court had to decide, in view of the pleadings of the parties, was whether Respondent 1 had ceased to be the employee of the factory and was in the employment of the head office at the time when the impugned order wasA 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 to 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 aforesaid and the employee continues to be in the employment 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. The only thing that happens in such a case is that he carries out the orders of master. The employee has the right to claim his wages from the employer and not from the third party to whom his services are lent or hired. It may be that such third party may pay his wages during the time that he has hired his services, but that is because of his agreement with the employer. That does not preclude the employee from claiming his wages from the employer. The hirer may also exercise control and direction in the doing of the thing for which he is hired or even the manner in which it is to be done. But if the employee fails to carry out his directions he cannot dismiss him and can only complain to the employer. The right of dismissal vests in the employer.