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CASE NO.: Appeal (civil)  7150-7151 of 2003

PETITIONER: Management, Mettur Beardsell Ltd.

RESPONDENT: Workmen of Mettur Beardsell Ltd. & Anr.

DATE OF JUDGMENT: 26/04/2006

BENCH: ARIJIT PASAYAT & TARUNCHATTERJEE

JUDGMENT: J U D G M E N T

With CIVIL APPEAL NOS.      2258     OF 2006 (Arising out of SLP (C) NO. 22724 OF 2004) AND  CIVIL APPEAL NO.    2259       OF 2006 (Arising out of SLP (C) NO. 5071 OF 2005) And  CIVIL APPEAL NO. 7152 OF 2003

ARIJIT PASAYAT, J.

       Leave granted in SLP (C) Nos. 22724 of 2004 and 5071  of 2005.  

       These appeals have a common matrix. By the impugned  judgment rendered by a Division Bench of the Madras High  Court three appeals were disposed of.   Writ Appeal No.761 of  1992 was against order dated 22.7.91 passed in Writ Petition  No.11956 of 1987 passed by a learned Single Judge, while  Writ Appeal No.760 of 1997 was against the order dated  24.2.1997 in Writ Petition No.1063 of 1988 passed by a  learned Single Judge.  The third appeal before the Division  Bench was Contempt Appeal No.13 of 1992 directed against  order dated 11.12.1992 in Contempt Application No.336 of  1992 passed by learned Single Judge.

       Factual background as highlighted by the appellant- Management of Mattur Beardsell Ltd. is as follows :

       Mettur Beardsell Ltd. started business in 1936 and  conducted operations successfully till 1970, when it faced  financial problems. On 19.5.1977 a Resolution was passed to  hive off its textile operation by entrusting it to its wholly owned  subsidiary which was to be formed.  In fact on 19.12.1981,  Mettur Textile Pvt. Ltd. was formed. On 21.6.1982 at the  Annual General Meeting of Mettur Beardsell Ltd. shareholders  authorized entering into of an arrangement on behalf of Mettur  Beardsell Ltd. and Mettur Textile Pvt. Ltd. For the sake of  convenience they are described as Beardsell and Textile  hereinafter.   

       The workers were informed about the transfer. On  9.2.1982 information about Integrated Textile Division

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consisting of manufacturing and marketing divisions of the  Textile Division in all locations including Madras with  necessary support staff was given. On 22.9.1982 notice to  workers was given that E.D.P. Department will also be treated  as a part of the Integrated Textile Division. The E.D.P.  Department was to continue to operate from 49, Rajaji Road  where the Integrated Division was situated. The office of  Beardsell was on 47 Bose Road which is different address.  On  29.11.1982 individual letters/notices were sent to employees,  who have been in the Textile Division, that they were being  treated as part of the Integrated Textile Division with unaltered  terms and conditions of work. On 30.11.1982 circular was  sent to the employees that employees’ allocation has been  completed, Beardsell was to become a partner of new formed  subsidiary "Textile" to ensure that Textile Division could be  treated separately. On 14.12.1982 a partnership firm called  "Mettur Textiles" was formed between the Textile and Beardsell  evidenced by a partnership deed. On 3.3.1983 an agreement  was entered into amongst Beardsell, Textile and one Rukmini  Investments Pvt. Ltd.  (in short ’Rukmini’).  Beardsell was paid  Rs.1,74,00,000/- by Rukmini Investments for divesting all  rights and assets in the Integrated Textile Division.  Later  Rukmini took over entire partnership business and  incorporated it as Mettur Textile Industries Ltd.  On 25.1.1983  employees of the Integrated Division were informed  individually about the arrangement and their absorption with  effect from 01.01.1983 without change in the conditions of  service. On 31.1.1983 employees were informed that their  services would be absorbed by Textile and that terms and  conditions which would be uninterrupted would cover salary,  wages, benefits, retrenchment and retirement. On 24.3.1983  notices were sent to the workmen informing them that  Beardsell had retired from partnership and that the terms and  conditions of work would not be any way less favourable than  the prevailing situation.  On 13.5.1983 letters were written by  the respondent-Employees Association to Beardsell admitting  the transfer to Mettur Textile and requested for an option for  retention/retransfer to the rolls of Beardsell. Their claim was  that they ought to have been a Memorandum of Settlement  under Section 12(3) of the Industrial Disputes Act, 1947 (in  short the ’Act’). On 17.6.1983 the respondent-workmen  through their Association wrote a letter to the Labour Officer  that they may be taken back as on the date of transfer of the  partnership by Beardsell. On 22.6.1983 several unions  entered into settlement under Section 12(3) of the Act agreeing  to continue as employees of Textile and not of Beardsell.  On  16.7.1983 Beardsell wrote a letter to the Labour Officer  informing him that all the employees working in the Integrated  Textile and Thread Division had become employees of Textile  and indicated that the said employees have left its service on  31.12.1982. Thereafter certain letters appear to have been  written to the Provident Fund Commissioner. The workmen  have objected to consideration of these documents on the  ground that they were not before the Labour Court or the High  Court.  On 6.4.1984 Mettur Beardsell Employees Association  wrote to Labour officer contending that they were employees of  and paid by Mettur Textile Industries ltd. from July, 1983.   I.D. Case No.8 of 1984 was registered on the basis of grievance  by the respondent-workmen asserting that they continued to  be workmen of Beardsell. By an Award dated 5.12.1986  Industrial Tribunal rejected the claims of the workmen.  A Writ  Petition No.11956 of 1987 was filed by the respondents- workmen against the Award in I.D. No.8 of 1984. By judgment  dated 22.7.1991, the Writ Petition was allowed holding that  the workmen should be treated as employees of Beardsell with

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all consequential benefits. Writ Appeal No.761 of 1992 was  filed by the appellant which has been dismissed by the  impugned judgment.  In the meantime the Contempt Petition  No.366 of 1992 was filed by respondent-workmen alleging that  the direction by the learned Single Judge on 22.7.1991 to the  effect that the workers should be treated as employees with all  consequential benefits had not been complied with.  By order  dated 11.12.1992 learned single judge hold that there was  contempt and sentenced the Managing Director of Beardsell to  two weeks’ imprisonment and fine of Rs.2,000/-.  Contempt  Appeal No.13 of 1992 was filed against the order of learned  single judge and the contempt matter was stayed.  However,  by the impugned judgment the Contempt Appeal was  dismissed.  On 12.4.1984 a letter was sent by Mettur Textile  Industries Ltd. intimating each workman that he was being  retrenched.  On 23.4.1984 employees replied that they may be  continued in service of Mettur Textile Industries Ltd. On  14.11.1984 respondents raised I.D. 89 of 1984 challenging the  retrenchment. By its award dated 19.6.1987 Industrial  Tribunal rejected the claim. Respondent-workman filed writ  petition No.1063 of 1988 against the said Award.  By order  dated 24.2.1997 learned Single Judge dismissed the writ  petition. Writ Appeal No.760 of 1997 was filed by the  respondent-workmen.  By the impugned judgment the High  Court allowed the Writ Appeal.  It appears that a claim petition  under Section 33 (C)(2) of the Act  for the period 1984 to 1992  was filed which was numbered as C.P. No.2242 of 1991.  The  Labour Court directed payment of Rs.44.5 lacks.  By order of  this Court dated 16.11.2004 the direction of the Labour Court  for payment was stayed. The sole basis of learned Single Judge  coming to the conclusion that the workmen continued to be  the employees of Beardsell is founded on Ex.22 i.e. voucher of  Beardsell used for payment subsequent to the claim of  transfer of employees.  The explanation offered by Beardsell as  to why the same cannot be utilized for forming any opinion  has been discarded by learned Single Judge and the Division  Bench without indicating any reason affirmed the findings  overlooking evidence led by the Beardsell to show that there  was nothing illegal in the transfer.  Learned Single Judge and  the Division Bench proceeded as if the ultimate objective of the  transfer was to target the concerned 27 workmen out of whom  9 have withdrawn from the dispute and was confined to only  18 workmen. Both learned Single Judge and the High Court  lost sight of the fact that more than 2500 workmen were  involved and all of them accepted transfer and did not raise  any dispute.  It was, therefore, utterly fallacious on the part of  the learned Single Judge and the Division Bench to hold that  the entire arrangement of transfer was with oblique motives.   Further claim petition under Section 33(C)(2) of the Act has  been adjourned by the Labour Court notwithstanding  pendency of these cases.

       According to learned counsel for the Beardsell, both  learned Single Judge and the Division Bench completely  misconceived the scope of the dispute raised. There was no  dispute regarding the genuineness of the transfer. However,  learned Single Judge as well as the Division Bench proceeded  on the basis as if there was a dispute as regards genuineness  of the transfer.  A bare reading of the reference made to the  Industrial Tribunal makes the position clear that there was no  such dispute.  Additionally, learned Single Judge introduced a  concept of consent which is foreign to Section 25FF of the Act.   The Division Bench not only erred in affirming the conclusions  of the learned Single Judge, but also without any challenge

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before the Tribunal or before learned Single Judge referred to  certain materials which were not brought on record by the  workmen and Beardsell had no opportunity to meet those  materials. Conclusions of fraud were arrived at when the  workmen have not established and mala-fides and fraud.    

       Learned counsel for the respondents-workmen on the  other hand submitted that though the plea of illegality of  transfer was not spelt out in so many words in the reference  that was the core issue; and, therefore, no infirmity can be  attached to judgment of the learned Single Judge and the  Division Bench. Reference was made to several decisions to  contend that consent is inbuilt in any transfer in service  jurisprudence.  

At this juncture, in view of rival contentions it is to be  noted that the reference itself did not relate to legality of  transfer. The reference as was made by the Government of  Tamil Nadu under Section 10(1)(b) of the Act in its G.O. Ms.  No.202 dated 19.1.1984 of the Labour Department reads as  follows :

"The dispute coming on for final hearing on  Wednesday, the 29th day of October, 1986 upon  perusing the reference, claim and counter  statements and all other material papers on  record and upon hearing the arguments of  Thiru A.L. Somayaji for Thiruvalargal Aiyar and  Dolia and Miss G. Devi, Advocate appearing for  the workmen and of Thiru S. Jayaraman,  Advocate for management No.2 and this dispute  having stood over till this day for consideration.           The basic issues involved in the cases are as follows:

1.      Was there a transfer of undertaking  under Section 25FF of the Act? 2.      Was this transfer vitiated by fraud? 3.      Is consent of the employees required in a  case of transfer of undertaking under Section  25FF?                  The second and third issues are being considered on the  basis of stands presently raised, though there was no such  plea forming foundation of the reference made to the  Industrial Tribunal.

Elaborate arguments were advanced on the question as  to whether an employee’s consent is a must under Section  25FF of the Act. The common law rule that an employee  cannot be transferred without consent, applies in master- servant relationship and not to statutory transfers. Though  great emphasis was laid by learned counsel for the respondent  on  Jawaharlal Nehru University v. Dr. K.S. Jawatkar and  others (1989 (Supp.) 1 SCC 679), a close reading of the  judgment makes it clear that the common law rule was  applied. But there is not any specific reference to Section 25FF  or its implication.  There is nothing in the wording of Section  25FF even remotely to suggest that consent is a pre-requisite  for transfer. The underlying purpose of Section 25FF is to  establish a continuity of service and to secure benefits  otherwise not available to a workman if a break in service to  another employer was accepted. Therefore, the letter of

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consent of the individual employee cannot be a ground to  invalidate the action.   

       The scope and ambit of Section 25FF of the Act needs to  be delineated.  

In Maruti Udyog Limited v. Ram Lal And Others. (2005  (2) SCC 638) it was observed as follows:   "How far and to what extent the provisions of  Section 25F of the 1947 Act would apply in  case of transfer of undertaking or closure  thereof is the question involved in this appeal.  A plain reading of the provisions contained in  Section 25FF and Section 25FFF of the 1947  Act leaves no manner of doubt that Section  25F thereof is to apply only for the purpose of  computation of compensation and for no other.  The expression "as if" used in Section 25FF  and Section 25FFF of the 1947 Act is of great  significance. The said term merely envisages  computation of compensation in terms of  Section 25F of the 1947 Act and not the other  consequences flowing therefrom. Both Section  25FF and Section 25FFF provide for payment  of compensation only, in case of transfer or  closure of the undertaking. Once a valid  transfer or a valid closure comes into effect,  the relationship of employer and employee  takes effect. Compensation is required to be  paid to the workman as a consequence thereof  and for no other purpose".  

In D. R.Gurushantappa v. A.K. Anwar & Ors. (1969 (1)  SCC 466) this Court noted as follows: "So far as the first point is concerned, reliance  is placed primarily on the circumstances that,  when the concern was taken over by the  Company from the Government there were no  specific agreements terminating the  Government service of Respondent No.1 or  bringing into existence a relationship of master  and servant between the Company and  respondent No.1. That circumstance, by itself,  cannot lead to the conclusion that Respondent  No.1 continued to be in Government service.  When the undertaking was taken over by the  Company as a going concern, the employees  working in the undertaking were also taken  over and since, in law the Company has to be  treated as an entity distinct and separate from  the Government, the employees, as a result of  the transfer of the undertaking, became  employees of the company and ceased to be  employees of the Government. This position is  very clear at least in the case of those  employees who were covered by the definition  of workmen under the Industrial Disputes Act  in whose cases, on the transfer of the  undertaking, the provisions of Section 25-FF of  that Act would apply. Respondent No.1 was a  workman at the time of the transfer of the  undertaking in the year 1962, because he was  holding the post of an Assistant

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Superintendent and was drawing a salary  below Rs.500 per mensem. As a workman, he  would, under Section 25-FF of the Industrial  Disputes Act, become an employees of the new  employer, viz., the Company which took over  the undertaking from the Mysore Government  which was the previous employer. In view of  this provision of Law, there was in fact, no  need for any specific contract being entered  into between the Mysore Government and  respondent No.1 in terminating his  Government service, nor was there any need  for a fresh contract being entered into between  the Company and Respondent No.1 to make  him an employee of the Company".  

Again in Management of R. S. Madhoram And Sons Agencies  (P) Ltd. v. Its Workmen. (1963 (5) SCR 377), the position was  highlighted as follows:-  "Section 25FF of the Act provides, inter alia,  that where the ownership or management of  an undertaking is transferred, whether by  agreement or by operation of law, from the  employer in relation to that undertaking to a  new employer, every workman who satisfies  the test prescribed in that section shall be  entitled to notice and compensation in  accordance with the provisions of S. 25FF as if  the workmen had been retrenched. This  provision shows that workmen falling under  the category contemplated by it, are entitled to  claim retrenchment compensation in case the  undertaking which they were serving and by  which they were employed is transferred. Such  a transfer, in law, is regarded as amounting to  retrenchment of the said workmen and on that  basis S. 25FF gives the workmen the right to  claim compensation.  There is, however, a proviso to this  section which excludes its operation in respect  of cases falling under the proviso. In  substance, the proviso lays down that the  provision as to the payment of compensation  on transfer will not be applicable where, in  spite of the transfer, the service of the  workmen has not been interrupted, the terms  and conditions of service are not less  favourable after transfer than they were before  such transfer, and the transferee is bound  under the terms of the transfer to pay to the  workmen, in the event of their retrenchment  compensation on the basis that their service  had been continuous and had not been  interrupted by the transfer. The proviso,  therefore, shows that where the transfer does  not affect the terms and conditions of the  employees, does not interrupt the length of  their service and guarantees to them payment  of compensation, if retrenchment were made,  on the basis of their continuous employment,  then S. 25FF of the Act would not apply and  the workmen concerned would not be entitled  to claim compensation merely by reason of the  transfer. It is common ground that the three  conditions prescribed by Cls. (a),(b) and (c) of

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the proviso are satisfied in this case, and so, if  S. 25FF were to apply, there can be little doubt  that the appellant would be justified in  contending that the transfer was valid and the  57 employees can make no grievance of the  said transfer. The question, however, is : Does  Section 25FF apply at all?  It would be noticed that the first and  foremost condition for the application of S.  25FF is that the ownership or management of  an undertaking is transferred from the  employer in relation to that undertaking to a  new employer. What the section contemplates  is that either the ownership or the  management of an undertaking should be  transferred; normally this would mean that the  ownership or the management of the entire  undertaking should be transferred before S.  25FF comes into operation. If an undertaking  conducts one business, it would normally be  difficult to imagine that its ownership or  management can be partially transferred to  invoke the application of S. 25FF. A business  conducted by an industries undertaking would  ordinarily be an integrated business and  though it may consist of different branches or  departments they would generally be  interrelated with each other so as to constitute  one whole business. In such a case, S. 25FF  would not apply if a transfer is made in regard  to a department or branch of the business run  by the undertaking and the workmen would be  entitled to contend that such a partial transfer  is outside the scope of S. 25FF of the Act.  It may be that one undertaking may run  several industries or business which are  distinct and separate. In such a case, the  transfer of one distinct and separate business  may involve the application of S. 25FF. The  fact that one undertaking runs these business  could not necessarily exclude the application  of S. 25FF solely on the ground that all the  business or industries run by the said  undertaking have not been transferred. It  would be clear that in all cases of this  character the distinct and separate businesses  would normally be run on the basis that they  are distinct and separate, employees would be  separately employed in respect of all the said  businesses and their terms and conditions of  service may vary according to the character of  the business in question. In such a case it  would not be usual to have one muster-roll for  all the employees and the organization of  employment would indicate clearly the  distinctive and separate character of the  different businesses. If that be so, then the  transfer by the undertaking of one of its  businesses may attract the application of S.  25FF of the Act.  But where the undertaking runs several  allied business in the same place or places,  different considerations would come into play.  In the present case, the muster-roll showing  the list of employees was common in regard to

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all the departments of business run by the  transferor-firm. It is not disputed that the  terms and conditions of service were the same  for all the employees and what is most  significant is the fact that employees could be  transferred from the department run by the  transferor-firm to another department, though  the transfer conducted several branches of  business which are more or less allied, the  services of the employees were not confined to  any one business, but were liable to be  transferred from one branch to another. In the  payment of bonus all the employees were  treated as constituting one unit and there was  thus both the unity of employment and the  identity of the terms and conditions of service.  In fact, it is purely a matter of accident that  the 57 workmen with those transfer we are  concerned in the present appeal happened to  be engaged in retail business which was the  subject-matter of the transfer between the firm  and the company. These 57 employees had not  been appointed solely for the purpose of the  retail business but were in charge of the retail  business as a mere matter of accident. Under  these circumstances, it appears to us to be  very difficult to accept Sri Setalvad’s argument  that because the retail business has an  identity of its own it should be treated as an  independent and distinct business run by the  firm and as such, the transfer should be  deemed to have constituted the company into  a successor-in-interest of the transferor firm  for the purpose of S. 25FF. As in other  industrial matters, so on this question too, it  would be difficult to lay down any categorical  or general proposition. Whether or not the  transfer in question attracts the provision of S.  25FF must be determined in the light of the  circumstances of each case. It is hardly  necessary to emphasize that in dealing with  the problem, what industrial adjudication  should consider is the matter of substance and  not of form. As has been observed by this  Court in Anakapalle Co-operative Agricultural  and Industrial Society v. Its workmen and  others [1962 - II L.L.J. 621] the question as to  whether a transfer has been effected so as to  attract S. 25FF must ultimately depend upon  the evaluation of all the relevant factors and it  cannot be answered by treating any one of  them as of overriding or conclusive  significance. Having regard to the facts which  are relevant in the present case, we are  satisfied that the appellant cannot claim to be  a successor-in-interest of the firm so as to  attract the provisions of S. 25FF of the Act.  The transfer which has been effected by the  firm in favour of the appellant does not, in our  opinion, amount to the transfer of the  ownership or management of an undertaking  and so, the tribunal was right in holding that  S. 25FF and the proviso to it did not apply to  the present case".

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       The views according to us reflect the correct position in  law.  Section 25FF of the Act provides, inter-alia, that where  the ownership or management of an undertaking is  transferred, whether by agreement or by operation of law, from  the employer in relation to that undertaking to a new  employer, every workman who satisfies the test prescribed in  that section shall be entitled to notice and compensation in  accordance with the provisions of Section 25FF as if the  workmen had been retrenched. This provision shows that  workmen falling under the category contemplated by it, are  entitled to claim retrenchment compensation in case the  undertaking which they were serving and by which they were  employed is transferred. Such a transfer, in law, is regarded as  amounting to retrenchment of the said workmen and on that  basis Section 25FF gives the workmen the right to claim  compensation.  There is, however, a proviso to this section which  excludes its operation in respect of cases falling under the  proviso. In substance, the proviso lays down that the provision  as to the payment of compensation on transfer will not be  applicable where, in spite of the transfer, the service of the  workmen has not been interrupted, the terms and conditions  of service are not less favourable after transfer than they were  before such transfer, and the transferee is bound under the  terms of the transfer to pay to the workmen, in the event of  their retrenchment compensation on the basis that their  service had been continuous and had not been interrupted by  the transfer. The proviso, therefore, shows that where the  transfer does not affect the terms and conditions of the  employees, does not interrupt the length of their service and  guarantees to them payment of compensation, if retrenchment  were made, on the basis of their continuous employment, then  S. 25FF of the Act would not apply and the workmen  concerned would not be entitled to claim compensation merely  by reason of the transfer. It is common ground that the three  conditions prescribed by Cls. (a), (b) and (c) of the proviso are  satisfied in this case, and so, if Section 25FF were to apply,  there can be little doubt that the appellant would be justified  in contending that the transfer was valid and the 57  employees can make no grievance of the said transfer. The  question, however, is : Does Section 25FF apply at all ?  It would be noticed that the first and foremost condition  for the application of Section 25FF is that the ownership or  management of an undertaking is transferred from the  employer in relation to that undertaking to a new employer.  What the section contemplates is that either the ownership or  the management of an undertaking should be transferred;  normally this would mean that the ownership or the  management of the entire undertaking should be transferred  before Section 25FF comes into operation. If an undertaking  conducts one business, it would normally be difficult to  imagine that its ownership or management can be partially  transferred to invoke the application of Section 25FF. A  business conducted by an industries undertaking would  ordinarily be an integrated business and though it may consist  of different branches or departments they would generally be  interrelated with each other so as to constitute one whole  business. In such a case, Section 25FF would not apply if a  transfer is made in regard to a department or branch of the  business run by the undertaking and the workmen would be  entitled to contend that such a partial transfer is outside the  scope of  Section 25FF of the Act.  It may be that one undertaking may run several  industries or businesses which are distinct and separate. In

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such a case, the transfer of one distinct and separate business  may involve the application of Section 25FF.  The fact that one  undertaking runs these businesses could not necessarily  exclude the application of Section 25FF solely on the ground  that all the businesses or industries run by the said  undertaking have not been transferred.  It would be clear that  in all cases of this character the distinct and separate  businesses would normally be run on the basis that they are  distinct and separate, employees would be separately  employed in respect of all the said businesses and their terms  and conditions of service may vary according to the character  of the business in question. In such a case it would not be  usual to have one muster-roll for all the employees and the  organization of employment would indicate clearly the  distinctive and separate character of the different businesses.  If that be so, then the transfer by the undertaking of one of its  businesses may attract the application of Section 25FF of the  Act.  It was submitted by the learned counsel for the  respondent that fraud was involved.  The conclusions of the  learned Single Judge and the Division Bench proceeded on the  premises as if the 27 employees in question were targeted. In  order to establish fraud there has to be specific averments or  materials adduced to establish the same.  In the instant case  there was no specific averment in that regard and in any event  no evidence was led.  The High Court seems to have lost sight  of the fact that huge amount of money had already been paid.  It has not established that the purpose was to target the 27  employees and for that purpose the appellant spent huge  amount of money.  Undisputedly the employees were informed  of the transactions at all relevant points of time.  It is also not  disputed by learned counsel for the respondent that nearly  2500 employees have accepted that the transfer is  genuineness and out of 27 employees who originally pressed  their grievances, nine are not pursuing it. The Tribunal had  rightly noted these aspects. Unfortunately learned Single  Judge and the Division Bench made out a new case of fraud  and the transaction to be "sham". The solitary material on  which decisions of learned Single Judge and the Division  Bench was founded is one receipt showing payment for one  month.  The explanation given in that regard does not appear  to have been considered in its proper perspective by the High  Court.

On the question of fraud few decisions need to be noted.  In Shrisht Dhawan (Smt.) v. M/s Shaw Brothers  (1992 (1)  SCC 534), it was noted as follows:

"20. But fraud in public law is not the  same as fraud in private law. Nor can the  ingredients which establish fraud in commercial  transaction be of assistance in determining  fraud in Administrative Law.  It has been aptly  observed by Lord Bridge in Khawaja that it is  dangerous to introduce maxims of common law  as to effect of fraud while determining fraud in  relation to statutory law."

The warning by Venkatachaliah J in G.B. Mahajan and  Ors. v. Jalgaon Municipal Council and Ors. (1991 (3) SCC 91)  on the use of concept of reasonableness was founded on the  following passage quoted from Tiller v. Atlantic Coast, (1942)  3189 US 54.

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"A phrase begins life as a literary  expression; its felicity leads to its lazy  repetition; and repetition soon establishes it as  a legal formula, undiscriminatingly used to  express different and sometimes contradictory  ideas."

In Shrisht Dhawan’s case (supra) it was further observed  as follows:-  

"xx             xx              xx              xx      xx       

If a statute has been passed for some one  particular purpose, a court of law will not  countenance any attempt which may be made  to extend the operation of the Act to something  else which is quite foreign to its object and  beyond its cope.   Present day concept of fraud  on statute has veered round abuse of power or  mala fide exercise of power.  It may arise due  to overstepping the limits of power or defeating  the provision of statute by adopting subterfuge  or the power may be exercised for extraneous  or irrelevant considerations.  The colour of  fraud in public law or administrative law, as it  is developing, is assuming different shades.  It  arises from a deception committed by  disclosure of incorrect facts knowingly and  deliberately to invoke exercise of power and  procure an order from an authority or tribunal.   It must result in exercise of jurisdiction which  otherwise would not have been exercised.  That  is misrepresentation must be in relation t the  conditions provided in a section on existence  or non-existence of which power can be  exercised.  But non-disclosure of a fact not  required by a statute to be disclosed may not  amount to fraud.  Even in commercial  transactions non-disclosure of every fact does  not vitiate the agreement."

A sham transaction is one which was always intended  and devised to be a fraud of a provision of the concerned  statute in relation to which it is alleged to be a fraud.

That being so the orders of the learned Single Judge and  the Division Bench cannot be maintained and are, therefore,  set aside.   

It appears that taking serious note of the fact that the  orders were not complied with, contempt proceedings were  initiated and orders have been passed. It is not in dispute that  a part of the amount payable was deposited in this court and  has been disbursed.  In view of the fact that the orders of  learned Single Judge and the Division Bench are being set  aside, the question of consequential action under Section  33(C)(2) of the Act does not arise. At the same time it cannot  be lost sight of the fact that orders of the learned Single Judge  and the Division Bench were not complied with. Since a sum  of Rs.10 lakhs has already been deposited and Rs.5 lakhs  have also been disbursed, in the peculiar circumstances of the  case, we direct that the balance money be disbursed to the  employees on the basis of their entitlements. This exercise

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shall be done by the Tribunal. Appeals are accordingly  disposed of.  No costs.