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CASE NO.: Appeal (civil)  678 of 2006

PETITIONER: BCPP Mazdoor Sangh & Anr

RESPONDENT: N.T.P.C. & Ors

DATE OF JUDGMENT: 11/10/2007

BENCH: Tarun Chatterjee & P. Sathasivam

JUDGMENT: JUDGMENT WITH

Civil Appeal Nos. 683, 724, 726 and 727 of 2006  

P. Sathasivam, J.

1.      Since all the above appeals were directed against the  common order dated 25.03.2004 passed by the High Court of  Chhattisgarh at Bilaspur in Writ Petition Nos. 2087 and 2072  of 2001 and 557 of 2004, they are being disposed of by the  following common judgment.  2.      The appellants before us are employees recruited by  National Thermal Power Corporation (for short \021NTPC\022) by  calling for list of names from the employment exchange and  appointed by following the procedure.  When steps were being  taken for transferring them to Bharat Aluminium Company  Limited (for short \021BALCO\022) which was originally a Public  Sector Undertaking under the Government of India,  subsequently by policy of disinvestment the entire  management had vested with M/s Sterlite under Agreement  dated 20.06.2002 w.e.f 01.07.2002.  Aggrieved by the decision  of their transfer from a Public Sector Undertaking to private  management, those employees approached the High Court of  Chhattisgarh at Bilaspur by filing writ petitions seeking  various reliefs.  They mainly prayed for an order declaring  clauses 8.2 and 16.3 of the agreement dated 22.05.1990 as  illegal, arbitrary and unenforceable against them who are non- executive workers as it unilaterally changes the service  conditions of all those employees who were not party to the  agreement.  In the same writ petitions, they also prayed that  the respondents-Management be restrained from enforcing the  said clauses and thereby transferring the non-executive  workers working under BALCO Captive Power Plant (for short  \021BCPP\022) to the management of BALCO from NTPC.  3.      The case of the appellants/employees is that they were  enrolled in the Employment Exchange, Korba and when NTPC  Korba Super Thermal Power Project asked to supply the  names of Artisan (Trainee), their names were sent to NTPC.   On 26.07.1987, NTPC conducted a written/trade test for the  post of Artisan Trainee (Fitter/Electrician) and the appellants  appeared in the test on the appointed date, time and venue.   The appellants received appointment orders duly signed by the  Deputy General Manager (P&A), Korba Super Thermal Power  Project of NTPC.  In these appointment orders, it is  categorically stated that the terms and conditions of  appointment of all the appellants are same.  They were  required to undergo training for a period of one year and also

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required to submit indemnity bond on the stamp paper of  Rs.55/- to remain in the service of NTPC or any other  department or undertaking of Government of India, for at least  three years.  On completion of training, the appellants were  issued separate appointment orders in the name of NTPC (a  Government of India Enterprise) BCPP.  The order further  states that after their training, the appellants will be posted  against the post sanctioned for BCPP which is under the  management of NTPC and in case at a later date, it is decided  by BALCO to directly manage the plant/station or transfer its  management to some other existing or new organization (called  successor organization) then their post and services will stand  transferred to BALCO or such successor organization as the  case may be.  4.      When they were working with NTPC, which was  managing BCPP, the Government of India decided to disinvest  shares of BALCO, which resulted into conversion of BALCO a  public sector enterprise to private sector organization and the  existing management decided to manage BCPP by themselves.   In view of this, the appellants who were appointed by NTPC  should be posted to other projects of NTPC.  5.      BALCO entered into an agreement of construction of  Captive Thermal Power Station for their aluminium complex at  Korba with NTPC on 30.07.1984.  Again BALCO entered into  another agreement on 22.05.1990 with NTPC.  In view of  clause 8.2 of the said agreement, recruitment of non-executive  staff shall be undertaken by NTPC specifically for BCPP as per  NTPC\022s recruitment norms and policies.  It was further made  clear that the staff shall be governed by NTPC\022s policies, rules  and regulations and in the event of transfer of management  from NTPC to any other agency, their services shall be  transferable to the successor organization as per provisions of  clause 16.0.  Clause 16.3 of the said agreement makes it clear  that in the event of transfer of management, BALCO shall  ensure transfer to the successor organization of all non- executive staff recruited for BCPP as per provision contained  in clause 8.0 and such NTPC executives posted at BCPP who  are declared by NTPC as surplus to its requirements as a  result of the transfer of management.  It also makes it clear  that the terms and conditions of such transfer shall not be  inferior to those enjoyed by the employees on the date of  transfer.  In cases where such transfer is not found possible,  BALCO shall be responsible for all consequent liabilities  including retrenchment compensation, if any.  6.      The said agreement entered into between the two parties  cannot be made retrospectively in case it affects the rights and  liabilities of the third person.  The same was entered into  between two parties without knowledge, consent and  willingness of the employees.  Therefore, these clauses are not  binding nor can be enforced against the employees, unless  they agree to such conditions.  The appellants are employees  of NTPC forever.  Further during the course of employment  process, NTPC has not disclosed to the appellants that they  are employing them for and on behalf of BALCO as their agent.   Therefore, the O & M Agreement i.e. Agreement to manage  BCPP on behalf of BALCO is not applicable to the appellants.   7.      Before the High Court, the managements, namely, NTPC  and BALCO filed separate counter affidavit.  According to  them, the writ petition filed by the employees as well as their  union under Article 226 of the Constitution of India is not  maintainable as the appellants have not been able to show  their legal right.  In any case, contractual rights between the  parties are not enforceable under Article 226 or 227 of the  Constitution of India.  Highly disputed questions cannot be  decided in a writ petition under Article 226.  Further, the

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provisions of the Madhya Pradesh Industrial Relations Act are  applicable to BALCO and NTPC and the appellants have  efficacious alternative remedy of approaching the Labour  Court.  8.      According to NTPC, it is merely an agent of BALCO on a  specific Power of Attorney given to them.  The ownership of  BCPP belongs to BALCO.  Recruitment was made pursuant to  an agreement exclusively for BCPP with specific undertaking  from the non-executive employees.  Those employees joined  employment knowing fully well the meaning of undertaking.   They have no right to question the agreement between BALCO  and NTPC.  The construction of BCPP was entrusted by  BALCO to NTPC.  Apart from the construction work, the  operation and maintenance of BCPP was also entrusted to  NTPC.  In order to carry out the operation and maintenance of  BCPP, NTPC recruited required number of workmen and  supervisors starting from 1980\022s.  The recruitment of these  employees was for the limited purpose of carrying out the        O & M of BCPP as long as the management of BCPP remained  with NTPC.  The offer of appointment as well as the  undertaking given by the employees specifically bring out the  above fact.   Besides, the O & M agreement signed between  NTPC and BALCO also makes it clear that the recruitment  made by NTPC is specifically for BCPP and in the event of  transfer of O & M of BCPP to any other agency, the services of  such employees will be transferable to the successor agency.   BCPP was and is being managed by NTPC on behalf of its  owner i.e. BALCO which is being operated under the specific  Power of Attorney.  In view of the same, the manpower of this  plant is shown separately from the manpower of NTPC in its  annual report.  The balance sheet, profit and loss account  statement of NTPC also do not include BCPP, hence it is not  another unit or division of NTPC.  9.      The employees have misunderstood the action taken by  the respondents.  The BCPP is owned by BALCO.  The BALCO,  because of their lack of expertise, wanted NTPC to maintain  the plant on behalf of BALCO.  Based on the agreement,  various administrative actions were taken and all those  actions that were taken for and on behalf of BALCO and not  for NTPC.  Due to oversight, certain lapses have crept into a  few appointment letters and the appellants cannot take  advantage of lapses in a few cases.  These employees have also  executed an undertaking and in all the appointment letters it  is specifically written on the right hand corner of page 1 that  the appointment is for BCPP.  10.     As per clauses 8.0 and 16.3 of the agreement dated  22.05.1990 entered into between NTPC and BALCO, since  these employees were recruited and appointed for BCPP they  can be transferred to BCPP which was made clear to them by  mentioning in para 14 of majority of appointment letters.  It  was also made clear that at a later date if it is decided by  BALCO to directly manage the plant/station or transfer its  management to some other existing or new organization, then  their post and services will stand transferred to BALCO or  such successor organization as the case may be.  They will not  have any option to remain on the rolls of NTPC.  Once BCPP  owned by BALCO is taken over by BALCO, the entire non- executive staff of BCPP will continue to remain in BCPP under  the management of BALCO in terms of clauses 8.0 and 16.3 of  the Agreement.  Once the plant is taken over, if the non- executive employees are not going to BALCO and if they are to  be taken by NTPC, they will become surplus and NTPC will  have no option except to order retrenchment.  To avoid such  contingency, it is just and proper that the non-executive  employees should go along with the plant.

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11.     Similar details have been furnished in the counter  affidavit filed on behalf of BALCO.   12.     Additional counter affidavit has also been filed on behalf  of NTPC clarifying certain facts.  It is reiterated that neither  the union nor the workers can compel NTPC to continue the  management.  It is also reiterated that all the employees were  aware of the fact that BCPP is owned by BALCO and NTPC is  merely an agent to run the establishment for some time and  not permanently.  13.     The High Court, after considering the claim of both  parties with reference to terms and conditions of the  agreement after finding that the writ petition by the employees  are maintainable and noting the terms and conditions,  particularly, clauses 8.0 and 16.3, the undertaking of the  employees accepted the stand taken by the management and  dismissed all the writ petitions filed by the employees.  In the  same order, the High Court has also recorded the statement of  the learned Additional Solicitor General, who appeared for  NTPC that if any representation is made to the NTPC and if  any vacancy in any of their projects is available, the same will  be considered.  Aggrieved by the dismissal of all the writ  petitions, the union as well as the employees filed the above  appeals.  14.     We heard Ms. Indira Jaising, Mr. Ravindra Shrivastava,  learned senior counsel and Mr. Lakshmi Raman Singh and  Mr. Atul Kumar, learned counsel on behalf of the appellant- employees and Mr. Raju Ramachandran, Mr. C.A. Sundaram,  learned senior counsel and Mr. S.K. Dhingra, learned counsel  for the respondents-Managements.   15.     Ms. Indira Jaising and Mr. Ravindra Shrivastava, learned  senior counsel for the employees, submitted as follows: i)      That all the non-executive employees were recruited  by NTPC; training was imparted by NTPC and in the  appointment orders, it was made clear that their  service terms and conditions will be as applicable to  NTPC employees and in future their services may be  transferred to any project of NTPC, therefore, all the  non-executive employees/appellants herein are the  employees of NTPC and after disinvestment of  BALCO, their services cannot be transferred to a  private sector organization - BALCO on the strength  of O & M agreement dated 22.05.1990 and the  subsequent agreement dated 20.06.2002 entered  into between NTPC and BALCO.   ii)     that their transfer to private organization amounts  to retrenchment by NTPC against their wishes  which is not permissible under law.   iii)    that clause 16.3 is discriminatory since it applies  only to non-executive employees and they alone are  to be transferred to successor organization whereas  the executives working in BALCO are to be  transferred to other establishments of NTPC.   iv)     that unilateral changes made to their service  conditions particularly when these employees were  not party to the agreement cannot be sustained.   Inasmuch as these employees enjoy service facilities  in NTPC which is a Government of India  undertaking, they have every right of protection of  their service conditions.  The appellants being  workers not being in equal bargaining powers have  no option but to sign on the dotted lines.  They want  to secure employment, in those circumstances it is  unjust and unreasonable to impose terms and  conditions of the agreement in which they were not  parties to the same.  

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v)      that under a special scheme, namely, land owner  category some persons were appointed by NTPC and  they cannot be transferred to other organization,  particularly, to a private organization.     16.     On the other hand, learned senior counsel Mr. C.A.  Sundaram appearing for BALCO and Mr. Raju Ramachandran  appearing for NTPC by taking us through the appointment  letters, undertakings, terms and conditions of the agreement  dated 22.05.1990, particularly, clauses 8.0 and 16.3  submitted that all the non-executive employees/appellants  were not appointed for NTPC, on the other hand, they were  selected and appointed only for BCPP which is owned by  BALCO hence their action to transfer them to BCPP/BALCO is  fully justified and the High Court was right in dismissing the  writ petitions filed by those employees.  17.      We have carefully perused all the relevant materials and  considered the rival submissions.      18.     Though no serious objection was made as to the  maintainability of the writ petition, however, learned senior  counsel appearing for the Management pointed out that even if  there is any breach by BALCO of its obligations in the matter  of terms and conditions of employment, the appellants have  appropriate remedy under Industrial Law. Inasmuch as the  claim of the employees relates to interpretation of certain  clauses in the agreement, appointment letters and no disputed  facts are involved and taking note of the fact that the issue  relates to employment of few hundreds of employees and in  the light of the assertion that transferring them to private  organization from a  public sector undertaking without their  specific consent is arbitrary and unreasonable and also of the  settled position that alternative remedy is rule of discretion  and not the rule of law,  we accept the conclusion of the High  Court and hold that the writ petitions under Article 226 of the  Constitution filed by the employees are maintainable.                            19.     In order to answer the contentions raised and in the light  of the reliefs prayed for by the employees, it is useful to refer  to the relevant clauses in the agreement.  First agreement  between the BALCO and NTPC was executed in July, 1984.   Since we are very much concerned about the subsequent  agreement dated 22.05.1990, we will consider the relevant  clauses of 1990 agreement.  Among various clauses, clauses  8.2, 8.5, 16.3 and 21.0 are relevant, which read as under: \0238.0 PERSONNEL MANAGEMENT

8.2.    Non-Executives

Recruitment of non-executive staff (supervisory and  workmen) shall be undertaken by NTPC specifically for  BCPP as per NTPC recruitment norms and policies,  this staff shall be governed by the NTPC\022s policies,  rules and regulations.  In the event of transfer of  management from NTPC to any other agency, their  services shall be transferable to the successor  organization as per provisions of clause 16.0.\024

\0238.5 Terms and Conditions of Service

BCPP employees would for the matters of discipline, be  governed by Standing Orders, Conduct, Disciplines  and Appeal Rules; etc. framed by NTPC and BALCO  shall have no jurisdiction in such matters during the  period NTPC manages BCPP on behalf of BALCO.  If  BALCO enters into any agreement with its own  employees for grant of any benefits or change in any  terms and conditions, it shall have no effect

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whatsoever or NTPC for any dispensation influenced  by the said agreement for employees engaged in BCPP,  Revision of terms and conditions of BCPP employees  will be in accordance with the policy laid down by  NTPC for these employees, which may be similar to  that of other employees of NTPC or might be different  on merit of each case as consciously decided by  NTPC.\024

\02316.0        Transfer of management:

16.3    Transfer of staff:

In the event of transfer of management, BALCO shall  ensure transfer to the successor organization of all  non-executive staff recruited for BCPP as per provision  contained in clause 8.0, and such NTPC executives  posted at BCPP who are declared by NTPC as surplus  to its requirements as a result of the transfer of  management.  Terms and conditions of such transfer  shall not be inferior to those enjoyed by the employees  on the date of transfer.  In cases where such transfer  is not found possible, BALCO shall be responsible for  all consequent liabilities including retrenchment  compensation, if any.

At the end of plant life, BALCO shall be responsible for  all liabilities including retrenchment compensation  etc., when the non-executives and such NTPC  executives posted at BCPP who are declared surplus  are retrenched or any other dispensation as deemed fit  is resorted to.\024

\02321.0        Effective date and duration of agreement:

The agreement shall come into force from  29.6.1987\005\005.\024

20.     Clause 8.5 makes it clear that in respect of matter of  discipline, the relevant Rules, Standing Orders framed by  NTPC alone are applicable for employees of BCPP and BALCO  has no jurisdiction in those matters during the period NTPC  manages BCPP on behalf of BALCO.  Likewise, though clause  16.3 enables BALCO to transfer all non-executive staff to the  successor organization, namely, new management, it makes it  clear that terms and conditions of such transfer shall not be  inferior to those enjoyed by the employees on the date of  transfer.  As per clause 21.0, the agreement of the year 1990  deemed to come into operation from 29.6.1987.  In other  words, all the terms and conditions have retrospective effect  from 29.061987.  With this background, we will consider  whether those terms are sustainable and the action of the  management in transferring the employees-appellants to BCPP  which is a private management is justifiable or not? 21.     It is not in dispute that NTPC is a public sector  undertaking wholly owned by the Government of India.   Likewise, initially BALCO was also a public sector undertaking  and BCPP is wholly owned by BALCO which was set up for  production of power for their units.  Subsequently in the year  2001, by virtue of disinvestment policy of the Government of  India, BALCO including BCPP were transferred to M/s Sterlite  which is a private concern.  Though the agreement between  BALCO and NTPC was entered into on 22.5.1990 enabling the  NTPC to manage, operate, supervise, maintain and control  BCPP in all aspects, as per clause 21.0, the terms and

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conditions deemed to come into operation from 29.6.1987.   Learned senior counsel appearing for the appellants, by  placing the relevant materials, submitted that most of the  employees were appointed prior to the agreement dated  22.5.1990, however, admittedly they were not parties to the  agreement.  In other words, according to the employees, the  said agreement was only bipartite i.e., between BALCO and  NTPC and that they were on the rolls of NTPC on the date of  the said agreement without their being party various terms  and conditions which affect their services are not enforceable  against them.  The appointment letters of employees are  annexed in Vol. II of the appeal paper book which clearly show  that they were appointed in the year 1987.  It is not in dispute  that the agreement was executed on 22.5.1990.  In order to  bind these employees, the management could have executed a  tripartite agreement by taking their consent.  At this juncture,  it is relevant to mention that even as per the agreement,  particularly, clause 16.3 insists that in the event of transfer to  the successor organization or new management, the terms and  conditions of such transfer shall not be inferior to those  enjoyed by the employees on the date of transfer.  Learned  senior counsel appearing for the employees pointed out that  inasmuch as these persons provided more benefits as per the  Standing Orders/Rules of NTPC and if the transfer is  implemented, all the non-executive employees have to work  with a private concern with less benefits and privileges  compared to NTPC which is a public sector undertaking.       22.     The bipartite agreement between NTPC and BALCO was  entered into on 22.05.1990.  It is brought to our notice that  the appointments of 236 employees are made prior to  22.05.1990 and at the time of recruitment and appointment  by NTPC, no agreement between NTPC and BALCO was in  existence empowering NTPC to make recruitment and  appointment on behalf of BALCO.  Therefore, as rightly  pointed out by learned senior counsel for the employees, the  provision made in clause 21.0 of the agreement, the effective  date and duration of agreement w.e.f 29.06.1987 is contrary to  the provisions of Section 23 of the Indian Contract Act and  also violative of Article 14 of the Constitution of India.  By  virtue of the aforesaid clause, the service condition has been  admitted to be changed to the employees by giving effect of the  agreement dated 22.05.1990 w.e.f. 29.06.1987.  Even during  the course of arguments made on behalf of BALCO,it was not  seriously disputed that the appointments made prior to  22.05.1990 cannot be termed in furtherance of the agreement  dated 22.05.1990.  In such circumstances, the finding of the  High Court that the services of the employees appointed by  NTPC are transferable to BALCO in the light of the provisions  made in clauses 8.2 and 16.3 of the bipartite agreement dated  22.05.1990 between NTPC and BALCO is not acceptable.   Even for the sake of argument, it was admitted that the power  of attorney was given to NTPC pursuant to the agreement  dated 22.05.1990 and 29.05.1991, it is only those employees  who have been appointed by NTPC on behalf of BALCO,  pursuant to the said power of attorney, can only be  transferred to BALCO.  23.     Now we will consider the appointment letters and the  undertakings.  It is not in dispute that the process of  recruitment was initiated by NTPC and in the advertisement, it  has been mentioned that \023NTPC Ltd. requires persons in the  following categories for its Korba Super Thermal Power Project  and BALCO Captive Power Project.\024  The said advertisement  nowhere stipulates that the said process of recruitment was  on behalf of BALCO.  The letters for test or interview to the  candidates have also been issued by NTPC, which are in the

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appeal paper-book.  Even those interview letters do not reveal  that the appointments are being made for/on behalf of  BALCO.  As stated earlier, it is not in dispute that those  appointment letters have also been issued by NTPC.  Learned  senior counsel appearing for the management, by drawing our  attention to clause 14 of the appointment letters, submitted  that those employees are precluded from raising such  contention.  We are unable to accept the same.  It is true that  in some of the appointment letters, clause 14 reads as under: \02314.  Your appointment as Jr. Tech (elect) will be against the  post sanctioned for BALCO Captive Power Plant/Station,  which is presently under the management of National  Thermal Power Corporation Limited.  In case at a later date it  is decided by BALCO to directly manage the Plant/Station or  transfer its management to some other existing or new  organization (called successor organization) then your post  and your services will stand transferred to BALCO or such  successor organization as the case may be.  You will be not  have any option to remain on the rolls of National Thermal  Power Corporation Ltd., or claim any benefit/compensation  for the past services from NTPC but shall be governed by the  terms and conditions as applicable to BALCO or such  successor organization, as the case may be.  Accordingly  please submit an undertaking in the enclosed format, while  accepting this offer of appointment.\024   

24.     It is to be noted that at the time of insertion of above- mentioned clause 14 in the appointment letter and obtaining  undertakings from the employees there was no agreement  between NTPC and BALCO for making recruitment and  appointment on behalf of BALCO for its BALCO Captive Power  Plant.  In such circumstances, as observed earlier and rightly  pointed out by learned senior counsel for the employees in the  absence of such agreement between NTPC and BALCO, clause  14 of the appointment letter and undertakings obtained by  NTPC is illegal and is contrary to the provisions of Section 23  of the Indian Contract Act.  In this connection, reliance was  placed on a judgment of this Court rendered in the case of  Central Inland Water Transport Corporation Limited and  Another Vs. Brojo Nath Ganguly and Another, (1986) 3 SCC  156.  In para 91, this Court made the following observation :  \02391. Is a contract of the type mentioned above to be  adjudged voidable or void? If it was induced by undue  influence, then under Section 19A of the Indian Contract  Act, it would be voidable. It is, however, rarely that contracts  of the types to which the principle formulated by us above  applies are induced by undue influence as defined by  Section 16(1) of the Indian Contract Act, even though at  times they are between parties one of whom holds a real or  apparent authority over the other. In the vast majority of  cases, however, such contracts are entered into by the  weaker party under pressure of circumstances, generally  economic, which results in inequality of bargaining power.  Such contracts will not fall within the four corners of the  definition of "undue influence" given in Section 16(1).  Further, the majority of such contracts are in a standard or  prescribed form or consist of a set of rules. They are not  contracts between individuals containing terms meant for  those individuals alone.  Contracts in prescribed or standard  forms or which embody a set of rules as part of the contract  are entered into by the party with superior bargaining power  with a large number of persons who have far less bargaining  power or no bargaining power at all. Such contracts which  affect a large number of persons or a group or groups of  persons, if they are unconscionable, unfair and

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unreasonable, are injurious to the public interest. To say  that such a contract is only voidable would be to compel  each person with whom the party with superior bargaining  power had contracted to go to court to have the contract  adjudged voidable. This would only result in multiplicity of  litigation which no court should encourage and would also  not be in the public interest. Such a contract or such a  clause in a contract ought, therefore, to be adjudged void.  While the law of contracts in England is mostly judge-made,  the law of contracts in India is enacted in a statute, namely,  the Indian Contract Act, 1872. In order that such a contract  should be void, it must fall under one of the relevant  sections of the Indian Contract Act. The only relevant  provision in the Indian Contract Act which can apply is  Section 23 when it states that "The consideration or object of  an agreement is lawful, unless . . . the court regards it as . . .  opposed to public policy."

In view of the same and of the fact that words and phraseology  used in the undertakings are same which are in a stereotype  form, it is justified in arriving at a conclusion that undue  influence was exercised by the management of NTPC on the  unemployed candidates to execute undertakings for  appointment.  25.     NTPC being an undertaking of the Government of India  and an instrumentality of State is under constitutional  obligation to act fairly with its employees, particularly, the  posts which were advertised from 1986 till 1988 were not in  existence in BALCO as the BCPP was not fully commissioned.   In those circumstances, NTPC was not justified in inserting  clause 14 in the appointment letters and obtaining  undertakings from the selectees.  26.     As rightly pointed out by learned senior counsel for the  employees and from the materials brought on record either  before the High Court or this Court, it is evident that during  the process of recruitment it was never disclosed to the  candidates/selectees that their recruitment is exclusively for  BALCO, on the other hand, in some of the appointment letters  issued by NTPC, the terms and conditions of appointment are  mentioned.  It provides pay-scale of NTPC, allowances and  HRA payable as per rules of NTPC and other facilities as  admissible under the rules of NTPC.  It also provides other  benefits of the company - contributory provident fund and  gratuity are payable as per rules of NTPC.  Para 8 of the  appointment letter provides for initial appointment and  posting to work at Korba and thereafter liable to be posted at  the discretion of NTPC in other office/project/unit or in any  other public sector undertakings in India or abroad.  The  aforesaid terms and conditions lead to an irresistible  conclusion that NTPC was their employer in all purposes.    27.     The materials placed clearly show that clause 14 referred  to above is against public policy and contrary to Section 23 of  the Indian Contract Act as well as violative of Article 14 of the  Constitution of India for the reason that undue influence was  exercised by NTPC management and the selected candidates to  accept the terms and conditions stipulated therein.  By virtue  of the aforesaid clause 14, as pointed out earlier, the status of  these public servants have been sought to be changed which is  again violative of Article 14.  In Mahavir Auto Store and  Others vs. IOC and Others, (1990) 3 SCC 752, this Court has  observed in para 18 that even in the field of public law, the  persons affected should be taken into confidence. 28.     The next submission of learned senior counsel for the  employees was that transfer of employer is not permissible  without tripartite agreement.  As per the law laid down in

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Nokes vs Doncaster Amalgamated Collieries Ltd., (1940) 3  All E.R. 549 and decision of this Court in Manager, M/s.  Pyarchand Kesarimal Ponwal Bidi Factory vs. Omkar  Laxman Thange & Ors., (1969) 2 SCR 272, the consent must  be express and consciously accorded in the course of  negotiation contemporous with the process of transfer so as to  amount to an informed consent.  Consequently, in order to  bind the appellants, there must be a tripartite agreement.   Since there is no tripartite agreement, as observed above, the  transfer from one employer to another cannot be effected.   In Nokes vs Doncaster Amalgamated Collieries Ltd.  (supra), it was observed as under: \023It will be readily conceded that the result contended for by  the respondents in this case would be at complete variance  with a fundamental principle of our common law - namely,  that a free citizen, in the exercise of his freedom, is entitled  to choose the employer whom he promises to serve, so that  the right to his services cannot be transferred from one  employer to another without his assent\005..\024

This Court in Pyarchand vs. Omkar Laxman (supra) held  thus: \023A contract of service being thus incapable of transfer  unilaterally, such a transfer of service from one employer to  another can only be affected by a tripartite agreement  between the employer, the employee and the third party, the  effect of which would be to terminate the original contract of  service by mutual consent and to make a new contract  between the employee and the third party.\024

29.     The Government or its instrumentality cannot alter the  conditions of service of its employees and any such alteration  causing prejudice cannot be effected without affording  opportunity of pre-decisional hearing and the same would  amount to arbitrary and violative of Article 14.  As pointed out  earlier, in the case on hand, the employees are neither party to  tripartite agreement nor they have been heard before changing  their service condition.  Therefore, the action of the  management is violative of Article 14 of the Constitution of  India.  Similar view has been taken by this Court in H.L.  Trehan and Others vs. Union of India and Others, (1989) 1  SCC 764.  In para 11 of the judgment, this Court observed as  under:  \023\005.. It is now a well established principle of law that there  can be no deprivation or curtailment of any existing right,  advantage or benefit enjoyed by a Government servant  without complying with the rules of natural justice by giving  the Government servant concerned an opportunity of being  heard. Any arbitrary or whimsical exercise of power  prejudicially affecting the existing conditions of service of a  Government servant will offend against the provision of  Article 14 of the Constitution. Admittedly, the employees of  CORIL were not given an opportunity of hearing or  representing their case before the impugned circular was  issued by the Board of Directors. The impugned circular  cannot, therefore, be sustained as it offends against the  rules of natural justice.\024 30.     It is useful to refer to the judgment of this Court in  Jawaharlal Nehru University vs. Dr. K.S. Jawatkar and  Others, 1989 Supp. (1) SCC 679.  In this case, Jawaharlal  Nehru University was the appellant before this Court.  The  main contention of the appellant-University was that the  respondent was appointed at the Centre of Post Graduate  Studies, Imphal and when the Centre was transferred to  Manipur University his services were automatically transferred

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to that University and consequently he could not claim to be  an employee of the appellant-University.  The argument  proceeds on the assumption that the Centre of PG studies at  Imphal was an independent entity which existed by itself and  was not a department of the appellant-University.  Rejecting  the said contention, this Court held thus:  \0237. \005.. \005. \005. The Centre of Post-Graduate Studies was  set up at Imphal as an activity of the appellant  University. To give expression to that activity, the  appellant University set up and organised the Centre at  Imphal and appointed a teaching and administrative  staff to man it. Since the Centre represented an activity  of the appellant University the teaching and  administrative staff must be understood as employees of  the appellant University. In the case of the respondent,  there can be no doubt whatever that he was and  continues to be, an employee of the appellant  University. There is also no doubt that his employment  could not be transferred by the appellant University to  the Manipur University without his consent  notwithstanding any statutory provision to that effect  whether in the Manipur University Act or elsewhere. The  contract of service entered into by the respondent was a  contract with the appellant University and no law can  convert that contract into a contract between the  respondent and the Manipur University without  simultaneously making it, either expressly or by  necessary implication, subject to the respondent’s  consent. When the Manipur University Act provides for  the transfer of the services of the staff working at the  Centre of Postgraduate Studies, Imphal, to employment  in the Manipur University, it must be construed as a  provision enabling such transfer of employment but  only on the assumption that the employee concerned is  a consenting party to such transfer. It makes no  difference that the respondent was not shown in the list  of Assistant Professors of the appellant University or  that the provision was not indicated in its budget; that  must be regarded as proceeding from an erroneous  conception of the status of the respondent. The position  in law is clear, that no employee can be transferred,  without his consent, from one employer to another. The  consent may be express or implied. We do not find it  necessary to refer to any case law in support of this  conclusion. 8. Inasmuch as the transfer of the Centre of Post- graduate Studies from the appellant University to the  Manipur University could not result in a transfer of the  employment of the respondent from the one to the  other, it must be concluded that the respondent  continues in the employment of the appellant  University\005\005\005..\024

It is clear that no employee could be transferred without his  consent from one employer to another.  Therefore, in view of  the aforesaid rulings the transfer of employees from NTPC - a  public sector undertaking to BALCO which is a private  organization is bad in law.  31.     The above discussion would clearly show that all  appointment orders were issued by NTPC and Rules,  procedure in respect of probation, training, D.A. and other  allowances, absorption in the regular scale, governed by  certified standing orders and other Rules and Regulations of  the company i.e., NTPC.  Even in the appointment order, it  had been specifically stated that in the event of their

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appointment, they have to execute service agreement in favour  of NTPC or any other Department or Undertaking of  Government of India for three years.  It is not disputed that all  the employees selected and appointed executed a service  agreement as suggested in favour of NTPC.  All the  appointment orders were sent with the above referred specific  conditions by the Senior Personal Officer, NTPC Korba Super  Thermal Power Project, Bilaspur.  Posting orders were also  issued by NTPC.  Perusal of agreements executed by the  selectees clearly show that there is no reference that the said  agreement is for and on behalf of the BALCO whereas it only  refers NTPC. All the abovementioned factual details clearly  support the case of the employees that they were selected and  their services could be continued only at NTPC or any other  public sector undertakings of Government of India.  There is  no iota of evidence or indication that they will be transferred to  a private concern with less service benefits. 32.     Learned senior counsel appearing for the employees  finally submitted that the impugned clauses in the agreement  are liable to be interfered with on the ground of discrimination.   Clause 16.3 of the agreement dated 22.05.1990 makes it clear  that non-executive employees are to be transferred to  successor organization and there is no reference to executives.   On the other hand, it was demonstrated before us, by facts  and figures, that the executives working in BALCO are to be  transferred to other establishments of NTPC.  Even though the  non-executive employees are also having a special knowledge  i.e., technicians, in the absence of any plausible reason  retaining executives alone with NTPC and transferring non- executive employees to a private organization cannot be  sustained and hit by Art. 14 of the Constitution of India.  On  the other hand, the appellants-non-executive employees are to  be retained by NTPC and posted in their various units.  We are  also conscious of the earlier decisions of this Court in BALCO  employees\022 Union (Regd.) vs. Union of India & Ors. (2002) 2  SCC 333 (BALCO\022s case) and All India ITDC Workers\022 Union  & Ors. Vs. ITDC & Ors.  (2006) 10 SCC 66 (ITDC\022s case)  upholding the policy of disinvestment.  Learned senior counsel  appearing for the Management strongly relying on BALCO\022s  case and ITDC\022s case submitted that no employee of public  sector undertaking has a vested right in continuing to be  employed by an instrumentality of the State.  There is no  quarrel as to the proposition laid down in BALCO\022s and ITDC\022s  case.  However, considering our discussion relating to various  aspects starting from calling for applications and subsequent  actions taken by NTPC, we are satisfied that the employees  have made out a case for continuing their service in NTPC.   33.     At the end of the arguments, Mr. Raju Ramachandran,  learned senior counsel appearing for the NTPC requested this  Court that if the claim of the employees are acceptable, they  are ready to consider the case of the employees whose  appointment letter neither contain clause 14 nor clause 16  and have not given an undertaking and they will be taken  back by the NTPC in the phased manner.  While appreciating  the gesture of the learned senior counsel and considering the  relevant materials, we are of the view that both the offending  clauses in the agreement cannot be sustained and all  employees are to be retained in NTPC.  34.     In the light of the above discussion, common order dated  25.3.2004 passed by the High Court of Chhatisgarh in W.P.  Nos. 2087 of 2001, 2072 of 2001 and 557 of 2004 are set  aside and the appeals filed by the employees are allowed.  No  order as to costs.