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PETITIONER: M/S KUNDAN SUGAR MILLS

       Vs.

RESPONDENT: ZIYAUDDIN AND OTHERS.

DATE OF JUDGMENT: 09/02/1960

BENCH: SUBBARAO, K. BENCH: SUBBARAO, K. GAJENDRAGADKAR, P.B. GUPTA, K.C. DAS

CITATION:  1960 AIR  650            1960 SCR  (2) 918

ACT:        Industrial Dispute-Rights of employer to transfer a workman-        if implicit in every contract of service.

HEADNOTE: The  General  Manager  of the appellant  Mills  ordered  the transfer  of four workmen from the appellant mill to  a  new mill,  which  had  been purchased  subsequently.   The  only connection  between  the  two  mills  was  the  identity  of ownership  and, but for it, one had nothing to do  with  the other.  The concerned workmen protested to the said order of transfer  and did not acceed to the request, thereupon  they were served with notice for disobedience of standing  orders and  were called upon for explanation which the workmen  did and thereafter they were dismissed from service.  The Labour Appellate Tribunal found that the management had no right to transfer  the workmen to the new factory and  therefore  the order  dismissing them was illegal.  The appellants came  up by special leave before the Supreme Court and contended that the right to transfer an employee by an employer from one of his  concerns  to another is implicit in every  contract  of service.   The  question is 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 the employment. Held, that apart from any statutory provision, the right  of an  employee  and an employer are governed by the  terms  of contracts  between them or by the terms necessarily  implied therefrom;  but  in  the absence  of  an  express  agreement between the employer and employees it cannot necessarily  be implied  that  the employer has the right  to  transfer  the employee  to any of its concerns in any place, and that  the employee  has a duty to join the concern to which he may  be transferred. In  the instant case, it was not a condition of  service  of employment  of  the  concerned  workmen  either  express  or implied that the’ employer had the right to transfer them to a new concern started by the employer subsequent to the date of the employment. Alexandre  Bouzourou v. The Ottoman Bank, A.I.R.  1930  P.C. 118,  Mary  (Anamalai Plantation Workers’ Union)  v.  Selali

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arai Estate, (1956) I.L.L.J. 243 and Bata Shoe Company,  Ltd v. Ali Hasan, (1956) I.L.L.J. 278, discussed.

JUDGMENT:        CIVIL APPELLATE JURISDICTION: Civil Appeal No. 136 of 1958.        Appeal  by  special  leave from  the  decision  dated  April        30,1956,  of  the  Labour Appellate  Tribunal  of  India  at        Lucknow in Appeeal No. III-45 of 1956, lip        919        arising out of the award dated February 6, 1956 of the State        Industrial Tribunal, Allahabad, in reference No. 96 of 1955.        Ram Lal Anand, I.M. Lal and S. S. Sukla, for the appellants.        B. D. Sharma, for respondents Nos.  1 to 5.        C.P.  Lal  and G. N. Dikshit, for respondent  No.  6.        1960.   February 9. The Judgment of the Court was  delivered        dy        SUBBA RAO, J.-This is an appeal by special leave against the        order  of  the Labour Appellate Tribunal  of  India  setting        aside  the award of the Industrial Tribunal, Allahabad,  and        directing  the reinstatement of the workers in Kundan  Sugar        Mills  at Amroha.  " Kundan Sugar Mills " is  a  partnership        concern and owns a sugar mill at Amroha.  The respondents  I        to  4 were-employed by the appellant as seasonal  masons  in        the year 1946.  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  &        General  Mills,  Bulandshahr.   On  January  19,  1955,  the        General Manager of the appellant-Mills ordered the  transfer        of  the respondents I 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 Bulandshabr.   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        117        920             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:        " Whether 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        tranfer  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

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      the order of the management, they were properly dismissed by        the  management.  The said respondents through their  Union,        respondent  No.  5,  perferred  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.        Learned  counsel  for  the appellant raised  before  us  the        following  two  questions:  (1) The  right  to  transfer  an        employee by an employer from one of his concerns to  another        is  implicit  in every contract of service;  (2)  the  State        Industrial  Tribunal  having held that  both  the  concerns,        i.e.,  the  mills at Amroha and the  mills  at  Bulandshahr,        formed one unit, the Appellate Tribunal had no  jurisdiction        to  set aside that finding under s. 7(1) of  the  Industrial        Disputes (Appellate Tribunal) Act, 1950.        To  appreciate  the  first contention, it  is  necessary  to        notice  the undisputed facts in this case.  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        921        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  I  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 th identity of ownership and, but for it,  one        has  nothing to do with the other.  It is also  in  evidence        that  an  imported workman 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. 1  1,000        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 II 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        entities.        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

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      922        conceded  that  there is no express  agreement  between  the        appellant and the respondents where under 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  had  such  an intention, the respondents  I  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  not  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 entities, situated        at different places and, to import a term conferring a right        on  the  employer  to  transfer respondents  I  to  4  to  a        different  concern is really to make a new contract  between        them.        The  decisions cited at the Bar do not in the least  sustain        the appellant’s broad contention.  In Alexandre Bouzourou v.        The  Ottoman Bank (1) the appellant was an employee  of  the        respondent-bank.   The bank transferred him from one  branch        to  another branch of the bank situated in different  towns.        As  he refused to comply with the order of transfer, he  was        dismissed.   Thereafter, he filed a suit to recover  damages        from the bank for wrongful dismissal.  It was argued  before        the Judicial Committee that under the terms of his  contract        of  service the sphere of his employment included  only  the        head office and not the branches of the bank.  The  evidence        in  that case showed that transfer was one of  the  ordinary        incidents of the bank’s employment, being usually concurrent        with an        (1)  A.T.R. [1930] P.C. 118, 119.             923        increase  of salary and responsibility, and suggest no  more        than  that the bank considered their  officials  convenience        where  possible. Indeed the appellant  therein did  not even        suggest in his correspondence thatthe transfer was a breach        of  his  contract.  On  these  circumstances  the   Judicial        Committee observed as follows at p. 119:             "  From  the point of view of  proper  organization  of        their  staff it is difficult to assume that the  Bank  would        willingly agree that their employees should not be bound  to        serve  outside the place where the contract was made  except        with their consent, and, in their  Lordships’ opinion such a        condition of the contract     would  require to  be  clearly        established."             The  essential  distinction between that case  and  the        present one is that there the bank with its branches was one        unit and the records clearly indicated that transfer was one        of  the ordinary incidents of service in the Bank.  In  such        circumstances when a person joined such a service, the Privy        Council  found  it easy to imply a term  of  transfer.  That        decision  is therefore not of any relevancy to  the  present        case.  In  Mary  (Anamalai Plantation  ’Workers’  Union)  v.        Seliparai   estate   (2),  labour  was  recruited   in   the

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      plantations  without any differentiation being made  between        factory  and  field  workers  and it  had  been  the  common        practice prevailing for several   years          to transfer        the  factory workers to the field and vice-versa,  according        to  the exigencies of work. A worker who had been  appointed        in such a plantation was transferred, owing to mechanisation        in  the factory, from the factory to the field.  The  Labour        Appellate  Tribunal of India held that in the  circumstances        of  the  case  the liability to be so  transferred  must  be        deemed to be an implied  condition  of  service. So  too  in        Bata  Shoe Company, Ltd. v. Ali Hasan (Industrial  Tribunal,        Patna & Ors.)  (3)   transfer   of  an   employee   in   the        circumstances  of   that, case from one post to another  was        held not to be an alteration of any service condition within        the  meaning  of s. 33 of the Industrial Disputes Act.  That        was a case of a management employing a worker in         one        concern and transferring him from one post to        (2) [1956] I.L.L.J. 343.        (3) [1956] 1 L.L.J. 278.                  924                  another.  In such a case it was possible to  imply        the condition  of  right of the management to  transfer  the        employee  from one post to another. S. N. Mukherjee v.  Kemp        &  Co.  Ltd.  (4) was a case arising out of  s.  23  of  the        Industrial  Disputes  (Appellate Tribunal) Act,  1950.   The        complaint there was that an employee was     transferred  by        the  management  with a view to victimize him  and  that  it        amounted to alteration in the conditions of employment.   It        was  held  that  if an employer employed  a  person  it  was        implicit in the appointment that he could be transferred  to        any  place  where the business of the employer in  the  same        line was situated, unless there was an express condition  to        the  contrary in the contract of employment.  In  that  case        the  worker was employed by Kemp & Co., Limited,  which  had        branches in different places.  The decision assumed that the        business was one unit and that the only question raised  was        that he should not be transferred to a place different  from        the  place  where he was actually  discharging  his  duties.        These  observations  must be limited to the  facts  of  that        case.        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 cases.        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 trans-        ferred 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        (4)  [1954] L.A.C. 903                                    925        a business subsequent to the date of the employment.     We,        therefore,  hold that it was not a condition of  service  of        employment of the respondents either    express  or  implied

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      that the employer has the right to  transfer them to a  new        concern  stared  by  him subsequent to  the  date  of  their        employment.        The respondents also relied upon a Government Order No. 6122        (ST)/XXXVI-A-640(S)-T-1953  in support of  their  contention        that  the  order  of transfer was bad.  By  this  Order  the        Government of U. P. had  directed  that  the  employment  of        seasonal  workmen in all vacuum pan sugar factories  in  the        Uttar Pradesh  should be governed by the rules contained  in        the  annexure thereto. Rule I in the said annexure is to the        following effect:             "  A  worker who has worked or but for illness  or  any        other  unavoidable  cause  would have worked  in  a  factory        during  the whole of the second half of the  last  preceding        season will be employed in this season  in such factory."        This  rule  has no relevancy to the question raised  in  the        present  case.  This rule only enjoins upon an  employer  to        employ  a worker in the circumstances mentioned  therein  in        the  same  factory in which he was working in  the  previous        season  during the next season also. This does  not  prevent        the employer to transfer an   employee  if he has the  right        to  do  so  under  the contract  of  service  or  under  any        statutory provisions.    We  have  already  held  that   the        employer in the present  case has no such right.             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        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        926             a  substantial  question of law arose in the  case  and        that it was well within the powers of the Labour   Appellate        Tribunal to entertain the appeal.             In  the result the appeal fails and is  dismissed  with        costs.                                                   Appeal dismissed.