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PETITIONER: R. C. SHARMA

       Vs.

RESPONDENT: THE CHIEF SECRETARY, GOVERNMENT OF MADHYAPRADESH, BHOPAL & O

DATE OF JUDGMENT25/04/1973

BENCH: GROVER, A.N. BENCH: GROVER, A.N. MUKHERJEA, B.K. VAIDYIALINGAM, C.A.

CITATION:  1973 AIR 2279            1974 SCR  (1)  67  1974 SCC  (3) 160

ACT: Industrial   Dispute-Services   of   employees   of    State Undertakings   transferred  to   Corporation-Conditions   of transfer,  interpretation of-Whether employees  entitled  to get  Dearness Allowance at same rate and on same basis  paid by State Government to its employees.

HEADNOTE: Three  industrial  undertakings  owned and  managed  by  the Madhya  Pradesh  Government were transferred to  the  Madhya Pradesh State Industries Corporation with effect from  April 1,  1963.   By  letter dated February 16,  1963  the State Government offered to transfer the services of the employees of  the  three  undertakings  to  the  Corporation  on   two conditions.   The first one was that their existing pay  and scale and other conditions of service and benefits to  which they were entitled would not be affected by the  transfer. The  second was that the transfer of services would  not  be treated  as an interruption in service.  In other words,  it was said. the employees would be entitled to leave and other benefits  on the same basis as if their services  under  the State  Corporation  were  a  continuation  of  their   total uninterrupted  services under the said  undertakings.   This offer  was accepted by the employees.  However,  relying  on the  second condition mentioned In the aforesaid letter  the employees  raised  an industrial dispute in  1968,  claiming from  the Corporation, dearness allowance on the same  scale and  on the same basis as it was subsequently being paid  by the  State  Government to its employees.  The  Labour  Court rejected the contention.  The present appellant as  Secretary of the employees Union filed a  writ  petition under    Article  2   the  Constitution.   The  High   Court dismissed the petition.  By certificate appeal was filed  in this Court. Dismissing the appeal. HELD  :  Ordinarily the change of employers would  have  the effect of interrupting service.  Condition 2 was, therefore. meant  to  overcome that situation.   That  condition  dealt solely  with  effect  of  the transfer  of  service  on  the benefits to which an employee would be entitled if there was no  interruption  in  his  service.   The  second   sentence

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therein,  namely  ’in  other  words’  etc.  was  merely  ex- planatory.  of  the  first sentence  that  the  transfer  of service  will  not  be treated as  an  interruption  in  his service.  The second sentence was not intended and could not be read as meaning that whatever benefits an employee of the State Government were to get in future the employees of  the Corporation would automatically become entitled to them.  If condition No. 2 was to be read as securing to a  transferred employee  benefits  which  the Government  might  in  future confer  upon its employees that would  contradict  condition No.   1  which  secured  only  such  benefits  to  which   a transferred  employee Was entitled at the time of  transfer. [89F].

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1907 of 1970, Appeal by certificate from the order dated October 30, 1969, of  the Madhya Pradesh High Court (Gwalior Bench)  in  Civil Misc.  Petition No. 16 of 1968. C. K. Daphtary, P. C. Bhartari and            C. Mathur, for the appellant Ram Panjwani and I. N. Shroff, for respondent No. 1. M. C. Setalvad and Rameshwar Nath, for respondent No. 2. 88 The Judgment of the Court was delivered by GROVER, J. This is an appeal by certificate from an order of the  Madhya  Pradesh High Court.  The facts may  be  shortly stated.  Prior to April 1, 1963, three undertakings  namely, Gwalior  Engineering Works, (2) Gwalior Potteries, and’  (3) Gwalior  Leather  Factory and Gwalior Tannery,  Morar,  were owned  and  managed  by  the  Madhaya  Pradesh  State.   The employees  in these undertakings were in the service of  the Madhya  Pradesh State Government.  These  undertakings  were transferred  to  the Madhya Pradesh  Industries  Corporation Ltd.,  hereinafter called the "Corporation".  The  employees of  these undertakings thus ceased to be in the  service  of the   State   Government  and  became   employees   of   the Corporation.  On February 16, 1963 the Government of  Madhya Pradesh  had made an offer to the employees ,of  the.  three undertakings which was as follows               "WHEREAS the State Government have decided  to               transfer  the  management of the  (1)  Gwalior               Potteries, (2) Gwalior Engineering Works,  (3)               Gwalior  Leather Factory and Tannery and  Tent               Factory  (hereinafter referred to as the  said               undertakings)  to  the  Madhya  Pradesh  State               Industries  Corporation (hereinafter  referred               to  as the said Corporation) with effect  from               1st day of April, 1963.               AND  WHREAS from and after the aforesaid  date               the said undertaking will cease to exist.               Now,  therefore,  it is proposed  to  transfer               your  services to the said Corporation on  the               conditions detailed below               (1)   Your  present pay and scale,  and  other               conditions  of service and benefits  to  which               you  are  at  present  entitled  will  not  be               affected by transfer.               (2)   The  transfer of your services will  not               be treated as an interruption in your service.               In  other words you win be entitled  to  leave               and  other  benefits on the same basis  as  if               your services under the State Corporation  was

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             a  continuation  of your  total  uninterrupted               services under the said undertakings",, The person to whom the letter was addressed was required  to let the General Manager of each of the Undertakings know ’by the 20th day of March 1963 whether he agreed to the transfer of  service to the Corporation on the  conditions  mentioned above.   It is not necessary to refer to the other terms  of the offer.  This offer had been accepted by the employees of the three undertakings. However Gwalior Shasakiya Audogik Karamehari Sangh, Lashkar, Gwalior,  filed  an  application  under  s  33C(2)  of   the Industrial  Disputes Act, 1947, on August 28, 1968  claiming that   the  dearness  allowance  should  be  paid   by   the Corporation at the same rate and on the same basis on  which the  Madhya  Pradesh  State  Government,  was  paying   this allowance  to  its  employees.   It  was  alleged  that  the Corporation  had paid the same rates as were being  paid  by the Madhya Pradesh State Government for about two years  but later on 89 the.  Corporation declined to pay the same rates of Dearness Allowance to its employees.  The Labour Court did not accede to  the contention of the Union of the employees  that  they were entitled to dearness allowance at the same rates and on the  same basis on which it was being paid to the  employees of  the State Government.  A petition was filed  under  Art. 226 of the Constitution by R. C. Sharma the Secretary of the Union  mentioned  before.   The High  Court  dismissed  that petition. The short. question involved in this appeal is whether under the  terms of the offer made and accepted by the  employees, they are entitled to the same dearness allowance as is being paid  by the State Government to its employees.   The  first term  made  it quite clear that when the  employees  of  the erstwhile  undertakings of the State would join the  service of the Corporation their subsisting pay and scale and  other conditions  of  service  and benefits  to  which  they  were entitled at that time would not be affected by the transfer. The case of the Union was that the second term or  condition entitled  them  to  the same dearness  allowance  which  the employees  of  the  Madhya  Pradesh  State  Government  were getting.   Now this term or condition was confined  only  to the question of the effect of the transfer on the service of an employee.  It was made clear that the transfer of service would  not  be treated as an interruption  in  his  service. This - was amplified by saying, "you will be  entitled  to leave  and  other  benefits on the same  basis  as  if  your services  under the State Corporation was a continuation  of your   total   uninterrupted   services   under   the   said undertakings".  The High Court relied on an earlier decision given  by it in Misc.  Petition No, 237 of 1968  decided  on March 26, 1969.  According to that decision leave and  other benefits that were secured under condition No. 2 were  leave and such benefits which depended upon the length of service, e.g.,  gratuity,  pension  etc.  The object  of  creating  a fiction  of  continuity  of  service was  not  to  make  the Corporation  employees  Government  employees  and  to  make applicable to them any change effected in the conditions  of service  of government employees; but what was intended  was to  secure to the transferred employees leave  and  benefits depending upon the length of service by making their service fictionally   uninterrupted.   Ordinarily  the   change   of employers  would  have the effect of  interrupting  service. Condition  No.  2  was, therefore, meant  to  overcome  that situation.   That condition dealt solely with the effect  of

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the transfer of service on the benefits to which an employee would  be  entitled  if there was  no  interruption  in  his service.   The  second sentence therein, namely "  in  other words"  etc.  was merely explanatory of the  first  sentence that  the  transfer  of service will not be  treated  as  an interruption  in the service.  The second sentence  was  not intended  and  could not be read as  meaning  that  whatever benefits an employee of the State Government were to get  in future the employees of the Corporation would  automatically become  entitled to them.  As pointed out by the High  Court in the earlier I judgment if condition No. 2 was to be  read as  securing  to a transferred employee benefits  which  the Government  might in future confer upon its  employees  that would  contradict  condition No. 1 which secured  only  such benefits to which a transferred employee was entitled at the time of 90 transfer.  We are in entire agreement with this view of  the High Court. Mr.  C. K. Daphtary who appeared for the appellant tried  to persuade us that condition No. 2 should be so interpreted as to  confer  on  the employees of the  Corporation  the  same benefits to which the employees of the State became entitled in  the  course  of  subsequent years.   We  are  unable  to construe condition No. 2 in the manner suggested.  All  that that  condition  secured was that the employees  should  not suffer  in the length of their service and in the  enjoyment of  the benefits which an uninterrupted service  confers  on them because of the transfer of their service from the State Government to the Corporation. We find no ground on which we can interfere in the order, of the High Court.  The appeal fails and it is dismissed but in the circumstances we make no order as to costs. G. C.                               Appeal dismissed. 91