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no work men were forced to work under the changed management with out settling his rights and benefits= It is settled law that without consent, workmen cannot be forced to work under different management and in that event, those workmen are entitled to retirement/retrenchment 1

Salt Lake City

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REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. 9921-9922 OF 2011

(Arising out of SLP (C) Nos. 11115-11116 of 2009
Sunil Kr. Ghosh & Ors. …. Appellant (s)

Versus

K. Ram Chandran & Ors. …. Respondent(s)

J U D G M E N T
P. Sathasivam, J.
1) Leave granted.

2) These appeals are directed against the final judgments

and orders dated 20.06.2008 and 25.08.2008 passed by the

High Court at Calcutta in CPAN No. 539 of 2002 and MAT No.

519 of 2008 respectively whereby the High Court dismissed

the contempt application and the appeal filed by the

appellants herein – employees/workers of Philips India Ltd.

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3) Brief facts:

(a) The appellants are the employees/workers of Philips

India Ltd. (in short `the Company’) having its Registered office

at No. 7, Justice Chandra Madhab Road, Calcutta and its

Consumer Electronics Factory at Salt Lake City, Calcutta. In

the year 1997, the Company introduced Voluntary Retirement

Scheme (in short “VRS”) for its workmen and majority of them

opted for and accepted the same. On 30.09.1998, the

Company entered into an Agreement for Sale of its Consumer

Electronics Factory at Salt Lake City with Kitchen Appliances

India Limited, a subsidiary of Videocon International Ltd. as a

going concern together with all assets and liabilities. Vide

letter dated 12.10.1998, the Company informed the Secretary

of Workers’ Union about having signed the agreement and also

withdrew the Voluntary Retirement Scheme (VRS) launched in

the year 1997. For effecting transfer, the Company circulated

a Notice for Extra-ordinary General Meeting of its share

holders and circulated a Proposed Resolution under Section

293 of the Companies Act, 1956. On 16.11.1998, the

Workers’ Union filed an application under Section 10(2) of the
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Industrial Disputes Act, 1947 (in short `the Act’) for referring

the dispute to Court of Enquiry, Labour Court/Tribunal.

(b) On 01.12.1998, a Suit being Civil Suit No. 483 of 1998

was instituted in the High Court at Calcutta by two

Employees‘ Unions in representative capacity against the

proposed resolution to be passed at the extra-ordinary general

meeting of the Company. Vide order dated 16.03.1999, the

learned single Judge of the High Court passed an order of

injunction restraining the Company from giving effect to the

said Resolution and to the Agreement for Sale dated

30.09.1998. Being aggrieved by the order of the learned single

Judge, the Company filed an appeal being APO No. 230 of

1999 before the Division Bench of the High Court. Vide order

dated 13.09.1999, the Division Bench allowed the appeal filed

by the Company. Thereafter, employees’ unions filed SLP (C)

No. 14274 of 1999 before this Court which was dismissed by

this Court on 15.10.1999. Against the same, Review Petition

No. 1585 of 1999 was filed which was also dismissed.

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(c) On 22.12.1999, both the Company and Kitchen

Appliances India Ltd. issued a notice informing the employees

that consequent upon transfer of ownership of the Consumer

Electronics Factory, the employment of all the workmen has

been taken over by the Kitchen Appliances India Ltd with

immediate effect and their services will be treated as

continuous and not interrupted by the transfer of ownership

and the terms and conditions of services will not be in any way

less favourable than those applicable immediately prior to the

transfer of ownership. Workers’ Union filed two title suits

being T.S. Nos. 788 and 795 of 1999, inter alia, praying for

declaration and permanent injunction restraining the

Company from giving effect to notice dated 22.12.1999. On

29.12.1999, the Workers’ Union addressed a letter to the

Company submitting their strong protest against the transfer

and also stating that the Company has been restrained to give

effect to the said notice in view of order dated 23.12.1999

passed by the Civil Judge (Junior Division) at Sealdah in Title

Suit No. 795 of 1999.

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(d) Workers’ Union filed Writ Petition No. 2275 of 1999

before the High Court for early disposal of workers’ application

for a reference. Vide order dated 19.09.2000, the writ petition

was disposed off with a direction to the Labour Commissioner

to pass necessary order either in terms of Sections 12(4) or

12(5) of the Act. On 13.12.2000, Labour Department,

Government of West Bengal refused to refer the dispute for

adjudication by observing that the interests of the workmen

are in no way affected due to transfer of ownership. Aggrieved

by the said decision, the Workers filed a Writ Petition being

No. 12125 of 2001 before the High Court. Vide order dated

08.10.2001, the writ petition was disposed off with a direction

to pay retirement/retrenchment benefits to the workers.

Contempt Application being No. 539 of 2002 was filed by the

workers, inter alia, alleging violation of the order dated

08.10.2001 which was dismissed by the single Judge of the

High Court on 20.06.2008. On 21.07.2008, the workers filed

MAT No. 519 of 2008 before the Division Bench of the High

Court which was also dismissed vide order dated 25.08.2008.

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(e) Being aggrieved, the Workers’ Unions have filed these

appeals before this Court by way of special leave petitions.

4) Heard Mr. Colin Gonsalves, learned senior counsel for

the appellants-workers and Mr. Jay Savla, learned counsel for

respondent Nos. 1 & 2 -Management.

5) The point for consideration in these appeals is whether

the workmen are entitled to the benefit of the order dated

08.10.2001 passed by the learned single Judge of the High

Court, particularly, in the absence of any appeal or challenge

before the higher forum by the Management?

6) It is the specific case of the appellants-workmen that

when the Company informed the workmen about the transfer

of ownership of Consumer Electronics Factory at Salt Lake

City, to Kitchen Appliances India Ltd., the said move was not

acceptable by the appellants-workers and they refused to give

their consent. According to the materials placed on record,

on 16.11.1998, the Workers’ Union filed an application under

Section 10(2) of the Act for referring the dispute to Court of

Enquiry/Labour Court/Tribunal and on 22.12.1999, the

undertaking of the respondent-Management was transferred to
6
Kitchen Appliances India Ltd. Pursuant to the said transfer,

311 employees joined the transferee company and 35 did not

agree to join the new employer. On 29.12.1999, on behalf of

the declined employees, their Union raised a dispute regarding

transfer of ownership of the Company without their consent as

illegal. Even on 13.12.2000, Labour Department, Government

of West Bengal declined the reference. On 06.03.2001, the

workers asked for VRS from Philips India Ltd. alleging that

they do not wish to join the new employer and when the same

request was turned down by the Company on the ground that

the VRS lapsed even in October, 1998, challenging the refusal

to refer and seeking direction for payment of VRS, the workers

filed petition being Writ Petition No. 12125 of 2001 before the

High Court.

7) On 08.10.2001, the learned single Judge of the High

Court disposed of the writ petition with a direction to the

respondent-Management for payment of retirement and

retrenchment benefits to the workers. Inasmuch as the

workers very much relied on the order of the learned single

Judge dated 08.10.2001, it is useful to refer to the directions
7
made therein. While declining to interfere with the order of

rejection made for reference, the learned single Judge of the

High Court issued the following directions:

“However, the petitioners shall be entitled to all

retirement benefits with effect from the date of approval of

the undertaking to Kitchen Appliances Ltd. and Philips India

Limited shall pay all such retirement benefits payable to the

employees within six months from this date. Such benefits

will be given as per normal Rules and conditions of service

including the retrenchment benefit. Such benefits shall be

available to the employees upto the date of approval.

With the aforesaid observations, this writ application

is disposed of.”

8) It is not in dispute that the order was passed by the

learned single Judge on 08.10.2001 after hearing the counsel

for the petitioners therein (Workers) and the respondent

therein (Management) including the Government counsel. It

is also not in dispute that the said order has become final

since neither the Management nor the Government challenged

the same before the Division Bench of the High Court or in

this Court.

9) Now, let us consider whether the said order dated

08.10.2001 is acceptable or not. Inasmuch as while rejecting

the challenge made to refer the matter for adjudication before

8
the Labour Court/Tribunal, the learned single Judge, in order

to protect and safeguard the interests of the workmen, issued

such directions taking note of various aspects including

several safeguards provided in the Act and also the payment of

compensation in case of transfer of an undertaking. No doubt,

the Management raised an objection that these workmen

neither availed the VRS within the stipulated time nor

retired/retrenched from the service due to the transfer of

ownership of the Company. It is true that the appellants-

workers did not avail both the conditions. But at the same

time, it is not in dispute and it cannot be disputed that these

workmen resorted to several remedies such as filing a suit,

making representation to the Management as well as to the

officers of the Labour Department for consultation and

consideration and finally to the Government for referring the

matter to the Labour Court/Tribunal for adjudication. After

several attempts, these workmen filed Writ Petition before the

High Court. The learned single Judge of the High Court has

taken note of proposal for transfer between Philips India Ltd.

and Workers’ Union and all other subsequent events including
9
the fact that the Company launched VRS to its employees who

did not opt to Kitchen Appliances India Ltd. After noting that

the dispute was sought to be raised but the appropriate

government declined to refer the same, the learned single

Judge, after considering the rival contentions of the workmen

and the Management, declined to interfere with the impugned

order therein and dismissed the same. However, the learned

single Judge, taking note of the fact that the workmen did not

give their consent for change of management, issued a positive

direction about the settlement of retirement benefits with

effect from the date of approval of the undertaking to Kitchen

Appliances Ltd. and directed the Company to pay all such

retirement benefits payable to the employees as per normal

rules and conditions of service including the retrenchment

benefits within six months. We have already referred to the

admitted fact that the said order was passed as early as on

08.10.2001 and has become final.

10) It is settled law that without consent, workmen cannot be

forced to work under different management and in that event,

those workmen are entitled to retirement/retrenchment
1
compensation in terms of the Act. In view of the same, we are

of the view that the workmen are entitled to the benefit of such

direction and it is the obligation on the part of the

Management- Philips India Ltd., to comply with the same. We

are also satisfied that the learned single Judge was conscious

of the fact that these workmen failed to avail the VRS within

the stipulated time and also did not retire from the service.

However, taking note of the fact that the workmen cannot be

compelled to join the transferee company against their wish

and without their consent and all along fighting for their cause

in various forums such as Civil Court, Labour Court, the

Government and the High Court and even in this Court, we

are of the view that the learned single Judge was fully justified

in passing such order.

11) A perusal of the directions passed by the learned single

Judge leaves no room for doubt that a mandatory duty was

cast upon respondent Nos. 1 & 2 to comply with the same. In

such circumstances, it is highly improper on the part of the

Management now to turn around and to contend that since

the appellants-workmen had neither been retired nor resigned
1
nor retrenched from service, as such, there is no question of

any payment or to comply with the directions passed by the

learned single Judge.

12) The entire genesis of the contempt application pertains to

violation of order dated 08.10.2001 passed by the learned

single Judge of the High Court. We are satisfied that the said

order was passed by the learned single Judge after hearing all

the parties in the nature of mandatory directions to

respondent Nos. 1 & 2. The High Court, in the impugned

order, instead of dismissing the contempt application ought to

have directed the respondents to implement the order dated

08.10.2001 passed by the learned single Judge.

13) In view of the above, we are satisfied that the appellants-

workmen have made out a case for interference by this Court.

Accordingly, we direct the respondent-Philips India Ltd. to

comply with the directions made by the learned single Judge

vide order dated 08.10.2001, which we have quoted in earlier

paragraphs, within a period of three months from the date of

the receipt of this judgment.

1
14) The civil appeals are allowed on the above terms. No

order as to costs.

………………………………………….J.

(P. SATHASIVAM)

………………………………………..J.

(J. CHELAMESWAR)

NEW DELHI;

NOVEMBER 18, 2011.

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