JUDGMENT
B.N. Srikrishna, J.
1. This petition, under Article 227 of the Constitution of India, impugns the order of the Industrial Court, Aurangabad, dated 28th September 1984, made in Appeal (IC) No. 20 of 1984, under the provisions of the Bombay Industrial Relations Act, 1946 (hereinafter referred to as “the Act”).
2. The Petitioner was employed in the year 1964 by the respondent No. 2 company as Head Watchman in the Watch and Ward Department. On 1.8.1971, the respondent No. 2 entered into an agreement of lease with the first respondent under which the management of the factory of the second respondent was transferred to the first respondent for a period of two years. The petitioner was at that time employed as head watchman in the said factory. Upon transfer it appears that the Transferee, namely, respondent No. 1 took all the employees of the factory into service with continuity of services. On 1.8.1976, there was an agreement between the first and second respondents under which the lease was to be extended on the same terms, for a further period of 30 years. On 8.7.1979, the petitioner was dismissed from service by respondent No. 1 whose employee he had by then become. He challenged his dismissal from service by an application (D.I.R. No. 45 of 1979) before the Labour Court at Sholapur, under Section 78 of the Act. While this application was pending before the Labour Court, on 30th July 1981, the Lease Agreement between the respondent No. 1 and respondent No. 2 was revoked and, upon surrender of the lease, the management of the factory reverted to respondent No. 2. This Surrender Deed clearly provides that with effect from 30th July 1981, the management of the factory would revert to respondent No. 2. So far as the employees in the employment of the factory were concerned, it was agreed therein that the Lessee i.e. respondent No. 1 would bear all responsibilities under the various Industrial laws in respect of the employees from the date of the Lessee taking over their service on the basis of their continued employment without break and pay the amount of gratuity, bonuses, workmen’s compensation and other dues on the lessees’ own responsibility and at their own cost.
3. The petitioner impleaded both respondents 1 and 2 as party Opponents to his application before the Labour Court. The Labour Court, upon trial of the application, found that the Order of dismissal passed against the petitioner was illegal and liable to be set aside. By the order, dated 26th September 1983, the Labour Court directed the opponent No. 2 (present respondent No. 2) to reinstate the petitioner within one month but denied him the claim for back wages.
4. The second respondent challenged the direction as to reinstatement by his appeal before the Industrial Court. The Industrial Court in appeal after careful scrutiny of the Lease Agreement, Surrender Deed and other documents, took the view that the first respondent had transferred the business of running the factory to the second respondent by the Surrender Deed w.e.f. 30th July 1981. Since the first respondent had undertaken all liability arising prior to 30th July 1981, the Industrial Court held that it was the first respondent who was liable to reinstate the petitioner. The Industrial Court then considered whether, in view of the fact that after 30th July 1981, the management of the factory was no longer vested in the first respondent, the first respondent could be directed to implement an order of reinstatement and held that, if the petitioner had continued in the service of the first respondent Karkhana, he would have continued in service only up to Order dated 30th July 1981. The Industrial Court then referred to the provisions of Section 25FF and held that the only relief to which the petitioner would be entitled to was payment of notice and compensation from the first respondent-Karkhana and directed the first respondent herein to pay the back wages from the date of termination of service till 31st July 1981, and in addition thereto, to pay him retrenchment compensation according to law.
5. Mr. M.S. Deshpande, learned Advocate for the petitioner attempted to assail the judgment of the Industrial Court on the ground that the petitioner, who was originally an employee of respondent No. 2, ought to have been reinstated in the service of respondent No. 2 notwithstanding the transfer of the management of the factory or respondent-No. 2 to respondent No. 1 and back. He also contended that every time there was a transfer, the employees’ services would continue uninterrupted and the transferee was liable to continue the employee in service. I am afraid this is contrary to the established position in law.
6. Section 25-FF of the Industrial Disputes Act makes specific provision to take care of the situation where the ownership or management of an undertaking is transferred, whether by agreement or by operation of law, from the employer to another. In such a contingency, Section 25-FF provides that unless the 3 conditions stipulated in the proviso are simultaneously fulfilled, the service of employee shall deem to have come to an end on the date of transfer and the workman shall be entitled to notice and compensation under Section 25F of the Act, as if retrenched. The 3 conditions in the proviso are:
(a) the service of the workman has not been interrupted by such transfer;
(b) the terms and conditions of service applicable to the workman upon transfer shall not be in any way less favourable;
(c) the transferee by under the terms of such transfer or otherwise has undertaken or is legally liable to pay compensation to the workman on the footing that his service has not been interrupted by the transfer;
7. The Supreme Court had occasion to consider this section in the case of Ankapalle Co-operative Agricultural and Industrial Society Ltd. v. Workmen, (1962) 2 Lab LJ 621 and again in Central Inland Water Transport Corporation Ltd. v. The Workmen, , In the latter case, the Supreme Court explained the import of Section 25FF as follows:-
(i) The first part of the section postulates that on a transfer of the ownership or management of an undertaking, the employment of workmen engaged by the said undertaking comes to an end, and compensation is made payable because of such termination;
(ii) In all cases to which Section 25-FF applies, the only claim which the employee of the transferor concern can legitimately make, is a claim for compensation against their employers. No claim can be made against the transferee of the said concerned:
(iii) By Section 25-FF the Legislature has made it clear that industrial undertakings are transferred, the employees of such transferred undertakings should be entitled to compensation, unless, of course, the continuity in their service or employment is not disturbed and that can happen if the transferee satisfies the three requirements of the proviso;
(iv) Since Section 25-FF provides for payment of benefit on the basis that the service of the employee stands terminated, neither fair play nor social justice would justify the claim of the employees that they ought to be reemployed by the Transferee”.
8. In view of the clear pronouncement of law by the Supreme Court, I am unable to accede to the arguments of Mr. Deshpande that the petitioner had a right of reinstatement subsisting against the second respondent. In my view, the Industrial Court was justified in holding that there was no right of reinstatement as against respondent No. 1 and setting aside the direction made in this regard by the Labour Court. The only relief which could have been, and, has been rightly granted, was payment of back wages for the period commencing from the date of dismissal i.e. 8.7.1979 to the date of the transfer of the undertaking i.e. up to 31st July 1981. In addition, the Industrial Court has rightly directed the first respondent (Transferor) to pay the retrenchment compensation in accordance with law. I see no infirmity in the reasoning of the Industrial Court, which is fully warranted, in view of the position of law as explained by the Supreme Court in the two judgments (supra).
The result is that petition fails and is hereby dismissed. Rule discharged with no order as to cost.