{"id":84892,"date":"1968-09-27T00:00:00","date_gmt":"1968-09-26T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/manager-ms-pyarchand-vs-omkar-laxman-thange-ors-on-27-september-1968-3"},"modified":"2018-06-16T03:33:36","modified_gmt":"2018-06-15T22:03:36","slug":"manager-ms-pyarchand-vs-omkar-laxman-thange-ors-on-27-september-1968-3","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/manager-ms-pyarchand-vs-omkar-laxman-thange-ors-on-27-september-1968-3","title":{"rendered":"Manager, M\/S. Pyarchand … vs Omkar Laxman Thange & Ors on 27 September, 1968"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Manager, M\/S. Pyarchand … vs Omkar Laxman Thange & Ors on 27 September, 1968<\/div>\n
Equivalent citations: 1970 AIR 823, \t\t 1968 SCR (2) 272<\/div>\n
Author: Shelat<\/div>\n
Bench: Shelat, J.M.<\/div>\n
           PETITIONER:\nMANAGER, M\/S. PYARCHAND KESARIMAL PONWAL  BIDI FACTORY\n\n\tVs.\n\nRESPONDENT:\nOMKAR LAXMAN THANGE & ORS.\n\nDATE OF JUDGMENT:\n27\/09\/1968\n\nBENCH:\nSHELAT, J.M.\nBENCH:\nSHELAT, J.M.\nBHARGAVA, VISHISHTHA\n\nCITATION:\n 1970 AIR  823\t\t  1968 SCR  (2) 272\n\n\nACT:\n    Industrial\tDispute--Transfer  of  employment  from\t one\nemployer  to  another--Such  transfer must  be\tpreceded  by\ntermination  of\t employment with first employer\t and  a\t new\ncontract--Establishment\t to  whom services of  employee\t are\nlent  by  employer  has no right to  dismiss  employee\tfrom\nservice.\n\n\n\nHEADNOTE:\n    The\t appellant-firm had a number of factories  including\none  at\t Kamptee  in Vidharba.\tIts  head  office  was\talso\nsituated there,.  The factory at Kamptee and the head office\nwere  treated as separate establishment. the  factory  being\nregistered under the Factories Act and the Head Office under\nthe  C.P.  and\tBerar Shops and\t Establishments\t Act,  1947.\nRespondent  No. 1 was originally employed at  the  aforesaid\nfactory\t but  later  he was directed to\t work  at  the\thead\noffice.\t When the Head Office dismissed him from service  he\nchallenged the order of dismissal by an application under s.\n16  of the C.P. & Berar Industrial Disputes settlement\tAct.\nThe Assistant Commissioner dismissed the application holding\nthat  Respondent  No.  1 at the material  time\twas  not  an\nemployee of the factory but was employed in the Head Office.\nThe Industrial Court refused, in revision, to interfere with\nthe Assistant Commissioner's order.  Respondent No.. 1 filed\na  writ\t petition under Art. 226 of the\t Constitution.\t The\nHigh Court observed that unless it was established that\t the\nemployment  of Respondent No. 1 in the factory\twas  legally\nterminated it could be assumed merely because he was  direct\nto work in the head office, that his employment was  changed\nand  the  head office was substituted as  his.\temployer  in\nplace  of  the said factory.,  As the order  passed  by\t the\nAssistant  Commissioner was not clear on this  question\t the\nHigh Court remanded the case for disposal according to\tlaw.\nThe firm appealed to this Court.\n    HELD:  (i)\tA  contract  for  service  is  incapable  of\ntransfer  unilaterally. Such a transfer of service from\t one\nemployer   to another  can only be effected by a  tripartite\nagreement  between the employer, the employee and the  third\nparty,\tthe  effect  of\t which would  be  to  terminate\t the\noriginal contract of service by mutual consent and to.\tmake\na new contract between the employee and the third party.  So\nlong  as  the contract of service is not terminated,  a\t new\ncontract  is  not   made  as  aforesaid,  and  the  employee\ncontinues   to\tbe  in\tthe  employment\t of  the   employer.\nTherefore,  when an employer orders him to: do certain\twork\nfor  another person the employee still continues to  be\t i.n\nhis employment.\t The only thing that happens in such a\tcase\nis  that  he  carries out the orders  of  his  master.\tThe.\nemployee has the right to claim his wages from the  employer\nand  not from the third party to whom his services are\tlent\nor  hired.   It may be that such a third party may  pay\t his\nwages  during the time\tthat he has hired his services,\t but\nthat  is  because of his agreement with the  employer.\tthat\ndoes not preclude the employee from claiming his wages\tfrom\nthe  employer.\t the hirer may also.  exercise\tcontrol\t and\ndirection in the doing of the thing for which he is hired or\neven  the  manner  in which it is to be done.\tBut  if\t the\nemployee fails to. carry out his direction he cannot\n273\ndismiss\t him  and can only complain to the  employee.\t The\n'right of dismissal vests with the employer. [279 &F]\n    Such being the position in law, in the present case\t the\nHigh  Court  was right in- setting aside the  order  of\t the\nAssistant  Commissioner\t and  the Industrial  Court  on\t the\nground that unless a finding was reached on the facts of the\ncase that the contract of service with the said factory came\nto  an end and a fresh contract with the head  office\tcame\ninto  being,  Respondent  No.  1  continued  to\t be  in\t the\nemployment of the factory and the head office therefore\t was\nnot competent to dismiss him. [281 F]\n    Mersey  Docks  and Harbour Board v. Coggins\t &  Griffith\n(Liverpool) Ltd. [1947] A.C. 1 at 17, Century Insurance\t Co.\nLtd.  v. Northern Ireland Road Transport Board, [1942]\tA.C.\n509,  Quarman  v. Burnett, (1840) 6 M. & W. 499',  Jones  v.\nScullard, [1898] 2 Q.B. 565, Nokes v. Doncaster\t Amalgamated\nCollieries,  Ltd. [1940] 3 All England Law Reports  549\t and\nDenham v. Midland Employees Mutual Assurance Ltd., [1955]  2\nQ.B. 437, referred to.\n    Jestamani\tGulabrai  Dholkia  v.  The   Scindia   Steam\nNavigation Company<\/a> [1961] 2 S.C.R. 811, distinguished.\n\n\n\nJUDGMENT:\n<\/pre>\n
    CIVIL  APPELLATE JURISDICTION:  Civil Appeal No. 793  of
\n1966.\n<\/p>\n
    Appeal  by\tspecial leave from the\tjudgment  and  order
\ndated August 21, 1964 of the Bombay High Court, Nagpur Bench
\nin Special Civil Application No. 353 of 1963.
\n    M.N.  Phadke,  Naunit  Lal\tand  B.P.  Singh,  for\t the
\nappellant.\n<\/p>\n
    D.D. Verma and Ganpat Rai, for respondent No. 1.
\n    The Judgment of the Court was delivered by
\n    Shelat,  J.\t This appeal, by special leave, is  directed
\nagainst the order of the High Court of Bombay (Nagpur Bench)
\nwhich set aside the orders of the Assistant Commissioner  of
\nLabour\tand  the Industrial Court, Nagpur and  remanded\t the
\ncase to the Assistant Commissioner.\n<\/p>\n
    The appellant-firm conducts a number of bidi   factories
\nat various places in Vidharba including the one at  Kamptee.
\nIts  head  office  is also situate there.   The\t factory  at
\nKamptee\t and  the head office have always  been\t treated  as
\nseparate   entities   though  owned  by\t  the\tsame   firm.
\nConsequently,  the  head  office was  registered  under\t the
\nCentral Provinces & Berar Shops and Establishment Act,\t1947
\nand  the  factory  at  Kamptee\twas  registered\t under\t the
\nFactories Act.\tThe factory has also its own standing orders
\ncertified  under  the Central Provinces &  Berar  Industrial
\nDisputes Settlement Act, 1947.\tRespondent 1 was  originally
\nemployed  in  the factory at Kamptee.  Two  or\tthree  years
\nthereafter  he was directed to work at the head\t office\t and
\nworked\ttherein\t for about six years prior to  the  impugned
\norder  of dismissal passed against him by the munim  of\t the
\nhead office.  Aggrieved by the order he flied
\n274<\/span>
\nan  application under s. 16 of the C.P. &  Berar  Industrial
\nDisputes  Settlement  Act alleging that the said  order\t was
\nincompetent and illegal.  The appellant-firm contended\tthat
\nat the material time Respondent 1 was employed as a clerk in
\nthe head office, that the head office was a separate entity,
\nthat  the  dismissal  order  had not  been  passed  ‘by\t the
\nappellant-firm\tas the owner of the said factory,  that\t the
\nfirm,  as  such owner, was wrongly impleaded  and  that\t the
\napplication was misconceived.\n<\/p>\n
    The\t Assistant  Commissioner dismissed  the\t application
\nholding\t that Respondent 1 at the material time was not\t the
\nemployee in the factory, but was employed in the firm’s head
\noffice.\t He relied on the fact that the head office and\t the
\nfactory\t had separate rules, that Respondent 1 used to\tsign
\nhis  attendance in the register of the head office, that  he
\nwas  being paid his salary by the head office,\tand  lastly,
\nthat his name was not on the muster roll of the factory.  He
\nalso  found  that whereas the staff of the head\t office\t was
\ngoverned by the C.P. & Berar Shops & Establishments Act, the
\nfactory was governed by the C.P. & Berar Industrial Disputes
\nSettlement Act.\t Against the dismissal of his  ,application,
\nRespondent  1  filed  a\t revision  application\tbefore\t the
\nIndustrial Court, Nagpur.  The Industrial    dismissed\t the
\napplication  holding  that  the only question raised  before
\nit  was\t whether Respondent 1 was the employee of  the\thead
\noffice\tand  that that being purely a question of  fact,  he
\ncould not interfere with the finding of fact arrived  at  by
\nthe Assistant Commissioner.  Respondent 1 thereafter filed a
\nwrit petition in the High Court challenging the said orders.
\nThe  High  Court  held that it was possible in\tlaw  for  an
\nemployer  to  have various  establishments  where  different
\nkinds  of work would be done, in which case an\temployee  in
\none  establishment  would  be liable to\t be  transferred  to
\nanother\t establishment.\t  But the High Court  observed\tthat
\nunless it was established that the employment of  Respondent
\n1  in  the factory was legally terminated it  could  not  be
\nassumed, merely because he was directed to work in the\thead
\noffice, that his employment was changed and the head  office
\nwas  substituted  as  his  employer in\tplace  of  the\tsaid
\nfactory.  As the order passed by the Assistant\tCommissioner
\nwas not clear on this question, the High Court remanded\t the
\ncase for disposal according to law.\n<\/p>\n
     Mr.  Phadke  for the appellants, raised  the  following
\ncontentions  against  the High Court’s order: (1)  that\t the
\nHigh  Court  made out a new case for Respondent 1,  in\tthat
\nRespondent 1 had never challenged the validity of the  order
\nof  dismissal  on  the ground that there was  no  change  of
\nemployment,   and  that\t therefore,  the  head\toffice\t was
\nincompetent  to order his dismissal, (2) that the  facts  of
\nthe  case  justified the conclusion that  Respondent  1\t had
\nceased\tto be the employee of the factory, and (3)  that  in
\nany  event he must be held to have given an implied  consent
\nto
\n275<\/span>
\nhis  being treated as the employee of the head\toffice.\t  In
\nsupport\t of these contentions he relied upon the  fact\tthat
\nRespondent 1 had worked at the. head office for the last six
\nyears  without\tany  protest,  that  his  name\twas  on\t the
\nattendance register of the head office, that it was the head
\noffice which paid his salary, and lastly, that he worked  in
\nthe head office under the direction and control of the munim
\nof that office.\n<\/p>\n
    As\tto the first contention, it would not be correct  to
\nsay  that the High Court made out a new case for  the  first
\ntime  for Respondent 1 which was not pleaded by\t him  before
\nthe Assistant Commissioner.  In para 1 of his application he
\nhad  expressly\taverred\t that about three  years  after\t his
\nemployment in the factory he had been ordered to work in the
\nhead  office.\tIn reply to the application  the  appellants
\nconceded that though Respondent 1 was first employed in\t the
\nfactory\t and had worked there for about three years, he\t had
\nthereafter  been transferred to and been working as a  clerk
\nin the head office.  There was, however, no averment in that
\nreply that the contract of service of Respondent 1 with\t the
\nsaid  factory was at any time put an end to or that when  he
\nwas directed to work in the head office a fresh contract  of
\nservice was entered into. between. him and  the head office.
\nThe  Assistant Commissioner in his said order held that\t the
\nhead office and the factory were two separate establishments
\nregistered   under   two  different  Acts,  and,  therefore,
\nsubject to different provisions of law. He further held that
\nsince  Respondent 1 was not actually working in the  factory
\nand his name did not figure in the factory’s muster roll and
\nwas  not paid his wages by the factory, the applicant  could
\nnot  be said to be an employee of the said factory.  In\t his
\nrevision application before the Industrial Court, Respondent
\n1 made an express plea that when he was directed to work  in
\nthe head office, he had received no notice from the  factory
\nthat  his  services  were terminated there or  that  he\t had
\nhenceforth  become the employee of the head office.   It  is
\nclear  from these pleadings  that it was not for  the  first
\ntime in the High Court that Respondent 1 contended as to the
\nincompetence of the head office to take disciplinary  action
\nagainst\t him and to pass the order of dismissal.  The  first
\ncontention of Mr. Phadke, therefore, cannot be accepted.
\n    As\tregards the second and the third contentions,  there
\nis  no\tdispute\t that though the head office  and  the\tsaid
\nfactory\t belong\t to the same proprietors, they\twere  always
\ntreated\t  as  two  distinct entities  registered  under\t two
\ndifferent  Acts, that  Respondent  1 was employed  first  in
\nthe  factory  where  he\t worked for 2 or  3  years  and\t was
\nthereafter  ordered  to\t work  at  the\thead  office   where
\nadmittedly he worked for about six years before the impugned
\norder  terminating his services was passed.  The   question,
\ntherefore,   which  the\t Assistant  Commissioner   and\t the
\nIndustrial Court had to decide, in view of the pleadings  of
\nthe parties, was whether
\n276<\/span>
\nRespondent  1 had ceased to be the employee of\tthe  factory
\nand  was  in the employment of the head office at  the\ttime
\nwhen the impugned order was passed, or whether his  services
\nwere  simply  lent to the head office and he  continued\t all
\nalong to be the employee of the factory ?\n<\/p>\n
    The general rule in respect of relationship\t of   master
\nand  servant is that a subsisting contract of  service\twith
\none master is a bar to service with any other master  unless
\nthe  contract otherwise provides or the master consents.   A
\ncontract   of  employment  involving  personal\tservice\t  is
\nincapable  of transfer.\t Thus, where a businessman  joins  a
\npartnership firm and takes his personal staff with him\tinto
\nthe  firm,  his staff cannot be made the staff of  the\tfirm
\nwithout the consent of the other partners.  of. Mersey Docks
\nand Harbour Board v. Coggins & Griffith (Liverpool) Ltd.(1).
\nIn  certain cases, however, it is. possible to say  that  an
\nemployee has different .employers, as when the employer,  in
\npursuance of a contract between him and a third party, lends
\nor  hires  out the services of his employee  to\t that  third
\nparty  for a particular work. Such an arrangement,  however,
\ndoes  not  effect  a transfer of  the  contract\t of  service
\nbetween the employer and his employee, but only amounts to a
\ntransfer  of  the benefit of  his   services.\tof.  Century
\nInsurance  Co.\tLtd.  v.  Northern  Ireland  Road  Transport
\nBoard(“).  In such cases where a third party engages another
\nperson’s employee it is the general employer who is normally
\nliable\tfor the tortuous acts committed by the employee\t and
\nhis liability is not affected by the existence of a contract
\nbetween him and the third party under which the services  of
\nthe employee are lent or hired out for a temporary period to
\nsuch third party.  In order to absolve the employer from the
\nliability  and to make the person who.\ttemporarily  engages
\nthe employee or hires his services it is necessary to  prove
\nthat the relationship of master and servant was\t temporarily
\nconstituted  between such third party and the employee,\t and
\nthat  it  existed  at the time when  the  tortuous  act\t was
\ncommitted   by\tthe  employee.\t There\tis,    however,\t   a
\npresumption  against  there  being such\t a  transfer  of  an
\nemployee as to make the hirer or the person on whose  behalf
\nthe employee is temporarily working and a heavy burden rests
\non  the party seeking to establish that the relationship  of
\nmaster and servant has been constituted pro hac vice between
\nthe  temporary employer and the employee  of.  Mersey  Docks
\nand  Harbour  Board  v.\t  Coggins  &  Griffith\t (Liverpool)
\nLtd.(1).   In cases where an employer has hired out or\tlent
\nthe services of his employee for a specific work and such an
\nemployee has caused damage to another person by his tortuous
\nact,  the question often arises as to who of the  two,\ti.e.
\nthe  employer or the person to whom such services are  hired
\nout or lent, is [1947] A.C. 1 at 17.\t\t\t (2)
\n[1942] A.C. 509.\n<\/p>\n
277<\/span><\/p>\n
vicariously   responsible  for\tsuch  damage.\t In    cases
\ncommonly  known\t as  cranes and carriage  cases,  courts  in
\nEngland\t evolved the rule of the employee being\t temporarily
\nthe   employee\t of   such  third  party   to\timpose\t the
\nresponsibility\ton  him if it was established  that  in\t the
\nmatter of the act, in the performance of which the  tortuous
\nact  was committed, such third party had  exercised  control
\nand  direction over the performance of the act\tin  question
\nand the manner in which it was to be performed.\t The classic
\ncase  commonly cited and in which this rule was\t applied  is
\nQuarman V. Burnett (1) of. also Jones v. Scullard(2)   where
\nLord  Russel  applied the test of the power to,\t direct\t and
\ncontrol the act in performance of which damage was caused to
\nanother\t person.  The position in law is,  therefore,  clear
\nthat  except  in the case of a statutory  provision  to\t the
\ncontrary,  a right to the service of an employee  cannot  be
\nthe  subject matter of a transfer by an employer to a  third
\nparty  without\tthe employee’s consent.\t Thus, in  Nokes  v.
\nDoncaster  Amalgamated Collieries, Ltd. (3) where  an  order
\nwas   made  under  s.  154  of\tthe  Companies\t Act,\t1929
\ntransferring all the assets and liabilities of a company  to
\nanother company.  Viscount Simon held that such an order did
\nnot mean that contracts of service between the appellant and
\nthe   transferer-company   also\t stood\t transferred.\t The
\nprinciple  that\t even  in cases where  the  services  of  an
\nemployee  are  lent  to\t a third  party\t temporarily  for  a
\nparticular work, the employee still remains the employee  of
\nthe  employer is illustrated in Denham v. Midland  Employees
\nMutual\tAssurance Ltd.(4). There Eastwoods Ltd. employed  Le
\nGrands\tto  make test borings on their property.  Le  Grands
\nprovided two skilled drillers with plant and tackle to carry
\nout the borings and Eastwoods Ltd. agreed to provide one  of
\nthe labourers, one Clegg to assist those skilled men free of
\ncharge to Le Grands.  While the said work .was being carried
\nout,  Clegg was killed in circumstances in which  Le  Grands
\nwere liable to pay  damages to\this widow on the ground that
\nhis  death  was caused on account of the  negligence  of  Le
\nGrands\t or  their  servants.\tLe  Grands  sought   to\t  be
\nindemnified by their insurers against their said  liability.
\nThey  were  covered by two policies, one  with\tthe  Midland
\nEmployers   Mutual  Assurance  Ltd.  in\t respect  of   their
\nliability  to  the employees and the other  with  Lloyds  in
\nrespect\t of their liability to the public in  general.\t The
\npolicy issued by the Midland Employers Mutual Assurance Ltd.
\nprovided  that if any person “under a contract\tof  service”
\nwith  the  insured were to sustain any\tpersonal  injury  by
\naccident  caused during the period of employment,   and\t  if
\nthe insured became liable to pay damages for such injury the
\nassociation would indemnify the insured against all sums for
\nwhich  he  would  be so liable.\t The policy  issued  by\t the
\nLloyds\tindemnified  Le Grands for any sums for\t which\tthey
\nmight become liable to
\n(1) [1840] 6 M. & W. 499.\n<\/p>\n
(2) [1898] 2 Q.B. 565.\n<\/p>\n
(3) [1940] 3 All England Law Reports 549.\n<\/p>\n
(4) [1955] 2 Q.B.437.\n<\/p>\n
278<\/span><\/p>\n
pay  in\t respect  of death or accidental  bodily  injury  to
\npersons and loss or damage to. property arising in or out of
\nthe  business  of  borings carried out by  Le  Grands.\t The
\nquestion was whether at the time of his death Clegg was\t the
\nservant of Le Grands  and under “a contract of service” with
\nthem as provided in their policy with the Midland  Assurance
\nLtd.   Dealing with  that  question, Denning, L.J.  observed
\nthat  the difficulty which surrounded such a  subject  arose
\nbecause of the concept that a servant of a general  employer
\nmay  be transferred to a temporary employer so as to  become
\nfor  the  time being his .servant.  Such a concept  was,  he
\nsaid,  a  very\tuseful\tdevice to  place  liability  on\t the
\nshoulders  of the one who should properly bear it,  but\t did
\nnot affect the contract\t of service itself.  No contract  of
\nservice\t can  be transferred from one  employer\t to  another
\nwithout the servant’s consent and such consent is not to  be
\nraised\tby operation of law but only by the real consent  in
\nfact of the man express or implied.  He further observed:\n<\/p>\n
\t\t  “In  none of the transfer cases which\t has
\n\t      been  cited to us had the consent of  the\t man
\n\t      been sought or obtained.\tThe general employer
\n\t      has  simply  told\t him  to  go  and  do\tsome
\n\t      particular work for the temporary employer and
\n\t      he  has gone.  The supposed transfer, when  it
\n\t      takes place, is nothing more than a device—a
\n\t      very convenient and just device, mark  you–to
\n\t      put  liability on to the\ttemporary  employer;
\n\t      and even this device has in recent years\tbeen
\n\t      very  much  restricted in its  operation.\t  It
\n\t      only  applies when the servant is\t transferred
\n\t      so completely that the temporary employer\t has
\n\t      the  right  to.  dictate, not  only  what\t the
\n\t      servant  is  to do, but also how he is  to  do
\n\t      it.”\n<\/p><\/blockquote>\n
Applying  these\t principles  to the  facts  before  him,  he
\nobserved  that\the had no doubt that if a third\t person\t had
\nbeen injured by the negligence of Clegg in the course of his
\nwork,  Le Grands and not Eastwoods would be liable  to\tsuch
\nthird  person.\tSo. also, when Clegg himself was killed,  Le
\nGrands were  liable  to\t his widow on the same footing\tthat
\nthey  were  his\t masters and  not  merely  invitors.   These
\nresults\t were achieved in law by holding that  Clegg  became
\nthe  temporary\tservant of Le Grands.  He  further  observed
\nthat there was no harm in thus describing him so long as  it
\nwas  remembered\t that  it  was a  device  designed  to\tcast
\nliability  on  the  temporary  employer.   However,  on\t the
\nquestion  whether  Clegg was “under a contract\tof  service”
\nwith Le Grands, he held that he was not, for his contract of
\nservice\t was with Eastwoods. They had selected him and\tpaid
\nhis  wages  and\t they alone could suspend  or  dismiss\thim.
\nClegg  was  never  asked to consent to\ta  transfer  of\t the
\ncontract of service and he never did so. If he was not\tpaid
\nhis wages or if he was wrongfully dismissed from
\n279<\/span>
\nthe work, he could sue Eastwoods for the breach of  contract
\nand  no\t one  else.   If he failed  to\tturn  up  for  work,
\nEastwoods alone ‘could sue him.\t He could, therefore, see no
\ntrace  of  a contract of service with Le Grands\t except\t the
\nartificial  transfer raised by law so as to make  Le  Grands
\nliable\tto others for his faults or liable to him for  their
\nown faults and that the artificial transfer so raised cannot
\nbe  said to be a contract of service within the said  policy
\nof  assurance.\tLe Grands, therefore, were not\tentitled  to
\n‘be indemnified by the Midland Assurance Company  under\t the
\nemployers’   liability\tpolicy\tbut  were  entitled  to\t  be
\nindemnified by Lloyds under their public liability policy.
\n    A  contract of service being thus incapable of  transfer
\nunilaterally,  such a transfer of service from one  employer
\nto  another can only be affected by a  tripartite  agreement
\nbetween the employer, the employee and the third party,\t the
\neffect of which would be to terminate the original  contract
\nof  service  by mutual consent and to make  a  new  contract
\nbetween the employee and the third party. Therefore, so long
\nas the contract of service is not terminated, a new contract
\nis not made as aforesaid and the employee continues to be in
\nthe  employment\t of  the  employer.    Therefore,  when\t  an
\nemployer orders him to do a certain work for another  person
\nthe  employee still continues to be in his employment.\t The
\nonly  thing that happens in such a case is that\t he  carries
\nout the orders of his master.  The employee has the right to
\nclaim  his  wages from the employer and not from  the  third
\nparty  to  whom his services are lent or hired.\t It  may  be
\nthat such third party may pay his wages during the time that
\nhe  has\t hired\this services, but that\tis  because  of\t his
\nagreement  with\t the employer.\tThat does not  preclude\t the
\nemployee  from\tclaiming his wages from the  employer.\t The
\nhirer  may also exercise control and direction in the  doing
\nof  the\t thing for which he is hired or even the  manner  in
\nwhich  it is to be done. But if the employee fails to  carry
\nout  his  directions  he cannot dismiss\t him  and  can\tonly
\ncomplain  to the employer.  The right of dismissal vests  in
\nthe employer.\n<\/p>\n
    Such  being\t the position in law, it is  of\t the  utmost
\nimportance  in\tthe present case that the appellants  at  no
\ntime took the plea that the contract of employment with\t the
\nfactory was ever terminated or that the respondent gave\t his
\nconsent,  express  or implied, to his  contract\t of  service
\nbeing  transferred to the head office, or that there  was  a
\nfresh  contract of employment so brought about\tbetween\t him
\nand the head office.  Unless, therefore, it is held from the
\ncircumstances  relied  upon by Mr. Phadke that there  was  a
\ntransfer  of  the contract of service or that  Respondent  1
\ngave  his consent, express or implied, to such\ta  transfer,
\nRespondent   1\twould  continue to be  the  servant  of\t the
\nfactory.  Since the case has been remanded to the  Assistant
\nCommissioner,  we  refrain from making any  observations  as
\nregards the effect of the admissions
\n280<\/span>
\nsaid to have been made by Respondent 1 and relied on by\t the
\nAssistant Commissioner.\n<\/p>\n
    Mr.\t Phadke,  however,  relied  on\tJestamani   Gulabrai
\nDholkia\t v.  The  Scindia  Steam  Navigation  Company<\/a>(1)  in
\nsupport\t of his contention that there was a transfer of\t the
\ncontract of  employment and that it was not a mere  transfer
\nof  the\t benefit of the services of Respondent 1.   In\tthat
\ncase  the appellants were originally in the service  of\t the
\nScindia\t Steam Navigation Company.  In 1937 Air Services  of
\nIndia\tLtd.  was  incorporated.   In  1943,  the   Scindias
\npurchased  the\tASI and by 1946 ASI  became  a\tfull-fledged
\nsubsidiary  of\tthe  Scindias.\tBetween\t 1946  to  1951\t the
\nScindias  transferred several of their\temployees  including
\nthe  appellants\t to the ASI.  The Scindias had a  number  of
\nsuch  subsidiary  companies  and it was usual  for  them  to
\ntransfer  their\t employees  to such companies  and  also  to
\nrecall them whenever necessary.\t In 1953, the Government  of
\nIndia decided to nationalise the airlines operating in India
\nwith effect from June 1953.  On April 6, 1953 the appellants
\nwrote to the Scindias to recall them to their original posts
\nbut  the  Scindias refused to do so as they were  not  in  a
\nposition  to  absorb them.  They pointed out  that  a  Bill,
\ncalled\tthe Air Corporation Bill, 1953, was  pending  before
\nParliament,  that under cl. 20 thereof persons working\twith
\nASI  on the appointed day would become the employees of\t the
\nCorporation,  that under that clause they had the option  to
\nresign if they did not wish to join the Corporation and that
\nif the appellants exercised that option. the Scindias  would
\ntreat  them as having resigned from their service.  The\t Act
\nwas  passed  on May 28, 1953.  Sec. 20 of the  Act  provided
\nthat  every employee of an existing air company employed  by
\nsuch  company  prior  to  July 1,  1952\t and  still  in\t its
\nemployment immediately before the appointed day,  shall,  in
\nso  far as such employee is employed in connection with\t the
\nundertaking which has vested in the Corporation by virtue of
\nthe Act, become, as from the appointed date, the employee of
\nthe  Corporation  in which the undertaking has\tvested.\t  On
\njune  8,  1953\tthe appellants made a  demand  that  if\t the
\nCorporation  were  to retrench any persons  from  the  staff
\nloaned\tto  ASI within the first five  years,  the  Scindias
\nshould\ttake them back. The Scindias refused.  None  of\t the
\nappellants had exercised the option provided by s. 20 (1  ).
\nOn August 1, 1953 ASI became vested in the Corporation\t and
\ns.  20(\t 1  )  came  into force\t as  from  that\t date.\t The
\nappellants contended inter alia that the contract of service
\nbetween\t them and the Scindias was not\ttransferable.\t The
\ncontention  was rejected on the ground that by reason of  s.
\n20(1)  the  contract  of service  of  the  appellants  stood
\ntransferred  to\t  the\tCorporation   and  that\t though\t the
\nappellants  were  not originally recruited by ASI  and\twere
\ntransferred  by\t the  Scindias\tto  the\t said  company,
\n(1) [1961] 2 S.C.R. 811.\n<\/p>\n
281<\/span><\/p>\n
they   were    the   employees\t of  ASI   and\t  were\tsuch
\nemployees  on\tthe  appointed day  and since they  had\t not
\nexercised  the\toption\tunder s. 20( 1\t)  they\t became\t the
\nemployees of the Corporation by operation of that provision.
\nThe Scindias, therefore, were no longer concerned with them.
\nIt  is true that the appellants were transferred to  ASI  on
\ncondition   that  they would receive the  same\tremuneration
\nand other benefits as they were getting in the Scindias\t and
\nfurther\t that\tit  was\t possible to contend  that  Scindias
\nalone\tcould\tdismiss\t them.\t But   the  learned   Judges
\nexplained  that these were special terms applicable  to\t the
\nappellants.  But in spite of them they still had become\t the
\nemployees  of  the  ASI\t and  were  such  employees  on\t the
\nappointed day.\tIt seems that this conclusion was reached on
\nthe   footing that since ASI was the subsidiary\t company  of
\nthe Scindias like several other subsidiary companies, and it
\nwas.  usual  for  the  Scindias to  transfer  any  of  their
\nemployees  to such subsidiary companies, the  appellants  on
\ntheir  transfer were deemed to have consented to become\t the
\nemployees  of ASI in spite of the right of the\tScindias  to
\nrecall\t them  whenever\t necessary  and\t further  that\t the
\nappellants continued to be and were the employees of the ASI
\non  the\t appointed day and were, therefore, governed  by  s.
\n20(1  )\t if the Act.  It is clear that this was\t a  case  of
\nemployees  becoming  the  employees of\tthe  Corporation  by
\nvirtue\tif  the\t operation  of\ta  statute.   The  decision,
\ntherefore,  is not an authority for the proposition that  an
\nemployer can transfer his employee to a third party  without
\nthe  consent  of such employee or’ without  terminating\t the
\ncontract  of employment with him.  That being the  position,
\nthe  case  of Jestamani v. The Scindia\tSteam  Navigation<\/a>(x)
\ncannot assist Mr. Phadke.\n<\/p>\n
    In\tour view the High Court was, right in setting  aside
\nthe  order of the Assistant Commissioner and the  Industrial
\nCourt on the ground that unless a finding was reached on the
\nfacts of the case that the contract of service with the said
\nfactory\t came to an end and a fresh contract with  the\thead
\noffice\tcame into being Respondent 1 continued to be in\t the
\nemployment  of the factory and the head\t office,  therefore,
\nwas  not competent to dismiss him.  The\t appeal,  therefore,
\nfails and is dismissed with costs.\n<\/p>\n
G.C.\t\t\t\t\t   Appeal dismissed.\n(1) [1961] 2 S.C.R. 811.\n282<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Manager, M\/S. Pyarchand … vs Omkar Laxman Thange & Ors on 27 September, 1968 Equivalent citations: 1970 AIR 823, 1968 SCR (2) 272 Author: Shelat Bench: Shelat, J.M. PETITIONER: MANAGER, M\/S. PYARCHAND KESARIMAL PONWAL BIDI FACTORY Vs. RESPONDENT: OMKAR LAXMAN THANGE & ORS. DATE OF JUDGMENT: 27\/09\/1968 BENCH: SHELAT, J.M. BENCH: […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-84892","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nManager, M\/S. 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