Kumar G. Mehta vs Gujarat Housing Board and Another

Kundan Singh, J.—This petition has been filed on behalf of 10 persons mentioned in the list Annexure-A by the Safai Kamdar Sangh for a

direction to the respondents to treat termination of the service of the persons mentioned in Annexure-A as illegal, unconstitutional and null and void

and to treat their service as continued as if they were not terminated at all.

The persons mentioned in Annexure-A were the employees of the Gujarat Housing Board-respondent No. 1. Nine persons out of 10 persons

filed claim petition before the appropriate authority for their regularisation in service. The matter was referred to the Labour Court in Reference

LCD No. 94 of 1980. The Labour Court after giving a reasonable opportunity to the parties concerned, rejected the demands No. 1 to 3 as not

pressed and with regard to demand No. 4 the Gujarat Housing Board was directed to make permanent 9 persons by the order dated November

5, 1984. One Vashram Harji 10th employee was senior-most but could not be impleaded in the proceedings before the Labour Court. As such,

the Labour Court directed these persons to be appointed on regular basis in regular pay scale of Rs. 196-232 with effect from January 1, 1984.

On October 1, 1986 the ""Safai Kamdars"" were simply told orally by the Time Keeper in-charge that their services were not required in future as

per the instructions from the higher authorities. It appears that these 10 ""Safai Kamdars"" were working in Nari Road Housing Complex, Bhavnagar

and that complex was taken over by the Corporation vide the Resolution No. 87 dated October 29, 1983 and that Nari Road, Bhavnagar

complex as taken over with civil amenities for a lump sum amount of Rs. 10,000/- for this work. As the ""Safai Kamdars"" were not taken over by

the Corporation hence they preferred this application.

An affidavit-in-reply has been filed by the Dy. Executive Engineer, Gujarat Housing Board, Bhavnagar, wherein it is stated that the persons

mentioned in Annexure-A to the petition were work-charged employees except Sr. No. 1 who was muster role employee. It is also stated in the

affidavit-in-reply that the procedure as provided in law was followed before retrenching them from service. Required notice was also sent on

September 30, 1986 and the persons mentioned in Annexure-A were personally called and the notice was given and also offered retrenchment

compensation. But they refused to accept the notice or compensation amount. As such, the demand draft of retrenchment compensation was sent

by registered post on the same day. But all of them have refused to accept the same. The Deputy Secretary has denied that the petitioners were

appointed on regular posts with effect from January 1, 1984 and that they were given regular pay scale. However, Vasahat in question was

transferred to the Bhavnagar Municipal Corporation by the Housing Board. Hence, the services of the persons mentioned in Annexure-A were

terminated in accordance with law and in accordance with the provisions of the Industrial Disputes Act.

It appears that the Dy. Executive Engineer of the Gujarat Housing Board was totally ignorant or avoiding to accept the adjudication of the

award of the Labour Court dated November 5, 1984 and that award has not been challenged by the Gujarat Housing Board at all anywhere and

therefore that has become final. It is further asserted in the affidavit-in-reply that the aforesaid persons who were junior-most amongst the work

charged Safai Kamdars were working in the Nari Road Housing Complex, Bhavnagar and their services were surplus and it was decided that they

can be transferred to any other colony as alleged in the petition. The services of those employees were attached to the work of ""Safai"" in the

Anand Nagar and Bharat Nagar colony at Nari Road, Bhavnagar were not required by the Board. But there is nothing on record to show that the

employees were junior-most except the bald statement of the Deputy Secretary particularly their services have already been regularised by the

Labour Court. Though it is admitted that all the liabilities of the said colonies for the civil amenities were taken over by the Municipal Corporation

the employees mentioned in Annexure-A were surplus and their services were not required by the Gujarat Housing Board as the other ""Safai

Kamdars"" were already working in other Housing Colony and they were senior to the persons mentioned in Annexure-A who are terminated from

service. The aforesaid employees/persons cannot be transferred to other colony as there was no vacancy there.

The Sur-Rejoinder affidavit has been filed by one H. S. Patel, on behalf of the Corporation wherein it is stated that the services which have been

undertaken by the Corporation under the agreement with the Gujarat Housing Board are being done by ""Safai Kamdar"" who are the employees of

the Corporation and no private contract has been given by the Corporation. Though, it is also admitted that the Corporation has given a contract

for cleaning septic tanks of the colony to one Jayantibhai Mohanbhai on May 31, 1986. The said work was not done by the persons mentioned in

Annexure-A but it was done always by the private contractor.

Learned counsel for the petitioner contended that the fundamental right of life i. e. means of livelihood has been provided under Article 21 of the

Constitution of India. Termination of service of any employee/ workman visits with the civil consequences of jeopardizing not only his/her livelihood

but also career and livelihood of dependents. Therefore, before taking any action putting an end to tenure of an employee/workman fair play

requires that a reasonable opportunity to putforth his case is given and domestic inquiry is required to be conducted complying with the principles

of natural justice. In support of his contention he relied upon the case of D.K. Yadav Vs. J.M.A. Industries Ltd., .

The main contention of the learned advocate for the petitioner is that the persons mentioned in Annexure-A were discharging their duty of

permanent nature under the Gujarat Housing Board and their services were made permanent by the Labour Court with retrospective effect and

treated them as regular servants of the Municipal Corporation with regular pay scale. The persons mentioned in Annexure-A were working at Nari

Road Complex, Bhavnagar and that complex is taken over by the Municipal Corporation. It was the duty of the respondent No. 1 to make

necessary arrangement for deputing services of the persons mentioned in Annexure-A to the Corporation or the Gujarat Housing Board should

have allotted the work to them through the other local authority under its control. But it is not so done. On the other hand, the services of the

aforesaid persons were terminated by oral order without following the due procedure laid down under the provisions of Section 25-FF of the

Industrial Disputes Act and considering the aforesaid persons as work charged employee retrenched their services. The respondent No. 2

Corporation has taken over the Nari Road Complex, Bhavnagar with all the amenities except the persons who were working there. The Municipal

Corporation ought to have taken the services of the persons mentioned in Annexure-A as continued and for that purpose the Corporation have

engaged the other persons and for that purpose the aforesaid persons were the best persons who are working continuously in that area. The action

of the respondents is wholly arbitrary and against the principles of natural justice and unconstitutional. The learned counsel for the petitioner has

relied on the case of Gurmail Singh and Others Vs. State of Punjab and Others, wherein it has been held ""The appellants were in service as

tubewell operators in the irrigation branch of the Public Works Department of the Punjab State. The State took a decision to transfer all the

tubewells in this branch to the Punjab State Tubewell Corporation, a company wholly owned and managed by the State of Punjab. Accordingly,

the appellants were served with a notice in terms of Section 25-FF of the Industrial Disputes Act, terminating their services and abolished the posts

sanctioned for the tubewell circle Irrigation Branch. The employees of the predecessor had no right to claim re-employment by the successor in

business save in exceptional circumstances. Even where available, that claim was not a matter of absolute right but one of discretion, to be

judicially exercised, having regard to all the circumstances. An Industrial Tribunal, while investigating such claim, had to carefully consider all the

aspects of the matter. It had to examine whether the refusal to give re-employment was capricious and industrially unjustified on the part of

successor in business or whether he could show cause for such refusal on reasonable and bonafide grounds such as want of work, inability of the

applicant to carry out the available work efficiently, late receipt of the application for re-employment in view of prior commitments or any other

cause which in the opinion of the Tribunal made it unreasonable to force the successor-in-interest to give re-employment to all or any of the

employees of the old concern. This, discretion given to Industrial Courts is no longer generally available because of the insertion of Section 25-FF.

Section 25-FF of the Industrial Disputes Act, provides that where there is transfer of an undertaking by agreement or operation of law, an

employee who loses his job because of such transfer will have a right to compensation from the predecessor, except where he gets the benefit of

uninterrupted service with the new employer on no less favourable terms than before and will be entitled to compensation in case he should be

retrenched later by the new employer. If a transfer is fictitious or benami, Section 25-FF has no application at all. In such a case, ""there has been

no change of ownership or management and despite an apparent transfer, the transferor employer continues to be the real employer and there has

to be continuity of service as before and there can be no question of compensation. A second type of cases which comes to mind is one in which

there is in form, and perhaps also in law, a succession but the management continues to be in the hands of the same set of persons organized

differently. In such cases, the transferee and transferor are virtually the same and the overriding principle should be that no one should be able to

frustrate the intent and purpose of the law by drawing a corporate veil across the eye of the Court. These exceptions to the above rules, would still

be operative. But it is necessary here to decide whether this principle will help us to identify the Corporation with the State Government for the

present purpose particularly, as there is a catena of cases which do not approve of such identification. There can be an exception to the principle

behind Section 25-FF. This is where, as here, the transferor and/or transferee is a State or a State instrumentality, which is required to act fairly

and not arbitrarily and the Court has a say as to whether the terms and conditions on which it proposes to hand over or take over an industrial

undertaking embody the requisite of fairness in action"" and could be upheld. In such circumstances, it will be open to this Court to review the

arrangement between the State Government and the Corporation and issue appropriate directions. Indeed, such directions could be issued even if

the elements of the transfer in the present case fall short of a complete succession to the business or undertaking of the State by the Corporation,

as the principle flowing from the contours of Article 14 of the Constitution the State and Corporation are obliged to adhere to.

On the basis of the principle laid down by the Supreme Court the learned counsel for the petitioner submitted that one limb of the State has

transferred the limb to other limb of the State. The respondents have committed an error in not handing over and to take over the work of the

aforesaid persons which is an infringement of the fundamental rights under Article 14 of the Constitution of India.

Learned State Counsel contended that retrenchment of the persons mentioned in Annexure-A was perfectly justified and was in accordance

with the provisions of Section 25-FF of the Industrial Disputes Act. The services of the said persons were not transferred but the colonies were

taken over by the Corporation and hence retrenchment compensation was also given to the aforesaid persons but that was not accepted by them,

hence the decision of the authorities was fully justified in law.

I have considered carefully the submissions made on behalf of the parties. The aforesaid persons were working for more than 9 to 13 years in

the respondent Housing Board and they were directed by the Labour Court to be regularized and they were entitled for regular pay scale. The

Gujarat Housing Board has not expressly transferred the services of the aforesaid persons to the Corporation, but it will be deemed indirectly that

their services have also been transferred to the Corporation as the work of the said persons were of permanent nature and that work was required

to be done by aforesaid persons or any other person. The defence of the respondents is that the work was being done by the employees of the

Corporation is not justifiable. However, all work has been done by the aforesaid petitioners that will be deemed to have been done continuously

after taking over the said Housing Complex by the Corporation on transfer. That work was available for the aforesaid persons and that has been

done by transfer of employees or by the employees engaged by the contractor. Retrenchment is not allowed by the Supreme Court in the

circumstances where the work was available and the transfer was made in formal nature from one limb of the State to another limb of the same

State.

In the present case, Nari Road Housing Complex, Bhavnagar was taken by the respondent-Corporation and the work was available it was the

duty of the Corporation to engage the aforesaid persons continuously. The action of Corporation is not justified at all and retrenchment of the

aforesaid persons-employees cannot be allowed at all and that was also illegal and is not sustainable in the eye of law in view of the rule laid down

by the Supreme Court.

So far as the back wages of the aforesaid persons-employees are concerned, they were illegally retrenched though they were available for the

same hence they are entitled to half back wages from the date of termination till the date they are allowed to join their duty.

Accordingly, the petition is allowed and the Bhavnagar Municipal Corporation is directed to take over their services, allow them to work

forthwith and regularise the persons mentioned in Annexure-A of the petition with continuity of service in the regular pay scale as regular employee

of the Corporation and the Corporation is further directed of to give 50% of back wages from the date of termination i.e. October 1, 1986 till they

are allowed to work under its control.

Accordingly, rule is made absolute to the aforesaid extent, with no order to costs. Interim order, if any, stands vacated.