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“Employees can't be forced to work for new management” by J Venkatesan

Comply with High Court order on retirement benefits: Bench

If there is change of ownership of a company, the existing employees cannot be forced to work under a different management without their consent and in that event, those workmen are entitled to retirement/retrenchment compensation under the Industrial Disputes Act, the Supreme Court has held.

Giving this ruling on Friday, a Bench of Justices P. Sathasivam and J. Chelameswar accepted the contention of the appellants --workmen of Philips India Ltd. -- that in the present case when the company informed the workmen about the transfer of ownership of its Consumer Electronics Factory at Salt Lake City, Kolkata, to Kitchen Appliances India Ltd., the said move was not acceptable to them as they refused to give their consent.

After the ownership changed hands, the workers did not give their consent and raised an industrial dispute. On a writ petition, a single judge of the Calcutta High Court, 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 and though there was no appeal to this order, it was not implemented. Aggrieved workers filed the present appeal.

Writing the judgment, Justice Sathasivam said: “Taking note of the fact that the workmen could not 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 single judge was fully justified in passing such order.”

Allowing the appeals filed by Sunil Kr. Ghosh and others, the Bench said: “A perusal of the directions passed by the single judge leaves no room for doubt that a mandatory duty was cast upon respondent company 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 nor retrenched from service, as such, there is no question of any payment or to comply with the directions passed by the single judge. 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 single judge vide order dated 8.10.2001, within three months.”