V. Lohithan v. State of Kerala and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **MONDAY, THE 20TH DAY OF JANUARY 2014/30TH POUSHA, 1935** **WP(C).No. 16201 of 2010 (A) ----------------------------** ## **AGAINST THE ORDER/JUDGMENT IN ID 27/2004 of INDUSTRIAL TRIBUNAL, KOLLAM** **PETITIONER :** **--------------------------** **V.LOHITHAN NO.53/1731, S.K.MEDICALS, SANTHIVILA NEMOM P.O., THIRUVANANTHAPURAM.** **BY ADVS.SRI.KURIAN GEORGE KANNANTHANAM (SR.) SRI.THOMAS GEORGE SRI.TONY GEORGE KANNANTHANAM** **RESPONDENTS:** **----------------------------** **1. STATE OF KERALA AND 2 OTHERS THE SECRETARY, LABOUR DEPARTMENT, SECRETARIAT TRIVANDRUM.** **2. K.RAJAN, KULANTHINKARA HOUSE, NEMOM P.O., THIRUVANANTHAPURAM.** **3. SMT.SANTHA, PROPRIETOR, S.K.MEDICALS, OPP.GOVERNMENT HOSPITAL, SANTHIVILA NEMOM P.O., THIRUVANANTHAPURAM.** **4. THE INDUSTRIAL TRIBUNAL, KOLLAM** **R1 BY ADV. GOVERNMENT PLEADER SRI. NOUSHAD THOTTATHIL R2 BY ADV. SRI.V.R.GOPU** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 20-01-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **WP(C).No. 16201 of 2010 (A)** ## **APPENDIX** ## **PETITIONERS EXHIBITS:** **EXT.P1: TRUE COPY OF THE CLAIM STATEMENT FILED BY THE 2[ND] RESPONDENT IN I.D. NO.27/04 BEFORE THE TRIBUNAL** **EXT.P2: TRUE COPY OF THE OBJECTION FILED BY THE PETITIONER IN I.D. NO. 27/04 BEFORE THE TRIBUNAL** **EXT.P3: TRUE COPY OF THE LICENSE ISSUED TO THE PETITIONER DURING THE YEAR 2004** **EXT.P4: TRUE COPY OF THE LICENSE ISSUED TO THE PETITIONER DURING THE YEAR 2004** **EXT.P5: TRUE COPY OF THE AWARD DATED 27.2.2010 OF THE INDUSTRIAL TRIBUNAL KOLLAM** ## **RESPONDENTS EXHIBITS: NIL** ## **TRUE COPY** **P.A TO JUDGE** **K. VINOD CHANDRAN, J - - - - - - - - - - - - -- - - - - - - - - - - - - - - - W.P(C) No.16201 of 2010** **- - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 20[th] day of January, 2014** ## **J U D G M E N T** The petitioner is the proprietor of one S.K Medicals in Thiruvananthapuram District. The petitioner is aggrieved by Ext.P5 award by which the petitioner was directed to re-instate the workman with continuity of service and back-wages, till retrenchment or superannuation. The Industrial Disputes Tribunal, Kollam had also limited the back wages to 50%. The dispute was raised by the 2[nd] respondent herein against his alleged illegal termination from employment with a proprietorship concern, namely, S K Medicals whose proprietor was the 3[rd] respondent. The 2[nd] respondent/workman contended that he was continuously employed from 21.3.1991 to 31.5.2003 and that his wages, at the WPC.16201/2010 : 2 : time of appointment was Rs.1,750/- and at the time of termination was Rs.5,500/- per month. The 2[nd] respondent alleged that the 3[rd] respondent had terminated his employment without any cause or reason and that he was entitled to reinstatement and back wages. 2. Obviously, conciliation failed and on the failure report; dispute was referred to the Tribunal, which was numbered as I.D No 27/04. The 3[rd] respondent/Management appeared before the Industrial Tribunal and filed a counter affidavit contending that the 3[rd] respondent had sold the shop to another. The petitioner then, sought for impleadment of the petitioner herein, who was the proprietor of the shop during the pendency of the dispute before the Tribunal. The petitioner filed an objection to the application for impleadment and also WPC.16201/2010 : 3 : to the claim contending that he was not at any time the employer of the 2[nd] respondent and that he was neither liable to pay any compensation by retrenchment or otherwise nor was he liable to reinstate the 2[nd] respondent. The Tribunal however, impleaded the petitioner who also participated in the proceedings, which concluded in Ext.P5 award. 3. On a reading of the award it is clear that the Tribunal found that the appointment of the petitioner was only from 21.3.1993 and that he was continued in the service of the 3[rd] respondent till 1.6.2003, on which date he was terminated without notice and without complying with the provisions of the I.D Act. It was also found by the Tribunal that the 2[nd] respondent was in the employment of the 3[rd] respondent. However, finding that the petitioner was the son-in-law of the 3[rd] respondent and also on the WPC.16201/2010 : 4 : ground that the 3[rd] respondent had suppressed the identity of the person to whom the transfer was made, the Tribunal found that the petitioner who was in management has stepped into the shoes of the 3[rd] respondent-management. The contention of the petitioner that the workman had only a claim of retrenchment compensation under Section 25FF; that too against the 3[rd] respondent, was negatived on the finding that the 2[nd] respondent herein was not aware of the transfer. 4. Since the statutory duties and liabilities of the management, before such transfer; was found to be not complied with, it was presumed that the workman has the right to continue in the service of the 3[rd] respondent till he is retrenched from the service or his superannuation. Though the liability was found to be that of the 3[rd] respondent who was referred to as WPC.16201/2010 : 5 : the first management, while making the award “managements”; referring to the first management as also the petitioner who was impleaded as the 2[nd] management, were directed to reinstate the workman and to disburse the wages of three months from March 2003 and thereafter 50% of the back wages from 1.6.2003 till date. 5. The petitioner assails the above award on the ground that the claim of the 2[nd] respondent workman can only be against the 3[rd] respondent especially, since, the specific allegation of the 2[nd] respondent was that he was employed by her and it was she who terminated him. Such claim has to be confined to the compensation payable under Section 25FF and there cannot be any further claim for reinstatement or for back wages, was the specific contention taken up by the petitioner before the Tribunal, relying on Section WPC.16201/2010 : 6 : 25 FF of the Industrial Disputes Act, 1947. Section 25FF is extracted hereunder:- **Compensation to workmen in case of transfer of undertakings:** - Where the ownership of management of an undertaking is transferred , whether by agreement or by operation of law, from the employer in relation to that undertaking to a new employer, every workman who has been in continuous service for not less than one year in that undertaking immediately before such transfer shall be entitled to notice and compensation in accordance with the provisions of Section 25F, as if the workman had been retrenched: Provided that nothing, in this section shall apply to a workman in any case where there has been a change of employers by reason of the transfer, if— - (a)the service of the workman has not been interrupted by such transfer; - (b)the terms and conditions of service WPC.16201/2010 : 7 : applicable to the workman after such transfer are not in any way less favourable to the workman than those applicable to him immediately before the transfer; and (c)the new employer is, under the terms of such transfer or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer. 6. The Section provides that in the case of transfer of undertakings, an employee who is sent out of the service of the transferror is entitled to compensation in accordance with the provisions of Section 25F, unless the service was continued uninterruptedly under the new employer, (sub clause (a) of first proviso); or when the new employer is, under the terms of such transfer or otherwise, legally WPC.16201/2010 : 8 : liable to pay the workman such compensation as has been fixed by Section 25F(clause (c) of the first proviso). The Section does not, in the circumstance of an absence of notice of the transfer create any liability on transferor or the transferee to continue the workman in employment. 6. The learned counsel for the 2[nd] respondent would place reliance on **Madho Ram & Sons v. The Workmen (AIR 1964 SC 645)** to contend that Section 25FF is not applicable in the present case in the context of there being no written agreement produced by either parties. However, such a proposition cannot be inferred from the aforecited decision. Therein, a firm comprised of members of a Join Hindu Family transferred the retail business carried on by the firm to a Company, again formed by the very same members. While the employees who WPC.16201/2010 : 9 : stood transferred, claimed retrenchment compensation, the employer claimed that the terms of the transfer, complied with the proviso to Section 25FF and hence the section has no application. The Court found that as per the terms of transfer the service of the employees were not interrupted, the conditions were not less favourable and the transferee was liable to treat the service with the transferor also for purposes of any subsequent retrenchment; perfectly in tune with sub-clauses (a) (b) and (c) of the proviso to Section 25FF. However, since there was no transfer of undertaking as such and there was only transfer of the retail business, which was only one of the businesses conducted by the firm; Section 25FF was found to be applicable. The facts hence are clearly distinguishable in the instant case. What is relevant for the present case is WPC.16201/2010 : 10 : only the principle reiterated in the said decision that the applicability of Section 25FF would depend upon an evaluation of all the relevant factors. 7. In the instant case, admittedly, even as per the claim, the termination was effected by the 3[rd] respondent, who was the proprietor of the shop in which the second respondent was employed. The termination, even according to the 2[nd] respondent was made on 1.6.2003 and the petitioner has acquired the management of the shop by transfer, that too from a 3[rd] party, only on 16.4.2004 as is evidenced by Ext.P3. The mere fact that the petitioner is the son-in-law of the 3[rd] respondent, does not create any liability on the 3[rd] respondent to either reinstate the 2[nd] respondent or to pay him compensation. In the context of the 2[nd] respondent having no case that he had been continued after the WPC.16201/2010 : 11 : transfer or that the terms of the transfer, entitled him to be continued under the transferee, the petitioner cannot be said to be the management of the workman who is liable to reinstate or pay back wages to the workman. The 3[rd] respondent also does not absolve herself of her liability by placing reliance on any condition of transfer which casts the responsibility to continue the 2[nd] respondent in employment or to settle his claims arising from the employment with the 3[rd] respondent. 8. In such circumstance, only claim surviving for the 2[nd] respondent workman is for retrenchment compensation against the 3[rd] respondent. Admittedly, the 2[nd] respondent was in the employment of the 3[rd] respondent from 21.3.1993 to 31.5.2003, as has been found by the learned Tribunal. The only claim that could be raised against the 3[rd] respondent is for WPC.16201/2010 : 12 : retrenchment compensation under Section 25FF, since, the specific case of the workman was that he was terminated before the transfer, by the 3[rd] respondent. Under Section 25FF the petitioner would be entitled to retrenchment compensation as also the notice pay. There can be no reinstatement since the proprietorship concern has been sold to another, after the termination of the 2[nd] respondent. In the context of the finding that the petitioner would not be liable for reinstatement or for any back wages; the award insofar as it mulcts such liability on the petitioner, as the 2[nd] management, is set aside to that extent, since, admittedly, the 2[nd] respondent workman was terminated by the 3[rd] respondent and the 3[rd] respondent had only later sold the undertaking. 9. The only claim subsisting for the workman against the management, being the 3[rd] respondent is WPC.16201/2010 : 13 : for retrenchment compensation. It is also to be noticed that the petitioner has been paid an amount of Rs.1,98,000/-, being amounts directed by this Court to be paid under Section 17B of the I.D Act. It is trite that the amounts paid under Section 17B cannot be refunded to the employer. But in the instant case it is to be noticed that the amounts were not paid by the employer. It is fairly submitted by the learned counsel for the petitioner that he is not seeking any refund and even the amount now deposited in the Civil Court Dispute Account of the High Court be paid to the workman-second respondent in satisfaction of the claim under Section 25FF. Ext.P5 award passed by the Tribunal is modified insofar as the entitling the 2[nd] respondent/workman to the retrenchment compensation under Section 25F together with interest; from the 3[rd] respondent alone. However, in WPC.16201/2010 : 14 : the context of the petitioner not seeking any refund and in the context of offering even the amount of Rs.38,500/- now deposited before the CCD A/c; the claim of the workman is recorded as satisfied and the amounts so deposited is also directed to be disbursed to the 2[nd] respondent. The petitioner, on raising proper claim, would be entitled to be disbursed the said amount. Writ petition hence stands allowed modifying the award of the Tribunal to the above extent. The satisfaction of the claim of the respondent/workman, against the 3[rd] respondent is also recorded, though paid by the petitioner herein. The parties are left to suffer their costs. Sd/- ## **(K. VINOD CHANDRAN, JUDGE)** jma //true copy// P.A to Judge