Statutory transfer of service turns on actual employment and control, not formal lending arrangements or special terms.

Employees lent by one company to another may still fall within Section 20(1) of the Air Corporations Act, 1953 if they were actually working for the undertaking, were paid by it, and were under its control and management. The statutory scheme secured continuity of service on existing terms, while preserving a written option to opt out within the prescribed time. Special lending arrangements, including recall rights and different service terms, did not by themselves exclude statutory employment. Where the employees did not validly opt out, their service transferred to the Corporation by operation of law and they could not claim a right to revert to the lending company or seek alternative relief.

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Issues: Whether employees lent by one company to another, though not directly recruited by the latter, were employees of the latter for the purposes of Section 20(1) of the Air Corporations Act, 1953, and on failure to opt out became employees of the Corporation, thereby losing any right to revert to the lending company or claim alternative benefits.

Analysis: Section 20(1) applied to every officer or employee of an existing air company who was employed before 1 July 1952 and remained in employment immediately before the appointed day. The provision was intended to secure continuity of service on the same terms, while the proviso preserved freedom to by written notice within the prescribed time. The appellants were working for the Air Services of India, were paid by it, were under its control and direction, and were subject to its management in the ordinary sense. The fact that they had originally been loaned by the Scindias and were governed by special terms as to pay, bonus, recall, and similar matters did not prevent them from being employees of the Air Services of India in law. Since they did not exercise the statutory option to opt out, they fell within the main provision and their service stood transferred to the Corporation by force of statute.

Conclusion: The appellants were governed by Section 20(1) and became employees of the Corporation on the appointed day, so they had no enforceable right against the Scindias to be taken back or to claim the alternative reliefs.

Ratio Decidendi: For the purpose of a statutory transfer of service, actual employment, control, payment, and integration into the establishment determine whether a worker is an employee of the existing undertaking, and special arrangements such as loan, recall, or differential service terms do not exclude statutory coverage where the employee does not validly opt out.

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