2007 (10) TMI 622 - SC - Indian Laws

Supreme Court rules in favor of employees in transfer dispute, deems clauses discriminatory and unenforceable

BCPP Mazdoor Sangh & Anr Versus N.T.P.C. & Ors

The Supreme Court set aside the High Court's order and allowed the appeals by the employees. The Court held that transferring employees from NTPC to BALCO ... Whether the terms are sustainable and the action of the management in transferring the employees-appellants to BCPP which is a private management is justifiable or not? Whether undue influence was exercised by the management of NTPC on the unemployed candidates to execute undertakings for appointment? Issues Involved:1. Validity of the transfer of employees from NTPC to BALCO.2. Applicability and enforceability of clauses 8.2 and 16.3 of the agreement dated 22.05.1990.3. Maintainability of the writ petitions under Article 226 of the Constitution.4. Impact of the agreement on the service conditions of the employees.5. Requirement of a tripartite agreement for the transfer of employment.6. Alleged discrimination between non-executive and executive employees.Detailed Analysis:1. Validity of the Transfer of Employees from NTPC to BALCO:The appellants, who were employees recruited by NTPC, challenged their transfer to BALCO, a private sector organization, following the disinvestment policy of the Government of India. The employees contended that their transfer to a private organization amounted to retrenchment by NTPC against their wishes, which is not permissible under law. The Supreme Court noted that the appointment letters and undertakings did not disclose that the recruitment was exclusively for BALCO. The Court held that the transfer of employees from NTPC, a public sector undertaking, to BALCO, a private organization, without their consent, was not justified and was bad in law.2. Applicability and Enforceability of Clauses 8.2 and 16.3 of the Agreement Dated 22.05.1990:Clauses 8.2 and 16.3 of the agreement between NTPC and BALCO provided for the transfer of non-executive employees to the successor organization in the event of a transfer of management. The employees argued that these clauses were illegal, arbitrary, and unenforceable as they were not parties to the agreement. The Supreme Court found that the agreement was bipartite and did not bind the employees, who were appointed before the agreement was executed. The Court held that the clauses were contrary to Section 23 of the Indian Contract Act and violative of Article 14 of the Constitution of India.3. Maintainability of the Writ Petitions Under Article 226 of the Constitution:The management argued that the writ petitions were not maintainable as the employees had an alternative remedy under industrial law. However, the Supreme Court upheld the High Court's decision that the writ petitions were maintainable, noting that the issue involved the interpretation of certain clauses in the agreement and appointment letters, and no disputed facts were involved. The Court emphasized that alternative remedy is a rule of discretion and not a rule of law.4. Impact of the Agreement on the Service Conditions of the Employees:The employees contended that the unilateral changes to their service conditions, particularly when they were not parties to the agreement, were not sustainable. The Supreme Court observed that the terms and conditions of the agreement dated 22.05.1990, which had retrospective effect from 29.06.1987, were not enforceable against the employees. The Court held that the service conditions of the employees could not be altered without their consent and that the employees were entitled to the benefits and privileges of NTPC, a public sector undertaking.5. Requirement of a Tripartite Agreement for the Transfer of Employment:The employees argued that the transfer of their employment required a tripartite agreement, which was not in place. The Supreme Court agreed, citing the principle that a contract of service cannot be transferred unilaterally and requires the consent of the employee. The Court held that the transfer of employees from NTPC to BALCO without a tripartite agreement was not permissible.6. Alleged Discrimination Between Non-Executive and Executive Employees:The employees contended that clause 16.3 of the agreement was discriminatory as it applied only to non-executive employees, while executives were transferred to other establishments of NTPC. The Supreme Court found that the non-executive employees, who also possessed special knowledge, were being treated unfairly compared to the executives. The Court held that the discrimination was violative of Article 14 of the Constitution and that all employees should be retained by NTPC and posted in their various units.Conclusion:The Supreme Court set aside the common order dated 25.03.2004 passed by the High Court of Chhattisgarh and allowed the appeals filed by the employees. The Court held that the transfer of employees from NTPC to BALCO without their consent was not justified and that the impugned clauses in the agreement were discriminatory and unenforceable. The employees were ordered to be retained in NTPC.