No automatic absorption right for employees after transfer of an electricity undertaking absent promise, statute, or settled practice.

A revoked electricity licensee's employees had no enforceable right to absorption by the Board after takeover of the undertaking under the Indian Electricity Act, 1910. The statutory scheme governing revocation, purchase and vesting did not impose a contractual, statutory or equitable duty to transfer employees, and no promise, assurance or settled practice established legitimate expectation. The Court also noted that automatic transfer of employees does not ordinarily follow transfer of an undertaking, and equitable considerations could not compel absorption where administrative and financial constraints militated against it. Earlier fact-specific or interim directions did not create a general right to continued employment.

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Issues: Whether the Board had any contractual, statutory or equitable obligation to absorb the employees of the revoked licensee's undertaking.

Analysis: The licence granted under the Indian Electricity Act, 1910 was revoked and the undertaking was taken over by the Board, but there was no contract, promise or assurance by the Board to absorb the employees. The scheme of sections 3, 4, 5, 6, 7 and 7A of the Act regulated revocation, purchase and vesting of the undertaking, but did not create any right in the employees of the erstwhile licensee to claim absorption in the purchaser's service. The doctrine of legitimate expectation was held inapplicable because it requires a foundation in promise or an established regular practice, and no such binding practice or representation by the Board was shown. The Court also held that transfer of an undertaking does not ordinarily entail automatic transfer of employees, and equitable considerations cannot compel absorption when the Board's financial position and administrative constraints make such a direction untenable. Reliance on earlier directions given on special facts and on interim or fact-specific orders was held not to create a general right to absorption.

Conclusion: The Board had no contractual, statutory or equitable obligation to absorb the appellants.

Ratio Decidendi: In the absence of a statutory mandate, contractual undertaking, or a legally sustainable legitimate expectation founded on promise or settled practice, employees of a transferred or revoked licensee's undertaking cannot claim absorption as a matter of right against the transferee public authority.

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