Transfer of industrial undertaking cannot be conditioned on compulsory absorption of workmen where statutory continuity is not satisfied.

Section 25-FF of the Industrial Disputes Act entitles workmen to notice and compensation on transfer of ownership or management, as if retrenched under Section 25-F, unless the statutory proviso preserves continuity of service. In the absence of that proviso being satisfied, the transferee is not legally liable to compulsorily absorb or re-employ the existing workmen; the claim lies against the transferor for compensation. A writ of mandamus cannot be used to impose absorption of all workmen as a condition precedent to transfer of an economically distressed industrial undertaking, and the requested direction was refused.

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Issues: Whether a writ of mandamus could be issued directing transfer of ownership of an industrial undertaking only on the condition that the transferee absorb and continue the services of the existing workmen.

Analysis: Section 25-FF of the Industrial Disputes Act provides that on transfer of ownership or management of an undertaking, workmen are entitled to notice and compensation as if retrenched under Section 25-F, unless the transfer satisfies the proviso so that continuity of service is preserved. The settled legal position is that, in the absence of satisfaction of the proviso, the employees of the transferred concern can claim compensation against the transferor, but no claim lies against the transferee for compulsory re-employment or absorption. The Court held that a purchaser of an economically distressed undertaking cannot be burdened with a condition to take over all workmen as a prerequisite to transfer of ownership.

Conclusion: The Court held that no direction could be issued compelling the transferee to absorb and continue the services of the workmen, and the request for mandamus failed.

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