Transfer of industrial undertaking: continuity and statutory compensation govern workmen's rights, not automatic re-employment by transferee.

On transfer of an industrial undertaking, successor-in-interest status depends on the substance of the transaction, including continuity of the business, same place of operation, and continuation of the same industrial activity, even if some assets or liabilities are excluded. The transfer in question satisfied that test, so the transferee was treated as the vendor concern's successor. Section 25-FF of the Industrial Disputes Act required workmen to receive notice and compensation on transfer unless the proviso preserved continuity of service; it did not give them a right to re-employment by the transferee under section 25-H. The workmen's remedy was confined to statutory compensation, not absorption by the transferee.

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Issues: (i) whether the appellant was a successor-in-interest of the transferred industrial concern; (ii) whether, on transfer of the undertaking, the workmen were entitled to re-employment by the transferee or were confined to the statutory compensation scheme under section 25-FF of the Industrial Disputes Act, 1947.

Issue (i): whether the appellant was a successor-in-interest of the transferred industrial concern.

Analysis: The determination depended on the substance of the transfer and not on any single factor such as the absence of goodwill or the retention of some assets and liabilities by the transferor. Relevant considerations included whether the business was purchased as a going concern, whether it continued at the same place, whether there was substantial interruption, and whether the transferee carried on the same or similar business. The transfer in question showed continuity of business, the same place of operation, and the same industrial activity, even though some assets and liabilities were excluded from the sale.

Conclusion: The appellant was a successor-in-interest of the vendor concern.

Issue (ii): whether, on transfer of the undertaking, the workmen were entitled to re-employment by the transferee or were confined to the statutory compensation scheme under section 25-FF of the Industrial Disputes Act, 1947.

Analysis: Section 25-FF, as amended, treated transfer of ownership or management as a situation in which workmen were entitled to notice and compensation as if retrenched, unless the conditions in the proviso preserved continuity of service. The section did not equate such transfer with retrenchment for the purpose of claiming re-employment from the transferee. Section 25-H could not be invoked because the statutory scheme of transfer and compensation was distinct from ordinary retrenchment, and the workmen could not claim both compensation from the transferor and immediate re-employment from the transferee on general notions of fairness.

Conclusion: The workmen were not entitled to re-employment by the appellant, and their remedy under the statute was confined to compensation.

Final Conclusion: The award directing re-employment could not be sustained because the transfer attracted the compensation scheme under section 25-FF and did not give the workmen a right to be absorbed by the transferee.

Ratio Decidendi: On a transfer of an industrial undertaking, workmen are entitled to compensation under section 25-FF unless the proviso is satisfied, and they cannot claim re-employment from the transferee on general principles of social justice.

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