# ] M/S. KUNDAN SUGAR MILLS v. ZIYAUDDIN AND OTHERS

- **Citation:** [1960] 2 S.C.R. 918
- **Court:** Supreme Court of India
- **Decided:** 1960
- **Case number:** Civil Appeal No. 136 of 1958
- **Bench:** P. B. Gajendragadkar, K. SUBJlA RAO, K. c. DAS GUPTA
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-kundan-sugar-mills-v-ziyauddin-and-others-1804
- **Pages:** 9

## Headnote

Industrial Dispute-Rights of employer lo transfer a wor/mianIf implicit in every contract of service.
The General Manager of the appellant Mills ordered the
transfer of four workmen from the appellant mill to a new mill,
which had been purchased subsequently. The only connection
between the two mills was the identity of ownership and, but
for it, one had nothing to do with the other. The concerned
workmen protested to.the said order of transfer and did .not
acceed to the request, thereupon they were served with notice
for disobedience of standing orders and were called upon for
explanation which the workmen did and thereafter they were
dismissed from service.
The Labour Appellate Tribunal found
that the management had no right to transfer the workmen to
the new factory and therefore the order dismissing them was
illegal. The appellants came up by special leave before the
Supreme Court and contended that the right to transfer an
employee by an employer from one of his concerns to another is
implicit in every contract of service. The question is \Vhether a
person employed in a factory can be transferred to some other
independent concern started by the same employer at a stage
subsequent to the date of the employment.
Held, that apart from any statutory provision, the right of
an employee and an employer are governed by the terms of
contracts between them or by the terms necessarily implied
therefrom; but in the absence of an express agreement between
the employer and employees it cannot necessarily be implied that
the employer has the right to transfer the employee to any of its
concerns in any place, and that the employee has a duty to join
the concern to which he may be transferred.
In the instant case, it was not a condition of service of
employment of the concerned workmen either express or implied
that the employer had the right to transfer them to a new
concern started by the employer subsequent to the date of the
employment.
Alexandre Bouzourou v, The Ottoman Bank, A.LR. 1930 P.C.
nS, Mary (Anamalai :Plantation Workers' Union) v. Selaliparai
Estate, (1956) I.L.L.J. 243 and Bata Shoe Company, Ltd v. Ali
Hasan, (1956) I.L.L.J. 278, discussed.

## Text

February, 9
•
918
SUPREME COURT REPORTS
[1960 (2)]
M/S. KUNDAN SUGAR MILLS
v.
ZIYAUDDIN AND OTHERS.
(P. B. GAJENDRAGADKAR, K. SUBJlA RAO, AND
K. c. DAS GUPTA, JJ.)
Industrial Dispute-Rights of employer lo transfer a wor/mianIf implicit in every contract of service.
The General Manager of the appellant Mills ordered the
transfer of four workmen from the appellant mill to a new mill,
which had been purchased subsequently. The only connection
between the two mills was the identity of ownership and, but
for it, one had nothing to do with the other. The concerned
workmen protested to.the said order of transfer and did .not
acceed to the request, thereupon they were served with notice
for disobedience of standing orders and were called upon for
explanation which the workmen did and thereafter they were
dismissed from service.
The Labour Appellate Tribunal found
that the management had no right to transfer the workmen to
the new factory and therefore the order dismissing them was
illegal. The appellants came up by special leave before the
Supreme Court and contended that the right to transfer an
employee by an employer from one of his concerns to another is
implicit in every contract of service. The question is \Vhether a
person employed in a factory can be transferred to some other
independent concern started by the same employer at a stage
subsequent to the date of the employment.
Held, that apart from any statutory provision, the right of
an employee and an employer are governed by the terms of
contracts between them or by the terms necessarily implied
therefrom; but in the absence of an express agreement between
the employer and employees it cannot necessarily be implied that
the employer has the right to transfer the employee to any of its
concerns in any place, and that the employee has a duty to join
the concern to which he may be transferred.
In the instant case, it was not a condition of service of
employment of the concerned workmen either express or implied
that the employer had the right to transfer them to a new
concern started by the employer subsequent to the date of the
employment.
Alexandre Bouzourou v, The Ottoman Bank, A.LR. 1930 P.C.
nS, Mary (Anamalai :Plantation Workers' Union) v. Selaliparai
Estate, (1956) I.L.L.J. 243 and Bata Shoe Company, Ltd v. Ali
Hasan, (1956) I.L.L.J. 278, discussed.
CIVIL APPELLATE JURISDICTION:
Civil Appeal
No. 136 of 1958.
Appeal by special leave from the decision dated
April 30, 1956, of the Labour Appellate Tribunal of
India at Lucknow in Appeal No. III-45 of 1956,
-
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•
S.C.R.
SUPREME COURT REPORTS
919
ansmg out of the award dated February 6, 1956
of the State Indmitrial Tribunal, Allahabad, in reference No. 96of1955.
Ram Lal Anand, J.M. Lal and S. S. Sulcla, for the
appellants.
B. D. Sharma, for respondents Nos. 1to5.
O.P. Lal and G. N. Dikshit, for respondent No. 6.
1960. February 9.
The Judgment of the Court was
delivered dy
SuBBA RAO, J.-This is an appeal by special leave
against the order of the Labour Appellate Tribunal of
India setting aside the award of the Industrial
Tribunal, Allahabad, and directing the re-instatement
of the workers in Kundan Sugar Mills at Amroha.
" Kundan Sugar Mills" is a partnership concern and
owns a sugar mill at Amroha. The respondents 1 to
4 were employed by the appellant as seasonal masons
in the year 1946. In 1951 the partners of the appellant-Mills purchased the building machinery and
other equipment of another sugar mill at Kiccha' in
the district of Nainital. They closed the said mill at
Kiccha and started it at Bulandshahr.
The new
factory was named Pannijee Sugar & General Mills,
Bulandshahr. On January 19, 1955, the General
Manager of the appellant-Mills ordered the transfer of
the respondents 1 to 4 from the appellant-Mills to the
new mill at Bulandshahr. The said respondents
through their representative, the fifth respondent,
protested to the General Manager against the said
transfer. But the General Manager, by his letter
dated
January 22/24, 1955,
insisted upon their
joining the new mill at Bulandshahr. But the said
respondents did not accede to his request. On
January 28, 1955, the General Manager served a
notice on the respondents 1 to 4 stating that they had
disobeyed his orders and thereby committed misconduct under Standing Order No. L(a). They were asked
to submit their explanation as to why action should
not be taken against them unaer the Standing Order.
The Labour Union, by its letter dated January 31,
1955, denied t.he charges. On February 2, 1955, the
General Manager made an order dismissing the
respondents 1 to 4 from service on the ground that
u7
K11ndan Sugar
Mills
v.
Ziyauddin
S11bba Rao J.
•
•
J(undan Sugar
JI/I ills
v.
Ziyauddin
Subba Rao].
•
920
SUPREME COURT REPORTS [1960(2)]
they had disobeyed his order of transfer and thns they
were guilty of misconduct under Standing Orde1·
No. LI(a). The Labour Union there(1fter rnisecl an
industrial dispute and the Government of U.P. by
its notification dated November 7, 1955, referred the
following issue for decision to the State Industrial
Tribunal for U. P. at Allahabad:
"Whether the employers have wrongfully and/or
unjustifiably terminated the services of Sarv(1 Shri
Zia Uddin, Raisuddin, Shafiqnddin and Ahmed
Bt1x for refusal to obey the orders of tranfer to M/s.
Pannijee Sugar and General_ Mills Co., Bufandshahr.
If so, to wh(],t relief are the workmen entitled."
The State Industrial Tribunal by its order d(],ted
February 6, 1956, made its award holding that the
management was within its rights and that, as the
respondents l to 4 had disobeyed the order of the
management, they were properly dismissed by the
management. The said respondents through their
Union, respondent No. 51 perferred an appeal to the
Labour Appellate Tribunal of India and the said
Appellate Tribunal held that the management had no
right to transfer the respondents 1 to 4 to the new
factory and therefore the order dismissing them was
illegal. The management has preferred the present
appeal against the said order of the Labour Appellate
Tribunal.
Learned counsel for the appellnnt raised before us
the following two questions: (1) The right to transfer
an employee by an employer from one of his concern&
to another is implicit in every contract of service;
(2) the State Industrial Tribunal having held that
both the concerns, i.e., the mills nt Amroha and the
mills nt Bulandshahr, forri1ed one unit, the Appellate
Tribunal had no juridiction to set aside that finding
under s. 7(1) of the Industrial Disputes (Appellate
Tribunal) Act, 1950.
To appreciate the first contention, it is necessary
to notice the undisputed facts in this case. It is true
that the partners of the Sugar Mills at Amroha own
also the Sugar Mills at Bulandshahr; but they were
proprietors of the former Mills in 1946 whereas they
purchased the latter mills only in the year 1951 and
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S.C.R.
SUPREME OOUR'r B,EPORTS
921
started the same in Bulandshahr in or about 1955.
The respondents l to 4 were employed by the owners
of the appellant-Mills at the Sugar Mills at 'Amroha
at a time when they were not proprietors of the Sugar
Mills at Bulandshahr. It is conceded that it was not
an express term of the contract of service between
the appellant and the respondents 1 to 4 that the latter
should serve in any future concerns which the appellant might acquire or start. lt is also in evidence
that though the same persons owned both the Mills
they were two different concerns. In the words of the
Appellate Tribunal, the only connection between the
two is in the identity of ownership and, but for it,
one has nothing to do with the other. It is also in
evidence that an imported workman at Amroha is
entitled to house-rent, fuel,
l~ht and travelling
expenses both ways, while at l3ulandshahr the workmen are not entitled to any of these amenities. The
workmen at Amroha are entitled to benefits under the
Kaul Award while those at Bulandshahr are not so
entitled.
The General
Manager~ E.W.l, in his
evidence stated that "the interim bonus of the
Bulandshahr factory as ordered by the Government
in November 1955 was Rs. 11,000 while for Amroha
it, was nearly li lacs". He also stated that "the
bonus for last year at Amroha would be probably
equal to li months' wages and at Bulandshahr equal
to about 4 or 5 days' wages." It is also in evidence
that apart from the disparity in the payment of bonus,
the accounts are separately made up tor the two mills. lt
is clear that the two mills arc situated at different places
with accounts separately maintained and governed by
different service conditions, though they happened to
be under the common management; therefore, they
are treated as two different entities.
The question of law raised in this case must be
considered in relation to the said facts. The argument
of the learned counsel for the appellant that the right
to transfer is implicit in every contract of service is
too wide the mark. Apart frorn any statutory provision, the rights of an employer and an employee are
governed by the terms of contracts between them or
by the terms necessarily implied therefrom. It fo
.,..
,.
'.
Kundan Sugar
Mills
v.
Ziyauddin
Subba Rao ].
•
•
922
SUPREME COURT REPORTS [1960(2)]
conceded that there is no express agreement between
Kundan Sugar the appellant and the respondents w hereunder the
Mitts
appellant has the right to transfer the respondents to
v,
Zi) auddin
any of its concerns in any place and the respondents
the duty to join the concerns to which they may be
transferred. If so, can it be said that such a term 1has
Subba Rao f. to be necessarily implied between the parties? When
the respondents I to 4were employed by the appellant,
the latter was running only one factbry at Amroha.
. There is nothing on record to indicate that at that
time it was intended to purchase factories at other
places or to extend its activities in the same line at
different places. It is also not suggested that even if
the appellant had had such an intention, the respondents I to 4 had knowledge of the same. Under such
circumstances, without more, it would not be right to
imply any such term between the contracting parties
when the idea of starting new factories at different
places was not in contemplation. Ordinarily the employees would have agreed only to serve in the factory
then in existence and the employer would have
employed them only in respect of that factory.
The
matter does not stop there. In the instant case, as we
have indicated, the two factories are distinct entities,
situated at different places and, to import a term
conferring a right on the employer to transfer respondents I to 4 to a different concern is really to make a
new contract between them.
,.
The decisions. cited at the Bar do not in the least
sustain the appellant's broad contention. In Alexandre
Bouzourou v. The Ottoman Bank (1) the appellant was
an employee of the respondent-bank. The bank
transferred him from one branch to another branch of
the bank situated in different towns.
As he refused
to comply with the order of transfer, he was dismissed.
Thereafter, he filed a suit to recover damages from the
bank for wrongful dismissal. It was argued before
the Judicial Committee that under the terms of his
contract of service the sphere of his employment
included only the head office and not the branches of
the bank. The evidence in that case showed that
tvansfer was one of the ordinary incidents of the
. · bank's employment, being usually concurrent with an
(I) A.1.R. [1930] P.C, l!8, 119 •
,.
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t
-..
S.C.R.
SUPREME COURT REPORTS
923
increase of salary and responsibility, and suggested
no more than that the bank considered their officials'
convenience where possible. Indeed the appellant
therein did not even suggest in his correspondence that
the transfer was a breach of his contract. On these
circumstances the Judicial Committee observed as
follows at p. 119 :
"From the point of view of proper organization of
their staff, it is difficult to assume that the Bank would
willingly agree that their employees should not be
bound to serve outside the place where the contract
was made except with their consent, and, in their
Lordships' opinion such a condition of the contract
would require to be clearly established.'.'
The essential distinction between that case and the
present one is that there the bank with its branches
was one unit and the records clearly indicated that
transfer was one of the ordinary incidents of service
in the Bank. In such circumi;itances when a person
joined such a service, the Privy Council found it easy
to imply a term of transfer. That decision is therefore
- not of any relevancy to the present case. In Mary
(Anamalai Plantation Workers' Union) v. Selaliparai
estate (2), labour was recruited in the plantations
without any differentiation being made between factory
and field workers and it had been the common
practice prevailing for several years to transfer the
factory workers to the field and vice-versa, according
to the exigencies of work. A worker who had been
appointed in such a plantation was transferred, owing
to mechanisation in the factory, from the factory to
the field.
The Labour Appellate Tribunal of India
held tha.t in the circumstances of the case the liability
to be so transferred must be deemed to be an implied
condition of service. So too in Bata Shoe Company,
Ltd. v. Ali Hasan (Industrial Tribunal, Patna & Ors.)
( 3) transfer of an employee in the circumstances of
that case from one post to another was held not to be
an alteration of any service condition within the
meaning of s. 33 of the Industrial Disputes Act. That
was a case of a management employing a worker in
one concern and transferring him from one post to
(2) [r956] I.L.L.J. 343·
(3) [1956] I L.L.J. 278.
Kundan Suga•
Milts
v.
Ziyauddin
Subba Rao J.
•
•
Kundan Sugar
Mills
v.
Ziyauddin
Subba Rao].
924
SUPREME COURT REPORTS [1960(2)]
another. In such a case it was possible to imply the
condition of right of the management to transfer the
employee from one post to another. S. N. Mukherjee
v. Kemp & Go. Ltd. (') was a case arising out of s. 23 of
the Industrial Disputes (Appellate Tribunal) Act, 1950.
The complaint there was that an employee was
transferred by the management with a view to
victimize him and that it amounted to alteration in
the conditions of employment. It was held that if
an employer employed a person it was implicit in the
appointment that he could be transferred to any place
where the business of the employer in the same line
was situated, unless there was an express condition to
the contrary in the contract of employment. In that
case the worker was employed by Kemp & Co.,
Limited, which had branches in different places. The
decision assumed that the business was one unit and
that the only question raised was that he should not
be transferred to a place different from the place
where he was actually discharging his duties. These
observations must be limited to the facts of that case.
It is not necessary to multiply the citation, for the
other decisions relied on by the learned counsel for the
appellant pursue the same reasoning followed in the
aforesaid cases.
We have referred to the decisions only to distinguish
them from the present case, and not to express our
opinion as to the correctness of the decisions therein.
It would be enough to point out that in all the said
decisions the workers had been employed in a business
or a concern and the question that arose was whether
in the circumstances of each case the transfer from
one branch to another was valid or amounted to
victimization. None of these decisions deals with a
case similar to that presented in this appeal, namely,
whether a person employed in a factory can be transferred to some other independent concern started by
the same employer at a stage subsequent to the date
of his employment. None of these cases holds, as it is
suggested by the learned counsel .for the appellant,
that every employer has the inherent right to transfer
his employee to another place where ho chooses to start
(4) [1954] L.A:c. 903
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•
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S.C.R.
SUPREME COURT RE!)ORTS
925
a bu::;iness subsequent to the date of the employmE>nt.
We, therefore, hold that it was not a conditioll of
service of employment of the respondents either
express or implied that the employer has the right to
transfer them to a new concern stared by him subsequent to the date of their employment.
The respondents also relied upon a Government
Order No. 6122 (ST)/XXXVI-A-640(8)-T-1953 in support of their contention that the order of transfer
was bad. By this Order the Government of U. P. had
directed that the employment of seasonal workmen in
all vacuum pan sugar factories in the Uttar Pradesh
should be governed by the rules contained in the
atinexure thereto. Rule 1 in the said annexure is to
the following effect :
"A worker who has worked or but for illness or
any other unavoidable cause would have worked in
a factory during the whole of the second half of the
last preceding season will be employed in this season
in such factory."
This rule has no relevancy to the question raised in
the present case.
This rule only enjoins upon an employer to employ a worker in the circumstances mentioned therein in the same factory in which he was
working in the previous season during the next season
also. This does not prevent the employer to transfer an
employee if he has the right to do so under the contract of service or under any statutory provisions.
We have already held that the employer in the present
case has no such right.
Lastly it is said that the Appellate Tribunal had
no jurisdiction to set aside the finding of the State
Industrial Tribunal, as it did not give rise to any substantial question of law within the meaning of s. 7(1)
of the Industrial Disputes {Appellate Tribunal) Act,
1950. The question raised was one of law, namely,
whether the appellant had the right to transfer the
respondents 1 to 4 from one concern to another. A
substantial question of law involved between the
parties and that raised also an important principle
governing the right of an employer to transfer his
employees from one concern to another of his in the
circumstances of this case.
We, therefore, hold that
Kundan Sugar
Mills
v.
Ziyauddin
Subba Rao ].
•
•
J(undan Sugar
Mills
v.
Ziyauddin
Subba Rao J.
February, 9
926
SUPREME COURT REPORTS [1960 (2)]
a substantial question of law arose in the case and
that it was 1voll within the powers of the Labour
Appellate Tribunal to entertain the appeal.
In the result the appeal fails and is dismissed with
costs.
Appeal dismissed.
S.S. LIGHT RAIL\VAY CO., LTD.
v.
UPPERDOAB SUGAR MILLS LTD. & ANOTHER
(P. B. GAJENDRAGADKAR, K. SuBBA RAo and
K. c. DAS GUPTA, JJ).
Railway Rates-Terminal charges fi~ed by Government-When
leviable-Railway Rates Tribunal-Jurisdiction of-Indian Railways
Act, I890 (IX of I890). SS, 3 (I4) 32 and 4I.
In pursuance of s. 32 of the Indian Railways Act, 1890 (IX
of 1890), the Central Government had by means of a notification,
fixed certain rates of terminal charges for loading and unloading
goods carried from one station to another by Railway. Inspite
of this notification the appellant Railway Company did not levy
any terminal charges in accordance with those rates up to a
certain point of time and continued to charge at a rate which \Vas
- then prevalent and in \vhich no terminal charges \Vere included.
Subsequently, however, the Railway Company issued a Local
Rates Advice by which terminal charges were added to the prevalent rates with the result that the total charges payable to the
Railway by the respondent mills rose considerably. It was for
relief against this increase that the mills made a complaint under
s. 41 (r) (i) of the Indian Railways Act to Railway Rates Tribunal.
The contention of the Railway Company, inter alia, was that as
in increasing the charges the .Administration had merely applied
standardised terminal charges as notified by the Central Government no complaint could be made in respect thereof under s. 41
(r) (i).
The Tribunal by a majority held that this was not a case
ot application ot a standardised terminal charge and so it had
jurisdiction to consider the question, and they ordered a reduction of terminal charges from the total charges. On appeal by
the Railway,
Held, that the Railway Rates Tribunal had no jurisdiction
either to investigate the reasonableness or otherwise of terminal
charges levied by
the
Railway or to reduce the same.
The charges sought to be levied by the Railway Administration were " terminal charges" within the meaning of the
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