# R. C. SHARMA v. THE CHIEF SECRETARY, GOVERNMENT OF MADHYA PRADESH, BHOPAL & ORS

- **Citation:** [1974] 1 S.C.R. 87
- **Court:** Supreme Court of India
- **Decided:** 1973-04-25
- **Case number:** Civil Appeal No. 1907 of 1970
- **Bench:** A. N. Grover, A. K. Mukherjea, C. A. Vaidialingam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/r-c-sharma-v-the-chief-secretary-government-of-madhya-pradesh-bhopal-ors-6035
- **Pages:** 4

## Headnote

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lnduslrial Dispute-Sen·ices of en1ployees of State U11dcrtakings transferred
to ~orporolion-Condirions of transfer, interpretation of-Whether employees
emztled lo get Dearness Allowance at same rate and on same basis as paid by
State Gover11me11t to its employees.
Three industrial undertakings owned and managed by the Madhya Pradesh
Government were transferred to the Madhya Pradesh State Industries Corpora.-
lion with effect from April I, 1963. By letter dated February 16, 1963 the State
Government offered to transfer the services of the employees of the three under ..
takings to the Corporation on two conditions. The first one was that their existing pay and scale and other conditions of service and benefits to which they
were entitled would not be affected by the transfer.
The second was that the
transfer of services would not be treated as an interruption in service. In other
words, .it was said, the employees would be entitled to leave and other benefits
on the same basis as if their services under the State Corporation were a continua ...
tion of their total uninter_rupted services under the said undertakings. This offer
was accepted by the employees.
However, relying on the second condition men ..
tioned in the aforesaid letter the employees raised an industrial dispute in 1968,
claiming from the Corporation, dearness allowance on the same scale and on
the same basis as it was subsequently being paid by the State Government to its
employees. The Labour Court rejected the contention. The present appellant
as Secretary of the employees Union filed a writ petition under Article 226 of
the Constitution. The High Court dismissed the petition. By certificat~ appeal
was filed in this Court.
Dismissin2 the appeal.
HELD : Ordinarily the change of employers would have the effect of interrupting service.
Condition 2 was, therefore. meant to overcome that situation.
Th;it condition dealt solely with effect of the transfer of service on the benefits
to which an employee would be entitled if there was no interruption in his ser ...
vice. The second sentence therein, namely 'in other words' etc. was merely ex ..
planatory of the first sentence that the transfer of service will not be treated as
an interru!)tion in his service. The second sentence was not intended and could
not be read as meaning that whatever benefits an employee of the State Gov~
ernment were to get in future the employees of the Corporation would automa~
tically become entitled to· them. If condition No. 2 was to be read as securing
to a transferred employee benefits which the Government might in future confer
upon its employees that would contradict condition No. 1 which secured only
such benefits to which a transferred employee was entitled at the time of transfer.
[89F]

## Text

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87
R. C. SHARMA
v.
THE CHIEF SECRETARY, GOVERNMENT OF MADHYA
PRADESH, BHOPAL & ORS.
April 25, 1973
ll
(A. N. GROVER, A. K. MUKHERJEA AND C. A. VAIDIALINGAM, JJ.]
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lnduslrial Dispute-Sen·ices of en1ployees of State U11dcrtakings transferred
to ~orporolion-Condirions of transfer, interpretation of-Whether employees
emztled lo get Dearness Allowance at same rate and on same basis as paid by
State Gover11me11t to its employees.
Three industrial undertakings owned and managed by the Madhya Pradesh
Government were transferred to the Madhya Pradesh State Industries Corpora.-
lion with effect from April I, 1963. By letter dated February 16, 1963 the State
Government offered to transfer the services of the employees of the three under ..
takings to the Corporation on two conditions. The first one was that their existing pay and scale and other conditions of service and benefits to which they
were entitled would not be affected by the transfer.
The second was that the
transfer of services would not be treated as an interruption in service. In other
words, .it was said, the employees would be entitled to leave and other benefits
on the same basis as if their services under the State Corporation were a continua ...
tion of their total uninter_rupted services under the said undertakings. This offer
was accepted by the employees.
However, relying on the second condition men ..
tioned in the aforesaid letter the employees raised an industrial dispute in 1968,
claiming from the Corporation, dearness allowance on the same scale and on
the same basis as it was subsequently being paid by the State Government to its
employees. The Labour Court rejected the contention. The present appellant
as Secretary of the employees Union filed a writ petition under Article 226 of
the Constitution. The High Court dismissed the petition. By certificat~ appeal
was filed in this Court.
Dismissin2 the appeal.
HELD : Ordinarily the change of employers would have the effect of interrupting service.
Condition 2 was, therefore. meant to overcome that situation.
Th;it condition dealt solely with effect of the transfer of service on the benefits
to which an employee would be entitled if there was no interruption in his ser ...
vice. The second sentence therein, namely 'in other words' etc. was merely ex ..
planatory of the first sentence that the transfer of service will not be treated as
an interru!)tion in his service. The second sentence was not intended and could
not be read as meaning that whatever benefits an employee of the State Gov~
ernment were to get in future the employees of the Corporation would automa~
tically become entitled to· them. If condition No. 2 was to be read as securing
to a transferred employee benefits which the Government might in future confer
upon its employees that would contradict condition No. 1 which secured only
such benefits to which a transferred employee was entitled at the time of transfer.
[89F]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1907 of 1970
Appeal by certificate from the order dated October 30, 1969, of the
Madhya Pradesh High Court (Gwalior Bench) in Civil Misc. Petition
No. 16 .of 1968.
·
C. K. Daphtary, P. C. Bhartari and 0. C. Mathur, for the appellant.
Ram Panjwani and I. N. Shroff, for respondent No. 1.
M. C. Setalvad and Rameshwar Nath, for respondent No. 2.
88
SUPREME COURT REPORTS
[ J 974] 1 S.C.R.
The Judgment of the Court was delivered by
GROVER, J.
This is an appeal by certificate from an order of the
Madhya Pradesh High Court.
The facts may be shortly stated. Prior
to April 1, 1963, three undertakings namely, Gwalior Engineering
Works, (2) Gwalior Potteries, and (3) Gwalior Leather Factory and
Gwalior Tannery, Morar, were owned and managed by the Madhaya
Pradesh State. The employees in these undertakings were in the service of the Madhya Pradesn State Government. These undertakings
were transferred to the Madhya Pradesh Industries Corporation Ltd.,
hereinafter called the "Corporation". The employees of these undertakings thus ceased to be in the service of the State Government and
became employees of the Corporation. On February 16,
1963 the
Government of Madhya Pradesh had made an offer to the employees
of the three undertakings which was as follgws :-
"WHEREAS tne State Government have decided to
transfer the management of the (1) Gwalior Potteries, (2)
Gwalior Engineering Works, (3) Gwalior Leather Factory
awl Tannery and Tent Factory (hereinafter referred to as
the said undertakings) to the Madhya Pradesh State Indus·
tries Coroorati0n (hereinafter referred to as the said Corporation)· with effect from 1st day of April 1963.
AND WHREAS from and after the aforesaid date the
said undertaking will cease to exist.
Now, therefore, it is proposed to transfer your services
to the said Corporation on the conditions detailed below :-
( 1) Your present pay and scale, and other conditions of
service and benefits to which you are at present entitled
will not be affected by transfer.
(2) The transfer of yonr services will not lfe treated as an
interruption in your service. In other words you will be
entitled to leave and other benefits on the same basis
as if your services under the State Corporation was a
continuation of your total uninterrnpted services under
the said undertakings"
The person to whom the letter was addressed was required to Jet the
General Manager of each of the Undertakings know by the 20th day
of March 1963 whether he agreed to the transfer of service to the
Corporation on the conditions mentioned above. It is not necessary
to refer to the other terms of the offer. This offer had been accepted
by the employees of the three undertakings.
However Gwalior Sbasakiya Audogik Karamchari Sangh, Lasbkar,
Gwalior filed an applicatiol) under s. 33C(2) of the Industrial Disputes A~t, 1947, on August 28, 1968 claiming that the dearness
allowance should be paid by the Corporation at the same rate and
on the same basis on which the Madhya Pradesh State Government
was paying this allowance to its employees.
It 'Yas alle~ed that the
Corporation bad paid the same rates as were bemg paid by the
Madhya Pradesh State Government for about two years but later on
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R. C. SHARMA v. M .P.
GOVT. (Grover, /,)
89
the Corporation declined to pay the same rates of Dearness Allowance to its employees. The Labour Court did not accede to the
contention of the Union of the employees that they were entitled to
dearness allowance at the same rates and on the same basis on which
it was being paid to the employees of the State Government. A petition was filed under Art. 226 of the Constitution by R. C. Sharmathe Secretary of the Union mentioned before.
The High Court dismissed that petition.
The short question involved in this appeal is whether under the
terms of the offer made and accepted by the employees they are entitl··
ed to the same dearness allowance as is being paid by the State
Government to its employees. The first term made it quite clear that
when the employees of the erstwhile undertakings of the State would
join the service of the Corporation their subsisting pay and scale and
other conditions of SIJ!Vice and benefits to which they were entitled
at that time would not be affected by the transfer.
The case of the
Union was that the second term or condition entitled them to the same
dearness allowance which the employees of the Madhya Pradesh State
Government were getting.
Now this term or condition was confined
only lo the question of the effect of the transfer on the service of an
employee. It was made clear that the transfer of service would not
be treated as an interruption in his service.
This was amplified by
saying, "you will be entitled to leave and other benefits on the same
basis as if your services under the State Corporation was a continuation
of your total uninterrupted services under the
said
undertakings".
The High Court relied on an earlier decision
given by it in Misc.
Petition No. 237 of 1968 decided on March 26, 1969.
According
to that decision leave and other benefits that were
secured
under
condition No. 2 were leave and such benefits which depended upon
the length of service, e.g., gratuity, pension etc.
The object of creating a fiction of continuity of service was not to make the Corporation
employees Government employees and to make applicable to them
any change effected in the conditions of service of government employees; but what was intended was to secure to the transferred e{ll·
ployeer leave and benefits depending upon the length of service lly
making their service fictionally uninterrupted.
Ordinarily the change
of employers would have the effect of interrupting service. Condition
No. 2 was, therefore, meant to overcome that situation. That condition dealt solely with the effect of the transfer of service on the. benefits to which an emplovee would be entitled i£ there was no interruption in his service.
The second sentence therein, namely, "in other
words" etc. was merely explanatory of the first sentence that the trans..
fer of service will not be treated as an interruption in the service. The
second sentence was not intended and could not be read as meaning
that whatever benefits an employee of the State Government were to get
in future the employees of the Corporation would automatically become
entitled to them. As pointed out by the High Court in the earlier
judgment if condition No. 2 was to be read as securing to a transferred
employee benefits which the Government might in future confer upon
its employees that would contradict condition No. 1 which secured only
such benefits to which a transferred employee was entitled at the time of
90
SUPREME COURT REPORTS
( 1974] .l S.C.R.
transfer.
We are in entire agreement with this view of the High
Court.
Mr. C. K. Daphtary who appeared for the appellant tried to persuade us that condition No. 2 should be so interpreted as to confer
on· the employees M the Corporation the same benefits to which the
employees of the State became entitled in the course of subsequent
years.
We are unable to construe condition No. 2 in the manner suggested.
All that that condition secured was that the employ.ees should
not suffer in the length of their service and in the enjoyment of the
benefits which an uninterrupted service confers on them because of
the transfer of their service from the State Government to the Corpo·
ration.
We find no ground on which we can interfere in the order of the
High Court.
The appeal fails and it is dismissed but in the circumstances we make no order as to costs.
Appeal dismi.;sed.
G.C.
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