TMI Blog2007 (10) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... for transferring them to Bharat Aluminium Company Limited (for short BALCO ) which was originally a Public Sector Undertaking under the Government of India, subsequently by policy of disinvestment the entire management had vested with M/s Sterlite under Agreement dated 20.06.2002 w.e.f 01.07.2002. Aggrieved by the decision of their transfer from a Public Sector Undertaking to private management, those employees approached the High Court of Chhattisgarh at Bilaspur by filing writ petitions seeking various reliefs. They mainly prayed for an order declaring clauses 8.2 and 16.3 of the agreement dated 22.05.1990 as illegal, arbitrary and unenforceable against them who are non- executive workers as it unilaterally changes the service conditions of all those employees who were not party to the agreement. In the same writ petitions, they also prayed that the respondents-Management be restrained from enforcing the said clauses and thereby transferring the non-executive workers working under BALCO Captive Power Plant (for short BCPP ) to the management of BALCO from NTPC. 3. The case of the appellants/employees is that they were enrolled in the Employment Exchange, Korba and when NTPC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services shall be transferable to the successor organization as per provisions of clause 16.0. Clause 16.3 of the said agreement makes it clear that in the event of transfer of management, BALCO shall ensure transfer to the successor organization of all non- executive staff recruited for BCPP as per provision contained in clause 8.0 and such NTPC executives posted at BCPP who are declared by NTPC as surplus to its requirements as a result of the transfer of management. It also makes it clear that the terms and conditions of such transfer shall not be inferior to those enjoyed by the employees on the date of transfer. In cases where such transfer is not found possible, BALCO shall be responsible for all consequent liabilities including retrenchment compensation, if any. 6. The said agreement entered into between the two parties cannot be made retrospectively in case it affects the rights and liabilities of the third person. The same was entered into between two parties without knowledge, consent and willingness of the employees. Therefore, these clauses are not binding nor can be enforced against the employees, unless they agree to such conditions. The appellants are employees of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Attorney. In view of the same, the manpower of this plant is shown separately from the manpower of NTPC in its annual report. The balance sheet, profit and loss account statement of NTPC also do not include BCPP, hence it is not another unit or division of NTPC. 9. The employees have misunderstood the action taken by the respondents. The BCPP is owned by BALCO. The BALCO, because of their lack of expertise, wanted NTPC to maintain the plant on behalf of BALCO. Based on the agreement, various administrative actions were taken and all those actions that were taken for and on behalf of BALCO and not for NTPC. Due to oversight, certain lapses have crept into a few appointment letters and the appellants cannot take advantage of lapses in a few cases. These employees have also executed an undertaking and in all the appointment letters it is specifically written on the right hand corner of page 1 that the appointment is for BCPP. 10. As per clauses 8.0 and 16.3 of the agreement dated 22.05.1990 entered into between NTPC and BALCO, since these employees were recruited and appointed for BCPP they can be transferred to BCPP which was made clear to them by mentioning in para 14 of majo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned senior counsel and Mr. S.K. Dhingra, learned counsel for the respondents-Managements. 15. Ms. Indira Jaising and Mr. Ravindra Shrivastava, learned senior counsel for the employees, submitted as follows: i) That all the non-executive employees were recruited by NTPC; training was imparted by NTPC and in the appointment orders, it was made clear that their service terms and conditions will be as applicable to NTPC employees and in future their services may be transferred to any project of NTPC, therefore, all the non-executive employees/appellants herein are the employees of NTPC and after disinvestment of BALCO, their services cannot be transferred to a private sector organization - BALCO on the strength of O M agreement dated 22.05.1990 and the subsequent agreement dated 20.06.2002 entered into between NTPC and BALCO. ii) that their transfer to private organization amounts to retrenchment by NTPC against their wishes which is not permissible under law. iii) that clause 16.3 is discriminatory since it applies only to non-executive employees and they alone are to be transferred to successor organization whereas the executives working in BALCO are to be transferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not the rule of law, we accept the conclusion of the High Court and hold that the writ petitions under Article 226 of the Constitution filed by the employees are maintainable. 19. In order to answer the contentions raised and in the light of the reliefs prayed for by the employees, it is useful to refer to the relevant clauses in the agreement. First agreement between the BALCO and NTPC was executed in July, 1984. Since we are very much concerned about the subsequent agreement dated 22.05.1990, we will consider the relevant clauses of 1990 agreement. Among various clauses, clauses 8.2, 8.5, 16.3 and 21.0 are relevant, which read as under: 8.0 PERSONNEL MANAGEMENT 8.2. Non-Executives Recruitment of non-executive staff (supervisory and workmen) shall be undertaken by NTPC specifically for BCPP as per NTPC recruitment norms and policies, this staff shall be governed by the NTPC s policies, rules and regulations. In the event of transfer of management from NTPC to any other agency, their services shall be transferable to the successor organization as per provisions of clause 16.0. 8.5 Terms and Conditions of Service BCPP employees would for the matters of discipline, be gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r words, all the terms and conditions have retrospective effect from 29.061987. With this background, we will consider whether those terms are sustainable and the action of the management in transferring the employees-appellants to BCPP which is a private management is justifiable or not? 21. It is not in dispute that NTPC is a public sector undertaking wholly owned by the Government of India. Likewise, initially BALCO was also a public sector undertaking and BCPP is wholly owned by BALCO which was set up for production of power for their units. Subsequently in the year 2001, by virtue of disinvestment policy of the Government of India, BALCO including BCPP were transferred to M/s Sterlite which is a private concern. Though the agreement between BALCO and NTPC was entered into on 22.5.1990 enabling the NTPC to manage, operate, supervise, maintain and control BCPP in all aspects, as per clause 21.0, the terms and conditions deemed to come into operation from 29.6.1987. Learned senior counsel appearing for the appellants, by placing the relevant materials, submitted that most of the employees were appointed prior to the agreement dated 22.5.1990, however, admittedly they were not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances, the finding of the High Court that the services of the employees appointed by NTPC are transferable to BALCO in the light of the provisions made in clauses 8.2 and 16.3 of the bipartite agreement dated 22.05.1990 between NTPC and BALCO is not acceptable. Even for the sake of argument, it was admitted that the power of attorney was given to NTPC pursuant to the agreement dated 22.05.1990 and 29.05.1991, it is only those employees who have been appointed by NTPC on behalf of BALCO, pursuant to the said power of attorney, can only be transferred to BALCO. 23. Now we will consider the appointment letters and the undertakings. It is not in dispute that the process of recruitment was initiated by NTPC and in the advertisement, it has been mentioned that NTPC Ltd. requires persons in the following categories for its Korba Super Thermal Power Project and BALCO Captive Power Project. The said advertisement nowhere stipulates that the said process of recruitment was on behalf of BALCO. The letters for test or interview to the candidates have also been issued by NTPC, which are in the appeal paper-book. Even those interview letters do not reveal that the appointments are b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, it would be voidable. It is, however, rarely that contracts of the types to which the principle formulated by us above applies are induced by undue influence as defined by Section 16(1) of the Indian Contract Act, even though at times they are between parties one of whom holds a real or apparent authority over the other. In the vast majority of cases, however, such contracts are entered into by the weaker party under pressure of circumstances, generally economic, which results in inequality of bargaining power. Such contracts will not fall within the four corners of the definition of undue influence given in Section 16(1). Further, the majority of such contracts are in a standard or prescribed form or consist of a set of rules. They are not contracts between individuals containing terms meant for those individuals alone. Contracts in prescribed or standard forms or which embody a set of rules as part of the contract are entered into by the party with superior bargaining power with a large number of persons who have far less bargaining power or no bargaining power at all. Such contracts which affect a large number of persons or a group or groups of persons, if they are uncons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gratuity are payable as per rules of NTPC. Para 8 of the appointment letter provides for initial appointment and posting to work at Korba and thereafter liable to be posted at the discretion of NTPC in other office/project/unit or in any other public sector undertakings in India or abroad. The aforesaid terms and conditions lead to an irresistible conclusion that NTPC was their employer in all purposes. 27. The materials placed clearly show that clause 14 referred to above is against public policy and contrary to Section 23 of the Indian Contract Act as well as violative of Article 14 of the Constitution of India for the reason that undue influence was exercised by NTPC management and the selected candidates to accept the terms and conditions stipulated therein. By virtue of the aforesaid clause 14, as pointed out earlier, the status of these public servants have been sought to be changed which is again violative of Article 14. In Mahavir Auto Store and Others vs. IOC and Others, (1990) 3 SCC 752, this Court has observed in para 18 that even in the field of public law, the persons affected should be taken into confidence. 28. The next submission of learned senior counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle of law that there can be no deprivation or curtailment of any existing right, advantage or benefit enjoyed by a Government servant without complying with the rules of natural justice by giving the Government servant concerned an opportunity of being heard. Any arbitrary or whimsical exercise of power prejudicially affecting the existing conditions of service of a Government servant will offend against the provision of Article 14 of the Constitution. Admittedly, the employees of CORIL were not given an opportunity of hearing or representing their case before the impugned circular was issued by the Board of Directors. The impugned circular cannot, therefore, be sustained as it offends against the rules of natural justice. 30. It is useful to refer to the judgment of this Court in Jawaharlal Nehru University vs. Dr. K.S. Jawatkar and Others, 1989 Supp. (1) SCC 679. In this case, Jawaharlal Nehru University was the appellant before this Court. The main contention of the appellant-University was that the respondent was appointed at the Centre of Post Graduate Studies, Imphal and when the Centre was transferred to Manipur University his services were automatically transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Centre of Post- graduate Studies from the appellant University to the Manipur University could not result in a transfer of the employment of the respondent from the one to the other, it must be concluded that the respondent continues in the employment of the appellant University .. It is clear that no employee could be transferred without his consent from one employer to another. Therefore, in view of the aforesaid rulings the transfer of employees from NTPC - a public sector undertaking to BALCO which is a private organization is bad in law. 31. The above discussion would clearly show that all appointment orders were issued by NTPC and Rules, procedure in respect of probation, training, D.A. and other allowances, absorption in the regular scale, governed by certified standing orders and other Rules and Regulations of the company i.e., NTPC. Even in the appointment order, it had been specifically stated that in the event of their appointment, they have to execute service agreement in favour of NTPC or any other Department or Undertaking of Government of India for three years. It is not disputed that all the employees selected and appointed executed a service agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X
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