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Friday, Oct 12, 2007
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“Service terms cannot be changed unilaterally”

Legal Correspondent

Court sets aside transfer of employees from NTPC to BALCO
It is violative of Article 14 of the Constitution: Bench

New Delhi: The government or its instrumentality cannot alter the conditions of service of its employees without affording them an opportunity of pre-decisional hearing, the Supreme Court held on Thursday. No employee could be transferred without his or her consent from one employer to another.

Any alteration in service conditions causing prejudice to employees would amount to an arbitrary decision and be violative of Article 14 of the Constitution (equality before law), said a Bench consisting of Justices Tarun Chatterjee and P. Sathasivam.

In the instant case, over 200 employees were recruited by the National Thermal Power Corporation (NTPC) for transferring them to the Bharat Aluminium Company (BALCO), which was originally a public sector undertaking. Subsequent to the policy of disinvestment, the entire management of BALCO vested with Sterlite.

Aggrieved at the decision to transfer them to a private management, the employees approached the Chhattisgarh High Court, which, however, declined to interfere. The Supreme Court allowed the appeal by the BALCO Captive Power Plant (BCPP) Mazdoor Sangh and others against this judgment.

Writing the judgment, Mr. Justice Sathasivam said: “The NTPC being an undertaking of the Government of India and instrumentality of state is under a constitutional obligation to act fairly with its employees; particularly, the posts which were advertised from 1986 to 1988 were not in existence in the BALCO as the BCPP was not fully commissioned. In those circumstances, the NTPC was not justified in inserting a clause in the appointment letters and obtaining undertakings from the selectees.”

The Bench held that ‘clause 14’ was against public policy and contrary to Section 23 of the Indian Contract Act as well as violative of Article 14 for, the NTPC management exercised undue influence on the selected candidates to accept the terms and conditions stipulated therein.

Tripartite agreement

For effecting a transfer from one employer to another, there must be a tripartite agreement, including the employees concerned along with the two managements so that it would be binding on the employees. In this case, since there was no tripartite agreement, the transfer from one employer to another could not be effected, the Bench said. Further, the employees had not been heard before their service conditions were changed.

The Bench held that the transfer of employees from the NTPC to the BALCO was bad in law.

They had made out a case for continuing in the NTPC, it said and set aside their transfers.

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