23 March 2020


Supreme Court

PEPSU Road Transport Corporation and Ors. v. S.K. Sharma and Ors.




If employees choose to accept transition from one concern to another and acquiesce then after decades cannot be permitted to turn back and challenge entire developments

In Instant case, Respondents, a group of twenty one employees of PEPSU Roadways claimed that in spite of transfer of that department to the Corporation they continue to be actually Government servants and therefore entitled to retiral benefits. Department merged along with the posts, assets, liabilities and the Respondent employees. There was no protest or challenge to such merger by way of transfer of the entire Department to the Corporation.

When the undertaking was taken over by the Company as a going concern, the employees working in the undertaking were also taken over and since, in law, the Company has to be treated as an entity distinct and separate from the Government, the employees, as a result of the transfer of the undertaking, became employees of the Company and ceased to be employees of the Government.

Ordinary Rules providing for asking of option or issuance of letters of absorption depend upon nature of stipulations which may get attracted to a case of deputation. There may be similar stipulations in case of merger by transfer. But if there are no such stipulations like in present case then the transferee concern like the Corporation has no obligation to ask for options and to issue letters of options to individual employees who become employees of the transferee organization simply by virtue of order and action of transfer of the whole concern leading to merger. No doubt in case of any hardship, the affected employees have the option to protest and challenge either the merger itself or any adverse stipulation. However, If the employees choose to accept the transition of their service from one concern to another and acquiesce then after decades and especially after their retirement cannot be permitted to turn back and challenge entire developments after a gap of decades.

Apex Court held that, Respondents had accepted to continue as employees of Corporation pursuant to order of merger/transfer of PEPSU Roadways with effect from 16th October, 1956 and on completing their service under the Corporation and reaching age of retirement, they were entitled to receive only benefits of CPF and gratuity as admissible to them under then prevailing Regulations of Corporation. Since, they accepted those retiral benefits there was no relationship left between the Corporation and Respondents and in such a situation further claim against the Corporation that it should treat Respondents to be Government servants and adjust their retiral benefits accordingly was totally untenable and wrongly allowed by High Court.


D.R. Gurushantappa v. Abdul Khuddus Anwar and Ors.  1969 (1) SCC 466: MANU/SC/0257/1969

Tags : Retiral Benefits Entitlement

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