Item 3 MRTU & PULP Act | Unilateral Employee Transfer Without Justification is Unfair Labour Practice: Bombay HC

The Bombay High Court has held that an employer’s unilateral transfer of employees, lacking any contractual or statutory basis and accompanied by a drastic alteration in duties, constitutes an unfair labour practice under Item 3 of Schedule IV of the MRTU and PULP Act. The judgment underscores that such actions, particularly when taken against employees engaged in prior litigation, cannot be justified as administrative necessity and must be scrutinized for mala fides.

Background & Facts

The Dispute

The Petitioners - Shivaji Narayan Yadav, Shabnoor Ayub, and Chandradeo Thakur - were long-serving employees of India Steel Works Ltd. (ISI BARS Ltd.) at its Turbhe (Vashi) unit. Petitioner No. 1 was appointed as a Die Maker in January 1996, Petitioner No. 2 as a Grinding Machine Operator on 17 January 1994, and Petitioner No. 3 as a Polishing Operator in October 1996. All three were engaged in protracted litigation against the Respondent concerning permanency, wages, and service benefits. On 7 August 2010, the Respondent issued transfer orders directing the Petitioners to report to its Khopoli unit with effect from 9 August 2010, citing that all other employees at Turbhe had resigned. The Petitioners immediately objected, asserting that their appointments did not permit transfer, no work matching their skills existed at Khopoli, and the Turbhe unit remained operational.

Key Facts

• Petitioner No. 1 attained superannuation on 1 May 2015
• Petitioner No. 2 is due to attain superannuation on 20 November 2026
• Petitioner No. 3 attained superannuation on 22 September 2025
• No written appointment letters were issued to any Petitioner
• The Respondent had no certified Standing Orders; Model Standing Orders governed service conditions
• Transfer order dated 7 August 2010 stated only that "other employees had resigned" - no mention of Voluntary Retirement Scheme (VRS)
• After transfer, Petitioner No. 1 was assigned watchman duties, Petitioner No. 2 was made to cut grass, and Petitioner No. 3 was assigned water pump operation
• Petitioners submitted multiple letters dated 9, 10, and 11 August 2010 objecting to transfer and seeking clarification on duties
• On 15 October 2011, Petitioners complained of threats by Manager Anand S. Panmand
• Documentary evidence submitted on 13 February 2018 included factory licence renewals, water and electricity bills showing continued operations at Turbhe
• Settlement dated 26 March 2010 referenced re-employment of VRS optees but did not mention closure of Turbhe unit or transfer of remaining employees

Procedural History

• 7 August 2010: Transfer orders issued by Respondent
• 9 - 11 August 2010: Petitioners objected via Advocate’s letters; reported at Khopoli under protest
• 14 October 2010: Complaint (ULP) No. 263 of 2010 filed before Industrial Court under Items 3, 5, 9, and 10 of Schedule IV of MRTU and PULP Act
• 6 January 2011: Industrial Court permitted production of VRS agreement only
• 5 April 2011: Application for stay of transfer order rejected
• 18 October 2012: Application for appointment of Investigating Officer to verify Turbhe operations rejected
• 5 December 2020: Industrial Court delivered impugned order - partly allowed complaint under Items 5 and 9, rejected Item 3, awarded lump sum compensation instead of full back wages
• 21 January 2021: Certified copy of order received by Petitioners
• 25 January 2021: Petitioners demanded implementation of order
• 12 June 2022: Writ Petition No. 14223 of 2022 filed under Article 227 of the Constitution

Relief Sought

The Petitioners sought:

• Declaration that the transfer order dated 7 August 2010 was illegal and constituted unfair labour practice under Item 3
• Full back wages from 9 August 2010 till superannuation
• Interest on back wages at 6% per annum
• Continuity of service for all consequential benefits
• Restoration of original service conditions
• Quashing of the Industrial Court’s order dated 5 December 2020

The Legal Issue

The central question was whether an employer’s unilateral transfer of employees, without any contractual or statutory authority, coupled with a drastic change in duties and a history of prior litigation, constitutes an unfair labour practice under Item 3 of Schedule IV of the MRTU and PULP Act.

Arguments Presented

For the Petitioner

Learned counsel for the Petitioners contended that:

• The transfer lacked any basis in contract, Standing Orders, or service rules
• The Model Standing Orders, applicable by default, contain no provision permitting inter-unit transfer
• The transfer followed prolonged litigation on service benefits, indicating mala fides and victimisation
• The duties assigned post-transfer (watchman, grass cutting, water pump operation) bore no nexus to their original skilled roles
• The Respondent’s claim of Turbhe unit closure was contradicted by documentary evidence - factory licence renewals, utility bills
• The Industrial Court’s finding that the Petitioners were aware of the VRS but declined it was inconsistent with its concurrent finding that the VRS was not extended to them, constituting unfair labour practice under Item 5
• The award of lump sum compensation without interest was inadequate and failed to compensate for prolonged deprivation
• The Respondent’s plea of abandonment was untenable given the Petitioners’ persistent communications and legal recourse

For the Respondent

Learned Senior Advocate for the Respondent submitted that:

• The Turbhe unit ceased operations after most employees opted for VRS, leaving only the Petitioners
• The transfer to Khopoli was a bona fide effort to retain employment and avoid retrenchment
• The transfer orders assured continuation of wages and service conditions
• The Petitioners reported only twice at Khopoli and thereafter failed to report despite reminders
• The Respondent had no intention to terminate service and had even reimbursed conveyance allowance
• The Petitioners had taken up alternative employment and abandoned service
• The VRS benefits could not be granted as they were not specifically prayed for
• Later events (accident, pandemic, bank proceedings) rendered Khopoli unit non-functional, but these were irrelevant to the legality of the 2010 transfer

The Court's Analysis

The Court undertook a rigorous examination of the transfer’s legality, focusing on the absence of any legal foundation for the action. It observed that transfer of service cannot be assumed; it must be traceable to a contract, certified Standing Orders, or established service conditions. The Respondent failed to produce any such authority, rendering the transfer legally unsustainable.

"When an employer seeks to transfer a workman, such power must come from some known and accepted source. It cannot be assumed or exercised in an uncertain manner."

The Court further noted the timing of the transfer - immediately following litigation on service rights - as a critical indicator of mala fides. The Petitioners’ objections were immediate, specific, and repeated, yet unanswered. The Respondent’s claim that the Turbhe unit was non-functional was undermined by documentary evidence of continued utility consumption and licence renewals.

The Industrial Court’s own findings were found to be internally contradictory: while paragraph 21 suggested the Petitioners knowingly declined the VRS, paragraph 22 held that the Respondent failed to extend the VRS to them - a finding that amounted to an unfair labour practice under Item 5. The Court held that this inconsistency fatally undermined the reasoning under Item 3.

The Court rejected the Respondent’s argument that the Petitioners were "unskilled" and thus could be assigned menial duties. It emphasized that the nature of work performed over years defined the service condition, not the employer’s subjective assessment of skill level. Assigning a Die Maker to watchman duties was not a reassignment - it was a demotion in substance.

On the issue of back wages, the Court held that once the Industrial Court found the Petitioners were "compelled to remain away from duties," the burden shifted to the Respondent to prove refusal to work. The Petitioners’ conduct - writing letters, seeking clarification, filing complaints - was inconsistent with abandonment. The Court rejected the notion that filing a complaint absolved the employer of its duty to provide work.

"Filing of a complaint does not automatically solve the difficulty at the workplace. The practical reality was that they were already facing uncertainty about their role and treatment."

The Court also dismissed the plea of abandonment, noting that continuous legal engagement and protestations of intent to continue service negated any inference of voluntary departure.

The Verdict

The Petitioners succeeded in part. The Bombay High Court:

• Quashed and set aside the Industrial Court’s order dated 5 December 2020 to the extent it rejected the complaint under Item 3 of Schedule IV of the MRTU and PULP Act and limited relief to lump sum compensation
• Declared the transfer order dated 7 August 2010 illegal and an unfair labour practice under Item 3
• Directed the Respondent to pay full back wages to all Petitioners from 9 August 2010 until their respective dates of superannuation, with continuity of service for all consequential benefits
• Ordered that the back wages shall carry interest at 6 percent per annum from the date they became due until realization
• Directed that Petitioner No. 2, who has not yet superannuated, be treated as in continuous service until his superannuation on 20 November 2026
• Directed the Respondent to compute and pay all amounts within twelve weeks from the date of judgment
• Declined to award costs

What This Means For Similar Cases

Transfer Without Authority Is Per Se Unfair

• Employers cannot transfer employees without express contractual, statutory, or Standing Order-based authority
• Model Standing Orders apply by default where certified orders are absent, and they do not permit unilateral transfers
• Any transfer lacking such foundation is vulnerable to being declared an unfair labour practice

Timing and Context Matter in Labour Disputes

• Transfers occurring after employee-initiated litigation are presumed mala fide unless proven otherwise
• Employers must demonstrate genuine operational necessity, not post-hoc justifications
• Documentary evidence of continued operations at the original unit will override verbal claims of closure

Back Wages Are Due When Employer Creates the Barrier

• Employees are entitled to full back wages if they are prevented from working due to employer’s unlawful conduct

• Failure to respond to clarifications, assign duties, or provide work constitutes constructive denial of service

• Abandonment cannot be inferred from filing complaints or seeking legal remedies

• Practitioners must insist on production of Standing Orders and appointment letters in transfer disputes

• Courts will not accept vague assertions of "administrative necessity" without concrete evidence

• Compensation for unfair labour practices must be meaningful, interest-bearing, and reflective of actual loss