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Mr. Phadke, however, relied on Jestamani Gulabrai Dholkia v. The Scindia Steam Navigation Company(1) in support of his contention that there was a transfer of the contract of employment and that it was not a mere transfer of the benefit of the services of Respondent 1. In that case the appellants were originally in the service of the Scindia Steam Navigation Company. In 1937 Air Services of India Ltd. was incorporated. In 1943, the Scindias purchased the ASI and by 1946 ASI became a full-fledged subsidiary of the Scindias. Between 1946 to 1951 the Scindias transferred several of their employees including the appellants to the ASI. The Scindias had a number of such subsidiary companies and it was usual for them to transfer their employees to such companies and also to recall them whenever necessary. In 1953, the Government of India decided to nationalise the airlines operating in India with effect from June 1953. On April 6, 1953 the appellants wrote to the Scindias to recall them to their original posts but the Scindias refused to do so as they were not in a position to absorb them. They pointed out that a Bill, called the Air Corporation Bill, 1953, was pending before Parliament, that under cl. 20 thereof persons working with ASI on the appointed day would become the employees of the Corporation, that under that clause they had the option to resign if they did not wish to join the Corporation and that if the appellants exercised that option. the Scindias would treat them as having resigned from their service. The Act was passed on May 28, 1953. Sec. 20 of the Act provided that every employee of an existing air company employed by such company prior to July 1, 1952 and still in its employment immediately before the appointed day, shall, in so far as such employee is employed in connection with the undertaking which has vested in the Corporation by virtue of the Act, become, as from the appointed date, the employee of the Corporation in which the undertaking has vested. On june 8, 1953 the appellants made a demand that if the Corporation were to retrench any persons from the staff loaned to ASI within the first five years, the Scindias should take them back. The Scindias refused. None of the appellants had exercised the option provided by s. 20 (1 ). On August 1, 1953 ASI became vested in the Corporation and s. 20( 1 ) came into force as from that date. The appellants contended inter alia that the contract of service between them and the Scindias was not transferable. The contention was rejected on the ground that by reason of s. 20(1) the contract of service of the appellants stood transferred to the Corporation and that though the appellants were not originally recruited by ASI and were transferred by the Scindias to the said company, (1) [1961] 2 S.C.R. 811.

they were the employees of ASI and were such employees on the appointed day and since they had not exercised the option under s. 20( 1 ) they became the employees of the Corporation by operation of that provision.

The Scindias, therefore, were no longer concerned with them. It is true that the appellants were transferred to ASI on condition that they would receive the same remuneration and other benefits as they were getting in the Scindias and further that it was possible to contend that Scindias alone could dismiss them. But the learned Judges explained that these were special terms applicable to the appellants. But in spite of them they still had become the employees of the ASI and were such employees on the appointed day. It seems that this conclusion was reached on the footing that since ASI was the subsidiary company of the Scindias like several other subsidiary companies, and it was. usual for the Scindias to transfer any of their employees to such subsidiary companies, the appellants on their transfer were deemed to have consented to become the employees of ASI in spite of the right of the Scindias to recall them whenever necessary and further that the appellants continued to be and were the employees of the ASI on the appointed day and were, therefore, governed by s. 20(1 ) if the Act. It is clear that this was a case of employees becoming the employees of the Corporation by virtue if the operation of a statute. The decision, therefore, is not an authority for the proposition that an employer can transfer his employee to a third party without the consent of such employee or' without terminating the contract of employment with him. That being the position, the case of Jestamani v. The Scindia Steam Navigation(x) cannot assist Mr. Phadke.