Sikkim High Court Limits Amalgamation Employee-Continuity Benefit to Staff on Transferor's Rolls on Effective Date

The Sikkim High Court has held that an employee-continuity clause in a scheme of amalgamation protects only those who remain employees of the transferor company when the scheme takes effect.

Background

The petitioners had originally been regular employees of Lanco Teesta Hydro Power Limited. During insolvency resolution they accepted fixed-tenure appointments with NHPC in December 2019.

Legal issue and Court's reasoning

LTHPL was subsequently amalgamated with NHPC under a government-approved scheme containing a clause for continuation of the transferor company's employees. The petitioners relied on that clause to seek permanent absorption in NHPC.

The Court treated employment status on the effective date of amalgamation as decisive. By accepting fixed-tenure appointments with NHPC years earlier, the petitioners had ceased to remain employees of LTHPL before the scheme became operative.

Result and practical consequence

A continuity clause cannot revive an employment relationship that no longer existed when the amalgamation took effect. It operates for employees transferred with the undertaking, not for persons who had already moved to a different contractual status.

The writ petition seeking permanent absorption was dismissed.