Amalgamation-Based Employee Continuity Benefits Apply Only To Transferor-Company Employees On Amalgamation Date: Sikkim High Court
The Sikkim High Court has held that the benefit of an employee-continuity clause under a scheme of amalgamation is available only to those who remained employees of the transferor company on the date the scheme became effective.
The Court observed that employees who had ceased to be on the rolls of the transferor company before the amalgamation could not invoke the scheme to claim employment-related benefits from the transferee company.
Justice A.Muhamed Mustaque remarked that: “If the Petitioners were not employees of the LTHPL as on the date of amalgamation, they cannot claim any relief based on the amalgamation order and scheme of amalgamation. The provision in the scheme relating to continuation of the employees of the transferor company cannot be invoked by persons who were not employees of the transferor company on the date on which the scheme became effective.
Background:
The petitioners were initially appointed as regular employees of Lanco Teesta Hydro Power Limited (LTHPL). Following insolvency proceedings against LTHPL, they accepted fixed-tenure appointments with NHPC Limited in December 2019.
Subsequently, LTHPL was amalgamated with NHPC pursuant to a scheme approved by the Central Government, which provided for continuation of LTHPL's employees in NHPC. The petitioners sought permanent absorption in NHPC, relying on this provision.
The Court held that the petitioners' entitlement under the amalgamation scheme depended on whether they were employees of LTHPL on the date of amalgamation.
Although they were initially regular employees of LTHPL, the petitioners had accepted fixed-tenure appointments with NHPC in 2019 pursuant to the resolution plan. Consequently, they had ceased to be employees of LTHPL much before the amalgamation.
The Court held that the clause providing for continuation of employees of the transferor company could not be invoked by persons who were not employees of the transferor company when the amalgamation became effective.
Since the petitioners were fixed-tenure employees of NHPC from 2019 onwards, the Court found that they were not entitled to permanent absorption under the amalgamation scheme and dismissed the writ petition.
Case Name: Homnath Neopaney v/s Chang Dorjee Tamang
Case No.: WP (C) No.30 of 2025
Date of Decision: 11.09.2026