Case Laws – Objection of the employees in case of the shifting of the registered office

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TaxClue Team
TaxClue Team
Taxclue is an online news portal for reporting all news, articles, judgments, Circulars, orders, and notifications relating to various corporate and tax laws in India. We use the tagline ‘Simplifying Laws’. Our mission is to Simplify the Laws and make people aware of their rights and duties in relation to tax matters in order to equip them to participate in nation-building.

Does the employee have the right to shift the registered office of the company from one city to another city or one state to another? No. There are some cases where employees have opposed the decisions taken by the Board of directors of the company. They have the reason for the loss of remuneration or employment.

But the decision given in the cases was in favor of the Company. Here in this article, we will discuss some legal cases related to this.

Case no – 1: Bharat Commerce and Industries Ltd., Re, (1973) 43 Com Cases 162 (Cal.)

In this case, it was held that employees’ union, which was a registered body and which represented quite a number of the employees at the registered office of the company, would have the legal standing to appear before the court and oppose the application on the ground that their interests are likely to be prejudicially affected if the resolution for shifting the registered office of the company from one state to another is confirmed by the court. However, it was held that the employees’ union cannot oppose on the ground that there would be loss of revenue or unemployment in the State or that the meeting at which the special resolution was passed was itself not valid.

Case No – 2: Metal Box India Ltd. Re, (2000) 37 CLA 15

In this case, it was held that where the shifting of the registered office was in accordance with a scheme approved by the BIFR, it was held that the workers had no right of objection because their continuation in the company’s employment was ensured unless, of course, a worker preferred voluntary retirement.

Case No – 3: Kwality Ice Creams (India) P Ltd., Re, (2009) 91 SCL 231: (2009) 148 Com Cases 631: (2010) 98 CLA 218 (CLB)

A different dimension to the employees’ right can be seen in the above-given case. In that case, the

company’s petition for shifting its registered office from West Bengal to Delhi was opposed by two employees of the head office on the ground that their action against the company would be prejudiced. The CLB said that the facility for litigation is not a valid ground to stall shifting. There was no restraint order from any Court against the proposed shifting. The Company Law Board allowed shifting subject to the condition that the interest of none of the employees at the registered office would be prejudiced by retrenchment or otherwise.

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