Amalgamation-based employee continuity benefits apply only to transferor-company employees on the amalgamation date.

The petitioners were initially recruited as regular employees of Lanco Teesta Hydro Power Limited (LTHPL) and were subsequently promoted.

Insolvency-resolution proceedings were initiated against LTHPL before the National Company Law Tribunal under Section 7 of the Insolvency and Bankruptcy Code, 2016. Pursuant to the resolution plan, LTHPL became a subsidiary of NHPC Limited with effect from 9 October 2019.

NHPC thereafter offered the petitioners employment on a fixed-tenure basis for one year from 26 December 2019, which they accepted.

Subsequently, a scheme of amalgamation between LTHPL and NHPC was approved by the Ministry of Corporate Affairs on 2 January 2025. The scheme provided that, upon its effectiveness, employees of LTHPL would be deemed employees of NHPC and would receive the benefits applicable under the scheme.

The petitioners sought absorption as permanent employees of NHPC on the basis of that amalgamation provision.

1. Whether the petitioners were employees of LTHPL, the transferor company, on the date the scheme of amalgamation became effective, so as to claim the benefit of the scheme’s employee-continuation provision.

2. Whether the petitioners, having accepted fixed-tenure employment directly with NHPC in 2019, were entitled to absorption as permanent employees of NHPC pursuant to the 2025 amalgamation.

The Court applied the terms of the Ministry of Corporate Affairs’ amalgamation order and scheme, under which employees of the transferor company, LTHPL, would continue as employees of the transferee company, NHPC, upon the scheme becoming effective.

The benefit of that provision was held to be confined to persons who remained employees of LTHPL on the date of amalgamation.

The Court also noted that, pursuant to the insolvency-resolution process under Section 7 of the Insolvency and Bankruptcy Code, 2016, LTHPL became NHPC’s subsidiary and thereafter a Government company under Section 2(45) of the Companies Act, 2013.

The governing principle was that an employee could invoke the amalgamation scheme only if an employer–employee relationship with the transferor company subsisted when the scheme became effective.

The petitioners’ original status as regular employees of LTHPL did not determine their entitlement; the material question was their employment status on the effective date of amalgamation.

The appointment letters showed that, after approval of the resolution plan, the petitioners accepted fixed-tenure employment directly with NHPC from December 2019.

Consequently, they had ceased to be employees of LTHPL well before the amalgamation.

Since the scheme protected only employees of the transferor company existing on the date of amalgamation, the petitioners could not rely on that provision to claim permanent absorption in NHPC.

The Court therefore found no basis for granting the requested relief.

They were therefore not entitled to invoke the amalgamation scheme’s provision concerning continuation of LTHPL employees or to seek permanent absorption in NHPC.

The writ petition was dismissed, with no order as to costs.