I think the flywheel diode should be across the transistor.

No, Nagarajan, location of diode is correct. When relais is suddenly switched-off, coil of relais has stored energy in magnetic field. Coil wants to have the current through coil inductivity continue to flow. For that, coil terminals becomes reverse polarized, so that, like with a battery, the current flows internally from - to +. So, terminal of coil which is connected to 0V of circuit becomes more postive than other end, and diode limits this induced voltage. As consequence, base of transistor sees about -0.7V, and need not to be protected.

Regards,
Kai