ALL INDIA ITDC WORKERS UNION AND ORS. v. ITDC & ORS

Citation: [2006] SUPP. 8 S.C.R. 127

Court: Supreme Court of India

Bench: AR. LAKSHMANAN, A.K. MATHUR

Case summary

ALL INDIA ITDC WORKERS UNION AND ORS. v. ITDC & ORS.pdf

Judgment text

ALL INDIA ITDC WORKERS UNION AND ORS. v. ITDC&ORS. OCTOBER 31, 2006 [DR. AR. LAKSHMANAN AND A. K. MATHUR, JJ. ] Constitution ofIndia-Articles I4, 2I and 311- Disinvestment decision by Government ofIndia-Sale ofa five star hotel property ofIndia Tourism Development Corporation to a private party-Writ Petitions by Workers Union challenging it as being arbitrary and illegal-Held, disinvestment decision is a policy decision of the Government which should be least interfered. in judicial review-On facts, the interests ofthe workers are fully protected and hence their allegations are baseless. Petitioners filed Writ Petitions before High Court questioning the decision ofthe Government ofIndia in disinvesting one of the five star Hotels belonging to Indian Tourism Development corporation (ITDQ by selling it to a private party as arbitrary and illegal.

The petitioners contended that Government oflndia sold the Hotel far below its market price;'that they belong to All India Common Cadre , being officers of the ITDC , and hence the transfer of their services to the new employer is illegal and arbitrary. The Writ Petitions of the petitioners were transferred to this Court. The petitioners filed an application before this Court to dire which they may be eligible in the Transferor on the Appointed Date. " In view of the above, we are of the opinion that the apprehension of the employees is baseless and is liable to be rejected. It is also pertinent to notice that ITDC has not participated in the disinvestment process as the same was carried out by the Ministry of Disinvestment, Government of India. The safeguards regarding the service conditions ofthe employees have been duly provided in the transfer document i. e. de-merger scheme and share purchase agreement. This Court also in Ba/co Employees' Union (Regd. ) v.

Union ofIndia and Ors, [2002] 2 SCC 333 held that the employees of the company registered under the Indian Companies Act do not have any vested right to continue to enjoy the status of the . ' ~ employee of an instrumentality of the State. In the instant case, with the intention to promote the scheme of disinvestment, the Government issued an advertisement to outright sale of 6 hotels and long term lease for 2 hotels. The property of respondent No. I was demerged in the name of the new company with the approval of the Company Law Board. We have perused the order approving the scheme of arrangement as annexed and marked as Annexure-C(a)/2. All the employees after the creation of the new company were shifted to the new company which was also a subsidiary company oflTDC. Respondent No. 1 invited tenders for sale of the Hotel. The offer made by Respondent Nos. 4 and 5 was accepted by respondent No.

l as successful bidder and accordingly, the shares of Hotel Yamuna View Private Limited were transferred under share purchase agreement dated 07. 02. 2002. It is pertinent to notice that at the time of inviting bid, no such liabilities of VRS to the employees were shown against Hotel Agra Ashok. All the liabilities were mentioned in the balance sheet of the company including property tax and water tax to be deposited with the Cantonment Board. Respondent Nos. 4 and 5 got the shares of Hotel Yamuna Private Limited transferred in their favour while share transfer agreement dated 07. 02. 2002 wherein certain. conditions were put in by respondent No. 1 keeping in mind the order of the High Court for maintaining the status quo of the class·. III and IV employees. Pursuant to the agreement, the Management of the Hotel was transferred to respondent No. 4. The employees have also challenged the non-implementation of VRS in respect of the employees of Hotel Agra Ashok.

In our view, the petitioners/ employees cannot claim parity in respect of other employees working under ITDC in different properties who have been granted benefits under VRS as the scheme was never made applicable to the employees working with the present property. No disclosure of any such introduction of VRS was given by ITDC at the time of sale, neither was any amount to be deposited by the purchaser. We are, therefore, of the opinion that respondent Nos. 4 and 5 is under no obligation to float the VRS scheme because in para 9(4), the VRS has to be given only when company retrenches its regular employees. But ·G here the company is ready to continue with its employees with the same terms and conditions mentioned in the share purchase agreement. The employees are unwilling to continue on the same terms and, therefore, they cannot compel the management to introduce VRS scheme. When the share purchase agreement was executed with respondent No.

5, then there was no scheme introduced for grant of VRS because prior to the sale the petitioners were ALL INDIA ITDC WORKERS UNION v. ITDC[LAKSHMANAN, J. ] 141 employees ofITDC and not of Hotel Yamuna View Limited. They have already objected their transfer to Hotel Yamuna Private Limited. The petitioners are demanding YRS from ITDC because as per the orders dated 13. 12. 2001 and 05. 03. 2002 ofthe Allahabad High Court, the employees of Hotel Agra Ashok cannot be transferred to the new company Hotel Yamuna Private Limited. With intention to escape the liability ofcontempt, the ITDC specifically asked the buyer to maintain the service conditions of the employees on _the same terms by entering into a share purchase agreement, however, no condition in this agreement was mentioned for offering YRS. In other words, a YRS scheme for employees of Ashok Travels & Tours was introduced by circular dated 02. 03. 2001 but there was no policy for YRS regarding Hotel Agra Ashok.

Also under Clause 8 of the said circular regarding introduction of VRS, it is clearly stated that the scheme does not confer any right whatsoever on any employee . to have their request for veluntary retirement accepted. The respondent has also no such obligation under para 94 {IV). This Court in a recent judgment in the case of Board of Trustees, Visakhapatnam Port Trust & Ors. v. T. S. N. Raju and Anr. , (2006) 9 SCALE 55 (Dr. AR. Lakshmanan and Tarun Chatterjee, 11) while considering the scheme of voluntary retirement applicable to Port Trusts considered the scope of entitlement to avail the benefit of the scheme. This Court held that the Ct. airman of the Port Trust has absolute right either to accept or not to accept the applications filed by the employees for retirement and the request of employees seeking voluntary retirement was not to take effect until and unless it was accepted in writing by the Port Trust Authorities.

This Court held in para 35 as under:- "In our opinion, the request of the employees seeking voluntary retirement was not to take effect until and unless it was accepted in writing by the Port Trust Authorities. The Port Trust Authorities had the absolute discretion whether to accept or reject the request of the employee seeking voluntary retirement under the scheme. There is no assurance that such an application would be accepted without any consideration. The process of acceptance of an offer made by an employee was in the discretion of the Po1t Trust. We, therefore, have no hesitation in coming to the conclusion that the YRS was not a proposal or an offer but merely an invitation to treat and the applications filed by the employees constituted an offer. " As already noticed, the Government of India constituted the .. Disinvestment Commission and accepted the recommendation of i:he said Commission.

A decision was taken by Inter-Ministerial Group and at the level ofthe Cabinet Committee on Disinvestment to divest each property individually rather than altogether or in groups. It is also beneficial for us to refer to the judgment of Ba/co Employees' Union (Regd. ) v. Union of India and Ors (supra) by which this Court has dealt with the scope of the judicial review in such economic policy decisions. This Court held as follows:- "34. Applying the analogy, just as the Court does not sit over the policy of the Parliament in enacting the law, similarly, it is not for this Court to examine whether the policy of this disinvestment is desirable or not...... 47. Process of disinvestment is a policy decision involving complex economic factors.

The Courts have consistently refrained from interfering with economic decisions as it has been recognised that economic expediencies lack adjudicative disposition and unless the economic decision, based on economic expediencies, is demonstrated to be so violative of constitutional or legal limits on power or so abhorrent to reason, that the Courts would decline to interfere. In matters relating to economic issues, the Government has, while taking a decision, right to "trial and error" as long as both trial and error are bona fide and within limits of authority.. 92. In a democracy it is the prerogative of each elected Government to follow it's own policy. Often a change in Government may result in the shift in focus or change in economic policies. Any such change may result in adversely affecting some vested interests.

Unless any illegality is committed in the execution of the policy or the same is contrary to law or ma/a fide, a decision bringing about change cannot per se be interfered with by the Court.... i- 93. Wisdom and advisability of economic policies are ordinarily not amenable to judicial review unless it can be demonstrated that the policy is contrary to any statutory provision or the Constitution. In other words, it is not for the Courts to consider relative merits of different economic polices and consider whether a Vl. •iser or better one can be evolved. For testing the correctness ofa policy, the appropriate r forum is Parliament and not the Courts ) ALL INDIA ! TDC WORKERS UNIONv. ITDC[LAKSHMANAN,J. ] 143 98.

In the case of a policy decision on economic matters, the courts should be very circumspect in conducting any enquiry or investigation and must be most reluctant to impugn the judgment of the experts who may have arrived at a conclusion unless the Court is satisfied that there is illegality in the decision itself. " In the instant case, the Government has acted on advice of experts before taking a decision to disinvest its shares in ITDC Limited. Even thereafter, · through a fair and transparent process as detailed in the reply affidavit of the Union of India, the Government has ensured that it has got the best price for its shares. It is also pertinent to notice that the Government has not received any other higher offer. The contention of the learned senior counsel for the writ petitioners that the price is less has not been supported by any documentary evidence. In similar situation, this Court has observed in Balcq Employees' Union case (supra) as follows:- "65.......

lt is not for this Court to consider whether the price which was fixed by the Evaluation Committee at Rs. 551. 5 crores was correct or · not. What has to be seen in exercise ofjudicial review ofadministrative action is to examine whether proper procedure has been followed and whether the reserve price which was fixed is arbitrarily low and on the face of it, unacceptable. 66...... When proper procedure has been followed, as in this case, and an offer is made of a price more than the reserve price then there is no basis for this Court to conclude that the decision ofthe Government to accept the offer of Sterlite is in any way vitiated. " The very same contention raised by the employees in the instant case was raised by the employees of Balco when the Government of India disinvested its majority shares in Balco.

This Court rejected the contention that the sale of the shares ofthe Government of lndi~ in Balco was legal as the employees of Balco have ceased to be employees of a Government Company. It was, inter alia, observed as follows:- "47.... Even though the workers may have interest in the manner in which the Company is conducting its business, inasmuch as its policy decision may have an impact on the workers rights, nevertheless it is an incitfonce of service for an employee to accept a decision of the .... employer which has been honestly taken and which is not contrary .. to Jaw. Even a government servant, having the protec~ion of not only Articles 14 and 16 of the Constitution but also of Article 311, has no absolute right to remain in service. For example, apart from cases of disciplinary action, the services of government servants can be terminated if posts are abolished.

If such employee cannot make a grievance based on part III of the Constitution or Article 311 then it cannot stand to reason that like the petitioners, non-government employees working in a company which by reason of judicial pronouncement may be regarded as a State for the purpose of part III of the Constitution, can claim a superior or a better right than a government servant and impugn it's change of status.. 48..... lf the abolition of a post pursuant to a policy decision does not attract the provisions of Article 311 of the Constitution as held in State ofHaryana v. Des Raj Sangar and Anr. on the same parity of reasoning, the policy of disinvestment cannot be faulted if as a result thereof the employees lose their rights or protection under Articles 14 and 16 of the Constitution. In other words, the existence of rights of protection under Articles 14 and 16 ofthe Constitution cannot possibly have the effect of vetoing the Government's right to disinvest.

Nor can the employees claim a right ofcontinuous consultation at different stages of the disinvestment process. If the dis;11vestment process is gone through without contravening any law, then the normal consequences as a result of disinvestment must follow. 49. The Government could have run the industry departmentally or in any other form. When it chooses to run an industry by forming a company and it becomes its shareholder then under the provisions of tl,e Companies Act as a shareholder, it would have a right to transfer its shares. When persons seek and get employment with such a company registered under the Companies Act, it must be pr~sumed that they accept the right of the directors and the shareholders to condPct the affairs of the company in accordance with law and at the same time they can exercise the right to sell. their shares. " We may also usefully refer to the decision of the Madras High Court in the case of (Southern Strur:turals Staff Union v.

Southern Structurals Ltd. ) (1994) 81 Comp. Cases 389 (Mad. ) wherein the Madras High Court held as follows:- "The employees have no vested right in the employer company ALL INDIA ! TDC WORKERS UNION. v. ! TDC [LAKSHMANAN, J. ] 145 continuing to be a government company or 'other authority' for the purpose of Article 12 of the Constitution of India. The status so conferred on the employees does not prevent the Government from disinvesting; nor does it make the consent ofthe employees a necessary precondition for disinvestment. " In the case of Balco, as well as in the present case, the Government of India has ensured that the interest of the workmen are fully protected. As in the case of Balco, the shareholder agreement between Government of India and the purchaser has been reproduced in the reply affidavit filed on behalf of the Union of India in Transfer Case No. 73 of 2002. We may also place on record the submission made by learned senior counsel Mr.

Rakesh Dwivedi that the Government of India cannot have any objection to a direction to the Hotel Yamuna View Private Limited to float a YRS scheme keeping in view its obligation under para 9. 4(iv) of the share purchase agreement in terms of the office memo dated 05. 05. 2000. A perusal of paragraphs 23, 24, 54, 55 and 56 of the judgment of this Court in Balco would indicate that the above protection of the workers' interest in similar circumstances has been held by this Court to be adequate and lawful. This Court in para 55 has observed as follows:- "55. We are satisfied that the workers' interests are adequately protected in the process of disinvestment. Apart from the aforesaid undertaking given in the Court, the exi! :ting laws adequately protect workers' interest and no decision affecting a huge body of workers can be taken without the prior consent of the State Government.

Furthermore, the service conditions are governed by the certified orders of the Colllpany and any change in the conditions thereto can only be made in accordance with law. " Further as per the Demerger Scheme, all the liabilities relating to the transferred undertaking upto the date of transfer were taken over and were to be discharged by the transferee. Thus, the transferee is liable to pay all the liabilities and dues (including gratuity) to the employees on the same terms and conditions of service which were applicable to the employees in the hotel, including the benefits related to the tenure of service in the hotel upto the date of transfer.

As far as the provident fund of the employees is concerned, the PF accounts of the employees of the hotel in ITDC PF Trust were transferred by the trust to the new accounts of the concerned employees in the Regional Provident Fund Commissioner after the completion offormalities under the provisions of Employees Provident Funds and Miscellaneous Provisions Act, 1952. The demerger of the hotel union from ITDC was a considered decision taken by the Cabinet Committee on Disinvestment and had the approval of the Department ofCompany Affairs in terms ofthe Companies. Act, 1956. The reasons for creating a separate companies has been given in the reply affidavit and the contents of the same are reiterated in reply. By order made by the Department of Company Affairs on 04. 10. 2001, ITDC was directed to convene a meeting ofthe creditors ofHotel Agra Ashok for the purpose of considering and if thought fit approving with or without modifications, the scheme and the said order also appointed Mr.

S. B. Mathur D-11 (Retd. ) Department ofCompany Affairs as Chairman for the meeting who was also to report the result of the meeting to the Department of Company Affairs on the conclusion of the creditors meeting. A meeting was held on 30. l0. 200 l and the Chairman of the said meeting had directly reported the result of the meeting to the Department of Company Affairs. It may also be noticed that a fresh petition was filed with the Department ofCompany Affairs on 26. 12. 2001 under Sections 391 and 394 ofthe Companies Act for approval to new scheme of agreement between ITDC and Hotel Yamuna View Private Limited and their respective shareholders for Hotel Agra Ashok. The company was also directed vide order dated Ol. Ol. 2002 to give public notice regarding the scheme of arrangement and hearing through advertisement in a leading English and vernacular daily ! lewspapeL The notice was duly published in Indian Express on 04. 01. 2002 and Amar Ujala, Agra Edition Hindi on 05. 01.

2002 after prott:cting the interest ofthe creditors and hearing the parties the Department of Company Affairs g? ve approval of the scheme of agreement on Ol. 02. 2002. The demerger was complete on 0 l. 02. 2002. It is only thereafter that the share:s ofGovernment oflndia in Hotel Yamund View Private Limited was solJ to Respondent No. 5 on 07. 02. 2002 by the share purchase agreement. It is also brought to our notice at the time of hearing that all the 8 petitioners who have challenged the policy decision of the Government of India have resigned their job and joined some other service. The statement was not disputed or denied by learned senior counsel for the petitioners. For the foregoing reasons, we hold that there is absolutely no merit or ALL INDIA ! TDC WORKERS UNION v. ! TDC [LAKSHMANAN, J. ] 147 substance in the contentions raised by learned senior counsel for the A petitioners.

The writ petitions are, therefore, liable to be dismissed and the policy decision taken by the Government of India to transfer the Hotel Agra Ashok to Mis Mohan Singh and Yamuna View Private Limited cannot be assailed at the instance of the employees. The writ petitions are accordingly dismissed, however, there will be no B order as to costs. In view of the disposal of the writ petitions, the transfer cases are also disposed off accordingly. B. S. Transfer cases disposed off.