Air India Employees Can't Demand Pre-Decisional Hearing In Economic Policy Matters Like Disinvestment: Madras High Court

While dismissing the plea filed by the Air Corporation Employees Union for the protection of their service conditions in light of Air India's disinvestment, the Madras High Court ventured to discuss the moot points raised in the petition elaborately with reference to the obligations of the employer.

Justice V. Parthiban went on to hold that the interests of the employees were sufficiently protected by the measures taken by the Government before and after the signing of the Share Purchase Agreement (SPA) with Talace Private Limited, a special purpose vehicle of Tata Group.

On the preliminary question of whether the employees should have been given due notice/ pre-decisional hearing before the signing of the Share Purchase Agreement, the bench referred to Balco Employees' Union vs. Union of India (2002) and All India ITDC Worker's Union vs. ITDC & Ors. (2006). It underlined that employees are devoid of any right to demand a pre-consultation hearing when its a disinvestment policy emanating from the economic decisions of the government. According to the single-judge bench, Articles 14 and 16 does not mean that prior notice of hearing must be given to the workers before a decision is taken to disinvest.

"The Courts have recognized larger public interest involved in such policy decisions and have consistently held that judicial review in such matters is almost impermissible except when the decision is stated to be smacked of total arbitrariness, unconstitutional or illegal", the court added.

The court refused to accept the petitioner's contentions based on the judgments in H.L. Trehan and Others v. Union of India and Others, (1989) and Balco Captive Power Plant Mazdoor Sangh and Ors. v. National Thermal Power Corporation and Ors. (2007(14) SCC 234). The bench noted that the latter actually challenged the service conditions that were altered and the former judgment was restricted to the factual matrix of the case, not challenging the economic policy taken.

"The quintessence legal principle viz., law of the land as on date is that an economic policy decision in furtherance of larger public interest cannot be subjected to judicial audit habitually or routinely merely on the ground that there was no opportunity of hearing afforded to the employees. Therefore, it is too late in the day to stall the process of disinvestment merely on such a slippery challenge", the bench underscored.

On the second issue of whether employees are required to be given prior notice under Section 9A of the Industrial Disputes Act and whether its absence would vitiate the process of disinvestment or not, the court said that such contentions cannot be countenanced in law. The court specifically referred to the averment that some of the suggestions of the bilateral committee were not there in the Share Purchase Agreement. When the employees raised their apprehensions about the same, it was duly put to rest by the respondent Union Government, the court inferred from the Counter Affidavit and written submissions made on behalf of the Government.

Employees' right to be heard is not 'sacrosanct' or 'inviolable' in the face of a 'monumental economic policy decision', the court reiterated its stand in reference to the application of Section 9A.

"The judicial review in such matters ought to be oriented towards balancing the paramount public interest and the interest of the employees and in such consideration even if this Court finds any infraction in complying with any statutory provisions, public interest must be allowed to prevail"

The petitioner had contended that alteration of service conditions pertaining to medical, passage and housing will always be under the scanner of Section 9A and referred to the judgment in Life Insurance Corporation of India v. D.J.Bahadur and Ors (1981) where the court held that LIC Act cannot substitute special legislation governing the service conditions of employees and notice under Section 9A of ID Act was mandatory. Reliance was also placed on Film Factory Workers Union, rep. By its General Secretary v. Government of India, Department of Heavy Industries, (2016) where the Supreme Court held that a settlement between the employer and the workmen is sacrosanct which cannot be government directives even if the company was wholly owned by the Government.

Before examining the contention, the court also pointed out that Section 9A was brought in by the petitioner only as a response to the counter and Solicitor General's submission that there was change in employment but merely a change in the share pattern. The petitioner has not resorted to Section 9A previously in the affidavit filed in support of the writ petition, it noted.

"....The setting up of the challenge on the said plea in the last leg of arguments appear to be a desperate attempt by the Union (Employees' Union) to persuade this Court to interfere, being pushed to the precipice of despondency, literally forced to flog the dead horse", the court observed at the outset.

The court observed that Section 9A cannot be applied in instances where there is a change of management and the employer and employees remain the same. By disinvestment and change of management, only the character of the company has been transformed from public into private sector, the court remarked.

"When the management is sought to be changed by disinvestment, the question would arise, who is to give notice under Section 9A; is it Air India Ltd, who is handing over its control and management in favour of the fourth respondent private company or is it the fourth respondent, who is taking over the reins of the company"

On the rhetorical question that was raised, the bench went on to note that Air India is no more in charge of the company after the Share Purchase Agreement and Take Over process was set in motion. Similarly, Talace Private Limited's requirement to comply with Section 9A has not arisen during the transitional stage when the petition was filed. In such a circumstance, the question of application of Section 9A, in light of the service conditions that are in a state of limbo, wouldn't arise.

"The scope and ambit of the section cannot be stated to cover a situation like the present one when the employer remains the same and so is the employment of the workmen, but the management of the company is different due to handing over of the company after the disinvestment... The right to notice under Section 9A of the I.D. Act would accrue only when the conditions of service get altered in the changed dispensation but not during its transitional stage", the court clarified its position.

Pedantic insistence on the compliance of Section 9A when the executive decision itself was taken to protect the interest of the employees in a difficult situation will be counteractive, the court opined.

The application of Section 9A should be read down to uphold the policy decision of the Government taken in the national interest and for the protection of employees' and consumers' interests, the court concluded by stating that more than Rs One lakh Crore has been infused into the sinking company by the Government.

"...As a matter of fact, by disinvestment, the company would continue to remain afloat and tax payer's money is saved from being injected into the sinking company. It is a rather win-win situation for both the Government as well as the second respondent company...", the court inferred.

"The fact that the employees' representatives were part of the bilateral committee constituted on 21.01.2020 could always be construed as a notice under Section 9A of the I.D. Act or an opportunity afforded to the employees for airing their grievances and views, in fulfilment of the test of reasonableness as contemplated in Article 14 of the Constitution of India", the court remarked.

"As seen from the report, all the areas of concern of the employees under the ten heads had been part of the consultative process, culminating in the suggestions. These suggestions have been taken forward and to the extent possible, they have been incorporated in the SPA, as could be seen in the tabulated statement incorporated in the written submissions filed on behalf of the Union of India", the court noted.

On the question of whether the conditions of service of the employees, in particular, with reference to their claim towards medical benefits scheme, passage rights, colony accommodation can be said to be undermined and taken away, the court made a reference to the tabulated statement mentioned above and answered in favour of the Government.

The major demands of the petitioner union were i) continuation of the existing medical scheme-Contributory Family Medical Scheme (CFMS), and not the proposed Central Government Health Scheme (CGHS), ii) colony accommodation till the age of superannuation against the sudden notice for leaving the premises within six months in the background of disinvestment and the threat of eviction notice upon failing to do so, and iii)maintenance of status quo with regards to passage facilities for serving and retired employees.

Some of the other pertinent demands made by the Petitioner Union which were also mostly marked as 'partially accepted' by the Government in its Tabulated Statement are given below:

"...The medical benefits are stated to continue in accordance with industry practice and industry norms. And so is the passage rights. As far as housing is concerned, it was submitted on behalf of the Government of India that only a fraction of the employees were in accommodation and the majority of the workmen/employees in lieu of colony accommodation had been compensated with admissible HRA. Once the employees are entitled to HRA in lieu of housing accommodation, the employees cannot raise the issue as a grievance, calling for the interference of this Court on this account", the court clarified by referring to the statement.

"The Government appeared to have taken every care not to jettison the interests of its employees, leaving them in the lurch, in the bargain. Considering the fact that Air India Ltd prior to the disinvestment initiative was a sinking company, a fortuitous transformation has happened for their own good. In the opinion of this Court, various conditions of service under the SPA are the best that the Government could wrangle out from the fourth respondent towards ensuring the protection of the employees' interest", the court concluded.

Accordingly, the court found the writ petition as devoid of merits in the absence of any enforceable rights of the employees and dismissed the same.

Also Read: 'Air India Was A Sinking Company, Interests Of Employees Protected': Madras High Court Dismisses Plea Against Disinvestment

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