Case: All India Itdc Workers Union &amp; Ors Vs. Itdc &amp; Ors

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 the 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 presumed that they accept the right of the directors and the shareholders to conduct the affairs of the company in accordance with law and at the same time they can exercise the right to sell their shares." 36. We may also usefully refer to the decision of the Madras High Court in the case of (Southern Structurals Staff Union vs. 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 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 of the employees a necessary precondition for disinvestment." 37. 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 2002.38. 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 VRS scheme keeping in view its obligation under para 9.4(iv) of the share purchase agreement in terms of the office memo dated 05.05.2000.39. 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 existing 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 Company and any change in the conditions thereto can only be made in accordance with law." 40. 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 of formalities under the provisions of Employees Provident Fund and Miscellaneous Provisions Act, 1952.41. 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 of Company Affairs in terms of the 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.42. By order made by the Department of Company Affairs on 04.10.2001, ITDC was directed to convene a meeting of the creditors of Hotel 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 of Company 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 30.10.2001 and the Chairman of the said meeting had directly reported the result of the meeting to the Department of Company Affairs.43. It may also be noticed that a fresh petition was filed with the Department of Company Affairs on 26.12.2001 under Section 391 and 394 of the 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 01.01.2002 to give public notice regarding the scheme of arrangement and hearing through advertisement in a leading English and vernacular daily newspaper. The notice was duly published in Indian Express on 04.01.2002 and Amar Ujala, Agra Edition Hindi on 05.01.2002 after protecting the interest of the creditors and hearing the parties the Department of Company Affairs gave approval of the scheme of agreement on 01.02.2002. The demerger was complete on 01.02.2002. It is only thereafter that the shares of Government of India in Hotel Yamuna View Private Limited was sold to Respondent No.5 on 07.02.2002 by the share purchase agreement.44. 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.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]19. The above judgment is distinguishable on facts and on law. The Jawaharlal Nehru University case (supra) would indicate that, in that case there was a purported transfer of the employee from Jawaharlal Nehru University to the Manipur University without his consent. Admittedly the JNU did not exercise any control over Manipur University. In the instant case, the transfer was from ITDC Ltd. to respondent No.3 Company, thepattern of the two companies were exactly the same. Therefore, it did not make any difference to the employees, especially, when the scheme ofitself provide that the employee will continue in service of the respondent No.3 with full benefits including continuity in service. The provisions of the Companies Act, 1956 were not involved in the JNUs case. Further the two Universities were totally unconnected entities hence the ratio of that judgment, in our opinion, is not applicable to the facts in hand. Even in the judgment of this Court, in JNU in para 8 it has been observed that at worst this would not impinge upon the validity of thescheme. The effect of that would be that the employee would be deemed to have retrenched and would be entitled to compensation as such in accordance with law. In the instant case, the employees never claimed that they may be considered as retrenched. Even if it is the claim of the petitioners that they have been retrenched, the writ petition is not the appropriate proceedings and the petitioners were required to institute appropriate proceedings as per the industrial/labour laws.We have given our thoughtful consideration to the rival submissions made by the respective counsel appearing for the respective parties. In our opinion, the present writ petitions filed by the employees merits to be dismissed. Since disinvestment was a policy decision of the Government of India. This Court also has held that the said policy decision should be least interfered in judicial review and that the Government employees have no absolute right under Article 14, 21 and 311 of the Constitution of India and that the Government can abolish the post itself. In the present case, the petitioners are not government servants and are merely employees of a public sector undertaking. This apart, the service conditions of the petitioners are being protected under the new management on the disinvestment of the Hotel and the fact that other hotels are also in an advanced stage of disinvestment in pursuance of the policy decision taken by the Government of India for disinvestment of the hotel units. We see no reason to interfere with the aforesaid decision. In case ultimately the petitioners are aggrieved by any aspect of terms of reference and formalization of agreement and completion of disinvestment it is always open to the petitioners to approach the courts for redressal of their grievances.24. We have already extracted Clause 9.4 of the share purchase agreement dated 07.02.2002 in paragraphs supra. In our view, the decision of the Government of India to divest the property was a policy decision which was not in any manner contrary to the law of the land. Similar policy decision of the Government of India to disinvest 51% of this share holding in Bharat Aluminium Company Limited referred to as Balco was challenged before this Court and this Court has dealt with the scope of the judicial review in such economic policy decisions. This Court rejected the contention that the sale of the shares of the Government of India in Balco was legal and the employees of Balco have ceased to be employees of a government company. However, it is stated that the service conditions of the employees were not affected by the transfer of the shares.25. We have also carefully perused the scheme. It is evident from the scheme itself that all the employees were to be retained as stipulated in the transfer documents on the same terms and conditions of service for 1 year and they were entitled for payment of gratuity and provident fund as per the then existing scheme. The terms and conditions of service applicable to the employees was not in any way be less favourable than those applicable to them immediately on the date thereof.In view of the above, we are of the opinion that the apprehension of the employees is baseless and is liable to be rejected.27. 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 of the employees have been duly provided in the transfer document i.e.scheme and share purchase agreement. This Court also in Balco Employees Union (Regd.) vs. Union of India and Others, (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.28. 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.1 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 asAll the employees after the creation of the new company were shifted to the new company which was also a subsidiary company of ITDC. Respondent No.1 invited tenders for sale of the Hotel. The offer made by Respondent Nos. 4 and 5 was accepted by respondent No.1 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.4.29.The employees have also challenged the nonimplementation 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 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 employees of ITDC and not of Hotel Yamuna View Limited. They have already objected their transfer to Hotel Yamuna Private Limited. The petitioners are demanding VRS from ITDC because as per the orders dated 13.12.2001 and 05.03.2002 of the 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 of contempt, 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 VRS. In other words, a VRS scheme for employees of Ashok Travels & Tours was introduced by circular dated 02.03.2001 but there was no policy for VRS 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 voluntary retirement accepted. The respondent has also no such obligation under para 94 (IV).As already noticed, the Government of India constituted the Disinvestment Commission and accepted the recommendation of the said Commission. A decision was taken byGroup and at the level of the Cabinet Committee on Disinvestment to divest each property individually rather than altogether or in groups.32. It is also beneficial for us to refer to the judgment of Balco Employees Union (Regd.) vs. Union of India and Others (supra) by which this Court has dealt with the scope of the judicial review in such economic policy decisions.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 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 2002.38. 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 VRS scheme keeping in view its obligation under para 9.4(iv) of the share purchase agreement in terms of the office memo dated 05.05.2000.39. 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.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 of formalities under the provisions of Employees Provident Fund and Miscellaneous Provisions Act, 1952.41. 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 of Company Affairs in terms of the 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.42. By order made by the Department of Company Affairs on 04.10.2001, ITDC was directed to convene a meeting of the creditors of Hotel 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 D11 (Retd.) Department of Company 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 30.10.2001 and the Chairman of the said meeting had directly reported the result of the meeting to the Department of Company Affairs.43. It may also be noticed that a fresh petition was filed with the Department of Company Affairs on 26.12.2001 under Section 391 and 394 of the 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 01.01.2002 to give public notice regarding the scheme of arrangement and hearing through advertisement in a leading English and vernacular daily newspaper. The notice was duly published in Indian Express on 04.01.2002 and Amar Ujala, Agra Edition Hindi on 05.01.2002 after protecting the interest of the creditors and hearing the parties the Department of Company Affairs gave approval of the scheme of agreement on 01.02.2002. The demerger was complete on 01.02.2002. It is only thereafter that the shares of Government of India in Hotel Yamuna View Private Limited was sold to Respondent No.5 on 07.02.2002 by the share purchase agreement.44. 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.