All India Itdc Workers Union & Ors vs Itdc & Ors

The Government of India issued a press communiqui in the month of January, 2001 proposing to sell Hotel Agra Ashok for a sum of Rs.2.36 crores which is wholly inadequate and amounts to a totally distress sale. The Government has devised a scheme of creating an artificial company i.e. Hotel Yamuna View Private Limited 4th respondent herein and the said company has been incorporated only for the purpose of selling the said hotel after the hotel is transferred to it. The employees have come to understand through press reports that the hotel is being sold out to one M/s Mohan Singh respondent No.5 and his bid was accepted by the Central Government in pursuance to the advertisement. It is further submitted that the entire Hotel Agra Ashok is being sold out only merely for a sum of Rs.3.90 crores whereas the valuation by the Agra Cantonment Board in the year 1999 of its land and buildings alone is more than Rs.5.58 crores. According to the employees, its market price at present cannot be less than Rs.20 crores. It is the contention of the employees that because of the change of ownership of the Hotel, the service conditions of the employees should not be changed by the private person and that the existing service conditions as originally agreed between the various employees of the Hotel and the new purchaser must be maintained. The prayer in the writ petition reads thus:

The above writ petition was transferred to this Court and is connected with other transferred cases.

The Union of India filed its affidavit in reply through its Under Secretary and submitted that successive governments, both at the Centre and the States have been following the economic policy of disinvestment in Public Sector Enterprises due to various reasons and in August, 1996, the Central Government set up a Public Sector Disinvestment Commission to make recommendations on the identified Central Public Sector Undertakings which may be disinvested. It was further submitted that ITDC is a Government Company as defined under Section 617 of the Companies Act, set up in 1966 and at the relevant time the Government of India was holding about 89.97% shares in ITDC, which was running 33 hotels in all and that ITDC was running heavy losses and its occupancy rates were far below the market average despite the fact that its room rents were lower than other five star hotels. The Disinvestment Commission in its report recommended that ITDC falls in the non-core category and hence disinvestment can go up to 74% or more. The recommendation was accepted by the Government at the level of Cabinet Committee on Disinvestment and a decision was taken by Inter-Ministerial Group and at the level of the Cabinet Committee on Disinvestment to divest each property individually rather than altogether or in groups. Respondent Nos. 4 & 5 filed a separate counter affidavit in reply. According to them, the Government of India had taken a decision for disinvestment of the properties owned by respondent No.1 as majority of properties doing hotel business were running huge losses to the tune of crores of rupees and unnecessarily increasing the liabilities of the Corporation. It was submitted that there is no change in service conditions of the employees as per the terms of share purchase agreement. That after the creation of the new Company - Hotel Yamuna View Private Limited, all the employees working with Hotel Agra Ashok were shifted to the new company which was also a subsidiary company of respondent No.1. Class III and IV employees of the Hotel approached the High Court and agitated their transfer from ITDC to Hotel Yamuna View Private Limited by way of a Writ Petition No. 41650 of 2001. The High Court, by way of an interim order, maintained the status quo regarding service conditions of Class III and IV employees of the hotel and pursuant to the agreement the Management of the Hotel Agra Ashok was transferred to respondent Nos. 4 and 5 on 07.02.2002 and started abiding by each terms mentioned in the agreement. Accordingly, the service conditions of the employees working with Hotel Agra Ashok were maintained as before. Some of the other employees of Hotel Agra Ashok filed civil Writ Petition No. 7195 of 2001 before the High Court of Delhi and that the Government of India as per the report of the Disinvestment Commission accepted the same and transferred the hotel to the respondents and that the decision of the Government of India to sell its share in ITDC was a policy decision within the ambit of law on the Constitution of India. With regard to the VRS scheme, it was submitted that for the employees of Ashok Travels and Tours, VRS Scheme 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 schemes does not confer any right whatsoever on any employee to have his request for voluntary retirement accepted.

Provided further, that no retrenchment of an Employee would be undertaken unless the affected Employee is given benefits which are higher of (a) the voluntary retirement scheme applicable to the Company as per the guidelines of the Department of Public Enterprises as of the date hereof and (b) the benefits/compensation required to be statutorily given to an employee under applicable law.

In view of the above, it is submitted that the apprehension of the petitioners is baseless and liable to be rejected.

In view of the above, we are of the opinion that the apprehension of the employees is baseless and is liable to be rejected.

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. 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.

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. 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. 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 substance in the contentions raised by learned senior counsel for the 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 M/s 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 order as to costs. In view of the disposal of the writ petitions, the transfer cases are also disposed off accordingly.