By Sanjay Raman Sinha
In a judgment that brings into question the whole process of disinvestment, something dear to this government, the Delhi High Court refused to entertain a petition by the Indian Airlines Officers Association (IAOA) seeking pay and allowance arrears from Air India, with which it merged in 2007. The Court said Air India had ceased to be a government-controlled company and therefore, the plea was untenable. IAOA had sought arrears of pay and allowances from January 1, 1997, to July 31, 2006, to the tune of Rs 118 crore, though the total arrears which include two other associations is Rs 208 crore.
Justice Jyoti Singh said: “It is an admitted position that during the pendency of the present writ petition, on 27.01.2022, 100 per cent shareholding of Air India has been acquired by M/s. Talace Pvt. Ltd. and Air India have ceased to be Government controlled companies, and are no longer amenable to the writ jurisdiction of this Court…. The writ petition cannot be entertained.”
Further, the counsel for Air India said it had been privatised and the entire shareholding of the Government of India had been transferred to a wholly owned subsidiary of Tata Sons Pvt. Ltd and, therefore, the petition cannot lie under Article 226 of the Constitution as Air India was no longer a public body.
This judgment raises serious questions about the entire disinvestment process of the government and the liabilities of a public sector company which has been bought by a private entity. Do the dues die a natural death or is the private entity liable to shoulder them?
The disinvestment of Air India left a certain group of employees from the erstwhile Indian Airlines in the lurch. The Court judgment has disheartened them further. The disinvestment deal of AI was completed in January 2022 after a long drawn out, two-year process, following which it was bought over by the Tatas.
Many issues had plagued the disinvestment—employees’ leave encashment options, pre-Covid level salary payment, medical benefits, clearance of pending dues, pension and wages matters and accommodation. After a protracted battle with the management, most Indian Airlines employees got their dues, while another set were left holding the short end of the stick. How fair is that?
Ranjan Dutta, former general secretary of IAOA and a petitioner in the matter, narrated the ordeal: “As people retired and died, we were barely 1,400 people left without getting our dues. We are still fighting it out in the courts. Who will pay our arrears? Our wages were given under a statutory order which was a Presidential Directive of the Ministry of Civil Aviation. So to say today that there is no statutory sanction behind the wage order is incorrect.”
The bitter experience has put a question mark on the process of disinvestment: its means and end. The Indian Airlines-affected group is a matter of case study. This is the way the story unfolded.
In January 1, 1997, under the direction of the Rakesh Mohan Committee, the wage revision of Indian Airlines was due. However, the requirement was that it should have been profit-making for three successive years. The Indian Airlines management till 2006 did not notify wage revision for presidential direction despite the fact that the airline was profit-making for three successive years twice.
However, in a pre-merger pact between Air India and Indian Airlines in April 2006/2007, the management, strangely, allowed wage revision to Air India which was a loss-making body, but not to Indian Airlines which was still profit-making. While others got wage arrears for 120 months, the affected group was given dues of four months only.
In protest, the Indian Airlines staff union (Air Corporation Employees’ Union) went on strike. As they were a unionised category, they collected wage arrears from January 1, 2000, instead of January 1, 1997. So effectively, they lost three years of arrears and received one promotion each. However, officers, who are debarred from union activity, could not go on strike and were denied wage and other benefits. Out of 18,000 employees, 13,500 were paid wage arrears because they went on strike. The remaining 4,500 were left high and dry, contrary to the tenets of natural justice.
Dutta elaborated: “The total liability of unpaid wage arrears to three categories of employees—the Indian Airlines Officers Association, the Indian Airlines Engineers Association and the Indian Airlines Technicians Association—was a total of Rs 208 crore, of which Rs 118 crore was of IAOA’s. This amount of Rs 208 crore still appears in the annual report and balance sheet of Air India and has been passed on to the Tatas which had given in writing that it will pay this amount. I intend to take this fight further in the courts.”
The embittered group filed a case in the Delhi High Court where the December 2022 verdict smashed their dreams once again. The Court held that since Air India was no more a government body, writ jurisdiction shall not apply on the Government of India to direct Air India to make the payment.
Dr Pradeep Sharma, senior advocate in the Supreme Court, and an expert on service matters, told India Legal: “The High Court of Delhi has observed that the writ petition was not maintainable, whereas the Supreme Court in Mr. R.S. Madireddy vs The Union of India and Ors. has held that writ petitions under Article 226 directed against private entities in respect of the discharge of any public duties are maintainable. Article 226 is worded in such a way that a writ of mandamus could be issued even against a private authority. But such private authority must be discharging a public function and rights sought to be enforced must be public duty. However, a right which purely originates from a private law cannot be enforced taking aid of the writ jurisdiction irrespective of the fact that such institutions are discharging public duties. It appears from the above that the aggrieved party may take shelter of this aspect.”
The government’s stand vis-a-vis the affected employees has been unrelenting. In this particular case, the government has altogether shed its responsibility towards the Indian Airlines employees. In another case when Air India employees faced accommodation problems, the government asked them to sign undertakings in 15 days or pay Rs 15 lakh penalty. Such instances abound. This puts a question mark on the government’s privatisation policy, processes and priorities.
In fact, in 1996, under the United Front government, a public sector Disinvestment Commission was set up to formalise norms for privatisation. One of the terms of the Commission was to ensure that appropriate measures were taken during disinvestment to protect the interests of the affected employees. But as is wont of commissions, the suggestions were buried in files.
In 2000, the norms for prioritising PSUs for divestment were declared. It was held that privatisation would be given to firms where sales led to considerable revenues to the government; where the sale of the unit could be done with the least difficulty in a short time and where mounting losses could be stopped swiftly. However, the norms for employees’ future were not a matter of consideration. If today the affected employees are compelled to demand justice from courts, how compatible are the laws of the land to their rights and tribulations?
Sharma explained: “Employees are entitled to salary/pension as part of constitutional rights. The High Court of Andhra Pradesh held that employees, whether current or former, are entitled to salary or pension whichever the case as a right to life under Article 21 and right to property under Article 300A of the Constitution in J. Aswartha Narayana Vs State of Andhra Pradesh.”
The basic tenet of strategic disinvestment is that the government should withdraw from areas where competitive markets have matured and are operating on a fair playing field. However, the doctrine of public trust enjoins that the government act fairly and transparently when dealing with public assets and employees. The government has a liability towards the employees as well as the public fund invested in the unit.Lack of proper planning reflects badly on the executive.
Capt SS Panesar, former director, Flight Safety & Training of Indian Airlines, has experienced the brunt of privatisation. He said: “It is quite clear that the interests of employees were not considered while taking the privatisation decision. Take the example of the merger of United Airlines and Continental Airlines four years back. The deal was finalised only when transfer, wages and dues of employees got sorted out. Here, the government took the privatisation decision without a forethought for the employees’ future and interests. Employees are facing accommodation woes, their medical benefits have been affected, wages have not been paid…. It is anarchy. People who have served the airline for the best part of their life are now condemned to run from pillar to post, from government and airline offices to courts….”
The India’s aviation market is currently the world’s third largest. As it moves out of the shadow of Covid-induced recession, airlines are expected to double their strength in the next 10 years. In terms of passenger carriage, AI will be the largest international and second largest domestic airline. But as AI expands its wings and becomes profitable, employee rights should not be forgotten lest they haunt it later.
Today, harsh market realities and fiscal compulsions dictate investment. Hapless employees are caught in the spinoff and have to take shelter in courts. Strangely, the courts have circumscribed their jurisprudence limits and avoided judicial overreach in economic matters unless there is violation of statutory constitutional provisions. Over the years, in a series of judgments, this stand of the Supreme Court has crystallised as a judicial testament.
In the BALCO case, the apex court declared that “it is neither within the domain of the Courts nor the scope of judicial review to embark upon an enquiry as to whether a particular policy is wise or whether a better public policy can be evolved. Nor are our Courts inclined to strike down a particular policy at the behest of a petitioner merely because it has been urged that a different policy would have been fairer or wiser or more scientific or more logical”.
Though employees may not be intimated prior to the merger or disinvestment, they are supposed to be informed in advance when a decision affecting their professional status is taken.
After the disinvestment decision, BALCO Employees Union appealed in the Delhi High Court. The Court held that “whenever the final decision is to be taken by the Respondents affecting the interests of the workers, the same be intimated with two weeks’ advance notice to the Petitioners by the Respondents”.
Much has changed since the BALCO case; disinvestment is a prime State policy now. The Modi government had renamed the Department of Disinvestments as the Department of Investments and Public Asset Management and spearheaded its disinvestment drive. Since 2014, the government has raised over Rs 4.04 lakh crore through disinvestment and strategic sale of public sector enterprises.
As the saga of disinvestment continues and crores are raked into government coffers, the rights and interests of employees shouldn’t be shortchanged. Employees who have given the prime years of their life for a company should not be given a copper handshake and asked to walk into the sunset.