Case Note & Summary
The Bombay High Court was seized with four writ petitions filed by various trade unions representing aircraft engineers, technical staff, and technicians employed by Air India Limited. The core dispute arose from Air India's decision to hive off its entire Engineering Department into a wholly-owned subsidiary, Air India Engineering Services Limited (AIESL). The petitioners contended that this demerger, undertaken without adequate consultation or feasibility study, threatened the job security and service conditions of thousands of employees. They highlighted that salaries and allowances had been unpaid for months, and they feared retrenchment either by Air India or by the subsidiary which they believed could not sustain commercial competition and might eventually close down. The employees had already approached the Regional Labour Commissioner (Central) seeking conciliation under the Industrial Disputes Act, 1947, but being convinced that Air India was proceeding unilaterally, they moved the High Court under Article 226. The reliefs sought included a restraint on the hiving-off, a direction to continue the employees on Air India's payroll on existing terms or at least send them on deputation to AIESL, and the constitution of an expert committee to study the feasibility of the demerger. Air India and the Union of India opposed the petitions, raising preliminary objections regarding maintainability. They argued that the petitioners had an efficacious alternative remedy before the industrial adjudicator, that the petitions suffered from delay and laches, and that the move was a policy decision taken at the highest government level to address the grave financial crisis facing Air India, which had incurred losses running into tens of thousands of crores. The Court, after hearing submissions, reserved judgment. The judgment, however, as reproduced here, does not contain the final decision or the detailed reasoning on the merits; the text is truncated before the Court’s analysis and conclusion.
Issue of Consideration
Whether the writ petitions are maintainable in view of alternative remedy under the Industrial Disputes Act, 1947, and whether the hiving-off/demerging of the Engineering Department of Air India to its subsidiary is legally permissible, and whether an expert committee should be set up to study feasibility.
Law Points
- alternative remedy under Industrial Disputes Act
- 1947
- industrial dispute conciliation
- policy decision of government
- employee rights on transfer of undertaking
- maintainability of writ petition
- delay and laches
Case Details
2013 LawText (BOM) (04) 30
Writ Petition No. 2457 of 2012 (along with W.P. No. 391/2013, W.P. (L) No. 2896/2012, W.P. (L) No. 585/2013)
A.M. Khanwilkar, A.P. Bhangale
Aspi Chinoy, Sanjay Singhvi, Jane Cox, Rajmohan A. Amonkar, Manmohan A. Amonkar, Bennet D'Costa, Richa Srivastava i/b PKA Advocates, V.P. Vaidya, Kevic Setalwad, Girish Kulkarni, Kavita Anchan i/b M.V. Kini & Co., Kevic Setalwad A.S.G., D.A. Athawale, D.P. Singh, J.S. Saluja
Air India Aircraft Engineers' Association (lead), All India Service Engineers' Association, All India Aircraft Engineers Association, Indian Aircraft Technicians' Association
Air India Ltd., Air India Engineering Services Ltd., Regional Labour Commissioner (Central), Union of India
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Nature of Litigation
Writ petition under Article 226 of the Constitution of India challenging the decision to hive off the Engineering Department of Air India into a wholly owned subsidiary and seeking protective orders for employees.
Remedy Sought
Restrain Air India from hiving-off/demerging its Engineering Department to AIESL; alternatively, direct Air India to continue the employees on its own payroll maintaining existing terms and conditions and send them only on deputation to AIESL; direct setting up of an expert committee to study the feasibility and economic viability of the demerger.
Filing Reason
Employees apprehended retrenchment, non-payment of salaries and allowances (including PLI), lack of a feasibility study, and feared the subsidiary would be commercially unviable and eventually close down. Air India was unwilling to negotiate despite ongoing conciliation proceedings.
Previous Decisions
Conciliation proceedings under the Industrial Disputes Act, 1947 were initiated before the Regional Labour Commissioner (Central) and were in progress at the time of filing the writ petitions.
Issues
Whether the writ petitions are maintainable in light of the alternative remedy available under the Industrial Disputes Act, 1947.
Whether the petitioners are guilty of delay and laches.
Whether the hiving-off/demerger of the Engineering Department to a subsidiary is legally permissible and violates employee rights.
Whether the Court should direct the constitution of an expert committee to study the feasibility of the demerger.
Submissions/Arguments
Petitioners: The demerger threatened job security; employees had not been paid salaries and allowances; there was no feasibility study; conciliation efforts were underway but Air India proceeded unilaterally; the subsidiary was likely to fail, leading to retrenchment; the employees were willing to go on deputation but not permanent transfer.
Respondents: The petitioners had an alternative and efficacious industrial dispute remedy; the writ petitions suffered from unexplained delay and laches; the decision to hive off was a policy decision of the Government of India taken in the context of Air India's severe financial crisis with losses in tens of thousands of crores; the petitions were an attempt to stall necessary restructuring.
Judgment Excerpts
Respondent No.1 has set up a wholly owned subsidiary in the name of Air India Engineering Services Limited (AIESL), the Respondent No.2, and planned hiving-off / demerging the entire Engineering Department of Respondent No.1 to Respondent No.2.
The petitioners have rushed to this Court by way of present petitions after being convinced that Respondent No.1 was going ahead with the hiving-off of the Engineering Department and that the services of the employees employed in the Engineering Department would be transferred to Respondent No.2 unlike some of the employees of Respondent No.1 were to be sent to Respondent No.2 only on deputation.
Respondent No.1 have contested these petitions. At the outset, they have raised preliminary objections. Firstly, that the petitioners have alternative and efficacious remedy for resolution of the industrial dispute as provided by law. Secondly, the petitions suffer from laches and unexplained delay. According to the Respondents, these petitions are an attempt to slow down the execution of the policy decision taken at the highest level by the Government of India, if not stifle the same.
Air India, for some time and even today, continues to go through serious financial crisis which seriously threatens the very existence of Air India. Air India has incurred losses which run into tens of thousands of crores.
Procedural History
Employees filed representations and initiated conciliation proceedings before the Regional Labour Commissioner (Central) under the Industrial Disputes Act, 1947. Petitioners then filed the present writ petitions. The High Court issued Rule, and with consent of parties, made it returnable forthwith and took up the matters for final disposal. Arguments were heard and judgment was reserved on March 22, 2013, and pronounced on April 2, 2013.
Acts & Sections
- Industrial Disputes Act, 1947:
- Trade Unions Act, 1926:
