2001 (12) TMI 832 - HC - Companies Law

Issues Involved:
1. Validity of the clause "for a period of one year from the closing date" in the agreement.
2. Protection of employees' interests during the disinvestment process.
3. Requirement of consent and hearing for employees during disinvestment.
4. Applicability of constitutional protections under Articles 14, 16, and 21.
5. Legal precedents and their applicability to the case.

Detailed Analysis:

1. Validity of the Clause "for a period of one year from the closing date":
The petitioners challenged the words "for a period of one year from the closing date" as being arbitrary, mala fide, capricious, and contrary to Article 14 of the Constitution. The court noted that the clause has been clarified by the respondents through a memo, which states that clause 13.1.(iii) is subject to clause 13.1(i). The court accepted this clarification, noting that it forms part of the agreement and thus does not violate the employees' interests.

2. Protection of Employees' Interests:
The petitioners argued that the disinvestment process did not adequately protect their interests. The court analyzed the clauses in the agreement, particularly Article 13.1, which states that the lessee shall offer employment to all regular employees on terms not inferior to those applicable on the closing date. The court referred to the Supreme Court's judgment in Balco Employees Union v. Union of India, which upheld similar provisions, ensuring no retrenchment for one year and voluntary retirement options thereafter. The court concluded that the employees' interests were adequately protected.

3. Requirement of Consent and Hearing:
The petitioners contended that the disinvestment process was carried out without their consent or notice. The court referred to the Supreme Court's ruling in Balco Employees Union, which stated that there is no principle of natural justice requiring prior notice and hearing for economic policy decisions affecting employees as a class. The court thus rejected the argument that the employees' consent or hearing was necessary.

4. Applicability of Constitutional Protections:
The petitioners claimed that the disinvestment process violated Articles 14, 16, and 21 of the Constitution. The court reiterated the Supreme Court's stance that policy decisions on economic matters are not ordinarily subject to judicial review unless contrary to statutory provisions or the Constitution. The court found no such contravention in this case and held that the disinvestment policy could not be challenged on these grounds.

5. Legal Precedents:
The petitioners cited several judgments to support their claims, including Manager Pyarachand Kesarimal Porwal Bidi Factory, Jawaharlal Nehru University v. Dr. K.S. Jawatkar, and John Wyeth India Ltd. The court distinguished these cases based on their specific facts and contexts, noting that they did not apply to the present case. The court emphasized the binding nature of the Supreme Court's judgment in Balco Employees Union, which directly addressed similar issues.

Conclusion:
The court dismissed the petitions, holding that the disinvestment process and the clauses in the agreement did not violate the employees' constitutional rights and adequately protected their interests. The court also noted that the policy decision on disinvestment was justified and could not be challenged by the employees. The court expressed hope that the new management would safeguard the employees' interests and ensure better efficiency in service.

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