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TMI Blog2001 (12) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... nnexure P after declaring the same as being wholly against public good, unconscionable, arbitrary, mala fide, capricious, discriminatory and contrary to article 14 of the Constitution. 2. Writ Petition Nos. 43871 and 872 of 2001 are filed by Hotel Ashok Employees Union a registered trade Union seeking for same/similar prayers. The petitioners state that ITDC Ltd., was established by the Govern- }ment of India, Ministry of Tourism as an autonomous public sector corporation. The Government of India had 90 per cent of the equity share capital of the Corporation. It is therefore a "Government company" under section 617 of the Companies Act, 1956. Respondent No. 1 Corporation was entrusted with the task of helping develop infrastructure and promote India as a tourist destination. The Corporation as on today has 34 hotels, in 24 major destinations. Hotel Ashok at Bangalore and Hotel Hassan Ashok, come under this group. This has 120 restaurants. 3. Respondent Nos. 4 and 7 companies were promoted by respondent No. 1 company as shell companies to give effect to the restructuring/disinvest-ment of respondent No. 1 company pursuant to schemes of demerger. They have been incorporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they also question these clauses as violative of articles 14 and 16 of the Constitution. They also say that an option ought to have been given to them. They also say that the shareholders meeting was held. The grounds as I see them are virtually the same/similar as the grounds raised in the connected petition. It is not necessary to refer to grounds. No amendment application is filed in this petition. 6. The Union of India has filed its counter affidavit. In the affidavit it has stated that out of 946 State level enterprises about 241 are not working at all, about 551 are making losses and 100 are reported not to be submitting their accounts at all. They say in paras 5, 6 and 7 as under : "It is submitted that the position in regard to the enterprises of States is even worse. Of the 946 State level enterprises, about 241 are not working at all; about 551 are making losses and 100 are reported not to be submitting their accounts at all. Secondly, neither the Centre nor the States have resources to sustain enterprises that are not able to stand on their own in the new environment of intense competition. Interest payments on past debt alone eat up 70 per cent of the total tax re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurred a net loss of Rs. 0.35 crore in 1999-2000 and Rs. 0.63 crore in 2000-01. The performance of the 5 hotels run by the Hotel Corporation of India is no better. The average occupancy rate of these 5 hotels is in the range of 19 to 54 per cent. Except Indo Hokke Rajgir, all the rest four incurred losses in 2000-01. The performance of the hotel under the Central public sector has been poor despite the average room rent being far below that prevalent in the hotels run by the private sector. It is evident that the preference of the consumer is not for more low room rent but for a total quality of the service provided. The hotels under the public sector, as evident from the scenario of low occupancy rate and continuous losses despite the room rents being lower, have been lacking the requisite professional approach and management capabilities. Hospitality sector is a sector where the Government of a country cannot be expected to remain forever." 7. They also refer to various case-laws to contend that courts cannot intervene in the matter of policy decision of disinvestment. They strongly rely on the latest judgment in the well known case of Balco Employees Union v. Union of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Attorney General would also contend that the period of one year is only in the larger interest of the employees as a whole. With a view to clear the apprehension in the mind of the employees he has filed a memo in which he has stated that on a true construction of article 13 of lease agreement is subject to clause 13.1. He also relies on the judgment of the Andhra Pradesh High Court in the case of GVM Reddy A.P. State Road Transport Corpn. 13. Sri Prabhakar Rao, learned counsel appearing for ITDC took me through the affidavit to contend that the arbitrary action complained about is factual and legally not available to the petitioners. 14. Sri A.N. Jayram, learned Advocate General, appearing for the contesting respondents invited my attention to the history of this agreement to contend that no case is made out by the petitioner. Learned senior counsel would say that these agreements have the approval and seal of the Company Law Board, shareholders and the Government. After hearing counsel I have given my careful attention to the material facts and arguments advanced before me. 15. Admitted facts reveal that the Government took a policy decision on disinvestment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orkmen in the light of the Supreme Court judgment. 19. Counsel for the workmen complain of no consent and no hearing in these matters. 20. Learned Attorney General rightly pointed out that the Supreme Court in Balco Employees Union s case ( supra ) rejected the demand of right of hearing and a notice in this regard. The Supreme Court in Balco Employees Union s case ( supra ) has ruled as under : "Merely because the workmen may have protection of articles 14 and 16 of the Constitution, by regarding BALCO as a State, it does not mean that the erstwhile sole shareholder, viz., Government had to give the workers prior notice of hearing before deciding to disinvest. There is no principle of natural justice which requires prior notice and hearing to persons who are generally affected as a class by an economic policy decision of the Government. If the abolition of a post pursuant to a policy decision does not attract the provisions of article 311 of the Constitution as held in State of Haryana v. Des Raj Sangar [1976] 2 SCC 844, on the same parity of reasoning, the policy of disinvestment cannot be faulted if as a result thereof the employees lose their rights or prote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployees Union s case ( supra ) almost the same clauses were noticed by the Apex Court : "Regarding employees, adequate provisions have been made in Shareholders Agreement (SHA) as follows : Recital H subject to clause 7.2, the parties envision that all employees of the company on the date hereof shall continue in the employment of the company. Clause 7.2( e ) It shall not retrench any part of the labour force of the company for a period of one (1) year from the closing date other than any dismissal or termination of employees of the company from their employment in accordance with the applicable staff regulations and standing orders of the company or applicable law ; and Clause 7.2( f ) subject to the sub-clause ( e ) any restructuring of the labour force of the company shall be implemented in the manner recommended by the board and in accordance with all applicable laws. The SP in the event of any reduction of the strength of its employees shall, ensure that the company offers its employees an option to voluntarily retire on terms that are not, in any manner less favourable than the voluntary retirement scheme offered by the company on the date of this agreement." (p. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er article 226 by reason of the disinvestment, employees do not lose their right to seek redressal through courts for any wrongs done to them. 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. Apart from the fact that the very status claimed by the employees in this case is a fortuitous occurrence with the employees having commenced work under a private employer and while on the verge of losing employment, being rescued by the State taking over the company. The employees cannot claim any right to decide as to who should own the shares of the company. The State which invested of its own volition, can equally well disinvest. So long as the State holds the controlling interest or the whole of the shareholding, employees may claim the status of employees of a Government company or other authority under article 12 of the Constitution. 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. Public interest is the paramount considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... areholders to conduct affairs of the company in accordance with law and at the same time exercise their right to sell their shares. The Supreme Court again noticed that the interest of the workmen is taken care of by the existing case-law. 33. In the light of the clear pronouncement of law and in the absence of any legal right with regard to option, this court cannot issue a direction with regard to option. The judgment in the case of John Wyeth India Ltd. ( supra ) is not applicable to the facts of this case. It was a case which arose under the Companies Act. In that case the very scheme of transfer was challenged from one company to another. In the said case there was also no protection as is available in this case. Moreover it was seen that there was a concession on behalf of the company in the said case. Therefore the said judgment is clearly distinguishable on the facts. In so far as Dr. K.S. Jawatkar s case ( supra ) is concerned that was a case with regard to transfer in terms of the Manipur University Act. That was a case in which Jawaharlal Nehru University decided to transfer the centre to Manipur University. In the light of the Manipur University Act the court ru ..... 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