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Modern Food Industries (I) Ltd. vs. Un Ors. (18.02.2002 -ELHC) Page 1



Civil Writ Petition No. 3818/2000

Decided On: 18.02.2002

Appellants: Modern Food Industries (I) Ltd. 
Respondent: Union of India and Ors.

Hon'ble Judges:

Sanjay Kishan Kaul, J.


For Appellant/Petitioner/Plaintiff: R.K. Khanna, Adv.

For Respondents/Defendant: Jayant Bhushan and Anju Bhattacharya, Advs.


Sanjay Kishan Kaul, L.

  1. This petition has been filed under Article 226 of the Constitution of Indian seeking directions against the respondents form selling away the members of the petitioner association during the process of dis-investment of respondent No. 5 corporation. It is also prayed in the writ petition that the employees of petitioner association should be absorbed in some other Government of India Department, Undertaking or Company on the same parity as was done by the Supreme Court while ordering closure of 168 polluting industries in Delhi in CW(C) No. 4677 of 1985. A further prayer is made to release we the benefits of Justice S. Mohan Committee for pay Revision w.e.f. 1.1.1997.

  2. It is relevant to stat that a challenge was made to the process of dis-investment by respondent No. 1 company namely, Modern Food Industries (India) Limited in CW No. 2480/98. The writ petitioner was dismissed on 22.5.1998. Another writ petition was filed in the Supreme Court being CW (Civil) No. 359/99. The Supreme Court observed that this is not a matter in which courts can intervene and dismissed the writ petition.

  3. Mr. Jayant Bhushan, learned counsel for the respondents, contends that the reliefs claimed for by the petitioner do not survive for consideration in view of the decision of the learned Single Judge of this court in CW 2480/98 and the order of Supreme Court in CW(C) No. 359/99. Mr. Bhushan contends that by these orders the issue of challenge to the dis-investment of respondent No. 5 does not survive consideration and further in so far as the rights of the employees are concerned the same would also not survive consideration in view of the fact that in CW(C) 359/99 a prayer had been made in that behalf before the Supreme Court.

  4. Mr. R.K. Khanna, learned counsel for the petitioner, states that he is not concerned with the process of dis-investment of respondent no. 5 corporation in the present case and assuming the same to have been upheld, the petitioners are raising the issue of rights of the employees of the corporation. It is in view thereof that learned counsel contends that the prayers have been raised in the writ petition.

  5. In so far as the contention of learned counsel for the petitioner arising from the orders passed

Modern Food Industries (I) Ltd. vs. Un Ors. (18.02.2002 -ELHC) Page 2

by the Supreme Court in polluting industries case is concerned, the same was passed by the Supreme Court limited to the facts of those cases and no general directions have been issued. The issue arising in the present petition would be that as to what are the rights of the employees in cases where dis-investment takes place. The Supreme Court had the occasion to consider this aspect in the recent judgment in BALCO Employees' Union (Registered) v. Union of India MANU/SC/0779/2001. While dealing with the rights of the employees the Supreme Court observed as under :-

"47. Process of dis-investment is a policy decision involving complex economic factors. The Courts have consistently refrained from interfering with economic decisions as it has been recognised that economic expediencies lack adjudicative disposition and unless the economic decision, based on economic expediencies, is demonstrated to be so vocative of constitutional or legal limits on power or so abhorrent to reason, that the Courts would decline to interfere. In matters relating to economic issues, the Government has, while taking a decision, right to "trial and error" as long as both trial and error are bonafide and within limits of authority. There is no case made out by the petitioner that the decision to disinvest in BALCO is in any way capricious, arbitrary, illegal or uninformed. Even though the workers may have interest in the manner in which the Company is conducting its business, inasmuch as its policy decision may have an impact on the workers' rights, nevertheless' it is an incidence of service for an employee to accept a decision of the employer which has been honestly taken and which is not contrary to law. Even a government servant, having the protection of not only Articles 14 and 16 of the Constitution but also of Article 311, has no absolute right to remain in service. For example, apart from cases of disciplinary action, the services of government servants can be terminated if posts are abolished. If such employee cannot make a grievance based on part III of the Constitution or Article 311 then it cannot stand to reasons that like the petitioners, non-government employees working in a company which by reason of judicial pronouncement may be regarded as a State for the purpose of Part III of the Constitution, can claim a superior or a better right than a government servant and impugn it's change of status. In taking of a policy decision in economic matters at length, the principles of natural justice have no role to play. While it is expected of a responsible employer to take all aspects into consideration including welfare of the labour before taking any policy decision that, by itself, will not entitle the employees to demand a right of hearing or consultation prior to the taking of the decision.

48. Merely because the workman 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 a 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. ShriDes Raj Sangar and another, (1976) 2 SSC 844, on the same parity of reasoning, the policy of dis-investment cannot be faulted if as a result thereof the employees lose their rights or protection under Articles 14 and 16 of the Constitution. In other words, the existence of rights of protection under Articles 14 and 16 of the Constitution cannot possibly have the effect of vetoing the Government's right to disinvest. Nor can the employees claim a right of continuous consultation at different stages of the dis-investment process. If the dis-investment process is gone through without contravening any law, then the normal consequences as a result of disinvestment must follow."

6. It is thus apparent from a reading of the aforesaid judgment that the Supreme Court has held that employment of the employees with a public sector enterprise is an incidence of the service of

Modern Food Industries (I) Ltd. vs. Un Ors. (18.02.2002 -ELHC) Page 3

the employee and the employee would thus be bound by the decision taking honestly which is not contrary to law. It is further held that there is no right in the employees to demand hearing or consultation prior to the taking of the decision.

  1. In so far as the merit of the decision by the employers is concerned, as stated above, the same stood already upheld by the judgment of learned Single Judge of this court and the order passed by the Supreme Court. That issue is no more rest integra. In view of the aforesaid position I am of the considered view that it is not open for the employees now to contend that they must be absorbed in a Government Department or that the process of dis-investment is affecting their rights of employment in such a manner as would call for an interference by this court. Any order sought in this behalf would be contrary to the ratio of the judgment of the Supreme Court in BALCO's case (supra).

  2. Learned counsel for the petitioner has also referred to dis-investment in Gujarat Communications and Electronics Limited where the State Government of Gujarat provided certain protection to the employees. That may be the scheme of dis-investment in that case. However, this cannot be a general rule laid down in all cases.

  3. In the present case the decision for dis-investment has already been upheld.

  4. In view of the aforesaid position I am of the view that there is no merit in the present petition.

  5. Dismissed.

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