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CASE NO.: Transfer Case (civil)  73 of 2002

PETITIONER: All India ITDC Workers Union & Ors.              

RESPONDENT: ITDC & Ors.                                                     

DATE OF JUDGMENT: 31/10/2006

BENCH: Dr. AR. Lakshmanan & A.K. Mathur

JUDGMENT: J U D G M E N T WITH

TRANSFER CASE (CIVIL) No. 76/2002

Dr. AR. Lakshmanan, J.

The employees of Hotel Agra Ashok filed a writ petition  being No. 41650 of 2001 in the Allahabad High Court  questioning the action of the first respondent - India Tourism  Development Corporation (hereinafter called ’the ITDC’), New  Delhi to sell Hotel Agra Ashok outrightly to a private party as  arbitrary and illegal.  According to them, Hotel Agra Ashok is  one of the biggest hotels at Agra and is a five star hotel having  58 centrally air-conditioned luxurious room and other  facilities.  It is also their case that non-implementation of  voluntary retirement scheme in respect of the employees of  the Hotel Agra Ashok is totally discriminatory, arbitrary,  unjust and without any rhyme or reason.  It is further  submitted that because the Government of India introduced a  disinvestment plan with the object to sell the hotel to a private  party which is liable to affect the employees very seriously  including their service conditions.   The Government of India issued a press communiqui in  the month of January, 2001 proposing to sell Hotel Agra  Ashok for a sum of Rs.2.36 crores which is wholly inadequate  and amounts to a totally distress sale.  The Government has  devised a scheme of creating an artificial company i.e. Hotel  Yamuna View Private Limited \026 4th respondent herein and the  said company has been incorporated only for the purpose of  selling the said hotel after the hotel is transferred to it.  The  employees have come to understand through press reports  that the hotel is being sold out to one M/s Mohan Singh \026  respondent No.5 and his bid was accepted by the Central  Government in pursuance to the advertisement.  It is further  submitted that the entire Hotel Agra Ashok is being sold out  only merely for a sum of Rs.3.90 crores whereas the valuation  by the Agra Cantonment Board in the year 1999 of its land  and buildings alone is more than Rs.5.58 crores.  According to  the employees, its market price at present cannot be less than  Rs.20 crores.  It is the contention of the employees that  because of the change of ownership of the Hotel, the service  conditions of the employees should not be changed by the  private person and that the existing service conditions as  originally agreed between the various employees of the Hotel  and the new purchaser must be maintained.  The prayer in  the writ petition reads thus: "(a]    a writ, order or direction in the nature of  mandamus

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restraining the respondents from unilaterally changing the  terms and conditions of all class III & IV employees of the  Hotel in view of the proposed sale of Hotel Agra Ashok, Agra,  to respondent no.5;  

(b)     a writ, order or direction in the nature of mandamus  directing the parties concerned to maintain status-quo in  respect of the service conditions of the petitioners and also in  respect of the proposed sale and transfer of Hotel Agra Ashok  to respondent no.5;

(c)     a writ, order or direction in the nature of mandamus  commanding the respondents to enforce and implement and  to apply Voluntary Retirement Scheme which has been made  applicable only in respect of the employees of Ashok Travels  and Tours and not in respect of the employees of Hotel Agra  Ashok, Agra;

(d)     any other writ, order or direction as this Hon’ble court  may deem fit and proper in the circumstances of the case,  and

(e)     award cost of the petition to be paid to the petitioners."

The above writ petition was transferred to this Court and  is connected with other transferred cases.   The petitioners have also filed I.A. No. 49 of 2004 in  transfer case No. 73 of 2002 and made a prayer to direct the  respondents to apply Voluntary Retirement Scheme (VRS) in  pursuance of the directions of the Government of India vide  letter No. I-JS(T)/2002 dated 12.02.2002 and as prayed for by  them in the writ petition.  It is stated in the said IA that the  employees of Hotel Ashok Agra are similarly situated and  serving under similar conditions under which employees of  different ITDC Hotels are circumstanced and serve the ITDC.   It is further submitted that in the case of Hotel Manali Ashok,  the VRS is made applicable during the pendency of the above  matters and that the employees do not challenge the policy of  disinvestment as such.  However, their service rights are to be  protected since there is no difference in service conditions  between the employees of Hotel Manali Ashok and Hotel Agra  Ashok, both are similar and equal and the discrimination  between the two sets of employees is violative of Article 14 of  the Constitution of India and, therefore, both are to be treated  similarly.  T.C. No. 76 of 2002 (Arising out of T.P.(C) No. 948 of 2001) Civil Writ Petition No. 7195 of 2001 was filed by one  K.K.Gautham and 7 Ors. in the High Court of Delhi against  ITDC, New Delhi and Hotel Yamuna View Pvt. Ltd. through its  Director Mr. Arvind Mehta, New Delhi.   In the above writ petition, the petitioners sought to  challenge the proposed action of respondent No.1 of  transferring out the services of the petitioners, who are officers  of respondent No.1 to respondent No.3, a newly incorporated  company.  It is stated that the petitioners are presently posted  in Hotel Agra Ashok in pursuance of their policy of  disinvestment and ITDC have proposed to sell the said Hotel  to a private bidder.  The grievance of the petitioners is that the  officers of the ITDC form an All India Common Cadre in  different disciplines and that All India seniority lists are  maintained and career progress takes place on the basis of All  India Seniority and that the officers are governed by common  service conditions, pay-scales and rules.  The petitioners  questioned the proposed transfer to a new employer as illegal  and arbitrary.  The prayer in the above writ petition reads as

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follows: "(i)    That this Hon’ble Court may pass a Writ of Certiorari  or any other appropriate writ, order or direction quashing  the scheme of transfer of services of the petitioners from  respondent No.1 to respondent No.3.

(ii)    That this Hon’ble Court may pass a Writ of Certiorari  or any other appropriate writ, order or direction quashing  the clause 3.3 (d) and 3.5 and such other clauses of the  Scheme of Arrangement prepared by respondent No.1  (Annexure-p-3)

(iii)   Award the cost of writ petition to the petitioners: and  

(iv)    Pass such other or further orders as this Hon’ble  Court may deem fit and proper in the facts and  circumstances of the case."        

The above writ petition was also transferred to this  Court.  A counter affidavit was filed by the ITDC, respondent  No.1 through its Company Secretary.  According to them,  disinvestment was a policy decision of the Government of  India and that this Court has held that the said policy  decisions should be least interfered in judicial review and that  the Government employees have no absolute right under  Article 14, 21 and 311 of the Constitution of India and that  the Government can abolish the post itself.  It is further  submitted that in the present case, the petitioners are not  Government employees and are merely employees of a public  sector undertaking and that the entire process of  disinvestment of the Hotel was carried out by the Government  of India, Department of Disinvestment and that in terms of the  settlement, the wages of the employees including the  petitioners had been restructured and revised and were  operative and that the respondent is not curtailing them and  the rights of the petitioners are not affected in any manner.  It  is further submitted that the contention of employees that the  scheme of VRS in respect of the employees of Ashok Travels &  Tours (a Unit of ITDC) be made applicable to the employees of  the disinvested Unit \026 Hotel Agra Ashok is absolutely  untenable because after the disinvestment, it is for the buyer  to float the scheme of VRS in terms of the transferred  documents.   In view of the above, it is submitted that the  apprehension of the petitioners is baseless and liable to be  rejected.  The Union of India filed its affidavit in reply through its  Under Secretary and submitted that successive governments,  both at the Centre and the States have been following the  economic policy of disinvestment in Public Sector Enterprises  due to various reasons and in August, 1996, the Central  Government set up a Public Sector Disinvestment Commission  to make recommendations on the identified Central Public  Sector Undertakings which may be disinvested.  It was further  submitted that ITDC is a Government Company as defined  under Section 617 of the Companies Act, set up in 1966 and  at the relevant time the Government of India was holding  about 89.97% shares in ITDC, which was running 33 hotels in  all and that ITDC was running heavy losses and its occupancy  rates were far below the market average despite the fact that  its room rents were lower than other five star hotels.   The Disinvestment Commission in its report  recommended that ITDC falls in the non-core category and  hence disinvestment can go up to 74% or more.  The

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recommendation was accepted by the Government at the level  of Cabinet Committee on Disinvestment and a decision was  taken by Inter-Ministerial Group and at the level of the  Cabinet Committee on Disinvestment to divest each property  individually rather than altogether or in groups.  Respondent Nos. 4 & 5 filed a separate counter affidavit  in reply.  According to them, the Government of India had  taken a decision for disinvestment of the properties owned by  respondent No.1 as majority of properties doing hotel business  were running huge losses to the tune of crores of rupees and  unnecessarily increasing the liabilities of the Corporation.  It  was submitted that there is no change in service conditions of  the employees as per the terms of share purchase agreement.   That after the creation of the new Company - Hotel Yamuna  View Private Limited, all the employees working with Hotel  Agra Ashok were shifted to the new company which was also a  subsidiary company of respondent No.1.  Class III and IV  employees of the Hotel approached the High Court and  agitated their transfer from ITDC to Hotel Yamuna View  Private Limited by way of a Writ Petition No. 41650 of 2001.   The High Court, by way of an interim order, maintained the  status quo regarding service conditions of Class III and IV  employees of the hotel and pursuant to the agreement the  Management of the Hotel Agra Ashok was transferred to  respondent Nos. 4 and 5 on 07.02.2002 and started abiding  by each terms mentioned in the agreement.  Accordingly, the  service conditions of the employees working with Hotel Agra  Ashok were maintained as before.  Some of the other  employees of Hotel Agra Ashok filed civil Writ Petition No.  7195 of 2001 before the High Court of Delhi and that the  Government of India as per the report of the Disinvestment  Commission accepted the same and transferred the hotel to  the respondents and that the decision of the Government of  India to sell its share in ITDC was a policy decision within the  ambit of law on the Constitution of India.  With regard to the  VRS scheme, it was submitted that for the employees of Ashok  Travels and Tours, VRS Scheme was introduced by circular  dated 02.03.2001 but there was no policy for VRS regarding  Hotel Agra Ashok.  Also under clause 8 of the said circular  regarding introduction of VRS, it is clearly stated that the  schemes does not confer any right whatsoever on any  employee to have his request for voluntary retirement  accepted.   Two rejoinders were filed on behalf of the workers’ union  to the reply filed by respondent Nos. 3, 4 and 5.  We heard Mr. M.L. Bhat, learned senior counsel assisted  by Ms. Purnima Bhat, learned counsel in T.C. No. 73 of 2002  and Mr. Jayant Nath, learned senior counsel assisted by Mr.  Suresh Tripathy, learned counsel in T.C. No. 76 of 2002 for  the respective petitioners and Mr. Rakesh Dwivedi, learned  senior counsel, Mr. Ashok Bhan and Mr. Gaurav Agarwal and  Mr. Praveen Jain, learned counsel for the respective  respondents.   We have carefully perused the averments made in the  affidavit and the reply filed by the respective respondents and  the rejoinder by the petitioners.  Our attention was also drawn  to the scheme of arrangement (de-merger) between ITDC Ltd.  and Hotel Yamuna View Private Limited, report of the  Disinvestment Commission and other relevant records and  annexures filed in both the writ petitions.   Mr. M.L. Bhat, learned senior counsel reiterated the  submissions in the Court and Mr. Jayant Nath, learned senior  counsel reiterated the contentions raised in the writ petition at  the time of hearing.  After inviting our attention to the prayer  in the respective writ petition, they also invited our attention

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to the order passed on 13.12.2001 by the High Court directing  maintenance of status quo regarding service conditions of  Class III and IV employees of Hotel Agra Ashok.  The said  interim order was extended up to the next date of hearing.   Our attention was also drawn to the share purchase  agreement clause 9.4 in Article 9 which reads thus: 9.4     The Purchaser will cause the Company to continue to  employ all the regular employees of the Unit which have  been transferred to the Company on the terms and  conditions that shall not be inferior to the terms and  conditions as applicable to the regular employees on the date  of transfer of the Unit including with respect to the voluntary  retirement scheme applicable to the Company as per the  guidelines of the Department of Public Enterprises, if any,  and terms set out in agreements entered into by ITDC in  relation to such regular employees with staff/workers  unions/associations. The Purchaser further covenants that  it shall cause the Company to ensure that:       

(i)     the services of the regular employees will not be  interrupted. (ii)    the terms and conditions of service applicable to the  regular employees will not in any way be less  favourable than those applicable to  them  immediately  on the date hereof.  

(iii)   it shall not retrench any of its regular employees for a  period of one year from the Closing Date other than  any dismissal or termination of regular employees  from their employment in accordance with the  applicable staff regulations and standing order of the  Company or applicable law.

(iv)    in the event of retrenchment of regular employees, the  Company  shall pay the regular employees such  compensation as is required under applicable labour  laws on the basis that the service of the regular  employees have been continuous and uninterrupted.  Provided further, that no retrenchment of an Employee  would be undertaken unless the affected Employee is  given benefits which are higher of (a) the voluntary  retirement scheme applicable to the Company as per  the guidelines of the Department of Public Enterprises  as of the date hereof and (b) the benefits/compensation  required to be statutorily given to an employee under  applicable law.

(v)     the Company will only undertake dismissal or  termination of the services of the employees on account  of disciplinary action in accordance with the applicable  staff regulations.  

(vi)    in respect of contract employees the terms and  conditions of the relevant contracts shall be fully  observed by the Company and the Purchaser shall keep  Government and ITDC indemnified against damages,  losses or claims resulting on account of the Company  failing to observe any of the terms and conditions of  such contracts."

Our attention was also drawn to the order dated  01.02.2002 and, in particular, last para of page 3 of the said  order referring to the status quo order passed by the High  Court regarding service conditions of Class III and IV  employees of the Hotel.  Our attention was also invited to

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clause 3.3(d) and 3.5. Learned senior counsel submitted that the employees  consent is necessary before transfer and cited Jawaharlal  Nehru University vs. Dr. K.S. Jawatkar and Others, 1989  Supp (1) SCC 679.  In this case, the Jawaharlal Nehru  University, under Section 5(2) of the Jawaharlal Nehru  University Act, 1966, established a Centre of Post-graduate  studies at Imphal and appointed the respondent as Assistant  Professor on a regular basis and also confirmed him w.e.f.  29.08.1979.  In 1981, the University decided to transfer the  Centre to the Manipur University.  Under Section 1(4) of the  Manipur University Act, 1980, the Governor of Manipur made  an order which provided for transfer of the members of the  faculties of the Centre to the Manipur University.  The  question was whether the transfer of the Centre resulted in  transfer of the respondent’s service to the Manipur University.   Answering in negative and rejecting the Jawaharlal Nehru  University’s appeal, this Court held: "The respondent continues to be an employee of the  appellant University.  The contract of service entered into by  the respondent was a contract with the appellant University  and no law can convert that contract into a contract between  the respondent and the Manipur University without  simultaneously making it either expressly or by necessary  implication, subject to the respondent’s consent.  The  provision in Manipur University Act for the transfer of the  services of the staff working at the said Centre must be  construed as enabling such transfer with the consent of the  employee concerned.  Since the transfer of the Centre could  not result in automatic transfer of the respondent’s service,  he continues in the employment of the appellant University."

The above judgment is distinguishable on facts and on  law.  The Jawaharlal Nehru University case (supra) would  indicate that, in that case there was a purported transfer of  the employee from Jawaharlal Nehru University to the  Manipur University without his consent.  Admittedly the JNU  did not exercise any control over Manipur University.  In the  instant case, the transfer was from ITDC Ltd. to respondent  No.3 Company, the share-holding pattern of the two  companies were exactly the same.  Therefore, it did not make  any difference to the employees, especially, when the scheme  of de-merger itself provide that the employee will continue in  service of the respondent No.3 with full benefits including  continuity in service.  The provisions of the Companies Act,  1956 were not involved in the JNU’s case.  Further the two  Universities were totally unconnected entities hence the ratio  of that judgment, in our opinion, is not applicable to the facts  in hand.  Even in the judgment of this Court, in JNU in para 8  it has been observed that at worst this would not impinge  upon the validity of the de-merger scheme.  The effect of that  would be that the employee would be deemed to have  retrenched and would be entitled to compensation as such in  accordance with law.  In the instant case, the employees never  claimed that they may be considered as retrenched.  Even if it  is the claim of the petitioners that they have been retrenched,  the writ petition is not the appropriate proceedings and the  petitioners were required to institute appropriate proceedings  as per the industrial/labour laws. Mr. M.L.Bhat, learned senior counsel also cited Nokes  vs. Doncaster Amalgamated Collieries Ltd. (1941) 11  Company Cases 83 House of Lords for the proposition that a  free citizen in exercise of his freedom is entitled to chose the  employer whom he promises to serve, so that the right to his

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services cannot be transferred from one employer to another  without his consent.  The Court was considering the whole  question, however, as to whether Section 154 of the  Companies Act, 1929 provides a statutory exception to that  principle.  The Lord Chancellor came to the conclusion that  the contracts of personal service are not automatically  transferred by an order made under Section 154.  The House  of Lords stated as under: "When the Court makes an order under Section 154 of the  Companies Act, 1929, transferring all the property and  liabilities of the transferor company to the transferee  company, a contract previously existing between an  individual and the transferor company does not  automatically become a contract between the individual and  the transferee company.  

The fundamental principle of common law that a free  citizen is entitled to choose his employer, so that the right to  his services cannot be transferred from one employer to  another without his consent, is not abrogated by the order  which could be made under the section.  To effect such an  alteration would require explicit clear words.  The right to  the service of an employee is not the property of the  transferor company."  

Mr.Jayant Nath, learned senior counsel appearing for the  petitioner in T.C. No. 76 of 2002 invited our attention to the  prayer in the writ petition and the salient features of the  scheme of arrangement and the order passed by the  Department of Company Affairs dated 01.02.2002 allowing the  scheme under Section 391 of the Act.  Mr. Rakesh Dwivedi, learned senior counsel in his reply  submitted that there will not be any difficulty to continue to  employ all the regular employees of the Union which have  been transferred to the Company on the terms and conditions  and the terms set out in the agreement entered into by ITDC  in relation to such regular employees with staff/workers  unions/associations.  He further proceeded to submit that, if  there is breach of the obligation under the scheme, the  employees can always approach the appropriate forum for  redressal.  He also invited our attention to the reply filed by  the respective respondents objecting to the prayer asked for in  the writ petition.  We have given our thoughtful consideration to the rival  submissions made by the respective counsel appearing for the  respective parties.  In our opinion, the present writ petitions  filed by the employees merits to be dismissed.  Since  disinvestment was a policy decision of the Government of  India.  This Court also has held that the said policy decision  should be least interfered in judicial review and that the  Government employees have no absolute right under Article  14, 21 and 311 of the Constitution of India and that the  Government can abolish the post itself.  In the present case,  the petitioners are not government servants and are merely  employees of a public sector undertaking.  This apart, the  service conditions of the petitioners are being protected under  the new management on the disinvestment of the Hotel and  the fact that other hotels are also in an advanced stage of  disinvestment in pursuance of the policy decision taken by the  Government of India for disinvestment of the hotel units.  We  see no reason to interfere with the aforesaid decision.  In case  ultimately the petitioners are aggrieved by any aspect of terms  of reference and formalization of agreement and completion of  disinvestment it is always open to the petitioners to approach  the courts for redressal of their grievances.

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We have already extracted Clause 9.4 of the share  purchase agreement dated 07.02.2002 in paragraphs supra.   In our view, the decision of the Government of India to divest  the property was a policy decision which was not in any  manner contrary to the law of the land.  Similar policy  decision of the Government of India to disinvest 51% of this  share holding in Bharat Aluminium Company Limited referred  to as Balco was challenged before this Court and this Court  has dealt with the scope of the judicial review in such  economic policy decisions.  This Court rejected the contention  that the sale of the shares of the Government of India in Balco  was legal and the employees of Balco have ceased to be  employees of a government company.  However, it is stated  that the service conditions of the employees were not affected  by the transfer of the shares.  We have also carefully perused the scheme.  It is evident  from the scheme itself that all the employees were to be  retained as stipulated in the transfer documents on the same  terms and conditions of service for 1 year and they were  entitled for payment of gratuity and provident fund as per the  then existing scheme.  The terms and conditions of service  applicable to the employees was not in any way be less  favourable than those applicable to them immediately on the  date thereof.  The relevant provisions of the transfer  documents relating to disinvestment of Hotel Agra Ashok are  being reproduced herein below: Clause 3.2 (d) of the Scheme of Arrangement reads as  follows:

"with effect from the appointed date, all employees of the  Transferor engaged in the Transferred Undertaking shall  become the employees of the Transferee on the terms and  conditions on which they are engaged as on the Appointed  Date by the Transferor without any interruption of services  as a result of this Scheme.  The Transferee agrees that the  services of all such employees with the Transferred  Undertaking upto the Appointed Date shall be taken into  account for purposes of all retirement benefits to which they  may be eligible in the Transferor on the Appointed Date."

In view of the above, we are of the opinion that the  apprehension of the employees is baseless and is liable to be  rejected. It is also pertinent to notice that ITDC has not  participated in the disinvestment process as the same was  carried out by the Ministry of Disinvestment, Government of  India.  The safeguards regarding the service conditions of the  employees have been duly provided in the transfer document  i.e. de-merger scheme and share purchase agreement.  This  Court also in Balco Employees’ Union (Regd.) vs. Union of  India and Others, (2002) 2 SCC 333 held that the employees  of the company registered under the Indian Companies Act do  not have any vested right to continue to enjoy the status of the  employee of an instrumentality of the State.  In the instant case, with the intention to promote the  scheme of disinvestment, the Government issued an  advertisement to outright sale of 6 hotels and long term lease  for 2 hotels.  The property of respondent No.1 was demerged  in the name of the new company with the approval of the  Company Law Board.  We have perused the order approving  the scheme of arrangement as annexed and marked as  Annexure-C(a)/2.  All the employees after the creation of the  new company were shifted to the new company which was  also a subsidiary company of ITDC.  Respondent No.1 invited  tenders for sale of the Hotel.  The offer made by Respondent

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Nos. 4 and 5 was accepted by respondent No.1 as successful  bidder and accordingly, the shares of Hotel Yamuna View  Private Limited were transferred under share purchase  agreement dated 07.02.2002.  It is pertinent to notice that at  the time of inviting bid, no such liabilities of VRS to the  employees were shown against Hotel Agra Ashok.  All the  liabilities were mentioned in the balance sheet of the company  including property tax and water tax to be deposited with the  Cantonment Board.  Respondent Nos. 4 and 5 got the shares  of Hotel Yamuna Private Limited transferred in their favour  while share transfer agreement dated 07.02.2002 wherein  certain conditions were put in by respondent No.1 keeping in  mind the order of the High Court for maintaining the status  quo of the class III and IV employees.  Pursuant to the  agreement, the Management of the Hotel was transferred to  respondent No.4.       The employees have also challenged the non- implementation of VRS in respect of the employees of Hotel  Agra Ashok.  In our view, the petitioners/employees cannot  claim parity in respect of other employees working under ITDC  in different properties who have been granted benefits under  VRS as the scheme was never made applicable to the  employees working with the present property.  No disclosure  of any such introduction of VRS was given by ITDC at the time  of sale, neither was any amount to be deposited by the  purchaser.  We are, therefore, of the opinion that respondent  Nos. 4 and 5 is under no obligation to float the VRS scheme  because in para 9(4), the VRS has to be given only when  company retrenches its regular employees.  But here the  company is ready to continue with its employees with the  same terms and conditions mentioned in the share purchase  agreement.  The employees are unwilling to continue on the  same terms and, therefore, they cannot compel the  management to introduce VRS scheme.  When the share  purchase agreement was executed with respondent No.5, then  there was no scheme introduced for grant of VRS because  prior to the sale the petitioners were employees of ITDC and  not of Hotel Yamuna View Limited.  They have already  objected their transfer to Hotel Yamuna Private Limited.  The  petitioners are demanding VRS from ITDC because as per the  orders dated 13.12.2001 and 05.03.2002 of the Allahabad  High Court, the employees of Hotel Agra Ashok cannot be  transferred to the new company Hotel Yamuna Private  Limited.  With intention to escape the liability of contempt, the  ITDC specifically asked the buyer to maintain the service  conditions of the employees on the same terms by entering  into a share purchase agreement, however, no condition in  this agreement was mentioned for offering VRS.  In other  words, a VRS scheme for employees of Ashok Travels & Tours  was introduced by circular dated 02.03.2001 but there was no  policy for VRS regarding Hotel Agra Ashok.  Also under Clause  8 of the said circular regarding introduction of VRS, it is  clearly stated that the scheme does not confer any right  whatsoever on any employee to have their request for  voluntary retirement accepted.  The respondent has also no  such obligation under para 94 (IV).   This Court in a recent judgment in the case of Board of  Trustees, Visakhapatnam Port Trust & Others vs. T.S.N.  Raju and Another, 2006 (9) Scale 55 (Dr. AR. Lakshmanan  and Tarun Chatterjee, JJ) while considering the scheme of  voluntary retirement applicable to Port Trusts considered the  scope of entitlement to avail the benefit of the scheme.  This  Court held that the Chairman of the Port Trust has absolute  right either to accept or not to accept the applications filed by  the employees for retirement and the request of employees

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seeking voluntary retirement was not to take effect until and  unless it was accepted in writing by the Port Trust Authorities.   This Court held in para 35 as under:- "In our opinion, the request of the employees seeking  voluntary retirement was not to take effect until and unless  it was accepted in writing by the Port Trust Authorities.  The  Port Trust Authorities had the absolute discretion whether to  accept or reject the request of the employee seeking  voluntary retirement under the scheme.  There is no  assurance that such an application would be accepted  without any consideration.  The process of acceptance of an  offer made by an employee was in the discretion of the Port  Trust.  We, therefore, have no hesitation in coming to the  conclusion that the VRS was not a proposal or an offer but  merely an invitation to treat and the applications filed by the  employees constituted an offer."

As already noticed, the Government of India constituted  the Disinvestment Commission and accepted the  recommendation of the said Commission.  A decision was  taken by Inter-Ministerial Group and at the level of the  Cabinet Committee on Disinvestment to divest each property  individually rather than altogether or in groups.  It is also beneficial for us to refer to the judgment of  Balco Employees’ Union (Regd.) vs. Union of India and  Others (supra) by which this Court has dealt with the scope of  the judicial review in such economic policy decisions.  This  Court held as follows:- 34. Applying the analogy, just as the Court does not sit over  the policy of the Parliament in enacting the law, similarly, it  is not for this Court to examine whether the policy of this  disinvestment is desirable or not\005\005

47. Process of disinvestment 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  violative 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 bona fide and  within limits of authority\005.. 92.     In a democracy it is the prerogative of each elected  Government to follow it’s own policy. Often a change in  Government may result in the shift in focus or change in  economic policies. Any such change may result in adversely  affecting some vested interests. Unless any illegality is  committed in the execution of the policy or the same is  contrary to law or mala fide, a decision bringing about  change cannot per se be interfered with by the Court.  93. Wisdom and advisability of economic policies are  ordinarily not amenable to judicial review unless it can be  demonstrated that the policy is contrary to any statutory  provision or the Constitution. In other words, it is not for the  Courts to consider relative merits of different economic  polices and consider whether a wiser or better one can be  evolved. For testing the correctness of a policy, the  appropriate forum is Parliament and not the Courts\005\005 98. In the case of a policy decision on economic matters, the  courts should be very circumspect in conducting any  enquiry or investigation and must be most reluctant to  impugn the judgment of the experts who may have arrived at

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a conclusion unless the Court is satisfied that there is  illegality in the decision itself."  

In the instant case, the Government has acted on advice  of experts before taking a decision to disinvest its shares in  ITDC Limited.  Even thereafter, through a fair and transparent  process as detailed in the reply affidavit of the Union of India,  the Government has ensured that it has got the best price for  its shares.  It is also pertinent to notice that the Government  has not received any other higher offer.  The contention of the  learned senior counsel for the writ petitioners that the price is  less has not been supported by any documentary evidence.  In  similar situation, this Court has observed in Balco Employees’  Union case (supra) as follows:- "65.    \005\005 It is not for this Court to consider whether the  price which was fixed by the Evaluation Committee at  Rs.551.5 crores was correct or not. What has to be seen in  exercise of judicial review of administrative action is to  examine whether proper procedure has been followed and  whether the reserve price which was fixed is arbitrarily low  and on the face of it, unacceptable.

66.     \005\005 When proper procedure has been followed, as in  this case, and an offer is made of a price more than the  reserve price then there is no basis for this Court to  conclude that the decision of the Government to accept the  offer of Sterlite is in any way vitiated."          The very same contention raised by the employees in the  instant case was raised by the employees of Balco when the  Government of India disinvested its majority shares in Balco.   This Court rejected the contention that the sale of the shares  of the Government of India in Balco was legal as the  employees of Balco have ceased to be employees of a  Government Company.  It was, inter alia, observed as follows:- "47.    \005\005 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 reason 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\005..

48.     \005.. 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 and Anr. on the same parity of reasoning, the policy  of disinvestment 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

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Government’s right to disinvest. Nor can the employees claim  a right of continuous consultation at different stages of the  disinvestment process. If the disinvestment process is gone  through without contravening any law, then the normal  consequences as a result of disinvestment must follow. 49. The Government could have run the industry  departmentally or in any other form. When it chooses to run  an industry by forming a company and it becomes its  shareholder then under the provisions of the Companies Act  as a shareholder, it would have a right to transfer its shares.  When persons seek and get employment with such a  company registered under the Companies Act, it must be  presumed that they accept the right of the directors and the  shareholders to conduct the affairs of the company in  accordance with law and at the same time they can exercise  the right to sell their shares."  We may also usefully refer to the decision of the Madras  High Court in the case of (Southern Structurals Staff Union  vs. Southern Structurals Ltd.) (1994) 81 Comp. Cases 389  (Mad) wherein the Madras High Court held as follows:- "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\005. 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."   

In the case of Balco, as well as in the present case, the  Government of India has ensured that the interest of the  workmen are fully protected.  As in the case of Balco, the  shareholder agreement between Government of India and the  purchaser has been reproduced in the reply affidavit filed on  behalf of the Union of India in transfer case No. 73 of 2002.  We may also place on record the submission made by  learned senior counsel Mr. Rakesh Dwivedi that the  Government of India cannot have any objection to a direction  to the Hotel Yamuna View Private Limited to float a VRS  scheme keeping in view its obligation under para 9.4(iv) of the  share purchase agreement in terms of the office memo dated  05.05.2000.  A perusal of paragraphs 23, 24, 54, 55 and 56 of the  judgment of this Court in Balco would indicate that the above  protection of the workers’ interest in similar circumstances  has been held by this Court to be adequate and lawful.  This  Court in para 55 has observed as follows:- "55.We are satisfied that the workers’ interests are  adequately protected in the process of disinvestment.  Apart  from the aforesaid undertaking given in the Court, the  existing laws adequately protect workers’ interest and no  decision affecting a huge body of workers can be taken  without the prior consent of the State Government.   Furthermore, the service conditions are governed by the  certified orders of the Company and any change in the  conditions thereto can only be made in accordance with  law."                      Further as per the Demerger Scheme, all the liabilities  relating to the transferred undertaking upto the date of  transfer were taken over and were to be discharged by the  transferee. Thus, the transferee is liable to pay all the  liabilities and dues (including gratuity) to the employees on  the same terms and conditions of service which were  applicable to the employees in the hotel, including the  benefits related to the tenure of service in the hotel upto the

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date of transfer.  As far as the provident fund of the  employees is concerned, the PF accounts of the employees of  the hotel in ITDC PF Trust were transferred by the trust to  the new accounts of the concerned employees in the Regional  Provident Fund Commissioner after the completion of  formalities under the provisions of Employees Provident  Fund and Miscellaneous Provisions Act,1952. The demerger of the hotel union from ITDC was a  considered decision taken by the Cabinet Committee on  Disinvestment and had the approval of the Department of  Company Affairs in terms of the Companies Act, 1956.  The  reasons for creating a separate companies has been given in  the reply affidavit and the contents of the same are reiterated  in reply.  By order made by the Department of Company Affairs on  04.10.2001, ITDC was directed to convene a meeting of the  creditors of Hotel Agra Ashok for the purpose of considering  and if thought fit approving with or without modifications, the  scheme and the said order also appointed Mr. S.B.Mathur D- 11 (Retd.) Department of Company Affairs as Chairman for the  meeting who was also to report the result of the meeting to the  Department of Company Affairs on the conclusion of the  creditors meeting.  A meeting was held on 30.10.2001 and the  Chairman of the said meeting had directly reported the result  of the meeting to the Department of Company Affairs. It may also be noticed that a fresh petition was filed with  the Department of Company Affairs on 26.12.2001 under  Section 391 and 394 of the Companies Act for approval to new  scheme of agreement between ITDC and Hotel Yamuna View  Private Limited and their respective shareholders for Hotel  Agra Ashok.  The company was also directed vide order dated  01.01.2002 to give public notice regarding the scheme of  arrangement and hearing through advertisement in a leading  English and vernacular daily newspaper.  The notice was duly  published in Indian Express on 04.01.2002 and Amar Ujala,  Agra Edition Hindi on 05.01.2002 after protecting the interest  of the creditors and hearing the parties the Department of  Company Affairs gave approval of the scheme of agreement on  01.02.2002.  The demerger was complete on 01.02.2002.  It is  only thereafter that the shares of Government of India in Hotel  Yamuna View Private Limited was sold to Respondent No.5 on  07.02.2002 by the share purchase agreement.  It is also brought to our notice at the time of hearing that  all the 8 petitioners who have challenged the policy decision of  the Government of India have resigned their job and joined  some other service.  The statement was not disputed or denied  by learned senior counsel for the petitioners. For the foregoing reasons, we hold that there is  absolutely no merit or substance in the contentions raised by  learned senior counsel for the petitioners.  The writ petitions  are, therefore, liable to be dismissed and the policy decision  taken by the Government of India to transfer the Hotel Agra  Ashok to M/s Mohan Singh and Yamuna View Private Limited  cannot be assailed at the instance of the employees.   The writ petitions are accordingly dismissed, however,  there will be no order as to costs. In view of the disposal of the  writ petitions, the transfer cases are also disposed off  accordingly.