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Air India can hive off workers: HC

April 04, 2013 19:59 IST

Observing that employees have no vested right to question the policy of employer to reorganise or hive-off workers, the Bombay High Court has dismissed petitions challenging Air-India's decision to transfer engineering workers to a subsidiary company of the airline.

"The petitions are devoid of merits and hence are being dismissed," said Justices Ajay Khanvilkar and A P Bhangale in their 99-page judgement on April 2.

The Air-India and the Union government had taken a policy decision to transfer aircraft and service engineers to a separate company called Air-India Engineering Services Ltd.

Air India said the decision was part of its "Turn Around Policy" (TAP) and was taken in public interest to ensure that the airline capitalises on the growth in the aviation sector in and around India.

This was challenged by Air India Aircraft Engineers Association, All India Service Engineers Association and Air India Employees Union saying that the decision was not only illegal and arbitrary but also in violation of service conditions and agreements made by the airline with employees.

The Unions argued that the engineering department had been hived off to Air-India Engineering Services Ltd, which was already in financial difficulty. There is a staggering amount of outstanding wages to the extent of Rs 100 crore payable to its employees.

Further, they argued, there was no guarantee that this subsidiary of Air India would become self-sufficient and self-sustaining, in any case, before seven years as per the projections in TAP.

However, the court observed, "this argument will have to be negatived keeping in mind exhaustive reports and consultation papers pertaining to TAP. From that, it is amply clear that all financial aspects have been taken into account and then the final decision of hiving off was taken at the highest level."

"There is no reason, therefore, to doubt the decision of hiving off on the basis of the point under consideration. In our opinion, the apprehension is outcome of misinformation and devoid of merits," the bench observed.

The fact that Respondent No 2 (Air India Engineering Services Ltd) will be wholly dependent on Government of India for financial support, at least for some time, does not mean that the policy decision is either arbitrary, discriminatory or malafide. That, in fact, has been taken in larger public interest, as is noticed from the circumstances on record, the bench observed.

"It is well established position that the employees have no vested right, much less to question policy decision of the employer about reorganisation or hiving-off, as in the present case," Justices Khanvilkar and Bhangale remarked.

"Once it is found that the policy decision is taken after due deliberation and consideration of all aspects at the highest level, nothing more needs to be examined. Moreover, the concerned employees have been assured of and protected of all existing service conditions and including continuity of service and past service," they said.

"Suffice it is to observe that there is sufficient material on record to reassure that the Government of India has committed itself to support the TAP of Air India which includes the process of hiving-off the concerned department, management and business whereof, would then vest with the Respondent no 2 (Air-India Engineering Services Ltd)," the judges said.

During the course of arguments, the court was assured that all privileges and benefits given to secure the interest of employees of Air India would be extended to the employees who were being transferred from Air India to Air India Engineering Services Ltd, while they remain in service.

"In view of this assurance, we find no reason as to why the petitioners should still entertain any apprehension about the viability of Respondent No 2," the judges noted.

Air India said the TAP was adopted for its survival. The airline said it was suffering operating cash loss of Rs 15 to Rs 16 crore per day. The accumulated losses suffered as on September 2012 were to the tune of Rs 30,000 crore.

Air India further said its debt-net worth position has turned negative to the extent of Rs 8,121 crore in March 2011.

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