Kerala High Court
Hindustan Paper Corporation Employees ... vs Government Of India on 16 October, 2018
Author: Dama Seshadri Naidu
Bench: Dama Seshadri Naidu
"C.R."
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU
TUESDAY ,THE 16TH DAY OF OCTOBER 2018 / 18TH SRAVANA, 1940
WP(C).No. 5550 of 2017
PETITIONER/S:
1 HINDUSTAN PAPER CORPORATION EMPLOYEES ASSOCIATION
(INTUC)AFFILIATION NO.6115,REPRESENTED GENERAL
SECRETARY,AJITHKUMAR.V,REG.NO.137/79, NEWS PRINT NAGAR
P.O.,KOTTAYAM-686 616.
2 SUJITH S. SURENDRAN
SUJI BHAVAN, BHARANANGANAM,MENACHIL, KIZHAKKEMATTOM
P.O.,KOTTAYAM.
3 E.BIJUKUMAR
MADAVANAILLOM, KULAMBOOR P.O.,PRIVOM, ERNAKULAM.
4 T.T.RAJU
THAZHATHEEDAKARIKODE HOUSE,KARIKODE P.O., PERUVA
VIA,KOTTAYAM.
BY ADV. SRI.P.N.MOHANAN
RESPONDENT/S:
1 GOVERNMENT OF INDIA
REPRESENTED BY SECRETARY,HEAVY INDUSTRIES
DEPARTMENT,ROOM NO.176, UDYOG BHAWAN,NEW DELHI.
2 NATIONAL INSTITUTION FOR TRANSFORMING INDIA NITI AAYOG
REPRESENTED BY CHIEF EXECUTIVE OFFICER,NITI AAYOG, SANSAD
MARG,NITI AAYOG, SANSAD MARG, NEW DELHI-110001.
W.P.(C) Nos.5550 & 9238/2017 &
W.P.(C) No.702/2018
-2-
3 THE GOVERNMENT OF KERALA
REPRESENTED BY SECRETARY TO GOVERNMENT,INDUSTRIES
DEPARTMENT,SECRETARIAT, THIRUVANANTHAPURAM-695 001.
4 HINDUSTAN NEWSPRINT LTD.
REPRESENTED BY MANAGING DIRECTOR,VELLOOR, KOTTAYAM-686
501.
BY ADVS.
SRI.N.NAGARESH, ASSISTANT SOLICITOR GENERAL
SRI.K.V.SOHAN, STATE ATTORNEY
SRI.V.KRISHNA MENON
SMT.J.SURYA
SMT.UMA GOPINATH
SRI.E.K.MADHAVAN
SRI.K.V.SOHAN STATE ATTORNEY
SRI.N.NAGARESH ASSISTANT SOLICITOR GENERAL
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16.10.2018, ALONG
WITH WP(C).702/2018, WP(C).9238/2017, THE COURT ON THE SAME DAY DELIVERED
THE FOLLOWING:
W.P.(C) Nos.5550 & 9238/2017 &
W.P.(C) No.702/2018
-3-
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU
TUESDAY ,THE 16TH DAY OF OCTOBER 2018 / 18TH SRAVANA, 1940
WP(C).No. 702 of 2018
PETITIONER/S:
1 HINDUSTAN LATEX WORKMENS CONGRESS (INTUC)
C/O. HLL LIFECARE LIMITED,PEROORKADA, TRIVANDRUM-
5,REPRESENTED BY ITS GENERAL SECRETARY.
2 HINDUSTAN LATEX WORKMENS CONGRESS AITUC
C/O. HLL LIFECARE LIMITED,PEROORKADA, TRIVANDRUM-
5,REPRESENTED BY ITS GENERAL SECRETARY.
3 K. NIZAR AHAMMED
EMPLOYEE NO.101069,HLL LIFECARE LIMITED,AKKULAM,
SREEKARYAM.P.O.TRIVANDRUM- 17.
BY ADVS.
SRI.P.N.MOHANAN
SRI.C.P.SABARI
RESPONDENT/S:
1 HLL LIFE CARE LIMITED
(FORMER HINDUSTAN LATEX LIMITED),REPRESENTED BY
CHARIMAN/ MANAGING DIRECTOR,POOJAPPURA,
THIRUVANANTHAPURAM- 695 012
W.P.(C) Nos.5550 & 9238/2017 &
W.P.(C) No.702/2018
-4-
2 GOVERNMENT OF INDIA
REPRESENTED BY SECRETARY,MINISTRY OF FINANCE,
DEPARTMENT OF INVESTMENT AND PUBLIC ASSET
MANAGEMENT,ROOM NO.528,5TH BLOCK NO.14, CGO
COMPLEX,LODHI ROAD, NEW DELHI- 110 003
3 GOVERNMENT OF INDIA
REPRESENTED BY SECRETARY,MINISTRY OF HEALTH & FAMILY
WELFARE (HPE SECTION),NIRMAN BHAWAN, NEW DELHI- 110 108
4 THE GOVERNMENT OF KERALA
REPRESENTED BY SECRETARY,INDUSTRIES
DEPARTMENT,SECRETARIAT, THIRUVANANTHAPURAM- 695 001.
BY ADVS.
SMT.BINI SARAMMA
SRI.N.NAGARESH, ASSISTANT SOLICITOR GENERAL
SMT.J.SURYA
SMT.P.VIJAYAMMA
SRI.N.NAGARESH ASSISTANT SOLICITOR GENERAL
SRI.PRINSUN PHILIP
SRI.V.KRISHNA MENON
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16.10.2018, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.P.(C) Nos.5550 & 9238/2017 &
W.P.(C) No.702/2018
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU
TUESDAY ,THE 16TH DAY OF OCTOBER 2018 / 18TH SRAVANA, 1940
WP(C).No. 9238 of 2017
PETITIONER/S:
1 KERALA NEWS PRINT EMPLOYEES UNION
(CITU), REPRESENTED SECRETARY, P.SURESH, REG.NO. 242/77,
NEWS PRINT NAGAR PO, KOTTAYAM 686616
2 H.N.L.EMPLOYEES ASSOCIATION
REPRESENTED BY SECRETARY, MOHANAN NAIR.K, REG.NO.
5/7/2000, NEWS PRINT NAGAR PO, KOTTAYAM 686616
3 P.SURESH
SENIOR ASSISTANT GERADE I, (BADGE NO.2039), HINDUSTAN NEWS
PRINT, NEWS PRINT NAGAR PO, KOTTAYAM 686616
4 MOHANAN NAIR.K
HARGE MAN, (BADGE NO. 1679), HINDUSTAN NEWS PRINT, NEWS
PRINT NAGAR PO, KOTTAYAM 686616
BY ADV. SRI.P.N.MOHANAN
RESPONDENT/S:
1 GOVERNMENT OF INDIA
REPRESENTED BY SECRETARY, HEAVY INDUSTRIES DEPARTMENT,
ROOM NO.176, UDYOG BHAWAN, NEW DELHI
W.P.(C) Nos.5550 & 9238/2017 &
W.P.(C) No.702/2018
-6-
2 NATIONAL INSTITUTIONS FOR TRANSFORMING INDIA NITI AAYOG
REPRESENTED BY CHIEF EXECUTIVE OFFICER, NITI AAYOG, SANSAD
MARG, NEW DELHI 110001
3 THE GOVERNMENT OF KERALA
REPRESENTED BY SECRETARY TO GOVERNMENT, INDUSTRIES
DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM 695001
4 HINDUSTRAN NEWSPRINT LTD.
REPRESENTED BY MANAGING DIRECTOR, VELLOOR, KOTTAYAM
686501
5 HINDUSTAN PAPER CORPORATION LTD.
REPRSENTED BY CHAIRMAN CUM MANAGING DIRECTOR, 75 C, PARK
STREET, KOLKATA 700016
BY ADVS.
SRI.N.NAGARESH, ASSISTANT SOLICITOR GENERAL
SRI.K.V.SOHAN, STATE ATTORNEY
SRI.V.KRISHNA MENON
SMT.J.SURYA
SRI.K.V.SOHAN STATE ATTORNEY
SRI.N.NAGARESH ASSISTANT SOLICITOR GENERAL
SRI.PRINSUN PHILIP
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16.10.2018, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.P.(C) Nos.5550 & 9238/2017 &
W.P.(C) No.702/2018
-7-
JUDGMENT
Introduction:
These three writ petitions involve two Public Sector Undertakings. But they raise the same questions of law. In all the writ petitions, the petitioners are trade unions, besides a few of their employees, the respondents are the same in all.
2. One industry manufactures newsprint; the other healthcare products. The Union Government has decided to disinvest its majority stake in these two industries, both set up a few decades ago in Kerala with the State Government's active logistical support. The imminent disinvestment looming large, the trade unions and the employees assail the Union Government's action, and the State Government sails with them. Of course, it sets up a case for itself; that its interests too suffer because of the disinvestment.
3. The sole question that craves an answer is, Can this Court judicially review the governmental policy of disinvestment? If it can, what are the parameters? We will see.
W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -8- Facts in Brief:
WP (C) No.5550 of 2017:
4. The first petitioner is a trade union and the petitioners two to four are the employees. They work in Hindustan Newsprint Ltd. (HNL), the fourth respondent, a Government of India undertaking.
5. The Newsprint Company was one of the Miniratna Companies, as per the Government of India reckoning. It produces newsprint of various types. Established in 1982, it has been earning profits throughout, except for three years. First, the Company employed 1200 persons, besides indirectly employing about 10,000 people. Later, because of modernisation, the Company reduced its employee-strength to 500. And the indirect employment, too, came down to about 5000.
6. The Company paid back, the pleadings stress, to the Central Government as dividend more than what it had invested in the Company. Besides, it continues to pay crores of rupees as tax, too. The company was established in 650 acres. Part of that are the W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -9- Government of Kerala acquired and the rest it surrendered from its land-pool. With its creditable performance, the Company developed a township, with the State Government's coordination, though. As its raw material is pulp from the eucalyptus and the bamboo reed, the State Government supplies it subsidised, for the Company generates employment and helps the State develop. It has subsidized water and power, too.
7. Besides, in 1963, the Government of Kerala allotted the Forest Department's 5,600 hectares pulpwood plantation to the Company, for its captive plantation of raw material. But, now, only 3,035 hectares remain with it, the rest lost to encroachment and other allied causes. When the Company faced financial troubles, the State Government exempted it for two years from the KGST Act, though the Government of India refused to extend the same benefit under the Income Tax Act.
8. In 2002, the Government of India tried to sell the Company to a private entity. But with the employees' agitation, it did not go W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -10- ahead. Now, the Union Government is determined to sell the Company, along with other public sector companies, as a part of its disinvestment--to raise Rs.565 billion. As a result, in Kerala, whatever PSUs that remain functioning--such as Instrumentation, Palakkad; ITI, Palakkad; HOC, Ambalamugal--are facing the threat of closure. The Union Government's measure will ruin Kerala's economy. And it will also result in a large-scale reduction in employment.
9. In these circumstances, the Hon'ble Chief Minister of Kerala, on 24.10.2016, requested the Government of India to delink the Company from its holding company. He also requested the Union Government to make it an independent enterprise under the Department of Heavy Industries. So it will have more operational freedom. But the Union Government has so far not acted on the Hon'ble CM's representation. Therefore, this writ petition.
10. The petitioners want this Court (a) to quash that portion of the Ext.P5 NITI Aayog Scheme, as it proposes to sell the Newsprint W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -11- Company; (b) to delink the Company from its holding company; (c) to direct the Kerala Government to take over the Company; and (d) to declare that the Newsprint Company cannot be sold to any private corporate entity.
W.P. (C) No.9238 of 2017:
11. Kerala Newsprint Employees Union and HNL Employees Association are the first and second petitioners. The third and fourth petitioners are employees. The respondents are the same as in W.P. (C) No.5550 of 2017.
12. As the pleas and the defence are identical, they need no elaboration.
W.P. (C) No.702 of 2018:
13. The first and the second petitioners are the trade unions, represented by their General Secretaries; the third petitioner is an employee. The first respondent is a Company; the second and the third respondents are the Ministry of Finance and Ministry of Health and Family Welfare respectively, both belonging to the W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -12- Union of India; the fourth respondent is the Government of Kerala.
14. HLL Life Care Ltd, formerly Hindustan Latex Ltd, is a fully- owned Government of India Company. The Union Government has decided to sell its stake in this Company, too. The petitioners have raised similar concerns as the petitioners did in W.P. (C) No.5550 of 2017 and W.P. (C) No.9238 of 2017, against disinvestment.
15. Earlier, the Union Government proposed to sell the Company. But because of political intervention and public pressure in Kerala, in March 2017 it withdrew the proposal. Now again, the Government revived that proposal: in November 2017, the Union Government in principle approved the Company's selling its two units. As recently as in December 2017, the Government invited applications for strategic disinvestment in the Company. It wants to sell its entire share.
16. The petitioners finally plead that the State Government's plea, the parliamentary intervention, and the public, as well as employee-dissent, have not dissuaded the Union government; it has W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -13- gone ahead.
17. The petitioners seek these reliefs from the Court: (1) to invalidate the Exhibit P5 decision of strategic sale; and (2) to set aside the notices the government uploaded on the website for auctioning the company through private bidders. Submissions:
Petitioners':
18. Sri Mohanan, the counsel for the petitioners in all the three writ petitions, submits that the Union Government's proposal to disinvest in both the Companies--HNL and HLL--established in industry-starved Kerala is unwarranted. According to him, a welfare state can be neither guided nor motivated by profit; the public interest is paramount and should outweigh all other considerations.
19. Sri Mohanan, after taking me through the pleadings and the documents, asserts that both the companies as well as the Union government have provided no justifiable grounds why these companies should be sold. He also submits that both are public W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -14- utility companies meant to serve the public interest--that is, supplying the newsprint and several healthcare products-- constitutionally declared to be fundamental: Right to Know and Right to Health.
20. The learned counsel persists with the plea that this Court can direct the first respondent to delink the HNL from HPCL., its holding company, and to retain it as a separate unit. In the alternative, he suggests that the Court should ask the Government of Kerala to take over the HNL "as and when it is proposed to be sold".
21. To support his contentions, Sri Mohanan relies on Balco Employees' Union (Regd.) v. Union of India 1 and Bengal Chemical Sramik Karmachari Union vs Union of India2.
The 1st and 2nd Respondents' and the 4th Respondent's:
22. The Government of India and the National Institute for Transforming India (NITI Ayog), the first and second respondents, 1 (2002) 2 SCC 333 2 Judgment dated 13.02.2018 in W.P.(C) No.15560 of 2017 W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -15- filed their defence. So did the fourth respondent Company. The learned Additional Solicitor General for the first and second respondents and the learned Standing Counsel for the Companies have submitted in tune with those defences.
23. Both the learned Additional Solicitor General and the learned Standing Counsel have contended that the petitioners' challenge against the decision to disinvest is misconceived. The disinvestment, according to them, is a policy decision, and it falls beyond the scope of judicial review. So the Courts cannot examine the decisional desirability. They also contend that the petitioners' fundamental rights do not get affected. The companies remain and so do the petitioners' jobs, under different management though.
24. Most allegations the petitioners have raised, according to both the learned counsel, are mere apprehensions. About the delinking of Company from HPCL or the State Government's taking it over, they submit that the very idea or suggestion is misconceived. They finally contend that the petitioners' approach W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -16- lacks bona fides and the writ petitions, they conclude, are vexatious. The State Government's:
25. Sri K. V. Sohan, the learned State Attorney, submits that the Union Government's efforts to sell the "immovable property having an extent of 282 hectares" along with its share in HPCL or HNL is unsustainable. The Government of Kerala, according to him, agreed to provide concessions and privileges to the companies the Union Government then sought to establish because it would promote State's industrialization and generate employment. In this regard, he refers to the Ext.P1 agreement.
26. Sri Sohan also stresses that the Ext.P1 agreement ended in October 2014, but the State Government renewed the contract, though for 20 years instead of 30 years. It was only to ensure that the industries would remain PSUs and serve the people of the State, besides generating employment.
27. And referring to the Ext.P2 agreement, Sri Sohan points out that the agreement has a mandate: if the Union Government W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -17- sells away its stake in the Company, all concessions the State Government granted will stand withdrawn. The State Government gave to the Company, the State Attorney stresses, vast extents of lands after acquiring them at its own expense. The Union Government, now, cannot stultify and defeat the State's efforts by abdicating its duty to sustain the Company.
28. Annexure R3(a) agreement between the Government of Kerala and the Hindustan Paper Corporation also stipulates that ''the Company shall not be entitled to transfer the land acquired or any part thereof by sale, gift, lease or otherwise except the provisions sanctioned of the Government.'' And Section 45A of the Kerala Land Acquisition Act restrains the Union Government or the Company itself from selling the immovable property, besides the shares either holds.
29. In September 2002, HPCL conveyed, the State Attorney reminds, over 282 Hectares to the Government of India's Department of Heavy Industry. But he asserts that the conveyance W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -18- does not bind the Government of Kerala. According to him, the Government of Kerala can resume possession of the land, the moment the Company ceases to be a Public Sector Undertaking. He also underlined the State Government's efforts to persuade, not with much success though, the Union Government not to disinvest. In the end, Sri Sohan has urged this Court to allow the writ petitions.
Discussion:
About Hindustan Newsprint Limited:
30. To begin with, on 07.10.1974, Hindustan Paper Corporation Ltd., a fully-owned Government of India Company, contracted with the Government of Kerala. It was for establishing the Newsprint Project. First, the State government acquired the land and handed it over to M/s Hindustan Paper Corporation Limited (HPCL), for establishing the Kerala Newsprint Project. On an extent of 282.86 hectares, the newsprint project came up in 1982-83. It was, next, transferred through a sale deed, dt. 07.06.1983, to the Hindustan W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -19- Newsprint Ltd., (HNL), a wholly owned subsidiary company of the HPCL.
31. The HNL works under the administrative control of the Department of Heavy Industries and Public Enterprises, Government of India. As on 28.02.2017, the company engaged 500 permanent employees and 800 temporary employees.
32. With a licence to produce 1,00,000 TPA Newsprint and 20,000 TPA of Writing and Printing Paper, till recently HNL had been achieving its full capacity use, except for a few years. From 2012-13, it has been incurring losses, though. But by now, it has paid Rs.120.93 crore to its holding company as dividend. And during 2015-16, HNL paid Rs.730.32 lakh as taxes and duties to the Government.
33. The contract HPCL entered into with the Government of Kerala on 07.10.1974 was renewed on 08.05.2006 for further 20 years. This contract, in fact, was for the supply of fibrous raw material by State Forest Department and for other facilities like water and road. W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -20- To be specific, under the agreement, the Government of Kerala undertook to supply to HNL annually 50,000 MT of Eucalyptus wood and 1,00,000 MT of Acacia, Mangium, and other Pulpwood from State Forest Department plantation and 75000 MT of reed and 75000 MT bamboo from the forest, subject to their availability. And the price is being fixed by the Government periodically.
34. But the Government of Kerala found it difficult to honour its contractual obligation of supplying raw material. So it let the Company have a captive plantation. And for this, it allotted 5600 Hectares of existing pulpwood plantation of State Forest Department to HNL under G.O.(MS) No. 42/93 dated 11.06.1993, on the lease. Yet physically, only 4277.395 hectares was seen to have been delivered. Of this land, now HNL claims it has surrendered to Government of Kerala 1242.25 hectares for various purposes, whereas 365.48 hectares is under encroachment or litigation. Thus, now, HNL has raised plantations of various pulpwood species in only 2670 hectares.
W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -21-
35. On disinvestment, the process began in 2002 and continued till 2007, when it was dropped because of the Union Government's policy change. Again, recently, it renewed its policy of disinvestment. As a result, HNL has received communication from the Department of Heavy Industry, Ministry of Heavy Industries and Public Enterprises, about the decision of the Cabinet Committee on Economic Affairs to disinvest. That decision, in fact, now stands accepted by the Union Cabinet "in the best overall interest of the country."
36. The decision thus taken and approved, the HPCL, as the holding company, has proposed to engage various agencies for disinvestment.
About the HLL Healthcare Limited:
37. In 1966 Hindustan Latex Limited was established as a single contraceptive unit. Now it is, under a new name "HLL Lifecare Ltd." a complete healthcare delivery company, with a multiproduct range, spread across several locations. The Company, the petitioners W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -22- claim, is the only one in the world, manufacturing and marketing the broadest range of contraceptives. Its healthcare products, too, cover a broad spectrum: blood collection bags, surgical sutures, vaccines, women's healthcare, and so on. HLL has also started LifeSpring Hospital, a joint venture, serving the poor patients by charging them nominally.
38. HLL has a strong distribution network, supplying its products to a million retail outlets, including over a hundred thousand villages. It exports products to over 70 countries. HLL also runs in Kerala scanning centres in all medical colleges; besides establishing testing labs and supplying to shops medicine, spectacles, surgical equipment, and so forth. Along with its five subsidiary companies, it employs 2000 persons directly and 3000 persons indirectly. Also it has been making profits and paying dividends throughout. The Company has its establishments at five places in Kerala on the land granted by the Government of Kerala. W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -23-
39. Now, the Union Government has taken a policy decision to disinvest in the two Companies. So we should examine the reach of judicial review in policy matter--and fiscal policy matters, at that. The Limits of Judicial Review vis-à-vis State's Policy Decisions:
40. In judicially reviewing an administrative action, the Court can neither usurp nor abdicate. Clear are the parameters of judicial review; they should never be transgressed. The judicial review, observes the Supreme Court in Fertilizer Corpn. Kamgar Union (Regd.) v. Union of India3, is limited to testing whether the administrative action has been fair and free from the taint of unreasonableness, and whether it has substantially complied with the procedural norms set for it by the rules of public administration.
41. Laws relating to economic activities should be viewed with a latitude greater than laws touching civil rights, such as freedom of speech, religion, and so on. According to the Supreme Court in R.K. Garg v. Union of India4 , the legislature should be allowed some play in 3 (1981) 1 SCC 568 4 (1981) 4 SCC 675 W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -24- the joints because it has to deal with complex problems. For they do not admit of solution through any doctrinaire or strait-jacket formula. And this is particularly true if the legislation deals with economic matters.
42. After observing as above, R. K. Garg quotes with approval observations of the Supreme Court of the United States (SCOTUS), per Justice Frankfurter, in Morey v. Doud5 . In the utilities, tax and economic regulation cases, there are good reasons for judicial self- restraint if not judicial deference to legislative judgment. The legislature, after all, has the affirmative responsibility. The courts have only the power to destroy, not to reconstruct. When these are added to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the Judges have been overruled by events -- self- limitation can be seen to be the path to judicial wisdom and institutional prestige and stability, so observes Morey. 5 354 US 457: 1 L Ed 2d 1485 (1957) W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -25-
43. BALCO quotes both R. K. Garg and Morey. Then, it observes that whatever has been said in the context of legislation in economic matters must apply equally to executive action in the field of economic activities. It, however, accepts that this executive decision does not receive the same judicial deference as does as the legislative wisdom or judgment. BALCO reminds us of the complexity of economic policies and, then, holds that every decision is necessarily empiric and is based on experimentation or, what one may call, 'trial and error method'. So its validity cannot be tested on any rigid a priori considerations or by any strait-jacket formula.
44. While adjudging the constitutional validity of an executive decision relating to economic matters, the Court should grant, BALCO stresses, a certain measure of freedom or 'play in the joints' to the executive. Apt is the SCOTUS'S assertion in Metropolis Theater Co. v. State of Chicago6 , as BALCO notes, that the problem of Government are practical ones and may justify if they do not 6 228 US 61 (1912) W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -26- require, rough accommodations, which may be illogical or unscientific. But even this criticism should not be hastily expressed. What is best is not discernible; the wisdom of any choice may be disputed or condemned. Mere errors of Government are not subject to judicial review. An only palpably arbitrary exercise of power can be declared void.
45. The Court cannot strike down a policy decision taken by the State Government, observes SCOTUS in Permian Basin Area Rate cases7, only because the Court feels that another policy decision would have been fairer or wiser or more scientific or logical. The Court can interfere only if the policy decision is arbitrary, discriminatory, or mala fide.
46. With the expansion of the State's presence in trade and commerce, the Government aims to stimulate efficiency, to keep the costs down, to improve management methods, to prevent time and cost overruns in the projects, to balance costs against timescales, to 7 390 US 747 (1968) W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -27- control quality, to ensure a favourable cost-benefit ratio, and so on. To achieve these values, the Government may have to, observes the Supreme Court in G. B. Mahajan v. Jalgaon Municipal Council 8, adopt "appropriate techniques of management of projects with concomitant economic expediencies." These are, the Court stresses, essentially matters of economic policy which lack adjudicative disposition unless they violate constitutional or legal limits on power. Or, to fall foul of the constitutional considerations, they must at least have "demonstrable pejorative environmental implications" or must amount to a clear abuse of power. Indeed, there lies the judicial recognition of administrator's right to trial and error, as long as both trial and error are bona fide and within the limits of authority. So concludes G. B. Mahajan.
47. While examining the legislative legitimacy of a policy, R. K. Garg rhetorically reminds us "there may be views and views, opinions and opinions which may be shared and believed by citizens 8 (1991) 3 SCC 91 W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -28- of the country including the representatives of the people in Parliament." But those perception differences must be sorted out in Parliament, which approves such policies. Privatization is a fundamental concept underlying the questions about the power to make economic decisions. According to R. K. Garg:
"What should be the role of the State in the economic development of the nation? How the resources of the country shall be used? How the goals fixed shall be attained? What are to be the safeguards to prevent the abuse of the economic power? What is the mechanism of accountability to ensure that the decision regarding privatisation is in public interest? All these questions have to be answered by a vigilant Parliament. Courts have their limitations--because these issues rest with the policy-makers for the nation. No direction can be given or is expected from the courts unless while implementing such policies, there is violation or infringement of any of the constitutional or statutory provision."
48. Unless the policy is capricious and is uninformed by any reason, it cannot be declared arbitrary. Nor can it be said to have been founded on mere ipse dixit of the executive functionaries, thus offending any constitutional provisions or conflicting with any W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -29- statutory provision. Then, the Court, according to M.P. Oil Extraction v. State of M.P. 9 "cannot and should not outstep its limit and tinker with the policy decision of the executive functionary of the State."
49. When Government forms its policy, it is based on many circumstances--of facts and of law--including the resource constraints. The policy can also be based on expert opinion. According to the Supreme Court in State of Punjab v. Ram Lubhaya Bagga10, it would be dangerous if Court tests the policy utility or effectiveness, based on the facts set out in the affidavits. The Court should dissuade itself from entering into this realm that belongs to the executive.
50. Relying on all the above decisions, BALCO notes that disinvestment is a policy decision involving complex economic factors. The courts have not interfered with economic decisions, for the economic expediencies lack adjudicative disposition. And unless 9 (1997) 7 SCC 592 10 (1998) 4 SCC 117 W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -30- the policy decision, based on economic expediencies, demonstrably violates any constitutional or legal limits, or militates against reason, the courts would decline to interfere. A Decision Taking a Different Path:
51. Sri Mohanan, the petitioners' counsel, has relied on Bengal Chemical Sramik Karmachari Union of Calcutta High Court. That decision, rendered by a learned Single Judge, surveyed precedential position, including BALCO. It has, then, held that the authorities examined to support the view that a policy decision of the Government is not immune from judicial scrutiny. The Government has broad latitude in making policies, and that latitude is greater in economic policies. The Government enjoys that latitude, Bengal Chemical notes, so long as its policies are based on material satisfying the Article 14 of the Constitution of India. Then, Courts do not have to determine the correctness or the wisdom of the policy or substitute it with a policy it perceives to be better.
W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -31-
52. A Court can, however, intervene in a policy matter when such policy is unconstitutional, or contrary to the statutory provisions, or vitiated by arbitrariness, or unreasonableness, or is unconscionable. Safeguarding public health is one crucial State objective.
53. Then, Bengal Chemical takes recourse to Article 21 and Article 39: the right to life and the directive principles of policy to be followed by the State. Indeed, Article 39 (e) of the Constitution lays down, rather exhorts the State, that the "health and strength of workers, men and women and the tender age of children are not abused..."
54. With great respect, I may observe that change of management, even because of disinvestment by the Government, would threaten or imperil the life of no worker. Nor does it lead to abuse of health and strength of workers. And BALCO clarifies it. So I regret my inability to accept the ratio of Bengal Chemical. W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -32- About the Employees' Right to Question Disinvestment:
55. True, the workers may have an interest in how a company conducts its business, for its policy may affect the workers' welfare. That said, it is an incidence of service, according to BALCO, for an employee to accept the employer's decision if it violates no 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, the government servants' services can be terminated if posts are abolished. If that government employee cannot make a grievance based on Part III of the Constitution or Article 311, then it cannot stand to reason how the employees in a company can claim a better right than a government servant's and impugn their change of status.
56. In taking a decision involving economic policies, the principles of natural justice have no role to play. While it is expected of a responsible employer to consider all aspects, including the welfare of the labour, before taking any policy decision, that by W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -33- itself will not entitle the employees to demand a right of hearing or consultation before the employer takes a decision, asserts BALCO.
57. The Supreme Court in Southern Structurals Staff Union v. Southern Structurals Ltd.,11 has examined the effect of Articles 14 and 16 on a citizen's right to employment. It holds that Article 14 protects all, not confined to employees of the State alone. The limitations placed by Article 16 on the State about employment is not intended to compel the State to employ all that seek such employment. Nor does it compel the State to retain all persons in its service. The employees have no vested right in the employer company continuing to be a government company or 'other authority' under Article 12 of the Constitution of India, observes Southern Structurals.
58. 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 11 (1994) 81 Comp Cas 389 (Mad) W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -34- Article 12 of the Constitution. The status so conferred on the employees, according to Southern Structurals, does not prevent the Government from disinvesting; nor does it make the employees' consent a precondition for disinvestment.
59. Emphatic is the enunciation in Southern Structurals that public interest is the paramount consideration. In the public interest, the Government can disinvest from the public sector companies. It may be to reduce the continuing drain on its limited resources, or to raise funds: funds for its priority welfare, or developmental projects, or even for running the Government. After all, Article 12 of the Constitution places no embargo on an instrumentality of the State or 'other authority' from changing its character.
60. BALCO concludes that the Government exercises no judicial or quasi-judicial functions when it decides, as a matter of policy, to disinvest shares in a public sector undertaking. It may be fair and sensible for the employer to consult the workers during the W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -35- management takeover. There is, however, no such obligation on the employer to consult the employees. Then comes the salutary observation that with the disinvestment of 51% of the shares, the Company's management and control, no doubt, goes into private hands. But it cannot, in law, be said that the employer has changed. The employees continue to be under the Company and change of management does not amount to a change in employment.
61. About the employees' rights, we may also examine All India ITDC Workers' Union v. ITDC12. The employees of Hotel Agra Ashok questioned the India Tourism Development Corporation's decision to sell Hotel Agra Ashok to a private party. The employees contended, among other things, that the Union Government's decision to disinvest would affect their service prospects seriously.
62. In the above factual backdrop, the Supreme Court has held that even if the employees were retrenched, the writ petition would not be an appropriate proceeding for them. They should, instead 12 (2006) 10 SCC 66 W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -36- "institute appropriate proceedings as per the industrial/labour laws."
About the Disinvestment:
63. The procedure for Strategic Disinvestment, as approved by the Government of India on 17.02.2016, provides for identification of Central Public Sector Enterprises (CPSES). NITI Aayog undertakes this process in consultation with the Administrative Ministry Department concerned.
64. To identify CPSES for strategic disinvestment, NITI Aayog has classified CPSES into ''high priority'' and'' low priority''. That classification was based on (i) National Security: (ii) Sovereign function at arms' length, and (iii) Market Imperfections and Public Purpose. Profitability does not affect the identification of the CPSES for strategic disinvestment.
65. The industries for disinvestment identified, the Core Group of Secretaries on Disinvestment (CGD) would consider NITI Aayog's recommendations. And this Core Group includes Secretary from W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -37- Administrative Ministry concerned, as well. Later the Cabinet Committee on Economic Affairs will approve "in principle'' the Strategic Disinvestment of a CPSE. It will also decide the specific method of disinvestment to be applied in each case.
66. In fact, neither the State Government nor the petitioners have pointed out any policy violations; nor have they asserted any specific illegality in disinvestment. They rather attacked the very disinvestment. Its desirability or policy prudence, I am afraid, does not lie within the remit of judicial review, as emphatically held in BALCO.
67. Granted, the Employees' Unions have highlighted the public importance and the indispensability of HLL products and services. Had the Union Government been winding up the establishment, the considerations, perhaps, would have varied. Here the HLL stands; only its management changes. The Government does assure that its disinvestment does not affect the employees' service prospects. Even if it affects, as held in ITDC, the policy itself W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -38- cannot be found fault with. The remedies to protect once employment lie elsewhere.
About the Union Government not Consulting the State Government:
68. Indeed, the State Government has strong objections about the disinvestment. It has, no doubt, contributed land for both the industries. It has contracted with the Companies on some terms.
Now, it accuses both the Union Government and the Companies of violating those terms.
69. But besides corresponding the Central Ministries concerned on the issue and urging Union Government not to disinvest, the State Government has not yet invoked its rights, if any, under those contracts. In these writ petitions, its appearance is incidental, brought as a respondent. And, as the occasion presented itself, it has taken recourse to passive resistance. It may, as it did, support the employees' cause, but it cannot carve out an independent cause of action for itself and seek redressal of its W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -39- grievances in someone else's writ petition.
70. On the State Government's grievance of non-consultation on disinvestment, BALCO has felt it to be a matter between the State Government and the Union of India. And the State Government cannot raise any grievance on that score against the Government of India, in the proceedings the employees have started.
As a result, I dismiss all the three writ petitions. No order on costs.
Sd/-
DAMA SESHADRI NAIDU JUDGE jjj W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -40- APPENDIX OF WP(C) 5550/2017 PETITIONER'S/S EXHIBITS:
EXHIBIT P1 A TRUE COPY OF THE AGREEMENT ENTERED ON 07.10.1974 BETWEEN THE FOURTH RESPONDENT AND GOVERNMENT OF KERALA.
EXHIBIT P2 A TRUE COPY OF THE AGREEMENT DATED 08.05.2006 BETWEEN THE FOURTH RESPONDENT AND GOVERNMENT OF KERALA.
EXHIBIT P3 A TRUE COPY OF THE COMMUNICATION DATED 30.3.2010 OF THE MANAGING DIRECTOR OF THE FOURTH RESPONDENT.
EXHIBIT P4 A TRUE COPY OF THE GO MS. NO.71/2015 DATED 22.9.2015 EXHIBIT P5 A TRUE COPY OF THE PROPOSAL OF THE RELEVANT PORTION ISSUED BY THE NITI AAYOG.
EXHIBIT P6 A TRUE COPY OF THE RELEVANT PORTION OF THE PROJECT REPORT.
EXHIBIT P7 A TRUE COPY OF THE COMMUNICATION DATED 24.10.2016 OF THE CHIEF MINISTER OF KERALA.
EXHIBIT P8 A TRUE COPY OF THE COMMUNICATION DATED 09.08.2016 OF THE LEADER OF OPPOSITION OF KERALA. RESPONDENT'S ANNEXURES R3(A) TRUE COPY OF THE AGREEMENT FOR ACQUISITION OF 56.6560 HECTARES OF LAND IN VELLOR VILLAGE, KOTTAYAM DISTRICT, KADUTHURUTHY SUB DISTRICT DATED 29.01.1979 W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -41- R3(B) TRUE COPY OF THE LETTER DATED 24.10.2016 ADDRESSED BY THE HON'BLE CHIEF MINISTER OF KERALA TO THE HON'BLE PRIME MINISTER OF INDIA R3(C) TRUE COPY OF THE RESOLUTION PASSED BY THE KERALA LEGISLATIVE ASSEMBLY DATED 13.03.2017 ALONG WITH THE COVERING LETTER ISSUED BY THE CHIEF SECRETARY OF KEARLA DATED 17.03.2017 R3(D) TRUE COPY OF THE LETTER DATED 14.06.2018 R3(E) TRUE COPY OF THE LETTER DATED 21.06.2018 ISSUED BY THE JOINT SECRETARY TO MINISTRY OF INDUSTRIES AND PUBLIC ENTERPRISES, GOVERNMENT OF INDIA R3(F) TRUE COPY OF THE LETTER DATED 26.06.2018 ADDRESSED BY THE PRINICPAL SECRETARY TO INDUSTRIES DEPARTMENT, KERALA TO THE JOINT SECRETARY OF MINISTRY OF INDUSTRIES AND PUBLIC ENTERPRISES APPENDIX OF WP(C) 702/2018 PETITIONER'S/S EXHIBITS:
EXHIBIT P1 A TRUE COPY OF THE ORDER DATED 08.11.1965 OF THE GOVERNMENT OF KERALA EXHIBIT P2 A TRUE COPY OF THE COMMUNICATION DATED 23.3.2017 OF THE THIRD RESPONDENT EXHIBIT P3 A TRUE COPY OF THE MEMORANDUM DATED 12.6.2017 SUBMITTED BY THE FIRST PETITIONER EXHIBIT P4 A TRUE COPY OF THE LETTER DATED 28.11.2017 EXHIBIT P5 A TRUE COPY OF THE NOTIFICATION DATED 27.12.2017 ISSUED BY THE SECOND RESPONDENT W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -42- EXHIBIT P6 A TRUE COPY OF THE NEWS ITEM DATED 31.7.2017 PUBLISHED IN INDIAN EXPRESS EXHIBIT P7 A TRUE COPY OF THE LETTER FORWARDED TO PRIME MINSTER BY THE CHIEF MINSTER OF KERALA EXHIBIT P8 A TRUE COPY OF THE LETTER DATED 26.6.2017 SENT TO THE OFFICE OF THE FINANCE MINSTER BY THE MEMBERS OF PARLIAMENT EXHIBIT P9 A TRUE COPY OF THE ORDER DATED 20.2.2017 IN WPC NO 5550/2017 EXHIBIT P10 A TRUE COPY OF THE ORDER DATED 30.032017 IN WPC NO 5550/2017 EXHIBIT P11 A TRUE COPY OF THE PRESS MEET OF THE MNISTER THE FAMILY WELFARE OF GOVERNMENT OF INDIS PUBLISHED IN HINDU NEWS PAPER DATED 25.01.2018 EXHIBIT P12 A TRUE COPY OF THE DETAILS OF THE POVERTY POSITION OF INDIA EXHIBIT P13 A TRUE COPY OF THE ORDER DATED 28.02.2018 OF THE GOVERNMENT APPENDIX OF WP(C) 9238/2017 PETITIONER'S/S EXHIBITS:
EXHIBIT P1 A TRUE COPY OF THE AGREEMENT ENTERED ON 07.10.1974 BETWEEN THE FOURTH RESPONDENT AND GOVERNMENT OF KERALA EXHIBIT P2 A TRUE COPY OF THE AGREEMENT DATED 08.05.2006 BETWEEN THE FOURTH RESPONDENT AND GOVERNMENT OF KERALA W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -43- EXHIBIT P3 A TRUE COPY OF THE COMMUNICATION DATED 30.03.2010 OF THE MANAGING DIRECTOR OF THE FOURTH RESPONDENT EXHIBIT P4 A TRUE COPY OF THE GO (MS) NO. 71/2015 DATED 22.09.2015 EXHIBIT P5 A TRUE COPY OF THE PROPOSAL OF THE RELEVANT PORTION ISSUED BY THE NITI AAYOG EXHIBIT P6 A TRUE COPY OF THE DETAILS INVITING PROPOSALS OF ASSET VALUER LEGAL ADVISOR, TRANSACTION ADVISOR DATED 03.02.2017 EXHIBIT P7 A TRUE COPY OF THE COMMUNICATION DATED 24.10.2016 OF THE CHIEF MINISTER OF KERALA EXHIBIT P8 A TRUE COPY OF THE COMMUNICATION DATED 09.08.2016 OF THE LEADER OF OPPOSITION OF KERALA EXHIBIT P9 A TRUE COPY OF THE ORDER DATED 20.02.2017 IN WPC.NO. 5550/2017 RESPONDENT'S ANNEXURES R3(A) TRUE COPY OF THE AGREEMENT FOR ACQUISITION OF 56.6560 HECTARES OF LAND IN VELLOR VILLAGE, KOTTAYAM DISTRICT, KADUTHURUTHY SUB DISTRICT DATED 29.01.1979 R3(B) TRUE COPY OF THE LETTER DATED 24.10.2016 ADDRESSED BY THE HON'BLE CHIEF MINISTER OF KERALA TO THE HON'BLE PRIME MINISTER OF INDIA R3(C) TRUE COPY OF THE RESOLUTION PASSED BY THE KERALA LEGISLATIVE ASSEMBLY DATED 13.03.2017 ALONG WITH THE COVERING LETTER ISSUED BY THE CHIEF SECRETARY OF KEARLA DATED 17.03.2017 W.P.(C) Nos.5550 & 9238/2017 & W.P.(C) No.702/2018 -44- R3(D) TRUE COPY OF THE LETTER DATED 14.06.2018 R3(E) TRUE COPY OF THE LETTER DATED 21.06.2018 ISSUED BY THE JOINT SECRETARY TO MINISTRY OF INDUSTRIES AND PUBLIC ENTERPRISES, GOVERNMENT OF INDIA R3(F) TRUE COPY OF THE LETTER DATED 26.06.2018 ADDRESSED BY THE PRINICPAL SECRETARY TO INDUSTRIES DEPARTMENT, KERALA TO THE JOINT SECRETARY OF MINISTRY OF INDUSTRIES AND PUBLIC ENTERPRISES