Full Text
HIGH COURT OF DELHI
LPA No. 107/2016
Through Ms. Tanya Aggarwal, Advocate.
Through Mr. Ciccu Mukhopadhyay, Sr. Advocate with Mr. Alok Bhasin and Ms. Poonam Das, Advocates for respondent No.1
Mr. Virender Mehta, Advocate for respondent No.2.
HON'BLE MS. JUSTICE SUNITA GUPTA SANJIV KHANNA, J.
This intra-Court appeal under Clause X of the Letters Patent by Globe
Ground India Employees‟ Union impugns the order and final
JUDGMENT
21st April, 2014 passed by the single Judge allowing W.P. (C) No. 1255/2014 filed by Lufthansa German Airlines. The appellant workers‟ union also impugns the order dated 24th October, 2015 passed by the single Judge dismissing Review Petition No.447/2015 and C.M.No. 20959/2015.
2. The issue involved is rather short and limited and, therefore, we would only notice the relevant facts. 2016:DHC:7630-DB
3. The appellant workers‟ union had raised an industrial dispute which in exercise of power conferred by clause (d) to sub-section (1) and sub-section (2A) of Section 10 of the Industrial Disputes Act, 1947 (Act, for short), was referred by the Central Government to Industrial Tribunal-cum-Labour Court vide order dated 4th February, 2010 on the following question:- “Whether the action of the Management of M/s Globe Ground India Private Ltd., New Delhi, a subsidiary of Lufthansa German Airlines (Carrier), in closing down their establishment on 15.12.2009 and retrenching the services of 106 workmen (as per annexure) is justified and legal ? To what reliefs are the workmen concerned entitled?”
4. Copy of this order was forwarded to the Presiding Officer of the Industrial Tribunal-cum-Labour Court, the Secretary of the appellant workers‟ union and vide corrigendum dated 4th March, 2010 to the CEO of the Globe Ground India Pvt. Ltd., the second respondent before us. For clarity, it is noted and recorded that the said order was not sent or addressed to Lufthansa German Airlines, the first respondent before us.
5. Consequent to the said reference, the appellant workers‟ union filed a statement of claim on or about 10th March, 2010, inter alia, stating that the second respondent was a subsidiary of the first respondent and was providing ground handling and other ancillary services to the first respondent at the Indira Gandhi International Airport and airports located at Kolkata, Mumbai, Bengaluru, Chennai, Hyderabad etc. The first respondent had started their operations at the Delhi International Airport in 1999 and had employed about 230 workmen. The first respondent was/is a German Airline operating its own aircraft, which were/are used for passenger and air cargo around the world. The first respondent had a subsidiary, named, Globe Ground Deutschland GMbH, for the ground handling work. The second respondent – Globe Ground India Pvt. Ltd., was a joint venture formed by Globe Ground Deutschland GmbH and the Bird Group, with 51% and 49% shares, respectively. The first respondent would appoint the Managing Director of the second respondent, for supervision and control of the latter‟s establishment in India. In December, 2008, the Bird Group had floated another company, Bird Worldwide Flight Services Ltd. to provide ground handling and ancillary services to international airlines. This new company had started providing ground handling services from January, 2009, utilizing the same equipment and vehicles which belonged to the second respondent. The workmen of the second respondent were deployed by the new company to operate the said equipment and provide ground handling and ancillary services without any authorization / instructions in writing. On 9th December, 2009, the first respondent informed the second respondent that they would stop availing ground handling services from them at the International Airport at Delhi with effect from 15th December, 2009. The workers‟ union, being aggrieved, had replied to the termination notice issued by the first respondent vide their letter dated 10th December, 2009. Thereafter, the appellant- Union had approached the Regional Labour Commissioner, Government of India vide letter dated 14th December, 2009 against termination of services of some employees and closure of operations by the respondent No.2, invoking Sections 25-F, 25-G, 25-O and 25-N and other provisions of the Act.
6. One of the contentions raised by the appellant workers‟ union in the claim petition is that the first respondent has not closed down or stopped business in India or abroad. The Bird Group, which was a partner in the second respondent joint venture, had floated a new company and this company was now providing services to the first respondent with effect from 15th December, 2009 at the Indira Gandhi International Airport at Delhi. It stands averred that the new company has retained most of the employees, except the trade union activists. The new company has taken over the infrastructure of the second respondent. The prayer made is that the management i.e. the second respondent should reinstate the left out workmen in service, with continuity and full back wages and consequential benefits. Names and details of the 106 aggrieved workers have been enclosed in the list as Annexure-A. The appellant workers‟ union does not seek employment of the said workers in the first respondent. No such prayer is made.
7. The second respondent has filed a reply on merits with which primarily we are not concerned. We would, however, record that factually the share holding pattern in the second respondent and the share holding of the first respondent was undisputed. The factum that the second respondent was providing ground handling services to the first respondent stands accepted as a fact.
8. During the pendency of the industrial dispute, the appellant workers‟ union had filed an application under Section 18 (3) (b) of the Act for impleading the first respondent as a party. This application was dismissed by the Industrial Tribunal-cum-Labour Court vide its order dated 16th June, 2011 holding that the matter was still at the preliminary stage and replication to the written statement was yet to be filed. Contentious issued were involved and evidence was yet to be led by the parties.
9. After some evidence had been recorded, the appellant workers‟ union filed another application for impleadment of the first respondent which was allowed by the Industrial Tribunal-cum-Labour Court vide its order dated 11th January, 2013. This order was impugned by the first respondent in W.P. (C) NO. 3295/2013. The writ petition was allowed by the order dated 16th September, 2013 on the limited ground that the impleadment order was passed without hearing the first respondent, i.e. the party that was impleaded. An order of remand was passed.
10. The Industrial Tribunal, after hearing the parties including the first respondent, passed the detailed order dated 12th December, 2013, impleading the first respondent as a party, primarily on the ground that the first respondent was a holding company of the second respondent and transfer of shares in the second respondent by the first respondent to the Bird Group on 22nd December, 2009 would possibly not be relevant, for the services of the workmen had been terminated earlier.
11. At this stage, we would like to refer to some facts and clarify the shareholding pattern in the second respondent. As noticed above, the first respondent, i.e. Lufthansa German Airlines, is a German company. The first respondent is the holding company of Lufthansa Commercial Holding Company which in turn held 51% shares in Globe Ground GmbH. At the time of incorporation of the second respondent, Globe Ground GmbH was the holding company of the second respondent with 51% shares. Subsequently, due to corporate restructuring, Globe Ground GmbH transferred their shareholding in the second respondent to Globe Ground Deutschland GmbH, which is a subsidiary of Lufthansa Commercial Holding Company, a subsidiary of the first respondent airline.
12. In view of the aforesaid position, it cannot be disputed and we would proceed on the basis that in terms of Section 4 of the Companies Act, 1956, the first respondent till they had transferred their shares to Bird Group on 22nd December, 2009 was the holding company of the second respondent. After the transfer of shares held by the first respondent in the second respondent to the Bird Group on 22nd December, 2009, the first respondent ceased to be the holding company of the second respondent. The observation made in the impugned decision dated 21st April, 2014 that the first respondent was not the immediate shareholder in the second respondent, and therefore, not the holding company is incorrect as per the definition of “subsidiary” in Section 4 of the Companies Act, 1956, which includes not even the first stage or immediate subsidiary but the subsidiary lower down in the ladder, provided the holding company has more than 50% shares in the line. However, this would not resolve the controversy before us. The first respondent could have been impleaded as a party to the industrial dispute only if it was a necessary and proper party and not otherwise. We have no hesitation in opining that any dispute between a third person and a subsidiary company would not necessarily require impleadment of the holding company. This, per se, is not the requirement and mandate in law. Privity of contract and employer and employee relationship would be determinative. The position may be different when the holding or subsidiary company, keeping in view the nature and character of the dispute, is a necessary and proper party to the said dispute. A company, whether a holding or subsidiary, is a juristic person and is entitled to enter into contracts with third persons and also to engage workmen. In any civil litigation or industrial dispute, the holding or subsidiary company ex-facie need not be impleaded as party, for the dispute is between the contracting parties, or in case of an industrial dispute the dispute is between the employer and the employee. The normal and general principle is that a company incorporated in accordance with law is a juristic person or a body corporate, capable of being sued and with a right to sue a third party. Debts and legal obligations of a company are not the debts payable by the subscribers to the memorandum or the shareholders. This is a general precept and, as is the case with most legal dictums, is subject to exceptions. One such exception can be when piercing of the corporate veil is pleaded and the contention is that the corporate legal identity between the holding and subsidiary should be ignored.
13. The expressions “necessary” or “proper parties” have been elucidated and explained in several decisions. The two expressions have separate and different connotations. A necessary party is one without whom no order can be made effectively; a proper party is one in whose absence an effective order can be made but whose presence is necessary for a complete and final decision on the question involved in the proceeding [Udit Narain Singh Malpaharai Vs. Board of Revenue, AIR 1963 SC 786 and Sarvinder Singh Vs. Dilip Singh (1996) 5 SCC539]. If necessary parties are not arrayed, the legal proceedings would not be maintainable unless they are impleaded. This may not be true in case of proper parties, who are required to be present to enable an effective and complete adjudication. The object and purpose of impleading a proper party is to make the person so impleaded as a party bound by the result of action of litigation even when no relief is claimed against him by ensuring that the dispute is effectively and completely settled. In this sense the Court or legal forum may require and implead a proper party when the decision cannot be effectively enforced and their presence is required and necessary to resolve the controversy. A proper party may be added to the litigation for effectual adjudication and for settlement of all questions involved. In Ramesh Hirachand Kundanmal Vs. Municipal Corporation of Greater Bombay, (1992) 2 SCC 524, the difference between a necessary and a proper party was explained in the following manner:-
14. The aforesaid principles are easy to define, but their application in the given factual matrix at times is difficult.
15. When we examine the findings recorded by the Industrial Tribunal in the order dated 12th December, 2013 impleading the first respondent as a party, we have to hold that the said forum has not examined the question of impleadment by applying the principle, whether or not the first respondent was a necessary or proper party. On the other hand, the said order proceeds on the assumption and finding that a holding company must per se be impleaded as a party to the industrial dispute. This, we observe and hold, was not the appropriate test or principle to be applied to determine and decide whether or not the first respondent was a proper and necessary party to the industrial dispute raised and referred to the Tribunal in terms of the order dated 4th February, 2010 read with corrigendum dated 4th March, 2010.
16. It is apparent from the impugned order passed by the single Judge that the appellant workers‟ union had predicated and defended their assertion for impleadment of the first respondent on the dictum that the holding company is a necessary party. On the said aspect, we agree with the single Judge that the holding company would not, because of the fact that it is a holding company, be a necessary or proper party to the litigation between the subsidiary company and its employees. If the aforesaid principle is not accepted, then in every litigation against a subsidiary or holding company and its workers, the holding or the subsidiary company, as the case may be, would be impleaded and made a party. This, as a general or universal proposition, would be unacceptable and legally untenable.
17. The second issue which arises for consideration is, whether in the facts of the present case, the holding company, i.e. the first respondent, can and should be impleaded as a necessary or proper party to the industrial dispute, which is pending before the Industrial Tribunal? We have deliberately and intentionally referred to the statement of claim filed by the appellant workers‟ union in detail, for the allegations made are pertinent to decide the said question. The averments made therein are factual averments as to why and how the second respondent was incorporated and had setup their business of ground handling for passenger and air cargo facilities at the Indira Gandhi International Airport, Delhi. The claim statement records, as a matter of fact, that the second respondent was providing ground handling facilities and services to the first respondent. The factual narration mentions that the first respondent continues to operate and have flights from the Delhi Airport and still requires ground handling services at Delhi. The question would arise whether the aforesaid averments and assertions are good reasons and adequate grounds to hold that the first respondent is a necessary or proper party to the industrial dispute. Having considered and examined the entire matrix, we have reached the conclusion that the first respondent is neither a proper nor a necessary party to the industrial dispute. The reasons for our conclusions are elucidated below.
18. The first respondent would not be a necessary party for obvious reasons. The appellant workers‟ union does not claim that the employees of the union, on whose behalf the claim is raised, were the employees or should be treated as employees of the first respondent. Piercing of the corporate veil regarding employment of the retrenched employees of the second respondent has not been pleaded or expounded. No prayer to the said effect has been made. What has been pleaded and asserted in the claim statement is the fact that the first respondent continues to operate flights from Indira Gandhi International Airport at Delhi and, secondly, the second respondent, who is the employer, should not have terminated and retrenched the workers. It is also pleaded and alleged that the second respondent has transferred its business and assets by setting up another company, namely, Bird Worldwide Flights Services Ltd. and this company has engaged services of employees of the second respondent, except of those who were involved in trade union activities. It is an accepted and admitted fact that the first respondent is no longer a shareholder of the second respondent and was never a shareholder in Bird Worldwide Flights Services Ltd. The appellant-union seeks employment or rather continuity of employment with the second respondent.
19. Given the aforesaid factual position and dispute raised, we do not think that the first respondent is even a proper party who should be impleaded in the industrial dispute. Every person connected and associated with the facts pertaining to the dispute or having entered into transactions with a party to the dispute is not required to be impleaded as a proper party. Pertinently, in the present case, the facts are not disputed by either the appellant workers‟ union or by the second respondent. There is no dispute on the position that the first respondent was in fact the holding company of the second respondent and that the second respondent was providing ground handling facilities to the first respondent at Delhi International Airport. It is an unchallenged position that the first respondent continues to operate its flights from the Delhi Airport and requires ground handling facilities for operating such flights. These facts are admitted and beyond the realm of challenge. When the aforesaid factual position is accepted and admitted, we fail to understand how and why the presence of the first respondent as a party would help in effective and complete adjudication of the dispute raised by the appellant union. Even otherwise, a witness who knows the facts and from whom the facts can be ascertained, may not be a proper party to litigation between the two contracting parties, in this case the employer and the employee. In the present case, as noticed above, there is no factual dispute between the appellant workers‟ union and the second respondent. The factual position relating to the first respondent in the lis or dispute between the appellant workers‟ union and the second respondent is uncontroverted and an admitted position. We do not think that the relief claimed will directly affect the first respondent or the presence of the first respondent is necessary to prevent multiplicity of actions or to ensure complete and effective adjudication.
20. The first respondent is also not a party whose presence and appearance is required for settling all the questions involved in the controversy. Once again we observe that there is no lis or dispute between the appellant union and the second respondent on the factual matrix relating to the first respondent. The issue and the lis between the appellant workers‟ union and the second respondent is different. The second respondent has pleaded in their defence, the Circular No.4 of 2007 dated 19th February, 2007 issued by the Government of India, Ministry of Civil Aviation, New Delhi. The circular directs that no ground handling agency operating at different airports across the country would be operated by airline operators without prior security clearance from the Bureau of Civil Aviation Security, Ministry of Civil Aviation, New Delhi. This was followed by the circular dated 28th September, 2007 and the guidelines dated 30th June, 2008, as per which only those agencies that had been duly licensed by the operator/Airport Authority of India for managing the airports in India could provide ground handling facilities. Reference is made to Regulations 3 and 5 of the Airport Authority of India (General Management, Entry for Ground Handling Services) Regulations, 2000 (hereafter referred to as “2000 Regulations”). It is stated that Indira Gandhi International Airport, New Delhi had cancelled the entry passes of the retrenched employees of the second respondent company as a security measure vide letter dated 14th December, 2009 and in terms of Regulation 3 of the 2000 Regulations, the second respondent had ceased to function with effect from 15th December, 2009 in view of the change in policy by the Government of India/Airport Authority of India. Accordingly, they were justified in terminating the workers in question, whose cause has been taken up by the appellant workers‟ union.
21. It is pertinent to mention, and an accepted position, that the second respondent is an existing company and has not been dissolved. During the course of hearing, learned counsel for the appellant workers‟ union has stated that the second respondent continues to provide ground handling services in other parts India, except for Delhi. The second respondent has pleaded that it is a French company which provides ground handling and ancillary facilities to international airlines as per the policy of the Government of India. The second respondent-company, it has been asserted, was not floated by the Bird Group. Further, the Delhi International Airport stands privatized and the private operator has its own policy of awarding contracts for ground handling as an operator. They are bound by the said policy. The defense of the second respondent and the plea of the appellant workers‟ union is the cardinal issue which has to be adjudicated and decided.
22. As an additional reason though not the primary ground, we would note, are the terms of reference quoted above, which are lucid and clear. They refer to the factual matrix that the second respondent was the subsidiary of the first respondent and the second respondent had closed down its establishment on 15th December, 2009 and retrenched the services of 106 workers. The dispute is whether the said retrenchment was justified and legal, and what relief the said retrenched workers were entitled to, if any. The terms of reference were never forwarded to the first respondent. They were forwarded and sent to the CEO of the second respondent and the appellant workers‟ union. The Government of India while making the reference never felt or regarded the first respondent was a proper and necessary party. The aforesaid expression of opinion by the Central Government may not be conclusive or binding, but is an indication of their opinion and belief. The adjudication has to be confined to the specific points and matters incidental to the reference made to it. In the context of the present matter, we do not think that the first respondent is required to be impleaded as a proper party to the proceedings before the Industrial Tribunal.
23. In the aforesaid circumstances we would not accept the present appeal and dismiss the same. Nothing stated in this judgment would be treated as expression of opinion on the merits of the industrial dispute between the appellant and the second respondent. In the facts of the case, there will be no order as to costs. -sd- (SANJIV KHANNA) JUDGE -sd- (SUNITA GUPTA)
JUDGE NOVEMBER 24th, 2016 NA/ssn