Air India Disinvestment: Madras HC Grants Interim Relief to Employees’ Union

The Air Corporation Employees’ Union recently moved the Madras High Court by way of a writ petition, seeking a direction restraining the Central Government, Air India and the confirmed selected bidder, which is a special-purpose vehicle set up by Tata Sons Limited, from going ahead with the disinvestment. By granting interim relief to the employees’ union, the High Court has underlined why their plea merits consideration, writes SHWETA VELAYUDHAN.

On December 3, a Single judge bench of the Madras High Court granted interim relief to the petitioner-union by restraining the Ministry of Civil Aviation, Air India Limited and its management in Chennai, from evicting the members of the petitioner-union from their official accommodation. The order passed by Justice V Parthiban restrains the respondents from discontinuing the medical benefits extended to the serving and retired employees of Air India Limited, in light of the changes proposed due to the disinvestment. The High Court has issued notices returnable by January 7, 2022, to the Ministry, Air India Limited and Talace Private Limited, the special purpose vehicle set up by Tata Sons Limited for the takeover.

Further, an interim relief was sought to issue a direction to the Ministry and Air India Limited to disclose the contents of the share purchase agreement (SPA) signed with Talace on October 25, to the petitioner-union. Additionally, an order restraining the Ministry, Air India Limited and Talace from proceeding further with the process of disinvestment of Air India Limited in any manner, pending the disposal of the writ petition was also sought vide the petition.

Details of the Petitioner-Union

The petitioner-union, Air Corporation Employees’ Union (ACEU), is a duly registered trade union representing over 5000 employees of Air India and the erstwhile Indian Airlines, pan-India. Being the largest recognised trade union in Air India Limited, the ACEU is an independent union with no political affiliations. Further, it is the main trade union representing non-managerial regular workmen other than pilots and engineers and has been espousing the cause of its workers (ranging from cabin crew, equipment operators, drivers to cleaning and security staff), for the last five decades.

The petitioner-union filed a writ petition before the Madras High Court on the basis that the deed of recognition of the petitioner-union requires the management of Air India Limited to consult the union on “matters pertaining to the wage structure, service conditions and all other issues affecting the interests of regular non-managerial employees of the company”. The petition has been filed in light of the ongoing process of disinvestment of 100 per cent stake of the Central Government in Air India Limited.

The petitioner-union has submitted that the decision to privatise Air India was taken without any consultations with the stakeholders, including trade unions. Moreover, the said decision was taken “at a time when the company had shown a marked improvement in its operational and financial performance pursuant to the implementation of the Turn Around Plan and Financial Re-structuring Plan from 2011-2012 onwards”, the petition states.

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Serious concerns raised

One of the foremost concerns raised by the petitioner-union is that the current employees, at the time of joining, believed to have job security until the age of superannuation at 58 years of age. Given the industry-wide practice of private carriers setting age restrictions in respect of cabin crew and in light of the current job market in the aviation sector, the employees now have a serious apprehension about the retention in employment of cabin crew, among others, upto the present age of superannuation.

The petitioner-union also submitted that Air India has a large number of women employees, who have historically waged legal battles to ensure parity in service conditions and employment until the age of superannuation. Due to the disinvestment plan, there now exists a serious apprehension among the women employees with respect to continuance of their employment, and the petitioner-union submitted that it is necessary in the interests of justice that their employment be protected even after the handover and share purchase, and there be no gender-based discrimination against them.

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Further, as an instrumentality of the Government, Air India Limited has followed a reservation policy, thereby giving employment to people from the Scheduled Castes, Scheduled Tribes and the Other Backward Castes categories. Further, quotas for differently-abled persons, sports players, etc., have also been provided in the past, and it would be doubtful whether a private player would continue to retain such employees in service. The petitioner-union also submitted that it is necessary to ensure that the conditions of service of these employees remain unaltered post-disinvestment.

The petitioner-union thus submitted that it is necessary to ensure that the employees of Air India Limited be treated as permanent and regular employees of the buyer company until the present age of superannuation at 58 years of age, in accordance with the service regulations/ standing orders under which they were appointed. Alternatively and without prejudice to the above submission, the petitioner-union submitted that the Government should at least ensure the continued deployment of the employees under the prevailing service conditions in other public sector undertakings which are not the subject of disinvestment, or with Government agencies, based on their qualifications.

Plea against non-disclosure

The petitioner-union further submitted that despite repeated representations from the petitioner-union in respect of concerns on behalf of the employees on job security and protections of their service conditions, there have been no consultations with the petitioner-union in respect of the clauses to be inserted in the SPA, on the subject.

Due to the disinvestment plan, the women employees now have a serious apprehension with respect to continuance of their employment, and the union submitted that it is necessary that their employment be protected to ensure there is no gender-based discrimination against them. 

In fact, the draft agreement was not shared with the petitioner-union, and there has been no disclosure till date about its contents by the Government or the management of Air India on the ground that it is a confidential cabinet document.

Based on the announcement made by the Secretary and the discussions with the management, the petitioner-union submitted that the SPA would be likely to assure continued employment for the employees for a period of only one year. Under such circumstances, the employees justifiably apprehend that they may lose their jobs in the near future, in the name of “cost optimization”. Further, neither the Government nor the management has held consultations with the petitioner-union in respect of a Voluntary Retirement Scheme (VRS) or framed one, as per the petitioner-union.

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Concern over Employees’ Housing

The petitioner-union further submitted that the issue of housing for the employees post disinvestment is one which needs urgent attention and to be addressed prior to the completion of the disinvestment process.

The Air India Specific Alternative Mechanism (AISAM), a group of Ministers led by the Home Minister held a meeting on August 9 wherein it was decided that the “AI employees may continue to stay at the residential colonies of the company post disinvestment for a period of six months or till the property is monetised whichever is earlier.”

Another letter issued by the Ministry on August 21, dealing with the modalities of vacating and handing over of Air India employees’ housing provides that, “appropriate binding legal and other arrangements including financial disincentives should be formulated to enable prompt vacation of the property by the employees”.

Thereafter, a letter issued by the Ministry on September 29 to the Chairman and MD refers to the abovementioned decision of the AISAM. It further requires an undertaking to be obtained, within a period of 15 days, from the retired or serving employees residing in the Air India Colonies stating that they shall vacate and hand over peaceful possession of the accommodation they are residing in, within a specified period. A failure to provide such an undertaking by the due date would automatically result in issuing an eviction notice to the concerned employees, after which the accommodation is to be vacated within one month.

The petitioner-union submitted that subsequently, employees residing in the accommodation provided by Air India Limited throughout India received notices asking them to vacate the accommodation post disinvestment. It submitted that the employees were also threatened with withholding of arrears and financial benefits due to them as per the Justice Dharmadhikari Committee recommendations, for failure to furnish the required undertaking.

Submitting that the HRA currently paid to the employees is insufficient, the petitioner-union also argued that it is therefore necessary to protect the right to housing of the employees by permitting them to stay in the company-provided housing, till the date of their superannuation at the age of 58 years.

The petitioner-union further submitted that the Joint Action Committee of Air India Unions had issued a notice of strike dated October 13 against the decision requiring employees to give an undertaking that they would vacate the company provided accommodation within six months, failing which they would face eviction. Thereafter, conciliation proceedings were initiated by the Deputy Chief Labour Commissioner (Central), with the terms being confined to the employees in Mumbai being required to provide the said undertaking.

Medical Benefits proposed post-Disinvestment

The petitioner-union further submitted that post disinvestment, medical benefits are proposed to be provided to the employees under the Central Government Health Scheme, which is a contributory scheme wherein monthly deductions from the employees’ wages are to be made. The benefits that the employees would be eligible to receive under the CGHS would depend on the quantum of the contributions made, which depends on their basic pay. This gives rise to an apprehension among the employees owing to the relatively low basic pay drawn by the employees of Air India Limited, which is yet to be revised since January 1, 2007. Given the above, the employees doubt whether they can afford treatment in good private hospitals once brought under the coverage of CGHS.

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Concern over pay cuts and delays

Further, the petitioner-union submitted that for a long time, based on the grounds of cost cutting, employees have been subjected to pay cuts and delays in disbursement of their salaries. Moreover, recommendations of the Justice Dharmadhikari Committee on issues such as arrears of pay and allowances are yet to be implemented.

Offer of Equity Shares 

The petitioner-union further submitted that as per the Project Information Memorandum (PIM), it was set out that the confirmed selected bidder would ensure that three percent of the equity shares of the company  are to be offered to the permanent employees of Air India. However, the petitioner-union has had no way of confirming whether the same had been incorporated in the SPA.

The draft share purchase agreement was not shared with the petitioner-union on the ground that it is a confidential cabinet document.

In light of the above and several other issues which remain to be addressed, the fact that the Government is seen to be rushing to complete the entire process of disinvestment by December this year is a serious concern raised by the petitioner-union.

Grounds for the Petition

The writ petition has been filed on the grounds that neither the Government nor the management of Air India has shared the draft SPA prior to signature, or divulged its contents to the petitioner-union. Such non-disclosure is contended to be in violation of the employees’ fundamental right under Article 19 (1) (a) of the Constitution of India, which has been held to include the right to know.

Further, the action of the Government and the management of Air India in entering into the SPA without holding prior consultations with the petitioner-union in respect of incorporation of clauses on the protection of the service conditions of the employees is submitted to be unjust and unfair and in violation of Article 14 of the Constitution. As per the understanding of the petitioner-union, the new employer will be required to retain the employees in service for just one year, which, given the current superannuation age of 58 years, is submitted to be contrary to the service regulations and the applicable standing orders. The petitioner-union submitted this to be in violation of their right to livelihood under Article 21 of the Constitution.

The failure on the part of the Government and the management of Air India to address the pressing issues relating to job security, wage revision, retention of employees’ accommodation, medical benefits, etc., prior to the process of disinvestment is submitted to be arbitrary, unfair and unjust. In case the issues raised are not addressed prior to the completion of the disinvestment process, it would result in the violation of the employees’ fundamental rights protected under Articles 14, 15, 16 and 21 of the Constitution, as per the petitioner-union.

The petitioner-union further submitted that the proposed move to evict the employees from the company provided accommodation post disinvestment without affecting any increase in the HRA paid to them, will result in depriving the employees and their family members of the right to decent housing, in violation of Article 21 of the Constitution. The proposed changes in the medical benefits presently extended to serving and retired employees post disinvestment is submitted to be in violation of the right to health of the employees and their family members, protected under Article 21 of the Constitution.

Further, the petitioner-union submitted that, without prejudice to its contention that the employees of Air India should be retained in service by the new employer until the present age of superannuation at 58 years, the Ministry and Air India Limited have failed to frame a suitable VRS/ Voluntary Separation Scheme (VSS) as per the applicable guidelines issued by the department of Public Enterprises (DPE). The petitioner-union further contended that the Central Public Sector Enterprises are expected to frame a suitable VRS/ VSS prior to handing over the company to the new employer, and ignoring these guidelines would have adverse implications for the workforce and would be arbitrary and unjust.

(Shweta Velayudhan is a labour and employment lawyer based in Delhi, and a part of the outreach team at The Leaflet.)