True Court CopyTM DRJ


W.P. (C) 13653/2018 and CM Appl. 53215/2018

Decided On: 21.01.2019

Appellants: Delhi Milk Scheme Employees Union (Regd.) and Ors. Vs. Respondent: The Union of India and Ors.

Hon'ble Judges/Coram:
S. Ravindra Bhat and Prateek Jalan


Prateek Jalan, J.

1. The challenge in this petition is to a tender dated 27.06.2018, whereby the Union of India has invited bids from prospective concessionaires to take over the operations and management of the Delhi Milk Scheme [hereafter referred to as "DMS"] for a period of thirty years. The petitioners claim to be a registered Union of workers of DMS and its President.

2. DMS was established in 1959 and functions as a subordinate office of the Ministry of Agriculture and Farmers Welfare of the Government of India (hereinafter referred to as "the Government"). Its objectives are to supply milk and dairy products to the citizens of Delhi, whilst assuring remunerative prices to milk producers. It has a plant and an office complex in New Delhi, milk collection and chilling centers located in and around Delhi, and 566 milk booths all over the city. By the impugned tender, the Government seeks to enter into an operations and management arrangement to ensure optimal capacity utilization and efficient management of the DMS plant, initially for a period of 30 years. The successful bidder is required to pay an "Annual Lease Rental" to the Government.

3. A similar tender issued on 22.02.2016, was challenged by the petitioners herein, before this Court in W.P.(C) 3372/2016, which was withdrawn after the tender was dropped by the Government. A second tender was issued on 26.05.2017, which also was withdrawn subsequently and the impugned tender was issued.

4. It is submitted by Mr. Ravi Prakash Gupta, learned Advocate for the petitioners that the impugned actions of the Union of India have been taken without due application of mind. He submits that there is no occasion for any concessionaire to be appointed as DMS has now become a profitable enterprise. It is his contention that the consequence of the impugned actions would be that members of the petitioner No. 1/Union may not be continued in the service of DMS and may instead be sent to the "Surplus Pool" of the Government, which would be to their detriment.

5. We are not inclined to entertain a challenge to a decision of this nature at the instance of a workers' union. Such a decision is essentially a matter of policy as to the most appropriate arrangement for the efficient and productive management of an asset owned by the Government. A policy decision is amenable to judicial review only if it is contrary to any provision of the Constitution or statute, or otherwise capricious or arbitrary. The contention raised by Mr. Gupta are substantially covered by the judgment of the Supreme Court in Balco Employees' Union (Regd.) vs. Union of India MANU/SC/0779/2001 : (2002) 2 SCC 333. The Court repelled a challenge by an employees' union in respect of a disinvestment of the majority shares in a public sector undertaking, BALCO, by the Government of India. After a survey of the previous pronouncements of the Court, it was held as follows:

"46. It is evident from the above that it is neither within the domain of the courts nor the scope of the judicial review to embark upon an enquiry as to whether a particular public policy is wise or whether better public policy can be evolved. Nor are our Courts inclined to strike down a policy at the behest of a petitioner merely because it has been urged that a different policy would have been fairer or wiser or more scientific or more logical.

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. There is no case made out by the petitioner that the decision to disinvest in BALCO is in any way capricious, arbitrary, illegal or uninformed. 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. In taking of a policy decision in economic matters at length, the principles of natural justice have no role to play. While it is expected of a responsible employer to take all aspects into consideration including welfare of the labour before taking any policy decision that, by itself, will not entitle the employees to demand a right of hearing or consultation prior to the taking of the decision.

48. Merely because the workmen may have protection of Articles 14 and 16 of the Constitution, by regarding BALCO as a State, it does not mean that the erstwhile sole shareholder viz., Government had to give the workers prior notice of hearing before deciding to disinvest. There is no principle of natural justice which requires prior notice and hearing to persons who are generally affected as a class by an economic policy decision of the Government. 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 vs. Shri Des Raj Sangar and Another, MANU/SC/0478/1975 : (1976) 2 SSC 844, 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 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."

The Court further observed (in paragraph 51) as follows:

"The policies of the Government ought not to remain static. With the change in economic climate, the wisdom and the manner for the Government to run commercial ventures may require reconsideration. What may have been in the public interest at a point of time may no longer be so."

6. In Villianur Iyarkkai Padukappu Maiyam v. Union of India and Ors. MANU/SC/0811/2009 : (2009) 7 SCC 561, the Supreme Court rejected a challenge to a decision of the Government of Pondicherry to enter into a port redevelopment project without calling for a public auction or tender. The Court held as follows:-

"167. In the matter of policy decision and economic tests the scope of judicial review is very limited. Unless the decision is shown to be contrary to any statutory provision or the Constitution, the Court would not interfere with an economic decision taken by the State. The court cannot examine the relative merits of different economic policies and cannot strike down the same merely on ground that another policy would have been fairer and better.

168. In a democracy, it is the prerogative of each elected Government to follow its 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 malafide, a decision bringing about change cannot per se be interfered with by the court.

169. It is neither within the domain of the courts nor the scope of judicial review to embark upon an enquiry as to whether a particular public policy is wise or whether better public policy can be evolved. Nor are the courts inclined to strike down a policy at the behest of a petitioner merely because it has been urged that a different policy would have been fairer or wiser or more scientific or more logical. Wisdom and advisability of economic policy are ordinarily not amenable to judicial review. 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 the limits of the authority. For testing the correctness of a policy, the appropriate forum is Parliament and not the courts.

170. Normally, there is always a presumption that the Governmental action is reasonable and in public interest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public interest. This burden is a heavy one and it has to be discharged to the satisfaction of the court by proper and adequate material. The court cannot lightly assume that the action taken by the Government is unreasonable or against public interest because there are large number of considerations, which necessarily weigh with the Government in taking an action."

7. In view of the aforesaid judgments of the Supreme Court, in our view, it is not open to the petitioners herein to assail the impugned tender on the grounds contained in the writ petition. However, we have also examined Mr. Gupta's contention regarding the consequence of the proposed arrangement on the workers of DMS. We find that the impugned tender permits the concessionaire to select willing DMS employees to continue under the concessionaire, with the remaining employees being absorbed in the surplus pool of the Government. Clause 2(k) of the Notice Inviting Tender makes this clear:-

"k) Concessionaire can adopt its own selection procedure to select those DMS employees who opt to work with the Concessionaire. For the avoidance of the doubt it is clarified that those DMS employees who are not selected or does not opt to work with the Concessionaire will continue to be part of the surplus pool of Government of India and can be redeployed anywhere by the Government of India as per rules."

8. Mr. Gupta has also argued that the relegation of an employee to the surplus pool has certain adverse consequences on increments and promotions under the relevant Office Memorandum dated 26.03.2002. The said office memorandum delineates the steps required for identification and declaration of surplus staff and such staff are available for re-deployment under the relevant Central Civil Service Rules. The judgment of the Supreme Court in K. Rajendran And Ors. Vs. State of Tamil Nadu And Ors. MANU/SC/0032/1982 : (1982) 2 SCC 273 has categorically upheld the Government's power to abolish a post and consequently terminate the services of an employee. Such an action has been held to be consistent with Article 311 of the Constitution. The judgment in BALCO (supra) has also considered the applicability of Article 311 in the context of disinvestment of shares in a Government company. The petitioner's grievance of being moved to the surplus pool is of far less consequence. We therefore reject Mr. Gupta's contention regarding the applicability of Article 311.

9. In the circumstances aforesaid, the writ petition is entirely devoid of merit, and is accordingly dismissed, alongwith the pending applications.

© Manupatra Information Solutions Pvt. Ltd.