JUDGMENT
C.K. Thakker, C.J.
1. Both the above petitions have been filed
by the petitioner for an appropriate writ,
direction or order challenging the action of the
respondents, adversely affecting the service
conditions of the petitioners.
2. So far as the first petition, i.e., Writ
Petition No. 5373 of 2002, is concerned, a
declaration is sought that as there was breach of
terms and conditions of absorption by Government of
India because of disinvestment of its equity stake
in Videsh Sanchar Nigam Ltd. (VSNL, for short)
in favour of a private company, the petitioners and
all similarly situated persons are entitled to re-
opt to receive Government pensionary benefits by
refunding the amounts received by them as pro-rata
pension/lumpsum payment at the time of their
absorption with VSNL. It was also prayed that the
Government of India is liable to pay to the
petitions and all similarly situated employees
pensionary benefits as per Government Rules on
their re-opting for Government pensionary benefits.
Consequential reliefs were also sought.
3. In the second petition, i.e., Writ
Petition No. 5374 of 2002, a prayer is made for
declaring that the action of the respondent in not
giving the petitioners and similarly situated
employees, who had not completed ten years of
service with the Government of India, the right to
exercise option for retaining Government pensionary
benefits on their absorption with VSNL is
arbitrary, discriminatory and violative of Articles
14 and 16 of the Constitution. It was, therefore,
prayed that appropriate direction be issued to the
Government of India that the Petitioners and
similarly situated employees, who had not completed
ten years of service on their date of absorption in
VSNL, are entitled to exercise option for retaining
Government pensionary benefits by counting their
service in Government of India along with their
service with VSNL for such benefits.
4. The case of the petitioners is that in
1986, the Government of India created VSNL by
converting VSNL as a wholly-owned Government
Public Sector Company. Several employees were
working with VSNL at that time. On December 11,
1989, notices were given to the employees working
in VSNL on deputation asking them to exercise
option either to be absorbed in the regular service
of VSNL with effect from January, 1990 or to retain
Government benefits in respect of pension and other
benefits. According to the petitions, employees,
who had not completed ten years in Government
service, were not entitled to pensionary benefits,
and hence, no option was given to them. VSNL has
given certain terms and conditions in respect of
pensionary benefits after exercising the option by
the employees to be absorbed with it. It was
mentioned that the permanent Government employees
could give an option to retain pensionary benefits
available to them in accordance with the Government
Rules or they could opt for being governed by rules
of VSNL. Such option was also made available to
quasi-permanent as well as temporary employees. A
copy of the memorandum is annexed to the petition.
It is stated by the petitioners that several
employees in various non-executive cadres opted for
absorption with VSNL and to receive pro-rata
pension/lumpsum amount.
5. The petitioners, however, stated that in
2000-01, the Government of India took a policy
decision of disinvestment of VSNL shares,
Petitioner No. 3, Federation of the Videsh Sanchar
Nigam Employees Union, therefore, wrote a letter to
the Hon’ble Minister for Communications, Government
of India, on December 12, 2000, requesting him that
sale of VSNL shares must ensure safeguards and
guarantees for the employees of VSNL, including job
security, proper employees of VSNL, including job
security, proper emoluments, pensionary benefits,
etc. Such letter was also written in January,
2001, reiterating what was stated in the earlier
letter. The attention of the Minister was also
invited to Sub-rules (25) and (26) of Rule 37-A of
the Central Civil Services (Pension) Rules, which
was introduced by amendment of 2000, which provided
that the Government of India disinvesting its
shares in any public sector undertaking to the
extent of 50% or more must provide adequate
safeguards for protecting interest of absorbed
employees with such public sector undertaking.
Such letters were addressed to the Hon’ble the
Prime Minister also. They have been annexed to the
petition. A request was also made to the Managing
Director of VSNL, respondent No. 3 herein, so that
the interest of the employees, who had been
absorbed in VSNL, may not be prejudicially
affected. It was stated that by the action of
disinvestment by the Government of India, the
employees would lose their status as Government
Employees, and they would be put in precarious
position. A subsequent step taken by the
Government of India was, therefore, illegal and
improper, and it was incumbent on the respondents
to ensure the benefits, which otherwise the
petitioners and similarly situated employees would
have received.
6. The petitions stated that the third
respondent, by his letter dated November 1, 2001 to
respondent No. 1, stated that the options were
exercised by the employees in 1989, and there was
no question of giving re-option to those employees
who had opted for the pro-rata pension/lumpsum
amount, which was accepted by VSNL. Regarding Rule
37-A of the Rules, the petitions were not
entitled to such benefits. It was, however, stated
that the issue should be referred to the Ministry
of Personnel, Public Grievances & Pension,
respondent No. 2 herein, as to whether it would be
feasible to provide re-option to such employees.
According to the petitioners, no decision had been
communicated by respondent Nos. 1 and 2 on the
question of re-option, and hence, they were
constrained to approach this Court. It was,
therefore, submitted that a preliminary direction
may be issued to the respondents to afford an
opportunity of re-option to the petitions and
similarly situated employees, who were working with
the Government and absorbed with VSNL, and to allow
pensionary and other benefits as if they were
Government Employees.
7. An affidavit-in-reply is filed by VSNL,
respondent No.3 herein. A preliminary objection
has been raised in the counter-affidavit that the
third respondent could not be said to be
‘authority’ within the meaning of Article 12 of the
Constitution, and hence, it is not subject to the
jurisdiction of this Court under Article 226 of the
Constitution. It was stated that respondent No.3
no longer remained a Government Company, and the
control and supervision of the Company was not with
Government of India. The Government of India was
holding 52.97% of the shares of the third
respondent, but was divested of 25% of the
shareholding to Tata Group of Companies by sale of
such shares on February 6, 2002 in furtherance of
its policy of disinvestment. It was, therefore,
privatised, and the Government of India handed over
management of VSNL to the Tata Group. At present,
the Government of India is having only 26.12% of
the shareholding, and the Tata Group owns nearly
45% of the shares of the third respondent. VSNL
is, therefore, not amenable to Writ Jurisdiction of
this Court.
8. It was also stated that the third
respondent was set up as a wholly-owned Government
Public Sector Company in 1986; but in 1989,
options were offered to the petitions and
similarly situated employees whether they were
interested in getting themselves absorbed with the
third respondent or would get themselves
transferred to the Surplus Staff Cell for
deployment against possible vacancies available in
other Government Offices. The petitions and
several other employees exercised the option for
absorption with VSNL, and they cannot make
grievance against such an action. They were
thereafter governed by the terms and conditions of
the option and absorption with VSNL. When it is
not the case of the petitioners that there was any
breach by the third respondent so far as the terms
and conditions of the absorption are concerned, no
prayer can be granted in their favour.
9. Referring to the decision of the Supreme
Court in the affidavit-in-reply in Balco Employees
Union (Regd.) v. Union of India and Ors., , it was submitted that when persons seek
and get employment with a company registered under
the Companies Act, it should be presumed that they
accept the right of the Directors and Shareholders
to conduct the company in accordance with law; and
such employees have no vested right in the
employer-company continuing to be a Government
Company or ‘other authority’ for the purpose of
Article 12 of the constitution.
10. The deponent has also stated;
“In any event the retirement benefits in
VSNL remain the same after privatisation
as they were before privatisation.”
11. It was, therefore, submitted that the
petitioners have no case; there was no right in
their favour to seek re-option; nor there was
corresponding duty on the third respondent to offer
such re-option; and the petitions were liable to
be dismissed.
12. An affidavit-in-reply is also filed by the
Assistant General Manager (Legal) of respondent
Nos. 1 and 2, wherein the facts stated and
contentions raised on behalf of respondent No. 3
have been reiterated. It was stated that options
were offered to the employees, who were taken on
deemed deputation with VSNL, and such options were
exercised by the employees. The terms and
conditions of the options were also disclosed.
They were also informed that if they would not
favour absorption with VSNL, their names would be
transferred to the Surplus Staff Cell for
deployment against possible vacancies available in
other Government Offices. It was expressly
stated that option, once exercised, shall be
final”. The employees exercised their option to be
absorbed by VSNL and for receiving retirement
benefits available under VSNL. They also got pro-rata
retirement benefits for services rendered
under the Government in the form of being able to
draw pro-rata monthly pension or a lumpsum amount
in lieu of 100% pro-rata pension paid in 1995.
13. The deponent then stated that the
petitioners and other employees are now seeking to
contend that at the time of exercising their
option, they were not aware that the Government
would disinvest its shareholding of respondent No. 3
or respondent No. 3 would be privatised; and,
therefore, they should be allowed to re-opt for
receiving Government pensionary benefits. When a
policy decision has been taken by the Government,
and the rights of the petitioners remained
unaffected after exercise of option, they cannot
contend that the action of the Government is
illegal or contrary to law. Respondent Nos. 1 and 2
also placed reliance on Balco Employees’ Union
(Regd.). Regarding Rule 37-A, it was the case of
the first and second respondents that the
petitioners and other similarly situated employees
are not entitled to the said benefit by going back
on their options which were exercised in 1989,
particularly when it was specifically stated that
exercise of the option was final. The petitioners,
in fact, wanted to approbate and reprobate, which
could not be allowed. It was, therefore, prayed
that the petitions be dismissed.
14. In affidavits-in-rejoinder, the
petitioners have reiterated what was stated in the
petitions and controverted all the facts stated and
contentions raised in the affidavit-in-reply.
15. We have heard the learned counsel for the parties.
16. So far as the preliminary contention
regarding maintainability of the petitions is
concerned, the learned counsel for the third
respondent drew our attention to an order passed by
a Division Bench of this Court in Writ Petition
No. 5233 of 2002 decided on October 22, 2002,
wherein it was observed by the Division Bench that
VSNL is no longer a Government Company; and the
control and management of the company is not with
the Government of India. “It is doubtful whether a
writ petition would lie against VSNL.”
17. The leaned counsel for the petitioners
may be right in submitting that what was observed
in the above order was that it is ‘doubtful’
whether a writ petition against VSNL would lie. It
is, however, not finally concluded by a judgment
that such a petition would not be maintainable.
But from the facts, and particularly from the
affidavit-in-reply of respondent No. 3, it is clear
that the Tata Group owns nearly 45% of the
shareholding of VSNL, and the Government owns only
26.12% of the shareholding. In the facts and
circumstances, therefore, it cannot be said that
the contention raised by the learned counsel for
the respondents has no force.
18. But even otherwise, in our opinion, the
petitioners are not entitled to any relief, and
hence, without expressing final opinion as to
maintainability or otherwise of the petitions, we
have considered the case on merits.
19. It is undisputed fact that VSNL was a
wholly-owned Government Company at one time. It is
also not in dispute that the petitioners and
similarly situated persons were working with VSNL.
20. On July 5, 1989, the Ministry of
Personnel, Public Grievances & Pension, Department
of Pension & Pensioners Welfare, Government of
India, issued an office memorandum, which dealt
with settlement of pensionary terms, etc., in
respect of Government Employees transferred en
masse to Central Public Sector Undertakings/Central
Autonomous Bodies on the terms and conditions
mentioned in the said memorandum. It dealt with
Permanent Government Servants, who had opted to
retain pensionary benefits available to them under
the Government Rules or to be governed by rules of
Public Sector Undertakings/Autonomous Bodies. It
was also provided that the said option would be
available to quasi-permanent and temporary
employees after they would be confirmed in Public
Sector Undertakings / Autonomous Bodies. It
covered those Permanent Central Government
Servants, who had completed ten years or more of
service and opted for retirement benefits of Public
Sector Undertakings / Autonomous Bodies. It dealt
with those Permanent Government Servants with less
than ten years of service, quasi-permanent and
temporary employees, who opted for the Rules of
Public Sector Undertakings / Autonomous Bodies.
Thus, detailed provisions were made by the
Government of India with regard to permanent
Government Servants, who had completed ten years or
more of service with the Government and opted for
retirement benefits of Public Sector
Undertakings / Autonomous Bodies. Similarly,
provisions were made for Permanent Government
Servants with less than ten years of services,
quasi-permanent employees and temporary employees
who have opted for rules of Public Sector
Undertakings / Autonomous Bodies.
21. Similarly, a memorandum had been issued by
VSNL on December 11, 1989, giving notice to the
employees working with VSNL on deputation calling
for their options to be absorbed with VSNL or to
remain with the Government. Such options were to
be exercised on or before December 27, 1989. The
terms and conditions of options were annexed to the
memorandum. It was clarified that any employee who
would not opt for absorption or would not intimate
his or her intention of not becoming a regular
employees of VSNL would be “deemed to have been
absorbed” in VSNL with effect from January 1, 1990.
The name of the person who would not opt in favour
of absorption would be transferred to the Surplus
Staff Cell for deployment against possible
vacancies available in other Government Offices.
22. Clause 4 of the memorandum then stated-
“Option once exercised shall be final.”
23. The terms and conditions of such
absorption have been mentioned in Annexure-I,
Clause 2 dealt with “Pensionary Benefits”, and it
provided that the permanent Government servants
would have an option to retain pensionary benefits
available to them under the Government rules or to
be governed by the rules of VSNL. Such option
would also be available to quasi-permanent or
temporary employees after they would be confirmed
in VSNL. It was also stated that permanent
Government servants with less than ten years of
service, quasi-permanent employees and temporary
employees, who had opted for the rules of VSNL,
would be entitled to certain benefits and permanent
Government servants, who had completed ten years or
more of service, and who would opt for retirement
benefits of VSNL, would receive pro-rata retirement
benefits for the service rendered under the
Government.
24. From the above discussion, it is amply
clear to us that in 1989, a policy decision was
taken by the Central Government with regard to
conferment of benefits to those employees who were
working with the Government and who were en masse
transferred to Central Public Sector Undertakings /
Central Autonomous Bodies. They were asked to
exercise their option by giving an opportunity for
such benefits. It is also on record that a similar
memorandum was issued by VSNL in December, 1989 to
the employees who were working with the Government
and en masse transferred to respondent No. 3.
Regarding terms and conditions of retiral benefits,
detailed provisions have been made in the annexure,
which was supplied with the option form. The
employees were expressly told that they were
required to exercise such option within a
stipulated period. Finally, they were informed
that an option, once exercised, would be final. It
is not even the case of the petitioners that
options were not exercised by them.
25. In our opinion, the contention raised on
behalf of the respondents is well-founded and must
be upheld that once the option was exercised in
1989, and as per the terms and conditions of the
option, such exercise of option was to be treated
as final, it would be too late, after more than ten
years, to contend that they would not be bound by
exercise of option or that re-option should be
allowed to them. That contention, therefore,
cannot be upheld, and is hereby rejected.
26. Regarding the contention that employees,
who had not completed ten years, were not allowed
to exercise the option with regard to pensionary
benefits, it may be stated that even when they were
in the Government service, when VSNL was a
Government Company, they were not entitled to such
benefits. Reading the memorandum also, it
becomes abundantly clear that the persons, who had
not completed ten years of service with the
Government, were not entitled to pensionary
benefits. The option, which was allowed by the
Government, and to be exercised by the employees,
was in respect of those employees who had completed
ten years or more of service and quasi-permanent
employees and temporary employees, who would be
entitled to such benefits after they would be
confirmed in the Public Sector or Autonomous
Bodies. Since the petitioners and similarly
situated persons, who had not completed ten years
of service, were not entitled to such benefits even
under the Government they cannot make grievance
for pensionary benefits. Moreover, as observed
hereinabove, the third respondent has specifically
stated in the affidavit-in-reply that retirement
benefits in VSNL would remain the same after
privatisation as they were before privatisation.
Hence, even on that ground, the grievance of the
petitioners is ill-founded and cannot be upheld.
27. Third ground, which was pressed in service
in the petitions as well as at the time of hearing,
was that when the options were sought from the
petitioners and other similarly situated employees
in 1989, they were of the view that the status of
VSNL would remain the same. It was at a subsequent
stage that the Government of India disinvested a
part of share capital in VSNL in favour of a
private party (the Tata Group), which affected
several employees, and hence, the petitioners are
entitled to re-opt Government benefits by refunding
the amount received by them from the Government.
It is also contended that the Government has not
taken sufficient care to safeguard and protect
interest of the employees, which would be contrary
to Rule 37-A of the Rules.
28. In this connection, in our view, the
respondents were right in relying upon Balco
Employees’ Union (Regd.). Almost in similar
circumstances, the Court held that in economic
policy mattes, it is for the State to take
appropriate decision, and the Court would not
embark upon wisdom or otherwise of such policy. In
that case, too, almost similar safeguards have been
provided, and the Apex Court upheld the action of
the authorities.
29. In paragraph 47, 48 and 49, the Court observed:-
“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 its
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 v. Des Raj Sangar, 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 ten 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
tat 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.”
30. In our view, the cases on hand are similar
to employees of Balco, and as held by the Supreme
Court, such a decision cannot be said to be
illegal, unlawful or otherwise unreasonable. Since
the employees were allowed to exercise option in
1989, they exercised such option, which was to be
treated as final, and as more than ten years have
passed, they cannot ask for re-option on the ground
that in 1989-90, they were under the impression
that the status of VSNL would continue to remain as
Government company; and as there was change at a
subsequent stage, the petitioners would be entitled
to re-option. As the action, which was taken
before more than a decide, was legal and valid, no
fault can be found, and the petitioners have no
right to make grievance.
31. For the foregoing reasons, in our opinion,
both the petitions deserve to be dismissed, and are
accordingly dismissed. In the facts and
circumstances, however, there shall be no order as
to costs.
32. The learned counsel for the petitioners
prayed that the Judgment and Order passed by us may
be kept in abeyance so as to enable the petitioner
to approach the Supreme Court. The Prayer has
been strongly objected by the learned counsel for
the respondents. In our opinion, no such prayer
can be granted. Hence, prayer is rejected.