Globe Ground India Employees ... vs Lufthansa German Airlines And ...
2016 Latest Caselaw 7072 Del

*          IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         LPA No. 107/2016

                                       Reserved on:      5th September, 2016
%                                   Date of Decision:    24th November, 2016

       GLOBE GROUND INDIA EMPLOYEES UNION ..... Appellant
                   Through  Ms. Tanya Aggarwal, Advocate.

                           versus

       LUFTHANSA GERMAN AIRLINES AND OTHERS ..... Respondent
                     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.
       CORAM:
       HON'BLE MR. JUSTICE SANJIV KHANNA
       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 dated

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.

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 15 th 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 22 nd

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. It cannot be said that the main object of the rule is to prevent multiplicity of actions though it may incidentally have that effect. But that appears to be a desirable consequence of the rule rather than its main objective. The person to be joined must be one whose presence is necessary as a party. What makes a person a necessary party is not merely that he has relevant evidence to give on some of the questions involved; that would only make him a necessary witness. It is not merely that he has an interest in the correct solution of some question involved and has thought of relevant arguments to advance. The only reason which makes it necessary to make a person a party to an action is so that he should be bound by the result of the action and the question to be settled, therefore, must be a question in the action which cannot be effectually and completely settled unless he is a party. The line has been drawn on a wider construction of the rule between the direct interest or the legal interest and commercial interest. It is, therefore, necessary that the person must be directly or legally interested in the action in the answer, i.e., he can say that the litigation may lead to a result which will affect him legally that is by curtailing his legal rights. It is difficult to say that the rule contemplates joining as a defendant a person whose only object is to prosecute his own cause of action. Similar

provision was considered in Amon v. Raphael Tuck & Sons Ltd. [(1956) 1 All ER 273 : (1956) 1 QB 357] , wherein after quoting the observations of Wynn-Parry, J. in Dollfus Mieg et Compagnie S.A. v. Bank of England [(1950) 2 All ER 605, 611] , that their true test lies not so much in an analysis of what are the constituents of the applicants' rights, but rather in what would be the result on the subject matter of the action if those rights could be established, Devlin, J. has stated: "The test is „May the order for which the plaintiff is asking directly affect the intervener in the enjoyment of his legal rights‟."

Notwithstanding, the strict legal differentiation between necessary and proper

party, the main purpose of impleading a party to the litigation is to ensure

presence of the said person, having regard to the rights and interests of the

persons involved in the litigation, for the dispute to be finally determined.

These questions are decided on grounds of justice and convenience in the given

factual matrix of a particular case (see Razia Begum Vs. Sahebzadi Anwar

Begum, AIR 1958 SC 886).

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