There are several public sector undertakings where the main switches are turned off because the moment they are activated, the meter starts recording losses. But even keeping the units idle will not save them from terminal complications. For one thing, the dying embers of labour disputes will keep the legal heat on in several courts. The judiciary will give contrary messages as the recent case of Uttar Pradesh Mineral Development Corporation fought in the Allahabad high court and the Supreme Court showed.
The fully state-owned corporation started making losses after its initial buoyancy and by the second decade of its existence, it could not pay even the wages to its 800-odd employees. The operations came to a standstill because of competition from private companies, globalisation and court orders protecting forest and mineral wealth. The corporation tried to borrow funds from the government for payment of wages, but to no avail. The employees moved the high court benches in Allahabad and Lucknow, where the corporation made conciliatory gestures. As the employees pressed their demands before the judiciary, the high court asked the government to absorb the staff "within four months in various organisations of the state government/public sectors and to pay compensation". This led to the appeal of the state government to the Supreme Court.
In this significant judgment, the Supreme Court laid down certain rules which would bring relief to industrial units that have the same plight. Firstly, it ruled that the employees could not rush to the high court when they are not paid their wages. The proper forum in such cases is the industrial tribunal or labour court. When there is alternative remedy available, it should be resorted to. Even if the high court had passed interim orders in the writ petition, it could be dismissed on the ground of availability of alternative remedy. Secondly, there are disputed questions of facts involved and therefore the first forum is the appropriate one; the high court is not equipped to deal with complicated questions of facts. Thirdly, the high court cannot pass orders that are contrary to the statutes and rules, however equitable it might appear.
Lastly, even if the officials of the corporation had made certain promises to pacify the employees, they have no binding force if they are against the law and the rules. In UP, the field is covered by the state Absorption of Retrenched Employees of Government or Public Corporations in Government Service Rules 1999, as amended from time to time. No authority can act inconsistently with the rules. The judgment also conditionally accepted the contention of the corporation that the judiciary could not compel an employer to continue making losses in business. If the employer decides to shut down its undertaking, it has the right to do so, subject to the law in force.
These issues had earlier divided the judges of the Allahabad high court. One judge, who has since been elevated to the Supreme Court (Justice Markandey Katju), had vehemently rejected artificial respiration for such ailing industries. He had said that the court could not ask the government to pay wages to workers even though they had not worked for long periods. Commenting on government policy in commercial matters, he recommended the central and state governments rapidly privatise most of the public sectors and services like banks, telecommunications, electricity, water works and even municipal services. A larger bench of the Allahabad high court, however, overruled Justice Katju and passed the orders that were challenged in the present appeal. The Supreme Court has now upheld the view of the minority judge, though without expressing any view on his judicial activism on the economic policy front.
In contrast to this case, the Supreme Court got Rs 50 crore for disbursement to starving employees of scores of sick Bihar public sector undertakings five years ago in the Kapila Hingorani vs State case in Bihar. The governments of Bihar and Jharkhand shared the burden. The order was passed in a public interest litigation.
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Meanwhile, some key issues on privatisation of public sector industries are still waiting for answers from the Supreme Court. The Balco judgment gave an almost free hand to the government for disinvestment. However, some of the propositions made in that judgment came in for severe criticism and the court had agreed to take a second look at them in the petition of the employees of Jessop Ltd. However, the court has not found time to do this hard and complicated exercise so far. The disinvestment wave has since slowed down, sweeping these questions under the carpet.