Globe Ground India Employees Union vs Lufthansa German Airlines

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 4076-4077 OF 2019 [Arising out of S.L.P.(C)Nos.25341-42 of 2017]

Globe Ground India Employees Union ... Appellant

Versus

Lufthansa German Airlines & Anr. ... Respondents

J U D G M E N T

R. Subhash Reddy,J.

1. Leave granted.

2. These appeals are directed against the judgment and

order dated 24.11.2016 passed in L.P.A. No.107 of 2016 and

order dated 14.7.2017 in R.P.No.146 of 2017 by the High

Court of Delhi at New Delhi.

3. Necessary facts in brief for disposal of these appeals

are that, the appellant workers’ union raised the industrial

dispute which was referred by the Central Government to Signature Not Verified Digitally signed by MADHU BALA Date: 2019.04.23 17:50:39 IST Reason: Industrial Tribunal-cum-Labour Court by an order dated

1 C.A.@ SLP(C)Nos.25341-42 of 2017

04.02.2010. The question which was referred for adjudication

by the Industrial Tribunal reads as under:-

“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. The aforesaid reference order was sent by the

Government to the Presiding Officer of Tribunal and also to

the second respondent herein. There was no communication of

such reference to, Lufthansa German Airlines. Before the

Industrial Tribunal, the appellant workers’ union filed a

statement on 10.3.2010, inter alia stating that the second

respondent company is a subsidiary of the first respondent

and was providing ground handling and ancillary services at

the Indira Gandhi International Airport and airports located

in different places like Calcutta, Mumbai, Bengaluru,

Chennai, Hyderabad etc. The second respondent Globe Ground

Private Limited is a company, and is a joint venture formed

by Globe Ground Deutschland GmbH and the Bird Group with 51%

and 49% shares respectively. In December, 2008, the Bird

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Group had floated another company, Bird Worldwide Flight

Services Ltd. which has undertaken ground handling and

ancillary services to international airlines. In the claim

petition filed before the Industrial Tribunal, it is the

specific case of the appellant that, the new company which

has started ground handling services from January, 2009, is

utilising the same equipment belonging to the second

respondent. On the information furnished by the first

respondent that they would stop ground handling services

from the International Airlines at Delhi w.e.f. 15.12.2009,

the members of the appellant’s union were issued termination

notices and the same is in violation of Sections 25-F, 25-G,

25-O and 25-N and other provisions of the Industrial

Disputes Act, 1947. It is the allegation of the appellant

that the first respondent has not closed down or stopped the

business in India. It is also specifically alleged that the

new company has retained most of the employees who worked

earlier except the trade union activists. As claimed before

the Industrial Court, it is the case of the appellant that

management i.e. the second respondent should reinstate left

out workmen in service by extending the benefit of

3 C.A.@ SLP(C)Nos.25341-42 of 2017

continuity of service and full wages. Before the Industrial

Court, the second respondent herein has filed reply. In the

reply filed, while denying various allegations made by the

claimant, the second respondent as a fact has stated that

the second respondent was providing handling services to the

Lufthansa German Airlines.

5. Though, no relief is claimed against the first

respondent i.e. the Lufthansa German Airlines, the

appellant’s union has filed an application for impleadment

of the first respondent in ongoing proceedings relating to

industrial dispute. There was an order allowing the

application filed by the appellant earlier, which was set

aside by the High Court in the Writ Petiton by remitting the

matter back for fresh consideration and subsequently the

Industrial Tribunal has passed an order dated 12.12.2013,

impleading the first respondent as a party, mainly on the

ground that the first respondent was a holding company of

the second respondent. Aggrieved by the order dated

12.12.2013, the first respondent i.e. Lufthansa German

Airlines has filed Writ Petition (Civil) No.1255 of 2014

before the High Court of Delhi at New Delhi, which was

4 C.A.@ SLP(C)Nos.25341-42 of 2017

allowed by the learned Single Judge by judgment dated

21.04.2014, by setting aside the order dated 12.12.2013

passed by the Industrial Tribunal. Aggrieved by the order of

the learned Single Judge, the appellant employees’ union has

filed intra court appeal under clause X of the Letters

Patent, in L.P.A No. 107 of 2016 which is dismissed by the

Division Bench of the High Court by the impugned order dated

24.11.2016. Further petition seeking review of the said

order in R.P. No.146 of 2017, is also ended in dismissal by

an order dated 14.7.2017. Questioning the order dated

24.11.2016 in L.P.A No.107 of 2016 and further order dated

14.7.2017 passed in R.P.No.146 of 2017, the appellant is

before us in these appeals.

6. We have heard at length Sri Colin Gonsalves, learned

senior counsel appearing for the appellant and Sri Chander

Uday Singh, learned senior counsel appearing for respondent

No.1.

7. Learned senior counsel Sri Colin Gonsalves, appearing

for the appellant herein, has submitted that the second

respondent was a subsidiary of the first respondent and was

providing ground handling and other ancillary services to

5 C.A.@ SLP(C)Nos.25341-42 of 2017

the first respondent at the Indira Gandhi International

Airport and other airlines. The first respondent had a

subsidiary, namely, Globe Ground Deutschland GmbH, for the

ground handling work and the second respondent herein Globe

Ground India Pvt. Ltd. is a joint venture formed by Globe

Ground Deutschland GmbH and the Bird Group with 51% and 49%

shares, respectively. In December, 2008, the Bird Group had

floated a new company, Bird Worldwide Flight Services Ltd.

to provide ground handling services by 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. It is

submitted that only pursuant to instructions of the first

respondent to the second respondent on 9.12.2009 that they

would stop availing ground handling services from 15.12.2009

the workmen of the appellant’s union were terminated. By

referring to the claim-petition filed before the Tribunal,

it is stated that the first respondent is a necessary and

proper party to the proceedings. It is submitted that this

Court has to look into by lifting corporate veil, to examine

6 C.A.@ SLP(C)Nos.25341-42 of 2017

whether the first respondent is a necessary and proper party

or not. It is submitted that for all practical purposes the

first respondent is a controlling company and having regard

to the claim made in the claim petition, the first

respondent is a necessary and proper party. It is the

contention of the learned senior counsel that the well

reasoned order passed by the Industrial Tribunal is set

aside by the learned Single Judge and the same is confirmed

by the Division Bench by the impugned order without

assigning valid reasons. In support of his plea, learned

senior counsel has placed reliance on the judgment in the

case of Hochtief Gammon vs. Industrial Tribunal, and others1

and the judgment in the case of Hussainbhai vs. Alath

Factory Thezhilali Union and others2 and the judgment in

the case of Grindlays Bank Ltd. vs. Central Government

Industrial Tribunal and others3.

8. On the other hand, Sri Chander Uday Singh learned

senior counsel, appearing for the first respondent, has

submitted that the first respondent was never the employer

of the workmen of the appellant’s union. It is submitted

1 AIR 1964 SC 1746 2 (1978) 4 SCC 257 3 1980 (Supp) SCC 420

7 C.A.@ SLP(C)Nos.25341-42 of 2017

that the termination notice to the members of the

appellant’s union were issued by the second respondent and

further, by taking us to the reference order which is

referred for adjudication by the Industrial Tribunal, it is

submitted that the first respondent is neither a necessary

nor a proper party to the proceedings before the Industrial

Court. Further by referring to communication dated

10.12.2009 addressed by the appellant’s union, it is

submitted that the said notice was issued only to the second

respondent protesting against the closure of business and

retrenchment of the employees in New Delhi International

Airport. Further by referring to the reference order, it is

submitted that by seeking impleadment of the first

respondent, the appellant cannot seek to expand the scope of

the reference. Learned senior counsel by referring to

Section 10(4) of the Industrial Disutes Act, 1947 has also

submitted that the appropriate Government has specified

the points of dispute for adjudication, the Tribunal shall

confine its adjudication to those points only and matters

incidental thereto. As such, it is submitted that to answer

the reference which is referred by the Government, the first

8 C.A.@ SLP(C)Nos.25341-42 of 2017

respondent is neither a necessary nor proper party. He

further submitted that, the parent company is not liable for

the acts of its subsidiary. Reliance is placed on the

judgment of this Court in the case of Balwant Rai Saluja and

another vs. AIR India Limited and others4 and also on the

judgment in the case of Kasturi vs. Iyyamperumal and

others5.

9. In the rejoinder affidavit, learned counsel for the

appellant, has submitted that if ultimately reference is

ordered in favour of the appellant’s union, no fruitful

purpose will be served to the members of the union as

submitted that for all practical purposes the first

respondent is to be considered as an employer. It is

submitted that in such view of the matter, the first

respondent is to be impleaded as a party respondent in the

reference proceedings, before the Industrial Tribunal.

10. Having heard learned counsel on both sides, we have

perused the material placed on record. The only question

which is required to be considered is whether, the first

respondent – Lufthansa German Airlines is to be impleaded as

4 (2014) 9 SCC 407 5 (2005) 6 SCC 733

9 C.A.@ SLP(C)Nos.25341-42 of 2017

a party respondent or not, in adjudication proceedings to

answer the reference referred by the Central Government to

the Industrial Tribunal-cum-Labour Court vide order dated

4.2.2010. From a reading of the reference, which is referred

to Industrial Tribunal, it is clear that the reference which

is required to be answered by the Industrial Tribunal is

that, whether the action of the Management of M/s Globe

Ground India (Pvt.) Limited, in closing down their

establishment on 15.12.2009 and retrenching the services of

106 workmen is justified and legal. At this stage, it is

apt to refer to Section 10 of the Industrial Disputes Act.

It is clear from the above said section, whenever, the

appropriate Government refers the points of dispute for

adjudication, the Labour Court or the Tribunal or the

National Tribunal, as the case may be, shall confine its

adjudication to those points only and matters incidential

thereto.

11. Whenever, an application is filed in the adjudication

proceedings, either before the Industrial Tribunal in a

reference made under the Industrial Disputes Act, 1947 or

any other legal proceedings, for impleadment of a party who

10 C.A.@ SLP(C)Nos.25341-42 of 2017

is not a party to the proceedings, what is required to be

considered is whether such party which is sought to be

impleaded is either necessary or proper party to decide the

lis. The expressions “necessary” or “proper” parties have

been considered time and again and explained in several

decisions. The two expressions have separate and different

connotations. It is fairly well settled that necessary

party, is one without whom no order can be made

effectively. Similarly, a proper party is one in whose

absence an effective order can be made but whose presence is

necessary for complete and final decision on the question

involved in the proceedings.

12. Learned senior counsel Sri Colin Gonsalves appearing

for the appellant, in support of his argument that the first

respondent is a holding company of the employer of workmen,

as such the first respondent is a necessary and proper

party, has placed reliance on the judgment in the case of

Hochtief Gammon vs. Industrial Tribunal, and others (supra).

In the aforesaid judgment while considering the scope of

Sections 18(3)(b), 11(3), 10(1) of the Industrial Disputes

Act, this Court has considered powers of the Tribunal to add

11 C.A.@ SLP(C)Nos.25341-42 of 2017

necessary and proper parties. In the said judgment this

Court has held that if the employer named in reference does

not fully represent the interests of the employer as such,

other persons who are interested in the undertaking of the

employer can be joined. But at the same time in the very

said judgment it is held that, the test always must be is

the addition of the party necessary to make adjudication

itself effective and enforceable?

13. In another judgment relied upon by the learned senior

counsel for the appellant in the case of Hussainbhai vs.

Alath Factory Thezhilali Union and others (supra), this

Court has prescribed the test for determining, workmen

employed by independent contractor to work in employer’s

factory, whether such workmen are workmen of the factory or

not. In this judgment, this Court has held that the

presence of intermediate contractors with whom alone workers

have immediate or direct relationship ex contractu is of no

consequence when, on lifting the veil or looking at the

conspectus of factors governing employment.

14. Similarly, in another judgment relied upon by the

learned senior counsel for the appellant in the case of

12 C.A.@ SLP(C)Nos.25341-42 of 2017

Grindlays Bank Ltd. vs. Central Government Industrial

Tribunal and others (supra), this Court has held that for

the proceedings arising out of the Industrial Disputes Act,

1947, the provisions of the Evidence Act, in their strict

sense, likewise do not apply to the proceedings. It is held

that the authorities to whom reference is made under the

Industrial Disputes Act, 1947, being quasi-judicial in

nature, have to exercise their discretion in a judicial

manner, without caprice, and according to the general

principles of law and rules of natural justice.

15. There cannot be any second opinion on the ratio

decided in the aforesaid cases relied on by the learned

senior counsel for the appellant. But, whenever an

application is filed for impleadment of a third party, who

is not a party to the reference under the Industrial

Disputes Act or any other proceedings pending before the

Court, what is required to be considered is whether such

party is either necessary or proper party to decide the lis.

It all depends on the facts of each case; the allegations

made and the nature of adjudication proceedings etc. In

this case it is to be noted that only the scope of reference

13 C.A.@ SLP(C)Nos.25341-42 of 2017

is limited which is already discussed above. However, it is

also clear from Section 10(4) of the Industrial Disputes

Act, 1947 that whenever a reference is made, the Industrial

Court shall confine its adjudication to the point of

reference and matters incidental thereto only.

16. Reverting back to the facts of the case on hand it is

clear that the first respondent had a subsidiary, namely,

Globe Ground Deutschland GmbH, which was holding 51% shares

along with 49% shares held by the Bird Group in the second

respondent company. Further, it is clear that the Bird

Group had floated another company, Bird Worldwide Flight

Services Ltd. to provide ground handling and ancillary

services which started from the month of January, 2009. It

is the allegation of the appellant’s union that even after

the formation of a new company, such new company is

utilizing same equipment and vehicles belonging to the

second respondent. It is also the allegation of the

appellant that after the formation of the new company, it

has retained most of the employees, except the trade union

activists. The appellant workers’ union does not seek

14 C.A.@ SLP(C)Nos.25341-42 of 2017

employment of the alleged retrenched workers in the first

respondent.

17. Having regard to facts and circumstances of present

case, we are of the opinion that the case law relied on by

the learned senior counsel for the appellant would not

render any assistance in support of the appellant’s case.

18. At the same time in the judgment in the case of

Balwant Rai Saluja and another vs. AIR India Limited and

others (supra) relied upon by Sri Chander Uday Singh,

learned senior counsel for the respondents, this Court has

observed that the corporate veil can be pierced and the

parent company can be held liable for the conduct of its

subsidiary, only if it is shown that the corporal form is

misused to accomplish certain wrongful purposes. In the

aforesaid case, having regard to facts, it was opined that

the doctrine of piercing veil cannot be applied. In the

aforesaid case it is held by this Court that the doctrine

of piercing veil, has been applied sparingly by the courts.

19. The other judgment relied on by the learned senior

counsel for the respondents in the case of Kasturi vs.

Iyyamperumal and others (supra), this Court again considered

15 C.A.@ SLP(C)Nos.25341-42 of 2017

the test to be applied while considering the application

filed under Order 1 Rule 10 of the Code of Civil Procedure,

1908. It is held that to consider the scope of application,

the tests are:- (1) there must be a right to some relief

against such party in respect of controversies involved in

the proceedings; (2) no effective decree can be passed in

its absence. Applying the aforesaid ratio laid down in the

judgment, referred in the aforesaid cases, we are of the

view that the said judgment relied on supports the case of

the respondents. Further, we are of the view that even in a

subsidiary company which is an independent corporate entity,

if any other company is holding shares, by itself is no

ground to order impleadment of parent company per se. In the

case at hand, it is clear that the second respondent itself

is a company in which the subsidiary of the first

respondent, namely, Globe Ground Deutschland GmbH, was

holding 51% shares and 49% shares were held by the Bird

Group. As per the case of the appellant, the Bird Group

has floated another company and started handling services

from the month of January, 2009 by uitlizing the same

equipments and vehicles belonging to the second respondent.

16 C.A.@ SLP(C)Nos.25341-42 of 2017

Further, having regard to limited scope of adjudication, to

answer the reference, which is circumscribed by Section

10(4) of the Industrial Dispute Act, 1947, we are of the

view that the first respondent is neither necessary nor

proper party, to answer the reference by the Industrial

Court. Further, we do not find any error in the order

passed by the learned Single Judge or in the order of the

Division Bench passed by the High Court of Delhi in the

impugned judgment, so as to interfere with such reasoned and

concurrent findings recorded by the courts. Thus, these

civil appeals are devoid of merits and the same are

accordingly dismissed, with no order as to costs.

.................... J.

[R. Banumathi]

.................... J.

[R. Subhash Reddy] New Delhi April 23, 2019

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