GLOBE GROUND INDIA EMPLOYEES UNION versus LUFTHANSA GERMAN AIRLINES & ANR. on 23 April 2019

GLOBE GROUND INDIA EMPLOYEES UNION

v.

LUFTHANSA GERMAN AIRLINES & ANR.

(Civil Appeal Nos. 4076-4077 of 2019)

APRIL 23, 2019

[R. BANUMATHI AND R. SUBHASH REDDY, JJ.]

Industrial Disputes Act, 1947– ss.10(4) and 25-F, 25-G, 25-O, 25-N – Information furnished by the first respondent (holdingcompany of the second respondent-employer of the appellant-workers’ union) that they would stop ground handling services fromthe International Airlines at Delhi – Workers of the appellant-unionwere issued termination notices– Dispute referred by the CentralGovernment to the Industrial Tribunal – Before the Tribunal, theappellant inter alia alleged that second respondent is a joint ventureformed by Globe Ground Deutschland GmbH and one Bird Group,which floated a new company that has undertaken ground handling/ancillary services to international airlines and was utilising the sameequipment belonging to the second respondent and in the saidcompany most of the employees were retained except the trade unionactivists – Though, no relief was claimed against the first respondent,the appellant sought its impleadment in the industrial disputeproceedings on the ground that it is the holding company of thesecond respondent and hence a proper and necessary party–Allowed by the Tribunal – Single Judge set aside the order –Appellant filed intra court appeal – Dismissed – Review – Dismissed– Held: Reference to be answered by the Tribunal was that, whetherthe action of the management of second respondent in closing downtheir establishment on 15.12.2009 and retrenching the services of106 workmen was justified and legal – Whenever, the appropriateGovernment refers the points of dispute for adjudication, the LabourCourt/the Tribunal/the National Tribunal, as the case may be, shallconfine its adjudication to those points only and matters incidentialthereto – Necessary party, is one without whom no order can bemade effectively – Proper party is one in whose absence an effectiveorder can be made but whose presence is necessary for completeand final decision on the question involved in the proceedings –

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AEven in a subsidiary company which is an independent corporateentity, if any other company is holding shares, by itself is no groundto order impleadment of parent company per se – In the presentcase, the second respondent itself is a company in which thesubsidiary of the first respondent, Globe Ground DeutschlandGmbH, was holding 51% shares and 49% shares were held by theBBird Group – Further, having regard to the limited scope ofadjudication to answer the reference, circumscribed by s.10(4) ofthe 1947 Act, the first respondent is neither necessary nor properparty, to answer the reference by the Industrial Court – No error inthe order passed by the Single Judge or the Division Bench – CodeCof Civil Procedure, 1908 – Or.1, r.10 – Doctrine of Piercing Veil.

Code of Civil Procedure, 1908 – Or.1, r.10 – Impleadment ofthird party, not a party to the reference under the 1947 Act – Held:For deciding such application for impleadment what is required tobe considered is whether such party is necessary or proper party toDdecide the lis – It all depends on the facts of each case; theallegations made and the nature of adjudication proceedings etc. –Industrial Disputes Act, 1947.

Words & Phrases – “Necessary Party” and “Proper Party” –Meaning of – Explained.

EDismissing the appeals, the Court

Conclusion

HELD: 1.1 The reference which was required to beanswered by the Industrial Tribunal was that, whether the actionof the Management of M/s Globe Ground India (Pvt.) Limited, inclosing down their establishment on 15.12.2009 and retrenchingFthe services of 106 workmen was justified and legal. It is clearfrom Section 10 of the Industrial Disputes Act, 1947 thatwhenever, the appropriate Government refers the points ofdispute for adjudication, the Labour Court or the Tribunal or theNational Tribunal, as the case may be, shall confine its adjudicationGto those points only and matters incidential thereto. Whenever,an application is filed in the adjudication proceedings, either beforethe Industrial Tribunal in a reference made under the IndustrialDisputes Act, 1947 or any other legal proceedings, forimpleadment of a party who is not a party to the proceedings, H

what is required to be considered is whether such party which issought to be impleaded is either necessary or proper party todecide the lis. The two expressions “necessary” or “proper”parties have separate and different connotations. 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 bemade but whose presence is necessary for complete andfinal decision on the question involved in the proceedings.[Paras 10, 11][649-C-G]

1.2 Whenever an application is filed for impleadment of athird party, who is not a party to the reference under the IndustrialDisputes Act or any other proceedings pending before the Court,what is required to be considered is whether such party is eithernecessary or proper party to decide the lis. It all depends on thefacts of each case; the allegations made and the nature ofadjudication proceedings etc. In this case it is to be noted thatonly the scope of reference is limited. It is also clear from Section10(4) of the Industrial Disputes Act, 1947 that whenever areference is made, the Industrial Court shall confine itsadjudication to the point of reference and matters incidentalthereto only. In the case on hand, the first respondent had asubsidiary, namely, Globe Ground Deutschland GmbH, which washolding 51% shares along with 49% shares held by the Bird Groupin the second respondent company. The Bird Group had floatedanother company, Bird Worldwide Flight Services Ltd. to provideground handling and ancillary services which started from themonth of January, 2009. [Paras 15, 16][650-G-H; 651-A-C]

1.3 Even in a subsidiary company which is an independentcorporate entity, if any other company is holding shares, by itselfis no ground to order impleadment of parent company per se. Inthe case at hand,the second respondent itself is a company inwhich the subsidiary of the first respondent, namely, Globe GroundDeutschland GmbH, was holding 51% shares and 49% shareswere held by the Bird Group. As per the case of the appellant,the Bird Group has floated another company and started handlingservices from the month of January, 2009 by uitlizing the sameequipments and vehicles belonging to the second respondent.

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AFurther, having regard to limited scope of adjudication, to answerthe reference, which is circumscribed by Section 10(4) of theIndustrial Dispute Act, 1947, the first respondent is neithernecessary nor proper party, to answer the reference by theIndustrial Court. No error in the order passed by the Single Judgeor in the order of the Division Bench passed by the High CourtBof Delhi in the impugned judgment, so as to interfere withsuch reasoned and concurrent findings recorded by the courts.[Para 19][652-B-E]

Balwant Rai Saluja and another v. AIR India Limitedand others (2014) 9 SCC 407 ; Kasturi v. IyyamperumalCand others (2005) 6 SCC 733 : [2005] 3 SCR 864– relied on.

Hochtief Gammon v. Industrial Tribunal, and othersAIR 1964 SC 1746 : [1964] SCR 596; Hussainbhai v.Alath Factory Thezhilali Union and others (1978) 4 SCCD257 : [1978] 3 SCR 1073 ; Grindlays Bank Ltd. v.Central Government Industrial Tribunal and others1980 (Supp) SCC 420 : [1981] SCR 341 – referredto.

Case Law Reference

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CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 4076-4077 of 2019.

From the Judgment and Order dated 24.11.2016 of the HighGCourt of Delhi at New Delhi in L.P.A. No. 107 of 2016 and order dated14.07.2017 in Rev. Pet. No.146 of 2017.

Colin Gonsalves, Sr. Adv., Ms. Aditi Gupta, Satya Mitra Advs.for the Appellant.

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Chander Uday Singh, Sr. Adv., Amar Dave, Bhargava V. Desai,Akshat Malpani, Alok Bhasin, Virender Mehta, Tarak Saha, AmrendraKumar Mehta, Advs. for the Respondents.

The Judgment of the Court was delivered by

R. SUBHASH REDDY, J. 1. Leave granted.

2. These appeals are directed against the judgment and orderdated 24.11.2016 passed in L.P.A. No.107 of 2016 and order dated14.7.2017 in R.P.No.146 of 2017 by the High Court of Delhi at NewDelhi.

3. Necessary facts in brief for disposal of these appeals are that,the appellant workers’ union raised the industrial dispute which wasreferred by the Central Government to Industrial Tribunal-cum-LabourCourt by an order dated 04.02.2010. The question which was referredfor adjudication by the Industrial Tribunal reads as under:- “Whether the action of the Management of M/s Globe GroundIndia Private Ltd., New Delhi, a subsidiary of Lufthansa GermanAirlines (Carrier), in closing down their establishment on 15.12.2009and retrenching the services of 106 workmen (as per annexure)is justified and legal? To what reliefs are the workmen concernedentitled?”

4. The aforesaid reference order was sent by the Government tothe Presiding Officer of Tribunal and also to the second respondent herein.There was no communication of such reference to, Lufthansa GermanAirlines. Before the Industrial Tribunal, the appellant workers’ unionfiled a statement on 10.3.2010, inter alia stating that the secondrespondent company is a subsidiary of the first respondent and wasproviding ground handling and ancillary services at the Indira GandhiInternational Airport and airports located in different places like Calcutta,Mumbai, Bengaluru, Chennai, Hyderabad etc. The second respondentGlobe Ground Private Limited is a company, and is a joint venture formedby Globe Ground Deutschland GmbH and the Bird Group with 51% and49% shares respectively. In December, 2008, the Bird Group had floatedanother company, Bird Worldwide Flight Services Ltd. which hasundertaken ground handling and ancillary services to international airlines.In the claim petition filed before the Industrial Tribunal, it is the specificcase of the appellant that, the new company which has started ground A

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Ahandling services from January, 2009, is utilising the same equipmentbelonging to the second respondent. On the information furnished bythe first respondent that they would stop ground handling services fromthe International Airlines at Delhi w.e.f. 15.12.2009, the members of theappellant’s union were issued termination notices and the same is inviolation of Sections 25-F, 25-G, 25-O and 25-N and other provisions ofBthe Industrial Disputes Act, 1947. It is the allegation of the appellantthat the first respondent has not closed down or stopped the business inIndia. It is also specifically alleged that the new company has retainedmost of the employees who worked earlier except the trade unionactivists. As claimed before the Industrial Court, it is the case of theCappellant that management i.e. the second respondent should reinstateleft out workmen in service by extending the benefit of continuity ofservice and full wages. Before the Industrial Court, the secondrespondent herein has filed reply. In the reply filed, while denying variousallegations made by the claimant, the second respondent as a fact has stated that the second respondent was providing handling services to theDLufthansa German Airlines.

5. Though, no relief is claimed against the first respondent i.e. theLufthansa German Airlines, the appellant’s union has filed an applicationfor impleadment of the first respondent in ongoing proceedings relatingto industrial dispute. There was an order allowing the application filedEby the appellant earlier, which was set aside by the High Court in theWrit Petiton by remitting the matter back for fresh consideration andsubsequently the Industrial Tribunal has passed an order dated12.12.2013, impleading the first respondent as a party, mainly on theground that the first respondent was a holding company of the secondFrespondent. Aggrieved by the order dated 12.12.2013, the first respondenti.e. Lufthansa German Airlines has filed Writ Petition (Civil) No.1255 of2014 before the High Court of Delhi at New Delhi, which was allowedby the learned Single Judge by judgment dated 21.04.2014, by settingaside the order dated 12.12.2013 passed by the Industrial Tribunal.Aggrieved by the order of the learned Single Judge, the appellantGemployees’ union has filed intra court appeal under clause X of theLetters Patent, in L.P.A No. 107 of 2016 which is dismissed by theDivision Bench of the High Court by the impugned order dated24.11.2016. 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 andfurther order dated 14.7.2017 passed in R.P.No.146 of 2017, the appellantis before us in these appeals.

6. We have heard at length Sri Colin Gonsalves, learned seniorcounsel appearing for the appellant and Sri Chander Uday Singh, learnedsenior counsel appearing for respondent No.1.

7. Learned senior counsel Sri Colin Gonsalves, appearing for theappellant herein, has submitted that the second respondent was asubsidiary of the first respondent and was providing ground handling andother ancillary services to the first respondent at the Indira GandhiInternational Airport and other airlines. The first respondent had asubsidiary, namely, Globe Ground Deutschland GmbH, for the groundhandling work and the second respondent herein Globe Ground IndiaPvt. Ltd. is a joint venture formed by Globe Ground Deutschland GmbHand the Bird Group with 51% and 49% shares, respectively. In December,2008, the Bird Group had floated a new company, Bird Worldwide FlightServices Ltd. to provide ground handling services by utilizing the sameequipment and vehicles which belonged to the second respondent. Theworkmen of the second respondent were deployed by the new companyto operate the said equipment and provide ground handling and ancillaryservices. It is submitted that only pursuant to instructions of the firstrespondent to the second respondent on 9.12.2009 that they would stopavailing ground handling services from 15.12.2009 the workmen of theappellant’s union were terminated. By referring to the claim-petitionfiled before the Tribunal, it is stated that the first respondent is a necessaryand proper party to the proceedings. It is submitted that this Court hasto look into by lifting corporate veil, to examine whether the firstrespondent is a necessary and proper party or not. It is submitted thatfor all practical purposes the first respondent is a controlling companyand having regard to the claim made in the claim petition, the firstrespondent is a necessary and proper party. It is the contention of thelearned senior counsel that the well reasoned order passed by theIndustrial Tribunal is set aside by the learned Single Judge and the sameis confirmed by the Division Bench by the impugned order withoutassigning valid reasons. In support of his plea, learned senior counselhas placed reliance on the judgment in the case of Hochtief Gammon A

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Avs. Industrial Tribunal, and others[1] and the judgment in the case ofHussainbhai vs. Alath Factory Thezhilali Union and others[2] andthe judgment in the case of Grindlays Bank Ltd. vs. CentralGovernment Industrial Tribunal and others[3].

8. On the other hand, Sri Chander Uday Singh learned seniorBcounsel, appearing for the first respondent, has submitted that the firstrespondent was never the employer of the workmen of the appellant’sunion. It is submitted that the termination notice to the members of theappellant’s union were issued by the second respondent and further, bytaking us to the reference order which is referred for adjudication by theIndustrial Tribunal, it is submitted that the first respondent is neither aCnecessary nor a proper party to the proceedings before the IndustrialCourt. Further by referring to communication dated 10.12.2009 addressedby the appellant’s union, it is submitted that the said notice was issuedonly to the second respondent protesting against the closure of businessand retrenchment of the employees in New Delhi International Airport.DFurther by referring to the reference order, it is submitted that by seekingimpleadment of the first respondent, the appellant cannot seek to expandthe scope of the reference. Learned senior counsel by referring toSection 10(4) of the Industrial Disutes Act, 1947 has also submitted thatthe appropriate Government has specified the points of dispute foradjudication, the Tribunal shall confine its adjudication to those pointsEonly and matters incidental thereto. As such, it is submitted that to answerthe reference which is referred by the Government, the first respondentis neither a necessary nor proper party. He further submitted that, theparent company is not liable for the acts of its subsidiary. Reliance isplaced on the judgment of this Court in the case of Balwant Rai Saluja Fand another vs. AIR India Limited and others[4] and also on thejudgment in the case of Kasturi vs. Iyyamperumal and others[5].

9. In the rejoinder affidavit, learned counsel for the appellant, hassubmitted that if ultimately reference is ordered in favour of the appellant’sunion, no fruitful purpose will be served to the members of the union asGsubmitted that for all practical purposes the first respondent is to beconsidered as an employer. It is submitted that in such view of the 1 AIR 1964 SC 17462 (1978) 4 SCC 2573 1980 (Supp) SCC 4204 (2014) 9 SCC 407H5 (2005) 6 SCC 733

matter, the first respondent is to be impleaded as a party respondent inthe reference proceedings, before the Industrial Tribunal.

10. Having heard learned counsel on both sides, we have perusedthe material placed on record. The only question which is required to beconsidered is whether, the first respondent – Lufthansa German Airlinesis to be impleaded as a party respondent or not, in adjudication proceedingsto answer the reference referred by the Central Government to theIndustrial Tribunal-cum-Labour Court vide order dated 4.2.2010. Froma reading of the reference, which is referred to Industrial Tribunal, it isclear that the reference which is required to be answered by the IndustrialTribunal is that, whether the action of the Management of M/s GlobeGround India (Pvt.) Limited, in closing down their establishment on15.12.2009 and retrenching the services of 106 workmen is justified andlegal. At this stage, it is apt to refer to Section 10 of the IndustrialDisputes Act. It is clear from the above said section, whenever, theappropriate Government refers the points of dispute for adjudication, theLabour Court or the Tribunal or the National Tribunal, as the case maybe, shall confine its adjudication to those points only and matters incidentialthereto.

11. Whenever, an application is filed in the adjudication proceedings,either before the Industrial Tribunal in a reference made under theIndustrial Disputes Act, 1947 or any other legal proceedings, forimpleadment of a party who is not a party to the proceedings, what isrequired to be considered is whether such party which is sought to beimpleaded is either necessary or proper party to decide the lis. Theexpressions “necessary” or “proper” parties have been considered timeand again and explained in several decisions. The two expressions haveseparate and different connotations. It is fairly well settled that necessaryparty, is one without whom no order can be made effectively. Similarly,a proper party is one in whose absence an effective order can be madebut whose presence is necessary for complete and final decision on thequestion involved in the proceedings.

12. Learned senior counsel Sri Colin Gonsalves appearing for theappellant, in support of his argument that the first respondent is a holdingcompany of the employer of workmen, as such the first respondent is anecessary and proper party, has placed reliance on the judgment in thecase of Hochtief Gammon vs. Industrial Tribunal, and others A

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A(supra). In the aforesaid judgment while considering the scope of Sections18(3)(b), 11(3), 10(1) of the Industrial Disputes Act, this Court hasconsidered powers of the Tribunal to add necessary and proper parties.In the said judgment this Court has held that if the employer named inreference does not fully represent the interests of the employer as such,other persons who are interested in the undertaking of theBemployer can be joined. But at the same time in the very said judgmentit is held that, the test always must be is the addition of the party necessaryto make adjudication itself effective and enforceable?

13. In another judgment relied upon by the learned senior counselfor the appellant in the case of Hussainbhai vs.Alath FactoryCThezhilali Union and others (supra), this Court has prescribed thetest for determining, workmen employed by independent contractor towork in employer’s factory, whether such workmen are workmen ofthe factory or not. In this judgment, this Court has held that the presenceof intermediate contractors with whom alone workers have immediateDor direct relationship ex contractu is of no consequence when, on liftingthe veil or looking at the conspectus of factors governing employment.

14. Similarly, in another judgment relied upon by the learned seniorcounsel for the appellant in the case of Grindlays Bank Ltd. vs.Central Government Industrial Tribunal and others (supra), thisECourt has held that for the proceedings arising out of the IndustrialDisputes Act, 1947, the provisions of the Evidence Act, in their strictsense, likewise do not apply to the proceedings. It is held that theauthorities to whom reference is made under the Industrial DisputesAct, 1947, being quasi-judicial in nature, have to exercise their discretionin a judicial manner, without caprice, and according to the generalFprinciples of law and rules of natural justice.

15. There cannot be any second opinion on the ratio decided inthe aforesaid cases relied on by the learned senior counsel for theappellant. But, whenever an application is filed for impleadment of athird party, who is not a party to the reference under the Industrial DisputesGAct or any other proceedings pending before the Court, what is requiredto be considered is whether such party is either necessary or properparty to decide the lis. It all depends on the facts of each case; theallegations made and the nature of adjudication proceedings etc. In thiscase it is to be noted that only the scope of reference is limited which isHalready 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 referenceand matters incidental thereto only.

16. Reverting back to the facts of the case on hand it is clear thatthe first respondent had a subsidiary, namely, Globe Ground DeutschlandGmbH, which was holding 51% shares along with 49% shares held bythe Bird Group in the second respondent company. Further, it is clearthat the Bird Group had floated another company, Bird Worldwide FlightServices Ltd. to provide ground handling and ancillary services whichstarted from the month of January, 2009. It is the allegation of theappellant’s union that even after the formation of a new company, suchnew company is utilizing same equipment and vehicles belonging to thesecond respondent. It is also the allegation of the appellant that after theformation of the new company, it has retained most of the employees,except the trade union activists. The appellant workers’ union does notseek employment of the alleged retrenched workers in the firstrespondent.

17. Having regard to facts and circumstances of present case,we are of the opinion that the case law relied on by the learned seniorcounsel for the appellant would not render any assistance in support ofthe appellant’s case.

18. At the same time in the judgment in the case of Balwant RaiSaluja and another vs. AIR India Limited and others (supra) reliedupon by Sri Chander Uday Singh, learned senior counsel for therespondents, this Court has observed that the corporate veil can bepierced and the parent company can be held liable for the conduct of itssubsidiary, only if it is shown that the corporal form is misused toaccomplish certain wrongful purposes. In the aforesaid case, havingregard to facts, it was opined that the doctrine of piercing veil cannot beapplied. In the aforesaid case it is held by this Court that the doctrine ofpiercing veil, has been applied sparingly by the courts.

19. The other judgment relied on by the learned senior counsel forthe respondents in the case of Kasturi vs. Iyyamperumal and others(supra), this Court again considered the test to be applied while consideringthe 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 A

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Acontroversies involved in the proceedings; (2) no effective decree canbe passed in its absence. Applying the aforesaid ratio laid down in thejudgment, referred in the aforesaid cases, we are of the view that thesaid judgment relied on supports the case of the respondents. Further,we are of the view that even in a subsidiary company which is anindependent corporate entity, if any other company is holding shares, byBitself is no ground to order impleadment of parent company per se. Inthe case at hand, it is clear that the second respondent itself is a companyin which the subsidiary of the first respondent, namely, Globe GroundDeutschland GmbH, was holding 51% shares and 49% shares wereheld by the Bird Group. As per the case of the appellant, the BirdCGroup has floated another company and started handling services fromthe month of January, 2009 by uitlizing the same equipments and vehiclesbelonging to the second respondent. Further, having regard to limitedscope of adjudication, to answer the reference, which is circumscribedby 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 answerDthe reference by the Industrial Court. Further, we do not find any errorin the order passed by the learned Single Judge or in the order of theDivision Bench passed by the High Court of Delhi in the impugnedjudgment, so as to interfere with such reasoned and concurrent findingsrecorded by the courts. Thus, these civil appeals are devoid of meritsEand the same are accordingly dismissed, with no order as to costs.

Divya Pandey

Appeals dismissed.

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