Fertilizer Corporation Kamgar Union (Regd.), Sindri & Ors. v. Union of India & Ors.

The case of Fertilizer Corporation Kamgar Union (Regd.), Sindri & Ors. v. Union of India & Ors. is a significant ruling by the Supreme Court of India. The case delves into the balance between fundamental rights and administrative decisions in the public sector. It addresses important issues related to workers’ rights under Article 19(1)(g) (freedom of occupation), the scope of Article 14 (right to equality), and the principle of public interest litigation. In this case, the Court examined the legality of the sale of public-sector assets and its implications for the workers employed in the factory.

The case is also notable for its interpretation of Article 32 of the Constitution, which grants the right to constitutional remedies, and it reinforces the maxim “Ubi jus ibi remedium”—where there is a right, there is a remedy.

Constitutional Provisions Involved

Before delving into the case, it is important to understand the constitutional provisions that are central to the case:

• Article 32 of the Indian Constitution provides the right to approach the Supreme Court for the enforcement of fundamental rights.
• Article 19(1)(g) guarantees the right to carry on any occupation, trade, or business.
• Article 14 guarantees equality before the law and protects individuals from arbitrary actions by the state.
• Article 43A (obiter) relates to worker participation in the management of industries.

These provisions set the framework within which the Court addressed the concerns of the workers in the case.

Facts of Fertilizer Corporation Kamgar Union v. Union of India 

The Fertilizer Corporation of India was a government company established under the Companies Act, 1956. The company’s directors were appointed by the President of India. In February 1980, the Board of Directors decided to sell certain redundant and outdated plants and machinery at the Sindri Fertilizer factory through a public tender process.

The process involved the following steps:

1. First Tender: An advertisement was released, inviting tenders for the sale of several chemical plants. The highest bid, ₹7.6 crore, was submitted by Ganpatrai Agarwal.
2. Modification of Tender: Later, it was decided that some of the equipment and machinery would be retained by the company for other uses, resulting in a modification of the sale offer. This led to a revised tender offering a reduced set of assets.
3. Second Tender: In the revised tender, Ganpatrai Agarwal once again submitted a bid for ₹4.25 crore, which was accepted by the Board. The tender committee approved this as the best offer, and a letter of intent was issued.

The workers at the Sindri plant, who numbered around 11,000, feared that the sale of these assets and the subsequent plant closure would result in retrenchment and unemployment. The union representing the workers, Fertilizer Corporation Kamgar Union, filed a writ petition before the Supreme Court challenging the sale and seeking relief under Article 32 of the Constitution.

The Petitioners’ Contentions

The petitioners, represented by the Fertilizer Corporation Kamgar Union, raised several issues concerning the sale of the plant and machinery:

1. Lack of Expert Report: They argued that the sale was carried out without any technical evaluation or expert report. The absence of an expert opinion on the valuation of the machinery and plants made the process questionable.
2. Unexplained Reduction in Price: The reduction in the bid price—from ₹7.6 crore to ₹4.25 crore—was not justified. The petitioners contended that there was no reasonable explanation for the significant drop in price.
3. Arbitrary Tender Process: The petitioners argued that the decision to restrict fresh tenders only to those who had already submitted bids for amounts over ₹4 crore was unfair and arbitrary.
4. Loss to Public Exchequer: The petitioners contended that the sale resulted in a loss to the public exchequer as the assets were sold at an undervalued price.
5. Violation of Employment Rights: The petitioners claimed that the sale of the plant would jeopardise the jobs of 11,000 workers, violating their right to work and their fundamental right to carry on an occupation under Article 19(1)(g) of the Constitution.

In their writ petition, the workers sought a remedy under Article 32, alleging violations of their fundamental rights.

The Respondents’ Defence

The respondents, which included the Union of India and the Board of Directors of Fertilizer Corporation of India, raised several defences:

1. Lack of Locus Standi: The respondents contended that the petitioners did not have the locus standi (standing) to file the writ petition. They argued that the workers could not invoke Article 32 to challenge the internal decisions of the company.
2. No Violation of Fundamental Rights: The respondents argued that the sale did not violate the fundamental rights of the workers. They pointed out that retrenchment issues, if any, could be addressed under labour laws and were not within the purview of constitutional remedies under Article 32.
3. Valid Administrative Decision: The respondents argued that the decision to sell the plant was taken in good faith, in accordance with the rules governing the company’s functioning. The Board of Directors had the right to manage the assets of the company and dispose of them as necessary.
4. Approval of the President: The sale process had the prior approval of the President of India, as required by the Articles of Association of the company. Therefore, the process followed was in accordance with the statutory requirements.

Issues for Determination

The Supreme Court identified the following key issues for determination:

1. Locus Standi: Whether the workers had the right to file a writ petition under Article 32 for the enforcement of their fundamental rights, and whether they had standing to challenge the sale of assets.
2. Violation of Fundamental Rights: Whether the sale of the assets violated the workers’ rights under Article 19(1)(g) (freedom to carry on occupation) and Article 14 (right to equality).
3. Arbitrary and Unfair Sale Process: Whether the process followed for the sale of the assets was arbitrary, unreasonable, or mala fide, thereby violating the principles of fairness enshrined under Article 14.

Judgement of the Court in Fertilizer Corporation Kamgar Union v. Union of India

The Supreme Court, in its judgement, made several important observations and rulings:

Locus Standi

The Court held that Article 32 can only be invoked to enforce fundamental rights, and therefore, the petitioners must demonstrate that their fundamental rights were violated. While the Court acknowledged that workers have the right to approach the court, it held that the sale of assets itself did not violate the workers’ rights under Article 19(1)(g).

Article 19(1)(g) – Right to Occupation

The Court clarified that Article 19(1)(g) guarantees the right to carry on any occupation, trade, or business, but it does not guarantee the right to a specific job or post. The Court held that the sale of assets, which led to the closure of certain parts of the plant, did not violate the workers’ fundamental right to carry on an occupation. The workers’ rights to continue in their respective jobs were not guaranteed by the Constitution, as the closure of a plant or the retrenchment of workers due to economic reasons did not amount to a violation of Article 19(1)(g).

Article 14 – Fairness in Administrative Action

The Court found that there was no evidence to suggest that the sale process was arbitrary or unfair. The Court held that the decision to sell the plant was taken in accordance with the company’s Articles of Association and had the approval of the President of India. The Court further noted that the Board of Directors had acted within their discretion to manage the assets of the company.

Public Interest Litigation and Locus Standi

The Court noted that the principle of public interest litigation could be invoked in certain cases where public property is mismanaged or dissipated. However, in this case, the Court did not find any evidence of bad faith or improper motive in the sale. Therefore, the workers’ plea was dismissed.

Key Takeaways from Fertilizer Corporation Kamgar Union v. Union of India Judgement

The Fertilizer Corporation Kamgar Union case is significant for several reasons:

1. Occupational Rights: The case clarified the scope of Article 19(1)(g), emphasising that it protects the right to engage in a profession but does not guarantee a right to a particular job or position.
2. Judicial Review: The judgement reinforces the principle that courts will not interfere in the commercial decisions of public enterprises unless there is clear evidence of arbitrariness, unfairness, or mala fides.
3. Locus Standi in Public Interest Litigation: The judgement also made important observations on locus standi in public interest litigation, highlighting that the public interest should be served, but not at the cost of frivolous claims.
4. Public Sector Accountability: The case stressed the importance of transparency in the sale of public assets but also recognised the autonomy of the government in managing its undertakings.

Conclusion

In conclusion, the Fertilizer Corporation Kamgar Union case is a significant decision that clarifies the limits of judicial intervention in the internal workings of public enterprises. It also underscores the balance between the protection of workers’ rights and the right of the state to manage public resources. The Court’s ruling affirmed the broader understanding of Article 19(1)(g), judicial review of administrative decisions, and the evolving scope of public interest litigation in India.