Case Note & Summary
The appellant, Globe Ground India Employees Union, filed an industrial dispute challenging the closure of M/s Globe Ground India Private Ltd. (second respondent) and retrenchment of 106 workmen on 15.12.2009. The Central Government referred the dispute to the Industrial Tribunal-cum-Labour Court on 04.02.2010. The appellant sought to implead Lufthansa German Airlines (first respondent), the holding company of the second respondent, as a party to the proceedings. The Industrial Tribunal allowed the impleadment, but the Delhi High Court set aside that order, holding that the first respondent was neither a necessary nor a proper party. The Division Bench dismissed the appeal and review petition. The Supreme Court upheld the High Court's decision, reasoning that the reference was confined to the management of the second respondent, and the first respondent was not the employer. The court noted that the parent company is not liable for acts of its subsidiary unless the corporate veil is lifted, which was not justified. The court also emphasized that under Section 10(4) of the Industrial Disputes Act, 1947, the Tribunal must confine its adjudication to the points of dispute referred. The appeals were dismissed.
Headnote
A) Industrial Law - Impleadment of Party - Necessary and Proper Party - Section 10(4) Industrial Disputes Act, 1947 - The court considered whether a holding company is a necessary or proper party in a reference concerning closure and retrenchment by its subsidiary. Held that the holding company is not a necessary party as the reference is confined to the management of the subsidiary, and the parent company is not liable for acts of its subsidiary unless the corporate veil is lifted, which was not warranted in this case (Paras 10-12).
B) Industrial Law - Scope of Reference - Section 10(4) Industrial Disputes Act, 1947 - The Industrial Tribunal must confine its adjudication to the points of dispute referred by the Government and matters incidental thereto. Impleading the holding company would expand the scope of the reference beyond the terms of reference (Para 10).
C) Company Law - Lifting Corporate Veil - Subsidiary and Holding Company - The court declined to lift the corporate veil to treat the holding company as an employer, as the subsidiary was a separate legal entity and the termination notices were issued by the subsidiary (Paras 11-12).
Issue of Consideration
Whether the first respondent (Lufthansa German Airlines) is a necessary or proper party to be impleaded in the industrial dispute reference proceedings before the Industrial Tribunal, where the dispute concerns the closure and retrenchment by its subsidiary (second respondent).
Final Decision
The Supreme Court dismissed the appeals, upholding the Delhi High Court's orders. The court held that the first respondent (Lufthansa German Airlines) is neither a necessary nor a proper party to the industrial dispute reference proceedings before the Industrial Tribunal.
Law Points
- Necessary party
- Proper party
- Impleadment
- Industrial Dispute
- Reference
- Subsidiary
- Holding company
- Lifting corporate veil
- Section 10(4) Industrial Disputes Act
- 1947
Case Details
Civil Appeal Nos. 4076-4077 of 2019 (Arising out of S.L.P.(C)Nos.25341-42 of 2017)
Colin Gonsalves (for appellant), Chander Uday Singh (for respondent No.1)
Globe Ground India Employees Union
Lufthansa German Airlines & Anr.
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Nature of Litigation
Civil appeals against the judgment of the Delhi High Court dismissing the appellant's application for impleadment of the first respondent (holding company) in industrial dispute proceedings.
Remedy Sought
The appellant (workers' union) sought impleadment of Lufthansa German Airlines as a party to the industrial dispute reference before the Industrial Tribunal.
Filing Reason
The appellant alleged that the first respondent was a necessary and proper party as it was the holding company and controlled the second respondent, and that the retrenchment was at its behest.
Previous Decisions
The Industrial Tribunal allowed impleadment; the Single Judge of the Delhi High Court set aside that order; the Division Bench dismissed the appeal and review petition.
Issues
Whether the first respondent (Lufthansa German Airlines) is a necessary or proper party to the industrial dispute reference proceedings before the Industrial Tribunal.
Submissions/Arguments
Appellant: The first respondent is a necessary and proper party as it is the holding company and controlled the second respondent; the corporate veil should be lifted; the first respondent's instructions led to the retrenchment.
Respondent: The first respondent was never the employer; the reference is confined to the management of the second respondent; impleadment would expand the scope of reference; parent company is not liable for acts of subsidiary.
Ratio Decidendi
In a reference under Section 10 of the Industrial Disputes Act, 1947, the Tribunal must confine its adjudication to the points of dispute referred. A holding company is not a necessary or proper party in proceedings concerning its subsidiary's closure and retrenchment, as the parent company is not the employer and is not liable for the subsidiary's acts unless the corporate veil is lifted, which was not warranted in this case.
Judgment Excerpts
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.
Whenever, an application is filed in the adjudication proceedings... for impleadment of a party who 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.
Procedural History
The Central Government referred the industrial dispute to the Industrial Tribunal on 04.02.2010. The appellant filed an application for impleadment of the first respondent. The Industrial Tribunal allowed the application on 12.12.2013. The first respondent challenged this order by filing Writ Petition (Civil) No.1255 of 2014 before the Delhi High Court, which was allowed by the Single Judge on 21.04.2014. The appellant filed an intra-court appeal (L.P.A. No.107 of 2016), which was dismissed by the Division Bench on 24.11.2016. A review petition (R.P. No.146 of 2017) was also dismissed on 14.07.2017. The appellant then appealed to the Supreme Court.
Acts & Sections
- Industrial Disputes Act, 1947: 10, 10(4), 25-F, 25-G, 25-O, 25-N
