This Case Commentary is written by Divyansh Samant, a First-year law student of Symbiosis Law School Noida

Introduction.

The case of Fertilizer Corporation Kamgar Union v. Union of India (1981) was a notable event in Indian constitutional law history that cleared confusion and doubts regarding different legal issues such as the inherent distinction between Article 32 & Article 226, the distinction between locus standii of an aggrieved party and maintainability of the writ petition, etc. It also was momentous in the development of Public Interest Litigation which was a neonate concept back in the 1980’s. The contention arose when due to financial constraints the Central Government decided to disinvest shares in Fertilizer Corporation of India (FCI), a Public Sector Undertaking (PSU). This led to discontentment within the Kamgar Union, representing the workers of the FCI who ultimately filed a writ petition in the Supreme Court under Article 32 challenging the legality of the government decision. The petitioners led by the Kamgar Union amongst others claimed that the government’s decision lacked transparency, was arbitrary, and violated the fundamental rights of the workers enshrined in Article 14(Equality before law) and Article 19(1)(g) (Right to different occupations) of Constitution of India. The Court in deciding the writ petition touched upon important legal issues particularly the concept of locus stand i.e. capacity to bring a case to the Court. It also lucidly delved into the correct interpretation of the Constitution of India while articulating the expanding scope of PILs.

Facts: Fertilizer Corporation of India was a Public Sector Undertaking (PSE) that had been a statutory corporation under the government of India with its Board of Directors being appointed by the President of India. In the 1980s the Government was grappling with financial constraints and fiscal deficits and there was a need to increase efficiency in the Public Sector by privatization. Following this, the government through the Board of Directors of the corporation decided to sell dispensable plants and machinery of the Sindri Fertilizer Corporation (a portion of its equity in FCI) and in pursuance of it released a tender on 25 February 1980, inviting bids for the sale of nine units of the closed down chemical plants. The tender was made through an advertisement and the tenderers were required to submit three different envelopes each relating to terms and conditions of the sale. Respondent no. 4 was the highest bidder to buy the entities for a bid price of 7.6 Crores. However, the sale was adjourned as some of the plants and machinery were required for the use of FCI itself, and subsequently, a fresh tender was released. At last, the bid of Respondent no.4 which was Rs. 4.25 crores were accepted, being the highest one.

Legal Issues:

1) Infringement of the Fundamental rights of the workers: The Petitioners alleged that the move of the Board of Directors to disinvest shares was arbitrary, unfair, lacked transparency, and did not have any rational criteria. The said move was asserted by them to be motivated by ulterior purposes and that it also violated principles of natural justice as the final tender was given to a selected group of individuals. (Violation of Article 14). Also, as a result of the sale, many workers would face retrenchment and change in employment terms due to the closure of the sold plants. If this is so, then if such circumstances lead to a violation of a worker’s right to the occupation (Article 19 (1)(g)) was to be determined by the Court.

2)Locus standii, PIL: Whether the petitioners could bring the said action in Court was a pertinent legal issue. The Kamgar Union argued that they were the party representing the interests of the workers who would have been affected directly by the sale decision, however, it was before the Court to decide if the Union had sufficient interest and direct relation to the workers or not. Hence the concepts of Public Interest Litigation had to be delved into as well.

3)Maintainability of Petition: A significant constitutional law question in the case was whether or not the writ was capable of being held maintainable under Article 32 of the Constitution or whether Article 226 should have been the correct remedy sought by the petitioners (under Article 43(a)).

Applicable Rule:

1) Article 14-Article 14 of the Constitution of India talks about the obligation of the state to provide equal protection of the law or maintain equality before the law to any person within India. However, the Supreme Court of India, expanding the scope of Article 14 has used it to enforce equity and reasonability in actions of the state, ensuring that state actions are not arbitrary. Article 14 empowers individuals to challenge discriminatory laws or governmental actions through judicial review and also allows individuals to assert their rights and hold the state accountable[1].

2)Article 19(1)(g)-Article 19(1)(g) talks about the fundamental right of persons to carry on any occupation, business, trade or profession. It is broad as it is available to all persons and allows them to do any work of their choice.

3)Article 32 & 226-Article 32 guarantees the citizens of India to approach the Supreme Court by appropriate proceedings for remedy i.e. enforcement of rights in case any of the fundamental rights granted by the Constitution of India is violated by the State. Article 226 being of a similar nature gives the right to the citizens to move to the High Courts for enforcement of fundamental rights, however, the right conferred by this article can also be exercised for the enforcement of any other purpose i.e. not just fundamental rights.

4)Maintainability of a petition- Maintainability of the petition means whether or not a Court has appropriate jurisdiction to adjudicate on a matter. Also, it is correlated to the existence and violation of a fundamental right.

Petitioner’s arguments: The petitioners made the following contentions: 1) The reduction in tender prize in the subsequent revised sale was within any reasonable accounting. 2)That the manipulation of the sale was made with ulterior purpose. 3)The restriction of not allowing fresh tenders for the tenderers who submitted tenders exceeding the value of Rs.4 crores about the reduced equipment was unfair and arbitrary. 4)The move of the government had a deleterious effect on the public exchequer and the sale had imperilled the employment of 11,000 odd workers who were to be retrenched as a result of the sale.[2]

Respondent’s arguments: 1)The Attorney-General appearing on behalf of the Union of India contended that the writ was not maintainable because firstly the petitioners have no locus standi and secondly, because the impugned sale does not violate any of their fundamental rights. 2)The Board of Directors of the undertaking had issued fresh offers, the only difference being that they were issued to only those whose earlier tender exceeded the Rs. 4 crores amount. 3)The Chief Engineer had already laid down in his report that the equipment and machinery had become unsafe to work with and could potentially lead to accidents and has highly recommended doing away with them[3].

Judgment: Article 14- With regards to Article 14, the Supreme Court declared that neither the disinvestment decision nor the sale process was unfair and arbitrary, and hence no violation of the fundamental rights under Article 14 of the workers occurred. The Court held that the decision of the government was part of its economic policy to meet the needs of the financial sector of the country. The Board of Directors only sold those plants and equipment that were redundant and posed a risk to the worker's life to the highest bidder (and hence not someone in particular) and had complete authority to do so under Article 68(20) of the Articles of Association Act. The Court said that policy decisions of the executive cannot be subject to judicial review unless they are arbitrary and unreasonable. Article 19(1)(g)- Interpreting Article 19(1)(g), The Court clarified that the right to practice any occupation is not the same thing as the right of the writers to work in a particular post under an employment contract (which is guarded by industrial laws) and that there is no fundamental right to hold a particular post or job of one’s choice. The petitioners were engaged in a contractual employment post and hence no violation of Article 19(1)(g) occurred. Moreover, the Court observed that the sale did not affect the employment of the workers and also the workers had been absorbed in other alternate posts in the other units. Locus Standii & PIL Court after much consideration found that the Petitioners did not have a clear-cut locus stand as their interests were insufficient to intervene in the government’s decision. The Court ruled that economic policy decisions like the disinvestment of shares come under the executive’s domain and as such the workers have no legal right to question it under Article 32. Hon’ble Judge Krishna Iyer(for himself and P.N. Bhagwati)remarked - “Who are you to ask about the illegal act of the Corporation if you have suffered no personal injury to person, property, mind-body or reputation? Public justice is never the janitor of personal motive”

However, the Court acknowledged the larger public interest that the issue raised and said that there may arise in some circumstances view of “changing awareness of legal rights and social obligations” a need to review the concept of locus standii, hence paving the way for the development of PIL’s. The Judges although highlighted the importance of Public Interest Litigation but did not override the power of Judicial review. Article 32 & 226-Also, the Court pointed out a detailed distinction between Article 32 and Article 226 clarifying that only violation of fundamental rights can be challenged under Article 32 which is not the case with Article 226 where High Courts have the power to enforce not just the fundamental rights but also the power for enforcement of any other legal right or any other purpose. It can thus be said that it was a legal error that the petitioners had made by coming to the Supreme Court under Article 32 and not firstly petitioning in the High Court under Article 226 as the latter option might have provided the workers with some relief as to infringement of “any right” instead of fundamental rights exclusively.

Hence due to (a)Incorrect remedy sought by petitioners (b)No infringement of Fundamental Rights and (c)Limitation of Judicial review, the writ petition was held non-maintainable. No contentions of the Petitioners were considered and hence the writ petition was unanimously dismissed by the Supreme Court and no costs were awarded to the petitioners.

CONCLUSION. Fertilizer Corporation Kamgar Union v. Union of India (1981) remains a critical point in Indian Legal history which untangled the doubts regarding locus standii of parties, acknowledged the limited scope of judicial review, and delved into the correct interpretations of Article 14, Article 19(1)(g), Article 32 and Article 226 of the Constitution of India. The Supreme Court dismissing the writ petition filed by the Kamgar Union upheld the government’s move to disinvest shares in Fertilizer Corporation of India (FCI), a public sector undertaking, and ruled that none of the fundamental rights of the workers were infringed. The Court outlined that while public interest is of crucial importance the judiciary cannot override its powers and interfere with the government's administrative and economic policy matters unless there is a clear infraction of the fundamental rights. It also pointed out the error made by the petitioners in seeking incorrect legal recourse under Article 32.

REFERENCES-

1)Faiz Ahmad Khan, ‘Beyond Formal Equality: Exploring the Substantive Dimensions of Article 14 in India’ (2024) 4 Jus Corpus LJ 248 accessed 21 September 2024.

2)Fertilizer Corporation Kamgar Union v Union of India (1981) 1 SCC 568 accessed 21 September 2024.

3)Mouli Singhal, ‘Fertilizer Corporation Kamgar Union (Regd.), Sindri & Another v Union of India and Others’ (thelegalquorum.com, 2023) https://thelegalquorum.com/fertilizer-corporation-kamgar-union-regd-sindri-another-vs-union-of-india-and-others/ accessed 21 September 2024.

[1] Faiz Ahmad Khan, ‘Beyond Formal Equality: Exploring the Substantive Dimensions of Article 14 in India’ (2024) 4 Jus Corpus LJ 248 accessed 21 September 2024.

[2] Fertilizer Corporation Kamgar Union v Union of India (1981) 1 SCC 568 accessed 21 September 2024.

[3]Mouli Singhal, ‘Fertilizer Corporation Kamgar Union (Regd.), Sindri & Another v Union of India and Others’ (thelegalquorum.com, 2023) https://thelegalquorum.com/fertilizer-corporation-kamgar-union-regd-sindri-another-vs-union-of-india-and-others/ accessed 21 September 2024.