Supreme Court Rules Air India No Longer A State Entity Post Disinvestment

Air India Limited ceased to be State or its instrumentality under Article 12 of the Constitution after its disinvestment and take over by the Tata Group in January 2022, and no case of alleged violation of fundamental right would lie against it, the Supreme Court ruled on Thursday.

The apex court dismissed the appeals filed against a Sept. 20, 2022 verdict of the Bombay High Court which had disposed of four writ petitions instituted by some employees of AIL over alleged stagnation in pay and non-promotion of employees and delay in payment of wage revision arrears, among others.

The top court noted that the petitions before the high court had claimed violation of Articles 14 (equality before law), 16 (equality of opportunity in matters of public employment), and 21 (protection of life and personal liberty) of the Constitution.

A bench of Justices B R Gavai and Sandeep Mehta noted that the high court had disposed of the pleas on the ground of non-maintainability of the writ petitions owing to the privatisation of AIL.

It said there was no dispute that the Government of India, having transferred its 100% share to Talace India Pvt Ltd, ceased to have any administrative control or deep pervasive control over the private entity and hence, 'the company after its disinvestment could not have been treated to be a State anymore after having been taken over by the private company'.

"Thus, unquestionably, the respondent no.3 (AIL) after its disinvestment ceased to be a State or its instrumentality within the meaning of Article 12 of the Constitution of India," it said.

The bench said once AIL ceased to be covered by the definition of State within the meaning of Article 12 of the Constitution, it could not have been subjected to the court's writ jurisdiction under Article 226 of the Constitution.

"The respondent no.3 (AIL), the erstwhile government run airline having been taken over by the private company Talace India Pvt Ltd, unquestionably, is not performing any public duty inasmuch as it has taken over the government company Air India Limited for the purpose of commercial operations, plain and simple, and thus no writ petition is maintainable against respondent no.3 (AIL), it said.

The apex court noted that AIL was a government entity on the date of filing of the writ petitions before the high court and the pleas came to be decided after a significant delay, by which time, the company had been disinvested and taken over by a private player.

It said since AIL had been disinvested and assumed the character of a private entity not performing any public function, the high court could not have exercised the extraordinary writ jurisdiction to issue a writ to such private entity.

"The division bench (of the high court) has taken care to protect the rights of the appellants to seek remedy and thus, it cannot be said that the appellants have been non-suited in the case. It is only that the appellants would have to approach another forum for seeking their remedy," the bench said in its verdict.

"By no stretch of imagination, the delay in disposal of the writ petitions could have been a ground to continue with and maintain the writ petitions because the forum, that is, the high court where the writ petitions were instituted could not have issued a writ to the private respondent which had changed hands in the intervening period," it said.

The bench said the view taken by the high court in denying equitable relief to the appellants and relegating them to approach the appropriate forum for ventilating their grievances was the only just and permissible view.

"In wake of the discussion made hereinabove, we do not find any reason to take a different view from the one taken by the division bench of the Bombay High Court in sustaining the preliminary objection qua maintainability of the writ petitions preferred by the appellants and rejecting the same as being not maintainable," the top court said, while dismissing the appeals.

The bench noted that on Oct. 8, 2021, the Centre announced that it had accepted the bid of Talace India Pvt Ltd to purchase its 100% shares in AIL.

It further noted that on Jan. 27, 2022, pursuant to the share purchase agreement signed with Talace India Pvt Ltd, 100% equity shares of Government of India in AIL were bought by the private company and AIL was privatised.