Read Time: 10 minutes

Synopsis

The Delhi High Court has recently dismissed a Public Interest Litigation challenging the Centre's decision to convert the Ordnance Factory Board (OFB) into seven corporations. The court said that the “policy decision had been taken in larger public interest and in the interest of the nation to strengthen the defence production in the country”.

 “In the present case, corporatization of the OFB, in no way, is violating or infringing the constitutional rights guaranteed to the citizens and the policy decision has been taken in larger public interest and in the interest of the nation to strengthen the defence production in the country ensuring quality products and a regular supply of arms & ammunitions to the Armed Forces”, the division bench of Chief Justice Satish Chandra Sharma and Justice Sanjeev Narula said.

Stating that no case for interference was made out on the petition by the Bharatiya Pratiraksha Mazdoor Sangh, the court observed that policy-making power was in the sole domain of the executive and it did not violate the constitutional rights guaranteed to citizens.

"The policy framed by Government of India is in national interest keeping in view the defence requirements, and therefore, the question of interference by this court does not arise. The policy decision in the present case, by no stretch of imagination, is violative of Article 21 nor any other constitutional provision," the court observed in its order dated August 3, 2023.

The petitioner, a federation of registered trade unions working in defence installations of Ministry of Defence, including OFB, was an industrial unit of Bharatiya Mazdoor Sangh (BMS). It stated that BPMS was the largest trade union in the country and the petitioner was duly recognised by the Ministry of Defence, Government of India.

The petitioners’ grievance was that in 2020, the Government constituted an Empowered Group of Ministers (EGoM) under the chairmanship of Raksha Mantri to oversee and guide the entire process, whereby the OFB could be converted into one or more than one, 100% government-owned corporate entities. It stated that on May 16, 2020, during the Covid-19 pandemic, the GOI announced its plan to corporatize the Ordnance Factories and the Finance Minister under the “Aatma Nirbhar Bharat Abhiyan” made such an announcement.

The petitioners’ contention was that finally, a notification was issued on October 1, 2021, whereby seven Major Corporations had been established in place of OFB regarding corporatization. It stated that the impugned notification had been passed without considering the views of the workers who were one of the main stakeholders/sufferers in the corporatization process.

“Thus, the impugned notification was the result of abuse of power of Government and suffered from manifest “arbitrariness” and therefore was violative of Article 14 of the Constitution. Moreover, the impugned notification had been issued by illegally silencing the legitimate voice/concerns of the workers of OFB”, it was submitted.

The court noted that the conversion of the Ordnance Factories from a Government department into a public sector company had been recommended by several committees that had been established by different governments in the past, including the T K A Nair Committee (2010), Kelkar Committee (2004), Raman Puri Committee (2015) and Shekatkar Committee (2016).

It noted that while taking the decision to convert OFB into seven corporate entities, the Government had ensured that the service conditions of the existing employees of OFB were protected as Central Government employees and a statement on affidavit had been made that the Government was committed to safeguard the interest of employees of OFB.

“The Government had decided that all employees of OFB (Group A, B & C) belonging to production units would be transferred to the corporate entities on deemed deputation initially for a period of two years without altering their service conditions as Central Government employees”, the court said.

“It had also been stated on the affidavit that the pension liabilities of the retirees and the existing employees would continue to be borne by the Government, that is, the service condition of the employees would not be changed and they would be entitled to the same benefit which they were drawing prior to conversion of OFB into corporate entities registered under the Companies Act, 2013 and 100% owned by the Government”, it added.

The bench opined that the policy decision of the Government was certainly aimed to enhance functional autonomy, efficiency and unleash new growth potential and innovation in Ordnance Factories and that the re-structuring was also aimed at transforming the Ordnance Factories into productive and profitable assets, deepen specialization in product range, enhance competitiveness, improving quality and cost efficiency.

“This Court does not find any reason to interfere with the policy decision of the Government of India especially in light of the fact that the interest of the employees has already been protected. Therefore, no case for interference is made out in the present case. The petition is, accordingly, dismissed”, the court ordered.

Case Title: Bharatiya Pratiraksha Mazdoor Sangh v. Union of India, Ministry of Defence through its Secretary Department of Defence Production & Anr.