Madras High Court Upholds Corporatization of Ordnance Factory Board

Court Rules Policy Decision as Essential for National Interest, Dismisses Appeal by Defence Employees Federation

In a significant judgment, the Division Bench of the Madras High Court dismissed the appeal filed by the All India Defence Employees Federation (AIDEF) challenging the corporatization of the Ordnance Factory Board (OFB). The court upheld the Union Government's policy decision to convert OFB into Defence Public Sector Undertakings (DPSUs), emphasizing the move's alignment with national interest and defense requirements.

The appeal, registered as W.A. No. 3077 of 2025, was adjudicated by Justices R. Suresh Kumar and Hemant Chandangoudar. The bench concluded that the government's decision, taken by the Cabinet Committee on Security and later approved by the Union Cabinet, was crucial for enhancing defense production capabilities. The policy aims to ensure a steady supply of quality arms and ammunition to the Armed Forces, thereby strengthening national security.

AIDEF, represented by Senior Counsel Mr. Ravi Kumar Paul, argued that the corporatization decision violated sections of the Industrial Disputes Act, 1947, particularly concerning ongoing conciliation proceedings. The counsel contended that the decision was taken during pending conciliation, thus prejudicial to employees' interests. However, the court dismissed these objections as hyper-technical, particularly in light of the policy’s national significance.

The court referenced a similar judgment by the Delhi High Court, which had previously dismissed a challenge to the same policy. The Delhi High Court had ruled that the policy was in the national interest and did not infringe upon any constitutional rights of the employees.

In its detailed judgment, the Madras High Court noted that the conciliation proceedings were deemed concluded upon the failure report's receipt by the government. However, it underscored that national security-related policy decisions should not be stalled by procedural technicalities, especially when they have been deliberated over a significant period and are aimed at strengthening the country’s defense infrastructure.

The judgment also highlighted the need for ensuring uninterrupted production capabilities in defense units, citing potential emergencies where national security could be at risk if production was halted. The court reiterated that the policy decision was a strategic move, taken after prolonged deliberations, and was not an ordinary administrative decision.

Ultimately, the court found no merit in the appeal, stating that the policy decision did not violate any constitutional provisions or employees' rights. The dismissal reinforces the government's autonomy in policy-making, especially concerning national security and defense production.

Bottom Line:

Industrial Disputes Act, 1947 - Policy decision of Union Government regarding corporatization of Ordnance Factory Board (OFB) - Challenges based on provisions of Section 33 and Section 22(b) of ID Act - Held, policy decision taken by Union Government for conversion of OFB into Defence Public Sector Undertakings (DPSUs) cannot be stalled on hyper-technical objections and is in national interest.

Statutory provision(s): Industrial Disputes Act, 1947 - Section 33, Section 22(b)

All India Defence Employees Federation (AIDEF) v. Government of India, (Madras)(DB) : Law Finder Doc Id # 2800625