Privatization and Insolvency

The steps taken by the Modi government over the last few years from enacting Insolvency &
Bankruptcy Code (IBC) to sharpening other laws have helped banks recover over Rs 5.5 lakh
crore of bad debt, including close to Rs 1 lakh crore from accounts that had been technically
written off. Besides IBC, strengthening prudential norms and increasing the provision coverage
ratio (PCR) requirement for banks including public sector banks (PSBs) have protected banks
from any potential hits. Overall, despite the Covid-19 pandemic, the turnaround in PSBs has
been remarkable. The recent reforms and proposed national asset reconstruction company
(NARCL) will help clean up balance sheets of banks and make fresh capital available from the
sale of bad assets, which will in turn, push credit growth. While there have been allegations of
write off by an incompetent opposition, this is done in accordance with the provisioning norms
fixed by RBI. Even if a loan has been written off, banks make every attempt to recover it. A
write-off is completely different from a waiver. Write-off is only a technical adjustment, whereas
a waiver means banks have given up their right to recover bad debts from the debtors. And under
the Modi government, banks may have written off but not waived bad loans.

it must be said that unlocking value through either quick resolution, monetization or via sale as
in the case of the loss-making Air India deal, which went to the Tatas, the Modi government has
exhibited sound business sense. The Tatas will pay Rs 18,000 crore to acquire Air India from the
government. Of the total money, 15% would go to the government and the rest will go in
clearing debt. This follows the group of ministers (GoM) known as the Air India Specific
Alternative Mechanism (AISAM), approving the bid winner. The long-awaited Air India
divestment is one of the biggest reforms by the Narendra Modi government.

The reserve price was fixed at Rs 12,906 crore and the winning bidder will take Rs 15,300 crore
debt. It will also retain all Air India employees for one year, and can offer VRS in the second
year. The deal includes a 100% stake in Air India and low-fare unit Air India Express as well as
a 50% holding in ground-handling company AISATS.

Air India’s total debt stands at over Rs 61,562 crore, with over Rs 1.1 lakh crore having been
spent on the airline since 2009. Air India, which has accumulated losses of over Rs 70,000 crore,
with a loss of Rs 20 crore per day, is one of the worst legacies of the corrupt Congress regime,
which is singularly responsible for sinking this airline with a series of damning economic
policies. It has taken a tall leader of Prime Minister Narendra Modi to undo the damage done by
Nehru’s decrepit socialism 68 years ago. Under the Air Corporations Act, 1953, Nehru
nationalised nine airlines, namely, Air India, Air Services of India, Airways (India), Bharat
Airways, Deccan Airways, Himalayan Aviation, Indian National Airways, Kalinga Airlines, and
Air India International. These were thereafter brought under the ambit of two PSEs, Indian
Airlines and Air India International. The unpalatable but hard truth is not merely the fact that
airlines were brought under government control but more importantly, running of airlines by
private businesses was made illegal and a criminal offence, with punishments ranging from a
fine of Rs 1,000 to an imprisonment for three months under Section 18(2). Nationalisation was
the “fevicol” Nehru used to fix even all that was rock solid and did not need a glue to start with.
However, Nehru’s Mahalanobis model of socialism, including the Industrial Policy Resolution of
1956 ruined one sector after another.

Comparing losses Kingfisher vs. Air India

The problem in Kingfisher is also to be seen in light of market situation created by the
Government. The Central Government Controls Air India, which is suffering its massive losses,
reportedly the said losses are Rs.30,000 crore. As the taxpayer to the Government, i.e., the tax-
payer continues to bear this burden that means that the Air India continues to fly and keep the
airfares low thereby putting financial burden and causing financial distress on other private
Airlines like Kingfisher. It is indeed an open secret that the huge losses of Air India with
continuous lower pricing because of Government backing led to the operational unviability of
Kingfisher Airlines since it was also constrained to keep its pricing low. Furthermore, the
Government Policy of 5/20, i.e., the requirement to fly 5/20 Aircraft over a period of 5 years
prior permitting Indian Airlines to fly abroad again put financial pressure on Kingfisher Airlines
and it was forced perhaps to take over Deccan Airlines at an artificially inflated price. Moreover,
the distortion of the market created by Jet Etihad deal is well recorded and is in public domain.
As such, the Government cannot wish away its own Policies, which have led to the collapse of
Kingfisher. It must be remembered that Kingfisher is not the first Airline, which has failed. Other
Airlines like erstwhile North-East Airlines, Jettison Airline has also failed due to financial
problems.

What are the factors/parameters considered by the Commission in analyzing whether an

agreement is or likely to cause AAEC?
What is AAEC
Section 20(4) of the Act enumerates the various factors that shall be considered by the CCI while
inspecting any proposed combination or acquisition. These factors include inter alia, the actual
and potential level of Section 20(4) of the Competition Act sets out certain factors that the CCI
shall consider, while determining if a combination causes or is likely to cause an AAEC in the
‘relevant market’ in India
Section 5 and 6 of the Act are the provisions governing combinations in India. Section 5 of the
Competition Act provides that an acquisition of enterprise(s) by one or more persons, a merger, or an
amalgamation exceeding the prescribed thresholds under the Act would require a prior filing to the
CCI as well as receiving of its approval. Section 6 of the Act inter alia provides that ‘combinations’
are required to be mandatorily notified by the parties to the CCI and prohibits combinations that
cause or are likely to cause an AAEC within the relevant market in India.

Anti-competitive agreements are contractual obligations that restrict competition. The provisions
pertaining to the same are provided in Section 3 of the Competition Act, 2002. The Act prohibits
any agreement connected with production, supply, distribution, storage, and acquisition or
control of goods or services as it may cause an appreciable adverse effect on the competitive
affairs of India.

As per Section 3(2) of the Companies Act, 2002, any anti-competitive agreement within the
meaning of section 3(1) is void. The entire agreement is deemed void on the existence of anti-
competitive clauses, which has an appreciable adverse effect on the competition.

Here’s a list of stipulations stated under this provision:

 No enterprise; association of enterprises; person or association of persons are allowed to

enter into any agreement associated with the production, supply, distribution, storage,
acquisition or control of goods/provision/services as it may potentially cause an
appreciable adverse effect of competition within India. Any agreement that contravenes
these provisions shall be declared as void.
 Any agreement between enterprises or associations of enterprises; or persons or
association of persons; or between any person and enterprise.
 Any agreements amongst enterprises or persons at various stages or levels of production
chain in different markets connected with production, supply, distribution, storage, sale
or price of, or trade in goods or provision of services.

Abuse of Dominant Position

Dominant position, as specified in the Act, is a position of strength enjoyed by an enterprise in
the relevant Indian market. It facilitates:
  The independent conduct of operations of competitive forces in the relevant market.
 The influencing of competitors, consumers or relevant market in its favor.

No enterprises or groups are permitted to abuse their dominant position. Section 4(2) of the Act
specifies the following Acts as an abuse of a dominant position:

 Direct or indirect imposition of unfair or discriminatory conditions or price in the sale

and procurement of goods or services.
 Curtailment of the production of goods or survives, or that of technical or scientific
development pertaining to the goods or service.
 Involvement in a practice that results in the denial of market access.
 Drawing conclusions to contracts based on acceptance by other parties of supplementary
obligations which is not associated with the subject of such contact.
 Utilization of the dominant position in one relevant market to either enter into or protect
another relevant market.

The powers of determining the eligibility of any enterprise or group to enjoy a dominant position
is vested with the Competition Commission of India (CCI). It may be noted that the mere
existence of dominance must not be categorized as a dominant position unless the dominance is
abused.

Merger, Amalgamation and Acquisition Control

Section 6 of the Companies Act, 2002, prohibits a person or enterprise from entering into a
combination that could result in an appreciable adverse effect on competition within the relevant
Indian market. On the other hand, if any person or an entire enterprise desires an entry into any
combination, a notice requesting the same shall be addressed to the Competition Commission of
India. The notice specified in the details must include the details of the proposed combination.
The form must be submitted with the prescribed fee within 30 days of the approval of the
proposal pertaining to merger or amalgamation or execution of any agreement or other
documents required for acquisition purposes.

Again, the CCII is the body that is empowered to determine whether the disclosure made under
section 6(2) of the Act is appropriate or if the combination may potentially have an appreciable
adverse effect on the competitive affairs of India.

TATA-Vistara acquisition vis Etihad airway case study

In 2013, Etihad Airways PJSC, which is UAE’s national airline, sought to acquire a 24% stake in
Jet Airways (India) Limited and also certain rights under a Shareholding Agreement (SHA) and a
Commercial Cooperation Agreement (CCA). This acquisition was crossing the thresholds in
terms of the value of the deal as prescribed under the Act and therefore the parties filed a notice
with the CCI. The CCI in its order approved the combination subject to the condition that if at
any time the information provided by the parties were found to be incorrect, then the order would
be revoked. Following factors were considered to determine the deal’s potential AAEC, Since
Etihad is not operating in Indian domestic air transportation services i.e., between two airports
within India, the domestic market was excluded from consideration of any competition concerns.
In the international cargo market, there are more players and therefore, the combination of Jet
and Etihad is not likely to impact competition in the international cargo market.

Share market Air India- Vistara (winter 2022 report)

In the Northern Hemisphere winter season (October 30th-March 25th), India has 86.3 million
nonstop departing seats, domestic and international, across Indian and foreign carriers. That's
according to the latest available data from OAG, with India's top 10 airlines shown below.

Of the 86.3 million, Air India has 8.2 million and Vistara 6.3 million, for a total of 14.5 million.
By joining forces, they'd be firmly India's second-largest operator and have a 16.8% share of the
whole market. They'd be three times smaller than IndiGo but three times larger than Go First,
presently fourth. AirAsia India and Air India Express are added, the Group would have a quarter
of the country's capacity. IndiGo and the Air India Group would have over seven in ten India
seats, really concentrating India's seats.

Merger and acquisition regulation

Regulation 4 of the Combination Regulations provides for certain categories of transactions that
are enumerated as not likely to have an AAEC in India and are therefore exempted. The ten
categories of transactions as enlisted in Schedule 1 are as under:

i) Solely in the investment and ordinary course of business – Investment for less than 25% of the
voting rights need not make a notification to the CCI as these will be deemed to be “investment-
only” transactions.

ii) Creeping acquisition between 25-50% – This refers to situations wherein an existing acquirer
who already holds 25% further acquires a percentage that is less than 50% of the shares, assets,
or voting rights.
iii) Joint control/sole control – In an acquisition wherein an acquirer has 50% or more shares or
voting rights in the target enterprise prior to acquisition and proposes to increase that share, there
is no requirement to notify this transaction unless this will result in the acquirer taking sole
control of the target

iv) Not directly related to any business activity – An exemption from notification is provided
wherein there is an acquisition of fixed assets that are not directly related to the business activity
of the acquirer company, and only made for investment purposes. The acquisition would not
result in any exercise of control by the acquirer.

v) Amended tender offer – This is an exemption from making a fresh/new combination

notification if and where there is a renewal with the open offer filed with the SEBI in terms of
the takeover code, as the combination notification with regards to the original open offer is
already filed with the SEBI.

vi) Acquisition of stock-in-trade and raw materials – Exemption from filing notification where
an acquisition is of raw materials, stores and spares, and other current assets in the ordinary
course of business.

vii) Acquisition of shares, voting rights pursuant to bonus issue/stock

split/buy-back/consolidation of the face value of shares/rights issue – When the acquisition of
shares is due to any of the above-mentioned circumstances, then notification is exempted.

viii) Acquisition of shares or voting rights by underwriters or stockbrokers – Wherein voting

rights/shares are being acquired by a person acting as a registered underwriter or registered
stockbroker of a stock exchange on behalf of his clients, no notification is necessary.

ix) Acquisition of shares of voting rights by a person within the same group – This refers to
intra-group acquisitions, these combinations need not be notified.

x) Merger/amalgamation of two or more enterprises wherein one enterprise holds more than 50%
shares or voting rights of the other enterprise – In such a case, notification is exempted subject to
the condition that the transaction should not result in a transfer from joint control to sole control.
xi) Acquisition of shares, control, voting rights, or assets by a purchaser approved by CCI – In
complex transactions, CCI may contemplate AAEC concerns, and to eliminate such concerns,
CCI sometimes proposes modifications to transactions. These may be structural or behavioural
modifications.

Apart from this, there are a few other exemptions that are also provided under the Act and allied
rules and regulations, which are as follows:

Specific exemptions are granted to regional rural banks and transactions pertaining to
reconstruction/amalgamation of public sector banks, the regulation under competition law shall
not apply to them.

Specific exemptions from CCI approval are also granted to Central Public Sector Enterprises
(CPSE) operating in the oil and gas sector.

Any acquisition of shares of financing facility which is entered into under a loan agreement or
investment agreement by registered FIIs, banks, or public financial institutions, are exempted
from obtaining prior approval from the CCI.

We cant foresight M&A of Air India and Vistara as possible domination over aviation sector , I
will further look after case study of air india and Indian airlines

A successful privatization of Air India is a major victory for the Indian government as the loss-
making Air India has cost taxpayers an average of nearly $3 million a day for the past decade.
Also this acquisition will get Tata, the ownership of iconic brands like Air India, Indian Airlines
& the Maharajah. Hereby Tata will be consolidating its position and has been working on a plan
to combine Vistara, Air India, and AirAsia under a common umbrella. Air India coming back to
the Tata group was also an emotional moment for the group as Ratan Tata, Tata Group
Chairman, tweeted, welcome back, Air India. He said that JRD Tata would have been overjoyed
if he was alive.
Indian airline Industry is beset with many problems, which consist of high price of ATF, scarcity
of skilled labour, quick fleet expansion, rise in labour costs and price competition among the
players. However, the major issue that poses a challenge for the airline industry in India is
infrastructure limitation which is required to be rapidly upgraded.

Airline M&A are on the rise across the globe. These M&A are highly strategic involving several
considerations. Airline M&A bear serious implications for travelers as well as airline employees.

The airlines industry is abuzz with news of M&A. In the last few years airline M&A have been a
growing trend in several countries across the globe. However, M&A in the aviation industry are
highly strategic in nature and are undertaken after taking into consideration several important
factors.

Possible negative outcomes :

The airline that takes over the aircraft (acquirer) pursuant to merger / takeover or sale / transfer
of the aircraft may be allowed the use of airport infrastructure like parking bays, landing slots
etc., which is allotted by Airport Operator without any payment. This was particularly necessary
as the transferred aircraft is in operation in the country already availing the airport infrastructure.

2. In terms of schedules / connectivity etc. it will be in public convenience if usage of such

infrastructure is allowed to the airline that take over the aircraft provided the user rights are
actually used by the airline. Only the user rights over such infrastructure that are given to an
airline on non-payment basis e.g. parking bays, landing slots etc. may be allowed to be used by
the airline that takes over the aircraft. For all other rights, the terms of lease / sale agreement
between the airport operator and the airline may apply.

3. The user rights belong to the Government / airport operator and therefore, cannot be
transferred by one airline to the other airline in any event. The Government / airport operator
shall allow the user rights to be availed by the airline that takes over the aircraft.
4. The user rights will be available with the airline that takes over the aircraft only in respect of
those rights, which are actually under use by the airline that transfers the aircraft. All other rights
will be taken over by the Government / airport operator. The user rights will be available with
the airline that takes over the aircraft only till such time that the infrastructure concerned is under
actual use. If the airline that takes over the aircraft does not use the concerned infrastructure, it
will lose the user rights over the infrastructure.

The merger between Air India and Indian Airlines made perfect sense on paper for over a
decade. Their complementary networks, common ownership and need to generate greater
efficiencies all pointed to the benefits of a merged entity. As it was, the merger coincided with a
flurry of increased domestic and international competition, placing great pressure on
management.

Successful implementation required robust guidance and a capable execution team to handle
such a complex undertaking. Instead, the process moved ahead without first strengthening the
management and organisation structure. More attention was devoted to discussion around non-
core issues such as long term fleet acquisitions and establishing subsidiaries for ground handling
and maintenance, than to addressing the state of the flying business

Air India has continued to see its domestic market share decline. The situation was compounded
by the cultural chasm between Air India and Indian Airlines, leading to an increase in internal
politics, a potentially messy situation in an entity with 35,000 employees. A bloated workforce,
unproductive work practices and political impediments to shedding staff made the creation of a
viable business model extremely challenging. The situation calls for a depth of leadership across
the organisation which still does not exist. There appears to be no clear business plan to revive
the carrier and effecting a turnaround now appears to be a herculean task.

I will further criticial case of air India- Indian airline case via lens of possible outcome
acquisition of Air India-Vistara
1. Economies of Scale: Combination of two or more organizations results in a single large
organization. The large organization enjoys economies of scale in buying (quantity discounts
because of bulk purchases), marketing (advertisement time in media is bought in bulk and
therefore costs less) etc.

2. Unity of interest: There is unity of interest and less scope for manipulation of affairs of
constituent companies.

3. Stability: When compared to other forms of combinations, complete consolidation has more
stability and enjoys longer life.

4. Simple structure: The organization structure is simple. Therefore it is easy to manage and
control.

5. Economy of management: Since there is one single entity, the expense of managing is less
when compared to a holding company structure where a number of officials have to be
employed.

6. Reduction in competition: When competing businesses combine together, then competition is

reduced. The amount spent on advertisement and sales promotions can be reduced.
7. Better management: Since employees of different businesses are combined into one, there is
greater depth of managerial talent available. Better team work, balanced decisions and overall
improvement in performance can be achieved. Since there is one single entity, the expense of
managing is less when compared to a holding company structure where a number of officials
have to be employed.

8. Increased financial strength: As the financial resources of the combined units are merged
together, the combined unit has increased financial resources. The size of the Balance Sheet
increases and the ability of the company to raise funds improves.

9. Expansion and diversification: Increased financial strength and economies of scale achieved
by a combined unit enable it to expand the business. The combined unit can plan for expansion
and diversification to ensure continuous growth.

When we look whether Air India-Air Asia-Vistara acquisition will be successful or not , we can
take up prior case of same merger of Air India and Indian Airlines ,

The merger brought together two disparate entities and created a behemoth with 30,517
employees - 214 per plane. Singapore Airlines has 161 while British Airways has 178.
Air India's high employee-aircraft ratio is expected to come down to 110 per aircraft once 19,000
employees are transferred to two new proposed units - one for ground handling and the other for
maintenance, repair and overhaul (MRO) operations. But, even here, workers want to be deputed
rather than transferred.

No attempts were made to standardise hiring policies for the rank and file. Air India has a five-
day week; Indian Airlines has a six-day week. Indian Airlines pilots were promoted
unconditionally once in six years while Air India pilots complained they got their turn after 10
years - if there was a vacancy. The ground handling teams of the two airlines continue to operate
separately...

"Before the merger, due diligence on HR issues was very poor," says CAPA'S Kaul. Some of the
gaps are being addressed but the process has been painfully slow. Five years after the two
airlines merged, staffers below the level of deputy general manager have still not been integrated.

Air India was also hurt by the delay in integrating the two airline reservation systems. A single
system allows it to sell tickets under one airline code, join alliances and ink code-share
agreements. It took until February 2011 for a common reservation system to come up.

Tata Motors’ long-term strategy included consolidating its position in the domestic Indian
market and expanding its international footprint by leveraging on in-house capabilities and
products and also through acquisitions and strategic collaborations. On acquiring JLR, Ratan
Tata, Chairman, Tata Group, said, “We are very pleased at the prospect of Jaguar and Land
Rover being a significant part of our automotive business. We have enormous respect for the two
brands and will endeavor to preserve and build on their heritage and competitiveness, keeping
their identities intact. We aim to support their growth, while holding true to our principles of
allowing the management and employees to bring their experience and expertise to bear on the
growth of the business.”

Tata’s takeover of Jaguar Land Rover did not always look promising. The financial crisis hit
soon after the deal closed, and demand for luxury cars tumbled in Europe and North America —
its two biggest markets. Struggling with a $3 billion debt it took on to pay for the deal, Tata
Motors was forced to put more money into the company after it failed to secure financial aid
from Britain.

Tata’s JLR deal was not looking good on paper while regarding to their finances but the proper
management of resources and finances brings lusture to either of JLR and TATA motors the
same can happen with TATA’s acquisition in aviation sector can result in global premium
service as it promises

TATA going to purchase 500 more aircraft

India’s largest conglomerate Tata Sons at present owns four airlines, Air India and its other arm
Air India Express, along with a majority share in Vistara and AirAsia India. Recently, Tata Sons
declared that it would merge Air India with Vistara. The merger would make Air India the
country’s largest international and second-largest local carrier with a fleet of 218 aircraft.
This deal has the potential to rank among the biggest by a single airline in terms of volume— it
could easily top $100 billion at list prices, including options. It could even overshadow an
American Airlines order for 460 Airbus and Boeing jets, more than a decade ago.

India is the world’s fastest-growing airline market— 500 new jets would both replace and
expand fleets, and serve a consumer base that continues to expand as more and more Indians
look at flying as an affordable and convenient travel option.
Prime Minister Narendra Modi has often spoken of his government’s goal to make India a $5
trillion economy. This deal would contribute to that.

Experts have warned of various obstacles that stand in the way of Air India’s ambition of
becoming a global leader again. These include frail domestic infrastructure, pilot shortages and
the threat of tough competition with established Gulf and other carriers.

Undoubtedly, the impact of mergers and acquisitions on employees is one of the riskiest factors
when we explore the advantages and disadvantages of mergers and acquisitions.Poor employee
management can crumble a company, no matter how many new assets it has acquired or how
much money it's saving as a result of the merger or acquisition.

The real fear is to employee , prior merger of Air India got backlashed due to its poor
employement policy

The Tata group had taken over the management of Air India on January 27 and as part of the Rs
2,700-crore deal the government has ensured that Tata Sons will have to retain all employees of
the airline for one year as part of the share purchase agreement. Furthermore, as part of the deal,
the Tatas also had the option of offering VRS if they were looking to retrench employees after
one year.Air India announced a VRS in June for permanent employees who have completed 55
years of age or 20 years of continuous service with the airline. As part of the new VRS for some
cabin crew, clerical and unskilled staffers, the VRS eligibility age has been relaxed from 55
years to 40 years.

Air India has been loggerheads with employees residing in company accommodation in Mumbai
and Delhi for months now. Air India's employees have until July 26 to vacate their staff quarters
both in Delhi and Mumbai.In May, the central government had asked Air India to remind its
workers residing in Delhi's Vasant Vihar and Mumbai's Kalina areas to vacate the premises by
that date.

The decision had been taken even before Air India's sale to the Tatas when the government
decided that Air India's land and colonies in these places would have to be vacated within six
months of the privatisation process being completed. the airline's employees approached the
Bombay High Court to challenge the decision.
TERMINATION OF EMPLOYEES DURING MERGER AND ACQUISITION

An acquisition has manifold considerations, movement of employees and their rights being one
of the most important aspects. A change in the ownership or management of a company may
result in a significant change in the working conditions of employees. Transfer of employees
between different locations of the new entity, change in work profiles and execution of fresh or
revised employment agreement with the new entity are some of the changes that would arise as a
result of a merger or an acquisition.

Section 2 (s) of the Industrial Disputes Act, 1947 ("ID Act") defines 'workman' as any person
who does any manual, unskilled, skilled, technical, operational, clerical or supervisory work for
hire or reward and for the purposes of any proceedings in relation to an industrial dispute,
includes any such person who has been dismissed, discharged or retrenched in connection with,
or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to
that dispute.

As per Section 25FF of the ID Act, where the ownership or management of an undertaking is
transferred, whether by agreement or by operation of law, from the employer in relation to that
undertaking to a new employer, every workman who has been in continuous service for not less
than one year in that undertaking immediately before such transfer shall be entitled to notice and
compensation in accordance with the provisions of section 25F, as if the workman had been
retrenched. There is a proviso to this section which states that a workman will not be entitled to
any notice or compensation if the following conditions are fulfilled:

 the service of the workman has not been interrupted by such transfer;
 the terms and conditions of service applicable to the workman after such transfer are not
in any way less favorable to the workman than those applicable to him immediately
before the transfer; and
 the new employer is under the terms of such transfer or otherwise, legally liable to pay to
the workman, in the event of his retrenchment, compensation on the basis that his service
has been continuous and has not been interrupted by the transfer.

However, the Supreme Court in the case of Sunil Kr. Ghosh v. K. Ram Chandran ((2011) 14
SCC 320) has held that, in the event employees are transferred to a new employer, it is
mandatory for the old employer to take the consent of the workmen even if there is no change in
the terms and conditions of their service and they are transferred on same or more favourable
terms. In the event the workmen do not consent to such transfer, they will have to be given
retrenchment compensation as per the provisions of the ID Act. This brought through a paradigm
shift in the industrial jurisprudence with regard to rights of workman in case of their transfer to
new employer. The reasoning given by the Supreme Court for the decision is that a workman
cannot be forced to work for anyone against their wish.

In recent case of twitter acquisition by elon musk , Twitter Inc. is facing new legal fallout from
mass layoffs under Elon Musk’s management, including complaints from some workers that
severance payments are less than promised and from other employees that the company
retaliated against them for exercising protected labor rights. The latest legal actions follow a
class-action lawsuit filed when the layoffs first began in early November which accused the
company of failing to give enough notice to hundreds of employees facing termination there is
certain fear in aviation sector regarding mass termination,changes in policy and enactment but
heres where labour law comes in force .
Tesla Inc was sued in Texas federal court in June for allegedly violating the WARN Act through
an abrupt nationwide purge of its workforce, including 500 layoffs at a factory in Sparks,
Nevada. Liss-Riordan also represents the workers in the Tesla case. Tesla has said it was merely
"right-sizing" by firing poorly performing workers and not engaging in layoffs that required
advance notice.
In India , As per Section 9A of the ID Act, if there is any change in the working conditions of
workman as prescribed in Schedule IV of the ID Act, the workman needs to be given notice at
least 21 days in advance of such case

Another important aspect with regard to employees in case of a merger or acquisition if the
employees are being transferred is that, they need to be given continuity of service. Their
seniority should be taken into account by the new employer and the conditions of service shall
not in any way be less favourable than those immediately prior to the transfer. This has to be
mentioned clearly in the new employment agreement/ appointment letter entered into with the
new entity. The Supreme Court in the case of McLeod Russel India Limited vs. Regional
Provident Fund Commissioner, Jalpaiguri and Others [2014(8)Scale 272] has held that the
transferee entity will be liable for any default on part of the transferor entity even if there is an
agreement to the contrary stating that the transferor will be liable. This decision of the Supreme
Court highlights the importance of a thorough due diligence which has to be conducted by the
acquiring entity and clearly ascertain the liabilities of the transferor entity towards provident
fund and various other labour laws and obtain indemnification and damages from the transferor
companies prior to such acquisition, if required.