Delhi High Court Dismisses Air India Appeals, Upholds Arbitral Awards On Wage Arrears For AIAEA & IATA

Today, The Delhi High Court dismissed Air India Limited's appeals and upheld arbitral awards directing the airline and its predecessor entities to pay wage arrears of Rs. 57.92 crore to the All India Aircraft Engineers Association (AIAEA) and Rs. 7.81 lakh to the Indian Aircraft Technicians Association (IATA).

A Division Bench of Justices Anil Kshetrapal and Harish Vaidyanathan Shankar held that Presidential Directives (PDs) issued on wage revision and arrears for engineers and technicians, are binding administrative instructions but do not have the character of statutory law, and that an arbitral tribunal does not exceed its mandate by examining such directives when quantifying admitted dues.

The Court observed:

“This Court is of the considered opinion that the learned Single Judge has rightly observed that while PDs are binding administrative instructions, they do not partake the character of statutory law.”

The dispute arose nearly 18 years ago. AIAEA, representing 480 engineers, and IATA, representing about 2,000 technicians employed with Indian Airlines Limited and its successor entities, claimed arrears from 1 January 1997, recognised under Department of Public Enterprises (DPE) guidelines dated 14 January 1999 and 25 June 1999.

A PD dated 21 July 2006, issued under Section 9 of the Air Corporations (Transfer of Undertakings and Repeal) Act, 1994, required conformity with the DPE guidelines but imposed prospective implementation, notional fixation, and payouts contingent on cash-flow capacity.

Settlements in 2007 fixed notional wages from 1 January 1997 but limited actual payments to 1 August 2006 and 1 August 2005, leaving certain arrears unresolved.

Conciliation proceedings around 2008 failed, and the Supreme Court, by orders dated 9 May 2013 and 9 May 2014, referred the dispute to arbitration to determine the quantum and heads of arrears for 1 January 1997 to 31 December 2007.

The Arbitral Tribunal, by awards dated 25 May 2016, held that arrears were payable from 1 January 1997, rejecting reliance on PDs or financial incapacity. It awarded Rs. 57,92,47,222 to AIAEA and Rs. 7,81,768 to IATA, with 12% interest and 18% interest on default.

Air India challenged the awards under Section 34 of the Arbitration and Conciliation Act, 1996, but the Single Judge rejected the challenge on 8 November 2023.

It then appealed under Section 37, contending that the Tribunal exceeded its mandate by disregarding the 21 July 2006 PD and awarding arrears contrary to prior settlements. AIAEA and IATA argued that arrears from 1 January 1997 had accrued, the PD was administrative, and arbitration was limited to quantification of admitted dues.

The Division Bench held that examining the PD was part of adjudication and within the Tribunal's mandate, especially since the PD formed the basis of Air India's defence. It further observed that having consented to arbitration and not raised the PD before the Supreme Court, Air India could not later challenge the tribunal's jurisdiction.

On evidence, the Court upheld the Tribunal's conclusions on liability and quantification, stating:

“Merely labelling such communications as 'recommendations' does not dilute the substantive tenor of the Appellants' stance, which unmistakably reflected acceptance of the claim and a request for financial approval to discharge the admitted liability.”

The Court rejected equity-based arguments as “an artificial construct,” adding that “the Award neither substitutes law with equity nor grants relief contrary to the applicable legal regime.”

Accordingly, the Bench dismissed the appeal, reiterating that review under Section 37 does not permit re-appreciation of facts and finding no patent illegality or jurisdictional error.

Appearances for appellant (Air India Limited): Advocates Dr. Abhishek Manu Singhvi, Anuradha Dutt, Lynn Pereira, Suman Yadav, Seema Mehta, Avinash K. Singh, Yash Johri.

Appearances for respondent (All India Aircraft Engineers Association): Advocates Jay Salva, Sameer Kumar, Vaibhav Pachauri, Sahil.

Appearances for appellant (National Aviation Company of India Limited): Advocates Arvind Nigam, Avishkar Singhvi, Amit Mishra, Azeem Samuel, Mitakshara Goyal, Akhil Kulshrestha, Vaibhav Kharbanda, Shivam Goel, Shrijeta Pratik.

Appearances for respondent (Indian Aircraft Technicians Association): Advocates Rakesh Kumar, Ramesh Babu.