A.K. Bindal
& Anr Vs. Union of India & Ors [2003] Insc 253
(25 April 2003)
S. Rajendra
Babu & G.P. Mathur.
With
T.C.(C) Nos.2, 4, 3, 9, 10, 11, 12, 13, 15 of 2000, T.C. (C) No.35 of 2000, and
T.P. (C) No.326 of 2002 G.P. MATHUR,J.
The
issue raised in these Transfer Petitions is regarding revision of pay scale of
officers of Fertilizer Corporation of India and Hindustan Fertilizer Corporation and, therefore, they are being
disposed of by a common order. For the sake of convenience, we will refer to
the pleadings in Transfer Case No. 8 of 2000 whereby Writ Petition No. 2108 of
1996 which was filed in Delhi High Court was transferred to this Court.
A.K. Bindal,
President, Federation of Officers' Association of Fertilizer Corporation of
India (for short 'FCI') and Dr. K.P. Sinha, authorised representative of
Federation of Officers' Associations of Hindustan Fertilizer Corporation Ltd.
(for short 'HFC') filed Writ Petition No. 2018 of 1996 in Delhi High Court
praying that Clauses 11,12 and 13 of the Memorandum dated 19.7.1995 issued by
Government of India, Ministry of Industry, Department of Public Enterprises and
connected clauses of Annexure V of the said Memorandum be quashed and
consequently the practice of uniform treatment of the officers in the profit and
loss making companies in the FCI/HFC be revived. The other prayer made is that
the respondents be directed to pay to the petitioners by way of interim relief
at least 60% of the benefit of the revision of pay and perks which their
counterparts have been given, pending final decision of the Writ Petition.
The
respondents arrayed in the Writ Petition are
(1)
The Union of India through the Secretary, Department of Fertilizers, in the
Ministry of Chemicals & Fertilizers;
(2)
The Secretary, Department of Public Enterprises, Ministry of Industry,
Government of India;
(3)
The Fertilizer Corporation of India Ltd.; and
(4)
Hindustan Fertilizers Corporation of India Ltd.
The
pleadings of the parties are fairly long and the documents filed are bulky but
we will refer only to basic facts which are necessary for the decision of the
controversy.
In
January, 1961 two Fertilizer companies, namely Sindri Fertilizers and Chemicals
Ltd. and Hindustan Fertilizer and Chemicals Ltd. were merged and a new company
named as Fertilizer Corporation of India Ltd. (for short 'FCI') was created.
Between 1961 and 1977, FCI, came to have 17 Fertilizer Units, 7 of which were
in operation while remaining 10 were at various stages of implementation. In
1978 the Government of India set up a Committee to work out the modalities for reorganisation
of its Fertilizer Industry. On the basis of the recommendation of the
Committee, the Government of India approved the bifurcation and reorganization
of FCI and National Fertilizer Ltd. (for short 'NFL') which was an independent
and separate undertaking at that time and allocated the various units to the
newly created undertakings which were five in number. Namrup, Haldia, Barauni
and Durgapur units were allocated to the newly
formed Hindustan Fertilizer Corporation Ltd. (for short 'HFC') and Sindri, Gorakhpur, Ramagundam, Talcher, Korba and
Jodhpur Mining Organization were retained with FCI.
The
other units were allocated to newly created Rashtriya Chemicals and Fertilizers
Ltd. and National Fertilizers Ltd. while a fifth company dealing exclusively
with planning and development was created which was known as Project and
Development (India) Ltd. After reorganization, the
industrial pattern of pay and DA was introduced and it was made effective from
1.9.1977. The Department of Chemicals and Fertilizers, Government of India
issued a circular on 3.9.1979 which provided that revision of pay scales and
fringe benefits of the officers of the entire FCI/NFL would be the same and
consequently all the officers in the five companies were treated alike with
reference to revision of their pay scales and fringe benefits etc.
The
revision of pay scales of officers which was due from 1.8.1986 could not be
given as the Government did not take steps in that regard. However a decision
was taken by the Government to give ad hoc relief to all the officers working
in the Public Enterprises, following the Industrial DA pattern and related
scales of pay and accordingly ad hoc relief was paid to all the officers of FCI
and HFC with effect from 1.1.1986 at uniform rate. Since the Government did not
take any decision regarding the revision of pay scales and perks of the
officers of the entire public sector in the country, the Bureau of Public
Enterprises (for short 'BPE') which is a policy making division of the
Government of India, recommended for payment of second relief to the officers
of Public Enterprises following the industrial DA pattern on 13.1.1990.
Consequently FCI/NFL issued circulars on 24.1.1990 for giving ad hoc relief to
the officers. During this period the Government of India and also the
Management of FCI and HFC made no distinction on the basis of "loss
making" or "profit making" companies in the matter of revision
of pay scale and fringe benefits to the officers of the companies and they were
treated alike irrespective of the fact that the companies in which they were
working had been making losses. The period of validity of the revised pay
scales made applicable from 1.1.1987 was for five years and thereafter the next
revision of pay scales became due from 1.1.1992 but the same was not done for
the officers employed in FCI and HFC on the ground that the two companies were
incurring losses. However, the other companies in erstwhile FCI/NFL group of
companies were given revised pay scale and fringe benefits with effect from
1.1.1992. According to the petitioners an unfair and unjust policy of
discrimination in the matter of revision of pay scales based upon profits and
losses of the company commenced at this stage. Thereafter the Department of
Public Enterprises, Ministry of Industry, Government of India issued an Office
Memorandum on 12.4.1993 on Wage Policy for the fifth round of wage negotiations
in Public Sector Enterprises (for short 'PSEs') whereby the ban imposed by D.O.
No.2(3)/91-DPE (WC) dated 17.10.1991 was withdrawn and it was directed that the
management of PSEs may commence their wage negotiations with the Trade
Unions/Associations. It further provided that under the new Wage Policy the
Managements were free to negotiate the wage structure keeping in view and
consistent with the generation of resources/profits by the individual
enterprises/units but the Government will not provide any budgetary support for
the wage increase and the respective managements will have to find the
requisite resources from within their own internal generation. Para 5 of this
Office Memorandum specifically said that the wage settlement should be
negotiated by the PSEs in accordance with the above parameters. This was
followed by the impugned Office Memorandum dated 19.7.1995 issued by the
Department of Public Enterprises on the subject of revision of scales of pay of
the Executives holding post below the Board level and non-unionised supervisors
with effect from 1.1.1992. The petitioners are basically aggrieved by para 13
of this Office Memorandum which provides that for sick PSEs registered with the
Board for Industrial and Financial Reconstruction (for short 'BIFR'), pay
revision and grant of other benefits will be allowed only if it is decided to
revive the unit and the revival package should include the enhanced liability
on this account.
The
stand of the respondents in the counter-affidavit filed by them is that FCI and
HFC which were under the administrative control of Department of Fertilizers
(for short 'DOF') were referred to BIFR and were declared as sick companies on
6.11.1992 and 12.11.1992 respectively. Out of the four units of FCI the unit at
Gorakhpur was lying closed since 10.6.1990. The commercial production in the Haldia
unit of FCI which is located in West Bengal did not commence at all ever since its
mechanical completion in 1981. The equity base of both the companies had been
totally eroded as a result of continuous losses. The FCI and HFC had projected
net losses of Rs.562.51 crores and Rs.438.99 crores respectively for the year
1996-1997. The BIFR had appointed Industrial Credit and Investment Corporation
of India Ltd. (for short 'ICICI') as the Operating Agency in March 1994 to
examine various options and work out unit wise rehabilitation plans for these
companies. The ICICI submitted its report in January 1995 and thereafter, the
matter was taken up by Group of Ministers which set up a Committee of officers
to evaluate all the available alternatives for revival of the companies. The
Department of Fertilizers, keeping in view the report of the Operating Agency
as well as suggestions received from various other bodies including the employees
unions/associations formulated revival packages. The package envisaged revamp
of the functional units of these companies namely, Sindri, Ramagundam and Talcher
of FCI and Durgapur, Barauni and Namrup units of HFC at a total investment of
Rs.2201.13 crore (Rs.1736.20 crore for FCI and Rs.464.93 crore for HFC) without
providing for wage revision of the employees. However, due to prior commitment
of funds of Public Sector Units/Cooperative Societies in the Fertilizer Sector
for their ongoing expansion and reluctance of Financial Institutions to fund
the revival packages of sick PSUs, the funding arrangements for these packages
could not be tied up. The ICICI also expressed serious reservation on the
viability of these packages necessitating a review of the same.
The
details of the budgetary support given by the government since 1991-1992 till
1995-1996 have been given in para 12 of the counter- affidavit. It is averred
in para 14 of the counter-affidavit that in case the pay scales and other
benefits of the employees are directed to be revised with effect from 1.1.1992
it would involve additional financial implication of Rs.120 crores (Rs.60 crores
each for FCI and HFC) for the five year period.
The
revival packages for both FCI and HFC have not been approved for implementation
by the BIFR because the Operating Agency, the Department of Fertilizers and the
Promoters have not been able to mobilize funds required for the revival
package. Pay revision of the employees will further add to the financial
requirements for the revival package, which is held up for want of funding.
It is also
pleaded in the counter affidavit that the Government guidelines do not prohibit
BIFR referred companies from revising their pay scales and other benefits with
effect from 1.1.1992 but has linked it with the basic issue of revival packages
of such companies. This revival package is to be approved by the BIFR after it
is agreed to by the Operating Agency and funding institutions. It has thus been
submitted that no decision could be taken on revision of pay scales of the
employees of FCI and HFC as it is linked to the revival packages being
formulated for these companies for approval of BIFR. The Office Memorandum
dated 19.7.1995 has been issued with the approval of the Cabinet Committee on
Economic Affairs.
The
basic thrust of the policy as contained in office memorandum dated 12.4.1993 is
that PSUs should generate their own resources for meeting the enhanced
liability on account of pay revision and no budgetary support shall be extended
to them by the Government.
After
transfer of writ petitions, this Court issued several directions to BIFR to
submit reports regarding viability of the units of the companies. The BIFR by
its order dated 2.11.2001 recommended winding up of FCI. A similar order for
winding up of HFC has also been passed. The FCI preferred an appeal before
AAIFR which has been dismissed. The Delhi High Court is now proceeding with
winding up of both the companies namely, FCI and HFC.
Shri
R. Venkataramani, learned senior counsel for the petitioners, has submitted
that just as pension is not bounty or a matter of grace depending upon the
sweet will of the employer, so also, a fair and reasonable return for
employment is neither a bounty nor a matter of grace. This is a right arising
out of the relationship of employment and in the determination of the same
particularly if the employer is the State, fair and reasonable criteria will
have to be adopted and to the extent a fair and reasonable return is denied on
the sole ground of the need to take a decision regarding continued existence of
the establishments in question, the fundamental right of the petitioners
guaranteed under Articles 14 and 21 read with Article 39(a) and 43 of the
Constitution is violated. Learned counsel has submitted that the impugned
Office Memorandum is discriminatory in as much as PSUs which follow the Central
Dearness Allowance pattern are getting the benefit of periodical pay revision
regardless of the position of the undertaking, namely whether running in losses
or making profits. The PSUs, such as the establishments in question, which are
governed by the Industrial Dearness Allowance pattern are singled out and are
denied periodical pay revision since 1992. It has been urged that having regard
to socio-economic objectives sought to be realized by the establishment of the
fertilizer industry in the public sector and the fact that the said industry
has served the aforesaid purpose of production and distribution of fertilizers
at affordable prices and augmenting agricultural and rural productivity, it was
inappropriate on the part of the Government of India to postpone the revision
of pay from 1992 and to link it up in the year 1995 with the decision to refer
the companies to BIFR.
Learned
counsel has further submitted that when it is not demonstrated that the
incident of loss is attributable to the conduct of employees or workers and
when it is acknowledged that several factors which could have been conveniently
dealt with to eliminate loss making condition (viz. old plants and obsolete
technology) and to do so was within the competence of the Government of India,
it will be gross injustice to the employees to deny their pay revision by
relating it with profitability. Sickness of PSU without consideration of the
causes of sickness, it is urged, can be no ground for denial of fair pay
revision particularly when the Government of India has failed to take relevant
and efficient steps to promote the health of the industry.
In
support of his submissions that financial capacity or otherwise can be no
ground for denying revision of wages of employees of the State or PSUs, Shri Venkataramani
has placed strong reliance on South Malabar Gramin Bank v. Coordination
Committee of South Malabar Gramin Bank Employees' Union and South Malabar Gramin Bank Officers' Federation
and Ors. (2001) 4 SCC 101 and All India Regional Rural Bank Officers Federation & Ors. v. Government of
India & Ors. (2002) 3 SCC 554.
Regarding
the submission based upon violation of fundamental rights of the petitioners,
learned counsel has laid great emphasis on the following observations made by Sawant
J. in Delhi Transport Corporation v. D.T.C.
Mazdoor
Congress (1990) Supp 1 SCR 142 at pages 276 and 277 which read as under:-
"The employment under the public undertakings is a public employment and a
public property. It is not only the undertakings but also the society which has
a stake in their proper and efficient working. Both discipline and devotion are
necessary for efficacy. To ensure both, the service conditions of those who
work for them must be encouraging, certain and secured, and not vague and
whimsical. With capricious service condition, both discipline and devotion are
endangered and efficiency is impaired.
The
right to life includes right to livelihood. The right to livelihood therefore
cannot hang on to the fancies of individuals in authority. The employment is
not a bounty from them nor can its survival be at their mercy.
Income
is the foundation of many fundamental rights and when work is the sole source
of income, the right to work becomes as much fundamental. Fundamental rights
can ill-afford to be consigned to the limbo of undefined premises and uncertain
applications. That will be a mockery of them." To strengthen his
submission that the denial of fair wages on account of non-revision of pay scale
would violate the fundamental right of the petitioners, learned counsel has
also tried to take support from certain observations made in All India Imams Organisation
& Ors. v. Union of India 1993 (3) SCC 584 wherein it was held that Imams
who perform religious duties are also entitled to emoluments, as right to life,
enshrined in Article 21 means right to live with human dignity and that
financial difficulties of the institutions cannot be above fundamental rights
of a citizen. Another serious contention raised by Shri Venkataramani is that
the Union of India had also agreed both in the meeting held on 20.9.1996 and
also in the affidavit filed before the Delhi High Court for a settlement
regarding the revision of pay scales being implemented from 1.1.1992 but without
payment of arrears upto 1.1.1996. According to the learned counsel the High
Court had passed an order on 10.11.1997 recording the compromise and the matter
was adjourned only to work out the modalities of payment, but on account of
filing of Transfer Petition by the Union of India in this Court, the compromise
could not be implemented. However, taking note of the said compromise this
Court passed orders on 19.4.2000 and 18.8.2000 for payment of fixed amounts to
various categories of employees.
The submission
is that in view of the compromise entered into by the respondents and the
orders passed by Delhi High Court and thereafter by this Court, it is not open
to the respondents to resile from the same and deny the benefit of revision of
pay scale to the petitioners.
In
order to appreciate the first submission, it is necessary to refer to the two
Office Memorandums which have been assailed in the writ petitions.
Para 2
of Office Memorandum No.1 (3)/86-DPE (WC) dated 12.4.1993 issued by Department
of Public Enterprise, Ministry of Industry, Government of India which is
relevant for our purposes is being reproduced below:
"Under
the new wage policy, the Managements are free to negotiate the wage structure
keeping in view and consistent with the generation of resources/profits by the
individual enterprises/units. The Government will not provide any budgetary
support for the wage increase and the respective managements will have to find
the requisite resources from within their own internal generation. For certain PSEs
which are monopolies or near monopolies or having an administered price
structure, it must be ensured that increase in wages after negotiations do not
result in an automatic increase in administered prices of their goods and
services." The subject and paras 11 and 13 of Office Memorandum issued by
the same department on 19.7.1995 read as under:
"Subject:
Revision of Scales of Pay of the Executives holding posts below the Board level
and non- unionised supervisors w.e.f. 1.1.1992.
Para
11. The pay revision of the executives holding posts below the Board level and
non-unionised supervisors would be permitted subject to the conditions
stipulated in the DPE's OM No.1(3)86-DPE(WC) dated 12.4.1993 and 17.1.1994.
These conditions prescribe that there shall be no increase in labour cost per
physical unit of output. The Government shall not provide any budgetary support
to the PSEs for meeting the enhanced liability.
The PSEs
which are monopolies or near monopolies or having an administered price structure,
it must be ensured that increase in salaries/wages do not result in an
automatic increase in administered prices of their goods and services.
Requisite resources for the pay increases must be found from within own
internal generation.
Para
13. For sick PSEs registered with the BIFR, pay revision and grant of other
benefits will be allowed only if it is decided to revive the unit. The revival
package should include the enhanced liability on this account. The benefit of
pay revision, etc. shall be extended to IISCO and financial liability thereof
shall be met by SAIL." The change in policy effected by these Memorandums
was that the Government would not provide any budgetary support for the wage
increase and the undertakings themselves will have to generate the resources to
meet the additional expenditure, which will be incurred on account of increase
in wages. So far as sick enterprises which were registered with BIFR it was
directed that the revision in pay scale and other benefits would be allowed only
if it was actually decided to revive the industrial unit. The question which
arises for consideration is whether the employees of Public Sector Enterprises
have any legal right to claim that though the industrial undertakings or the
companies in which they are working did not have the financial capacity to
grant revision in pay scale, yet the Government should give financial support
to meet the additional expenditure incurred in that regard.
The
Fertilizer Corporation of India and
Hindustan Fertilizer Corporation are both companies registered under the
Companies Act with the only difference that they are Government Companies
within the meaning of Section 617 of the Companies Act. What will be the legal
position of a Government Company and whether its employees will be treated to
be government servants was examined in Heavy Engineering Mazdoor Union v. State
of Bihar & Ors. AIR 1970 SC 82 and it was held as under in para 4 of the
reports:
".............It
is an undisputed fact that the company was incorporated under the Companies Act
and it is the company so incorporated which carries on the undertaking. The
undertaking, therefore, is not one carried on directly by the Central
Government or by any one of its departments as in the case of posts and telegraphs
or the railways........" After referring to the well known decision in Saloman
v. A. Saloman & Co. Ltd. 1897 AC 22, Halsbury's Laws of England and some
other English decisions the Court ruled as under:
"............Therefore,
the mere fact that the entire share capital of the respondent-company was
contributed by the Central Government and the fact that all its shares are held
by the President and certain officers of the Central Government does not make
any difference. The company and the share holders being, as aforesaid, distinct
entities the fact that the President of India and certain officers hold all its
shares does not make the company an agent either of the President or the
Central Government..........." Again in para 5 it was held that the fact that
a minister appoints the members or directors of a corporation and he is
entitled to call for information, to give directions which are binding on the
directors and to supervise over the conduct of the business of the corporation
does not render the corporation an agent of the State.
The
legal position is that identity of the Government Company remains distinct from
the government. The Government Company is not identified with the Union but has
been placed under a special system of control and conferred certain privileges
by virtue of the provisions contained in Sections 619 and 620 of the Companies
Act. Merely because the entire share holding is owned by the Central Government
will not make the incorporated company as Central Government. It is also equally
well settled that the employees of the Government Company are not civil
servants and so are not entitled to the protection afforded by Article 311 of
the Constitution (Pyare Lal Sharma v. Managing Director AIR 1989 SC 1854).
Since employees of Government Companies are not government servants they have
absolutely no legal right to claim that government should pay their salary or
that the additional expenditure incurred on account of revision of their pay
scale should be met by the government. Being employees of the companies it is
the responsibility of the companies to pay them salary and if the company is
sustaining losses continuously over a period and does not have the financial
capacity to revise or enhance the pay scale, the petitioners cannot claim any
legal right to ask for a direction to the Central Government to meet the
additional expenditure which may be incurred on account of revision of pay
scales. It appears that prior to issuance of the Office Memorandum dated
12.4.1993 the Government had been providing the necessary funds for the
management of Public Sector Enterprises which had been incurring losses. After
the change in economic policy introduced in early nineties, Government took a
decision that the Public Sector Undertakings will have to generate their own
resources to meet the additional expenditure incurred on account of increase in
wages and that the government will not provide any funds for the same. Such of
the Public Sector Enterprises (Government Companies) which had become sick and
had been referred to BIFR, were obviously running on huge losses and did not
have their own resources to meet the financial liability which would have been
incurred by revision of pay scales. By the Office Memorandum dated 19.7.1995
the Government merely reiterated its earlier stand and issued a caution that
till a decision was taken to revive the undertakings no revision in pay scale
should be allowed. We, therefore do not find any infirmity legal or
constitutional in the two Office Memorandums which have been challenged in the
writ petitions.
We are
unable to accept the contention of Shri Venkataramani that on account of
non-revision of pay scales of the petitioners in the year 1992, there has been
any violation of their fundamental rights guaranteed under Article 21 of the
Constitution. Article 21 provides that no person shall be deprived of his life
or personal liberty except according to procedure established by law. The scope
and content of this Article has been expanded by judicial decisions. Right to
life enshrined in this Article means something more than survival or animal
existence. It would include the right to live with human dignity. Payment of
very small subsistence allowance to an employee under suspension which would be
wholly insufficient to sustain his living, was held to be violative of Article
21 of the Constitution in State of Maharashtra v. Chandrabhan AIR 1983 SC 803.
Similarly, unfair conditions of labour in People's Union for Civil Liberties v.
Union of India AIR 1982 SC 1473. It has been held to embrace within its field
the right to livelihood by means which are not illegal, immoral or opposed to
public policy in Olga Tellis v. Bombay Municipal Corporation AIR 1987 SC 108.
But to
hold that mere non-revision of pay scale would also amount to a violation of
the fundamental right guaranteed under Article 21 would be stretching it too
far and cannot be countenanced. Even under the Industrial law, the view is that
the workmen should get a minimum wage or a fair wage but not that his wages
must be revised and enhanced periodically. It is true that on account of
inflation there has been a general price rise but by that fact alone it is not
possible to draw an inference that the salary currently being paid to them is
wholly inadequate to lead a life with human dignity.
What
should be the salary structure to lead a "life with human dignity" is
a difficult exercise and cannot be measured in absolute terms. It will depend
upon nature of duty and responsibility of the post, the requisite qualification
and experience, working condition and a host of other factors. The salary
structure of similarly placed persons working in other Public Sector
Undertakings may also be relevant. The petitioners have not placed any material
on record to show that the salary which is currently being paid to them is so
low that they are not able to maintain their living having regard to the post
which they are holding. The observations made in paragraphs 276 and 277 in
Delhi Transport Corporation v. D.T.C. Mazdoor Congress (supra), strongly relied
upon by learned counsel for the petitioners, should not be read out of its
context. In the said case the Court was called upon to consider the
constitutional validity of Regulation 9 of Delhi Road Transport Authority
(Conditions of Appointment and Service) Regulations, 1952, which gave power to
terminate the services of an employee after giving one month's notice or pay in
lieu thereof. The termination of services of some of the employees on the
ground that they were inefficient in their work by giving one month's notice
was set aside by the High Court as in its opinion Regulation 9(b) gave absolute
unbridled and arbitrary powers to the management to terminate the service of
any permanent or temporary employee and, therefore, the same was violative of
Article 14 of the Constitution. It was in this context that the aforesaid
observations were made by one Hon'ble Judge in his separate opinion. The issue
involved was not of revision of pay scale but that of termination of service
which has an altogether different impact on an employee.
The
contention that economic viability of the industrial unit or the financial
capacity of the employer cannot be taken into consideration in the matter of
revision of pay scales of the employees, does not appeal to us.
The
question of revision of wages of workmen was examined by a Constitution Bench
in Express Newspapers Ltd. & Ors. v. Union
of India & Ors. AIR 1958 SC 578 having regard to the provisions of
Industrial Disputes Act and Minimum Wages Act and the following principles for
fixation of rates of wages were laid down :
(1)
that in the fixation of rates of wages which include within its compass the
fixation of scales of wages also, the capacity of the industry to pay is one of
the essential circumstance to be taken into consideration except in cases of
bare subsistence or minimum wage where the employer is bound to pay the same
irrespective of such capacity ;
(2)
that the capacity of the industry to pay is to be considered on an
industry-cum-region basis after taking a fair cross section of the industry;
and
(3)
that the proper measure for gauging the capacity of the industry to pay should
take into account the elasticity of demand for the product, the possibility of
tightening up the organisation so that the industry could pay higher wages
without difficulty and the possibility of increase in the efficiency of the
lowest paid workers resulting in increase in production considered in
conjunction with the elasticity of demand for the product - no doubt against
the ultimate back-ground that the burden of the increased rate should not be
such as to drive the employer out of business.
(Emphasis
supplied) The same question was again examined in Hindustan Times Ltd. v. Their
Workmen AIR 1963 SC 1332 and the Court recorded its conclusion in following
words in para 7 of the Report :
"While
industrial adjudication will be happy to fix a wage structure which would give
the workmen generally a living wage, economic considerations make that only
dream for the future. That is why the Industrial Tribunals in this country
generally confine their horizon to the target of fixing a fair wage. But there
again, the economic factors have to be carefully considered. For these reasons,
this Court has repeatedly emphasised the need of considering the problem on an
industry-cum-region basis, and of giving careful consideration to the ability
of the industry to pay." (Emphasis supplied) It may be noticed that in
these cases the Court was considering the question of wage structure for
workmen who belong to economically poor section of society and providing them
even living wage was held to be a distant dream on account of economic
considerations and also the capacity of the industry to pay.
In
South Malabar Gramin Bank v. Coordination Committee of South Malabar Gramin
Bank Employees' Union and South Malabar Gramin Bank Officers' Federation and
Ors. (2001) 4 SCC 101, relied upon by the learned counsel for the petitioners,
the Central Government had referred the dispute regarding the pay structure of
the employees of the Bank to the Chairman of the National Industrial Tribunal
headed by a former Chief Justice of a High Court. The Tribunal after
consideration of the material placed before it held that the officers and
employees of the Regional Rural Banks will be entitled to claim parity with the
officers and other employees of the sponsor banks in the matter of pay scale,
allowances and other benefits. The employees of nationalised commercial banks
were getting their pay scales on the basis of 5th bipartite settlement and by
implementation of the award of the National Industrial Tribunal, the employees
of the Regional Rural Banks were also given the benefits of the same
settlement.
Subsequently,
the pay structures of the employees of nationalised commercial banks were
further revised by 6th and 7th bipartite settlements but the same was not done
for the employees of the Regional Rural Banks who then filed writ petitions. It
was contended on behalf of the Union of India and also the Banks that financial
condition of the Regional Rural Banks was not such that they may give their
employees the pay structure of the employees of the nationalised commercial
banks. It was in these circumstances that this Court observed that the decision
of the National Industrial Tribunal in the form of an award having been
implemented by the Central Government, it would not be permissible for the
employer bank or the Union of India to take such a plea in the proceedings
before the Court. The other case namely All India Regional Rural Bank Officers Federation & Ors. v. Government of
India & Ors. (2002) 3 SCC 554 arose out of interlocutory applications and
contempt petitions which were filed for implementation of the direction issued
in the earlier case namely South Malabar Gramin Bank (supra). Any observation
in these two cases to the effect that the financial capacity of the employer
cannot be held to be a germane consideration for determination of the wage
structure of the employees must, therefore, be confined to the facts of the
aforesaid case and cannot be held to be of general application in all
situations.
In
Associate Banks Officers' Association v. State Bank of India & Ors. 1998
(1) SCC 428 it was observed that many ingredients go into the shaping of the
wage structure of any organisation which may have been shaped by negotiated
settlements with employees' unions or through industrial adjudication or with
the help of expert committees. The economic capability of the employer also
plays a crucial part in it; as also its capacity to expand business or earn
more profits. It was also held that a simplistic approach, granting higher
remuneration to workers in one organisation because another organisation had
granted them, may lead to undesirable results and the application of the
doctrine would be fraught with danger and may seriously affect the efficiency
and at times, even the functioning of the organisation. Therefore, it appears
to be the consistent view of this Court that the economic viability or the
financial capacity of the employer is an important factor which cannot be
ignored while fixing the wage structure, otherwise the unit itself may not be
able to function and may have to close down which will inevitably have
disastrous consequences for the employees themselves. The material on record
clearly shows that both FCI and HFC had been suffering heavy losses for the
last many years and the Government had been giving considerable amount for
meeting the expenses of the organisation. In such a situation, the employees
cannot legitimately claim that their pay scales should necessarily be revised
and enhanced even though the organisations in which they are working are making
continuous losses and are deeply in red.
The
second argument based upon the so-called settlement/compromise may now be
examined. The petitioners A.K. Bindal and others moved Civil Misc. Application
No.7885 of 1996 before the High Court for grant of interim relief. It was
prayed that a direction regarding implementation of the revision benefit with
effect from the date of the application by notionally calculating the pay etc.,
as would have been available to the petitioners, had the pay revision been
implemented from 1.1.1992 be issued and further at least 50 per cent of the
arrears which would be due to the petitioners for the period 1.1.1992 to the
date of the filing of the application be paid to them. The respondents opposed
the prayer for grant of interim relief by filing a reply stating that the
application is devoid of any merits and the same is liable to be dismissed. The
relevant part of para G, H and I which has a bearing on the controversy in
hand, is being reproduced below:- "As already submitted in reply to A
& B above, budgetary support to the extent possible has been provided by
the Government to enable these companies to sustain operations in their
functional units with a view to avoiding irretrievable damage to equipment and
supplementing the indigenous urea production. This has been done even at the
cost of large cash losses incurred by these companies pending a final decision
on their revival by the BIFR. These companies are unable to generate any
internal resources to absorb the enhanced liability of increased salary to
their employees. Under the extant guidelines for salary revision of PSUs
employees, such liability is not to be met through budgetary support. Pay
revision will be allowed only if it is decided by the BIFR to revive these
companies and the revival packages include the enhanced liability on this
account. As a compromise solution, the managements of the Respondents No.3 and
4 had explored the possibility of providing salary revision w.e.f. 1.1.96
subject to the condition that no arrears would be paid for the period 1.1.92 to
31.12.95 which the company would consider at a later date after its turn
around, however, subject to availability of funds. Since no mutual agreement
could be arrived at between the managements & the associations, this
proposal could not get finalised.........." The application was heard by a
learned Single Judge of the High Court who passed an order on 10.11.1997 which
according to the petitioners contains the terms of the settlement. After the
transfer of the Writ Petitions this Court passed a detail order on 19.4.2000
and it is necessary to reproduce the same in extenso.
"Having
heard leaned senior counsel for the petitioners, learned senior counsel Mr. Goswami
for the Union of India, the learned counsel for the Hindustan Fertiliser
Corporation Ltd. (HFC) and Fertilizer Corporation of India (FCI), we find that
appropriate interim orders, without prejudice to the rights and contentions of
all concerned, are required to be passed at this stage for employees of all the
units of the aforesaid two corporations.
In the
writ petition which was moved before the High Court of Delhi by the concerned
employees of the aforesaid two concerns claiming for revision of pay scales and
payment of appropriate amounts accordingly, a learned Single Judge of the High
Court has on 10th
November 1997 made the
following observations :
"In
reply to the petitioner's application the respondent had taken the stand that
as a compromise the respondents 3 and 4 agreed to provide revised salary to the
petitioners w.e.f. 1st
January 1996, subject
to the contention that no arrear w.e.f. 1st January 1992 till 31st December 1995 will be paid. The petitioner is prepared to accept the
offer of the respondent. Counsel for the respondent wants to take instruction
with regard to payment as per record. Let him do so.
Matter
be listed on 21st
November, 1997."
It is, of course, true that the order recites that respondent nos.3 and 4
agreed to provide revised salary to the petitioner w.e.f. 01st January 1996 subject to the contention that no
arrears w.e.f. 01st
January 1992 till 31st December 1995 will be paid and the petitioner was
prepared to accept the said offer of the respondent. Though respondent nos.3
and 4 agreed to provide revised salary to the petitioner but the real
responsibility to make payment would rest on the shoulders of the respondent-
Union of India. The order further recites that counsel for the respondent
wanted to take instructions with regard to the payment as per the record and
the Court said 'let him do so', and, therefore, the matter was to be listed on 21st November, 1997.
It is
to be noted that, therefore, the matter stood adjourned for passing appropriate
orders in the light of what transpired on 10th November 1997 only in connection with fixing the
mode of payment of the appropriate salary in the revised time scale with effect
from 01st January, 1996. For that purpose, the matter stood
adjourned from time to time till ultimately it got transferred to this Court
pursuant to our order in T.P. (c) No.845 of 1998.
Learned
senior counsel Shri Goswami has filed a reply, which is taken on record, to the
prayer of the petitioners in the transferred case. In fact he raised grievance
that the financial conditions of these units is not good and many of them have
been closed. Be that as it may, as the proceedings are pending before the Board
for Financial and Industrial Reconstruction (BIFR), since 1992 it will be for
the BIFR to look into the grievance of the respondent-Union of India to do the needful in this
connection. We are sure that the Union of India will also fully cooperate in
seeing to it that the BIFR is enabled to take appropriate decisions in this
connection at the earliest.
However,
in the light of what is stated in the order of the learned Single Judge of the
High Court dated 10th November 1997 which uptill now has not been sought to be
got revised, reviewed or appealed against, we deem it fit, in the interest of
justice, to give at least a limited relief to all the employees of the
aforesaid two concerns, including, Class III and IV employees, purely as an
ad-hoc measure, and without prejudice to the rights and contentions of all
concerned to the following effect :
Revised
salary shall be computed with effect from 01st January 1992 notionally for the concerned staff
members of all the units of the aforesaid two Government Corporatations,
namely, HFC and FCI only.
No
arrears shall be paid to the concerned staff members till 31st March, 2000. Only actual revised salary will be
available in the time scale so computed, from 01st April 2000 on the basis of the revised pay scale available from 01st January 1992.
However,
no further upward revision of pay scales will be available to the concerned
staff members pursuant to the present order. That question is kept open.
The
revised salaries payable from 01st April 2000
shall be paid to the concerned employees within six weeks from today and then
in future salaries in revised pay scales as per 1.1.92 revision will be made
available to the concerned staff members from month to month till further
orders.
These
proceedings will now stand over for six months.
In the
meantime we hope and trust that the Union of India will take appropriate steps
before BIFR due to the emergent situation which is projected vociferously by
learned senior counsel for the Union of India to the effect that may of these
units have been closed.
It is
for the Union of India to respond appropriately to the BIFR enquiry which is
pending since 1992. Learned counsel for BIFR also assured this Court that the
moment the BIFR hears from the concerned authroties, BIFR will promptly take
decisions in the matter.
It is
axiomatic to observe that if these two corporations, which are the limbs of the
Government, want appropriate funds to be released for compliance of this order,
it will be for the Union of India to stand up to the occasion and to comply
with such request." (Emphasis supplied) The Union of India moved an
application for clarification/modification of the above order which was heard
on 18.8.2000 and the following order was passed:- "Having heard learned
Solicitor General for the applicant - Union of India and learned senior counsel
Mr. Sanyal, for the contesting respondents, purely as an adhoc measure and
without prejudice to the rights and contentions of the parties in the main
matter, we deem it fit in the interest of justice to modify our order dated
19.04.2000 to the following effect :-
(i)
The authorities shall pay as an adhoc measure and on account Rs.1,500/- to
Class-I employees; Rs.1,000/- to Class II employees; Rs.750/- to Class-III employees
and Rs.500/- to Class-IV employees consisting of various categories in each of
the Classes; per month with effect from 1.4.2000. This payment will be without
prejudice to the rights and contentions of the parties in the pending matters.
(ii)
We make it clear that this order will not affect whatever payment by way of HRA
is being released or was released by the authorities to the employees
concerned.
(iii)
The direction that payments as earlier issued by us on 19.4.2000 will stand
modified by the present order.
(iv)
According to this order, all arrears with effect from 1.4.2000 to 31.7.2000
will be cleared within ten weeks from today and the current payment be made
with effect from 1.8.2000 along with the salary payable for the month of
August, 2000.
(v)
Future payments shall accordingly be made from month to month regularly along
with usual salaries payable to them.
This
order is passed purely as an ad hoc measure and will not come in the way of the
ultimate decision of this Court.
This
order will also not be treated as a precedent in any matter in view of the
special facts of the present case. We express no opinion about the nature of
the order passed by learned Single Judge of the High Court. That question will
abide by the decision in the main matter. In view of the present order, I.A.s are
disposed of." (Emphasis supplied) It may be noticed that the reference to
the word "compromise" has been made in the order of the High Court
dated 10.11.1997 and this order was passed in Civil Misc. Application No.7885
of 1996 which was filed by the petitioners for grant of interim relief. In the
counter-affidavit which was filed on behalf of the respondents it was asserted
that the application is meritless and the prayer for interim relief was devoid
of any merits and the application was liable to be dismissed. In para G, H and
I of the counter- affidavit, reproduced above, it was stated that pay revision
will be allowed only if it is decided by the BIFR to revive the companies and
the revival packages will include the enhanced liability on this account. A
reading of the above paragraphs will further show that the management of
respondent nos.
3 and
4 alone had explored the possibility of a compromise solution but even this
proposal could not be finalised. The learned Single Judge of the High Court, in
our opinion, misunderstood the content and import of the stand taken in para G,
H and I of the counter-affidavit and wrongly proceeded on the basis as if the
respondent nos. 3 and 4 had, subject to certain conditions, agreed to provide
revised salary from 1.1.1996. In fact no offer of payment of revised salary had
been made yet it was mentioned in the order that "the petitioner is
prepared to accept the offer of the respondent". No final order had been
passed recording any compromise as the counsel for respondents wanted to take
instructions and the matter was adjourned. It is also noteworthy that the so
called agreement/compromise mentioned in the order was only on behalf of
respondent nos. 3 and 4 which are FCI and HFC respectively. There was no
compromise or agreement to pay revised salary on behalf of the Union of India
which is respondent no. 1 to the writ petition.
The
order passed by this Court on 19.4.2000 clearly recorded that a limited relief
to all the employees of the two companies was being granted purely as ad hoc
measure and without prejudice to the rights and contentions of all concerned.
This was reiterated in the subsequent order dated 18.8.2000 when it was said
that the order was being passed purely as ad hoc measure and will not come in
the way of the ultimate decision of the Court The principal relief claimed by
the petitioners is against Union of India and Secretary, Department of Public
Enterprises (respondent nos. 3 and 4) as it is they who have issued the
impugned memorandum dated 19.7.1995 which places embargo upon the revision of
pay scale of employees of sick PSUs registered with BIFR. Factually there being
no compromise or settlement on behalf of respondent nos.3 and 4 for payment of
revised salary as they had never agreed to do so and the orders passed by this
Court on 19.4.2000 and 18.8.2000 having clearly indicated that they were being
passed by way of ad hoc measure and were not to come in any way in the ultimate
decision of the case, it is not possible to hold that there was any compromise
or settlement at any earlier stage which entitled the petitioners to get
revised salary. The contention of the petitioner based upon the alleged
settlement or compromise is, therefore, devoid of merits and has to be
rejected.
Apart
from what we have discussed earlier, it is necessary to take note of a
subsequent development which has a serious impact on the relief claimed by the
petitioners. The respondents have filed an affidavit on 15.2.2003 sworn by Shri
Pawan Wadhwa, Deputy Secretary, Department of Fertilizers, Ministry of
Chemicals and Fertilizers. It is averred in the said affidavit that the
accumulated losses as on 31.1.2003 of HFC have been Rs.7421.52 crores and that
of FCI have been Rs.8874.00 crores. To meet the expenditure towards salary,
wages as well as other administrative expenses in these units including
preservation cost of the plants, total plan and non-plan budgetary assistance
to the tune of Rs.2,227.00 crores has been extended by the Government of India
till 31.1.2003. The commercial production in some of the units of both the
companies never commenced and the remaining units suspended operations one by
one as viability/economics of production of urea in these plants had become
extremely unfavourable.
The
revival packages of these companies could not be taken up for want of funding
tie up with the Financial Institutions on account of their reservation about
the techno-economic viability of the proposals. The revival package based on unit-wise
techno-economic viability were considered by the competent authority in the
Government from time to time culminating in Government's decision on 18.7.2002
and 5.9.2002 for closure of majority of the units of both FCI and HFC along
with supporting establishments. The Government had incurred an expenditure for
Rs.72.96 lakhs per month in respect of HFC and Rs.69 lakhs per month in respect
of FCI in implementing the orders of this Court dated 19.4.2000 and 18.8.2000.
The accumulated expenditure which had been borne by the Government of India
through non-plan budgetary support till date as on this account adds up to
Rs.16.56 crores in respect of FCI and Rs. 21.56 crores in respect of HFC. It is
further averred that in October 1998 the Government announced a scheme for
Voluntary Retirement for the employees of the Central Public Sector
Undertakings. This scheme was liberalised and another scheme was announced on
5.5.2000 in order to give benefit to the employees of the Enterprises in which
pay revision with effect from 1.1.1992 and 1.1.1997 had not been affected. The
Government announced further liberalised scheme on 6.11.2001 under which the
Voluntary Retirement compensation on the basis of their existing pay (basic +
DA) was increased by 100 per cent and 50 per cent respectively. According to
the respondents almost 99 per cent of employees of FCI and HFC had opted for
the Voluntary Retirement Scheme (for short VRS). The exact figures regarding
implementation of the Scheme as on 24.3.2003 is given below:
PSU-WISE
DETAILS OF IMPLEMENTATION OF VRS S.No Item HFC FCI
1.
Total employees as on 20.9.2002 4881 5712
2.
Employees opted for VRS 4781 5675
3.
Employees released 4325 5097
4.
Funds released by DOF (Rs. Crores) 174.50 253.50
5.
Funds actually utilized by the company 154.10 237.30
6.
Balance funds with the Company 20.50 16.20
Shri Mukul
Rohtagi, learned Additional Solicitor General has submitted that while framing
the Voluntary Retirement Scheme the grievance of the petitioners regarding
non-revision of their pay scale has been taken into consideration and it was
for this reason that in the second Voluntary Retirement Scheme announced on
6.11.2001 ex-gratia payment in respect of employees on pay scales at 1.1.1987
level has been increased by 100 per cent and for employees on pay scales at
1.1.1992 level, it has been increased by 50 per cent So far as HFC is concerned
4781 out of 4881 employees had opted for VRS and only 100 remained. Similarly
for FCI out of 5712 employees 5675 had opted for VRS and only 37 remained. The
majority of left over number of employees in both the companies is proposed to
be retained for assisting in completion of the formalities entailing the
closure process. The Government of India had released an amount of Rs.154 crores
to HFC and Rs.237.50 crores to FCI for disbursal of VRS benefits to these
employees. Learned counsel has submitted that the employees of both the
Companies having taken advantage of VRS and having taken the amount without any
demur, the relationship of employer and employee had ceased to exist. They
cannot therefore raise any grievance regarding the non revision of pay scale at
this stage and consequently the Writ Petitions have become infructuous. Even Shri
A.K. Bindal who filed the writ petition in his capacity as President of
Federation of Officers Association had also taken voluntary retirement and
after acceptance of the amount had left the company and had gone out.
Shri Venkataramani
has submitted that the employees had no option in the matter and had accepted
the VRS under compulsion as it was provided therein that those who did not opt
for the same within three months from the date of offer would be eligible only
for retrenchment compensation. He has also submitted that under the Scheme the
total compensation amount has to be calculated on the basis of existing pay
scale and as there was no revision of pay scales since 1992, the petitioners
have got a very small amount. Learned counsel has further submitted that there
can be no waiver of fundamental rights and even if an employee has opted for
VRS and has taken the amount and left the company it would not mean that he has
foregone his right to claim the salary which he was entitled to get during the
period when he was an employee of the company.
The
material on record shows that both FCI and HFC had suffered continuous losses.
The Financial status of the companies as on 31.3.1996 was as under:
FCI
HFC Paid up equity and reserves as on 31.3.96 662.84 705.13 Accumulated Loss upto
31.3.96 2510.95 3096.16 Net worth as on 31.3.96 (-) 2248.11 (-) 2385.03 Net
Profit/Loss (95-96) (-) 426.62 (-) 466.52 (Provisional) (All figures in crores)
In the year 1996-97 FCI and HFC projected net losses of Rs. 562.51 crores and Rs.
438.99 crores respectively. The total loss suffered by these companies as on
31.1.2003 was Rs.8874.00 crores and 7421.52 crores respectively. The Government
extended non-plan budgetary assistance of Rs.2369.00 crores to FCI and
Rs.2227.00 crores to HFC upto 31.1.2003.
The
units of the companies have already suspended their operations quite some time
back and as on date no unit is functioning nor any production is being made.
There is also no denial of the fact that the companies have suffered huge
losses and salaries of the employees who were practically doing no work has
been paid by the Government for a considerable long period. The employees
accepted VRS with their eyes open without making any kind of protest regarding
their past rights based upon revision of pay scale from 1.1.1992.
The
Voluntary Retirement Scheme (VRS) which is some times called Voluntary
Separation Scheme (VSS) is introduced by companies and industrial
establishments in order to reduce the surplus staff and to bring in financial
efficiency. The Office Memorandum dated 5.5.2000 issued by Government of India
provided that for sick and unviable units, the VRS package of Department of
Heavy Industry will be adopted. Under this Scheme an employee is entitled to an
ex-gratia payment equivalent to 45 days emoluments (pay + D.A.) for each
completed year of service or the monthly emoluments at the time of retirement
multiplied by the balance months of service left before the normal date of
retirement, whichever is less. This is in addition to terminal benefits. The
Government was conscious about the fact that the pay scales of some of the PSUs
had not been revised with effect from 1.1.1992 and therefore it has provided
adequate compensation in that regard in the second VRS which was announced for
all Central Public Sector Undertakings on 6.11.2001. Clause (a) of the scheme
reads as under:
a) Ex-gratia
payment in respect of employees on pay scales at 1.1.87 and 1.1.92 levels,
computed on their existing pay scales in accordance with the extant scheme,
shall be increased by 100% and 50% respectively.
This
shows that a considerable amount is to be paid to an employee ex-gratia besides
the terminal benefits in case he opts for voluntary retirement under the Scheme
and his option is accepted. The amount is paid not for doing any work or
rendering any service. It is paid in lieu of the employee himself leaving the
services of the company or the industrial establishment and forgoing all his
claims or rights in the same. It is a package deal of give and take. That is
why in business world it is known as 'Golden Handshake'. The main purpose of
paying this amount is to bring about a complete cessation of the jural
relationship between the employer and the employee. After the amount is paid
and the employee ceases to be under the employment of the company or the
undertaking, he leaves with all his rights and there is no question of his
again agitating for any kind of his past rights, with his erstwhile employer
including making any claim with regard to enhancement of pay scale for an
earlier period. If the employee is still permitted to raise a grievance
regarding enhancement of pay scale from a retrospective date, even after he has
opted for Voluntary Retirement Scheme and has accepted the amount paid to him,
the whole purpose of introducing the Scheme would be totally frustrated.
The
contention that the employees opted for VRS under any kind of compulsion is not
worthy of acceptance. The petitioners are officers of the two companies and are
mature enough to weigh the pros and cons of the options which were available to
them. They could have waited and pursued their claim for revision of pay scale
without opting for VRS. However they, in their wisdom thought that in the fact
situation VRS was a better option available and chose the same. After having applied
for VRS and taken the money it is not open to them to contend that they
exercised the option under any kind of compulsion. In view of the fact that
nearly ninety nine per cent of employees have availed of the VRS Scheme and
have left the companies (FCI & HFC), the writ petition no longer survives
and has become infructuous.
Shri Nageshwar
Rao, learned senior counsel appearing in Transferred Case No.35 of 2000 (Writ
Petition filed by employees of HFC in Calcutta High Court) apart from
challenging the validity of the Office Memorandum on the same grounds also
urged that the price of urea was fixed by the Government under Fertilizer
Control Order which was wholly unremunerative and, therefore, the employees
cannot in any way be held responsible for the losses suffered by the Units and
consequently they should not be made to suffer on that account. We are unable
to entertain this submission as the factual foundation for such a plea has not
been laid in the pleadings. That apart, learned counsel for the respondents has
made a statement that the Government had reimbursed the Units in that regard.
For
the reasons discussed above, we find no merit in the Transferred Petitions
which are accordingly dismissed. No costs.
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