2003 (7) TMI 733 - SC - Indian Laws

Court Denies Wage Revision for IDPL Employees: Financial Constraints and VRS Opt-In Grounds for Dismissal.

Officers & Supervisors of I.D.P.L. Versus Chairman & M.D.I.D.P.L. and Ors.

The HC dismissed the writ petition filed by IDPL officers and supervisors seeking interim relief and pay-scale revision per the Fifth Pay Commission. The ... Revision of pay and allowances of the Central Government employees - Non-payment of interim relief and revision of pay-scales - management of the IDPL to release installments - HELD THAT:- In our opinion, since the employees of government companies are not government servants, they have absolutely no legal right to claim that the Government should pay their salary or that the additional expenditure incurred on account of revision of their pay-scales 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, in our view, 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. We are unable to countenance the submission made by Mr. Sanghi 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. In the instant case, it is also not in dispute that the units of the companies have already suspended their operations and as on date no unit is functioning. It is also observed in the dated 23.01.1996 that the company's sales were of the order of ₹ 215 crore against the projected sales of ₹ 305.65 crore for the year ended 31.03.1995 and the company incurred a net loss of ₹ 69.80 crore against the projected profit of ₹ 0.08 crore. The major reasons for the poor performance of the company was stated to be constrained in working capital, power supply problems, reduction of custom tariff on import on bulk drugs, highly competitive marketing in formulation and high wage bills besides withdrawal of price preference. The progress period ended on 30.09.1995 and as per the company's balance sheet were ₹ 77 crore against the envisaged sales of ₹ 177.47 crores for the period ended 30.09.1995 and the company incurred a net loss of ₹ 47 crores against the projected net profit of ₹ 7.69 crores. The accumulated loss stood at ₹ 577.10 crores against the projected accumulated loss of ₹ 499.30 crores as on 31.03.1995 and ₹ 624.10 crores against ₹ 478.66 crores as on 30.09.1995. In A.K. Bindal [2003 (4) TMI 406 - SUPREME COURT], this Court specifically held 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 Court also negatived other contentions raised by the employees and referred to and relied upon the fact that the Company was a sick unit. Facts in the present case are similar. Since this Court has already decided the very issue in question and the petitioners have opted for the VRS nothing survives in this petition and the same is liable to be dismissed. The petitioners having applied for VRS it is not open to them to contend that they are entitled to pay revision. It is also pertinent to notice that one of the units of the company, namely, IDPL Kamgar Union, Rishikesh filed a special leave petition No. 23361 of 1994 challenging the orders of the BIFR dated 10.02.1994 and of AAIFR dated 18.07.1994 and claimed the deferred facilities, the special leave petition was dismissed by this Court vide its judgment dated 07.01.1995. Thus, we see no merit in the writ petition. We, therefore, dismiss the same. However, there will be no order as to costs. Issues Involved:1. Non-payment of interim relief and revision of pay-scales.2. Financial incapacity of IDPL and its impact on wage revision.3. Legal right of employees to claim wage revision despite financial constraints.Summary:Non-payment of interim relief and revision of pay-scales:The petitioners, officers and supervisors of IDPL, filed a writ petition challenging the non-payment of interim relief and revision of pay-scales as per the Fifth Pay Commission's recommendations. They argued that other public sector employees received these benefits, citing the judgment in Jute Corporation of India Officers' Association v. Jute Corporation of India Ltd. and Anr. [1990]2SCR1006. Despite legal notices and a contempt petition, the respondents cited financial constraints and unprecedented financial crunch as reasons for non-compliance.Financial incapacity of IDPL and its impact on wage revision:IDPL was declared a sick industrial company by BIFR and underwent a failed revival package. The respondents argued that due to continuous losses and lack of funds, IDPL could not implement wage revisions. The Government of India provided financial assistance only for salaries, and the decision for IDPL's revival was pending. The court noted that the economic viability of the employer is crucial for wage revision, referencing the principles laid down in Express Newspaper (Private) Ltd. and Anr. v. Union of India and Ors. (1961)ILLJ339SC and Hindustan Times Ltd., New Delhi v. Their Workmen (1963)ILLJ108SC.Legal right of employees to claim wage revision despite financial constraints:The court held that employees of government companies are not government servants and cannot claim a legal right for the government to meet additional expenditure for wage revision. The responsibility lies with the company, and if it is financially incapable, employees cannot demand revised pay-scales. The court referenced A.K. Bindal and Anr. v. Union of India and Ors. (2003)IILLJ1078SC, emphasizing that financial capacity is essential for wage revision.Conclusion:The court dismissed the writ petition, stating that the petitioners, having opted for VRS, cannot claim pay revision. The directions in Jute Corporation of India Officers' Association (supra) were deemed inapplicable due to IDPL's financial incapacity and failure of the revival scheme. The petitioners' claims were found to lack merit, and no costs were awarded.