TaxTMI 
TaxTMI 
2003 (4) TMI 406
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....Rajat Arora, Rajiv Nanda, Pratap Venugopal, P.S. Sudhir, Ajay Kumar Jain, Ms. Nitika Pal, Ms. Suruchii Agarwal for the Appearing Party. JUDGMENT 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. 2. 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 offi....
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....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 h....
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....at 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. 4. 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....
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....y 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. 7. 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. 8. Shri R. Venkataramani, learned senior counsel for the petitioners, has submitted that just as pension....
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....nd efficient steps to promote the health of the industry. 9. 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 & South Malabar Gramin Bank Officers' Federation [2001] 4 SCC 101 and All India Regional Rural Bank Officers Federation v. Government of India [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. DTC Mazdoor Congress [1990] Suppl. 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 va....
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....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." 12. 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 ....
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....ihar 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. . . ." 15. 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. . . ." 16. Again in para 5 it was held that the fact that a minister appoints the member....
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....esources 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. 18. 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 sustai....
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....nd 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. 19. 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 (P.) Ltd. v. Union of India 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 ....
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....he 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 Indi....
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....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 to 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 paras 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....
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....1st 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. 1st January, 1996 subject to the contention that no arrears w.e.f. 1st 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 o....
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....r 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 pending since 1992. Learned counsel for BIFR also assured this Court that the moment the BIFR hears from the concerned authorities, 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] 24. 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 ad hoc measure and without prejudice to the rig....
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....lity 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 paras 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 instruction 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 19-4-20....
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....ackages 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 em....
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....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. 28. 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. 29. The material on record shows that both FCI and HFC had suffered continuous losses. The Financial status of the comp....
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....of employees on pay scales at 1-1-1987 and 1-1-1992 levels, computed on their existing pay scales in accordance with the extent scheme, shall be increased by 100 per cent and 50 per cent 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 foregoing 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 e....