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2017 (3) TMI 1270
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....regard to the prayer sought for by the Writ Petitioners/Employees Union, W.P.No.18566 of 2015, is taken as the lead case. The petitioner therein is a registered trade union and a recognised Union of HPF, a public sector undertaking wholly owned by the Central Government. The petitioner represents 70 workmen out of the total 700 workmen and officers, who are regular employees of the HPF. It is submitted that more than 3800 of the total 4500 employees, have left employment under the Voluntary Retirement Scheme (VRS) announced by the Management periodically from 1991. The petitioner challenges the Voluntary Retirement Scheme announced by the respondents, dated 20.03.2014 and the circular dated 21.03.2014, as unfair and illegal and seek for consequential reliefs of payment of 72 months salary on the 2007 pay scales to each employee; arrears of pay on 2007 pay scales to each employee; not to deduct income tax on the severance package payable under the Voluntary Retirement Scheme; not to deduct the recoverable monthly advance, Special Performance Allowance and adjustable advance paid to the employees and permit the employees to occupy the staff quarters till 01.05.2016, at the same rate ....
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....assed by the BIFR recommending winding up of the company is as follows:- The workmen of HPF were not granted revision of pay, since 1987 while their counter parts working in other public sector undertakings (PSUs), had received benefits of pay revision periodically upto 2007. The settlements which were entered into with the Management under Section 12(3) and 18(1) of the Industrial Disputes Act, (I.D., Act), with regard to payment of 20% of the salary as advances, which can be adjusted only against arrears payable upon revision of pay. However, on account of accumulation of repayable monthly advance, which had reached unbearable levels, a settlement was entered into between the workmen and the Management of HPF on 19.08.2009, agreeing to discontinue the repayable monthly advance from August 2009 and whatever was paid to them between September 2002 and July 2009, could be adjusted against the pending arrears of wage revision due and payable to the Workmen. Another settlement was arrived at on 19.08.2009, by virtue of which the workers were to be paid Special Performance Allowance equivalent to 20% of the salary and such payment to continue till the revival proposal submitted to t....
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....ms Mfg., Company Limited, Indunagar, Udhagamandalam, Tamil Nadu, Subject: VRS package for the employees of Hindustan Photo Films Mfg., Co., Ltd., (HPF), Udhagamandalam, Tamil Nadu. Sir, The undersigned is directed to convey the approval of the competent authority to the following: (i) Implementation of VRS at 2007 notional pay scales without any arrears as one time relaxation of DPE guidelines for all the employees of HPF and providing a sum of Rs. 181.54 crore in the form of Non-Plan loan from the lump sum provision for implementation of Voluntary Retirement Scheme and Statutory Dues'. (ii) Settlement of all outstanding recoveries of recoverable/adjustable advances/special performance allowance paid to employees in the past which are not covered under DPE guidelines, out of VRS dues as stated above subject to vacation of interim stay by Hon'ble High Court of Madras. (iii) To waive recoveries of such recoverable/adjustable advances/special performance allowance in respect of employees who have superannuated/left the company prior to implementation of this enhanced VRS proposal. (iv) To....
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....ay apply without prejudice to the rights of parties. Pursuant to the said modification, the second respondent issued a circular directing the employees to apply for VRS coupled with an undertaking to forgoe the notice pay. 334 employees applied for VRS and for want of funds, the applications were kept pending. In the mean time, 50 workmen were superannuated, 3 passed away without receiving compensation and were paid only the statutory dues after recovering all the allowances. During January 2015, nearly 340 employees were given VRS compensation after deducting all the advances and income tax and the maximum amount to those with 30 years or more service at the rate of 60 days wages multiplied by the number of completed years of service or salary for the remaining years, whichever is less. The scheme was extended by order dated 25.02.2015, and further extended on 13.03.2015 and 26.03.2015. In the mean time, the employees represented for exemption from income tax. The learned Senior counsel would submit that though the scheme is called as a VRS, it is only a closure compensation scheme as VRS can be implemented in respect of surplus staff or staff who are not required for the establis....
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....dia pertaining to the loss making PSUs, which have a direct impact on the present proceedings. The learned counsel elaborately referred to the press release issued by Government of India, dated 28.09.2016 and the conditions stipulated therein. 10. With regard to the deduction of income tax, it is submitted that the contentions of the Department that taxes are liable to be deducted at source in accordance with Section 10(10C) of the Income Tax Act, 1961 (IT Act) is not tenable, as the employees are exempted from paying income tax in terms of Section 10(10B) of the IT Act, as the compensation is received by the Workmen, pursuant to a notification issued by the Central Government, which is in the nature of special protection to the Workmen and as such, the monetary limit provided under proviso clause 2(i) of Section 10(10B), of the IT Act would not apply. It is further submitted that it is a case of closure followed by winding up of the company and therefore, the package offered is a severance of employment and therefore, it is a severance package and not a retirement package, as there is termination of employment and there is no option left to the employee. The Central Government ....
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....ccepted the scheme, cannot now state that it is not a VRS and having accepted the monies paid to them and cannot now content that it is a closure. It is further submitted that the company was not closed down, but it was wound up based on the recommendations made by the BIFR, which was accepted by this Court in C.P.No.114 of 2003. 12. With regard to the contention raised by the petitioners that they have accepted the benefit under the VRS without prejudice to their rights, the said expression without prejudice depends upon the context in which it is used and in the present circumstances, the use of expression 'without prejudice', cannot mean that the employees can seek for a totally different relief having accepted the VRS package. To support such contention, reliance was placed on the decision of the Hon'ble Supreme Court in the case of Tarapore & Company vs. Cochin Shipyard Ltd., Cochin & Anr., reported in AIR 1984 SC 1072. Further, it is submitted that whatever the statutory dues including income tax, which is payable on the acceptance of the package given under the VRS scheme has to be remitted and tax has to be deducted at source in terms of Section 10(10C) of th....
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....uld be granted 72 months salary on the 2007 pay scale and arrears be paid on the 2007 pay scale without deduction of income tax. It is further submitted that the decision of the Hon'ble Division Bench relied on by the Income Tax Department in the case of S.K. Sundararamier & Sons.(supra), is distinguishable on facts and it is not a case of an individual assessment, but a case where no tax is liable to be paid in terms of Section 10 of the IT Act. 15. By way of reply, the learned Additional Solicitor General of India, submitted that the present argument of the petitioners cannot be tested in a Writ Petition and the question as to whether, it is a retrenchment or not, is a mixed questions of fact and law which has to be agitated before appropriate forum. 16. Mrs.Rita Chandrasekar, learned counsel appearing for HPF, submitted that till date even those employees, who have opted for VRS and received the payments continued to occupy the quarters and the Management is unable to pay the charges towards electricity and other amenities and as of now, there is no electricity supply for the quarters during the day time and only skeleton lighting facility is available at night and tho....
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....nsation payable to the workers, as in cases where closure is approved under the ID Act, should be adopted. Supplementing this stand, reference has been made to the scheme of the Central Government with regard to loss making CPSs, which was admittedly issued during September 2016. Therefore, in the considered view of this Court, the petitioner cannot seek to rely upon the subsequent press release of the Government of India much after the press release given by the Central Government on 28.02.2014, which is with particular reference to the HPF employees. Therefore, reliance placed on the office memorandum and press releases issued during September 2016, cannot be relied on to test the correctness of the impugned proceedings and therefore, the same stands eschewed and this Court proceeds to consider the validity of proceedings/circular on the given facts and circumstances of the case. The petitioners contend that they are entitled to better terms in the said package i.e., to be paid 72 months' salary in the 1997 scale, together with arrears without any deductions towards income tax or other allowances. So far as the deduction of other allowances are concerned, the petitioners have....
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....t has made a study and sanctioned a specified sum of money exclusively for the employees of HPF. The VRS package has taken into consideration the 2007 pay scale as a notional pay scale and has calculated its benefit. The employees were given the option to accept the terms of settlement and retire from service. 21. It is not in dispute that more than 350 employees have availed the VRS package and received the benefit after deductions towards allowances and TDS. The TDS which had been deducted, has been kept in a separate Escrow account pursuant to interim directions issued in these Writ Petitions. The VRS package has been made known to the employees by the impugned circular, dated 21.03.2014. 22. It is the case of the petitioners that there is no option available to the employees as the company has been closed down and therefore, the quantum which is sought to be given to the employees should be construed as a compensation for closure and they should be paid higher sums of money. In the considered view of this Court, this interpretation is wholly impermissible in the facts and circumstances of the case. Though the petitioners would state that there is no option available, ther....
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.... correctness of such statement, there is no case before the Court of an employee who has refused to accept the VRS package, but these are all cases, where though they challenge the notification and circular, the net effect is all employees want to leave the organisation, but they seek for better terms. Therefore, the consequential reliefs sought for by the employees in these Writ Petitions do not flow from the main prayer in the Writ Petition, which is to quash the proceedings, dated 20.03.2014 and 21.03.2014. 24. Assuming that the declaratory relief is granted, the consequential relief cannot be granted, as it is independent of the declaratory relief. Therefore, assuming for the sake of argument, if the impugned circular is held to be illegal and unconstitutional, then the Court cannot direct the respondent to pay 72 months salary together with arrears as such quantum is liable to be paid only after an industrial adjudication takes place to declare that it is a closure and the procedure under the ID Act has to be followed. Therefore, this Court can safely conclude that the employees of HPF are in a quandary, on one hand, they wanted to leave the organisation, receive compensati....
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....ment took a decision to rehabilitate the workmen presumably bearing in mind that it is a welfare State and the workmen should not be retrenched suddenly and thrown to the streets without any relief. Therefore, this Court is of the considered view that the petitioners cannot maintain the challenge to the impugned proceedings/circular on the grounds raised and it is held that it is an option for the workmen to accept the package and such of those who do not wish to accept the package, consequences are bound to follow, which have to be met in accordance with law before the appropriate forum. 28. Having held so, the only other question that remains to be decided is with regard to deduction of tax at source. Section 10 of the IT Act falls in Chapter III and it deals with incomes not included in total income. Section 10 states that in computing the total income of a previous year of any person, any income falling within any of the clauses mentioned therein shall not be included. For the purpose of this case, sub-section (10B) & (10C) of Section 10 would be relevant, which are quoted herein below:- Incomes which do not form part of Total Income Incomes not included in....
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....the transfer; (c) the expressions employer and workman, shall have the same meanings as in the Industrial Disputes Act, 1947 (14 of 1947); ......... S.10(10C) any amount received (or receivable) by an employee of:- (i) a public sector company; or ............... .............. (viii) such institute of management as the Central Government may, by notification in the Official Gazette, specify in this behalf, [on his] [voluntary retirement or termination of his service, in accordance with any scheme or schemes or voluntary retirement or in the case of a public sector company referred to in sub-clause (i), a scheme or voluntary separation, to the extent such amount does not exceed five lakh rupees]; Provided that the schemes of the said companies or authorities [or societies or Universities or the Institutes referred to in sub-clauses (vii) and (viii), as the case may be, governing the payment of such amount are framed in accordance with such guidelines (including inter alia criteria of economic viability) as may be prescribed [***]: provided further that where exemption has been allowed to an employee und....
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....nt, it undoubtedly would qualify the parameters laid down under sub-section (10B) of Section 10 of the Income Tax Act. This is so because the monetary benefit which will accrue to the employees is in the nature of a compensation, which is pursuant to a decision taken by the Government of India specifically for the employees of HPF. Therefore, the amount would be exempted from income tax in terms of the first proviso under Section 10(10B) of the IT Act. In terms of clause (2) of first proviso, the ceiling limit is Rs. 5,00,000/-. The second proviso states that the first proviso shall not apply in respect of any compensation received by a workmen in accordance with any scheme, which the Government may, having regard to the need for extending the special protection to the workmen in the undertaking to which such scheme applies and other relevant circumstances, approve in its behalf. The compensation which is received by the workmen would fall within the definition of compensation found in explanation to Section 10(10B). 32. In such circumstances, this Court has no hesitation to hold that the package having been received by the workmen as compensation pursuant to the decision taken ....