TMI Blog1986 (9) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in lieu of reinstatement can be given to the employer in fit cases? III. What would be the appropriate amount to be reasonably awarded in lieu of reinstatement? These are the questions which call for answers in this appeal.(By Special Leave arising out of W.P. No. 2329 of 1984 dismissed by the High Court of Delhi summarily by its order dated 26.9.1984) 2. Undisputed are the following facts, the same being incapable of being disputed: (1) The respondent Corporation (I.T.D.C.) is 'State' within the parameters of Article 12 of the Constitution of India it being an instrumentality of the State as per the law enunciated by this Court in Central Inland Water Transport Corporation Limited and Anr. v. Brojo Nath Ganguly and Anr. and Central Inland Water Transport Corporation Limited and Anr. v. Taran Kanti Sengupta and Anr. MANU/SC/0439/1986 : (1986)IILLJ171SC . (2) Appellant was an employee of the Respondent Corporation holding the post of Manager of Hotel Ranjit, New Delhi, at the material time when his services were terminated by the impugned order. (Annexure P-10, Memorandum No. P-B(OP)-22 dated 18th September, 1984) (3) Services of the Appellant were ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The power may be exercised depending on whether or not the concerned employee belongs to the same region, or to the same caste as that of the authority exercising the power, of course without saying so. Such power may be exercised even in order to make way for another employee who is a favourite of the concerned authority. Provincialism, casteism, nepotism, religious fanatism, and several other obnoxious factors may in that case freely operate on the mind of the competent authority in deciding whom to retain and whom to get rid of. And these dangers are not imaginary ones. They are very much real in organisations where there is a confluence of employees streaming in from different states Such a rule is capable of robbing an employee of his dignity, and making him a supine person whose destiny is at the mercy of the concerned authority (whom he must humour) notwithstanding the constitutional guarantee enshrined in Articles 14 and 16 of the Constitution of India. To hold otherwise is to hold that the fundamental right embedded in Articles 14 and 16(1) is a mere paper tiger and that it is so ethereal that it can be nullified or eschewed by a simple device of framing a rule which aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n so far as the 'gold collar' (managerial cadre) employees are concerned, the consequence of quashing of the regulation calls for some reflection. In the private sector, the managerial cadre of employees is altogether excluded from the purview of the Industrial Disputes Act and similar labour legislations. The private sector can cut the dead wood and can get rid of a managerial cadre employee in case he is considered to be wanting in performance or in integrity. Not so the public sector under a rule similar to the impugned rule. Public sector undertakings may under the circumstances be exposed to irreversible damage at the hands of a 'gold collar' employee (belonging to a high managerial cadre) on account of the faulty policy decisions or on account of lack of efficiency or probity of such an employee. The very existence of the undertaking may be endangered beyond recall. Neither the capitalist world nor the communist world (where an employee has to face a death sentence if a charge of corruption is established) feels handicapped or helpless and countenances such a situation. Not being able to perform as per expectation or failure to rise to the expectations or fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those belonging to the managerial or similar high level cadre, reinstatement would be a rule, and compensation in lieu thereof a rare exception. In so far as the high level managerial cadre is concerned, the matter deserves to be viewed from an altogether different perspective-a larger perspective which must take into account the demands of National Interest and the resultant compulsion to ensure the success of the public sector in its competitive co-existence with the private sector. The public sector can never fulfil its life-aim or successfully vie with the private sector if it is not managed by capable and efficient personnel with unimpeachable integrity and the requisite vision, who enjoy the fullest confidence of the 'policy-makers' of such undertakings. Then and then only can the public sector undertaking achieve the goals of 1. maximum production for the benefit of the community, 2. social justice for workers, consumers and the people, and 3. reasonable return on the public funds invested in the undertaking. 6 . It is in public interest that such undertakings or their Board of Directors are not compelled and obliged to entrust their managements to perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in lieu of reinstatement, and not reinstatement, is warranted in the circumstances of the present case. 8 . Counsel for the appellant having forcefully pressed the claim for reinstatement, has contended that in case the Court is disinclined to order reinstatement, the appellant ought to be awarded the full salary and allowances which would have accrued to him till the date of his superannuation which is more than 8 years away. We think it would be unreasonable to award 8 years' salary and allowances, as lump sum compensation in lieu of reinstatement. We consider it unreasonable because : (i) To do so would tantamount to paying to the appellant EVERY MONTH 20% OVER AND ABOVE what he would have earned if he was continued in service WITH-OUT DOING ANY WORK as the lump sum payment of 8 years' salary invested at 15% interest (it being the current rate of interest) would yield a monthly recurring amount equivalent to his current monthly salary 'plus' 20%; (ii) To do so would be tantamount to paying to him his present salary etc. plus 20% more every month not only till his date of retirement but till his death (if he lives longer) and also to his heirs therea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under the impugned order till the date of payment of compensation equivalent to 3.33 years' salary including usual allowances to him. (2) Provident Fund amount payable to the appellant and retirement benefits computed as on the date of payment as per Clause 1 shall be paid to him within 3 months from the said date. III-The appellant shall vacate and make over possession of the premises provided to the appellant by the respondent-company before the expiry of 3 months from the date of this order or within one month of the day on which payment under Clause II is made, whichever is later. IV-Respondent shall pay the costs to the Appellant. V-Interim order shall stand vacated subject to the direction embodied in Clause III. VI-Since the amount is being paid in one lump sum, it is likely that the employer may take recourse to Section 192 of the Income-tax Act, 1961 which provides that any person responsible for paying any income chargeable under the head 'Salaries', shall, at the time of payment, deduct income-tax on the amount payable at the average rate of income computed on the basis of the rates in force for the financial year in which the payment is made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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