2007 (9) TMI 727 - SC - Income Tax

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the appellant, as a male dependent aged 15 years or above at the time of the deceased employee's death, was entitled to be kept on a live roster and subsequently appointed on compassionate grounds upon attaining the age of 18 years under Clause 9.3.2(iii) of the National Coal Wage Agreement (N.C.W.A.) V.

- Whether the circulars issued by the respondent employer prescribing a limitation period (initially six months in 1995, later extended to one year in 2000) for filing applications for compassionate appointment were valid and binding, and whether they could be strictly enforced to deny the appellant's claim.

- Whether the rejection of the appellant's application on grounds of delay and under-age was justified, particularly in light of the employer's failure to keep the appellant's name on the live roster as mandated by the settlement.

- Whether the existence of an elder brother in employment with the subsidiary company barred the appellant's entitlement to compassionate appointment.

- The applicability and scope of the principles governing compassionate appointments as exceptions to Article 16(1) of the Constitution of India, including the necessity of strict compliance with the relevant scheme or settlement.

- The extent of the employer's discretion in framing and enforcing limitation periods for applications under a binding settlement and the reasonableness of such limitations.

2. ISSUE-WISE DETAILED ANALYSIS

Entitlement under N.C.W.A. V and the live roster provision:

The relevant legal framework is Clause 9.3.2(iii) of N.C.W.A. V, a binding settlement under Sub-section (3) of Section 18 of the Industrial Disputes Act, 1947. It mandates that if a male dependent is 15 years or older at the time of the employee's death, he should be placed on a live roster and provided employment commensurate with his skill and qualifications upon reaching 18 years of age. During this interim, female dependents are to receive monetary compensation.

The Court noted that the appellant was admittedly over 15 years at the time of his father's death and had filed an application for compassionate appointment initially as a minor and later after attaining majority. However, the respondent failed to place his name on the live roster and rejected his application citing delay and under-age status.

The Court held that the respondent did not discharge its duty under the settlement, and the appellant's entitlement to be kept on the live roster was clear. The failure to do so was a breach of the binding settlement and was neither fair nor reasonable.

Validity and enforceability of limitation periods prescribed by circulars:

The respondent issued circulars in 1995 and 2000 prescribing limitation periods of six months and one year respectively for filing applications for compassionate appointment. These circulars were administrative directions and not statutory rules or part of the settlement.

The Court assumed jurisdiction to consider the validity of such circulars but emphasized that these must be read in conjunction with the binding settlement and interpreted reasonably. The limitation periods were not imperative or absolute; the respondent retained discretion to consider applications beyond these periods after scrutiny.

The Court found that the initial rejection of the appellant's application did not rely on delay but on under-age status, and the respondent's later invocation of delay was unfair and raised for the first time in litigation. The subsequent circular extending the limitation to one year was prospective and borne out of consultations with unions, contrasting with the earlier unilateral circular.

The Court distinguished the present case from precedents where limitation periods were prescribed by statutory rules, holding that the circulars here do not have the same binding force and cannot override the settlement's provisions.

Rejection of application on grounds of delay and under-age:

The respondent's rejection letter cited the appellant's under-age status and failure to keep his name on the live roster as reasons for denial. The Court emphasized that the appellant's application as a minor should have been considered under the live roster provision, and the respondent's failure to maintain the roster was a breach of duty.

The delay in filing after attaining majority was not a valid ground for rejection, especially since the respondent did not enforce the limitation period strictly or consistently. The Court held that the appellant's rights under the settlement were not to be curtailed arbitrarily.

Effect of elder brother's employment on appellant's claim:

The respondent initially contended that the appellant was not entitled to appointment because his elder brother was already employed by a subsidiary company. This contention was later abandoned by the respondent and found to be unfounded by the Court.

Compassionate appointment as an exception to Article 16(1) and its strict construction:

The Court reiterated that appointments on compassionate grounds constitute an exception to the constitutional guarantee of equality in public employment under Article 16(1). Such exceptions are carved out narrowly to alleviate immediate hardship caused by the death of the breadwinner.

Precedents were cited emphasizing that compassionate appointments should be strictly confined to the purpose they serve and must comply with the scheme or settlement governing them. The Court referred to authoritative decisions underscoring that no vested right accrues to claim compassionate employment beyond reasonable periods and conditions specified by the employer or settlement.

Employer's discretion and reasonableness in framing limitation periods:

While the Court assumed the respondent had jurisdiction to prescribe limitation periods, it underscored that such discretion must be exercised reasonably and in good faith. The employer must consider the spirit of the settlement and the purpose of compassionate appointments.

The Court found the six-month limitation in the 1995 circular to be neither statutory nor imperative, and the later extension to one year more reasonable. The respondent's inconsistent application of these limitations and failure to maintain the live roster undermined the fairness of the process.

3. SIGNIFICANT HOLDINGS

"A settlement within the meaning of Sub-section (3) of Section 18 of the Industrial Disputes Act is binding on both the parties and continues to remain in force unless the same is altered, modified or substituted by another settlement."

"The period of six months' limitation prescribed in the circular letter dated 12.12.1995 was not statutory. It is also not imperative in character. Even for entertaining such an application beyond the period of six months, the Headquarters of the Central Coal Field Limited is entitled to consider the facts and circumstances of each case."

"Appointment on compassionate ground is given only for meeting the immediate hardship which is faced by the family by reason of the death of the bread earner. When an appointment is made on compassionate ground, it should be kept confined only to the purpose it seeks to achieve, the idea being not to provide for endless compassion."

"The action of the respondent is neither fair nor reasonable nor bona fide."

"The limitation periods prescribed by circulars issued unilaterally by the employer cannot override the binding provisions of the settlement and must be applied reasonably and consistently."

"The rejection of the appellant's claim on grounds of delay and under-age without maintaining the live roster as mandated by the settlement was arbitrary and unjustified."

"The appeal is allowed and the respondent is directed to offer appointment to the appellant on a suitable post within eight weeks."