TMI Blog2003 (4) TMI 406X X X X Extracts X X X X X X X X Extracts X X X X ..... t nearly ninety nine per cent of employees have availed of the VRS Scheme and have left the companies (FCI HFC), the writ petition no longer survives and has become infructuous. - TRANSFERRED CASE (C) NOS. 2 TO 4, 8 TO 13, 15 AND 35 OF 2000 AND T.P.(C) NO. 326 OF 2002 - - - Dated:- 25-4-2003 - S. RAJENDRA BABU AND G.P. MATHUR, JJ. Mukul Rohatgi, R. Venkatramani, L. Nageswara Rao, N.N. Goswami, A. Bhattacharya, Sanjoy Kr. Ghosh, Vivek Singh, Vani Singh, Ms. Vimla Sinha, Yunus Malik, L.R. Singh, R. Krishnamorthi, Ambhoj Kumar Sinha, Ms. Mridula Ray Bhardwaj, Dr. Sumant Bhardwaj, Ms. Mona Rajvanshi, Raj Kumar Gupta, Sheo Kumar Gupta, A.N. Bardiyar, Prshant Chaudhary, G.S. Chatterjee, Raja Chatterjee, Punit Dutt Tyagi, Ms. Kirti Renu Mishra, S. Wasim A. Qadri, B.V. Balram Das, T.A. Khan, R.N. Poddar, Mrs. Anil Katiyar, Deba Prasad Mukherjee, Annam D.N. Rao, Niraj Gupta, Ms. Meera Mathur, Shambhu Prasad Singh, Ms. Manjula Gupta, Ms. Sushama Suri, Ghanshyam Joshi P. Addy, S. Saxena, R.C. Verma, Mukesh Verma, Manish Srivastava, Mrs. Rekha Palli, Shreekant N. Terdol, Jagat Arora, Rajat Arora, Rajiv Nanda, Pratap Venugopal, P.S. Sudhir, Ajay Kumar Jain, Ms. Nitika Pal, Ms. Sur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of India set up a Committee to work out the modalities for reorganisation of its Fertilizer Industry. On the basis of the recommendation of the Committee, the Government of India approved the bifurcation and reorganisation of FCI and National Fertilizer Ltd. (for short NFL ) which was an independent and separate undertaking at that time and allocated the various units to the newly created undertakings which were five in number. Namrup, Haldia, Barauni and Durgapur units were allocated to the newly formed Hindustan Fertilizer Corporation Ltd. (for short HFC ) and Sindri, Gorakhpur, Ramagundam, Talcher, Korba and Jodhpur Mining Organi-zation were retained with FCI. The other units were allocated to newly created Rashtriya Chemicals and Fertilizers Ltd. and National Fertilizers Ltd. while a fifth company dealing exclusively with planning and develop-ment was created which was known as Project and Development (India) Ltd. After reorganization, the industrial pattern of pay and DA was introduced and it was made effective from 1-9-1977. The Department of Chemicals and Fertilizers, Government of India issued a circular on 3-9-1979 which provided that revision of pay scales and fringe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ban imposed by D.O. No. 2(3)/91-DPE (WC) dated 17-10-1991 was withdrawn and it was directed that the management of PSEs may commence their wage negotiations with the Trade Unions/Associa-tions. It further provided that under the new Wage Policy the Manage-ments were free to negotiate the wage structure keeping in view and consistent with the generation of resources/profits by the individual enterprises/units but 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. Para 5 of this Office Memorandum specifically said that the wage settlement should be negotiated by the PSEs in accordance with the above parameters. This was followed by the impugned Office Memorandum dated 19-7-1995 issued by the Department of Public Enterprises on the subject of revision of scales of pay of the Executives holding post below the Board level and non-unionised supervisors with effect from 1- 1-1992. The petitioners are basically aggrieved by para 13 of this Office Memorandum which provides that for sick PSEs registered with the Board for Industrial and Financial Recons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment since 1991-1992 till 1995-1996 have been given in para 12 of the counter-affidavit. It is averred in para 14 of the counter-affidavit that in case the pay scales and other benefits of the employees are directed to be revised with effect from 1-1-1992 it would involve additional financial implication of Rs. 120 crores (Rs. 60 crores each for FCI and HFC) for the five year period. The revival packages for both FCI and HFC have not been approved for implementation by the BIFR because the Operating Agency, the Department of Fertilizers and the Promoters have not been able to mobilize funds required for the revival package. Pay revision of the employees will further add to the financial requirements for the revival package, which is held up for want of funding. 6. It is also pleaded in the counter affidavit that the Government guidelines do not prohibit BIFR referred companies from revising their pay scales and other benefits with effect from 1-1-1992 but has linked it with the basic issue of revival packages of such companies. This revival package is to be approved by the BIFR after it is agreed to by the Operating Agency and funding institutions. It has thus been submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablishment of the fertilizer industry in the public sector and the fact that the said industry has served the aforesaid purpose of production and distribution of fertilizers at affordable prices and augmenting agricultural and rural productivity, it was inappropriate on the part of the Government of India to postpone the revision of pay from 1992 and to link it up in the year 1995 with the decision to refer the companies to BIFR. Learned counsel has further submitted that when it is not demonstrated that the incident of loss is attributable to the conduct of employees or workers and when it is acknowledged that several factors which could have been conveniently dealt with to eliminate loss making condition ( viz. old plants and obsolete technology) and to do so was within the competence of the Government of India, it will be gross injustice to the employees to deny their pay revision by relating it with profitability. Sickness of PSU without consideration of the causes of sickness, it is urged, can be no ground for denial of fair pay revision particularly when the Government of India has failed to take relevant and efficient steps to promote the health of the industry. 9. In s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by Shri Venkataramani is that the Union of India had also agreed both in the meeting held on 20-9-1996 and also in the affidavit filed before the Delhi High Court for a settlement regarding the revision of pay scales being implemented from 1-1-1992 but without payment of arrears up to 1-1-1996. According to the learned counsel the High Court had passed an order on 10-11-1997 recording the compromise and the matter was adjourned only to work out the modalities of payment, but on account of filing of Transfer Petition by the Union of India in this Court, the compromise could not be implemented. However, taking note of the said compromise this Court passed orders on 19-4-2000 and 18-8-2000 for payment of fixed amounts to various categories of employees. The submission is that in view of the compromise entered into by the respondents and the orders passed by Delhi High Court and thereafter by this Court, it is not open to the respondents to resile from the same and deny the benefit of revision of pay scale to the petitioners. 11. In order to appreciate the first submission, it is necessary to refer to the two Office Memorandums which have been assailed in the writ petitions. Para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to generate the resources to meet the additional expenditure, which will be incurred on account of increase in wages. So far as sick enterprises which were registered with BIFR it was directed that the revision in pay scale and other benefits would be allowed only if it was actually decided to revive the industrial unit. The question which arises for consideration is whether the employees of Public Sector Enterprises have any legal right to claim that though the industrial undertakings or the companies in which they are working did not have the financial capacity to grant revision in pay scale, yet the Government should give financial support to meet the additional expenditure incurred in that regard. 14. The Fertilizer Corporation of India and Hindustan Fertilizer Corporation are both companies registered under the Companies Act with the only difference that they are Government Companies within the meaning of section 617 of the Companies Act. What will be the legal position of a Government Company and whether its employees will be treated to be Government servants was examined in Heavy Engg. Mazdoor Union v. State of Bihar AIR 1970 SC 82 and it was held as under in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould 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 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. It appears that prior to issuance of the Office Memorandum dated 12-4-1993 the Government had been providing the necessary funds for the management of Public Sector Enterprises which had been incurring losses. After the change in economic policy introduced in early nineties, Government took a decision that the Public Sector Undertakings will have to generate their own resources to meet the additional expenditure incurred on account of increase in wages and that the government will not provide any funds for the same. Such of the Public Sector Enterprises (Government Companies) which had become sick and had been referred to BIFR, were obviously running on huge losses and did not have their own resources to meet the financial liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility of the post, the requisite qualification and experi-ence, working condition and a host of other factors. The salary structure of similarly placed persons working in other Public Sector Undertakings may also be relevant. The petitioners have not placed any material on record to show that the salary which is currently being paid to them is so low that they are not able to maintain their living having regard to the post which they are holding. The observations made in paragraphs 276 and 277 in DTC Mazdoor Congress s case ( supra ), strongly relied upon by learned counsel for the petitioners, should not be read out of its context. In the said case the Court was called upon to consider the constitutional validity of Regulation 9 of Delhi Road Transport Authority (Conditions of Appointment and Service) Regulations, 1952, which gave power to terminate the services of an employee after giving one month s notice or pay in lieu thereof. The termination of services of some of the employees on the ground that they were inefficient in their work by giving one month s notice was set aside by the High Court as in its opinion Regulation 9( b ) gave absolute unbridled and arbitrary powers t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dream for the future. That is why the Industrial Tribunal s in this country generally confine their horizon to the target of fixing a fair wage. But there again, the economic factors have to be carefully considered . For these reasons, this Court has repeatedly emphasised the need of considering the problem on an industry- cum -region basis, and of giving careful consideration to the ability of the industry to pay . . . ." (p. 1336) [Emphasis supplied] 20. It may be noticed that in these cases the Court was considering the question of wage structure for workmen who belong to economically poor section of society and providing them even living wage was held to be a distant dream on account of economic considerations and also the capacity of the industry to pay. 21. In South Malabar Gramin Bank s case ( supra ), relied upon by the learned counsel for the petitioners, the Central Government had referred the dispute regarding the pay structure of the employees of the Bank to the Chairman of the National Industrial Tribunal headed by a former Chief Justice of a High Court. The Tribunal after consideration of the material placed before it held that the officers and employees o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... higher remuneration to workers in one organisation because another organisation had granted them, may lead to undesirable results and the application of the doctrine would be fraught with danger and may seriously affect the efficiency and at times, even the functioning of the organisation. Therefore, it appears to be the consistent view of this Court 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 material on record clearly shows that both FCI and HFC had been suffering heavy losses for the last many years and the Government had been giving considerable amount for meeting the expenses of the organisation. In such a situation, the employees cannot legitimately claim that their pay scales should necessarily be revised and enhanced even though the organisations in which they are working are making continuous losses and are deeply in red. 22. The second argument based upon the so-called settlement/ compromise may now b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contains the terms of the settlement. After the transfer of the Writ Petitions this Court passed a detail order on 19-4-2000 and it is necessary to reproduce the same in extenso . "Having heard learned senior counsel for the petitioners, learned senior counsel Mr. Goswami for the Union of India, the learned counsel for the Hindustan Fertiliser Corporation Ltd. (HFC) and Fertilizer Corporation of India (FCI), we find that appropriate interim orders, without prejudice to the rights and contentions of all concerned, are required to be passed at this stage for employees of all the units of the aforesaid two corporations. In the writ petition which was moved before the High Court of Delhi by the concerned employees of the aforesaid two concerns claiming for revision of pay scales and payment of appropriate amounts accordingly, a learned Single Judge of the High Court has on 10th November, 1997 made the following observations : In reply to the petitioner s application the respondent had taken the stand that as a compromise the respondents 3 and 4 agreed to provide revised salary to the petitioners w.e.f. 1st January, 1996, subject to the contention that no arrear w.e.f. 1st Janua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of justice, to give at least a limited relief to all the employees of the aforesaid two concerns, including, Class III and IV employees, purely as an ad hoc measure, and without prejudice to the rights and contentions of all concerned to the following effect: Revised salary shall be computed with effect from 1st January, 1992 notionally for the concerned staff members of all the units of the aforesaid two Government Corporations, namely, HFC and FCI only. No arrears shall be paid to the concerned staff members till 31st March, 2000. Only actual revised salary will be available in the time scale so computed, from 1st April, 2000 on the basis of the revised pay scale available from 1st January, 1992. However, no further upward revision of pay scales will be available to the concerned staff members pursuant to the present order. That question is kept open. The revised salaries payable from 1st April, 2000 shall be paid to the concerned employees within six weeks from today and then in future salaries in revised pay scales as per 1-1-1992 revision will be made available to the concerned staff members from month to month till further orders. These proceedings will now stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alaries payable to them. This order is passed purely as an ad hoc measure and will not come in the way of the ultimate decision of this Court . This order will also not be treated as a precedent in any matter in view of the special facts of the present case. We express no opinion about the nature of the order passed by learned Single Judge of the High Court . That question will abide by the decision in the main matter. In view of the present order, I.As. are disposed of." [Emphasis supplied] 25. It may be noticed that the reference to the word "compromise" has been made in the order of the High Court dated 10-11-1997 and this order was passed in Civil Misc. Application No. 7885 of 1996 which was filed by the petitioners for grant of interim relief. In the counter-affidavit which was filed on behalf of the respondents it was asserted that the application is meritless and the prayer for interim relief was devoid of any merits and the application was liable to be dismissed. In paras G, H and I of the counter-affidavit, reproduced above, it was stated that pay revision will be allowed only if it is decided by the BIFR to revive the companies and the revival packages will incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch entitled the petitioners to get revised salary. The contention of the petitioner based upon the alleged settlement or compromise is, therefore, devoid of merits and has to be rejected. 26. Apart from what we have discussed earlier, it is necessary to take note of a subsequent development which has a serious impact on the relief claimed by the petitioners. The respondents have filed an affidavit on 15-2-2003 sworn by Shri Pawan Wadhwa, Deputy Secretary, Department of Fertilizers, Ministry of Chemicals and Fertilizers. It is averred in the said affidavit that the accumulated losses as on 31-1-2003 of HFC have been Rs. 7421.52 crores and that of FCI have been Rs. 8874.00 crores. To meet the expenditure towards salary, wages as well as other administrative expenses in these units including preservation cost of the plants, total plan and non-plan budgetary assistance to the tune of Rs. 2,227.00 crores has been extended by the Government of India till 31-1-2003. The commercial production in some of the units of both the companies never commenced and the remaining units suspended operations one by one as viability/ economics of production of urea in these plants had become extremel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that while framing the Voluntary Retirement Scheme the grievance of the petitioners regarding non-revision of their pay scale has been taken into consideration and it was for this reason that in the second Voluntary Retirement Scheme announced on 6-11-2001 ex gratia payment in respect of employees on pay scales at 1-1-1987 level has been increased by 100 per cent and for employees on pay scales at 1-1-1992 level, it has been increased by 50 per cent. So far as HFC is concerned 4781 out of 4881 employees had opted for VRS and only 100 remained. Similarly for FCI out of 5712 employees 5675 had opted for VRS and only 37 remained. The majority of left over number of employees in both the companies is proposed to be retained for assisting in completion of the formalities entailing the closure process. The Government of India had released an amount of Rs. 154 crores to HFC and Rs. 237.50 crores to FCI for disbursal of VRS benefits to these employees. Learned counsel has submitted that the employees of both the Companies having taken advantage of VRS and having taken the amount without any demur, the relationship of employer and employee had ceased to exist. They cannot there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employees who were practically doing no work has been paid by the Government for a considerable long period. The employees accepted VRS with their eyes open without making any kind of protest regarding their past rights based upon revision of pay scale from 1-1-1992. 32. The Voluntary Retirement Scheme (VRS) which is some times called Voluntary Separation Scheme (VSS) is introduced by companies and industrial establishments in order to reduce the surplus staff and to bring in financial efficiency. The Office Memorandum dated 5-5-2000 issued by Government of India provided that for sick and unviable units, the VRS package of Department of Heavy Industry will be adopted. Under this Scheme an employee is entitled to an ex gratia payment equivalent to 45 days emoluments (pay + D.A.) for each completed year of service or the monthly emoluments at the time of retirement multiplied by the balance months of service left before the normal date of retirement, whichever is less. This is in addition to terminal benefits. The Government was conscious about the fact that the pay scales of some of the PSUs had not been revised with effect from 1-1-1992 and therefore it has provided adequat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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