IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.
Kang Gursharan Singh 2014.04.07 10:50 Letters Patent Appeal No.80 of 2005 (O&M) DATE OF DECISION : APRIL03 2014 The Punjab State Cooperative and Marketing Federation Limited ......APPELLANT VERSUS Rajinder Singh and others ....RESPONDENTS CORAM : HON'BLE Mr.JUSTICE SANJAY KISHAN KAUL, CHIEF JUSTICE HON'BLE Mr.JUSTICE ARUN PALLI PRESENT: Mr.Vikas Singh, Advocate, for the appellant.
Mr.Ashok Sharma Nabhewala, Advocate, for the private respondents.
Mr.HS Sethi, Additional Advocate General, Punjab..KAUL,, CJ.
(Oral) SANJAY KISHAN KAUL On 31.1.2014, the present case was adjourned to 8.5.2014.
At the joint request of learned counsel for the parties, the matter, which is on the regular board of this Court, is taken up for hearing, and is being disposed of.
Employees of the Punjab State Federation of Consumers Cooperative Wholesale Stores Limited (hereinafter referred to as 'Constofed').a Cooperative Society registered under the Punjab Cooperative Societies Act, 1961 (hereinafter referred to as 'the said Act').stated to be wholly owned by the State of Punjab, filed Civil Writ Petition No.4975 of 1999 before Letters Patent Appeal No.80 of 2005 (O&M) 2 this Court, seeking parity of pay scales with other employees of agencies like Markfed, Sugarfed, WeavCo.Housefed and Spinfed, claiming that the recommendations of the 4th Pay Commission had not been implemented qua them and certain benefits of revised pay scales were also restricted from 1.11.1989 instead of 1.1.1986.
Constofed, apparently, went through financial difficulties with its survival itself coming into question with the result that the aspect of its merger with the Punjab State Cooperative and Marketing Federation Limited (hereinafter referred to as 'Markfed') was examined and an amalgamation order was passed by the Registrar, Cooperative Societies, Punjab, on 30.6.2000.
Constofed had been brought under liquidation under Section 57 of the said Act.
This order was, however, assailed before this Court in Civil Writ Petition No.9075 of 2000 and in terms of order dated 15.9.2000, the writ petition was allowed quashing the amalgamation proceedings on account of certain defects but with leave to the Registrar to consider the process de-novo, in accordance with the provisions of the said Act.
It is, thereafter, that after initiating proceedings in accordance with the said order, that order dated 17.5.2001 came to be passed, which dealt with the objections/claims and the amalgamation was directed on the following terms and conditions set out in para 10.0 :- “i) Markfed will take over all assets and liabilities of Constofed; ii) All the 54 employees of Constofed will be absorbed in Markfed in equivalent rank and Letters Patent Appeal No.80 of 2005 (O&M) 3 pay.
However, these 54 posts will be treated as personal posts meaning thereby that the posts will be abolished as soon as any of these employees retires, resigns or dies; iii) The other terms and conditions will be governed by Markfed Employees' Rules from the date they join the service in Markfed; iv) Markfed will issue a Share Certificate of the face value of shares to the shareholders of Constofed within three months from the order of amalgamation; v) Leased and rented building of Constofed will be taken over by the Markfed immediately after the amalgamation.
These buildings will be used for the purpose, for which these were allotted/leased/rented to Constofed; vi) The liabilities on account of claims noted at (i) to (xii) above, would be subject to the outcome of judicial proceedings, if any, pending with the competent authorities; and vii) The liabilities arising out of business dealings as noted above in para No.7.0 would be taken over by Markfed in keeping with the last audited books of account of Constofed and may be handed over to them by Constofed.”
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We are informed that this order became final though it was sought to be assailed by some employees by filing Civil Writ Petition No.10283 of 2001, which was dismissed as withdrawn on 30.4.2012.
It is in the conspectus of the aforesaid amalgamation that, ultimately, Civil Writ Petition No.4975 of 1999, referred to aforesaid, came to be decided by the learned Single Judge on 5.8.2004.
Letters Patent Appeal No.80 of 2005 (O&M) 4 The stand of Markfed before the learned Single Judge was that it would be the aforesaid order of amalgamation which would govern the rights and obligations of Markfed qua its employees and that they were not bound to revise the pay scales of the employees of erstwhile Constofed in view of clause (vi) of the order of amalgamation, extracted aforesaid.
The benefits would be admissible to such employees from the date they joined the services of Markfed.
Constofed was running into losses of ` 5 crores and, thus, a policy decision was taken to absorb the employees of Constofed into Markfed so that they are not thrown on the road.
The aforesaid plea was examined by the learned Single Judge, who concluded that when reference was made to the liabilities being subject to outcome of judicial proceedings, they would include the proceedings relating to the writ petition.
A final direction was issued calling upon Markfed to allow the benefit of revision of pay scales with effect from 1.1.1996 to the original petitioners with interest payable at the rate of 6% per annum on arreaRs.The aforesaid order of the learned Single Judge came to be assailed in the present Letters Patent Appeal.
The Letters Patent Appeal was dismissed on 15.5.2006 rejecting the plea that since the original petitioners had not worked with the Markfed from 1.1.1986 to 16.5.2000, they were not entitled to any revision of pay scales on that account.
The grant of interest was, however, set aside with a direction to make the payment within four months.
We may clarify here that there is no controveRs.relating to the grant of proper revised pay scales Letters Patent Appeal No.80 of 2005 (O&M) 5 from the date the original petitioners were absorbed in Markfed.
A Special Leave Petition No.20878 of 2006 was preferred against this order.
Leave was granted and the Special Leave Petition was registered as Civil Appeal No.8164 of 2010.
The Supreme Court disposed of the appeal on 20.9.2010 by setting aside the order of the Division Bench dated 15.5.2006 and remitting the matter back for reconsideration in the conspectus of the observations made therein.
The relevant portion of the Supreme Court order is extracted hereunder:- “The short point argued by the learned counsel for the appellant is that the 4th Pay Commission Report had not been accepted by the CONSTOFED, whereas the learned counsel for the respondents submits that it was pending consideration when the CONSTOFED was taken over by the MARKFED.
We are told by the learned counsel for the appellant that the validity of the merger order is pending final disposal before the Punjab & Haryana High Court in C.W.P.No.10283 of 2001.
In our opinion, the report of a Pay Commission is only a recommendation, and does not give rise to any right in a party to claim the recommended amount, unless the recommendation is accepted by the Government or concerned authority.”
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The Supreme Court, thus, opined as aforesaid that a recommendation of the Pay Commission is only a recommendation and would not give right to a party to claim the recommended amount unless the recommendation was accepted by the Government or concerned authority.
On the matter being remitted back to this Court, it Letters Patent Appeal No.80 of 2005 (O&M) 6 was listed from time to time and the controveRs.was crystalised by the order dated 10.7.2012 of the Division Bench.
Clause (i) of Para10.0 of the amalgamation order dated 17.5.2001 was referred to, which required Markfed to take over all assets and liabilities of Constofed.
The issue of adoption of recommendations of 4th Pay Commission was pending consideration and prior to a decision one way or the other, the merger took place with Markfed.
The Division Bench, thus, opined that, prima facie, the word “liabilities”.
used in the expression “MARKFED”.
would include the right of the employees of Constofed to call upon Markfed to consider the adoption of the report of 4th Pay Commission and it would “fall to MARKFED to take a decision in this matter”.Thereafter, the matter was adjourned for a decision of the Markfed.
The Markfed, thereafter, had taken a decision and the order passed in this behalf dated 18.9.2012 has been placed on record.
The order refers to the history of various litigations, referred to aforesaid, as also the pleas on which the appeal was filed before the Division Bench against the order of the learned Single Judge dated 5.8.2004.
The grounds for assailing the order of the learned Single Judge have been crystalised in the order, as under:- “(i) As per the order of amalgamation, the service conditions of the petitioners are governed by the service rules governing the employees of Markfed, only from the date of their joining the Markfed.
(ii) In the Balance Sheet of the Constofed as on the Letters Patent Appeal No.80 of 2005 (O&M) 7 date of merger with the Markfed, there is no provision at all for the arrears on account of revision of pay scales etc.of the employees of the Constofed.
Since, provision in the balance sheet was only for the salary for the period from November 2000 to 16/05/2011 be also paid to petitioneRs.the same was released to the petitioners during the pendency of the appeal.
(iii) Constofed was running in to loss of Rs.5.00 Crores and the Government took a policy to absorb the petitioners in Markfed so that they and their families are not thrown on the road.
(iv) Constofed employees have been re-employed and thus, respondent-Markfed is not liable for the arrears on account of revision of pay scales prior to 18/05/2001, the date of joining of the employees of the Constofed in the Markfed.”
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The conclusions are as under:- “.....Though, as per the amalgamation ordeRs.it was mentioned that Markfed will take over all the assets and liabilities of the Constofed but Markfed in its petition before the Hon'ble Supreme Court of India had also submitted that the report of the pay commission was only recommendations and does not accrue any right to the employees of the Constofed unless the recommendations were accepted by the Board of Directors of the Constofed.
The recommendations of the pay commission were never approved to be implemented by the BOD of Constofed.
Further, the payment of arrears to the employees was not included in the list of the liabilities by the Registrar, Cooperative Societies, Punjab, Chandigarh at the time of passing the orders of amalgamation of Constofed in Markfed.
The Letters Patent Appeal No.80 of 2005 (O&M) 8 employees joined Markfed from 17/05/2001 onwards.
Earlier due to bad financial condition, Constofed did not accept the recommendations of 4th Pay Commission.
In this situation, the Markfed can not accept the recommendations of 4th Pay Commission for these former employees of Constofed for the period they remained in the service of Constofed.
As far the period after their joining in the Markfed, they have already been given benefit on the basis of recommendations of the 4th pay commission.”
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It is the say of the learned counsel for Markfed before us that nothing really survives in the present appeal in view of what has been observed by the Division Bench on 10.7.2012 and the consequent order passed on 18.9.2012, which had not been assailed further.
On the other hand, learned counsel for the original private petitioners contended that the order dated 10.7.2012 really amounted to calling upon Markfed to pass a formal order for adoption of the 4th Pay Commission recommendations and, thus, the order dated 18.9.2012 was neither here nor there.
He submitted that, thus, he would like to make submissions qua this order, even though the same may not have been specifically assailed in the present petition.
We have heard learned counsel for the parties.
It is not in issue that the crux of the dispute, as urged earlier on 10.7.2012 before the Division Bench as also before us today, is now based on clause (i) of Para 10.0 of the amalgamation order dated 17.5.2001, which requires Markfed to Letters Patent Appeal No.80 of 2005 (O&M) 9 take over all assets and liabilities of Constofed.
In view of the observations in the order dated 18.9.2012 that payment of arrears to employees was never included in the list of liabilities by the Registrar at the time of passing of the amalgamation order dated 17.5.2001, we called upon the learned counsel for the original private petitioners to point out to us whether there was, in fact, any material to the contrary available on record.
Learned counsel has not been able to point out any such material but his submission is that the amalgamation order be read, which requires all the liabilities to be taken over and such liabilities would include the prospective claims of the employees, which would arise from the writ proceedings which were already pending in the present case.
This plea, in our opinion, however, seeks to ignore clause (iii) of Para 10.0 of the amalgamation order, which clearly stipulates that the terms and conditions would be governed by Markfed Employees' Rules “from the date they join the service in Markfed”.There is no issue that the benefit has been granted from the date of amalgamation.
Clause (vi) of Para 10.0 refers to the liabilities on account of claims noted at (i) to (xii).as specified in the amalgamation order, subject to the outcome of judicial proceedings.
These liabilities, on perusal of the order shows, refer to the objections filed by different entities and the claims stated to be pending qua them.
There is, however, no reference to any claim of the employees or the pendency of the writ proceedings from which the present Letters Patent Appeal arises.
Thus, this itself should have put the matter at rest.
The Letters Patent Appeal No.80 of 2005 (O&M) 10 so-called possible liabilities arising from the writ proceedings never formed part of any certified liability, as per the amalgamation order.
We are also to note that the Hon'ble Supreme Court, while remitting the matter back, has also clarified by giving an opinion that the Pay Commission recommendation is only a recommendation and would not give any right to claim the recommended amount unless it was accepted by the Government or the concerned authority.
The Pay Commission recommendations were never accepted by the Board of Constofed though the matter came up on the Agenda and was deferred from time to time.
In fact, it is this which persuaded the Division Bench on 10.7.2012 to observe that the expression “liabilities”., at best, would take into consideration the aspect of a decision to be taken by Markfed qua the issue and that decision has since been taken adveRs.to the petitioneRs.We are unable to accept the plea of the learned counsel for the original petitioners that the order dated 10.7.2012 amounted to granting relief to them and only a formal order was to be passed by Markfed.
No such conclusion can be drawn, as would be apparent from a plain reading of the order.
Now, coming to the order dated 18.9.2012, which learned counsel for the private petitioners has insisted to be examined in the present proceedings, we find nothing fallacious or onerous qua the same to call for our interference.
The amalgamation order itself is very clear.
The liability of Markfed would start from the date of joining of the employees of Letters Patent Appeal No.80 of 2005 (O&M) 11 Constofed, on amalgamation.
As explained aforesaid, there were no arrears of revised salary payable reflected in the balance-sheet and naturally so, as no decision accepting the recommendations to be followed had been taken.
The endeavour, in fact, was to provide means of livelihood to the employees of Constofed rather than winding it up and causing serious affect on the employees and their families.
Thus, the decision of Markfed not to make the 4th Pay Commission recommendations applicable to the employees of Constofed prior to their absorption in Markfed, does not call for any interference.
The result of the aforesaid is that the impugned order of the learned Single Judge dated 5.8.2004 is set aside, the writ petition filed by the original petitioners is dismissed and the present appeal is allowed, leaving the parties to bear their own costs.
( SANJAY KISHAN KAUL ) CHIEF JUSTICE April 03, 2014 ( ARUN PALLI ) Kang JUDGE