All India Hvoc Workmen Federat Vs. Union of India (Uoi) and ors. - Court Judgment

S. Muralidhar, J.

1. This appeal is directed against an order dated 26.2.2002 passed by the learned Single Judge dismissing the Writ Petition (C) 671/2001 filed by the appellant herein.

2. The facts leading to the filing of the present appeal are that Hindustan Vegetable Oil Corporation Limited (HVOC), respondent No. 2 herein, of which the members of the appellant federation were employees, became an unviable undertaking and its case was referred to the Board for Industrial and Financial Reconstruction (BIFR), under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) in December, 1999. The BIFR declared HVOC as a sick industrial company in terms of Section 3(1)(o) of SICA. The employees of HVOC are members of the appellant federation, applied to the BIFR to the inclusion of parties and sought direction for revival of the respondent No. 2.

3. On 6.11.2000, the Ministry of Consumer Affairs, Food and Public Distribution Government of India issued an order introducing a Voluntary Separation Scheme (VSS) for all employees of HVOC. Under the VSS, the employees could opt for any one of two schemes, which read as under:

Scheme A: The compensation will consist of salary of 35 days for every completed year of service and 25 days for the balance of service left until retirement. The compensation will be subject to a minimum of Rs. 25,000 or 250 days salary whichever is higher. However, this compensation shall not exceed the sum of the salary that the employee would draw at the prevailing level for the balance period left before the superannuation. In addition, terminal benefits as listed at para (6) will be paid.

Scheme B : The compensation would consist of an ex-gratia payment of 45 days salary for each completed year of service or monthly salary at the time of retirement multiplied by the balance months of service left before the normal date of retirement, whichever is less. In addition, terminal benefits as listed at para (6) will be paid.

Terminal Benefits:

(i) Cash equivalent to the accumulated earned leave as per HVOC rules shall be payable.

(ii) Gratuity as per the payment of gratuity Act shall be payable.

(iii) Employee and his family shall also be entitled to travel by the entitled class to the place. Where he/she intends to settle down.

(iv) Reimbursement of the total domiciliary medical treatment up to a maximum of one months pay plus dearness allowance, shall be payable to the employees.

(v) Salary arrears for the earlier pay revision period 1.1.1992 to 30.6.1997 for the non-unionized category and from 1.1.1993 to 30.7.1997 for the unionized category shall be paid.

4. One of the HVOC employees, R. Sree Kumar, filed Writ Petition (C) No. 275 of 2001 in this Court for quashing the said notification dated 6.11.2000. On 23.1.2001, the appellant herein filed Writ Petition (C) 671/2001 seeking a similar relief. The main ground of challenge in the two petitions was that the VSS was inconsistent with the compensation package approved by the Hon'ble Supreme Court in its order dated 7.12.1996 in is No. 30 arising out of the Writ Petition (C) 4617/1985.

5. While the writ petitions were pending, pursuant to an order dated 7.2.2001 passed by the learned Single Judge, the members of the appellant exercised their option in terms of the VSS notified on 6.11.2000 without prejudice to their rights and contentions in the writ petitions. Meanwhile, the Government of India came out with another Office Memorandum dated 6.11.2001 by which a revised Voluntary Retirement Scheme (VRS)/VSS was announced. Thereafter, the proceedings before the BIFR culminated in a final order dated 7.12.2001.

6. The appellant did not amend the writ petition filed by it but filed an interlocutory application, CMP No. 12620/2001, in the pending writ petition praying for a direction to the respondents to recalculate the ex-gratia payment to the members of the appellant federation in accordance with the modified revised VSS as per the office memorandum dated 6.11.2001. The learned Single Judge held that the no facts of two companies could be compared since each company's package would have been devised keeping in view the financial position of that particular company. It was observed: 'there may be situations where in one particular scheme additional emoluments are paid but they may be deferred depending on the amounts generated as in the case mentioned above. These are matters of weighing the economic condition of a particular company and no uniform pattern can be made in respect of the same.' The learned Single Judge accordingly dismissed the writ petition [WP(C) 275/2001] of Sree Kumar R. and following the said decision, passed the impugned order dismissing the writ petition filed by the appellant.

7. Mr. Anukul Chandra Pradhan, learned Counsel appearing for the appellants, submits that for employees belonging to the same establishment different norms would apply depending on whether they had opted for the first VSS Scheme dated 6.11.2000 or the later one dated 6.11.2001. This, according to him was discriminatory and vocative of Article 14 of the Constitution of India. He relied upon the decisions of the Hon'ble Supreme Court in D.S. Nakara and Ors. v. Union of India : (1983)ILLJ104SC , LIC of India and Anr. v. Consumer Education & Research Centre : AIR1995SC1811 , State of Maharashtra v. M.P. Vashi : AIR1996SC1 and Bhagwan Sahai Carpenter v. Union of India : AIR1989SC1215 to contend that an instrumentality of State or a public sector undertaking like Respondent No. 2 herein could not be seen to act arbitrary or illegally in the matter of treatment of its employees. He submitted that merely because the members of the appellant had accepted the amounts under the VRS of 6.11.2000 cannot preclude them from claiming the better benefits under the later VSS dated 6.11.2001.

8. Ms. Tamali Wad, the learned Counsel for Respondent No. 2 submitted that the employees of the appellant federation had already exercised their option under the scheme first announced on 6.11.2000 and also withdrew the amounts payable there under. Further, the revised scheme announced on 6.11.2001, clearly stipulated in Clause 4 that 'the employees, who have already been released by the PSUs before the date of issue of this O.M., shall not be covered under the modified scheme.' thereforee, there was no question of the members of the appellant federation being granted the benefit under the revised scheme. She further pointed out that the appellant had in fact not challenged Clause 4 of the revised scheme dated 6.11.2001 but was only seeking its extension to its members. The relief now sought was clearly beyond the scope of the writ petition itself. She placed reliance on the decisions of the Hon'ble Supreme Court in Vice Chairman & Managing Director, APSIDC Limited v. R. Varaprasad : (2003)IIILLJ23SC , A.K. Bindal v. Union of India : (2003)IILLJ1078SC and Officers & Supervisors of IDPL v. Chairman & MD, IDPL : AIR2003SC2870 to contend that once an employee exercised the option under VSS dated 6.11.2000 he was precluded from seeking the benefits under the revised VSS dated 6.11.2001. Prescribing such a cut off date for the applicability of different schemes for the same set off employees was neither arbitrary nor discriminatory.

9. Upon a consideration of the submissions of learned Counsel for the parties and after perusing the records, we are of the view that no ground has been made out by the appellant for interference with the impugned order passed by the learned Single Judge. The facts reveal that the members of the appellant federation had exercised their option under the first scheme announced on 6.11.2000 and accepted the amounts payable there under, albeit without prejudice to their rights and contentions. Significantly, although the appellants had approached the court challenging the VSS dated 6.11.2000, the case now sought to be made out is that the revised VSS dated 6.11.2001 should also be made applicable to them as it is more favorable than the earlier scheme for which they had opted.

10. Be that as it may, we find nothing arbitrary or discriminatory in the Government of India stipulating that the revised VSS will not apply to those who had already opted for the earlier VSS. In A.K. Bindal v. Union of India (supra) a similar question arose for consideration. The employees of certain fertilizer companies had been demanding revision of pay scales notwithstanding that the units were suffering losses and had been referred to the BIFR. Meanwhile the VRS dated 6.11.2001 was announced and some of the employees opted for it. It was argued that merely because the employees had opted for the VRS, their claim for revision of pay scales could not be denied to them. Rejecting this contention the Hon'ble Supreme Court observed (SCC p. 186-187):

33. The Voluntary Retirement Scheme (VRS) which is sometimes 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 the Government of India provided that for sick and unviable units, the VRS package of the 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 + DA) 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 thereforee it has provided adequate compensation in that regard in the second VRS which was announced for all Central public sector undertakings on 6-11-2001. Clause (a) of the Scheme reads as under:

(a) Ex gratia payment in respect of employees on pay scales at 1-1-1987 and 1-1-1992 levels, computed on their existing pay scales in accordance with the extant Scheme, shall be increased by 100% and 50% respectively.34. This shows that a considerable amount is to be paid to an employee ex gratia besides the terminal benefits in case he opts for voluntary retirement under the Scheme and his option is accepted. The amount is paid not for doing any work or rendering any service. It is paid in lieu of the employee himself leaving the services of the company or the industrial establishment and foregoing all his claims or rights in the same. It is a package deal of give and take. That is why in the business world it is known as 'golden handshake'. The main purpose of paying this amount is to bring about a complete cessation of the jural relationship between the employer and the employee. After the amount is paid and the employee ceases to be under the employment of the company or the undertaking, he leaves with all his rights and there is no question of his again agitating for any kind of his past rights with his erstwhile employer including making any claim with regard to enhancement of pay scale for an earlier period. If the employee is still permitted to raise a grievance regarding enhancement of pay scale from a retrospective date, even after he has opted for Voluntary Retirement Scheme and has accepted the amount paid to him, the whole purpose of introducing the Scheme would be totally frustrated.

35. The contention that the employees opted for VRS under any kind of compulsion is not worthy of acceptance. The petitioners are officers of the two Companies and are mature enough to weigh the pros and cons of the options which were available to them. They could have waited and pursued their claim for revision of pay scale without opting for VRS. However, they in their wisdom thought that in the fact situation VRS was a better option available and chose the same. After having applied for VRS and taken the money it is not open to them to contend that they exercised the option under any kind of compulsion. In view of the fact that nearly ninety-nine per cent of employees have availed of the VRS Scheme and have left the Companies (FCI and HFC), the writ petition no longer survives and has become infructuous.

11. The decision in A.K. Bindal was reiterated in Officers & Supervisors of IDPL v. Chairman & MD, IDPL (supra), where it was observed in para 11 (SCC p.496) as under:

since the employees of government companies are not government servants, they have absolutely no legal right to claim that the Government should pay their salary or that the additional expenditure incurred on account of revision of their pay scales should 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, in our view, 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. We are unable to countenance the submission made by Mr Sanghi that economic viability of the industrial unit or the financial capacity of the employer cannot be taken into consideration in the matter of revision of pay scales of the employees.

12. In the A.P.S.I.D.C. Ltd (supra), the question of cut off date for the purpose of VRS was considered and it was held that in para 15 that 'rights and benefits available to the employees under a particular VRS ought to be examined in the light of specific terms and conditions governing them.' It was also held in para 18 that 'the question of withdrawal from the voluntary retirement schemes, once accepted the terms and conditions of the scheme, cannot be permitted.

13. In view of the above categorical pronouncements of the Hon'ble Supreme Court, we find no merit in the contention of the learned Counsel for the appellant. As regards the applicability of the decision in D.S. Nakara (supra), it has been explained in later decisions that Nakara is not an authority for the proposition that there can never be any cut off date whatsoever for the applicability of a revised scheme of pension. The subsequent Constitution Bench decision in Krishena Kumar v. Union of India : (1991)ILLJ191SC confined the ratio of Nakara to revision of pension and declined to apply it to a revision of gratuity benefits. In T.N. Electricity Board v. R. Veerasamy : (1999)IILLJ783SC after reviewing the case law up to that point, the Hon'ble Supreme Court held (at page 420):

In Union of India v. P.N. Menon : (1995)IILLJ307SC a similar question came up for consideration and distinguishing Nakara and following Krishena Kumar and other similar cases, the Court held that whenever the Government or an authority, which can be held to be a State within the meaning of Article 12 of the Constitution, frames a scheme for persons who have superannuated from service, due to many constraints, it is not always possible to extend the same benefits to one and all, irrespective of the dates of superannuation. As such, any revised scheme in respect of post-retirement benefits, if implemented with a cut-off date, which can be held to be reasonable and rational in the light of Article 14 of the Constitution, need not be held to be invalid. Whenever a revision takes place, a cut-off date becomes imperative because the benefit has to be allowed within the financial resources available with the Government. When the army personnel claimed the same pension irrespective of their date of retirement, this Court in the Constitution Bench case of the Indian Ex-Services League v. Union of India : [1991]1SCR158 considered the grievance of ex-servicemen who had laid the claim on the basis of Nakara but ultimately negatived the same and followed Krishena Kumar.

The other decisions relied upon by the counsel for the appellant have no application to the facts of the present case. We are bound to follow the authoritative pronouncements of the Hon'ble Supreme Court in A.K. Bindal IDPL and APSIDC which apply to the facts of the instant case.

14. For all the above reasons, we find no ground to interfere with the impugned order of the learned Single Judge. The appeal is accordingly dismissed with no order as to costs.