Bombay High Court
Tata Global Beverages Limited And ... vs Tata Tea Limited (Bombay) ... on 7 March, 2017
Bench: Anoop V. Mohta
1
prs
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
LETTERS PATENT APPEAL NO.242 OF 2007
IN
WRIT PETITION NO.4009 OF 1997
Tata Global Beverages Limited
(Formerly known as Tata Tea Limited)
a company incorporated under the
provisions of the Companies Act, 1956
having hits registered office at
1, Bishop Lefroy Road, Kolkatta - 700 020
and also having its executive office at
11/13, Botawala Building, 1st floor,
Office No.2-6, Horniman Circle, Fort,
Mumbai - 400 001. ... Appellant(Org. Respondent)
Versus
1. Tata Tea employees Union
a trade Union, registered under
the Trade Unions Act, 1926
having its office at Chartered Bank
Building, now at M.G.Road,
Mumbai 400 023,
New Excelsior Building,
A.K. Nair Marg, Fort,
Mumbai - 400 023.
2. Shri N.L.Bhalchandra,
Industrial Tribunal, Maharashtra,
Mumbai. ... Respondents(Org. Petitioners)
WITH
CIVIL APPLICATION NO.67 OF 2009
IN
LETTERS PATENT APPEAL NO.242 OF 2007
IN
WRIT PETITION NO.4009 OF 1997
Tata Global Beverages Limited
(Formerly known as Tata Tea Limited)
::: Uploaded on - 14/03/2017 ::: Downloaded on - 15/03/2017 00:09:58 :::
2
a company incorporated under the
provisions of the Companies Act, 1956
having hits registered office at
1, Bishop Lefroy Road, Kolkatta - 700 020
and also having its executive office at
11/13, Botawala Building, 1st floor,
Office No.2-6, Horniman Circle, Fort,
Mumbai - 400 001. ... Applicant (Org. Respondent)
Versus
1. Tata Tea employees Union
a trade Union, registered under
the Trade Unions Act, 1926
having its office at Chartered Bank
Building, now at M.G.Road,
Mumbai 400 023,
New Excelsior Building,
A.K. Nair Marg, Fort,
Mumbai - 400 023.
2. Shri N.L.Bhalchandra,
Industrial Tribunal, Maharashtra,
Mumbai. ... Respondents(Org.Petitioners)
....
Mr. Ajit Kapadia with Mr. Pratik Salgaonkar i/by Crawford
Bayley & Co. for the Appellant and for applicant in CAL 67 of
2009.
Mr. Arshad Shaikh with Netaji Gawade i/by M/s Sanjay Udethi &
Co. for Respondent No.1.
CORAM : ANOOP V.MOHTA AND
P.R.BORA, JJ.
JUDGMENT RESERVED ON: 5th JANUARY, 2017.
JUDGMENT PRONOUNCED ON: 7 th MARCH, 2017.
JUDGEMENT (PER:- P.R.BORA, J.) :
1) The present appeal is directed against the order
passed by the learned Single Judge in Writ Petition
No.4009/1997, on 19th of September, 2007. Present respondent
no.1 had filed the said writ petition challenging the award
passed by present respondent no.2 in Reference (I.T.)
No.156/1985 on 31st of July, 1996. Following was the dispute
referred to the Industrial Tribunal for adjudication.
SCHEDULE
"To determine the propriety, validity and legality
of the Company's circular dated 22 nd May, 1974
intimating unilateral withdrawal of the Pension
Scheme from 9th of May, 1974. "
The learned Industrial Tribunal rejected the Reference. In the
writ petition, the learned Single Judge set aside the order passed
by the Industrial Tribunal and held that the benefit which
initially was extended unilaterally by the employer had
metamorphosed into a privilege with the passage of time and the
workers were entitled to receive pension as a matter of right.
Aggrieved thereby, the employer has preferred the present
appeal. For convenience, appellant is hereinafter referred to as
'Company' and respondent No.1 as 'Union'.
2) The company had introduced a Pension Scheme for
its clerical staff and had informed the employees about the said
Scheme by a circular dated 2 nd of March, 1948. The circular
reads thus:
"TO ALL MEMBER OF THE INDIAN CLERICAL STAFF PENSION
The Directors have agreed that, with effect from 1 st January
1948 pensions on the following scale will be paid to
employees retiring with the consent of the Company after 35
years' service.
50% of Salary drawn in last year of service less whatever
sum the Company's contribution to the Provident Fund in
respect of the employees and his share of the Capital Reserve
Account will yield when invested at 4%
For example:
Assume 50% is Rs.100/- and the Company's
Contribution and share of Capital Reserve
Account in Provident fund payable to retiring
employee is Rs.3,000/-. The maximum pension
payable will be Rs.100/- less Rs.10/- (being interest
of 4% p.a. on Rs.3000 or Rs.90/- per month.
For retirement with the consent of the company before 35
years' service but not before 30 years' service proportionate
pension will be paid as follows: -
34 years 47% of Salary less Provident Fund adjustment
as above.
33 years --do--
32 years --do--
31 years --do--
30 years --do--
Retirements under 30 years' service to be considered on their
merits and will receive the sympathetic consideration they
have received in the past. The same applies to assistance to
widows and dependents in the event of the premature
decease of the employee. No fixed rules regarding these will
be laid down.
So long as a dearness allowance remains in force, a retiral
dearness allowance equal to 50% of the minimum dearness
allowance payable from time to time to employees will be
paid to retiring employees eligible for pensions.
It must be clearly understood that the above scheme is
entirely discretionary on the part of the Directors and that
they are at liberty to withdraw it any time and particularly
if the legislature or any award made under legislation places
the company in a position where the company is bound to
pay any pension, gratuity or retiral or superannuation
allowance.
For Pro JAMES FINLAY & Co., LIMITED
Sd/- Charles Forgan Worries.
Bombay, 2nd March 1948"
3) On 22nd of May, 1974, the company issued another
circular informing thereby that the clerical staff shall not be
entitled to pension since the Payment of Gratuity Act 1972 had
come into force and withdrew the said Pension Scheme w.e.f. 9th
of May, 1974. In the year 1983, an employee by name
P.S.Manian, claimed the pension as per the Scheme introduced
by the Company vide circular dated 2 nd of March, 1948. After
his request was rejected by the Company informing him that the
said Pension Scheme was withdrawn by the Company after
introduction of Payment of Gratuity Act, 1972, the Union raised
a dispute about withdrawal of the said Pension Scheme and the
Government, in exercise of the powers conferred by sub-clause
(d) of sub-section (1) of Section 10 read with sub-section (5) of
Section 12 of the Industrial Disputes Act, 1947 ( hereinafter
referred to as the "ID Act") referred the said dispute for
adjudication to the Industrial Tribunal.
4) Before the Industrial Tribunal it was the stand of the
Union that the Pension Scheme so volunteered by the Company
vide circular dated 2nd of March, 1948, was in force for
continuous period of more than 24 years and had thus become
the condition of service which could not have been unilaterally
withdrawn by the Company without giving notice of change as
envisaged under Section 9-A of the Industrial Dispute Act and
on the ground that the Payment of Gratuity Act has come into
force. As against it, it was the contention of the Company that
the document of 2nd of March, 1948 was a settlement between
the Company and the workmen containing a clause therein that
the Pension Scheme so introduced was liable to be withdrawn at
the total discretion of the Directors of the Company at any time
and particularly if the Legislature or any award made under
legislation places the Company in a position where the Company
is bound to pay any pension, gratuity or retiral or
superannuation allowance. According to the Company, on
enactment of the Payment of Gratuity Act, 1972, since the
gratuity thereunder was made compulsorily payable, there had
remained no scope for any member of the clerical staff to opt for
pension in lieu of gratuity and, as such, the company was
constrained to withdraw the said Pension Scheme. It was also
contended by the Company that since the Pension Scheme was
withdrawn in accordance with the settlement, the Company was
not required to issue notice of change under Section 9A of the ID
Act before withdrawal of the said benefit. The dispute so
referred was also resisted by the Company on the ground of
delay.
5) The learned Industrial Tribunal accepted the
contentions raised on behalf of the Company and, resultantly,
rejected the Reference. While rejecting the Reference, the
Tribunal has recorded the following conclusions:
(i) That the Dispute as raised by Second Party Union
after 11 years seems to be not within reasonable
time.
(ii) That it was not necessary on the part of the
Company to give notice of change under Section
9A of the Industrial Disputes Act before
withdrawal of the Pension Scheme.
The conclusion that notice under Section 9A was not required to
be given by the Company is based on the following inferences
drawn by the Tribunal.
(a) That the withdrawal of the Pension Scheme is not
covered under Schedule IV of the Industrial
Disputes Act and more particularly is not covered
under Entry No.2 and 8 of the said Schedule IV as
was canvassed by the Union.
(b) When there is no express provision and the benefits
are extended, the said benefits can be termed as
customary usage and the same cannot be
withdrawn without giving notice under Section 9-A
of the ID Act; however, in the matter in hand,
when the Pension Scheme was expressly provided
vide the circular dated 2nd of March, 1948, wherein
the provision of withdrawal of the said Scheme was
also incorporated, the same cannot be held to be a
customary usage, and as such, was liable to be
withdrawn in terms of the said circular, without
giving any notice under Section 9-A of the ID Act.
The learned Industrial Tribunal therefore, held that the Union
had failed to justify its demand and also failed in proving that
the circular dated 22nd of May, 1974, intimating unilateral
withdrawal of the Pension Scheme from 9th of May, 1974 was
improper, invalid and illegal. The Reference was, therefore,
rejected by the Tribunal for the aforesaid reasons.
6) In the Writ Petition filed by the Union, the learned
Single Judge has set aside both the aforesaid findings recorded
by the Tribunal; first, that there was inordinate delay in referring
the dispute and other that the withdrawal of the Pension Scheme
did not attract the provisions of Entry 2 or 8 of the 4 th Schedule
of the ID Act, thereby relieving the employer from compliance
with the provisions envisaged under Section 9A of the ID Act.
On the aspect of delay, the learned Single Judge has observed
that there was no evidence on record to indicate that the Union
or its members have, in fact, received the circular of 22 nd of May,
1974. About the Pension Scheme, the learned Single Judge has
observed that the unilateral grant of pension has fructified into a
privilege over a period of 24 years which could not have been
withdrawn without complying with the mandatory requirement
of notice of change under Section 9A of the ID Act. The learned
Single Judge has also observed that it was not open for the
employer to contend that the workmen would be entitled to
either gratuity or pension after the Payment of Gratuity Act has
come into force and that the introduction of the Payment of
Gratuity Act cannot in any manner fetter the right of the
employees to receive pension under the Document of 1948.
7) After having heard the learned Counsel appearing for
the parties and on perusal of the material on record, the first
point which falls for our consideration is 'whether the circular
dated 2nd March, 1948, whereby the Pension Scheme for clerical
staff was introduced by the employer can be held to be a
settlement, as contemplated under section 2(p) of the I.D.Act.
According to employer, it is a settlement. The Industrial Tribunal
has upheld the said contention. As against it, the learned Single
Judge has held that the document of 2 nd March, 1948 was not a
settlement, but a voluntary offer given by the employer, which
had fructified into a privilege by passage of time and has thus
become a condition of service.
8) The observations made by the Tribunal reveal that it
has held the document of 2nd March, 1948 to be a settlement
relying upon the opening sentence used in the said Circular that
"The Directors have agreed", giving an interpretation to the same
that there was a demand from the workmen for Pension Scheme
and the same was agreed and accordingly, the Circular of 2 nd
March, 1948 was issued to that effect and benefits were
extended, which the workers availed till its withdrawal i.e. upto
May, 1974. Before the learned Single Judge similar submission
was made that the words "The Directors have agreed" indicate
that the Directors had agreed with the workers that from 1 st
January, 1948 pension would be payable to the retiring
employees on certain terms and conditions. The learned Single
Judge however, has rejected the contention so raised, observing
that it would be a complete misreading of the document to
interpret it to mean that the Directors had agreed with the
Union, when there is no other corroborative evidence on record.
It is further observed that there is no material on record to
establish that the pensionary benefits payable under the said
document were extended to the workers due to an agreement
arrived at between the Union and the Directors of the company.
It is further observed that the aforesaid words will have to be
therefore, construed in the context that they appear, meaning
thereby, that the Directors had agreed amongst themselves that
pensionary benefits should be paid to the retiring employees.
The learned Single Judge has therefore, held that the document
of 1948, cannot be construed, as a settlement or as an
agreement, but was a charter for payment of pension. The
learned Single Judge has also observed that, had it been a
bilateral document, there would be no room for such a clause in
the said agreement, giving full discretion to the Directors to
withdraw the said scheme. We do not see any infirmity in the
finding recorded by the learned Single Judge .
9) It was also sought to be canvassed by the learned
Counsel for the company that the 'Bilgrami' award had
transformed the unilateral act of the company into an 'Award'
and when the company became statutorily liable to pay
gratuity the company was entitled to withdraw the benefit of
pension, without giving any notice of change in that regard
in as much as the change was pursuant to an award. Our
attention was invited to paragraph No. 51 of the Bilgrami
award, wherein the Tribunal has observed that,- "Under the
Agreement the pension is allowed to the clerical staff retiring
from the company after 35 years service and the pension granted
is quite liberal." The aforesaid observations were made by the
learned Tribunal while dealing with demand No. 8(b), whereby
it was demanded that an employee entitled to receive pension
under the Company's Pension Scheme shall have the option to
claim gratuity in lieu of pension. The demand was accepted by
the Tribunal and the clerical staff entitled to pension on
retirement was provided with an option to claim gratuity, in
lieu of pension. It was contended by the learned Counsel for
the company that the Pension Scheme introduced by the
company vide circular dated 2nd March, 1948 was thus
approved in the Bilgrami award as an Agreement between the
company and its employees. The learned Counsel further
contended that, the Bilgrami award has been referred in all
subsequent settlements arrived at between the Company and its
employees and in all those subsequent settlements, it has been
clearly averred that the service conditions not expressly altered
as laid down in the award of the Industrial Tribunal of Mr.
Bilgrami dated 15th January, 1964, as amended by the
Agreement dated 1st July, 1965, shall remain unaltered.
According to the learned Counsel, the learned Industrial
Tribunal was right in holding that the circular dated 2nd March
1948 had become an award or settlement and since the pension
scheme was withdrawn by the Company, according to the agreed
terms incorporated in the said circular, the company was not
required to give notice under Section 9-A of the Industrial
Disputes Act.
10) We are, however, unable to agree with the
preposition so canvassed. Similar such argument was advanced
before the learned Single Judge on behalf of the Company that,
the proviso to Section 9-A must be interpreted purposively and
the word "agreement" should be read into the said proviso. It
was further sought to be canvassed that as observed in the
Bilgrami award the document of 1948 was bilateral document
giving the Company the right to withdraw the benefit
unilaterally and any bilateral document would attract the
proviso of Section 9-A. The learned Single Judge, however,
rejected the said contention stating that, the Industrial Disputes
Act recognizes only the term "settlement" which is defined in
Section 2(p) of the Act. The learned Single Judge has further
observed that the term "Agreement" which has not been defined
cannot be read into the proviso to Section 9-A, as the term
"Settlement" has a different connotation under the Industrial
Disputes Act. The learned Single Judge has further observed
that, every agreement between the parties need not be a
settlement. The legislature has therefore with some purpose
excluded the word "agreement" from the proviso. The learned
Single Judge has also said that to read into the proviso the word
"agreement" would be doing violence to the proviso. The
learned Single Judge has further in clear terms held that, the
document of 1948 is neither a settlement nor an agreement, but
is a charter of the Company, unilaterally extending the
pensionary benefits to the workmen. We fully subscribe the
observations made and the conclusions recorded by the learned
Single Judge.
11) It was further contended by the learned Counsel for
the company that the Pension Scheme introduced by the
company cannot become a privilege within the meaning of
Item 8 of the 4th schedule since it was the concession
voluntarily offered by the company containing a clause therein
that the same was liable to be withdrawn at the discretion of
the direction of the company. The learned Counsel in order to
support his aforesaid contention placed reliance on the
judgment of the Madras High Court in the case of Secretary of
Tamilnadu Electricity Board Accounts Subordinate Union Vs
Tamilnadu Electricity Board and others - 1984 II LLJ 478.
However, the ratio laid down in the said judgment cannot be
made applicable to the facts of the present case. In the said
case, two workmen of the Tamilnadu Electricity Board were
permitted to do trade union work on a full time basis and the
said permission was subsequently withdrawn. A dispute was
therefore raised claiming that, it was a privilege within the
meaning of item 8 of Schedule 4 of the Industrial Disputes Act
and could not have been withdrawn without following the
procedure under Section 9A of the Act. Concession so granted
in the said case cannot be in any way equated or compared
with the Pension Scheme voluntarily introduced by the
Company, which remained in force for long 24 years. As has
been observed by the Madras High Court, the concession granted
for a limited period and extended periodically cannot be
claimed as of right. In the instant case, the well prepared
Pension Scheme was offered to the employees and the same
remained in force over the period of 24 years. The learned Single
Judge, therefore held that the unilateral grant of pension had
fructified into a privilege which could not have been withdrawn
by the stroke of pen without following the mandatory
requirement of notice of change under Section 9-A. We do not
see any error in the finding recorded by the learned Single
Judge.
12) Relying on the judgment of the Hon'ble Apex Court
in the case of MGB Gramin Bank Vs. Chakrawarti Singh AIR
2013 SC 3365, it was argued by the learned Counsel for the
company that the pension was not the vested right as has been
claimed by the Union. Referring to the discussion made by the
Apex court in paragraphs No. 10, 11 and 12 of the aforesaid
judgment the learned counsel submitted that the right which
is independent of any contingency only can be held to be a
vested right. The learned counsel submitted that the document
of 1948 undisputedly contains a provision that the benefit of
pension was liable to be withdrawn at any time at the
discretion of the Directors of the company and if the legislature
or any award made under legislation places the company in a
possession where the company is bound to pay any pension,
gratuity or retiral or superannuation allowance. It was
therefore, sought to be canvassed by the learned counsel that
the right of pension can not be held to be a vested right and
consequently cannot be held to be a privilege and therefore
cannot acquire the status of condition of service. As such,
according to the learned counsel, no notice of change under
section 9A of the Act was required to be given by the company
before withdrawing the benefit extended vide the document of
1948.
13) In our opinion, the aforesaid judgment does not
have any application to the facts of the present case. Though it
is true that the document of 1948 contains a clause permitting
the withdrawal of the said benefit by the Directors of the
company, at their discretion or on a contingency as mentioned
therein, it is difficult to accept that the aforesaid clause was
acquiesced by the union or workers. From the material on
record, it is quite clear that there was no occasion in past for
the Union to make any grievance in respect of the aforesaid
provision. However, after the said clause was acted upon by the
Company, the Union raised its objection. As against it, the
benefit extended vide the said document was enjoyed by the
employees over the period of 24 years and that was the reason
that the learned Single Judge held that it had acquired the
status of privilege enjoyed by the employees and consequently
become the condition of service. We upheld the conclusion
arrived at by the learned Single Judge.
14) In the impugned order the learned Single Judge has
relied upon the judgment of the Hon'ble Apex Court in the case
of Bareilly Holdings Limited Vs. Their Workmen, (1979) 3
Supreme Court Cases 257, wherein it is held that double
benefit of sick leave; one as a condition of service and the
other under the Employees State Insurance Act 1948, can co-
exist, as the later benefit is not substitute for a former. The
learned Single Judge has also referred to the judgment of the
Hon'ble Apex Court in the case of Calcutta Electric Supply
Corporation Limited Vs. Calcutta Electric Supply Workers
Union and ors., (1994)6 Supreme Court Case 548, wherein it
is held that withdrawal of the medical benefits available, as
part of service conditions by the employer, without giving
statutory notice in Form-E to the Union and the Authorities
was impermissible merely because the employees were covered
by the ESI Act.
15) The learned counsel appearing for the company
submitted that both the aforesaid judgments of the Hon'ble
Apex Court are distinguished by the Madras High Court in the
case of Indian Oxygen Employees' Union and others Vs Boc
India Limited, 1998 II LLJ 1248 (Formerly known as Indian
Oxygen Limited and others). The learned counsel submitted
that facts of the present matter are more akin to the facts
involved in the case before the Madras High Court. The
learned counsel submitted that in the case before the Madras
High Court the medical benefits scheme was introduced in
terms of settlement reached between the management and the
union. In the settlement so arrived at, there was a specific
clause to the effect that "as and when the provisions of
Employees State Insurance Act or any other enactment
covering medical facilities for the time being in force or as may
be enforced in future are made applicable to the employees,
who are not covered by the said Act/ such enactment, the
medical reimbursement of domiciliary treatment and
hospitalization/chamber consultations facilities will stand
withdrawn with effect from the date such employees are
brought under the purview of the ESI Act or such other
enactment." The learned counsel submitted that the medical
benefit scheme was withdrawn in terms of the aforesaid
agreement and in such circumstances, the Madras High Court
held that it was well open to the employer to enforce the
particular clause in the agreement, which provides for
withdrawal of the scheme in respect of the employees, who
are brought under the coverage of the ESI Act. The learned
counsel submitted that in the instant matter also a clear
understanding was given in the document of 1948 itself that
on coming into force any enactment providing for gratuity or
similar pensionary benefits, the existing Pension Scheme will
be withdrawn at the discretion of the Directors of the
company. The learned counsel submitted that in view of the
judgment of the Division Bench of the Madaras High Court no
fault can be found in the action of the company in
withdrawing the Pension Scheme in terms of the document of
1948 after coming into force of the Payment of Gratuity Act,
1972.
16) The fact apart that we have certain reservations as
regards to the view taken by the Madras High Court, the
endevour of the company to take support of the aforesaid
judgment so as to hold its action of withdrawing Pension
Scheme legal and valid must fail only on the count that in the
said case the medical benefits scheme was not unilaterally
withdrawn or it was not an unilateral change in conditions of
service. The employer had issued notices consequent to the
amendment of ESI notification before withdrawing the said
scheme. Whereas in the instant matter the company without
giving notice of change as envisaged under Section 9-A of the
I.D. Act, unilaterally withdrew the Pension Scheme. In the
circumstances, the contention of the company that there was
no illegality in its action has to be rejected.
17) It was also sought to be canvassed by the learned
counsel appearing for the company that the learned Single
Judge assigned to itself the role of an Appellate Court and
stepped into reappreciating and evaluating the evidence and
substituted his own findings in place of those arrived at by
the Industrial Tribunal. According to the learned counsel such
course was not permissible in exercise of certiorari jurisdiction
by the High Court. To buttress the said contention the learned
counsel has relied upon the judgment of the Hon'ble Supreme
Court in case of Surya Deo Rai V/s Ram Chander Rai and
ors., (2003)6 Supreme Court Cases 675.
18) We are however, not at all impressed with the
submissions so made. The parameters for exercise of
jurisdiction under Article 226 or 227 of the Constitution
cannot be tied down in a straight jacket formula or rigid
rules. The High Court may in appropriate cases where the
judicial conscience of the High Court dictates it to act lest a
gross failure of justice or grave injustice, should occasion, can
exercise its jurisdiction. In the instant case, it does not appear
to us that the learned Single Judge has committed any error in
exercising its jurisdiction to set aside the award passed by the
Industrial Tribunal.
19) In view of the foregoing discussion, we are of the
clear opinion that the learned Single Judge has correctly held
that the document of 1948 was neither a settlement nor an
agreement. We also concur with the finding recorded by the
learned Single Judge that the document of 1948, which
originally was a voluntary benefit granted to the workers by
the company had crystalized into privilege with the passage of
time and the clause for withdrawal therein can not operate to
the disadvantage of the workers, when the said benefit has
become a privilege over the years. Apart from the justness in
the action of the company to withdraw the Pension Scheme on
the ground that payment of gratuity is made compulsorily
payable, withdrawal of such privilege without a notice of
change, in no case was permissible.
20) In the Reference the Industrial Tribunal was to
determine the `propriety', `validity' and `legality' of the
company's circular dated 22nd May, 1974, whereby the company
withdrew the Pension Scheme. In the award passed by the
Tribunal it has not at all dealt with the aspect of propriety.
The learned Single Judge, no doubt has held that, it was not
open for the employer to contend that the workman would be
entitled to only one benefit; either of gratuity or of pension on
the ground that Payment of Gratuity has come into force.
However, this issue has not been elaborated as it ought to have
been. According to us, prime importance must have been
given by the Tribunal to determine the "Propriety" of the
circular dated 22nd May, 1974. However, it appears that legality
and validity issues were focused more and propriety aspect
lost sight of. The word "Propriety" is nowhere defined. It is
capable of variety of meanings. In the context of the present
matter the word `propriety' would mean `Justness'. The
circular dated 22nd May, 1974 is to be thus tested on the anvil
of justness and it has to be determined whether the action of the
company to unilaterally withdraw the Pension Scheme, which
was in existence for more than 24 years, can be held to be just
on the ground that the payment of Gratuity Act had come into
force?"
21) Similar such issue "whether the employee was entitled
to receive full amount of pension payable to him even after receipt
of provident fund and gratuity" was for determination for the
Hon'ble Apex court in the case of Som Prakash Rekhi Vs Union
of India and Anr. - (1981) 1 SCC 449. Deciding the matter in
favour of an employee the Hon'ble Apex court held that, "
" The pensions are paid out of regard
for past meritorious services. The root of
gratuity and the foundation of provident
fund are different. Each one is a salutary
benefaction statutorily guaranteed
independently of the other."
The Hon'ble Apex Court, has further held that, -
" The pension scheme came into existence
prior to the two beneficial statutes and
Parliament when enacting these legislation
must have clearly intended extra benefits being
conferred on employees. Such a consequence
will follow only if over and above the normal
pension, the benefits of provident fund and
gratuity are enjoyed. To hold that, on receipt of
gratuity and provident fund the pension of the
employee may be reduced pro tanto is to
frustrate the supplementary character of the
benefits."
22) In the said matter, the petitioner was employed as a
Clerk in the Burmah Shell Oil Storage Ltd and retired at the age
of 50 after qualifying for a pension on April 1, 1973. He was
covered by a scheme under the Employees' Provident Funds and
Family Pension Fund Act, 1952. The pensionary provision was
also applicable for the Burmah Shell employees depended on the
terms of a Trust Deed of 1950 under which a pension Fund was
set up and regulations were made for its administration.
Regulation 13 and 15 entitled the petitioner to pension and
contained the formula for quantification. Regulation 13 has a
significant clause: "less the authorized deductions specified in
Regulation 16, namely..." The Regulation 16 reads thus, :
"16. The authorized deductions to be made in
calculating the amount of non-contributing member's
pension shall be as follows:
(1) A sum equal to four per cent of such amount
standing to the credit of the member at the
relevant date in any Provident Fund as
represents any Company's contributions to that
fund in respect of the period of the member's
Accredited Service (including bonuses and
interest on such contributions up to that date),
(2) A sum equal to four per cent of any
amount which before the relevant date the
member has withdrawn from a Provident Fund
inso far as such withdrawal is under the Rules
of the Provident Fund charged against the
period of the member's Accredited Service
( including bonuses and interest thereon) or
has been paid out to him during the Accredited
Service under the Rules of Provident Fund,
together with interest thereon from the date of
such withdrawal or receipt to the relevant
date.
(3) If the Company so elects, a sum not
exceeding six per cent of the amount of any
payment which any company has made or may
make or which any company shall be or have
been required by law to make to the member
in connection with the termination of his
service with that company together with
interest thereon from the date of payment
down to the relevant date.
By virtue of Regulation 13, the Petitioner was entitled to a
pension of Rs.165.99 subject to certain deductions which form
the controversy in the matter. By letter dated September 25,
1974, the employer (Burmah Shell ) explained that from out of
pension of Rs.165.99 two deductions were authorised by
regulation 16. One such deduction was based on Regulation
16(1) because of Employees' Provident Fund Payment to the
pensioner and the other rested on Regulation 16(3) on account
of payment of gratuity. The Hon'ble Apex Court after
elaborating the objects behind bringing the enactments in
respect of Pension, Provident Fund and Gratuity held that:
" We must realize that the pension scheme
came into existence prior to the two beneficial
statutes and Parliament when enacting these
legislations must have clearly intended extra
benefits being conferred on employees. Such
a consequence will follow only if over and
above the normal pension, the benefits of
provident fund and gratuity are enjoyed. On
the other hand, if consequent on the receipt of
these benefits there is proportionate reduction
in the pension, there is no real benefit to the
employee because the Management takes away
by the left hand what it seems to confer by the
right, making the legislation itself left-handed.
To hold that on receipt of gratuity and
provident fund the pension of the employee
may be reduced pro tanto is to frustrate the
supplementary character of the benefits.
Indeed, that is why by Sections 12 and 14
overiding effect is imparted and reduction in the
retiral benefits on account of provident fund
and gratuity derived by the employee is frowned
upon. We, accordingly, hold that it is not open
to the second respondent to deduct from the full
pension any sum based upon Regulation 16
read with Regulation 13. If Regulation 16
which now has acquired statutory flavor, having
been adapted and continued by statutory rules,
operates contrary to the provision of the PF Act
and the Gratuity Act, it must fail as invalid.
We uphold the contention of the petitioner."
In the said matter also there was a private treaty between the
parties i.e. employer and employee whereby the employees had
agreed to deductions before coming into force of the beneficial
enactment of Provident Fund and Gratuity. The Hon'ble Apex
Court in this context held that, even if it is assumed that by
private treaty the parties have otherwise agreed to deductions
before coming into force of these beneficial enactments they
cannot now be deprivatory.
23) The Hon'ble Apex Court has further held that -
" Welfare benefits such as pensions, payment
of provident fund and gratuity are in
fulfilment of the directive principles. The
payment of gratuity or provident fund should
not occasion any deduction from the pension
as a "set-off". Otherwise, the solemn statutory
provisions ensuring provident fund and
gratuity become illusory. Pensions are paid
out of regard for past meritorious services.
The root of gratuity and the foundation of
provident fund are different. Each one is a
salutary benefaction statutorily guaranteed
independently of the other. Even assuming
that by private treaty parties had otherwise
agreed to deductions before the coming into
force of these beneficial enactments they
cannot now be deprivatory. It is precisely to
guard against such mischief that the non
obstante and overriding provisions are
engrafted on these statutes."
24) In the case of Shalimar Paints H.O. Employees
Union Vs. Shalimar Paints Ltd. and Ors. 1981 Labour and
Industrial Cases 349, the Division Bench of the Calcutta High
Court has held that payment of gratuity is not an alternative to
pension. In the said case, a settlement between the employer
and its workmen was arrived at providing benefit of gratuity and
pension. During the operation of the said settlement, the West
Bengal legislature passed an Act known as the West Bengal
employees' Payment of Compulsory Gratuity Act, 1971. Then
come into force the Central Act: Payment of Gratuity Act 1972,
whereupon the Company made an application under section 5
thereof requesting the State Government to exempt the
Company from the operation of the Central Act. The request so
made was however rejected. The Company thereafter issued a
circular to its employees to the effect that since gratuity is made
compulsorily payable, the pension benefit should be withdrawn.
The dispute, therefore, arose between the Company and its
employees which was referred for adjudication to the Tribunal.
The issue that was referred for adjudication before the Tribunal
was as follows :
"Whether the management is justified in refusing to
continue the existing scheme of pension benefit
consequent on the enforcement of legislation providing
for payment of gratuity? To what relief, if any, are the
workmen entitled?"
The Tribunal held that, the Company could not have
discontinued the existing pensionary benefits on the ground that
payment of gratuity has been made compulsory by the Central
Act. The Company challenged the award of the Central Tribunal
before the Calcutta High Court. It was argued before the High
Court on behalf of the Company that, under the settlement,
payment of gratuity was alternative of pension. In other words,
if an employee opted for pension, he was not entitled to gratuity.
As gratuity was made compulsorily payable under the Central
Act, according to the Company, it was justified in discontinuing
the scheme for pension. The learned Single Judge of the High
Court took a view that, on the basis of settlement, gratuity,
although payable in a limited number of cases was clearly an
alternative to pension. The learned Single Judge of the High
Court, therefore, set aside the award of the Central Tribunal.
The appeal was filed against the judgment of the learned Single
Judge, which came to be allowed by the Division Bench. While
allowing the appeal, the Division Bench has held that the
employees of the respondent Company were entitled to the
benefit of pension in accordance with the scheme for pension,
besides the payment of gratuity which is compulsorily payable by
virtue of Section 4 of the Payment of Gratuity Act, 1972. In the
said case, it was argued on behalf of the employees that, as the
employees were entitled to the benefit of the pension under the
terms of settlement, the respondent Company cannot deprive
them of the said benefit simply because the payment of gratuity
has been made compulsory by Section 4 of the Central Act.
Accepting the said argument it is observed by the Division
Bench that, "there is no provision in the payment of Gratuity Act
divesting the employees of their vested right to get pension in
terms of the agreement arrived at between the respondent
Company and its employees." The Division Bench has further
observed that, "had it been the intention of the legislature to
deprive the employees of the existing benefits of retirement, it
would have made an express provision in that regard, at least, by
necessary implication such intention could be gathered." It is
further observed that, in a beneficial legislation, deprivation of
an existing benefit cannot be inferred without a provision to that
effect, either express or implied. The Division Bench has
recorded a clear finding that, the employees of the respondent
Company were entitled to the benefit of the pension in
accordance with the scheme for pension, besides the payment of
gratuity which is compulsorily payable by virtue of Section 4 of
the Central Act.
25) The Hon'ble Apex court in Union of India Vs. All
India Services Pensioners' Association - (1988) 2 SCC 580
has explained that there is always a distinction between the
pension payable on retirement and the gratuity payable on
retirement by observing that "while pension is payable
periodically as long as the pensioner is alive, gratuity is ordinarily
paid only once on retirement."
26) In Allahabad Bank and Another Vs. All India
Allahabad Bank Retired Employees Association - (2010) 2
SCC 44, the Hon'ble Apex court has held that, -
" In our considered opinion pensionary
benefits or the retirement benefits as the case
may be whether governed by a Scheme or
Rules may be a package consisting of payment
of pension and as well as gratuity. Pensionary
benefits may include payment of pension as
well as gratuity. One does not exclude the
other. Only in cases where the gratuity
component in such pension schemes is in better
terms in comparison to that of what an
employee may get under the Payment of
Gratuity Act the government may grant an
exemption and relieve the employer from the
statutory obligation of payment of gratuity.
(We may at this stage note that the appellant establishment did
not succeed in its attempt to get the establishment exempted
from the operation of the provisions of the Payment of Gratuity
Act.)
27) In view of the law laid down as above, the
withdrawal of Pension Scheme by the company on the ground
that the payment of gratuity is made compulsory after coming
into force of the payment of Gratuity Act, in no case can be
held to be 'just'. Moreover, as has been observed by the
learned Single Judge only those employees of the company,
who were working in Mumbai were not being paid both the
benefits, whereas the workmen in Calcutta were being paid
gratuity, as per Gratuity Act and Pension under the 1948
document. The benefit of gratuity, which is payable statutorily
does not substitute the benefits payable, as condition of service.
In the circumstances, it has to be held that the act of the
company of withdrawing the Pension Scheme after coming
into force of the Payment of Gratuity Act was proprietyless.
28) The point now remains to be considered is that of
limitation. According to the Industrial Tribunal, the dispute
raised by the Union after 11 years cannot be said to be within
the reasonable time. Relying on the judgment in the case of
Nedungadi Bank Limited Vs. K.P.Madhavantutty and ors.,
( 2002) Supreme Court Cases 455 and the other in the case of
Haryana State Co-operative Land Development Bank vs.
Neelam, 2005 II CLR 45, it was vehemently argued by the
learned Counsel for the company that the Industrial Tribunal
was right in rejecting the Reference, holding the same to be not
filed within the reasonable time. It was also argued that not
raising of any dispute by the Union for the period of 10 years,
though there was a cause of action for raising such dispute
would lead to an inference that Union had accepted the decision
of the company and it shall be held that the Union has
acquiesced to the withdrawal of the Pension Scheme by its
conduct of remaining silent on the issue for the period of 10
years.
29) Our attention was invited by the learned counsel for
the company to some of the observations made by the learned
Single Judge in paragraph No.26 of the impugned order, to the
effect that in the examination-in-chief the witness examined by
the Union had stated that four employees from the Bombay
office had received pensionary benefits upto 26th May, 1984.
The learned Counsel took us through the evidence of the
witnesses examined by the Union to show that none of the
witnesses has stated any such fact. The learned counsel
submitted that the finding recorded by the learned Single Judge
on the basis of non existing evidence is unsustainable. The
learned Counsel asserted that the Reference was liable to be
rejected on the ground of limitation also.
30) It is true that though the Pension Scheme was
withdrawn by the company by a circular dated 22nd May, 1974,
the dispute in that regard was raised in the year 1983. It is also
true that in the period between 1974 to 1983 four employees got
retired and none of them or the Union raised any dispute,
though the benefit of pension was not extended to the said
employees. Ostensibly, it may, therefore, appear that the
dispute was raised after about 9 years which certainly cannot be
said to be within reasonable time. However, it was rightly
pointed out by the learned Counsel for the Union that though
the circular, whereby the Pension Scheme was withdrawn, was
issued on 22nd May, 1974, the first retirement thereafter took
place in the year 1980, when an employee by name Shri
J.R.Redkar got retired. The other three employees got retired
thereafter in the year 1981 and in 1982. Thereafter, one Shri
P.S.Manian was issued with the notice dated 29th February,
1983 informing him that he will be retiring on attaining the age
of superannuation with effect from 29th February 1984. When
the request of Shri P.S.Manian to process his case for pension
was refused, the Union immediately raised the dispute. It,
therefore, cannot be said that there was delay in raising the
dispute by the Union. Even if it is assumed that the cause of
action had arisen in 1980 when first retirement took place after
issuance of the notice of 1974 and Pension Scheme was not
made applicable to the retiring employee viz. Shri Redkar, the
delay caused, at the most was of three years, which cannot be
held to be inordinate or unreasonable and the dispute so raised
cannot be held to be a stale or belated claim.
31) In the case of Nedungadi Bank Limited Vs.
K.P.Madhavantutty and ors., the workman was dismissed
after lawfully and properly conducting the disciplinary
proceedings against him. His dismissal was upheld in the
appeal and the benefits legally due to him were paid to him. The
said workman, after seven long years, raised a dispute against
his dismissal on the ground that two other employees dismissed
in similar situation, were reinstated. In these circumstances, it
was held by the Honourable Apex Court that reference of the
said dispute after about seven and half years was bad; both on
the grounds of delay as well as non existence of an industrial
dispute. Moreover, as observed by the Hon'ble Apex court
under what circumstances the said two employees were
dismissed and subsequently reinstated was nowhere mentioned
by the concerned workman. It is evident that the
observations made and the law laid down in the aforesaid
judgment cannot be made applicable to the facts of the present
case.
32) In the case of Haryana State Co.op. Land
Development Bank V/s Neelam, 2005 II CLR 45, the conduct of
the appellant therein in approaching the Labour Court after
more than seven years, was considered to be a relevant factor by
the Labour Court for refusing to grant any relief to her. Such a
consideration on the part of the Labour Court was justified by
the Honourable Apex Court observing that the Labour Court in
the afore mentioned situation cannot be said to have exercised
its discretionary jurisdiction injudiciously, arbitrarily or
capriciously. The facts of the present case are quite different
and, as such, the law laid down in the aforesaid judgment also
would not apply to the present case.
33) We reiterate that the dispute raised by the union
against withdrawal of the pension scheme cannot be said to have
raised belatedly. The learned Industrial Tribunal was wrong in
holding that the union did not raise the dispute within
reasonable time. Though some of the observations made by the
learned Single Judge are factually incorrect, we affirm the
conclusion recorded by the learned Single Judge that the
dispute so raised was not liable to be rejected on the point of
limitation.
34) After hearing considered the submissions advanced
on behalf of the appellant from all angles we have reached
to the conclusion that there is no merit in the appeal.
For the reasons stated, the appeal is dismissed. Pending Civil
Applications, if any, stand disposed of. No costs.
(P.R.BORA,J.) (ANOOP V.MOHTA,J.)
Later on :
1. The learned counsel appearing for the Appellant prayed
for staying the effect and operation of the order passed today
for next eight weeks, so as to enable the Appellant to approach
the Hon'ble Apex Court.
2. The learned counsel for Respondent No.1 opposed the
prayers so made.
3. The request so made can not be considered by a Single
Judge. Since Hon'ble Shri Justice Anoop V. Mohta is presently
sitting at Goa (Panji), the Registry is directed to place the
matter for consideration of the request so made by the
Appellant on a convenient date in consultation with Hon'ble
Shri Justice Anoop V. Mohta on video conferencing.
7.3.2017 (P.R.Bora,J.)
10 MARCH 2017
P.C.:
1. In view of the order passed on 7 March, 2017 the Registry
has placed the present matter after having consulted with
Hon'ble Shri Justice Anoop V. Mohta today at 2.10 p.m. by
video conferencing at Judges Conference Hall, 4 th Floor, Annex
Building. Accordingly, the matter was heard by the Bench on
video conferencing.
2. The learned counsel appearing for the Appellant prayed
for staying the effect and operation of the order passed by the
Bench on 7th March, 2017 for next eight weeks.
3. The learned counsel appearing for Respondent No. 1
opposed the request so made.
4. In view of the fact that during pendency of the present
Appeal the stay was operating in favour of the Appellant. We
deem it appropriate to stay the effect and operation of the
order passed by us on 7th March, 2017 for next six weeks. Order
accordingly.
(P.R.BORA,J.) (ANOOP V.MOHTA,J.)
.....
