National Textile Corporation ... vs Suresh Chand Gupta And Ors.
2005 Latest Caselaw 1733 Del

JUDGMENT

Markandeya Katju, C.J.

Page 0083

1. These writ appeals have been filed against the judgment of the learned single Judge dated 18.10.2005 in WP(C) No. 9887-91, 18396-18536/2005.

2. Heard learned counsel for the parties and perused the record.

3. The facts in detail have been set out in the judgment of the learned single Judge and hence we are not reproducing the same except where necessary.

4. The writ petitioners (respondents herein) are employees of the National Textile Corporation Limited (hereinafter referred to as 'the NTC'). They are Page 0084challenging Office Memorandum dated 13.1.2005 issued by the Ministry of Textiles, Government of India, purporting to review the rehabilitation scheme of several units of NTC in cases where BIFR had already sanctioned a rehabilitation scheme.

5. The petitioners are also challenging the letter dated 20.4.2005 issued by the General Manager (Textiles) of the NTC (DP&R), whereby instructions have been issued to five units of NTC (DP&R) Region directing the General Manager to convey that the workmen desirous of availing Voluntary Retirement Scheme (VRS) should submit their applications to the management for consideration. The writ petitioners are posted at various units of NTC and their apprehension is that once the majority of the workmen accept the VRS offered under the Office Memorandum dated 13.1.2005 the management of NTC would close down five viable units of NTC without fulfillling the statutory obligations and in violation of the orders passed by BIFR in sanctioning the rehabilitation scheme as also the order passed by the Supreme Court directing the several units of NTC to implement the scheme.

6. It may be mentioned that NTC had made a reference to BIFR which was registered as Case No. 501 of 1994 and the BIFR declared the NTC as a sick company. After exploring all the possibilities of revival and rehabilitation of the company and after hearing all the parties the BIFR on 22.2.2002 sanctioned the scheme for rehabilitation of NTC. A true copy of the scheme sanctioned by the BIFR as Annexure-I to the writ petition.

6. In para 5 of the writ petition it is alleged that the revival proposal envisaged closure of unviable mills and revival of viable mills. After scrutinising the proposal submitted by NTC, the BIFR found five mills as viable and four mills as unviable which are mentioned in para 5 of the writ petition. The scheme envisaged that the mills which were found viable would be revived by carrying out renovation/modernisation of the existing machinery and the surplus workers would be identified and offered VRS. The surplus land and surplus machinery would be disposed of and all the sale proceeds would be utilised for the revival of these units. The workmen of the unviable units would also be offered VRS. The BIFR submitted its proposal to the operating agency which had considered the various materials and documents and the view points of the representatives of banks, financial institutions and the Ministry of Textiles. The BIFR then decided to circulate a draft revival scheme to the parties under Section 19(1) and 19(2) of SICA. After hearing the parties and considering the objections and suggestions made by the concerned parties the BIFR has sanctioned a scheme under Section 18 of SICA vide order dated 22.2.2002. This scheme envisaged closure of four unviable units and revival/modernisation of five viable units. As per the scheme the surplus workers would be identified and offered VRS. It is alleged in para 11 of the petition that under the scheme, an amount of Rs. 68.47 crores was earmarked as capital expenditure for modernisation of the five viable mills.

7. It is alleged in para 14 of the writ petition that respondent No. 4 by letter dated 13.1.2005 has sought to modify and review the VRS scheme of several units of NTC which was sanctioned by the BIFR and which was sought to be implemented as per the directions of Supreme Court in the Page 0085order dated 27.9.2002 in SLP (Civil) No. 16732 of 1997. Thus a modified VRS scheme was proposed to be implemented in 20 NTC mills over and above the VRS which had already been offered. It is alleged that the introduction of this modified VRS scheme vide letter dated 13.1.2005 will have the result that if the majority of the employees opt for VRS in these mills, the mill could be closed down without complying with the provisions of the Industrial Disputes Act. A copy of the memorandum dated 13.1.2005 is Annexure III to the writ petition.

8. It is alleged that this action of the respondents in offering Modified Voluntary Retirement Scheme (MVRS) is arbitrary, capricious, unreasonable, mala fide and in contravention of the scheme sanctioned by the BIFR.

9. A counter affidavit was filed in the writ petition on behalf of the NTC and we have perused the same. It is alleged in the preliminary objections therein that five persons have filed the writ petition in an effort to subvert and jeopardize an all-India revival scheme under which the respondent has already (a) ensured that the assets are unencumbered by issuing Government Guaranteed Tax Free Bonds for Rs. 248.69 Crores to banks and financial institutions against a One Time Settlement; (b) mobilised Rs. 1779.35 Crores for Voluntary Retirement Scheme (VRS) through Government Guaranteed Bonds; (c) ensured closure of 65 of the 66 unviable mills and granted VRS to 44,229 employees at a cost of Rs. 1548.39 Crores; (d) paid Rs. 179.86 Crores towards statutory dues and Rs. 12.67 Crores towards interest on Provident Fund contribution and ESI; and (e) sold surplus assets for Rs. 649.26 Crores, surplus land for Rs. 378.60 Crores and further surplus land worth Rs. 1500 Crores is proposed to be sold by 31.3.2006.

10. It is alleged that none of the writ petitioners are from Delhi. They are all employed in different managerial capacities in mills situated in Rajasthan and Punjab and their grievance is in respect of extension of MVRS in their respective mills situated in Rajasthan and Punjab and hence it is alleged that this Court does not have jurisdiction in the matter.

11. It is stated in the counter affidavit that upon a reference made under Section 15(1) of SICA, the BIFR declared the NTC as a 'sick industrial company' on 15.4.2003. The Industrial Development Bank of India was appointed as the operating agency under Section 17 of SICA and was directed to formulate a revival scheme. A revival scheme was ultimately approved by the BIFR on 22.2.2002. It was mentioned in the summary record of proceedings that in addition to offering VRS to all employees of unviable mills, VRS would also be offered to surplus labour of viable mills. It was further recorded that memoranda of understanding had been entered into between the respondent and the unions of these viable mills.

12. In para 2.3 of the counter affidavit it is stated that the MVRS was already in existence as the same had been approved by the Board of Directors of respondent No. 2 at its meeting held on 24.12.2001 with effect from 1.1.2002. A copy of the MVRS is annexure R-1 to the counter affidavit. In para 3.1 of the scheme it was mentioned that the following are viable Mills:-

Page 0086

(a) Kharar Textile Mills, Kharar, Punjab.

(b) Suraj Textile Mills, Malaut, Punjab.

(c) Udaipur Cotton Mills, Udaipur, Rajasthan.

(d) Shri Bijay Cotton Mills, Bijaynagar, Rajasthan.

(e) Mahalaxmi Mills, Beawar, Rajasthan.

13. It is stated that memoranda of understanding entered into with the unions of the above mills which are deemed to form part of the scheme permit the respondent to introduce VRS or MVRS in respect of even such viable mills. Hence, it is alleged that the contention of the petitioners that no VRS or MVRS can be introduced in respect of these viable mills is contrary to the express provisions of the scheme.

14. As per the scheme the revenue generated from the sale of surplus land and machinery was to be utilised for the revival of the viable mills. This envisaged modernisation and renovation to be completed within a period of three years i.e. 2002-03, 2003-04 and 2004-05. However, due to delay in the sale of surplus land and machinery the revival of the mills could not be undertaken within the stipulated time as per the sanctioned scheme. There was a feeling within a large section of the workmen of the five viable mills that they should in all fairness be given an option to elect for VRS or MVRS as had been given to their counterparts in other mills of the respondent. The trade unions of all the five mills made a representation to the respondent No. 3 in this respect and in this context the office memorandum dated 13.1.2005 was issued.

15. In para 2.10 of the counter affidavit it is stated that on 3.3.2005 the question of rehabilitation of all the subsidiaries of the NTC was considered by the Board of Reconstruction of Public Sector Enterprises and the Board endorsed a proposal to restructure the NTC into a single company by merging all subsidiary companies into respondent No. 2, i.e. the holding company. It was also proposed that the rehabilitation efforts would be concentrated on the 15 best performing mills on an all India basis. Accordingly, an application was filed by respondent No. 2 before the BIFR on 8.4.2005 seeking modification of the revival scheme. However, as the BIFR was not functioning, the said application could not be taken up. It is stated that the BIFR is now functional and respondent No. 1 now understands that respondent No. 2 is making efforts to have the said application listed for hearing.

16. It is stated that NTC has been repeatedly receiving requests from the employees of the five mills for grant of MVRS. It is in this context that one must appreciate the meeting of 27.1.2005 between the CMD of respondent No. 2 and the representatives of the workers union. The MVRS applications received from workmen/employees of these five mills would indicate that while a significant majority of the employees of these mills have made requests for MVRS, the respondent has not acceded to the request of all these employees. It has in fact acted in accordance with the mandate of the sanctioned scheme which also permits respondent No. 1 to grant MVRS to employees of these five mills. It is alleged by NTC that its actions are subject to the final outcome of the application for modification of the scheme made before the BIFR.

Page 0087

17. In para 3.1 of the counter affidavit the NTC has denied that the respondents are seeking to close the mills without complying with the provisions of the Industrial Disputes Act.

18. The extension of MVRS in respect of five mills is in accordance of the sanctioned scheme and at any event, the NTC has filed an application before the BIFR for modification of the scheme. It is alleged in para 3.3 of the counter affidavit that the grievances of the writ petitioners are hypothetical and imaginary.

19. The learned single Judge in the impugned judgment has held that the NTC has modified the scheme without the approval of the BIFR. The learned single Judge has held that the NTC has no jurisdiction or authority to modify or vary a scheme sanctioned by the BIFR.

20. It is submitted by the learned counsel for the appellant that the VRS scheme of 22.2.2002 merely clarified that even surplus workers of viable mills would also be given VRS. There was no prohibition on giving VRS to any employee which is an administrative decision of the management. He submitted that reference to all workmen of unviable mills and surplus workmen of viable mills in the scheme was merely to clarify that in respect of these categories the appellant would have no discretion and that it was mandatory to offer VRS to such workmen. However, there was no bar to offer VRS to other workmen also. We agree with this submission. There is nothing to show that other workmen cannot be offered VRS.

21. It may be mentioned that the memoranda of understanding signed between the NTC and the trade unions were made part of the scheme. By these memoranda of understanding the trade unions of these viable mills agreed that workers could be shifted from mill to mill and workers rendered surplus due to revision of workload norms, closure, merger and privatization may opt for VRS.

22. The scheme was based on the assumption that the appellant would achieve optimum capacity utilization during 2005-2006. However, while the net losses for the year ending March,2001 stood at Rs. 58.48 Crores, the present losses stand at about Rs. 251.75 Crores.

23. Due to certain reasons the sanctioned schemes of all the 9 subsidiaries of the NTC, including that of the appellant, could not be effectively implemented. These reasons are cited in the application filed with the BIFR on 8.4.2005 by the NTC seeking permission to restructure itself.

24. The application had been preceded by another fresh appraisal by the same NITRA, which had now identified on an all India basis, 15 mills out of 53 mills for revival and modernization at a cost of Rs. 318.83 Crores. The reference to VRS in the application was only in the context of seeking permission from the BIFR for closure of these mills, which admittedly cannot be resorted to without BIFR approval, and not to the action of giving VRS per se, which is always within the administrative realm of the appellant. The application was filed pursuant to a fresh appraisal by NITRA and a decision of the Government was taken on 13.1.2005 to restructure NTC into Page 0088one single company by merging all the subsdiaries into a holding company. The said office memorandum also stated that NTC should concentrate on the revival and modernization of 15 mills, which include 2 of the 5 mills of the appellant. The said office memorandum also stated that permission of the BIFR should be obtained wherever required. It is submitted that it is wrongly noted in the impugned order as mandating approval from BIFR for acceding to VRS requests of employees.

25. It is submitted by learned counsel for the appellant that with mounting losses (i.e. a cumulative loss of Rs. 251.75 crores, and annual loss of Rs. 38.43 crores) and a wage bill of Rs. 17.93 crores of which the mills could only generate 12%, the remaining 88% deficit of the wage bill had to be financed through aid from the Ministry, the workmen, who were reeling under the burden of a wage freeze imposed by the sanctioned scheme until the mills broke even, started agitating for an exit option in the form of MVRS. It is in this context that the meeting of 27.1.2005 was held with the representatives of workmen. It is further stated that the non-workmen, who were in managerial or semi-managerial cadre earning handsome salaries and who did not have a VRS option as attractive as that available to the industrial workmen, organized under the banner of the National Federation of NTC Employees preferred an application before the BIFR seeking relief identical to that claimed in the writ petition.

26. On the facts of this case, we are of the opinion that this is not a fit case for exercise of our discretion under Article 226 of the Constitution.

27. It is an admitted fact that as on 30.9.2005, 1965 out of 2300 employees of the appellant had been relieved. Of these employees, 1238 were relieved on 30.9.2005 itself, but whose payment could not be released on account of the stay order passed by the learned single Judge dated 7.10.2005.

28. It may be noted that the writ petition was filed by five persons belonging to management staff. The writ petitioners claimed that they have a right to compel the appellant to keep the mills running, despite the fact that the wage bill itself is Rs. 17.93 crores per annum and the mills are not even able to generate 12% of this wage bill. It is evident that the appellant faces a serious law and order problem in its mills as hundreds of workmen who have been relief are demanding their payments and have been surviving without any payment since October,2005.

29. Apart from that the petitioners have failed to demonstrate that any legal right of theirs has been infringed. The appellant has stated that it has no intention to dispense with the services of the writ petitioners, if they do not wish to accede to the VRS. Hence, we fail to understand what grievance can the petitioners have. At any event, this is not a fit case for exercise of our discretion under Article 226 of the Constitution.

30. Five managers cannot hold up the VRS of hundreds of workmen, who would be getting the same under the impugned office memorandum of 13.1.2005.

31. It is well settled that even if there is a violation of law, this Court is not bound to interfere in discretionary jurisdiction under Article 226 of the Page 0089Constitution, vide Chandra Singh v. State of Rajasthan ; and Champalal Binani v. C.I.T, , etc.

32. In Master Marine Services (P) Ltd v. Metcalfe & Hodgkinson (P) Ltd. and Anr. , the Supreme Court observed:-

The modern trend points to judicial restraint in reviewing administrative actions. Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. Even when defect is found in the decision making process, the court must exercise its discretionary powers under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, should the court interfere.

33. In view of the above, this appeal is allowed and the impugned judgment is set aside.