Delhi High Court

Rajiv Mahendru & Anr. vs Chairman-Md, I.R.C.C., New Delhi ... on 27 February, 2013

Author: Valmiki J. Mehta

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         WP(C) No.895/1997

%                                                      February 27, 2013


      RAJIV MAHENDRU & ANR.                     .... Petitioners
                  Through: Petitioner no.2 in person.


                          versus


      CHAIRMAN-MD, I.R.C.C., NEW DELHI & ANR. .... Respondents
                  Through: Mr. Sanjiv K. Jha, Adv.


CORAM:
HON'BLE MR. JUSTICE VALMIKI J. MEHTA

To be referred to the Reporter or not?


VALMIKI J. MEHTA, J (ORAL)

1.           This writ petition is filed by two petitioners who seek the relief

of promotion to the post of Deputy Manager in the respondent

No.1/Corporation namely Indian Road Construction Corporation Ltd. The

claim of the petitioners to promotion is on the ground that on completion of

period of service of five years in the feeder cadre, the petitioners had

become entitled to promotion, and though the petitioners have completed


WP(C) No.895/1997                                               Page 1 of 18
 eleven years they have been stagnating in their present grade of Section

Officers. It is pleaded in the writ petition that there is discrimination against

the petitioners because a junior to the petitioners, one Sh. S. Surin has been

given promotion.

2.           On behalf of the respondents following three grounds are

urged:-

     i)      Firstly, it is argued that there is no discrimination against the

     petitioners because Sh.S.Surin was an ST employee and therefore as per

     the requirement of the 40 point roster maintained, for          the SC/ST

     employees as per the Presidential directives issued by the Department

     of Public Enterprises, an ST candidate could not have been ignored,

     resulting in the appointment of Sh.S.Surin.

     ii)            The petitioners are estopped from pursuing the present

     petition because the petitioners during the pendency of the present writ

     petition applied for voluntary retirement, took voluntary retirement by

     accepting monetary benefits, and since the voluntary retirement was

     applied for and taken without reserving rights in the present writ

     petition, the writ petition no longer can be entertained.

     iii)           Even if the petitioners for the sake of arguments are

WP(C) No.895/1997                                                Page 2 of 18
      presumed to have applied for and taken voluntary retirement by

     reserving rights to pursue the present petition, yet, in view of the

     judgments of the Supreme Court in the cases of A.K.Bindal & Anr. vs.

     Union of India & Ors., 2003 (5) SCC 163 and Officers and

     Supervisors of IDPL vs. Chairman and MD, IDPL & Ors., 2003 (6)

     SCC 490, the petitioners are not entitled to the relief of promotion

     inasmuch as the same will entail financial consequences upon the

     respondent No.1/Corporation which is a sick Corporation, which has

     already been ordered to be wound up and which respondent

     No.1/Corporation is not doing business since February, 2000. It is

     argued that in terms of the ratio of the aforesaid two Supreme Court‟s

     judgments, there is no automatic entitlement to claim monetary benefits

     once the respondent No.1/Corporation was in a grave financial

     condition and in fact, it has ceased business thereafter since February,

     2000.

3.           So far as the first aspect of the entitlement of the petitioners to

promotion is concerned, I find that the petitioners have not referred to any

specific rule in the writ petition as per which the petitioners become

automatically entitled to promotion after a period of five years.          The

WP(C) No.895/1997                                               Page 3 of 18
 petitioners have however filed the relevant Rules as Annexure P-1(b)

alongwith the petition and the Rule with respect to appointment by

promotion is Rule 9 with its sub-Rules 9.1.(a) to (n). Some of the relevant

sub-Rules are sub-Rules (c), (f), (i) and (l) and which read as under:

             "(c) Departmental Promotion Committees shall be
             constituted by the appointing authorities concerned to
             make recommendations for appointment by promotion
             against selection posts.

             ...........

(f) Promotion to posts declared as non-selection posts and indicated as such in the Annexure to these rules shall be made on the basis of seniority subject to fitness. Fitness of a person will be judged by his performance as reflected in his confidential reports for a period not less than 3 years.

............

(i) The qualifying period referred to in (f) above will only enable the employees for consideration for promotion to the higher grade; completion of such period will not confer any right on any employee for automatic promotion to a higher grade.

...........

(l) Panel prepared for promotion shall be valid for a period of one year, unless otherwise extended. In any case, it will cease to be in force on the expiry of a period of one year and a half or when a fresh panel is prepared, whichever is earlier. The date of commencement of validity of the panel will be the date on which the panel

receives the approval of the competent authority."

4. A reference to the aforesaid sub-Rules of Rule 9 shows that

there is no specific period provided for grant of promotion, however, sub-

Rule (f) talks of ACRs being considered for not less than three years. Also,

the promotion is only after a DPC is constituted, and which DPC judges the

candidates on seniority subject to fitness. Sub Rule (i) however specifically

provides that the qualifying period referred to in sub-Rule (f) will enable the

employees only for consideration for promotion to the higher grade, and

completion of the period will not confer any right on any employee for

automatic promotion to a higher grade.

5. Accordingly, I do not find anything in the Rules that without

the petitioners being duly considered fit by a duly constituted DPC, and

subject to availability of posts, there is automatic entitlement to the

petitioners for promotion.

6. The petitioners have also contended that they were

discriminated against because a junior to them, Sh.S.Surin was appointed,

however, a reference to the counter affidavit of respondents No. 1 and 2

shows that in para 16 on merits it was specifically mentioned that Sh.S.Surin

was an ST employee and therefore he was appointed as per the 40 point

roster. Para 16 reads as under:-

"16. In reply to para 16, it is stated that there was no ban but restrictions were imposed by the Ministry not to increase the overall liability of the Corporation. It is further stated that while making promotions upto the lowest rung of Group „A‟ posts, the reservation admissible as per 40 point roaster maintained for SC/ST employees has to be taken care of by the management as per the Presidential Directives issued by Departmental of Public Enterprises. Any eligible SC/ST candidate falling in reserved slot as per 40 point roaster, cannot be ignored and has to be considered for promotion to meet the mandatory requirement. Shri S.Surin, being a ST employee, though he is junior to the petitioners had been promoted to the post of Dy.Manager against a vacancy as reserved by the roaster to meet the mandatory requirements. Representation of petitioners could not be replied for reasons mentioned at para 10."

The petitioners have however not filed the rejoinder

controverting this position as stated in para 16 of the counter affidavit of the

respondents No.1 & 2. Therefore, it is clear that Sh.S.Surin and the

petitioners fell under different categories of employees and Sh.S.Surin got

promotion on account of his being an ST employee and application of the 40

point roster. Therefore there is no reason for the petitioners to feel

discriminated.

7. On the aspect of the petitioners taking voluntary retirement

during the pendency of the present writ petition, there is some amount of

controversy as to whether or not the petitioners applied for VRS subject to

reserving their rights as claimed in the present writ petition. Whereas the

petitioners claim that the letter in typed proforma dated 30.6.2000 was given

alongwith a covering letter reserving rights prayed in this petition, on behalf

of the respondents No. 1 and 2 it is contended that there was no covering

letter and so-called endorsement of receipt on the copy of the letter with the

petitioner dated 30.6.2000, is only an illegible scribble not specifying who is

the person who received it, i.e full name and designation of the person who

allegedly received the letter is not at all clear. It is argued on behalf of the

respondents No. 1 and 2 that since the respondent No.1/company had closed

business since the year February, 2000 and did not have many employees

except a few, this letter dated 30.6.2000 has been inserted in the official

record subsequent to obtaining the benefits of the voluntary retirement. The

argument is further buttressed by referring to the letters by which the

petitioners unconditionally received the benefits of the voluntary retirement

in full and final settlement of all their service dues.

8. In my opinion, the argument as urged on behalf of the

respondents No. 1 and 2 carry more credibility and conviction. This I say so

because any doubt as to the petitioners unconditionally and not conditionally

taking voluntary retirement becomes clear from the letters dated 20.10.2000

and 25.10.2000 of the respondent No.1 to the petitioners by which the

petitioners received the VRS amounts. These letters specifically state that

the amounts being received by the petitioners will be in full and final

settlement of the dues of the petitioners on proceeding under voluntary

retirement. It is not disputed that petitioners have received these letters

dated 20.10.2000 and 25.10.2000 as per the endorsements on these letters

and which endorsements do not show that they are not receiving the amounts

in full and final settlement of their dues on proceeding under voluntary

retirement. Also, I do find some strength in the arguments urged on behalf

of the respondents No. 1 and 2 that the so-called letter of the petitioners

dated 30.6.2000 bearing running page No. 103 whereas there is also existing

a running page No.103 of the official file and which was a document being

typed proforma signed by the petitioners for seeking voluntary retirement

not containing any condition of reserving of rights. Similar is the fact and

argument with respect to running page No.104 with respect to the petitioner

No. 2 in this case. Even taking the argument further, it is argued on behalf

of respondent No.1, that the petitioners may have at the time of making an

application for voluntary retirement sought to take VRS without prejudice to

the present petition, however, when the actual benefits were taken the

position was changed as the covering letter received by the petitioners

specifically states that the petitioners have taken their voluntary retirement

benefit in full and final settlement of their dues. Unconditional receipt of

benefits under the covering letter being an undisputed aspect, in my opinion,

the petitioners are therefore estopped from claiming that they still have the

rights to pursue the present petition. Petitioners cannot blow hot and cold in

the same breath. It is perfectly possible that the respondent No.1 may not

have agreed to voluntary retirement in case the petitioners were not to take

the amounts under the covering letters dated 20.10.2000 and 25.10.2000 in

full and final satisfaction of their dues.

9. Finally, independent of points No. 1 and 2 above, the

petitioners not being entitled to the promotion and petitioners having taken

voluntary retirement and hence estopped, in my opinion, the point No. 3

argued on behalf of the respondents No. 1 and 2 give a very strong argument

for denying the relief of promotion and higher pay-scale to the petitioners.

The direct judgment in this regard of the Supreme Court would be the

judgment in the case of IDPL (supra). Paras 7, 8, 11, 13, 17 and 18 of the

said judgment are relevant and they read as under:-

"7. In the above background, the question which arises for consideration is whether the employees of public sector enterprises have any legal right to claim revision of wages that though the industrial undertakings or the companies in which they are working did not have the financial capacity to grant revision in pay-scale, yet the Government should give financial support to meet the additional expenditure incurred in that regard.

8. We have carefully gone through the pleadings, the Annexures filed by both sides and the orders passed by the BIFR and the judgments cited by the counsel appearing on either side. Learned counsel for the contesting respondent drew our attention to a recent judgment of this Court in A.K. Bindal and Anr. v. Union of India and Ors. in support of her contention. We have perused the said judgment. In our opinion, 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.

............

11. In our view, the economic capability of the employer also plays a crucial part in it; as also its capacity to expand

business or earn more profits. The contention of Mr. Sanghi, if accepted, that granting higher remuneration and emoluments and revision of pay to workers in other governmental undertakings and, therefore, the petitioners are also entitled for the grant of pay revision may, in our opinion, only lead to undesirable results. Enough material was placed on record before us by the respondents which clearly show that the first respondent had been suffering heavy losses for the last many years. In such a situation the petitioners, in our opinion, cannot legitimately claim that their pay-scales should necessarily be revised and enhanced even though the organization in which they are working are making continuous losses and are deeply in the red. As could be seen from the counter affidavit, the first respondent company which is engaged in the manufacture of medicines became sick industrial company for various reasons and was declared as such by the BIFR and the revival package which was formulated and later approved by the BIFR for implementation could not also be given effect to and that the modifications recommended by the Government of India to the BIFR in the existing revival package was ordered to be examined by an operating agency and, in fact, IDBI was appointed as an operating agency under Section 17(3) of SICA. It is also not in dispute that the production activities had to be stopped in the major two units of the company at Rishikesh and Hyderabad w.e.f. October, 1996 and the losses and liabilities are increasing every month and that the payment of three installments of interim relief could not also be made due to the threat of industrial unrest and the wage revision in respect of other employees is also due w.e.f. 1992 which has also not been sanctioned by the Government of India.

............

13. We have already reproduced the directions passed by this Court in Jute Corporation of India Officers' Association (supra). However, after the said judgment in which

conditional directions were issued, as is apparent, the Central Government vide its O.M. dated 19.07.1995 decided as follows:-

"13. For SICK, PSC registered with the BIFR pay revision and grant of other benefits will be allowed only if it is decided to revive the unit. The revival package should include the enhanced liability on this account. The benefit of pay revision etc. shall be extended to IISCO and financial liability thereof shall be met by SAIL."

.............

17. In A.K. Bindal (supra), this Court specifically held that the economic viability or the financial capacity of the employer is an important factor which cannot be ignored while fixing the wage structure, otherwise the unit itself may not be able to function and may have to close down which will inevitably have disastrous consequences for the employees themselves. The Court also negatived other contentions raised by the employees and referred to and relied upon the fact that the Company was a sick unit. Facts in the present case are similar.

18. Further, directions issued in Jute Corporation of India Officers' Association (supra) would have no bearing in the present case as the Scheme under the SICA has failed to revive the Company. When the Company cannot be revived because of large losses, there is no question of enhancing scales of pay and dearness allowances. Direction No. (ii) issued in that case indicates that the employees appointed on or after January 1, 1989 will be governed by such pay scales and allowances as may be decided by the Government in its discretion. If the company itself is dying, the Government has discretion not to grant enhanced pay scales or dearness allowances and for the same reason Direction No. (i) cannot be implemented." (underlining added).

10. The emphasized portions of the aforesaid paragraphs of the

judgment in IDPL (supra) case shows that economic viability and financial

capacity of the employer is an important factor which cannot be ignored

while fixing the wage structure and revision of pay-scales, and upward

revision cannot be done when a PSU has been suffering heavy losses for

many years. It has further been observed that the responsibility to pay

salaries to the employees of PSUs is of the PSUs and not of the Central

Government which is not bound to give moneys to PSUs to clear the

monetary liabilities of the PSUs to be created on account of enhancement of

salaries. Further the Supreme Court has categorically observed that where

units have already suspended the operation, then employees cannot claim

entitlement for revision and enhancement of the pay-scales, more so once

the companies are making continuous loss and are deeply in red.

11. It is undisputed in the present case that the respondent No. 1

suffered grave losses and it is in the process of winding up. The business of

the company has been closed since over about last 12 years i.e since

February, 2000. The aforesaid ratio of judgment of the Supreme Court

therefore squarely applies to the present case that there cannot be grant of

monetary benefits to employees including, by promotion, totally overlooking

the financial condition of the sick PSUs.

12. The observations which have been made by the Supreme Court

in IDPL (supra) case, are similar to the observations which have been made

by the Supreme Court in the case of A.K.Bindal (supra). The relevant

paragraphs of the judgment of the Supreme Court in the case of A.K.Bindal

(supra) are paragraphs 22, 34 and 35.

"22. In South Malabar Gramin Bank v. Coordination Committee of South Malabar Gramin Bank Employees' Union and South Malabar Gramin Bank Officers' Federation and Ors., (2001)ILLJ743SC , relied upon by the learned counsel for the petitioners, the Central Government had referred the dispute regarding the pay structure of the employees of the Bank to the Chairman of the National Industrial Tribunal headed by a former Chief Justice of High Court. The Tribunal after consideration of the material placed before it held that the officers and employees of the Regional Rural Banks will be entitled to claim parity with the officers and other employees of the sponsor banks in the matter of pay scale, allowance and other benefits. The employees of nationalised commercial banks were getting their pay scales on the basis of 5th bipartite settlement and by implementation of the award of the National Industrial Tribunal, the employees of the Regional Rural Banks were also given the benefits of the same settlement. Subsequently, the pay structures of the employees of nationalised commercial banks were further revised by 6th and 7th bipartite settlements but the same was not done for the employees of the Regional Rural Banks who then filed writ petitions. It was contended on behalf of the Union of India and also the Banks that financial condition of the Regional Rural Banks was not such that they may give their employees the pay structure of the employees of the

nationalised commercial banks. It was in these circumstances that this Court observed that the decision of the National Industrial Tribunal in the form of an award having been implemented by the Central Government, it would not be permissible for the employer bank or the Union of India to take such a plea in the proceedings before the Court. The other case namely All India Regional Rural Bank Officers Federation and Ors. v. Government of India and Ors. (2002)IILLJ527SC arose out of interlocutory applications and contempt petitions which were filed for implementation of the direction issued in the earlier case namely South Malabar Gramin Bank (supra). Any observation in these two cases to the effect that the financial capacity of the employer cannot be held to be a germane consideration for determination of the wage structure of the employees must, therefore, be confined to the facts of the aforesaid case and cannot be held to be of general application in all situations. In Associate Banks Officers' Association v. State Bank of India and Ors., (1998)1SCC428 it was observed that many ingredients go into the shaping of the wage structure of any organisation which may have been shaped by negotiated settlements with employees' unions or through industrial adjudication or with the help of expert committees. The economic capability of the employer also plays a crucial part in it; as also its capacity to expand business or earn more profits. It was also held that a simplistic approach, granting higher remuneration to workers in one organisation because another organisation had granted them, may lead to undesirable results and the application of the doctrine would be fraught with danger and may seriously affect the efficiency and at times, even the functioning of the organisation. therefore, it appears to be the consistent view of this Court that the economic viability or the financial capacity of the employer is an important factor which cannot be ignored while fixing the wage structure, otherwise the unit itself may not be able to (sic) and may have to close down which will inevitably have disastrous consequences for the employees themselves. The

material on record clearly shows that both FCI and HFC had been suffering heavy losses for the last many years and the Government had been giving considerable amount for meeting the expenses of the organisation. In such a situation, the employees cannot legitimately claim that their pay scales should necessarily be revised and enhanced even though the organisations in which they are working are making continuous losses and are deeply in red.

..........

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 business world it is known as 'Golden Handshake'. The main purpose of paying this amount is to bring about a compete 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 & HFC), the writ petition no longer survives and has become infructuous." (underlining added).

13. A reference to the aforesaid paras shows that similar

observations have been made on the economic viability of PSUs for grant of

monetary benefit as have been made in the case of IDPL (supra). Also, in

paragraph 34 of the judgment in A.K.Bindal (supra) quoted above, it is

specifically observed that as per "golden handshake" on taking VRS by an

employee, the jural relationship between the employer and the employee

ceases, and the employee leaves with all rights and there is no question of

his again agitating for any grant of his past rights with his erstwhile

employer including making any claim with regard to enhancement of pay-

scale for an earlier period. The Supreme Court has observed, and indeed

forcefully, that an employee if is allowed to raise a grievance regarding

enhancement of pay-scale even after opting and taking voluntary retirement