Madras High Court
The Management vs The Presiding Officer on 19 August, 2024
Author: P.T. Asha
Bench: P.T. Asha
W.P.Nos. 4673 and 7413 of 2015
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 16.07.2024
PRONOUNCED ON : 19.08.2024
CORAM
THE HONOURABLE Ms. JUSTICE P.T. ASHA
W.P.Nos. 4673 and 7413 of 2015
W.P.No.4673 of 2015
The Management,
Bharat Heavy Electrical Ltd,
Rep by its Senior Deputy General Manager (HRM)
Boiler Auxiliaries Plant,
Ranipet 632 406 ...Petitioner
-vs
1. The Presiding Officer,
Central Government Industrial Tribunal,
Cum Labour Court, Shastri Bhavan,
Chennaiu
2. BAP Employees Union,
Rep by its General Secretary,
1/59
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W.P.Nos. 4673 and 7413 of 2015
Regn.No.373/NATR
(Participative Union)
Bharat Heavy Electrical Limited,
Ranipet 632 406 ...Respondents
Prayer in W.P.No.4673 of 2015: Writ Petition is filed to issue a Writ
of Certiorari to call for the records connected with I.D.No.38 of 2013
on the file of the first respondent and quash the award dated
28.11.2014.
W.P.No.7413 of 2015
The General Manager,
M/s. Bharat Heavy Electrical Ltd,
Trichy 620 014 ...Petitioner
-v-
1. BHEL Mazdoor
Sangam / BMS,
Rep by its General Secretary,
C2/109, Kilasapuram,
BHEL Township,
Trichy 620 014.
2. BHEL Desia Thozhilalar Sangam/DTS,
Rep. by its General Secretary, A3/75,
Township, BHEL, Trichy-620014.
2/59
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3. BHEL Labour Liberation Front
Rep by its General Secretary, B2/429,
BHEL Town Ship Kilasapuram, Trichy-620014.
4. BHEL PriyarThozhilalar Nala UrimaiSangam,
Rep by its General Secretary, 166, RVS Nagar,
Vengur Trichy-620013.
5. BHEL Marumalarchi Employees Progressive Union/MLF,
Rep by its General Secretary,
B3/348F, BHEL Town Ship Kilasapuram,
Trichy-620014.
6. BHEL Democratic Trade Union/AITUC,
Rep. by its General Secretary, 334/4,
Ezhilnagar, Boiler Project(post), Trichy-624014.
7. Boiler Plant Workers Union,
Rep. by its General Secretary, 3/343, Thirunagar,
Pappakuruchy, Kattur Post, Trichy – 620019.
8. BHEL all Technicians Union
Rep. by its General Secretary, E2/372,
BHEL Township, Kailasapuram, Trichy-620014
9. Boiler Plant Anna Workers Union
Rep. by its General Secretary, 14A,
South Street, Kattaipar, Trichy-620013.
3/59
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W.P.Nos. 4673 and 7413 of 2015
10. Boiler Plant Dr. Ambedkar Employees Union,
Rep by its General Secretary, B3/268-F,BHEL Township,
Kailasapuram, Trichy-620012
11. BHEL Employees Progressive Union/LPF,
Rep by its General Secretary, B3/352,
BHEL Township, Kailasapuram, Trichy-620012
12. Boiler Plant Employees Union/INTUC,
Rep. by its General Secretary, 2&4,
Building BHEL, Trichy-620014.
13. BHEL workers Union/CITU,
Rep by its General Secretary, C2/678F,
Kailasapurum, Trichy.
14. The Presiding Officer Central Government
Industrial Tribunal Cum Labour Court,
Shastri Bhavan Chennai. ...Respondents
Prayer in W.P.No.7413 of 2015: Writ Petition is filed to issue a
Writ of Certiorari to call for the records connected with I.D.No.24 of
2012 and quash the award dated 28.11.2014 passed by the 14th
respondent, i.e, The Presiding Officer, Central Government Industrial
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Tribunal cum Labour Court, Chennai.
W.P.No.4673 of 2015
For Petitioner : Mr.Vijaya Narayanan, senior counsel
for Mr.John Jachariah
For Respondent-1: Tribunal
For respondent-2 : Mr.Balan Haridas
W.P.No.7413 of 2015
For Petitioner : Mr.Vijay Narayanan, Senior counsel
for Mr.Sanjay Mohan
for M/s.Ramasubramanian and Asso.
For Respondents 1 to 3
5 to 7, 9 to 13 : Mr.V.Ajay Khose
For Respondents 4 and 8: Served -No Appearance
For Respondent 14 : Tribunal
5/59
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COMMON ORDER
A common judgment is being pronounced in these writ petitions
since the issues involved in both the writ petitions are more or less the
same and the facts overlap.
2. These writ petitions have preferred against the common
award passed in I.D.Nos.24 of 2012 and I.D.No.38 of 2013.
3. I.D.No.24 of 2012 is in respect of the petitioner's factory at
Trichy and I.D.No.38 of 2013 is in respect of their factory at Ranipet.
4. W.P.No.7413 of 2015 is filed to quash the award in I.D.No.24
of 2012 and W.No.4673 of 2015 is filed to quash the award in
I.D.No.38 of 2013.
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FACTS OF THE CASE AND THE ORDER OF THE FIRST
RESPONDENT:
5. The facts giving rise to these Writ Petitions are herein below
set out:
W.P.No.7413 of 2015 as already stated is filed for issuance of
certiorari to quash the Award dated 28.11.2014 in I.D.No.24 of 2012
passed by the first respondent. The facts of the Ranipet Unit is also
identical except for the fact that the Failure Report had not been
despatched to the appropriate Government.
6. In the affidavit filed in support of the petition, the petitioner
would submit that it is a Central Public Sector Enterprise and having
manufacturing units at various locations throughout India including
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one at Trichy and two other Units at Ranipet. W.P.No.7413 of 201
relates to the factory at Trichy and W.P.No.4673 of 2015 relates to the
factories at Ranipet. The petitioner would submit that the petitioner
is bound to implement the guidelines issued by the Department of
Public Enterprises with reference to areas like revision of pay /
allowances, incentives and bonus, implementation of presidential
directives on reservation policy, recruitment policy, Deputation Rules
for employees from Central Government to PSUs' besides other
service related benefits. Since the petitioner is a multi-locational
Government Company, all the policy issues are formulated centrally at
the Corporate Office at New Delhi and thereafter forwarded to the
Units / Offices across the country for implementation.
7. It is the contention of the petitioner that their employees
including those in the workmen category are paid on a monthly basis
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irrespective of the number of days they work in a month. The weekly
holiday is granted in terms of the statutory provisions. As per Section
41 of the BHEL standing orders, every employee is entitled to holiday
with wages for a whole day of any week. In cases of unauthorized
absence /extra ordinary leave, salary is deducted on the basis of 30%
calculation on a month. The petitioner company would submit that
the Unions cannot dissent to this deduction as it pertains to the
encashment of Earned Leave (E.L.) and Half-Pay Leave (H.P.L.).
The gratuity is payable as per the statutory provisions.
8. It is the case of the petitioner that leave encashment rules of
the petitioner company provides the extent of leave encashment,
accumulation limit etc., however the method of calculation of leave
encashment is given in Establishment Accounts Manual. This manual
was silent about the number of days in a month that had to be taken
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into account for arriving at one day's salary for the purpose of leave
encashment. Thereafter, based on a Judgement of the Hon'ble
Supreme Court that a month has to be considered as 26 days for the
purpose of calculating gratuity, the establishment accounts manual
which provides for calculation of overtime wages erroneously
incorporated the same calculation for the purpose of leave
encashment, i.e., for the purpose of calculating leave encashment a
month was treated to be 26 days.
9. A proposal on the above lines was approved by the
management and on 30.01.2004, a circular to this effect had been
notified. The effective date of such calculation was to be 24.01.2004
and an interoffice memo dated 06.02.2004 was issued. However, on
03.06.2005 the Resident Audit Officer raised an objection to this
circular dated 30.01.2004 as the same had huge financial implications
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in the cash outgo and it was significant deviation from long
established practice.
10. The audit objection further stated that the Judgement of the
Hon'ble Supreme Court was with reference to payment of gratuity and
drawing its parallel to leave encashment was absolutely erroneous.
The leave encashment being a cash equivalent of a leave salary
comparison can only be made with salary since gratuity is payment
given in recognition of service rendered by an employee.
11.The audit objection was also to the effect that the practice of
30 days to constitute a month for the purpose of leave encashment was
being followed in a majority of the public sector enterprises and
Government organizations. They therefore held the circular dated
30.01.2004 to be bad as it had resulted in excess expenditure of 13.14
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crores.
12.In the light of the above, the petitioner was advised once
again to amend the rules for calculating encashment of leave on the
basis of 30 days a month. Since the change of computation formula
would amount to change in service condition it was felt that notice
under Section 9 A of the Industrial Dispute Act, herein after called the
Act, had to be given by way of abundant caution.
13.On 07.04.2007, the petitioner had issued a notice under
Section 9 A of the Act, informing the workmen that the computation
of leave encashment would be on a 30 day basis. Immediately, the
respondents had raised a dispute on 17.04.2007 before the Labour
Officer, Vellore regarding the above as per the provisions of the Act to
which the petitioner had also filed their objections.
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14.The petitioner would submit that meanwhile the Department
of Public Enterprises, Ministry of Heavy Industries and Public
Enterprises had once again issued an office memo dated 11.12.2008
directing all Central Public Sector Enterprises including BHEL to
follow 30 days basis to compute leave encashment. Thereafter, since
the parties were unable to reach the settlement, the Assistant
Commissioner of Labour sent a failure report to the Government on
31.10.2007 in respect of the Trichy Unit and as regards the Ranipet
unit the failure report was recorded on 17.03.2009.
15. In view of this direction from the department of public
enterprises the corporate office of the petitioner company has issued a
circular dated 30.12.2009 bearing Ref.No.037/PPX/2009 informing
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their employees that the 30 day rule would be applicable to recruits
who have joined the Rolls of petitioner company on or after
01.01.2010 and in respect of employees appointed earlier, leave
would be calculated on the basis of 26 days as per the earlier circular
until further orders.
16.In the mean time the appropriate Government became the
Government of India by virtue of an amendment to the Act. Therefore,
with effect from that date, the Government of Tamil Nadu ceased to
be the appropriate authority. By virtue of this amendment, despite
receipt of the failure report, no reference under Section 10 of the Act
was made by the Government of the Tamil Nadu. In the case of
Trichy Unit the failure report had been dispatched to the appropriate
authority which then was the Government of Tamil Nadu whereas in
the case of the Ranipet unit the failure report was only recorded and
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there is nothing to show that the report of the Conciliation officer had
been forwarded to the appropriate authority. However, on 01.09.2011,
the petitioner had issued a circular informing the workman that the 30
days period would be extended to all the employees.
17. By reason of this change in the service conditions brought
about on 01.01.2011, the Units both at Trichy and Ranipet had raised
a dispute against the circular before the Assistant Labour
Commissioner (Central) vide their letter dated 04.11.2011 which was
followed by another letter dated 22.12.2011.
18. The respondent Unions had also filed Writ Petition
No.30157 of 2011 before this Court challenging the method of
calculating the leave encashment on the basis of 30 days instead of 26
days. This Court was pleased to pass the interim orders. The
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petitioner was ordered to deposit the differential amount of leave
encashment of 30 days a month and 26 days a month into a fixed
deposit in a nationalised bank in the name of the employee. This was
modified by order dated 23.12.2012 made in MP.No.1 of 2015 in
W.P.No.4673 of 2015 in and by which the differential amount in
respect of the employees was directed to be placed in a fixed deposit
in the name of the petitioner. The Government had referred the
following issue for adjudication to the 1st respondent.
“Whether the action of BHEL changing 26 days
formula into 30days for computation of EL
encashment in violation of Section 9A is legal and
justified? If not, to what relief the employees are
entitled?” (Trichy Unit).
Whether the action of the management in respect of
changing service condition without issuing notice under
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Section 9A of the Act is justified or not? If not to what
relief the workmen (Ranipet Union) are entitled to?
19. Before the Tribunal, a joint trial was conducted in respect of
both I.D.No.24 of 2012 and I.D.No.38 of 2013. The respondent did
not examine any witnesses and by way of consent, Exs.W1 to W28
were marked. On the side of the petitioner in respect of their Ranipet
Union, one Selvam was examined as M.W1, Melvin Bennet Roy was
examined as M.W2 and V.K.Natarajan was examined as M.W3 and
Exs.M1 to M38 were marked on the side of the management. After
hearing the parties, the Tribunal had answered the reference in favour
of the respondent/workman. Aggrieved by the same, the Management
is before this Court.
SUBMISSIONS:
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20.The arguments advanced by the learned counsel appearing on
behalf of the learned counsel for the petitioner which has been set out
in the form of written arguments would contend that it is only the
Units at Trichy and Ranipet where the petitioner's have been unable to
implement the circular dated 17.04.2007 with respect to the
calculation of leave encashment from 26 days to 30 days as set out in
Section 9A. The Bangalore Unit had challenged the same in
I.D.No.232 of 2009 which has gone in favour of the management. The
Unions at Haridwar and Hyderabad had also challenged the change of
the calculation before the High Court at Nainital and the High Court at
Hyderabad. The writ petitions filed by them were dismissed. The
calculation of earned leave divided by 30 days has been implemented
in the rest of India. It is their contention that this leads to a disparity
between the similarly placed employees.
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21.He would argue that the finding of the Tribunal that Section
9A notice had not been issued is perse erroneous since the notice had
already been issued on 17.04.2007 which has been marked as W3 and
M.18. Therefore, once a notice has been issued, there cannot be
another notice with reference to the very same proceedings. The
notice dated 17.04.2007 has been kept in limbo and it is neither
nullified, withdrawn nor cancelled. The circular dated 30.12.2009 had
been issued only on the basis of the earlier Section 9A notice dated
17.04.2007.
22.The learned senior counsel would submit that the
Conciliation Officer had submitted a failure report on 31.10.2007 and
had forwarded the same to the Secretary to the Government through
the Labour Commissioner, Chennai in respect of the Trichy Unit. The
learned senior counsel fairly admitted that the failure report insofar as
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the Ranipet Unit was not forwarded to the Government. He would
further submit that the Tribunal has only relied upon the documents
filed in the case of the Ranipet and has not considered the fact that in
the case of the Trichy Unit, the failure report has reached the
Government and therefore, it cannot be treated in the same manner as
the Renipet Unit.
23.The learned senior counsel would further submit that as per
Rule 12(4) of the Industrial Disputes Act, the failure report has sent to
the Secretary to Government through the proper channel, i.e., Labour
Commissioner for ensuring compliance of the statutory provisions by
the Government. He would submit that once the failure report has
been recorded the petitioner company was under the genuine belief
that the Conciliation officer has complied with the provisions of
Section 12 (4) of the Act.
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24. The learned senior counsel would further submit that the
circular dated 30.12.2009 (Ex.M23) had been partially implemented
i.e changes were implemented for those joining after 01.01.2010 while
keeping the changes pending in respect of those who had been
recruited prior to 01.01.2010. Thereafter, on 01.09.2011, under
Ex.M24, the 30 day formula was implemented in respect of all the
employees. This is only pursuant to the earlier notice dated
17.04.2007-Ex.W3-M18. Therefore, the finding of the Tribunal that a
fresh notice was required is totally erroneous.
25.The learned senior counsel would further submit that the
Tribunal by coming to the conclusion that there has been a violation of
the provisions of Section 33 (2) of the Act has contradicted the above
finding by stating that notice ought to have been given under the
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amended law of 2010. By taking such a contradictory stand the
Tribunal has admitted that the Conciliation initiated earlier had come
to an end by reason of the amendment and therefore there was no
Conciliation. He would further submit that once the 1st respondent
had come to the conclusion that the notice was issued under the said
rules the findings of the 1st respondent that Conciliation would come
to an end only on the receipt of the failure report by the government is
erroneous.
26.In support of this contentions he has chosen to rely upon the
Judgement reported in 1985 (1) LLJ 340 – EID Parry Staffs
Association and others Vs. DCL, which is the Judgement of the
Andhra Pradesh High Court. The petitioner therein were the
employees of Parry and Company Limited which is a subsidiary of
E.I.D parry (I) Ltd. The challenge was to the seniority list prepared
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for effective retrenchment. This was challenged by the union before
the Conciliation officer and the same was admitted for Conciliation.
The petitioners had also filed a Writ Petition on 12.09.1983 and the
retrenchment was given effect from 14.09.1983.
27.The learned Judge has made this observation as he was of the
opinion that once the failure report has been despatched by the
Conciliation officer to the Government it would be fairly reasonable to
presume that the Government had received the report. The same
would apply in the instant case with reference to the case of Trichy.
That apart he would submit that the management cannot be made to
await indefinitely to implement the change.
28.In the Judgement reported in 1989 (1) MLJ 425 – Gordon
Woodroffe Employees Union Vs. State of Tamil Nadu, the learned
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Judge has observed that once the management complies with the
provisions of the Act it cannot be said that the management owes
public duty or statutory duty to await the reference which could be
made at the instance of the workers. Therefore, it is the contention
that there was no necessity for the petitioner to issue the second notice
as no reference had been made by the appropriate authority.
29.It is also the contention that the respondent union cannot as a
matter of right claim calculation of wages encashment of leave on 26
days a month since the position prior to 30.01.2004 was that
encashment was calculated on 30 days a month and the Management
was only reverting to the original petition. He would therefore pray
that the Writ Petitions to be allowed.
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30.The sum and substance of the argument of Mr.Balan Haridas,
learned counsel appearing for the second respondent in W.P.No.4673
of 2015 is that bilateration is the fulcrum of the industrial movement
and this is evident from the fact that Section 9A notice has been
incorporated into the Act. It is the contention of the respondent that
on 30.01.2004 the workmen were given the benefit of a month being
calculated as 26 days which benefit they have enjoyed for nearly 3
years. Thereafter, the change was sought to be made by Section 9A
notice on 17.04.2007. Pending these proceedings and after the failure
report the petitioner had sought to implement the encashment of leave
by calculating it as a 30 days period and not a period of 26 days.
31.After the failure report the petitioner by the circular dated
30.12.2009 had informed the employees that the change in formula
computation and leave encashment would be applicable to new
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recruits who have joined the petitioner company on or after
01.01.2010 and with reference to employees who had joined prior to
01.01.2010 the same was kept in abeyance.
32.In the interregnum the appropriate authority had been
changed from the State Government to the Central Government by an
amendment in the Act and on 01.09.2011 the circular effecting the
change in computation and leave encashment has been made
applicable to all employees. It is the contention of the learned counsel
that in the circular dated 30.12.2009 the petitioner had informed that
the change in formula would be applicable only to new recruits and
not to old recruits and this service condition continued till 01.09.2011
in so far as the method of calculating the leave encashment salary.
33.The learned counsel would further submit that from 2007 the
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service condition with reference to the calculation of the leave
encashment salary was 26 days and this benefit has been made
available to all the workmen till 30.12.2009. Thereafter they came to
understand that the change in the number of days from 26 to 30 days
would become effective only with reference to new recruits and nearly
2 years thereafter i.e., 4 years after the period of leave encashment had
been made effective as 26 days, the petitioner had brought about a
change in the service condition by introducing 30 days leave
encashment system to all employees. Therefore, there was a necessity
for compliance of the provisions of Section 33 (1) of the Act as the
Conciliation proceedings was still on.
34.The learned counsel would submit that the appropriate
authority had not received the failure report and therefore under
Section 20 (2) (b) of the Act the Conciliation had not concluded. It is
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their contention that the circular dated 01.09.2011 is a fresh cause of
action. The learned counsel would submit that this circular is a
change in service condition which requires the issue of notice under
Section 9 A Act. Since by efflux of time the payment of wage under
the head of leave encashment had become a condition of service, even
if the State Government continued to be the same a notice under
Section 9A was mandatory.
35.Mr.V.Ajay Khose, learned counsel appearing for the
respondents 5 to 7 and 9 to 13 in W.P.No.7413 of 2015 would add to
the above arguments by stating that there is no question of
presumption since the provisions of Section 20 (2) (b) is mandatory.
He would submit that even if the appropriate authority continued to be
the State Government the failure report in the case of Trichy unit had
not been received by the Government before the change had been
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introduced as the failure report has been forwarded only on
25.05.2012, whereas the change has been effected on 01.09.2011.
36.It is also his contention that before implementing the change
no steps have been taken by the petitioner company to verify as to
whether the failure report had been received by the appropriate
authority. Therefore, taking note of the fact that the failure report had
been forwarded only after 25.05.2012 (though this document has not
been marked at the Trial before the 1st respondent the same is a
Government document which is not seriously objected to by the
petitioner, this Court is referring to the same), it is clear that the
Conciliation proceedings had not concluded as contemplated by
Section 20 (1) (b) of the Act.
37.He would rely upon the followig Judgements:
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(i)1999 (6) SCC 275 – Lokmat Newspapers Pvt. Ltd., Vs.
Shankarprasad with particular reference to paragraph No.37.
(ii)2000 (4) SCC 245 – Indian Overseas Bank Vs. I.O.B Staff
Canteen Workers' Union and another, with particular reference to
paragraph No.17.
(iii)2018 (6) SCC 195 – Paradeep Phosphates Limited Vs. State
of Orissa and others, with particular reference to paragraph No.21.
(iv)2022 (3) SCC 803 – Indian Overseas Bank and others Vs.
Om Prakash Lal Srivastava, with particular reference to paragraph
No.83.
DISCUSSION:
38.Heard the extensive arguments of both sides. Before
discussing the issue on hand it would be useful to extract the
following provisions of the Act, which are relevant for the discussion.
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Section 9A. Notice of change.
- No employer, who proposes to effect any change in the
conditions of service applicable to any workman in
respect of any matter specified in the Fourth Schedule,
shall effect such change,-
(a)without giving to the workmen likely to be affected by
such change a notice in the prescribed manner of the
nature of the change proposed to be effected; or
(b)within twenty-one days of giving such notice:Provided
that no notice shall be required for effecting any such
change-
(a)where the change is effected in pursuance of any
[settlement or award] [ Substituted by Act 46 of 1982,
Section 6, for certain words (w.e.f. 21.8.1984).]; or
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(b)where the workmen likely to be affected by the change
are persons to whom the Fundamental and
Supplementary Rules, Civil Services (Classification,
Control and Appeal) Rules, Civil Services (Temporary
Service) Rules, Revised Leave Rules, Civil Service
Regulations, Civilians in Defence Services
(Classification, Control and Appeal) Rules or the Indian
Railway Establishment Code or any other rules or
regulations that may be notified in this behalf by the
appropriate Government in the Official Gazette, apply.
Section 12. Duties of conciliation officers.—
(1) Where any industrial dispute exists or is
apprehended, the conciliation officer may, or where the
dispute relates to a public utility service and a notice
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under section 22 has been given, shall hold conciliation
proceedings in the prescribed manner. (2) The
conciliation officer shall, for the purpose of bringing
about a settlement of the dispute, without delay,
investigate the dispute and all matters affecting the merits
and the right settlement thereof and may do all such
things as he thinks fit for the purpose of inducing the
parties to come to a fair and amicable settlement of the
dispute. (3) If a settlement of the dispute or of any of the
matters in dispute is arrived at in the course of the
conciliation proceedings the conciliation officer shall
send a report thereof to the appropriate Government 2
[or an officer authorised in this behalf by the appropriate
Government] together with a memorandum of the
settlement signed by the parties to the dispute. (4) If no
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such settlement is arrived at, the conciliation officer
shall, as soon as practicable after the close of the
investigation, send to the appropriate Government a full
report setting forth the steps taken by him for
ascertaining the facts and circumstances relating to the
dispute and for bringing about a settlement thereof,
together with a full statement of such facts and
circumstances, and the reasons on account of which, in
his opinion, a settlement could not be arrived at. (5) If, on
a consideration of the report referred to in sub-section
(4), the appropriate Government is satisfied that there is
a case for reference to a Board, 3 [Labour Court,
Tribunal or National Tribunal], it may make such
reference. Where the appropriate Government does not
make such a reference it shall record and communicate to
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the parties concerned its reasons therefor. (6) A report
under this section shall be submitted within fourteen days
of the commencement of the conciliation proceedings or
within such shorter period as may be fixed by the
appropriate Government: 1 [Provided that, 2 [subject to
the approval of the conciliation officer,] the time for the
submission of the report may be extended by such period
as may be agreed upon in writing by all the parties to the
dispute.]
Section 20. Commencement and conclusion of
proceedings.—(1) A conciliation proceeding shall be
deemed to have commenced on the date on which a notice
of strike or lock-out under section 22 is received by the
conciliation officer or on the date of the order referring
the dispute to a Board, as the case may be.
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(2) A conciliation proceeding shall be deemed to
have concluded—
(a) where a settlement is arrived at, when a
memorandum of the settlement is signed by the parties to
the dispute;
(b) where no settlement is arrived at, when the
report of the conciliation officer is received by the
appropriate Government or when the report of the Board
is published under section 17, as the case may be; or
(c) when a reference is made to a Court, Labour
Court, Tribunal or National Tribunal under section 10
during the pendency of conciliation proceedings.
(3) Proceedings before an arbitrator under section
10A or before a Labour Court, Tribunal or National
Tribunal shall be deemed to have commenced on the date
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or the reference of the dispute for arbitration or
adjudication, as the case may be and such proceedings
shall be deemed to have concluded on the date on which
the award becomes enforceable under section 17A.
Section 33. Conditions of service, etc., to remain
unchanged under certain circumstances during pendency
of proceedings.—(1) During the pendency of any
conciliation proceeding before a conciliation officer or a
Board or of any proceeding before an arbitrator or a
Labour Court or Tribunal or National Tribunal in respect
of an industrial dispute, no employer shall,—
(a) in regard to any matter connected with the
dispute, alter, to the prejudice of the workmen concerned
in such dispute, the conditions of service applicable to
them immediately before the commencement of such
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proceeding; or
(b) for any misconduct connected with the dispute,
discharge or punish, whether by dismissal or otherwise,
any workmen concerned in such dispute, save with the
express permission in writing of the authority before
which the proceeding is pending.
(2) During the pendency of any such proceeding in
respect of an industrial dispute, the employer may, in
accordance with the standing orders applicable to a
workman concerned in such dispute or, where there are
no such standing orders, in accordance with the terms of
the contract, whether express or implied, between him and
the workman,—
(a) alter, in regard to any matter not connected with
the dispute, the conditions of service applicable to that
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workman immediately before the commencement of such
proceeding; or
(b) for any misconduct not connected with the
dispute, or discharge or punish, whether by dismissal or
otherwise, that workman: Provided that no such workman
shall be discharged or dismissed, unless he has been paid
wages for one month and an application has been made
by the employer to the authority before which the
proceeding is pending for approval of the action taken by
the employer.
(3) Notwithstanding anything contained in sub-
section (2), no employer shall, during the pendency of any
such proceeding in respect of an industrial dispute, take
any action against any protected workman concerned in
such dispute—
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(a) by altering, to the prejudice of such protected
workman, the conditions of service applicable to him
immediately before the commencement of such
proceedings; or (b) by discharging or punishing,
whether by dismissal or otherwise, such protected
workman, save with the express permission in writing of
the authority before which the proceeding is pending.
4...........
5..........
39.The following are the dates and events which are relevant for
the discussion:
Date Description
30.01.2004 Inter office memorandum issued by the Corporate
Office, approving calculation of leave encashment at 26
days as a month with effect from 24-1-2004.
03.06.2005 Objections raised by the Resident Audit Officer to the
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Date Description
inter office memorandum dated 30-01-2004 as follows:
• The Circular dated 30.01.2004 had huge financial
impact in cash outgo and was a significant deviation
from the long running practice. Implementation of
the revised methodology should have been approved
by the Board of Directors and not merely by the
Committee of Directors.
• One of the reasons given for implementation of the
Circular dated 30.01.2004 was a judgment of the
Supreme Court with regard to the Payment of
Gratuity Act. Drawing parallels with leave
encashment was erroneous. Leave encashment is
actually cash equivalent of leave salary and logical
comparison can only be made with salary. All
employees get salary on a monthly basis irrespective
of the number of days they worked in a month and
not 26 days. Gratuity is a payment given in
recognition of the services rendered by an employee
which is the reason for taking into account the actual
number of days which an employee worked in a
month.
• The paractice of treating 30 days to constitute a
month for the purpose of leave encashment is
followed by a manority of public sector enterpises,
government and other organizations.
• The decision of BHEL to treat 26 days to constitute a
month for leave encashment is therefore irregular
and has resulted in excess expenditure of Rs.13.14
crores.
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Date Description
07.04.2007 BHEL Corporate Office Unit advised all the units
including the Petitioner to issue Sec 9A Notice and then
effect the change.
17.04.2007 Petitioner issued notice under section 9A. At relevant
time the State Government was the appropriate
authority for the Petitioner Company
18.10.2007 Petitioner submitted reply to the objections of the Union
stating, that prior to 2004 the leave encashment was
calculated on the basis of 30 days and that there had
been an audit objection and hence the change, before
the Labour officer, Vellore.
11.12.2008 Department of Public Enterprises issued an office
memorandum directing all Public Sector Units including
the Petitioner to compute the leave encashment on the
basis of 30 days and has stated as follows:
Many CPSEs are following 30 days month for the
purpose of leave encashment. The adoptions of 26 days
month calculation of leave encashment by some CPSEs
have attracted avoidable audit paras.
In order to bring about uniformity on the above issues
across the CPSEs, it has been decided after careful
consideration that CPSEs should adopt 30 days' month
for the purpose of calculating leave encashment."
Therefore, it directed the Petitioner Unit that:
“All the administrative Ministries/ Departments
concerned with the CPSEs are requested to issue
Suitable directions to the CPSEs under their
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Date Description
administrative control in this regard."
18.12.2008 Letter sent by the Petitioner to the Labour Officer,
Vellore, to reopen the case for further hearing.
17.03.2009 Failure of conciliation was recorded by the Labour
Officer, Vellore.
30.12.2009 Petitioner informed the employees of the change in
formula of the computation of encashment of earned
leave/half-a-day leave and that it would be applicable
for new recruits from 01-01-2010 and change for
employees who joined prior to 01-01-2010, the circular
was kept in abeyance.
15.09.2010 By an amendment to the ID Act, the Central
Government became the appropriate Authority for the
Petitioner
01.09.2011 The Corporate issued a circular bringing it effect the
change in computation of the leave encashment policy.
17.09.2011 Dispute raised before the Assistant Labour
Commissioner (Central 1) by the respondent union.
40. The entire dispute between the petitioner management and
the respondent workmen revolves around the question as to whether a
fresh notice under Section 9A was required in order to implement the
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change in the number of days in a month for calculating the leave
encashment for 26 days as implement by IOM dated 30.01.2004 to the
30 days period originally notified by way of Section 9A notice dated
17.04.2007 and ultimately implemented by a circular dated
01.09.2011. A reading of Section 9A makes it very clear that an
employer cannot effect any change in the service condition of any
workmen without giving the workmen, who are likely to be effected
by change, a 21 days notice. This Court has to therefore analyse if the
subsequent circular on 01.09.2011 would amount to a change in
service. The above narration of the dates and events would show that
on and from 24.01.2004 the workmen had been receiving leave
encashment salary calculated by treating a month to be 26 days. This
service condition continued right upto 17.04.2007 i.e., for over 3½
years until the petitioner had issued the Sec 9A notice informing the
workmen about the following changes:
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“The computation of a day’s wage for the purpose
of leave encashment was aiculated by dividing the
monthly wage by 30. However, vide Circular dated
.01.2004 an amendment to the Establishment Accounts
Manual was carried out providing that while computing
a day’s wage for leave encashment amount, the rate of
encashment per day of leave shall be first arrived at and
for this nurpose the monthly rate of Basic Pay including
special pay, personal pay, Welding Allowance, Non-
practicing Allowance, if any, and Dearness Allowance
shall be added and the sum so arrived at, would be
divided by 26. It was provided that the resultant figure
shall be the rate of encashment per day of leave.
Amendment to this effect was carried out on 30.01.2004
fer the purpose of encashment of Earned Leave.
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Similar amendment was carried out in para 7.14 of
the Establishment Accounts Manual on 21.08.2006, to
provide same computation formula for the purpose of
encashment of HPL.
The matter has been reconsidered. It is found that
aforesaid computation formula is not in consonance with
the DPE’s instructions as also in consonance with
practices in other Public Sector Undertakings.
It is, therefore, proposed to revert back to the
earlier computation formula for calculating a day’s wage
by dividing the monthly wage by 30° days instead of 26
days.
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On expiry of the notice under Section 9-A the
change will be brought into effect.
41. This notice was immediately challenged by the union by
raising a dispute and the matter was pending before the Conciliation
officer. The Conciliation officer in respect of both the units had given
their failure report. As regards the Trichy unit the Conciliation officer
has forwarded the failure report to the Government. However, there is
nothing to show that this notice has been received by the Government
and from the document that has been filed by the respondent union in
the course of the arguments it is seen that the same had been
forwarded to the Government only on 25.05.2012. In the case of
Ranipet unit there is no evidence to show that the notice has even
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been forwarded to the appropriate authority.
42. Therefore, in the light of the provisions of Section 20 (2) (b)
the Conciliation proceeding has not concluded as Section 20 (2) (b)
makes it clear that the Conciliation proceedings will be deemed to
have concluded only when the report of the Conciliation officer is
received by the appropriate government. In the meanwhile there has
been an amendment to the act in and by which the appropriate
government has become the central government.
43. Further, the respondents would also show that on
30.12.2009 the petitioners had taken a conscious decision that the
change in the formula of computation of leave encashment salary
would be calculated on the 30 days period for new recruits who have
been employed from 01.01.2010. In the case of employees who have
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joined prior to 01.01.2010 the computation would continue to be as
intimated by the Inter Office Memorandum dated 06.02.2004 till
further orders. Therefore, after the failure of the Conciliation
proceedings the workmen of these units who had joined prior to
01.01.2010 were informed that their service condition in so far as it
related to the encashment of leave would be of 26 days formula.
Thereafter, all of a sudden on 01.09.2011, nearly 7 years and 7 months
after the initially implementation of the 26 days period ie.,
24.01.2004, the following circular has been issued:
“1.Presently, 26 days month is taken from
computation of encashment amount of leave as per the
Establishment Accounts Manual (Edition III, Chapter
VII). However, vide corporate HR circular
No.037/PPX/2009, the computation of encashment
amount of Leave was changed from 26 days month to 30
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days month for new recruits joining BHEL on or after
01.01.2010.
2.In view of specific instructions issued by DPE on
the subject which states as “In order to bring about
uniformity on the issue, it has been decided after careful
consideration that CPSEs should adopt 30 days month
for the purpose of calculating leave encashment”, the
formular for computation of encashment of leave in
BHEL has been reviewed.
3.Accordingly, it has been decided to adopt 30
days month for the purpose of calculation of leave
encashment for all employees who joined BHEL before
01.01.2010.
44. A mere reading of this circular would clearly indicate that
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the decision has been arrived at pursuant to a review undertaken by
the DPE. The circular clearly indicates that on a review it has been
decided to bring about the change in the service condition. The
circular does not state that the notice dated 17.04.2007 was being
given effect to. Therefore, it was mandatory that the petitioner issues a
notice under Section 9 A informing the workmen of the decision taken
by the DPE to review service condition. Therefore, this circular is
clearly a change in the service condition of the workman. That apart,
the circular seeks to change service condition that had been in the
practice for over 7 years. The management had made it service
condition and therefore the same could not be withdrawn unilaterally.
This view finds support in the Judgement of the Hon'ble Supreme
Court reported in 1999 (6) SCC 275 – Lokmat Newspapers Pvt. Ltd.,
Vs. Shankar Prasad, the Judges had observed as follows:
“In view of the aforesaid settled legal position,
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there is no escape from the conclusion that the impugned
notice dated 25th March, 1982 under Section 9-A which
was issued long after the actual installation of the photo
composing machine had fallen foul on the touchstone
of Section 9-A read with Schedule IV item no.10. Such a
notice in order to become valid and legal must have
preceded introduction of such a machine and could not
have followed the actual installation and effective
commission of such a machine. The decision rendered by
the Division Bench in this connection is found to be
perfectly justified both on facts and in law. It must,
therefore, be held that the impugned termination or
discharge of the respondent was violative of the
provisions of Section 9-A of the I.D. Act and he was
discharged from service without the appellant's following
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the mandatory requirements of Section 9-A of the I.D.
Act. Effect of non-compliance of Section 9-A of the I.D.
Act renders the change in conditions of service void ab
initio”
45.In another Judgement of the Hon'ble Supreme Court reported
in 2018 (6) SCC 195 – Paradeep Phosphates Limited Vs. State of
Orissa and others, the learned Judges were dealing with an issue
relating to the enhancement of retirement age where an earlier
decision was taken to enhance the retirement age of Central Public
Sector employees from 58 years to 60 years which was later decided to
roll back. Aggrieved by the same the trade union had raised a dispute
stating that the rolling back of retirement age from 60 years to 58
years has been made without issuing Section 9 A notice. The learned
Judges after considering the facts had observed as follows:
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20.Undoubtedly, it is a cardinal principle of law
that beneficial laws should be construed liberally. The
Industrial Dispute Act, 1947 is one of the welfare
legislations which intends to provide and protect the
benefits of the employees. Hence, it shall be interpreted
in a liberal and broad manner so that maximum benefits
could reach to the employees. Any attempt to do strict
interpretation would undermine the intention of the
legislature. In a catena of cases, this Court has held that
the welfare legislation shall be interpreted in a liberal
way.
21.The grievance of the appellant-Company before
this Court is that the increase in the superannuation age
of the employees was temporary in nature in order to
combat the losses and in no circumstances, it can be said
that withdrawal of it amounts to withdrawal of customary
concession or privilege or change in usage. Eighth clause
of the Fourth Schedule says “withdrawal of any
customary concession or privilege or change in usage”.
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The whole dispute revolves around the interpretation of
the terms customary concession, privilege or change in
usage.
22.In the instant case, we are mainly concerned
with the term ‘privilege’. The word “privilege” as such is
not defined in the Act. In the absence of statutory
definition, we have to take recourse of the dictionary or
general meaning of the term “privilege”. The Dictionary
meaning of the word privilege means a “special right,
advantage or immunity granted or available only to a
particular person or ground”. In other words, a
particular and peculiar benefit or advantage enjoyed by a
person, company, or class, beyond the common
advantages of others.
23.It is admitted position that the Board of
Directors took the decision of enhancement of age of
retirement and it came into force with retrospective effect
from 27.05.1998 as mentioned in the order dated
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19.11.1998. Though, this decision implemented without
the amendment in the Standing Orders and Rules, yet
impliedly it got the force as a service condition since it
directly relates with the service condition of the
employees. Age of superannuation is an integral part of
the service condition of the employee. Also, enhancement
of superannuation age would impliedly amount to a
privilege since it was provided particularly for the
central public sector employees.
27.To sum up, we are of the view that at the very
moment when the order of enhancement of
superannuation of the employees came into force though
temporary in nature, it would amount to privilege to
employees since it is a special right granted to them.
Hence, any unilateral withdrawal of such privilege
amounts to contravention of Section 9A of the Act and
such act of the employer is bad in the eyes of law.
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28.In view of above detailed discussion, we are of the
considered view that there is no error in the impugned
judgment of the High Court, hence, we are not inclined to
interfere in it. Accordingly, these appeals are hereby
dismissed leaving parties to bear their own cost.
46. Therefore, in the light of the above decisions, the order of
the first respondent is correct and cannot be called into question.
Accordingly, the Writ Petitions stand dismissed. Considering the fact
that the Writ Petitions have been dismissed, the petitioner
Management is directed to disburse the differential amount that is
kept in deposit by them within a period of four weeks from the date of
receipt of a copy of this order. No costs.
Index : Yes/No 19.08.2024
Speaking order/non-speaking order
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Neutral Citation: Yes/No
kan
P.T.ASHA, J.,
kan
W.P.Nos. 4673 and 7413 of 2015
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19.08.2024
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