JUDGMENT 1. This decision will dispose of six(6) appeals raising the same basic issue between the same parties the management and the workmen of Nagaland Pulp and Paper Co. Ltd. ('NPPC') the workmen being before us in a representative capacity. 2. The basic issue between the parties is whether the workmen are entitled to revised pay scales with effect from 1st January, 1992. In our opinion, the question must be answered in the negative. 3. WA No. 1(K)/99 is directed against the judgment and order dated 28th July, 1997 passed by a learned Single Judge in Civil Rule No. 163(K)/96. The remaining five (5) appeals are directed against the judgment and order dated 6th November, 2006 passed by a learned Single Judge in Civil Rule No. 74(K)/99 and 4 other Petitions. In all these cases, NPPC was directed to revise the pay scales of its workmen with effect from 1st January, 1992 while in the last five (5) cases a further pay enhancement was directed to be given from with effect from 1st January, 1997 in terms of the rehabilitation package to be finalized by the Board of Industrial and Financial Reconstruction (BIFR'). 4. The Hindustan Paper Corporation (HPC') a Government of India enterprise under the Department of Public Enterprises, Ministry of Heavy Industry had two units called the Nagaon Paper Mill and the Cachar Paper Mill. It also had three subsidiaries called the Hindustan News Print Ltd., Mundya National Paper Mills and the Nagaland Pulp and Paper Co. Ltd, (NPPC'). We are only concerned with the affairs of NPPC, which was incorporated sometime in September 1971 as a public limited company with the Government of Nagaland and HPC being the shareholders. 5. NPPC started commercial production sometime in July 1982 but it soon began incurring operating losses. Eventually in April 1992 a reference was made to the Bureau of Industrial and Financial Reconstruction (BIFR') under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 ('SICA'). It was declared a sick company and the Industrial Development Bank of India ('IDBI') was appointed as the Operating Agency for preparing a rehabilitation scheme for its revival. NPPC stopped commercial production in October 1992. The admitted position is that since then, idle wages are being paid to the workmen of NPPC till date. 6. In the meanwhile, from 1982 onwards, wage settlement agreements were entered into between NPPC and its workmen. NPPC stopped commercial production in October 1992. The admitted position is that since then, idle wages are being paid to the workmen of NPPC till date. 6. In the meanwhile, from 1982 onwards, wage settlement agreements were entered into between NPPC and its workmen. The last such Memorandum of Settlement was entered into on 4th December, 1989 for the period 1st January, 1987 till 31st December, 1991. 7. After 1992, HPC (including Nagaon Paper Mill, the Cachar Paper Mill and the Hindustan News Print Ltd.) and its workmen entered into wage settlement agreements between October 1995 and 31st January, 1996 but no such settlement was entered into between NPPC and its workmen. Therein lies the rub. According to the workmen of NPPC they have not had a revision of pay scales since 1992 while their counterparts in HPC and Hindustan News Print Ltd. have had the advantage of upwardly revised pay scales. It is this that prompted the workmen of NPPC to approach the writ Court for a direction that they too had a right to a wage revision like their counterparts. As mentioned above, their plea was accepted by two different learned Single Judge Benches and hence, these appeals at the instance of the management of NPPC. Proceedings before the BIFR 8. At this stage, it is necessary to broadly notice the details of the proceedings that have taken place before the BIFR since 1992. 9. As mentioned above, NPPC was declared a sick company, but the rehabilitation package yielded results. Consequently, by an order dated 13th November, 1995 NPPC was discharged by the BIFR from the purview of SICA as a sick company. However, it continued to remain under the purview of the BIFR under Section 23 of the SICA. 10. Unfortunately, the positive developments did not last long and a reference was again made to the BIFR in respect of NPPC on or about 22nd May, 1998 and by an order dated 31st August, 1998 it was again declared sick. A few years later, on 4th March, 2002 orders were passed by the BIFR for the winding up of NPPC. 11. On or about 20th April, 2006 the Appellate Authority for Financial and Industrial Reconstruction (AAFIR') set aside the winding up order issued by the BIFR. A few years later, on 4th March, 2002 orders were passed by the BIFR for the winding up of NPPC. 11. On or about 20th April, 2006 the Appellate Authority for Financial and Industrial Reconstruction (AAFIR') set aside the winding up order issued by the BIFR. This led to the formulation of yet another revival package, which was ultimately sanctioned by the BIFR on 29th May, 2007 (with a corrigendum issued on 15th October 2007). 12. On 22nd May, 2008 the workers union of NPPC moved an application before the BIFR in view of certain developments that had taken place after the sanctioning of the rehabilitation scheme. After hearing all the concerned parties, the BIFR passed an order on the same date. The relevant extract of that order reads as follows: The payment of arrears of Salary/wage of the employees/workers w.r.t. 1992 and 1997 pay revisions would be governed by the decision of the Hon'ble High Court/other superior legal forum(s). 13. The net result of the proceedings before the BIFR and its orders is that though a rehabilitation scheme is in place, the issue of pay revision from 1992 onwards was not decided. It is under these circumstances that even though all other issues appear to have been settled, the matter is still alive before us, though on a limited issue. Contentions and conclusions 14. Learned Counsel for NPPC raised two contentions before us. Firstly, the workmen had no right to an upwardly revised pay scale. Secondly, even if the workmen had a right to an upwardly revised pay scale, NPPC did not have the financial wherewithal or resources to meet the liability. Both these submissions were refuted by learned Counsel for the workmen. On our part, we agree with the submissions of learned Counsel for NPPC. 15. The first contention: The philosophy and principles underlying wage revision in respect of public sector enterprises (such as NPPC) are to be found in two Office Memoranda dated 12th April, 1993 and 19th July, 1995. 16. The Office Memorandum dated 12th April, 1993 provides, inter alia, that for wage increases, the management will need to generate their own resources and it should not depend on budgetary support from the Government. 16. The Office Memorandum dated 12th April, 1993 provides, inter alia, that for wage increases, the management will need to generate their own resources and it should not depend on budgetary support from the Government. This is what is said in paragraph 2 of the Office Memorandum: Under the new wage policy, the Managements are free to negotiate the wage structure keeping in view and consistent with the generation of resources/profits by the individual enterprises/units. The Government will not provide any budgetary support for the wage increase and the respective managements will have to find the requisite resources from within their own internal generation. 17. Paragraph 13 of the Office Memorandum dated 19th July, 1995 deals with public sector enterprises registered with the BIFR (such as NPPC). This is what is said therein: 13. For sick PSEs registered with 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.... 18. Both these Office Memoranda were the subject of discussion in A.K. Bindal v. Union of India (2003) 5 SCC 163 . The question posed for consideration by the Supreme Court was "Whether the employees of public sector enterprises have any legal right to claim 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". This question was answered in the negative by the Supreme Court. 19. While doing so, the Supreme Court held in paragraph 17 of the Report: 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 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. It appears that prior to issuance of the office memorandum dated 12.4.1993 the Government had been providing the necessary funds for the management of public sector enterprises which had been incurring losses. It appears that prior to issuance of the office memorandum dated 12.4.1993 the Government had been providing the necessary funds for the management of public sector enterprises which had been incurring losses. After the change in economic policy introduced in the early nineties, the Government took a decision that the public sector undertakings will have to generate their own resources to meet the additional expenditure incurred on account of increase in wages and that the Government will not provide any funds for the same. Such of the public sector enterprises (government companies) which had become sick and had been referred to BIFR, were obviously running on huge losses and did not have their own resources to meet the financial liability which would have been incurred by revision of pay scales. By the office memorandum dated 19.7.1995 the Government merely reiterated its earlier stand and issued a caution that till a decision was taken to revive the undertakings, no revision in pay scale should be allowed. We, therefore, do not find any infirmity, legal or constitutional in the two office memorandums which have been challenged in the writ petitions. (emphasis supplied). 20. Dealing with the issue whether the economic viability of an industrial unit or the financial capacity of the employer can be taken into consideration in the matter of revision of pay scales of employees, the Supreme Court referred to Express Newspaper (P.) Ltd. v. Union of India AIR 1958 SC 578 ; Hindustan Times Ltd. v. Workmen AIR 1963 SC 1332 and Associate Banks Officers' Association v. State Bank of India (1998) 1 SCC 428 and concluded: 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 (sic), 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. Three important principles can be called out from the decision of the Supreme Court in Bindal. They are: (i) Economic viability or Financial capacity is a relevant, factor in determining the wage structure of the employees. (ii) A sick company should not expect any budgetary support from the Government of India (and in the case of NPPC, from the Government of Nagaland as well) to come out of its financial difficulties. They are: (i) Economic viability or Financial capacity is a relevant, factor in determining the wage structure of the employees. (ii) A sick company should not expect any budgetary support from the Government of India (and in the case of NPPC, from the Government of Nagaland as well) to come out of its financial difficulties. It should generate its own resource for the purpose. There is no unconstitutionality in this. (iii) No company or its workmen have a legal right to demand budgetary support from the Government of India for the purposes of wage revision. 22. In view of the contents of the Office Memorandum dated 19th July, 1995 we may add a fourth principle that emerges, which is that if it is decided to revive a sick enterprise, then the revival package "should include" the enhanced liability on account of any pay revision. This is important because if the liability on account of pay revision is huge and no provision is made for it, then the revival package, itself may fail flat. We propose to advert to this principle a little later. 23. An issue similar to the one that we are concerned with arose in respect of Mandya National Paper Mills, another subsidiary of HPC. In Mandya National Paper Mills Officer's Guild v. Union of India and Ors. WP No. 3736/1997 dated on 27th October, 2006 the Karnataka High Court followed A.K. Bindal and concluded: The Supreme Court in A.K. Bindal's case held, that the Government is entitled to classify the employees on the basis of an establishment making profit and an establishment under loss of the purpose of extending the benefit of revision of pay and other allowances. The Supreme Court further held, that employees of a loss making unit, as a matter of right, cannot claim the revision of pay and other allowances. In view of the law declared by the Supreme Court the claim of the Petitioner for extension of revision of pay under the circular dated 29.1.1996 and the memorandum dated 19.7.1995 is liable to be rejected. (emphasis supplied) 24. In view of the law declared by the Supreme Court the claim of the Petitioner for extension of revision of pay under the circular dated 29.1.1996 and the memorandum dated 19.7.1995 is liable to be rejected. (emphasis supplied) 24. To conclude the discussion on this issue, we may refer to Officers and Supervisors of I.D.P.L. v. Chairman and M.D., I.D.P.L. (2003) 6 SCC 490 wherein the Supreme Court formulated the following question for its consideration: 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. 25. Answering the question in the negative, the Supreme Court held in paragraph 11 of the report as follows: 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 to 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 shows 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. (emphasis supplied). 26. Conclusion: The first contention of learned Counsel for the Appellant is, therefore, accepted and it is held that the workmen cannot, as matter of right, demand an upward wage revision when NPPC is suffering losses. 27. The second contention: The arrears of salary, subject to the revision of pay scales, are admittedly in the region of Rs. 1,336 lakh for the period from 1st January, 1992 to 30th June, 2006. Has this been provided for? 28. 27. The second contention: The arrears of salary, subject to the revision of pay scales, are admittedly in the region of Rs. 1,336 lakh for the period from 1st January, 1992 to 30th June, 2006. Has this been provided for? 28. As we have seen earlier, the Office Memorandum dated 19th July, 1995 provides that the revival package in respect of a sick company should include" the enhanced liability on account of any pay revision. The factual position is that the revival package for NPPC did not make any such provision. On the contrary, it left the decision to be taken by "the Hon'ble High Court/other superior legal forum(s)". In other words, the revival package did not make any provision for meeting this liability. To now foist such a huge liability on NPPC may completely throw the revival plans out of gear, making its revival all the more difficult. 29. However, learned Counsel for the workmen contended that NPPC had made a provision for this liability in its balance sheet. 30. We find from a perusal of the balance sheet that an amount of Rs. 1,336 lakh has been shown as a contingent liability under the head of 'Payment to Pressing Creditors'. A contingent liability is distinguishable from an actual liability. AS-29 defines a contingent liability as (a) a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise, or (b) a present obligation that arises from past events but is not recognized because: (i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, (ii) the amount of the obligation cannot be measured with sufficient reliability. 31. In this context, it is useful to recall that the BIFR, while sanctioning the rehabilitation scheme, sanctioned payment of arrears towards pay revision only from 27th June, 2007. This coupled with the fact that the revival package did not make any provision for arrears for the period prior thereto indicates, quite clearly, that the liability was not intended to be provided for. This coupled with the fact that the revival package did not make any provision for arrears for the period prior thereto indicates, quite clearly, that the liability was not intended to be provided for. For as to now impose this liability on NPPC may be financially ruinous for it, or as the Supreme Court put it rather mildly in Officers and Supervisors of I.D.P.L. it may lead to "undesirable results". 32. We may also mention in this context that the rehabilitation scheme sanctioned by the BIFR postulated 'Payment to Pressing Creditors' through the issuance of non-cumulative redeemable preference shares. It is stated in the affidavit dated 17th November, 2009 of (sic) Imsong of NPPC that it was "neither in a position to, not could nor did issue 5% non-cumulative redeemable preference share which was stated as a (sic) of finance in respect of the amount under the head payment to pressing creditors. Even if any effort is made to do so it is next to impossible to expect anybody to apply and subscribe therefore considering the existing and prospective financial possibilities of, NPPC in the near/distant future". It follows from this that the financial resources for meeting the liability of payment to pressing creditors could not be arranged. Since the payment of Rs. 1,336 lakh has not been provided for or arranged, its disbursement is clearly not possible. 33. Conclusion: Whichever way the issue is looked at NPPC did not have the capability of meeting the contingent liability of arrears due to the pay revision claimed by the workmen for the period 1st January, 1992 to 30th June, 2006. 34. Additional contention of the Workmen: It was contended by learned Counsel for the workmen that the workmen of NPPC should be treated at par with the workmen of HPC, the Nagaon Paper Mill and the Cachar Paper Mill, with whom otherwise they would be subjected to a discriminatory treatment. This contention is stated only to be rejected. The facts and financial health of these companies have no similarity to the facts and financial health of NPPC. If at all any comparison is to be made of the financial health of NPPC, then it must be with Mandya National Paper Mills, and this comparison (sic) certainly not to the advantage of the workmen of NPPC. 35. The facts and financial health of these companies have no similarity to the facts and financial health of NPPC. If at all any comparison is to be made of the financial health of NPPC, then it must be with Mandya National Paper Mills, and this comparison (sic) certainly not to the advantage of the workmen of NPPC. 35. In view of the above, all the appeals are allowed and the judgments and orders under appeal dated 28th July, 1997 and 6th November, 2006 are set aside. No costs. Appeal allowed.