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2012 DIGILAW 714 (PAT)

Surendra Pathak v. Hindustan Fertilizers Corpn.

2012-05-03

CHAKRADHARI SHARAN SINGH, T.MEENA KUMARI

body2012
ORDER (Per: HONOURABLE MR. JUSTICE CHAKRADHARI SHARAN SINGH) All these appeals under Clause 10 of the Letters Patent of Patna High Court arise out of a common judgment and order dated 07.09.2010 passed by learned Single Judge in a batch of nine writ applications which involve common questions of law and facts and have accordingly been heard together and are being disposed of by a common order after hearing the learned Counsels for the parties at length. 2. Before adverting to necessary facts leading to the institution of the present appeals under Clause 10 of the Letter Patent of the Patna High Court, it would be apposite to note the moot issue involved in this case. The issue is, whether a party can claim consequential benefits derived by him under an interim order passed by a Court even after dismissal of the main claim of such parties. In other words, what would be the effect of dismissal of a petition on the interim order passed by the Court if during the pendency of such petitions the parties have derived benefit out of such interim relief. 3. In the present case the issue is as to what would be the effect of the amount payable to these appellants by virtue of an interim order dated 18.8.2000 passed by the Apex Court under which the appellants were paid some amount as ad hoc measure during the pendency of the petitions before it for the purposes of calculation of payment of amount of gratuity, even after dismissal of the petitions by the Apex Court. 4. To be more specific the moot question in batch of cases is, whether the ad hoc payments made to these appellants under the interim order passed by the Supreme Court dated 18.8.2000 can be included in the wages and such amounts can be termed as “Wages” within the meaning of Section 2(s) of the Payment of Gratuity Act, 1972, even after dismissal of the petitions by the Supreme Court on merits. The question is as to what would be the effect of dismissal of the petitions by the Supreme Court on the interim order passed by it in the same proceeding. 5. The question is as to what would be the effect of dismissal of the petitions by the Supreme Court on the interim order passed by it in the same proceeding. 5. The facts as recorded in the impugned order of the learned Single Judge have not been disputed by the contesting parties and, therefore, the facts in the present order have been taken from the facts narrated in the impugned order of the learned Single Judge. 6. Hindustan Fertilizer Corporation Limited ( in short HFCL) was a Government of India Company incorporated under the Companies Act, 1956 in terms of Section 617 of the Act, one of its three units situated at Barauni in the State of Bihar for producing Urea. The Company was referred to the Board for Industrial and Financial Re-construction (BIFR) in terms of Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) as it suffered heavy losses continuously from year to year and was finally declared a sick unit under SICA. The Corporation was finally decided to be closed down by the Central Government, being shareholder of the Company. 7. The Corporation, thereafter, through its Personnel Department issued a Circular dated 19.9.2002 extending Voluntary Separation Scheme (VSS) to all the employees of the Corporation. The employees of the Corporation were required to give their options between the periods 21.9.2002 to 20.12.2002 for quick reference. Clause 5.1 and 5.2 of the said VSS is quoted hereinbelow:- “5.1 Ex-gratia payment in respect of the employees computed on the existing pay scales in accordance with the extant Scheme shall be increased by 100% under both the schemes since employees of HFCL are drawing pay scales of 1/1/1987. 5.2. Salary for the purpose of calculation of ex-gratia will consist of basic pay and D.A. only. The ad-hoc amount being paid to the employees as per the direction of Hon’ble Supreme Court shall not be included in the salary for the purpose of computation of ex-gratia.” 8. 5.2. Salary for the purpose of calculation of ex-gratia will consist of basic pay and D.A. only. The ad-hoc amount being paid to the employees as per the direction of Hon’ble Supreme Court shall not be included in the salary for the purpose of computation of ex-gratia.” 8. This is not in dispute, and the same has been recorded by the learned Single judge, that the Government of India in the Department of Public Enterprises, Ministry of Industry, prior to introduction of the VSS, when the matter was pending before the BIFR, came out with an office memorandum dated 19.7.1995 providing that for sick Public Sector Undertakings ( PSEs) registered under the BIFR, pay revision and grant of other benefits would be allowed only if it was decided to revive the Unit. Aggrieved by the same, the Federation of Officers’ Association of FCI through its President, and authorized representative of Federation of Officers’ Association of HFCL filed writ petitions before the High Court for quashing the aforesaid provisions and connected clauses of the said memorandum of the Government and as consequence thereof for revival of practice of uniform treatment of the Officers in the profit-and-loss-making Companies in the FCI/HFCL. They also prayed for grant of interim relief of at least 60% of the benefits for revision of pay and perks which their counterparts have been given, pending final decision of these writ petitions. 9. The writ petitions were transferred to the Supreme Court and the said transferred cases led by the case of A.K. Bindal and another vs. Union of India and others, an interim order dated 19.4.2000 was passed with a direction to pay certain revised salary to the employees of the FCI and Hindustan Fertilizer Corporation. The Central Government moved an application for clarification/modification of the said order dated 19.4.2000. It will appear from paragraph 25 of the final judgment delivered by the Supreme Court in case of A.K.Bindal and others vs. Union of India and others reported in (2003) 5 SCC 163 , that by another interim order dated 18.8.2000, the Supreme Court modified the said interim order dated 19.4.2000 in following terms:- “Having heard learned Solicitor-General, of the applicant Union of India and learned Senior Counsel Mr. Sanyal, for the contesting respondents, purely as an ad hoc measure and without prejudice to the rights and contentions of the parties in the main matter, we deem it fit in the interest of justice to modify our order dated 19.4.2000 to the following effect:- (i) The authorities shall pay as an ad hoc measure and on account Rs. 1500/- to Class I employees; Rs. 1000/- to Class II employees; Rs. 750/- to Class III employees and Rs. 500 to Class IV employees consisting of various categories in each of the classes, per month with effect from 1.4.2000. This payment will be without prejudice to the rights and contentions of the parties in the pending matters. (ii) We make it clear that this order will not affect whatever payment by way of HRA is being released or was released by the authorities to the employees concerned. (iii) The direction that payments as earlier issued by us on 19.4.2000 will stand modified by the present order. (iv) According to this order, all arrears with effect from 1.4.2000 to 31.7.2000 will be cleared within ten weeks from today and the current payment be made with effect from 1.8.2000 along with the salary payable for the month of August, 2000. (v) Future payments shall accordingly be made from month to month regularly along with usual salaries payable to them. This order is passed purely as an ad hoc measure and will not come in the way of the ultimate decision of this Court. This order will also not be treated as a precedent in any matter in view of the special facts of the present case. We express no opinion about the nature of the order passed by the learned Single Judge of the High Court. That question will abide by the decision in the main matter. In view of the present order, IAs are disposed of.” 10. In view of the interim order dated 18.8.2000 the HFC started making payment to its employees as an ad hoc measure, a sum of Rs. 1500/- per month. That question will abide by the decision in the main matter. In view of the present order, IAs are disposed of.” 10. In view of the interim order dated 18.8.2000 the HFC started making payment to its employees as an ad hoc measure, a sum of Rs. 1500/- per month. It appears from the impugned order, which is not in dispute, that in terms of the said VSS, out of 1134 employees in the roll of Barauni Unit in September, 2002, nearly all employees exercised their options in favour of VSS and only six were retained in the roll of HFCL at Barauni Unit in order to assist finalization of closure activities, i.e., clearance of its employees dues, processing of pension cases of such employees and the dues of contract labours etc. It also transpires from the order of the learned Single Judge, which is not in dispute that out of 4881 employees of the HFCL only 45 were retained for finalizing closure exercising. The employees of the HFCL, including the appellants herein, continued getting ad hoc payment in terms of the interim order passed by the Apex Court dated 18.8.2000 till 20.1.2003, when they left the services of the HFCL on their release under the VSS. 11. The Apex Court, however, finally dismissed the transferred writ petitions by order dated 25.4.2003 holding that there was no merit in the writ petitions. Relevant paragraphs of the Apex Court are quoted hereinbelow for quick reference:- “32. The units of the Companies have already suspended their operations quite some time backs and as on date no unit is functioning nor is any production being made. There is also no denial of the fact that the Companies have suffered huge losses and salaries of the employees who were practically doing no work have been paid by the Government for a considerably long period. The employees accepted VRS with their eyes open without making any kind of protest regarding their past rights based upon revision of pay scale from 1.1.1992. 33. The Voluntary Retirement Scheme (VRS) which is sometimes called Voluntary Separation Scheme (VSS) is introduced by Companies and industrial establishments in order to reduce the surplus staff and to bring in financial efficiency. The office memorandum dated 5.5.2000 issued by the Government of India provided that for sick and unviable units, the VRS package of the Department of Heavy Industry will be adopted. The office memorandum dated 5.5.2000 issued by the Government of India provided that for sick and unviable units, the VRS package of the Department of Heavy Industry will be adopted. Under this Scheme an employee is entitled to an ex gratia payment equivalent to 45 days’ emoluments ( Pay + DA) for each completed year of service or the monthly emoluments at the time of retirement multiplied by the balance months of service left before the normal date of retirement, whichever is less. This is in addition to terminal benefits. The Government was conscious about the fact that they pay scales of some of the PSUs had not been revised with effect from 1.1.1992 and therefore it has provided adequate compensation in that regard in the second VRs which was announced for all Central Public Sector Undertakings on 6.11.2001. Clause (a) of the Scheme reads as under: (a) Ex gratia payment in respect of employees on pay scales at 1.1.1987 and 1.1.1992 levels, computed on their existing pay scales in accordance with the extant Scheme, shall be increased by 100% and 50% respectively. 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 the business world it is known as “ golden handshake”. The main purpose of paying this amount is to bring about a complete 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 and HFC), the writ petition no longer survives and has become infructuous. 37. For the reasons discussed above, we find no merit in the transferred petitions which are accordingly dismissed. No costs.” 12. Thereafter, some of the employees of the HFCL including the appellants herein, made complaints before the Assistant Labour Commissioner (Central)-cum-Controlling Authority (Under the Payment of Gratuity Act), Patna claiming that their gratuity has not been properly calculated and paid to them in as much as, the ad hoc payment of Rs. 1500/- per month has not been included in their wages for that purpose. As would appear from the impugned order of the learned Single Judge, 248 employees, including these appellants started as trainees in the HFCL and raised claim with respect to their stipend/salary received by them for inclusion of training period as their service period. The Corporation initially opposed the claim but the matter was finally compromised under the directions of the Central Government and the said period was accepted to be calculated for the purpose of gratuity. The Corporation initially opposed the claim but the matter was finally compromised under the directions of the Central Government and the said period was accepted to be calculated for the purpose of gratuity. All the other 239 similarly situated employees thereafter accepted the gratuity and gave up their claims with regard to inclusion of ad hoc payment of Rs.1500/- per month for the purposes of Payment of Gratuity under the Payment of Gratuity Act, 1972, except the nine employees who raised their claim before the Assistant Labour Commissioner. 13. The Assistant Labour Commissioner ( Central). Patna by his order dated 22.9.2004, 7.10.2004, 30.9.2004, 24.11.2004, 10.11.2004, 15.9.2004, 11.3.2005, 8.10.2004 and 11.3.2005 passed in LAC case Nos. 36(35).03, 36(31)/03, 36(30)/03, 36(8)/03, 36(10)/03, 36(34)/03, 36(14)/03, 36(33)/03 and 36(12)/03; accepted the contentions of these appellants and directed the inclusion of ad hoc payment of Rs. 1500/- per month for the purpose of calculation of gratuity and held that the HFCL was liable to pay the said amount. The appellants herein, preferred appeals before the Appellate Authority, i.e., Regional Labour Commissioner (Central), which were dismissed by the Appellate Authority vide order/judgment dated 5.6.2008, 9.6.2008, 4.6.2008,4.6.2008,4.6.2008, 5.6.2008, 6.6.2008, 4.6.2008 and 9.6.2008 passed in Case nos. 36/13/04-Appeal/RLC, 36/15/04-Appeal/RLC, 36/14/04-Appeal/RLC, 36/23/04-Appeal/RLC, 36/24/04-Appeal/RLC, 36/3/05-Appeal/RLC, 36/11/05-Appeal/RLC, 36/12/04-Appeal RLC and 36/10/04-Appeal/RLC respectively and affirmed the orders passed by the Assistant Labour Commissioner (Central) Patna. 14. Aggrieved by the orders of the learned Assistant Labour Commissioner (Central) Patna and the Regional Labour Commissioner (Central), the Hindustan Fertilizer Corporation Limited (HFCL) filed nine separate writ applications mainly on the ground that the ad hoc payment of Rs. 1500/- would not be treated as a part of the salary of employees for the purposes of calculation/payment of gratuity, as the same was paid to the employees on an interim direction given by the Supreme Court in which it was clearly mentioned that the payment will be without prejudice to the rights and contentions of the parties in the pending matters and the said interim order will not come in the way for ultimate decision of this Court. It was contended that as the transferred petitions were finally dismissed by the Apex Court without granting any relief to the petitioners therein, the claim of pay revision of the employees also stood rejected. It was contended that as the transferred petitions were finally dismissed by the Apex Court without granting any relief to the petitioners therein, the claim of pay revision of the employees also stood rejected. It seems from the record, which finds mentioned in the impugned order of the learned Single Judge, and which has not been disputed by the respondents herein, that an Interlocutory application was moved for clarification/modification of the interim order dated 18.8.2000 on which, after referring to the interim order the Apex Court vide an order dated 01.05.2008 passed the following order:- “By the final order dated 25.4.2003 the transferred petition stood dismissed. When the final order is passed the interim order automatically comes to an end. Therefore, it does not need any further clarification when the transferred petition was finally dismissed, the interim order stood vacated.” 15. The appellants herein, were impleaded respondents in the writ petitions and they appeared before the learned single Judge and contested the writ petitions. The learned Single Judge allowed the writ petitions and quashed the orders under challenge passed by the Regional Labour Commissioner (Central), Patna and Assistant Labour Commissioner (Central), Patna holding that respondents-employees had no right to receive the said amount of ad hoc payment of Rs. 1500/- per month in accordance with the terms and conditions of their employment. Learned Single Judge held that such payments could not be included in their wages as the same were made without prejudice to the right of the employer and upon dismissal of the transferred writ petitions no right to receive such payment crystallized in favour of the employees. 16. Out of nine writ petitioners, eight have preferred the present appeals under Clause 10 of the Letters Patent of the Patna High Court against the order of the learned Single Judge dated 7.9.2010. 17. Learned counsel for the appellants Mr. Arbind Nath Pandey, has vehemently submitted that the amount which was directed to be paid by the Supreme Court as an ad hoc measure, was in addition to the salary of the appellants and the said payment continued to be made to them at the rate of Rs. 1500/- per month up to date when they were released under the VSS, i.e., 20.1.2003. According to him, the amount was, therefore, part of the salary of the appellants and would come under the definition of “Wages”. 1500/- per month up to date when they were released under the VSS, i.e., 20.1.2003. According to him, the amount was, therefore, part of the salary of the appellants and would come under the definition of “Wages”. He also submitted that Income Tax was also deducted from the salary every year treating the said ad hoc amount to be part of gross yearly income. He further contended that the Apex Court did not pass any order to deduct the amount paid to the employees as an ad hoc measure; the said amount should not be excluded from “Wages” for the purpose of calculation of gratuity. 18. Learned counsel for the appellants has relied upon the definition of “Wages” as contained in Section 2(s) of the Payment of Gratuity Act, 1972. In support of his contention that the ad hoc payment made to the appellants under the interim order comes within the said definition of “Wages”. 19. Opposing the contention made on behalf of the appellants Shri K.N.Gupta, learned counsel for the Hindustan Fertilizer Corporation Limited ( Respondents in all these cases) has contended that the amount paid on the interim direction of the Supreme Court did not come within the definition of “Wages” under Section 2(s) of the Payment of Gratuity Act, 1972, which means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and not otherwise. 20. In order to appreciate rival contentions of the parties, it would be appropriate to refer to Section 2(s) of the Payment of Gratuity Act, 1972, which reads thus:- “2(s).- “Wages” means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employments and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance”. 21. From bare reading of the provisions it would appear that the “Wages” under the payment of Gratuity Act means only such emoluments earned by the employee while on duty or on leave “in accordance with the terms and conditions of his employments”. 21. From bare reading of the provisions it would appear that the “Wages” under the payment of Gratuity Act means only such emoluments earned by the employee while on duty or on leave “in accordance with the terms and conditions of his employments”. The said ad hoc payments were admittedly paid to these appellants under the interim order passed by the Apex Court as ad hoc measure making it clear that the payment was to be made without prejudice to the rights and contentions of the parties in the pending transferred petitions. Such payments were ad hoc measures and were subject to final decision of the Apex Court. As has been mentioned above, the Apex Court finally dismissed the transferred writ petitions, thus rejecting the right claimed by these appellants to get a revision of their pay scale 22. It has rightly been held by the learned single Judge that result of the dismissal of the writ petitions was that an interim order itself did not survive and stood vacated as clarified by the subsequent order dated 1.5.2008. 23. I find force in the submission of the learned counsel for the respondent- Hindustan Fertilizer Corporation Limited that ad hoc payment made to the appellants under interim order of the Apex Court dated 18.8.2000 cannot be included for the purposes of Wages within the meaning of Section 2(s) of the Payment of Gratuity Act, 1972, which was apparently not paid to the appellants “ in accordance with the terms and conditions of their employment.” On the other hand, as the Apex Court has dismissed the transferred writ petitions finally, no right to receive such payments ever crystallized in the appellants. 24. Law regarding merger of the interim order into final order is well settled. It has been repeatedly held by the Apex Court in various judgments that interim order always merges in the final order and when a case is dismissed, interim order stands automatically nullified. Reference may be made in this regard to a recent judgment of the Supreme Court reported in (2012) 4 SCC 307 (Kanwar Singh Saini vs. High Court of Delhi), wherein the Apex Court in paragraph 17 held as follows:- “……………. However, once a suit is decreed, the interim order, if any, merges into the final order. Reference may be made in this regard to a recent judgment of the Supreme Court reported in (2012) 4 SCC 307 (Kanwar Singh Saini vs. High Court of Delhi), wherein the Apex Court in paragraph 17 held as follows:- “……………. However, once a suit is decreed, the interim order, if any, merges into the final order. No litigant can derive any benefit from mere pendency of case in a Court of law, as the interim order always merges in the final order to be passed in the case and if the case is ultimately dismissed, the interim order stands nullified automatically. (Vide A.R. Sircar Vs. State of U.P.7, Shiv Shankar V. U.P. SRTC 8, Arya Nagar Inter college V. Sree Kumar Tiwary 9, GTC Industries Ltd. V. Union of India 10 and Jaipur Municipal Corpn vs. C.L.Mishra 11.)” 25. It has been held by the Apex Court in 1995 Supp. (2) SCC 726 that once the petition was dismissed; the effect of dismissal was that interim order stood merged in the final order and stood nullified. An interim order is granted to protect the interest of a party approaching the Court till the same is adjudicated finally. It is temporary in nature and it is made in the meantime. 26. In view of the above, it is held that the amount paid to the appellants as an ad hoc measure pursuant to an interim order dated 18.8.2000 cannot be treated to be part of “Wages” within the meaning of Section 2(s) of the Payment of Gratuity Act, 1972 as the interim order of the Supreme Court merged in the final order, rejecting the claim of these appellants. 27. In view of the pronouncements referred to above the appellants cannot claim any consequential benefits arising out of payment of amount as ad hoc measure, pursuant to interim order passed by the Supreme Court. The payments made to the appellants as an ad hoc measures under the interim order as aforesaid, therefore, cannot be taken into account for the purposes of calculation of gratuity. 28. There is no reason, therefore, to interfere with the impugned order passed by the learned single Judge. 29. Lastly, learned counsel for the appellants prayed that any amount paid to the appellants may not be recovered. In reply Mr. 28. There is no reason, therefore, to interfere with the impugned order passed by the learned single Judge. 29. Lastly, learned counsel for the appellants prayed that any amount paid to the appellants may not be recovered. In reply Mr. K.N.Gupta, appearing on behalf of the respondent- Hindustan Fertilizer Corporation Limited has stated that there is no proposal to make any recovery from these employees. He has also submitted at the bar that the amount paid to these appellants under the interim orders of the Supreme Court have not been taken into account while calculating the amount of gratuity payable to them. Therefore, there is no question of adjustment/recovery of any amount of gratuity paid in excess to these appellants. Keeping in view the chequered history of the case, I feel it appropriate to direct the appellants not to recover any amount, if already paid to these appellants in excess by taking into account the ad hoc amount paid as “Wages”, while calculating admissible gratuity. 30. The respondent-Hindustan Fertilizer Corporation Limited will be at liberty to withdraw the amount deposited by it as conditions precedent for preferring appeal before the Appellate Authority, i.e., Regional Labour Commissioner (Central), Patna, if the same has not been withdrawn so far. If an application is made for withdrawal of the amount, the Respondent No.1 is directed to refund the same forthwith. 31. With these observations and directions, these appeals are dismissed. T. Meena Kumari, J.- I agree.