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2014 DIGILAW 1212 (CAL)

Putcha Parvathisem v. Hindustan Copper Limited

2014-12-24

SAMBUDDHA CHAHRABARTI

body2014
JUDGMENT : Sambudddha Chakrabarti, J. By this writ petition the petitioners have, inter alia, prayed for a writ in the nature of mandamus commanding the respondents to recall, withdraw and cancel the decision not to pay the residual arrears out of the 1997 pay revision pertaining to the period from January 01, 1997 to November 30, 1999 as communicated by the letters of the respondents, dated November 01, 2010 and February 25, 2011 being Annexures P-1, P-13 and P-16 respectively, a writ in the nature of mandamus commanding the respondents to take all necessary steps for the immediate release of the arrears arising out of the 1997 pay revision for the said period mentioned above and for other reliefs. 2. The petitioners are former executives of Hindustan Copper Limited, i.e., the respondent no. 1 herein (the company, for short). According to the petitioners in or about the year 1997 the company was incurring continuous losses for various reasons. Consequently, it had to introduce several austerity measures like Voluntary Retirement Scheme, deferment of salaries of its employees, etc. The company was also not in a position to revise the pay scales of its employees etc. 3. On and from the year 2004, however, the financial health of the company gradually improved. Consequently, the company started the process of revision of salary of the executives, which included the petitioners, with effect from January 01, 1997, and the Ministry of Mines, Government of India communicated its decision to implement the pay revision and other benefits for the Board and the below Board level executives with effect from the proposed date on a notional basis subject to certain conditions which were mentioned in the said letter. 4. The Assistant General Manager (Personnel) of the company issued an office order declaring that the scales of pay of all the regular executives borne on the rolls of the company as on January 01, 1997 would be revised subject to certain conditions. The said office order fixed the period of such pay revision from January 01, 1997 to December 31, 2006. 5. Subsequently, the respondent no. 4 presented before the appropriate authority of the Government of India a break-up of the arrears of wage and salary due to the existing and former workmen and executives for the period from 1997 to 2004. It appears from the data furnished that an amount of about Rs. 5. Subsequently, the respondent no. 4 presented before the appropriate authority of the Government of India a break-up of the arrears of wage and salary due to the existing and former workmen and executives for the period from 1997 to 2004. It appears from the data furnished that an amount of about Rs. 1,94,71,631/- was due to the former executives, other than those who had taken voluntary retirement, as arrears arising out of the pay revision for the years 1997, 1998 and 1999. On behalf of the Government of India approval was conveyed to the payment of residual arrears arising out of the pay revision. The first instalment of arrears and salaries for the period from December 01, 1999 to July 31, 2002 was paid by the company to the executives including the former ones. However, the second instalment was not paid during the financial year due to the loss suffered by the company. 6. This was a followed by a meeting between the management of the company and various trade unions wherein the unions consented to fore go the residual wage arrears for the period from January 01, 1997 to November 30, 1999. 7. The petitioners further alleged that the management of the company soon thereafter initiated the process on implementation of the wage/salary revision of 2007 without clearing the long standing dues of the former executives of the company other than those who had voluntarily retired. Initially an interim relief at the rate of 18 per cent. was released in favour of the serving employees and, thereafter, the entire exercise of the pay revision of 2007 was completed by March, 2010. The entire arrears for the period from January, 2007 to March, 2010 were released in one go. 8. Discrimination has been alleged against the company for not clearing the dues arising out of the previous pay revision of 1997 for the period from January 01, 1997 to November 30, 1999. The five top executives of the company retired or separated themselves from the company after getting wage/salary revision of 2007 which could be implemented after obtaining the consent of the workers and members of the unions of the company. 9. The five top executives of the company retired or separated themselves from the company after getting wage/salary revision of 2007 which could be implemented after obtaining the consent of the workers and members of the unions of the company. 9. This had to the submission of representation by some of the petitioners to the Chairman-cum-Managing Director of the company on July 28, 2009 by which he was requested him to release the pay revision for the earlier period. The company in turn intimated them that pay and allowances of the executives were revised notionally. It was subsequently decided that no arrears would be paid from the period January, 1997 to November 1999 and such decision was equally applicable to all employees, former or present. 10. By a letter, dated February 5, 2010, the petitioner No. 1 informed the respondent No. 2 about the difficulties faced by the eligible executive due to non-receipt of the arrears in question and requested him to take a decision on the issue of arrear payment to the concerned executives. Various representations were submitted from time to time to different authorities, both of the company as well as the Government of India but no steps were taken on behalf of the company to meet their grievances. 11. Ultimately some of the petitioners sent a letter dated October 01, 2010 to all the Directors recording therein the reasons of their grievance and requested the respondent no. 2 to take steps for early release of the unpaid arrears. In return, the company wrote back that pay and allowances of the executives were revised subject to the paying capacity of the company and it was decided that no arrears would be paid for the period from January 1997 to November 1999. This letter has been annexed to the writ petition as Annexure- P13. 12. Under the circumstances, the petitioners by a letter through their learned advocate demanded justice from the respondents authorities calling upon them to clear the dues for the period concerned. In reply, the respondent no. 5 by a letter dated February 25, 2011 informed the learned advocate that keeping in view the operational requirements and the need for modernisation and expansion for the sustenance of the company, its available financial resources did not permit any diversion of funds as claimed on behalf of the petitioners. In reply, the respondent no. 5 by a letter dated February 25, 2011 informed the learned advocate that keeping in view the operational requirements and the need for modernisation and expansion for the sustenance of the company, its available financial resources did not permit any diversion of funds as claimed on behalf of the petitioners. This letter by the company has been annexed to the writ petition as Annexure P16 and as mentioned earlier, has been assailed in the present writ petition. 13. The respondents nos. 1 to 6 have contested the writ petition by filing an affidavit-in-opposition. The principal contention of the answering respondents was that consequent upon economic liberalization the erstwhile pricing mechanism of copper was replaced by a pricing mechanism linked to the price of copper in the London Metal Exchange in 1993-94. Consequently the company had to face stiff competition from private companies and its financial health was severely impaired. Finding no alternative the company was compelled to initiate austerity measures to ensure a turn around and the developmental activities in all fronts almost came to a standstill. After a gap of about eight years the company earned profit in the year 2003-04. 14. The 1997 pay revision which was effected from January 1, 1997 for the executives and from November 1, 1997 for the non executives could not be implemented due to adverse financial situation of the company. When the financial position was showing signs of improvement the company decided to implement the 1997 pay revision and approached the Ministry of Mines for mandatory Governmental approval. 15. The Ministry of Mines by a letter dated April 17, 2006 conveyed approval of the Government for revision of pay of the executives of the company (Board level and below Board level). It was mentioned in the letter that the proposed revised scale of pay with effect from January 1, 1997 in case of executives may be adopted by the company as per the revised scale of pay indicated in the office memorandum, dated June 25, 1999. The resource for meeting the increased obligation for salary and wages would be met though internal generation of resources and no budgetary support would be provided for the payment of revised scales of pay. It was further stipulated in the said letter that the revised scales of pay might be implemented with effect from August 1, 2004. The resource for meeting the increased obligation for salary and wages would be met though internal generation of resources and no budgetary support would be provided for the payment of revised scales of pay. It was further stipulated in the said letter that the revised scales of pay might be implemented with effect from August 1, 2004. The arrears of payment on account of such wage or pay revised would be decided separately in consultation with the ministry keeping in view the paying capacity of the company. 16. According to the respondents the 1997 pay revision was implemented for the executives with effect from January 1, 1997 in terms of the Government of India's directive. However, this fixation was notional and it was directed that actual payment would commence from August 1, 2004 in the revised scale of pay. According to the respondents Rs. 26 crores were kept aside for payment of arrear salary from January 1, 1997 for the executives and November 1, 1997 for the non-executives but November 30, 1999 for regular employees and those separated due to superannuation, resignation and death. The respondents have asserted that direction of the Government was to pay arrears for the period from January 1, 1997/November 1, 1997 to July 7, 2002 during the financial year 2008-09 keeping in view the fiscal position of the company. But the company suffered a huge financial loss during 2008-09 curtailing the paying capacity. As a result the company could not pay the residual wage/pay revision to its existing employees and to those separated on superannuation, resignation etc. for the period from January 1, 1997/November 1, 1997 to July 31, 2002. The arrear for this period was not paid either to the regular employees or to the separated employees, other than the voluntary retirement opes. This has been approved by the relevant department of the Government. 17. Wage revision for the year 2007 was implemented on receipt of the Presidential directives for the executives of the company with effect from January 1, 2007. 18. The company has not discriminated between the regular employees and those separated from the company other than by voluntary retirement in the non-release of pay revision arrears of 1997 for the residual period which has affected both the regular as well as the separated employees alike. 18. The company has not discriminated between the regular employees and those separated from the company other than by voluntary retirement in the non-release of pay revision arrears of 1997 for the residual period which has affected both the regular as well as the separated employees alike. Moreover, the average age of the employees being 50 plus about 1,500 are to be superannuated by 2015 and shall also be equally affected. The company, therefore, cannot take a partisan view by making payment of arrears to the already separated employees ignoring the regular employees. There is no denying of the fact that the regular employees have received the benefit of 2007 pay revision but that is only by way of their being in service on the cut off date of implementation of the 2007 pay revision as per the Government directive which is January 1, 2007 for the executives and November 11, 2007 for the non-executives. It has been emphasised by the company that the payment of arrear for the period under reference was to be made in the financial year 2008-09 contingent upon the financial position of the company as reflected in the availability of surplus fund and if the company was not in a position so to do at that point of time the same could not be performed in an extended time frame. 19. The petitioners have filed an affidavit-in-reply to the affidavit in- opposition largely reiterating their stands in the writ petition. They had reasserted that the implementation of the pay revision did not have any uniform effect in view of the fact that the separated employees being similarly circumstanced as the petitioners have been deprived of their dues for ensuring the interest of the continuing employees. That apart, from the years 2004-05 till 2007-08 the company had earned a huge profit compared to the marginal loss suffered in the years 2008-09 which was again regained in the next financial year. If the company had set apart Rs. 26 crores for the regular as well as the separated employees for some unknown reasons they did not release the arrears. The marginal loss of Rs. 10.31 crores cannot be the cause for the non-disbursement of the legitimate arrears of the salary. 20. If the company had set apart Rs. 26 crores for the regular as well as the separated employees for some unknown reasons they did not release the arrears. The marginal loss of Rs. 10.31 crores cannot be the cause for the non-disbursement of the legitimate arrears of the salary. 20. The petitioners have specifically alleged that the communication dated October 17, 2008 from the Government of India did not contemplate that the residual arrears arising out of the 1997 pay revision would not be paid after the current financial year. There was no bar also for the company to seek any clarification in view of the profit of Rs. 154.68 crores in the next financial year. The estimated arrears of salary amounting to less than Rs. 2 crores were not paid by the respondent company citing losses. But on June 1, 2009 the company had declared interim relief at the rate of 18 per cent. for its existing employees. 21. Thus the issue involved in this petition ultimately boils down to whether by not implementing the scheme of wage revision from 1997 the company had discriminated between the two sets of employees and whether the decision to give effect to the subsequent pay revision of 2007 without first clearing the dues of the executives from the earlier period was legal and justifiable. 22. Mr. Sengupta, the learned Sr. Counsel for the respondents nos. 1 to 6 made his submissions in terms of the stand taken in their affidavit. He has placed the letter dated October 17, 2008 issued by the Government of India whereby payment of residual arrears arising out of the 1997 pay revision for the period from January 1, 1997 for the executives and November 1, 1997 for the non-executives to July 31, 2002 to the existing and separated employees, other than those by voluntary retirement, was approved to be paid in two instalments during the current fiscal year subject to the availability of surplus funds. According to Mr. Sengupta the payment thus was to be made according to the paying capacity of the company and since in that financial year the company suffered a loss of Rs. 10.31 crores the paying capacity had been restricted and the company was not in a position to meet the required finances for payment of arrears. 23. According to Mr. Sengupta the payment thus was to be made according to the paying capacity of the company and since in that financial year the company suffered a loss of Rs. 10.31 crores the paying capacity had been restricted and the company was not in a position to meet the required finances for payment of arrears. 23. The respondents justified that it was under such stringent financial situation the company had taken decision that no arrear would be paid for the period from January 1997 to November, 1999. 24. Mr. Sengupta had taken a further point on the maintainability of the writ petition alleging that the decision was taken on administrative grounds and no employee or an ex-employee had any vested right to agitate and since the decision rested on the assessment of a financial situation the High Court cannot substitute that decision by its own decision under the writ jurisdiction. 25. While this stand of the respondent is basically based on the financial health of the company during early 1990s and the financial year 2008-09 the challenge of the petitioners is to the decision taken by the respondents to release the amount from a certain date which has pre-judicially affected the petitioners who had really separated themselves from the company earlier. Mr. Ghosh has raised a relevant question. The financial condition of the company has been appended to the writ petition in the form of the annual report of 2009-10 and there was absolutely no impediment to make payment of the arrears along with interest for the period from January 1, 1997 to November 30, 1997 arising out of the pay revision of 1997. 26. I find sufficient logic in the submission of the petitioners that in the matter of payment of the arrears pursuant to the pay revision of the year 1997 the respondents authorities did not implement it uniformly to all categories of employees. Mr. Ghosh submitted that the company paid a hefty sum of about Rs. 51.91 crores in favour of its existing employees arising out of the 2007 pay revision but comparatively a much smaller sum of about Rs. 1,94,71,631/- along with interest has not been paid. 27. In reply to Mr. Mr. Ghosh submitted that the company paid a hefty sum of about Rs. 51.91 crores in favour of its existing employees arising out of the 2007 pay revision but comparatively a much smaller sum of about Rs. 1,94,71,631/- along with interest has not been paid. 27. In reply to Mr. Sengupta's submissions the stand of the petitioners is that the decision communicated to the company, dated April 7, 2006 was separately adopted in accordance with Clause 4 of the said communication and this had the concurrence of the relevant ministry of the Government of India for the payment of the arrears arising out of 1997 pay revision for the period from 1st January, 1997 to July 31, 2002 in two instalments. Of that payment of the arrears from December 1, 1999 to July 31, 2002 has already been released but the payment for the earlier period has not been made. 28. I cannot discern much logic in the stand taken by the respondents that the decision of the company has not affected any vested right of any employee or ex-employee. It cannot be gainsaid that their right was crystallized by the in the communication made on behalf of the ministry of Mines, Government of India, to the respondent company whereby payment of residual arrears arising out of the 1997 pay revision upto July 31, 2002 to the existing employees during the current fiscal year and to those separated, otherwise other than by voluntary retirement, in two instalments were approved. 29. A bare reading of the said communication clearly reveals that it did not contemplate that residual arrears arising out of the pay revision could not be paid after the current financial year. If one is required to put a fair interpretation of the said communication it must be read as the desire expressed by the Government of India for an expeditious payment of the residual arrears from 1997 and that is why the words during "the current fiscal year" were used. If the poor financial condition of the company stood in the way of releasing the amount it could most certainly be released in the subsequent year or years with the clarification or approval of the Government of India. Whether the Government of India would have sanctioned the same is a different question. If the poor financial condition of the company stood in the way of releasing the amount it could most certainly be released in the subsequent year or years with the clarification or approval of the Government of India. Whether the Government of India would have sanctioned the same is a different question. But there is nothing on record that the company ever sought for any clarification for making the payment if its finances did not permit such payment to be made during a particular fiscal year. It would have been in fitness of things for the company, if it wanted to establish its bona fide, to seek a clarification from the Government of India whether it could to make the said payment in any subsequent year. At least the company could thereby justify an impartial stand by them. 30. Mr. Sengupta's assertion that the resolution adopted on April 16, 2009 was binding upon the petitioners overlooks a basic factual situation. It is true that it appears from the minutes of the said meeting that the unions conveyed their consent for foregoing the residual wage arrears for the period from January 1, 1997 to November 30, 1999. But the petitioners having all ceased to be employees of the respondent company such a concession was not likely to bind them. They could not be represented by the unions anymore after they had ceased to be the employees of the company. That apart, the petitioners being the former executives of the company could not be bound by any concession made by the trade unions. On the top of everything the petitioners had alleged that the top level executives who represented the management of the company in the said meeting with the trade unions were handsomely benefited by the implementation of the 2007 pay revision. 31. Thus the stand taken by the respondents that there has not been any discrimination after the 2007 pay revision was introduced is not a sufficient answer the issue raised by the petitioners. It is never the case of the petitioners that after 2007 there has been any discrimination. But discrimination was alleged in the implementation of the pay revision of 1997. 32. I find sufficient force in the logic of the petitioners that a certain period had been left out to the detriment of a class of employees. It is never the case of the petitioners that after 2007 there has been any discrimination. But discrimination was alleged in the implementation of the pay revision of 1997. 32. I find sufficient force in the logic of the petitioners that a certain period had been left out to the detriment of a class of employees. If the company had decided to implement the wage revision of 2007 it should have first cleared the long standing dues of the executives of the company who had separated themselves, otherwise than by way of voluntary retirement, arising out of the arrears of the previous pay revision. I have already found that the effort on the part of the company to justify the decision in the name of insufficient paying capacity is not wholly tenable or validly project able in view of the failure on the part of the company to take appropriate action by seeking clarification from the Government of India which might have established their bona fide. The subsequent improvement in the finances of the company should have weighed with the authorities. In view of the huge profit made by the company in the subsequent years the alleged financial incapacity in a single year is not a matter of much consequence for the company to not to release the arrear salaries of the petitioners for the period from January 1, 1997 to November 30, 1999 which has been assessed by the petitioners to be less than Rs. 2 crores. 33. Moreover, it cannot be said as an absolute proposition as argued by the respondents, that the impugned administrative decision has not affected any vested right of the petitioners. An administrative decision, even if it is a result of a discretion, is liable to be tested on the anvil of rule of law and fairness. If such decision is not just and fair or is such that no man of ordinary prudence would have arrived at the same or has been accentuated by reasons not relevant to the issues involved the court has not only power but it will be justified in interfering with the same. This is all the more so when the decision pre-judicially affects the right of an individual or a body of persons or, if not interfered with, is likely to create differentiations without any reasonable classification. 34. This is all the more so when the decision pre-judicially affects the right of an individual or a body of persons or, if not interfered with, is likely to create differentiations without any reasonable classification. 34. The question is not so much whether the petitioners had any vested right in their favour. A far more relevant issue is whether they had been discriminated against. The company having decided to implement the pay revision from a certain year benefiting a certain class of employees, those excluded in the process, unless very cogent reasons therefor are discern able, have a right not to be treated differently. Once some persons have been treated in a certain manner, a right is created in favour of those who are similarly circumstanced, to be treated equally and at par with them. 35. It has been submitted that a writ court cannot sit in appeal over an administrative decision. Neither do I have any intention so to do. But the validity of an administrative decision can always be examined by a writ court. 36. If an administrative decision is unfair for any reason or discriminatory, it is always vulnerable to judicial review. If an administrative decision is taken out of the purview of judicial review the purpose of the evolution of administrative law as a distinct branch of jurisprudential study must fall through. An administrative decision is always open to judicial scrutiny and if it cannot satisfy to have complied with the well settled principles like transparency, impartiality or fairness or transgress the well defined boundaries, it is liable to be struck down. 37. In view of what has been discussed above, I find no logic in the respondent company's not making the payment of the arrears for the said period and I find sufficient merit in the submission of the petitioners. 38. In such view of it I allow the writ petition and set aside the decision not to pay the residual arrears arising out of the 1997 pay revision. I direct the respondent company to take all necessary steps for the release of the arrears arising out of the said pay revision for the period from January 1, 1997 to November 30, 1999 which is due to the petitioners with interest at the rate of 8 per cent. within eight weeks from the date of the communication of the order. 39. within eight weeks from the date of the communication of the order. 39. There shall, however, be no order as to costs. Urgent Photostat certified copy of this order, if applied for, be supplied to the parties on priority basis upon compliance of all requisite formalities. Later: 40. After delivery of the judgment Mr. Basu, the learned advocate for the respondent company prays for stay of operation of the order. The learned advocate appearing for the petitioner has objected to the prayer made by the respondent company. 41. In view of what has been discussed in the body of the judgment and the reasons assigned for allowing the writ petition and in view of the fact that eight weeks' time has been granted for implementation of the order, the prayer for stay is heard, considered and rejected.