RAJASTHAN FINANCIAL CORPORATION OFFICER ASSOCIATION v. C. S. RAJAN
2015-02-04
PRAKASH GUPTA, SUNIL AMBWANI
body2015
DigiLaw.ai
ORDER : 1. We have heard learned counsels appearing for the parties. 2. This contempt petition has been filed for the alleged noncompliance of the order passed by a Division Bench of this Court in D.B. Civil Writ Petition No.669/1988, dated 05.09.1988, against which a Special Leave to Appeal(Civil) No.15605/1988, filed before the Hon'ble Supreme Court, was dismissed on 16.12.1988. 3. The Rajasthan Financial Corporation Officers Association, had filed D.B. Civil Writ Petition No.669/1988, against the orders, by which the ex-gratia payment to the employees of the Corporation @ 20%, was sought to be withdrawn. The Division Bench found that ex-gratia is an integral part of pay and emoluments, inasmuch as in the advertisement issued for recruitment, it was clearly mentioned that the employees of the Corporation will be paid 20%, as ex-gratia, of the emoluments per annum. The Division Bench was of the view that the directions given by the State Government regarding payment of ex-gratia, were not within the jurisdiction of the Government, and set aside the orders dated 22.07.1987 and 10.12.1987, with further directions that payment should be made to the employees, which they were getting since 1973 and onwards. The Corporation was required to comply with the order within three months. 4. It is submitted that ex-gratia was paid to the members of the applicant-Association upto 2011, after which it has been stopped, and thus, the respondents have, despite knowledge of the judgment of this Court, against which the Special Leave Petition was dismissed, committed deliberate and intentional contempt of the Courts, punishable under the Contempt of Courts Act, 1971. 5. In reply to the petition, filed on behalf of the State of Rajasthan, it is stated that the ex-gratia amount is not a part of pay and emoluments. It was by way of incentive, to attract the finacial experts, to be employed by the Rajasthan Financial Corporation at the time of its incorporation, and thereafter for sometime. The ex-gratia payment depends upon the decision, to be taken by the Board of Directors of the Corporation every year, on the financial performance of the Corporation. The Rajasthan Financial Corporation(Staff) Regulations, 1958 (for short, 'the Regulations of 1958'), do not provide for any ex-gratia payment. The Regulation 4(a), provides for emoluments, which includes pay scale and allowances. The ex-gratia is an additional payment, which cannot be treated to be a right, or part of the emoluments.
The Rajasthan Financial Corporation(Staff) Regulations, 1958 (for short, 'the Regulations of 1958'), do not provide for any ex-gratia payment. The Regulation 4(a), provides for emoluments, which includes pay scale and allowances. The ex-gratia is an additional payment, which cannot be treated to be a right, or part of the emoluments. In paragraphs 1 to 3, 9 and 11, it is stated as follows:- “1. That the present contempt petition has been filed by the petitioners jointly for the alleged non compliance of order dated 05.09.1988 passed by the Hon'ble DB of Rajasthan High Court, Jaipur Bench, Jaipur. Earlier, the Hon'ble DB of Rajasthan High Court, Jaipur vide order dated 23.10.2013, in the same matter in D.B. Contempt Petition No.352/2013 (Ajay Kumar Jain & Ors. V/s C.K. Mathew & Anr.) and D.B. Contempt Petition no.929/2013(RFC Officers Association and Ors. V/s C.K. Mathew & Anr.) has allowed the petitioners to withdraw the petition and file a fresh one. These petitions were closed by the Hon'ble Court as withdrawn. 2. In this context it is most respectfully submitted that the Board of Directors of the Corporation had approved the payment of ex gratia to its employees on year to year basis @ 20% of basic pay and dearness allowance from the F.Y. 1973-74 to 201011. 3. The issue of payment of ex gratia was reviewed by the corporation in the F.Y. 2011-2012 in the back ground of the fact that the main resources provider(i.e. Small Industries Development Bank of India SIDBI) has decided to drastically reduce the refinance which directly affected the lending operations of the Corporation. Despite best efforts at the Government level and by COSIDICI, SIDBI did not agree to provide adequate refinance and directed the SFCs to raise funds from alternatives resources. This unfortunate decision of SIDBI made fiscals of RFC precarious and RFC even could not meet its repayment obligations and defaulted in repayment to SIDBI. Consequently, the lending operations of RFC came to a halt (i.e. the loans sanctions which were Rs.470 crore in 2010-2011 were drastically reduced to Rs.284 crores in 2011-2012 and to Rs.114 crore in 2012-2013 i.e. the business has reduced by 75%). In 2013-2014(till 31.01.2014) the Corporation could sanction loans of Rs.53 crore only. 9.
Consequently, the lending operations of RFC came to a halt (i.e. the loans sanctions which were Rs.470 crore in 2010-2011 were drastically reduced to Rs.284 crores in 2011-2012 and to Rs.114 crore in 2012-2013 i.e. the business has reduced by 75%). In 2013-2014(till 31.01.2014) the Corporation could sanction loans of Rs.53 crore only. 9. As per the tripartite MOU entered amongst RFC, SIDBI and State Government on 02.07.2009 (ANNEXURE-R2/1), the Board of Directors of the Corporation has taken effective steps in bringing down the administrative and establishment expenditure of the Corporation. During the process of financial and administrative restructuring, Dy. Secretary, Industries Department, GOR, Jaipur vide letter dated 27.02.2012 enclosed record note of the meeting held on 09.02.2012 in the Finance Department, GOR advising Industries Department on the ex-gratia issue (ANNEXURE-R2/2) for further necessary action with regard to the following decisions taken in the said meeting:- (i) The Administrative Department-AD (i.e. Industries Department) may be requested to direct RFC to examine the issue of payment of ex-gratia @ 20% to the employees of RFC and examine service record of all the employees of RFC as to how payment of ex-gratia is an integral part of the emoluments and whether such conditions were laid down in the advertisement of recruitment or was it a part of service conditions/service rules while making recruitment of a particular employee? After examination, if it is found that in cases, where such conditions existed in the advertisement or service rules of a particular employee, then such payment may be continued in the light of judgment of Hon'ble High Court in DBCWP 669/1988. In other cases in which there was no mention of grant of payment of ex-gratia in the recruitment advertisement or other service conditions, the payment of ex-gratia @ 20 prima facie appears to be irregular. This should be examined and in such cases, RFC should take a view to stop the payment henceforth. (ii) Payment of ex-gratia to the deputationists should henceforth be discontinued. However, these officials can draw deputation allowance as provided in rules. For this purpose, AD may issue directions to RFC. Rules Division of FD may also be requested to make appropriate amendment in order No.F.1(47)FD(Gr.2)/ 82 dated 27th June, 1989. (iii) In future, RFC shall ensure that such a condition is neither in the recruitment advertisement nor incorporated in any service conditions/rules.
For this purpose, AD may issue directions to RFC. Rules Division of FD may also be requested to make appropriate amendment in order No.F.1(47)FD(Gr.2)/ 82 dated 27th June, 1989. (iii) In future, RFC shall ensure that such a condition is neither in the recruitment advertisement nor incorporated in any service conditions/rules. (iv) RFC shall carry out the above exercise of examining service record of the employees, prepare proposals, put up to the Board of the Corporation, take appropriate decision. 11. During FY 2012-13, organizational and financial restructuring of the Corporation was implemented vide which following steps have been taken:- i. Voluntary Retirement Scheme was introduced under which 176 employees have taken retirement and around 300 employees were sent on deputation/reverse deputation to other Government Departments/Board/Corporations. Presently, 264 employees of the Corporation are on deputation. Both the measures have resulted in saving of employees cost of approx. Rs.20 crore per anuum. ii. The matter of payment of ex-gratia was reviewed and decided to release ex-gratia to 85 employees (FY 2011-12) and 81 employees (FY 2012-13) as per judgment of Hon'ble High Court dated 5.9.1988 to those employees in whose advertisement at the time of recruitment in service of RFC, there was a mention of ex-gratia. Ex-gratia payment has not been made to the deputationist officers of the Government posted in RFC and to other employees of RFC in whose advertisements at the time of recruitment in service, there was no mention about ex-gratia. The Corporation was not able to meet the repayment obligations of SIDBI, therefore, the entire outstanding liability of SIDBI of Rs.542 crore was settled at Rs.340 crore. The State Govt. has infused fresh equity of Rs.25.65 crore in 2012-13 and Rs.25 crore in 2013-14. RFC has raised alternative resources through Non-SLR bonds of Rs.300 crore in 2012-13 to make pre-payment to SIDBI. The State Government has also agreed to guarantee for raising Rs.500 crore through non SLR Bonds in 2013-14. The Board of Directors of the Corporation with the support and co-operation of the State Govt. is striving hard for survival of the Corporation. If the Corporation had not taken the above measures, it would not have been even in a position to pay the monthly salary bills of its employees.” 6.
The Board of Directors of the Corporation with the support and co-operation of the State Govt. is striving hard for survival of the Corporation. If the Corporation had not taken the above measures, it would not have been even in a position to pay the monthly salary bills of its employees.” 6. It is submitted by learned counsel appearing for the State of Rajasthan, and the Rajastan Financial Corporation(for short, 'the Corporation), that with the reduction of refinance by the SIDBI, the business of the Corporation has been reduced to the extent of 75%, resulting in the increase in cost of the funds, raised at higher rates through Bonds, in place of refinance at cheaper rates from SIDBI. In the last few years, the Corporation is finding it difficult to survive. The profits, as disclosed in the 58th and 59th Annual Report of the Corporation, of the years 2012-13 and 2013-14 respectively, are not to the extent, which may cover the costs for all the employees to be paid ex-gratia, and thus, a decision was taken in a Meeting of the Officers of the State Government, dated 09.02.2012, for payment of ex-gratia, as follows:- “58. After discussion, the following decisions were taken:- (1) The AD may be requested to direct RFC to examine the issue of payment of ex-gratia @ 20% to the employees of RFC. During discussions a point was raised that payment of ex-gratia is an integral part of emoluments. For this purpose, it was agreed that service record of all the employees of RFC should be examined and seen as to how payment of ex-gratia is an integral part of the emoluments and whether such conditions were laid down in the advertisement of recruitment or was it a part of service conditions/service rules while making recruitment of a particular employee? After examination, if it is found that in cases, where such conditions existed in the advertisement or service rules of a particular employee, then such payment may be continued in the light of judgment of Hon'ble Court in DBCWP 669/1988. In other cases in which there was no mention of grant of payment of ex-gratia in the recruitment advertisement or other service conditions, the payment of ex-gratia @ 20% prima facie appears to be irregular. This should be examined and in such cases, RFC should take a view to stop the payment henceforth.
In other cases in which there was no mention of grant of payment of ex-gratia in the recruitment advertisement or other service conditions, the payment of ex-gratia @ 20% prima facie appears to be irregular. This should be examined and in such cases, RFC should take a view to stop the payment henceforth. (2) Payment of ex-gratia to the deputationists should henceforth be discontinued. However, these officials can draw deputation allowance as provided in rules. For this purpose, the AD may issue directions to RFC. Rules Division of FD may also be requested to make appropriate amendment in order No.F.1(47)FD (Gr.2)/82 dated 27th June, 1989 (copy placed below). (3) In future, RFC shall ensure that such a condition is neither in the recruitment advertisement nor incorporated in any service conditions/rules. (4) The AD/RFC shall carry out the above exercise examining service record of the employees, prepare proposals, put up to the Board of the Corporation, take appropriate decision by 31.03.2012 positively and apprise Finance Department of the factual position.” 7. It is not denied that the members of the Association, who were appointed in the year 1973-74 and thereafter, in pursuance to the advertisement, in which payment of ex-gratia was made a condition for employment, have been regularly paid thr ex-gratia amount. The payment of ex-gratia was however stopped in respect of other employees, on the basis of the decision of the Board of Director of the Corporation following the deliberations made by the State Government. 8. We do not agree with the submission made by learned counsel appearing for the applicant that the amount of ex-gratia is a part the pay and allowances, which cannot be reduced, despite decision by the Board of Directors, considering the financial performance of Corporation. The amount of ex-gratia is not a part of pay and allowances, as provided in the Regulations of 1958. The payment would, in any circumstances, depend upon the financial performance, and the decision of the Board of Directors of the Corporation. 9. The State Government, after considering the directions issued by the High Court, was of the view that where such conditions existed in the advertisement, or service rules of a particular employee, then such payment may be continued in the light of judgment of the High Court.
9. The State Government, after considering the directions issued by the High Court, was of the view that where such conditions existed in the advertisement, or service rules of a particular employee, then such payment may be continued in the light of judgment of the High Court. In other cases, where there was no mention of grant of payment of ex-gratia in the recruitment advertisement, or service conditions, the payment of ex-gratia @ 20%, prima facie appears to be irregular. 10. The Board of Directors of RFC, in pursuance to the decision taken by the State Government, resolved to pay ex-gratia to only those employees, who were employed in pursuance to the advertisement, in which condition for payment of 20%, as ex-gratia, was mentioned as one of the conditions, on which they were recruited. 11. It is stated by learned counsel appearing for the State of Rajasthan and the RFC, that those employees, who were appointed in pursuance to the advertisement for payment of 20% ex-gratia, have been paid the amount upto Financial Year 2011-12 and 2012-13. 12. We are also informed that, apart from those employees, who were employed in the year 1973-74 and thereafter, in pursuance to the advertisement, in which 20% ex-gratia was one of the conditions, there are large number of other employees, on deputation, and those, who were not appointed under a condition of payment of 20% of amount as ex-gratia. These employees were not party to the writ petition, and thus, they are not entitled to payment of ex-gratia, as a part of their salary. In any case, the emoluments, to be paid to the employees, as provided under the Regulations of 1958, do not include ex-gratia, as a part of the emoluments. 13. We do not find that the respondents have committed any willful, or deliberate disobedience of the orders passed by this Court. In any case, the orders regarding pay, allowances and emoluments, were not passed by a Division Bench of this Court, in respect of the employees, who were not the petitioners before it. 14. The contempt petition is dismissed.