The Management of TANSI, Mettur Dam. v. The Presiding Officer, Labour Court, Salem & Ors.

IN THE HIGH COURT OF JUDICATURE AT MADRASDated : 19..08..2009C O R A MThe Honourable Mrs. Justice Prabha SridevanandThe Honourable Mr. Justice M. SathyanarayananWrit Appeal No.1016 of 20041 The Management of TANSI, Mettur Dam.2 The Management of TANSI, Rep. by its Chairman & Managing Director, Chennai. .. Appellants/Petitioners versus1 The Presiding Officer, Labour Court, Salem.2 K.JANARDHANAM3 R.NATARAJAN4 R.PONNUSAMY5 A.VELLIAN6 M.KALIAPPAN7 R.NATHAMANI8 S.ARULAPPAN9 K.PONNAKAN10 RATHINAM11 K.R.SUNDARARAJAN12 ARUMUGAM13 D.C.INNASIMUTHU14 A.PERIASAMY15 LAKSHMANAN16 K.MADHAN17 P.CHINNAPPAN18 RAMAN19 M.P.PERUMALSAMY20 MARIMUTHU21 V.RAMAN22 A.MOHAMMED ALI23 K.KUPPUSAMY24 G.KUPPUSAMY25 CHINNAPPAN26 P.MUNISAMYNAIDU https://hcservices.ecourts.gov.in/hcservices/ 27 K.CHINNAPPAN28 K.MANI29 MADHALAIMUTHU30 L.PALANISAMY31 KRISHNAN32 N.RAMAN PILLAI33 M.AROKIASAMY34 GURUSAMY35 MOORTHY36 R.MARIMUTHU37 DHANAPALAN38 M.PERUMAL39 C.KOLANDAISAMY40 K.KARUPPANNAN41 K.CHELLAPPAN42 VEERAN43 G.RAMASAMY44 R.KALIMUTHU45 K.PACHIAPPAN46 S.PALANIAPPAN47 A.GOVINDAN48 O.BOOMICHETTY49 PALANIAPPAN50 C.PULIKARAN51 V.KRISHNAN52 K.KANDASAMY53 MAKBOOL JOHN54 G.ARUMUGAM55 V.MARIMUTHU56 K.GURUNATHAN57 RANJAN58 V.AMMASI59 A.ANDIMUTHU60 V.SENGODAN61 M.KANTHAN62 RAMU63 R.CHINNANNAN64 H.SAHUL HAMEED65 S.SEERANGAN66 A.VALLILAPPAN67 RAMASAMY68 K.MUNUSAMY69 T.ANGAPPAN70 K.JAGANNATHAN71 RAMAN72 S.DURAISAMY73 M.NARAYANAN74 V.PACHAMUTHU75 M.RAJU https://hcservices.ecourts.gov.in/hcservices/ 76 PACHIAPPAN77 M.CHELLADURAI78 M.SUBRAMANIAM79 M.MARIAPPAN80 SWAMINATHAN81 PALANI82 M.MARIMUTHU83 A.PONNUVEL ACHARI84 S.KASI85 K.NACHIMUTHU86 PALANISAMY87 R.PERUMAL88 K.PALANISAMY89 K.PALANISAMY90 C.THANGAVELU91 K.NACHIMUTHU92 M.KALIAPPAN93 PARAMASIVAM94 KUPPUSAMY95 AMMASI96 VEERAN97 MARIAPPAN98 V.PALANISAMY99 M.SHANMUGAM100 V.VENKATRAMAN101 S.GURUSAMY102 P.RAMASAMY103 M.CHINNAPPAN104 K.CHINNUSAMY105 S.R.SUBBIAH106 K.M.VENKATACHALAM107 J.ABRAHAM108 V.CHENNIAPPAN109 C.MUTHUSAMY110 C.GOVINDAN111 K.KUPPUSAMY112 S.RAMASAMY113 S.SRINIVASAN114 S.P.KAVERY115 MARAPPAN116 KAMATCHI117 RAMASAMY.. Respondents/RespondentsPrayer : Writ Appeal filed under Clause 15 of the Letters Patentagainst the order passed by a learned single Judge of this Courtdated 29.7.2003 in W.P. No.17312 of 1996 presented to this Courtunder Article 226 of the Constitution of India to issue a writ ofcertiorari calling for the records of the first respondent pertainingto the order passed in C.P.No.87/95 dated.29.12.1995. https://hcservices.ecourts.gov.in/hcservices/ For Appellants : Mr. S. SathiyamoorthyFor Respondents-2 to 117 : Mr. K.V. ShanmuganathanJ U D G M E N TPrabha Sridevan, J.The 117 employees who had retired availing the VoluntaryRetirement Scheme offered by the appellant-Corporation in the year1986, preferred a claim petition under Section 33C(2) of theIndustrial Disputes Act, 1947 on the ground that while calculatingthe retrenchment compensation, ex gratia and Earned Leave wages, theManagement has taken 30 days and 31 days for the month for thepurpose of calculating the amount instead of taking 26 days in themonth, as calculated in the case of gratuity. The Labour Court,Salem accepted their contention and passed orders. Against that, theappellants herein filed the writ petition. That was dismissed by thelearned single Judge holding that there is no irregularity in theorder. 2. Learned counsel for the appellants raised only two points.One is that when the option under Voluntary Retirement Scheme hasbeen accepted and the benefits have been taken, no claim can be madeand it is not open to the respondents to re-agitate the matter,especially after nine years, and claim that dues are payable on theground of pay revision. In this regard, he relied on (2003) 5 S.C.C.163 [A.K. Bindal vs. Union of India]. He also referred to 2007 (1)L.L.N. 740 [Guru Jambheshwar University vs. D. Pal], where theSupreme Court has held that the principle of 26 working days permonth as applicable under the Payment of Gratuity Act cannot beimported for determining retrenchment compensation payable underSection 25F(b) of the I.D. Act. Secondly, it was also submitted thatthe appellant-Corporation had incurred heavy loss in itsadministration due to surplus and eight units had been closed downand in those circumstances, the Voluntary Retirement Scheme wasextended to its employees. Learned counsel submitted that havingaccepted the amounts paid in the year 1986, the respondents cannotreturn after nine years and make a claim under Section 33C(2) of theAct.3. Learned counsel for the respondents-workmen submitted thatthey are all poor workers who are entitled to the relief.4. It is not necessary to go into the details regarding thefacts of the case. In (2003) 5 S.C.C. 163 (supra), the facts arealmost identical. There, the company was Fertilizer Corporation ofIndia, a Government of India Enterprise and the employees had retiredtaking advantage of the Voluntary Retirement Scheme extended by it. https://hcservices.ecourts.gov.in/hcservices/ When there was a pay revision, they again made a claim alleging thatthey are entitled to more. The Supreme Court held as follows :"34. This shows that a considerable amount is to bepaid to an employee ex gratia besides the terminal benefitsin case he opts for voluntary retirement under the Schemeand his option is accepted. The amount is paid not fordoing any work or rendering any service. It is paid in lieuof the employee himself leaving the services of the companyor the industrial establishment and foregoing all hisclaims or rights in the same. It is a package deal of giveand take. That is why in the business world it is known as“golden handshake”. The main purpose of paying this amountis to bring about a complete cessation of the juralrelationship between the employer and the employee. Afterthe amount is paid and the employee ceases to be under theemployment of the company or the undertaking, he leaveswith all his rights and there is no question of his againagitating for any kind of his past rights with hiserstwhile employer including making any claim with regardto enhancement of pay scale for an earlier period. If theemployee is still permitted to raise a grievance regardingenhancement of pay scale from a retrospective date, evenafter he has opted for Voluntary Retirement Scheme and hasaccepted the amount paid to him, the whole purpose ofintroducing the Scheme would be totally frustrated."In that case also, the Supreme Court held that "the contention thatthe economic viability of the industrial unit or the financialcapacity of the employer cannot be taken into consideration in thematter of revision of pay scales of the employees does not appeal tous". And then, it was held thus :"Therefore, it appears to be the consistent view ofthis Court that the economic viability or the financialcapacity of the employer is an important factor whichcannot be ignored while fixing the wage structure,otherwise the unit itself may not be able to function andmay have to close down which will inevitably havedisastrous consequences for the employees themselves. Thematerial on record clearly shows that both FCI and HFC hadbeen suffering heavy losses for the last many years and theGovernment had been giving a considerable amount formeeting the expenses of the organisations. In such asituation, the employees cannot legitimately claim thattheir pay scales should necessarily be revised and enhancedeven though the organisations in which they are working aremaking continuous losses and are deeply in the red." https://hcservices.ecourts.gov.in/hcservices/ In the present case also, there is no dispute that TANSI has beenclosed on account of the loss sustained by it.5. In 2007 (1) L.L.N. 740 (supra), an identical issue came upbefore the Supreme Court and the Supreme Court explained the positionin paragraphs 15, 17, and 18 as hereunder :"15. It may be noted that Section 4(2) of the Paymentof Gratuity Act uses the expression ''the employer shallpay gratuity to an employee at the rate of fifteen days'wages based on the rates of wages last drawn by theemployee." On account of the language used in Section 4(2)it becomes necessary to find out the rate of wages whichnecessarily involves the concept of actual working days. Itwas on the basis of the aforesaid language of theprovisions under the Payment of Gratuity Act that thisCourt in the case of Jeevanlal (supra) observed that"although a month is understood to consist of 30 days,gratuity payable under the Payment of Gratuity Act treatingthe monthly wages as wages for 26 days is not new orunknown....17. There is another important feature which deservesnotice. Subsequent to the decision of this Court inJeevanlal (supra) an explanation has been added aftersecond proviso to Section 4(2) of the Payment of GratuityAct, by Act No. 22 of 1987, which reads as under:-"Explanation: In the case of a monthly rated employee,the fifteen days' wages shall be calculated by dividingthe monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen."18. By adding the explanation, the legislature hasbrought the statute in line with the principle laid down inthe case of Jeevanlal (supra) and has given statutoryrecognition to the principle evolved, viz. that in case ofmonthly rated employee the fifteen days' wages shall becalculated by dividing the monthly rate of wages by twentysix and multiplying the quotient by fifteen. But, no suchamendment has been made in the Industrial Disputes Act. Ifthe legislature wanted that for the purposes of Section 25F(b) also the average pay had to be determined by dividingthe monthly wages by twenty-six, a similar amendment couldhave been made. But the legislature has chosen not to doso. This is an additional reason for holding that theprinciple of "twenty-six working days" is not to be appliedfor determining the retrenchment compensation under Section https://hcservices.ecourts.gov.in/hcservices/ 25F(b) of the Act."Therefore, we are bound by the decision of the Supreme Court and theretrenchment compensation can be paid only by working it out at therate of `5/30 and not at the rate of 15/26, as in the case of paymentof gratuity. 6. In addition to the aforesaid decision, there are two otherreasons why the respondents are not entitled to the claim made bythem. In the voluntary retirement scheme of the appellants, it wasspecifically mentioned that gratuity will be paid by applying theprinciple of 15/26 and there was no agreement to pay earned leaveetc. by applying the principle of 15/26. It is on the basis of thisclaim that the respondents gave their applications for availing thevoluntary retirement scheme and eleven years later, without anyexplanation for the delay, they have filed their claim petition. Thelearned single Judge had followed 2000 (1) L.L.N. 418 [Management ofShadlow India Ltd. vs. Presiding Officer, Labour Court], but in 2007(1) L.L.N. 740 (supra), the Supreme Court has declared that there isno justification to import the concept of "26 working days" into theIndustrial Disputes Act when no amendment has been made to the Act tobring it in line with the language in the Payment of Gratuity Act. 7. For the aforesaid reasons, the order of the learned singleJudge is set aside and the writ appeal is allowed, but there shall beno order as to costs. Consequently, W.A.M.P. No.1834 of 2004 isclosed.Sd/-Asst.Registrar/True Copy/Sub.Asst.RegistrarabToThe Presiding Officer,Labour Court, Salem.+ 1 cc to Mr.S.Sathiamurthi,Advocate,SR.39462W.A. No.1016 of 2004 BV(CO)EM/28.8.09