CORAMTHE HON’BLE MR.MARKANDEY KATJU, CHIEF JUSTICEandTHE HON’BLE MR v. N.Pandurangan

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 01.02..2005CORAMTHE HON’BLE MR.MARKANDEY KATJU, CHIEF JUSTICEandTHE HON’BLE MR.JUSTICE D.MURUGESANW.A.Nos.155 to 158 of 2004andW.A.M.P.Nos.258 to 261, 7406 and 7407 of 2004---------The Tamil Nadu Cements Corporation Ltd.,Rep. by its General Manager,Alangulam Works,Alangulam 626 127...Appellants in W.A 155 and 158/2004Kamarajar DtThe Tamil Nadu CementsCorporation Ltd.,rep by its General Manager Ariyalur Works,Ariyalur Cement Factory, Ariyalur P.O.Trichy District. ... Appellants in WA 156 & 157 /2004Vs.N.Pandurangan..Respondent in W.A.155 of 2004 G.Manoharan..Respondent in W.A.156 of 2004G.Balasubramanian..Respondent in W.A.157 of 2004 S.Veerapandian..Respondent in W.A.158 of 2004 PRAYER: Appeals filed against the common order of thelearned Single Judge dated 11.12.2002, passed in W.P.Nos.7660/94, 39816/96, 763/98 and 16386/2000, as stated therein. -------- For Appellant:: Mr.V.Karthick for M/s. T.S.Gopalan & Co.For Respondents:: Mr.N.G.R.Prasad for M/s.Row & Reddy https://hcservices.ecourts.gov.in/hcservices/ J U D G M E N TTHE HON’BLE THE CHIEF JUSTICE These four writ appeals are filed against the commonorder of the learned single Judge passed in four connectedwrit petitions on 11.12.2002. 2. Heard learned counsel for the parties, and perusedthe records. 3. The writ petitioners prayed for quashing ofparagraph-8 of the impugned circular inR.C.No.11677/B.L.4/89 of the respondent (appellant herein)dated 24.08.1993 discontinuing payment of subsidy interestto the Housing Development Finance Corporation (hereinafterreferred to as HDFC), and for a consequential orderdirecting the respondent in the writ petitions (theappellant) to continue to give subsidy interest towardshouse building advance and to refund the amount deductedfrom their salary towards subsidy to HDFC. 4. The petitioner in W.P.No.7660 of 1994Mr.N.Pandurangan joined the service of the Tamil NaduCements Corporation Ltd. as typist in the year 1972 attheir Alangulam works. The respondent is a Government ofTamil Nadu Undertaking and is a ‘State’ under Article 12 ofthe Constitution of India. The petitioner was promoted asSenior Typist in the year 1987. It is alleged that on10.09.1992 his post was upgraded to the Managerial Cadrethough his duties remained the same. 5. On 24.10.1989 the respondent-Corporation enteredinto a settlement under Section 12(3) of the IndustrialDisputes Act, 1947 with various unions including its StaffAssociation providing for House Building Advance. At thattime the petitioner was a member of the Staff Association.As per the terms of the said settlement, an employee couldavail House Building Advance from HDFC, and the HDFC usedto charge 14% interest per annum on the loans so advanced.As per the terms of the settlement the employees had to pay6% interest per annum and the interest exceeding 6% had tobe borne by the respondent-Corporation. The employee, whohad put in 10 years of service and had 7 years of serviceleft, could avail of the loan. 6. According to the notice dated 05.05.1990, theworkers, who are covered by the Cement Wage Board wereeligible to get Rs.75,000/- towards House Building Advance.The petitioner in W.P.No.7660 of 1994 availed House https://hcservices.ecourts.gov.in/hcservices/ Building Advance of Rs.60,000/- and the first instalmentwas disbursed on 1.4.1990. On 18.09.1992 he was upgraded tomanagerial cadre. 7. It is alleged in paragph – 8 of the petitioner’saffidavit filed in support of the writ petition inW.P.No.7660 of 1994 that the respondent-Corporation put upthe impugned Circular dated 24.08.1993 stating that thepersons who had been promoted from workmen category tomanagerial cadre will not get the benefit of subsidisedinterest which in this case works out to 8% per annum. Inshort the petitioner had to bear the interest burden of 8%which worked out to Rs.49,126/- in his case. It is furtheralleged that had he known of this discontinuation ofsubsidy, he would not have availed of the loan itself.Further, the terms of the settlement dated 24.10.1989 doesnot envisage such a contingency. The petitioner made arepresentation to the General Manager, and Chairman andManaging Director of the respondent-Corporation, but to noavail. On the other hand, the respondent-Corporation hasstarted deducting the subsidy interest of 8% from October1993, which according to the petitioner is illegal. It isfurther alleged by the writ petitioner in W.P.No.7660 of1994 that there is no provision in the settlement dated24.10.1989 under Section 12(3) of the Industrial DisputesAct, 1947 that in the event of an employee moving to themanagerial cadre the interest subsidy on the House BuildingAdvance will not be available to him. It is also allegedthat the respondent-Corporation has no jurisdiction to stopthe interest subsidy of 8% when the petitioner was movedinto the managerial cadre. 8. A counter affidavit has been filed by the GeneralManager of the respondent-Corporation, and we have perusedthe same. It is alleged in paragraphs 3 and 4 that when thepetitioner joined the services of the respondent-Corporation, he was a ‘workman’ within the meaning of theword ‘workman’ as defined in the Industrial Disputes Act,1947, and hence, he was governed by the provisions of thesaid Act. On and from 10.09.1992 he came into managerialcadre, and hence, he ceased to be a workman, and therefore,the Industrial Disputes Act, 1947 has ceased to apply tohim. It is further alleged that the terms of the settlementunder Section 12(3) of the Industrial Disputes Act, 1947were made applicable only to a ‘workman’ governed by theIndustrial Disputes Act, 1947. Once a person ceases to be a‘workman’ he is not entitled to get the benefit of thatsettlement. The petitioner is entitled to get interestsubsidy from the date of the grant of the loan up to thedate of his promotion to the managerial cadre and notthereafter. https://hcservices.ecourts.gov.in/hcservices/

9. It may be mentioned here that whereas thepetitioner in W.P.No.7660 of 1994 Mr.N.Pandurangan hadobtained the loan prior to the circular dated 24.08.1993,the other writ petitioners in the connected writ petitionsobtained loans after the circular dated 24.08.1993.However, in our opinion, that will not make any differencein this case. 10. The facts of the case reveal that on 24.10.1989 asettlement was reached under Section 12(3) of theIndustrial Act, 1947 between the appellant and the unionsgoverning the workmen of the appellant in variousfactories. Caluse - 3 of the settlement envisages that theworkmen would bear 6% of the interest in respect of theloans taken by them from the Housing Development FinanceCorporation, and the interest over and above 6% would beborne by the Appellant. In other words, the workmen weregiven a subsidy on interest towards repayment of loansobtained by them for house building. It was also providedthat the interest would be payable from 24.10.1989 onwards.On 24.08.1993 the appellant issued a Circular. Caluse-4 ofthe Circular is as under:- “An employee will be paid a maximum of Rs.75,000/-only”, though no such clause was stipulated in thesettlement. 11. Clause – 8 of the impugned Circular reads asunder:- “The interest subsidy which was given as perthe recommendations of the Cement Wage BoardAward to eligible employees drawing salary andthose who had already received their loanamount under the Scheme will not be eligiblefor further interest subsidy in the event oftheir getting promoted to higher grades(management cadre). Hence, deductions will bemade in respect of those employees who hadalready received their loan amount and who hadbeen promoted from the date of such promotion.Deductions will be made as per the existingrates that were prevailing before thepromotion.”The Circular therefore envisages that interest subsidywould not be payable in respect of persons who werepromoted to the managerial cadre from the date ofpromotion. 12. The writ petitioner in W.P.No.7660 of1994/Appellant in W.A.155 of 2004 availed a housing loan inJuly 1991 when he was in the workman cadre. On 10.09.1992he was promoted to the managerial cadre. After the Circulardated 24.08.1993, the respondent-Corporation withdrew the https://hcservices.ecourts.gov.in/hcservices/ interest subsidy and the writ petitioner-appellantchallenged the Circular dated 24.08.1993 by filingW.P.No.7660 of 1994. The other three respondents availedtheir housing loan during March 1997, September 1994 andJuly 1994 respectively, and on their promotion to themanagerial cadre the interest subsidy was sought to bediscontinued and they filed W.P.Nos.16386 of 2000, 763 of1998 and 39816 of 1996. By a common order dated 11.12.2002,the learned single Judge held that it is not specificallyprovided that the settlement would be applicable only aslong as the employee continues to be at that level, and notif he attains any promotion to the managerial level, thatthere has been no change or amendment to the settlement,that the settlement envisages promotion to the managerialcadre on completion of 10 years, that it would not bepossible to reconcile with the terms of the Circular thatan employee being promoted should be deprived of theinterest subsidy, and that the intention behind thesettlement cannot be whittled down by a circular. Thelearned single Judge also made a reference to the fact thatthe respondents in W.A.Nos.156 to 158 of 2004 had availedof the loan when they were aware of the circular, but as hehad held that the circular is invalid, he directed that thebenefits should be extended to them also. 13. The learned counsel for the appellants submittedthat the settlement dated 24.10.1989 would be applicable toworkmen as long as they remain in the cadre of workmen, andwould not be applicable the moment they ceased to beworkmen and came into the managerial cadre. The Circulardated 24.08.1993 applies only to those who have ceased tobe workmen. Hence, he submitted that the order of thelearned single Judge deserves to be set aside. 14. We have carefully perused the settlement dated24.10.1989 entered under Section 12(3) of the IndustrialDisputes Act, 1947, the translated English copy of which issupplied to us. Clauses 1 to 5 of the said settlementprovides as follows:- Clause-1: The management is giving rotatingfund and house building loan facility as per theAward of the Cement Industry Wage Board. For theworkers to whom the Cement Wage Boardrecommendations are applicable, loans will begranted through the Housing Development FinanceCorporation (HDFC). That loan will be grantedsubject to the conditions of the HousingDevelopment Finance Corporation.Caluse-2: For repayment of the loan, themaximum amount to be recovered from the salaryshould be in such a way that it shall not exceed https://hcservices.ecourts.gov.in/hcservices/ the permissible recovery amount as laid down inthe Payment of Wages Act. Caluse-3: The Labour should bear 6% of theinterest to be paid to the Housing DevelopmentFinance Corporation towards the loan availed.Beyond that the management shall make thepayment. Clause-4: For availing this loan, theworkers should have at least 10 years of regularservice. Further, they should have 7 years forsuperannuation. Further, it will be given afterverifying whether the worker has the capacity torepay the loan.Caluse-5: If already the workers had availedthe loan from the Housing Development FinanceCorporation are eligible as aforesaid, themanagement will bear the interest from 24.10.1989for them. For those who had availed the loanwithout eligibility for obtaining the housingloan facility, the management will pay theinterest on the date when they acquire theeligibility. 15. Admittedly, the House Building Advance Subsidy wassanctioned when the respondents were workmen. Thesettlement provided that on completion of 10 years ofservice the workmen will be given managerial cadre. HenceMr.N.Pandurangan came to managerial cadre on 10.10.1992while Mr.S.Veerapandian came to the managerial cadre on12.02.1996. In our opinion, the learned single Judge hasrightly held that when the House Building Advance Subsidywas given to the writ petitioners they were in the workmencadre and in the settlement it is nowhere provided that ontheir being moved to the managerial cadre the subsidy willbe stopped. In our considered opinion, the managementcannot deviate from the bilateral settlement by theunilateral Circular dated 24.08.1993. 16. In L.I.C. Vs. D.J.Bahadur and Others, AIR 1980 SC2181 the Supreme Court observed that even if notice underSections 9-A and 19(2)(6) of the Industrial Disputes Act,1947 was given the settlement does not suffer death merelyon giving such notice. The Award or Settlement willcontinue to be operative quo-contract. 17. The aforesaid decision was followed in KarnatakaState Road Transport Corporation Vs. KSRTC Staff & Workers’Federation and Another, (1999) 2 SCC 687. In KarnatakaState Road Transport Corporation case it was observed thatin the absence of a fresh settlement superseding the https://hcservices.ecourts.gov.in/hcservices/ earlier one, the efficacy and binding nature of the earliersettlement will continue to survive. Hence, the unilateralorder of the Government was illegal and uncalled for. TheSupreme Court further observed that the State Governmentcannot issue directions to the Corporation to commit breachof a binding settlement operative between the parties. Inour opinion, the aforesaid decision squarely applies to thefacts of the present case. 18. The contention of the management that some of theemployees were granted House Building Advances after theissuance of the impugned Circular has in our opinion, noconsequence because the said Circular itself is illegal, inview of the decision by the Supreme Court in KarnatakaState Road Transport Corporation case (cited supra). Ifthat contention is accepted, the writ petitioner inW.P.No.7660 of 1994 Mr.N.Pandurangan will lose Rs.49,126/-and the writ petitioner in W.P.3981 of 1996Mr.S.Veerapandian will lose Rs.61,086/-. Moreover, it issettled law that since labour legislation is beneficiallegislation, if two views are reasonably possible, the viewin favour of the employees should be accepted, vide K.C.P.Employees’ Association, Madras Vs. Management of K.C.P.Ltd., Madras & Other, (1978) 2 SCC 42 in which the SupremeCourt observed:“In Industrial Law, interpreted and applied inthe perspective of part IV of the Constitution, thebenefit of reasonable doubt on law and facts, ifthere be such doubt, must go to the weaker section,labour”. In Alembic Chemical Works Co. Ltd. Vs. The Workmen,AIR 1961 SC 647 the Supreme Court observed (videparagraph – 7) that in a welfare legislation where twoconstructions of the statute are possible, the one whichis more beneficial to the employees should be adopted,(See also Ramesh Metal Works and Another Vs. State, 1962(1) LLJ 169, General Secretary, Cochin Port Wharf StaffAssociation Vs. Chairman, Cochin Port Trust and Others,1982 (1) LLJ 173, etc.,).19. In view of the above there is no force in theseappeals, and accordingly they are all dismissed. No costs.Consequently, connected W.A.M.Ps. are also dismissed. Sd/Asst.Registrar/true copy/Sub Asst.Registrarsm https://hcservices.ecourts.gov.in/hcservices/ Copy to: - 1.The General Manager,The Tamil Nadu Cements Corporation Ltd.,Alangulam Works, Alangulam - 626 127.Kamarajar District.2.The General Manager, Tamil Nadu Cements Corporation Ltd.,Ariyalur Cement Factory, Ariyalur.Trichy District.2 cc to T.S. Gopalan, SR. 39822 ccs to M/S. Row & Reddy, SR. 3845 & 3846 W.A.Nos.155 to 158 of 2004TS (CO)kk 10.2.05