EID Parry (India) Ltd. v. M.N.Padmanabhan & Ors.

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED :: 26-06-2008CORAMTHE HONOURABLE MR.JUSTICE S.J.MUKHOPADHAYAANDTHE HONOURABLE MR.JUSTICE V.DHANAPALANWRIT APPEAL No.698 OF 2001EID Parry (India) Ltd.,P.B.No.12, Dare House,Chennai-600 001....Appellant-vs-1.M.N.Padmanabhan2.The Labour Officer, Kuralagam, Chennai-600 008....RespondentsAppeal under Clause 15 of the Letters Patent against the orderdt. 15.12.2000 and made in WP 2573/1994 Petition presented underArticle 226 of the constitution of India to issue a writ of Certioraricalling for the records relating to the proceedings of the firstrespondent in A/1598/93 dated 3.1.94 quash the same.For appellant : Mr.A.L.Somayaji, Senior Counsel, for M/s.T.S.Gopalan & Co.For respondent 1 : Mr.R.N.AmarnathFor respondent 2 : Mr.M.Dhandapani, Spl.Govt.Pleader.J U D G M E N TV.DHANAPALAN,J.Appellant/management has filed this appeal aggrieved over theorder, dated 15.12.2000, passed by a learned single Judge inW.P.No.2573 of 1994, whereby the order of the second respondent, inrejecting the first respondent/workman's application for making a https://hcservices.ecourts.gov.in/hcservices/ reference under Section 2-A of the Industrial Disputes Act, 1947, wasset aside.2. According to the first respondent/workman, he joinedservice in the appellant company as a Clerk on 18.03.1959 and afterworking at various places, he was lastly posted at Cuddalore Branch inthe Farms Inputs Division; he was a member of E.I.D.Parry StaffAssociation, a registered trade union; he put in 34 years of service;there was a scheme called Voluntary Retirement Scheme (VRS) introducedby the appellant on 01.06.1993, which was available to the employees,who had completed 10 years of service or 40 years of age, which schemeprovided for financial assistance besides normal terminal benefits toemployees, who opted to leave the service under the Scheme; through aletter, dated 13.07.1993, he opted for the said Scheme; on 21.07.1993,a settlement between him and the appellant was reached under Section 18(1) of the Industrial Disputes Act,1947, and the payments towardsgratuity, provident fund etc., were made to him by the appellant;thereafter, he sent a letter, dated 21.07.1993, to the appellant,alleging that the application for VRS was obtained under coercion andhe was deprived of pension; hence, he raised an industrial disputeunder Section 2-A of the Act before the second respondent, claimingthat the alleged settlement was not legal and that he was coerced tosign such a settlement and, therefore, he could not be denied pension;the second respondent, by his order dated 03.01.1994, dismissed hisclaim, stating that the dispute raised by him did not come within thepurview of Section 2-A, aggrieved over which, he filed the WritPetition, which was allowed by a learned single Judge.3. The appellant, who was the second respondent in the WritPetition, filed a counter, stating that the first respondent herein wasa Clerk under the management; there was a Scheme called VRS put up bythe appellant on 01.06.1993, which was available to the firstrespondent; agreeing to the terms of the Scheme, the first respondentopted for the same; accordingly, the first respondent submitted anapplication on 13.07.1993 and was informed that he could go to Madrason 21.07.1993 for settlement of amount; apart from gratuity andprovident fund, the first respondent was entitled to a sum ofRs.73,368/- and, on the said day, the first respondent also submittedan application for payment of gratuity and a sum of Rs.50,599/- was dueto him by way of gratuity; therefore, the petitioner was required tosign a settlement under Section 18 (1) of the Act, placing on recordhis voluntary retirement and the payment of his dues consequent tovoluntary retirement and the same was signed by the first respondent;thereafter, the appellant had given the first respondent a cheque for asum of Rs.72,112/- and another cheque for a sum of Rs.50,599/- towardsgratuity and the same were encashed by the first respondent; however,after receiving the amount, the first respondent sent a letter, dated21.07.1993, stating that VRS was obtained under coercion and thesettlement, dated 21.07.1993, was illegal; therefore, on 20.08.1993, areply was sent by the appellant, denying the allegation that thesettlement was obtained under coercion, for which the first respondent https://hcservices.ecourts.gov.in/hcservices/ sent a reply, dated 23.08.1993, dictating conditions for joining duty;finally, the appellant sent a reply, dated 07.09.1993, directing thefirst respondent to report for duty and return all the amounts, whichhe had received; and, thereafter, on 15.09.1993, the first respondentcaused a lawyer's notice, which was duly replied by the appellant, butthe first respondent, on 10.11.1993, submitted a petition to the secondrespondent, purporting to be a one under Section 2-A of the Act,praying that the settlement, dated 21.07.1993, be declared as invalidand for a further direction to the appellant to pay full pension andthat the second respondent was justified in taking the view that therewas no valid industrial dispute, which could be taken cognizance ofunder Section 2-A of the Act. 4. Mr.A.L.Somayaji, learned Senior Counsel for the appellant,in his submissions, has strenuously contended that after introductionof Voluntary Retirement Scheme, the first respondent gave an optionand, accordingly, he submitted an application to the appellantmanagement on 13.07.1993, stating that he had carefully read andunderstood the terms and conditions of the Scheme and thereby exercisedhis option to accept the benefits of the Scheme and retire from theservice of the appellant company. According to the learned SeniorCounsel, once the first respondent had opted for the Scheme, he couldnot contend that he had not known the implications of the Scheme. Hewould also contend that the first respondent had entered into asettlement under Section 18 (1) of the Act and having accepted theterms and conditions of the settlement and agreeing that apart from theamounts disbursed as per the settlement, he would not be eligible orentitled to any other claim of retirement benefits such as retiringallowance (pension) or like, even if other employees were held entitledto retiring allowance or any other retirement benefit by any award orsettlement or Court verdict, he could not deviate from the terms andseek for pension, contrary to the settlement reached. 5. The mainstay of the learned Senior Counsel is that afterthe amount is paid and the employee ceases to be under the employmentof the company or the undertaking, there is no question of his againagitating for any kind of his past rights with his erstwhile employer,for the reason that if the employee is still permitted to raise agrievance regarding pension, even after he has opted for VoluntaryRetirement Scheme and accepted the amounts paid to him, the wholepurpose of introducing the Scheme would be totally frustrated.6. In support of his contentions, the learned Senior Counselhas relied upon the following decisions :(i) A.K.Bindal and Another v. Union of India and Others, 2003(5) Supreme Court Cases 163 :"34. This shows that a considerable amount isto be paid to an employee ex gratia besides theterminal benefits in case he opts for voluntary https://hcservices.ecourts.gov.in/hcservices/ retirement under the Scheme and his option isaccepted. The amount is paid not for doing anywork or rendering any service. It is paid in lieuof the employee himself leaving the services ofthe company or the industrial establishment andforegoing all his claims or rights in the same.It is a package deal of give and take. That is whyin the business world it is known as "goldenhandshake". The main purpose of paying this amountis to bring about a complete cessation of thejural relationship between the employer and theemployee. After the amount is paid and theemployee ceases to be under the employment of thecompany or the undertaking, he leaves with all hisrights and there is no question of his againagitating for any kind of his past rights with hiserstwhile employer including making any claim withregard to enhancement of pay scale for an earlierperiod. If the employee is still permitted toraise a grievance regarding enhancement of payscale from a retrospective date, even after he hasopted for Voluntary Retirement Scheme and hasaccepted the amount paid to him, the whole purposeof introducing the Scheme would be totallyfrustrated."(ii) An unreported Division Bench decision of this Court inW.A.No.702 of 2001, dated 03.07.2007 :"5. According to the counsel for thecontesting respondents-writ petitioners, theUnion illegally closed the dispute withoutobtaining any finding with regard to the issuefor which reference was made. The case of theother employees was not discussed and it wasclosed. He placed reliance on a Bench decisionof this Court in Shaw Wallace & Co.Ltd. v. Stateof Tamil Nadu, rep.by the Commissioner andSecretary, Labour Department & Ors., reported in1988 (1) LLJ 177. That was a case in which theCourt discussed and determined the power of theGovernment u/s 10 to refuse to make a referenceof a dispute for adjudication. The Court heldthat the normal rule is that the Governmentshould refer such dispute except in the followingcircumstances :-"(a) the claim is very stale ;(b) the claim is opposed to theprovisions of the Act ;(c) the claim is inconsistent with any https://hcservices.ecourts.gov.in/hcservices/ agreement between the parties ;(d) the claim is patently frivolous ;(e) the impact of the claim on thegeneral relations between the employer and theemployee in the region is likely to be adverse ;(f) the person concerned is not aworkman as defined by the Act."(iii) Everstee v. District Labour Officer, 1999 (2) LLJ 851 :"9.....In our opinion, the appellant, havingvoluntarily tendered his resignation pursuant toa scheme for voluntary retirement, theresignation having been accepted by themanagement and all the benefits arising out ofsuch resignation have been paid by the managementand received by the appellant, he cannot betreated as a 'workman' under Sec.2(s) of theIndustrial Disputes Act. As already noticed, thedefinition only includes persons who arepresently employed or who have been dismissed,discharged or retrenched from the service of theemployer. In fact, dismissal, discharge orretrenchment is an act of the employer, whereasterminating the contract of service by way ofresignation by the workman is his own act. Weare, therefore, of the opinion that the claim ofthe appellant is misconceived and beyond thescope of Sec.2 (s) of the Industrial DisputesAct. A perusal of the petition submitted by theappellant before the Labour Officer and also theOriginal Petition filed before this Court revealsthat the appellant had accepted the benefitsoffered to him in pursuance of the VoluntaryRetirement Package announced by the managementand on being satisfied about the calculation andthe quantum thereof, chose to tender hisresignation and thereafter, on diverse dates,received benefits confirming each time that themanagement had fully and finally settled theaccounts, thereby severing the employer-employeerelationship once and for all...." 7. Per contra, Mr.R.N.Amarnath, learned counsel for the firstrespondent, would contend that though the settlement was reached on21.07.1993, the first respondent did not know Clause 9 of the same,which dealt with terminal benefits, particularly the terms regardingthe pension and other retirement allowances. He would further contendthat pension being an amount which would be payable only to an ex-employee has an intimate link with termination and, therefore, thereference under Section 2-A cannot be rejected. Finally, the learnedcounsel would submit that the finding of the learned single Judge thatpension has a link with termination was well founded and, therefore, https://hcservices.ecourts.gov.in/hcservices/ the same cannot be interfered with. Accordingly, he prayed fordismissal of the appeal. To strengthen his arguments, the learnedcounsel has cited a decision of the Orissa High Court in JosephNiranjan Kumar Pradhan v. Presiding Officer, Industrial Tribunal,Orissa and Others, 1977 (1) LLJ 36, wherein the petitioner was theproprietor of a business concern and the workman, having previouslyworked under the State Government and after superannuation, undertookemployment under the petitioner and on account of incapacity related toold age and chronic ailment, the workman's services were terminated.8. To decide the issue involved in this case, it is quiterelevant to quote Clause 9 of the Memorandum of Settlement and Sections2-A, 2 (oo) and 10 of the Industrial Disputes Act,1947, which read asunder :"Clause 9.- The workman hereby agrees thatapart from the amounts disbursed as per thissettlement, he would not be eligible or entitledto any other claim or retirement benefit such asretiring allowance (pension) or like, even ifother employees are held entitled to retiringallowance or any other retirement benefit by anyaward or settlement or Court verdict." "Section 2-A. Dismissal etc. of anindividual workman to be deemed to be anindustrial dispute.- Where any employerdischarges, dismisses, retrenches or otherwiseterminates the services of an individual workman,any dispute or difference between that workmanand his employer connected with, or arising outof, such discharge, dismissal, retrenchment ortermination shall be deemed to be an industrialdispute notwithstanding that no other workman norany union of workmen is a party to the dispute.""Section 2 (oo) : "retrenchment' means thetermination by the employer of the service of aworkman for any reason whatsoever, otherwise thanas a punishment inflicted by way of disciplinaryaction but does not include -(a) voluntary retirement of theworkman; or (b) .....(c) .....""Section 10. Reference of dispute to Boards,Courts or Tribunals.- Where the appropriateGovernment is of opinion that any industrialdispute exists or is apprehended, it may at any https://hcservices.ecourts.gov.in/hcservices/ time, by order in writing - (a) refer the dispute to a Board forpromoting a settlement thereof; or (b) refer any matter appearing to beconnected with or relevant to the dispute to aCourt for inquiry; or (c) refer the dispute or any matterappearing to be connected with, or relevant tothe dispute, if it relates to any matterspecified in the Second Schedule, to a LabourCourt, for adjudication; or (d) refer the dispute or any matterappearing to be connected with or relevant to thedispute, whether it relates to any matterspecified in the Second Schedule or the ThirdSchedule to a Tribunal, for adjudication."9. In this context, it is significant to note that the firstrespondent/workman has ceased to be in employment of the appellant, byopting for Voluntary Retirement Scheme. Further, under Clause 9 of theMemorandum of Settlement, he has agreed that apart from the amountsdisbursed as per the settlement, he would not claim any other amountsor retirement benefit such as retiring allowance (pension). It cannotalso be the case of the first respondent that he was discharged,dismissed, retrenched or otherwise terminated from the services of theappellant. Hence, he cannot contend that the dispute between him andthe employer connected with or arising out of such discharge,dismissal, retrenchment or termination shall be deemed to be anindustrial dispute under Section 2-A. Section 2 (oo) is categoricalthat 'retrenchment' does not include voluntary retirement. Havingreceived the amounts, to which he was entitled under the Scheme, thefirst respondent cannot also resist the same by saying that he wascoerced to opt for the Scheme. That apart, he has not explained thecircumstances under which he was coerced. Even assuming that he wascoerced to opt for the Scheme, when a letter was written by the firstrespondent to that effect, the appellant sent a reply, dated28.08.1993, denying the same, and stating that they had no objectionfor the first respondent joining duty, provided all the amounts whichwere received by him were paid back to the appellant. However, thefirst respondent had not chosen to do so. All these circumstances wouldcertainly go against the first respondent.10. As per Section 10 of the Act, where the appropriateGovernment is of opinion that any industrial dispute exists or isapprehended, it may refer the dispute to a Board for promoting asettlement thereof; or refer any matter appearing to be connected withor relevant to the dispute to a Court for inquiry; or refer the dispute https://hcservices.ecourts.gov.in/hcservices/ or any matter appearing to be connected with or relevant to thedispute, if it relates to any matter specified in the Second Schedule,to a Labour Court, for adjudication; or it may also refer the disputeor any matter appearing to be connected with or relevant to thedispute, whether it relates to any matter specified in the SecondSchedule or the Third Schedule to a Tribunal, for adjudication.11. To comply with Section 10 for reference to a Board, Courtor Tribunal, the existence of a dispute has to be taken intoconsideration. Section 2-A has been introduced with an object, whereany employer discharges, dismisses, retrenches or otherwise terminatesthe services of an individual workman, any dispute or differencebetween that workman and his employer connected with, or arising outof, such discharge, dismissal, retrenchment or termination shall bedeemed to be an industrial dispute notwithstanding that no otherworkman nor any union of workmen is a party to the dispute.12. If the workman claims a matter for reference underSection 2-A, it must be construed that there exists a dispute.However, on an appraisal of the Voluntary Retirement Scheme, dated01.06.1993; the Settlement, dated 21.07.1993, between the appellant andthe first respondent and also Clause 9 thereof, what comes to be knownis that the first respondent had agreed that apart from the amountsdisbursed as per the settlement, he would not be eligible or entitledto any other claim or retirement benefit such as retiring allowance(pension) or like, even if other employees are held entitled toretiring allowance or any other retirement benefit by any award orsettlement or Court verdict. Therefore, in this case, no dispute withregard to pension does exist.13. The Voluntary Retirement Scheme (VRS), which is sometimescalled Voluntary Separation Scheme (VSS), is introduced by thecompanies and industrial establishments in order to reduce the surplusstaff and to bring in financial efficiency. A considerable amount ispaid to an employee towards ex gratia besides the terminal benefits incase he opts for voluntary retirement under the Scheme and his optionis accepted. The amount is paid not for doing any work or renderingany service. It is paid in lieu of the employee himself leaving theservices of the company or the industrial establishment and foregoingall his claims or rights in the same. It is a package deal of give andtake. The main purpose of paying this amount is to bring about acomplete cessation of the jural relationship between the employer andthe employee. After the amount is paid and the employee ceases to beunder the employment of the company or the undertaking, he leaves withall his rights and there is no question of his again agitating for anykind of his past rights with his erstwhile employer including makingany claim with regard to pension.14. In the case on hand, the first respondent, having optedfor VRS and after entering into the Settlement having fully understoodthe terms of Settlement and particularly Clause 9 thereof and also https://hcservices.ecourts.gov.in/hcservices/ encashing the amount of Settlement arising thereon, claimed furtherbenefits in the name of pension. If the first respondent is permittedto raise such a grievance even after he has opted for VoluntaryRetirement Scheme and accepted the amounts paid to him thereunder, thevery object and the purpose of introducing the Scheme will be defeated.As the first respondent has already ceased to be a workman and oncessation of the jural relationship and on claiming the entire amountof settlement and receiving the same, there cannot be any scope toconstrue that there is a dispute still existing to raise a claim underSection 2-A of the Act. Therefore, this Court has no reason to believethat there exists any dispute in this case. However, the learnedsingle Judge, without going into the entire facts and circumstances ofthe case, has come to the conclusion that pension being an amountwhich would be payable only to an ex-employee has an intimate link withtermination and, therefore, the reference under Section 2-A cannot berejected, which, in our considered opinion, cannot be sustained. 15. The Supreme Court, in A.K.Bindal's case, referred toabove, has held that once the employees opt to retire under VRS andaccept the benefits thereunder, their rights as employees come to anend and, thereafter, they cannot again assert their rights andreagitate their claim for pay revision for pre-retirement period norcan they contend that they opted for VRS under compulsion.16. In the decision cited by the learned counsel for thefirst respondent in Joseph Niranjan Kumar Pradhan's case, cited supra,the workman was terminated by the employer because of his incapacityrelated to old age and chronic ailment, whereas, this is a case wherethe first respondent voluntarily retired from service, which cannot beconstrued to be a termination, retrenchment, discharge or dismissal.So, the said decision is not of any help to the first respondent.17. Following our elaborate discussion in the foregoingparagraphs, this Writ Appeal is allowed, setting aside the order of thelearned single Judge. No costs. Consequently, the connectedC.M.P.No.6151 of 2001 is closed.Sd/Asst.Registrar/true copy/Sub Asst.Registrardixit https://hcservices.ecourts.gov.in/hcservices/ ToThe Labour Officer,Kuralagam,Chennai-600 008.+1cc to Govt. Pleader Sr 32508+1cc to Mr.R.N.Amarnath, Advocate Sr 32329+1cc to M/s.T.S.Gopalan & Co., Sr 32279SSV (CO)km/7.7.W.A.No.698 OF 2001