P.G.RADHAKRISHNAN NAIR v. NONE

W.P.(C) NO.22308/2005 9. SANTHOSH.P.H. EX.B.NO.12194, ASSISTANT MANAGER, (MECH), FACT.LTD. XX/10, VANDANA, KALLUKADAVU ROAD, PULINCHODE, ALWAYE 683 101. 10. CLAUDIUS PETER, EX.B. NO.8148, DEPUTY CHIEF ENGINEER, TECH SERVICES, FACT CD, CLADALE, ERAVIPURAM P.O. QUILON 691 011. BY ADV. MR.ANTONY M. AMBAT RESPONDENT(S): ---------------------------- 1. THE CHAIRMAN AND MANAGING DIRECTOR, THE FERTILIZERS AND CHEMICALS TRAVANCORE LIMITED, UDYOGAMANDAL 683 501. 2. UNION OF INDIA, REPRESENTED BY THE SECRETARY, MINISTRY OF CHEMICALS AND FERTILIZERS, DEPARTMENT OF FERTILIZERS, SASTRI BHAVAN, NEW DELHI. BY MR.A.M.SHAFFIQUE, SENIOR ADVOCATE FOR R1 BY ADVS MR.E.K.NANDAKUMAR FOR R1 MR.A.K.JAYASANKAR NAMBIAR FOR R1 SMT.PRIYA MAHESH FOR R1 BY MR.VARGHESE P. THOMAS, CGSC FOR R2 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 11/06/2009, THE COURT ON 23/07/2009 DELIVERED THE FOLLOWING: W.P.(C) NO.22308/2005APPENDIX PETITIONER'S EXHIBITS P1:- COPY OF THE OFFICE ORDER DT. 25.6.99.P2:- COPY OF THE OFFICE ORDER ISSUED BY FACT DT. 28TH AUGUST 2001.P3:- COPY OF THE JUDGMENT IN OP. NO.6613/02(K) DT. 26TH FEBRUARY 2003.P4:- COPY OF THE JUDGMENT IN WA. NO.642/03 DT. 9.7.03.P5:- COPY OF THE LETTER ISSUED BY FACT DT. JUNE 21, 2004 TO A FORMER OFFICER.P6(a)-(b):- COPY OF THE RELEVANT PAGES OF ANNUAL REPORT OF FACT LTD.P7:- COPY OF THE LETTER DT. 18.3.02 ISSUED BY THE 2ND RESPONDENT.P8 TO P8(i):- COPY OF THE REPRESENTATIONS DT. 2.5.05 SUBMITTED BY THEPETITIONERS 1 TO 10.P9:- COPY OF THE ADVERTISEMENT IN ECONOMIC TIMES DT. 20.6.02.R1(a):- COPY OF THE ORDER DT. 11.7.2001 ISSUED BY MINISTRY OF CHEMICALS &FERTILISERS, DEPARTMENT OF FERTILISERS TO THE IST RESPONDENTTRUE COPY P.S. TO JUDGETSS C.K.ABDUL REHIM,J.--------------------------------------------WP(C).No.22308 of 2005---------------------------------------------Dated this the 23rd day of July, 2009.JUDGMENTThe petitioners in this writ petition were officers of the firstrespondent, which is a public sector undertaking of Union ofIndia. Petitioners 1 to 9 resigned from the service of the firstrespondent company on various dates falling in between1.1.1997 to 30.6.2001. The 10th petitioner was removed fromservice on 3.5.2001, which falls within the above said period.Petitioners were paid gratuity and other terminal benefits onrelieving from the service, based on the pay scale which existedbefore 1.1.1997. The grievance voiced in this writ petition isabout denial of the differential amount in gratuity and otherterminal benefits based on the revised pay scale which came intoeffect as on 1.1.1997, along with interest. 2. The Department of Public Enterprises, Government ofIndia, had issued Ext.P1 'Office Memorandum' intimating itsdecision to accept recommendations of a high level committeeconstituted for revising pay and allowances of managerial staff in WPC.22308/20052Central Public Sector Undertakings, which was annexedtherewith, with effect from 1.1.1997. Consequently, the firstrespondent issued Ext.P2 order dated 28.8.2001, revising the payscale of managerial personnel in their service. It is specificallydeclared in Ext.P2 that the revised pay scale will be applicablewith effect from 1.1.1997. But it is mentioned that payment ofrevised salary will be made effective only from 1.7.2001. Inclause (9) of Ext.P2 it is mentioned that arrears consequent torevision of basic pay/wages and DA for the period from 1.1.1997to 30.6.2001 will be reviewed and decided by theManagement/Government, when the company starts earningcontinuous profit atleast for three years. It is further stated thatpayment of PF, Gratuity and Annual Bonus on revised wages forthe said period will be subject to payment of arrears of wagespertaining to the said period. Clause 9 in Ext.P2 is extractedbelow:“ The liability and payment of arrears relatingrevision of basic pay/wages and DA for theperiod from 1.1.1997 to 30.6.2001 will bereviewed and decided by theManagement/Government, when the company WPC.22308/20053starts earning continuous profit atleast for threeyears. PF, Gratuity and annual bonus onrevised wages for this period will also be subjectto payment of arrears of wages for this period.”3. Some of the retired employees of the first respondentcompany, who left service between 1.1.1997 and 30.6.2001,challenged clause (9) of Ext.P2 before this court in various writpetitions , contending that the condition incorporated therein tothe effect that the increase in terminal benefits resulting from thepay revision will be paid only if company earns profitconsecutively for a period of three years, is unsustainablebecause it is in variance with the direction issued by the Ministryof Chemicals and Fertilisers Government of India. The firstrespondent company resisted those writ petitions contending thatthe question regarding revision of terminal benefits will ariseonly in a case where the arrears of pay and allowances areactually released and as long as the arrears of salary pursuant tothe pay revision is not released, the revision of terminal benefitsand its payment does not arise for consideration. Whiledisposing of those writ petitions through Ext.P3 common WPC.22308/20054judgment, this court observed that, the condition in clause (9)that payment of arrears of revised terminal benefits to thosewho were already retired will be made only on the firstrespondent company making profit consecutively for three years,is highly unjust as it is not going to be fulfilled in the near future.The court observed that it amounts to a practical denial of theclaim for revised terminal benefits to those who had alreadyretired from service. In Ext.P3 judgment this court observed asfollows:- “I find considerable force in the submission ofthe petitioners in this regard and I am inclinedto agree with them. If the conditions imposedby the first respondent are upheld, the samewill result in permanently denying whateverpittance they may receive by way of revision ofterminal benefits. So I am inclined to allowthe third relief sought by the petitioners. Forother benefits, the petitioners may wait forbetter times. Accordingly, the originalpetitions are disposed of directing the firstrespondent to pay the gratuity, leaveencashment of privilege leave/medical leaveadmissible on the basis of the revised pay and WPC.22308/20055allowances within three months from the dateof receipt of a copy of this judgment. Theclaim of the petitioners for other benefits iskept open for which they may work out theirremedies at the appropriate time.” 4. Ext.P3 judgment was taken up in appeal by the firstrespondent company in WA.642/2003 and connected cases. ByExt.P4 common judgment the writ appeals were dismissed. TheDivision Bench observed that it is not reasonable for the companyto contend that eventhough the scales have been revised witheffect from 1.1.1997 the employees who were in service on thatday and retired thereafter shall be treated differently. It is heldthat those who retired from service after 1.1.1997 has to betreated uniformly and equally as they constitute one class andthere is no rational basis for a differential treatment. Since thepay scales were revised with retrospective effect, the benefitshould be made equally admissible to all. 5. Consequent to Ext.P4 judgment the first respondentcompany paid gratuity and other terminal benefits to managerialemployees who retied between 1.1.1997 and 30.6.2001. Ext.P5is a letter issued by the first respondent to one of such WPC.22308/20056employees granting such benefits. It is stated in Ext.P5 asfollows:-“In the context of the judgments pronounced bythe Honourable High Court of Kerala, we areglad to inform you that the management hasdecided to pay the difference in the gratuity andleave encashment amount, as per rules basedon revised wages to the managerial personnelwho left the services between 1.1.1997 and30.6.2001 on account ofsuperannuation/voluntary retirement and diedwhile in service, in 12 equal monthlyinstalments.”It is evident that the benefit allowed pursuant to Ext.P4 judgmentwas limited to managerial personnel who left service on accountof, superannuation, voluntary retirement, and died while inservice. But those who resigned from service as well as thosewho were removed from service were not included in thecategory of employees eligible for such benefits.6. Mr.Antony M.Ambat, learned counsel appearing for thepetitioners had pointed out that exclusion of persons likepetitioners, who left service of the first respondent company WPC.22308/20057during the relevant period by way of resignation and removal, ishighly illegal and unjustifiable and it amounts to discrimination.It is contended that the petitioners are eligible atleast forpayment of the same benefits as granted in Ext.P5. It ispointed out that as per section 4(1) of the Payment of GratuityAct 1972 all employees who had rendered continuous service fornot less than 5 years are entitled for payment of gratuity on theirtermination of employment by way of superannuation,retirement, resignation or death or disablement. Therefore, thepetitioners are seeking direction for payment of differential ingratuity based on the revised pay scale. 7. Mr.A.K.Jayasankaran Nambiar, learned counsel for thefirst respondent company contested the case mainly on theground that the petitioners have no manner of right to claim thedifferential amount in terminal benefits arising out of the payrevision, unless the first respondent takes a decision to grantsuch benefits. The terms in Ext.P2 order will not put them entitledfor such benefits. Further as per the decision of the firstrespondent company taken as evidenced by Ext.P5, it specificallyintended to extend such benefits only to those category of WPC.22308/20058employees, who left service on account of, superannuation,voluntary retirement, and died while in service. Therefore there isno legal right for the petitioners to claim such benefits which arearising out of Exts.P2 and P5, is the contention. 8. The dispute regarding entitlement of the petitioners forthe benefits claimed need evaluation, not on the basis ofExts.P2 and P5, but on the basis as to whether they werediscriminated in any manner in denial of such benefits. Thespecific relief sought for in this writ petition includes declarationof clause 9 in Ext.P2 as ultravires. The reasoning upon whichthe challenge against the said clause was dealt with in Exts.P3and P4 judgments is relevant and need be looked into. In Ext.P4judgment it is observed that the pay scales had been revised bythe company with effect from 1.1.1997 and having beenintroduced the revised scales with effect from that date it is notreasonable for the first respondent to contend that theemployees who were in service on that day and retired thereaftershall be treated differently. It is specifically observed that thosewho were in service as on that date constitute one class and areentitled for equal treatment. The discrimination in between those WPC.22308/20059who were in service as on 1.1.1997, differentiating them as thosewho retired after a particular date and those who retired beforethat date, without disclosing any rational basis for suchdifferential treatment, cannot be sustained on the toutchstone ofArticle 14 and 16 of the Constitution., is the findings. Therefore,it is held that as long as the revision is introduced withretrospective effect, the benefit should be made equallyadmissible to all. The reasoning rendered in Ext.P4 judgmentholds valid and the first respondent company had suffered thatjudgment. When the consequential orders were issued, thecompany had further distinguished and created two classesamong the employees who were in service as on 1.1.1997, asthose who retired due to superannuation, voluntary retirement,and died while in service in difference to those who wereresigned and removed from service. Whether such adiscrimination is valid or not, especially in view of the judgmentof this court and the provisions contained in the Payment ofGratuity Act 1972, is the question to be decided. The learnedcounsel for the respondents had pointed out a decision of theHonourable Supreme Court in Uco Bank and others vs. WPC.22308/200510Sanwar Mal (2004 (2) LLJ 490) . Referring to the provisionsin Banking Companies ( Acquisition and Transfer ofUndertakings) Act 1970 and the Regulations governing theservice of employees of that particular Bank, the HonourableSupreme Court observed that, the disqualification for pensionwith respect to resigned employees in difference to employeesretired is valid. The learned counsel also produced copy of ajudgment of this court in OP.No.17206/99 dated 16.10.2003,wherein a learned Single Judge of this court found that in thecase of an employee of the first respondent who was treated asresigned, is not entitled to the differential in gratuity on accountof a long term settlement regarding revision of wages entered bythe company with the Trade Unions with retrospective effect. Butin the case at hand, as stated above, the question regardingentitlement of gratuity is governed by section 4(1) of thePayment of Gratuity Act. It provides entitlement of Payment ofGratuity with respect to retired employees and resignedemployees at par. In view of the principle laid in Ext.P4 judgmentwhen considered on the basis of section 4(1) of the Act, it canonly be construed that those employees who resigned from the WPC.22308/200511service after 1.1.1997 could not be denied of the same benefitsallowed to those who retired after that date, and if such adiscrimination is permitted the same will be violated Article 14and 16 of the Constitution of India. Hence I am inclined to holdthat the petitioners 1 to 9 who resigned from service of the firstrespondent company in between 1.1.1997 and 30.6.2001 isentitled to gratuity on the basis of the revised pay scale. 9. With respect to the 10th petitioner there is slightdifference as he was removed from service , contrary to the caseof other petitioners 1 to 9 who were resigned. It is revealedthat the 10th petitioner was removed from service allegingunauthorised absence. But in fact the 10th petitioner hadsubmitted resignation prior to such removal and the removal waswithout considering his request for resignation. It is evidentthat the removal was not treated as part of any punishment andhe was paid gratuity and other terminal benefits as applicable tothe case of resignation. Since the respondent company hadalready paid gratuity and other terminal benefits to the 10thpetitioner on his removal from service, he should also be treatedin par with petitioners 1 to 9 in the matter of payment of WPC.22308/200512differential amount in gratuity. Therefore, I am inclined to holdthat the benefits entitled for petitioners 1 to 9 are equally entitledfor the 10th petitioner. 10. Lastly, learned counsel for the petitioners contendedthat the first respondent company is liable to pay interest on thedifferential amount of gratuity, because it is a statutory liability.Valuable rights of the employees on retirement to get the gratuitywas delayed because of the illegal and unreasonable approach ofthe first respondent and therefore the payment of gratuity mustbe visited with penalty of payment of interest, is the contention.In support he placed reliance on a judgment of the HonourableSupreme Court in H.Gangahanume Gowda vs. KarnatakaAgro Industries Corporation Limited (2003(3) SCC 40).The Honourable Supreme Court, considering the provisions undersection 7(2) of the payment Gratuity Act 1972, held that thePayment of gratuity with or without interest as the case may be,does not lie in the domain of discretion, but it is a statutorycompulsion. But in the case at hand, the entitlement is claimedbased on Ext.P2. But the benefit of Ext.P2 was made available tosimilarly placed employees, , only from June, 2004 as per Ext.P5, WPC.22308/200513based on Exts.P3 and P4 judgments. Therefore at the most thedenial of such benefits can be attributed only from July, 2004onwards. But the petitioner had approached this court claimingsuch benefits only in July, 2005, exactly on 26.7.2005. Hence itis proper to limit payment of interest on the differential amountof gratuity within the period after filing of this writ petition.11. In the result, the writ petition is allowed in part,directing the first respondent to make payment of the differentialamount of gratuity due to the petitioners 1 to 10, based on therevised pay scale declared through Ext.P2 order which came intoeffect as on 1.1.1997, along with interest due thereon at 7.5%p.a. from 26.7.2005 onwards till the date of payment, as early aspossible, either in lump sum or in instalments, at any rate withina period of six months from the date of receipt of a copy of thisjudgment. C.K.ABDUL REHIM, JUDGEPmn/ WPC.22308/200514