1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 4795 OF 2009 M/s. Philips Electronics India Limited ] (Previously known as Philips India Limited)] A Public Limited Company incorporated ] under the Indian Companies Act, 1913, ] Having its Corporate Office at ] Technopolis Knowledge Park, ] Nelco Complex, Mahakali Caves Road, ] Chakala, Andheri (E), Mumbai – 400093. ] ... Petitioners Versus 1. The Workmen employed under it, ] represented by Philips Employees Union ] C/469, 2nd Floor, Vashi Plaza, Sector 17 ] Navi Mumbai 400 705. ] 2. The Member, ] Industrial Tribunal, New Administrative ] Building, Bandra (E), Mumbai- 400051. ] ... Respondents Mr. K.M. Naik with Mr. V.P. Sawant and Ms. N.R. Patankar for the Petitioners. Mr. Arshad Shaikh with Mr. Mahesh Londhe and Ms. Pallavi Dedhia i/b M/s. Sanjay Udeshi & Co. for the Respondents. CORAM: S.J. VAZIFDAR, J. JUDGMENT RESERVED ON : 2ND MARCH, 2010. JUDGMENT PRONOUNCED ON : 7TH JUNE, 2010. 2 ORAL JUDGMENT : 1. The Petitioner has challenged the order of the Industrial Tribunal, answering the Reference partly in the affirmative by granting demand No.4 of the Respondents. By the said order, the Petitioner is directed to pay the workmen the difference in commuted amounts paid to them as lump-sum and the amount as shown in the annexure to the Award due to them under VRS-MUMBAI-2001 and the Settlement dated 10th December, 2010 with eighteen percent interest from the date the amount was due till the date of realisation thereof. Respondent No.2 is the learned Member of the Industrial Tribunal who has passed the Award impugned in the Writ Petition. The reference in this judgment to the Respondent(s) is, therefore, limited to Respondent No. 1. 2. It is not necessary to refer to the various proceedings which led to the Award challenged in this Writ Petition. Suffice it to note that the Petitioner had raised preliminary issues regarding the maintainability of the Reference. By Award Part-I dated 30th September, 2006, the Tribunal rejected the preliminary objection. The Petitioner challenged the same by filing Writ Petition No.3110 of 3 2006. The same was dismissed by an order and judgment dated 21st March, 2007. The Petitioner filed Appeal No.336 of 2007 against the said judgment. The petition has been admitted, but no interim reliefs have been granted. The Division Bench directed the Industrial Tribunal to hear the entire Reference expeditiously and observed that the admission of the Appeal would in no way influence the view of the Industrial Tribunal on the merits of the case. It is in these circumstances that the Industrial Tribunal passed Award-Part II dated 12th January, 2009, which is challenged in the present Writ Petition. 3. The Award warrants no interference. The questions raised are predominantly on facts. Even the construction of the documents which fall for consideration is based predominantly on facts, and an appreciation of the evidence. While I find no reason to interfere with the Award, I will add to the reasons furnished by the learned Member. The Award also can be upheld on a different approach to the facts. 4. It is necessary to state the facts leading to the said two documents only briefly. 4 5. The Industrial relations between the parties had not been cordial. There were serious differences which resulted in numerous litigations between the parties. While there was discontent amongst the employees, the management also considered these facts as an obstacle in the way of bringing about a more productive and cost- effective way of working. Fortunately, the parties decided to resolve these differences. The Petitioner found it necessary to reconstruct its operations to make its establishment commercially viable in view of the changed financial and commercial environment brought about, inter alia, by globalisation and the entry into the market of overseas competitors operating at extremely thin margins. 6(A). During the course of negotiations, there ensued a exchange of drafts containing various proposals. The main effect thereof was the offer by the Petitioner of a Voluntary Retirement Scheme (VRS) to its employees. Discussions/negotiations in this regard took place, inter alia, on 2nd November, 2001. The terms of the VRS were minuted. Drafts were exchanged. While it is neither necessary nor relevant to refer to the terms and conditions, it is necessary to note that the draft letter that was proposed to be signed by the employees contained the 5 statement : “I also agree to opt for the VRS-MUMBAI-2001 announced by the Company.” (B). Similarly, a draft MOU was also prepared on 21st November, 2010. This draft also required the employees who opted for the VRS to execute a letter which contained, inter alia, a statement similar to the one in the letter annexed to the draft MOU of 2nd November, 2010 set out above. (C). By a notice dated 30th November, 2001, a meeting was convened on 5th December, 2001. From the affidavit in lieu of the examination in chief of one Dinesh Keshav Malekar, the Respondent’s witness, it appears that at the meeting held on 5th December, 2001, the members of the union expressed their dissatisfaction, inter alia, with the quantum of compensation offered by the Petitioner. They agreed in principle to early retirement, but insisted on the compensation being enhanced. In the event of the Petitioner refusing the same, the union considered it better to refuse the settlement for early separation and to concentrate on the settlement of the two pending Charter of Demands. At this meeting the proposal to structure the VRS to provide for a 6 lump-sum payment as well as a regular monthly income was mooted. It was also submitted that the same should be arranged through a reliable third party such as the LIC or the HDFC Bank Limited. 7. This brings me to the two documents which are the centre of the present controversy. According to the Respondents, the settlement between the parties was crystallized only by a Memorandum of Settlement dated 10th December, 2001. The Petitioner does not deny either the execution of this Memorandum of Settlement or the applicability thereof to the parties. According to the Petitioner, however, the settlement between the parties is contained not merely in the Memorandum of Settlement, but also in a document dated 7th December, 2001, which I would refer to as the VRS-MUMBAI-2001. The Respondents deny the applicability of the VRS-MUMBAI-2001 dated 7th December, 2001. In a nutshell, the dispute between the parties is this. Monthly payment is to be made by the Petitioner through the LIC for a period of either 60 months or 120 months as may be opted for by each employee. Each employee was also given the option to avail of 1/3rd 7 thereof as lump-sum payment immediately. The dispute is whether the one-third amount is to be paid to the employees after deducting an amount on account of accelerated payment or not. Needless to state, according to the Petitioner, there had to be a deduction, whereas, according to the Respondents, the amount was to be paid without deducting any amount. VRS-MUMBAI-2001 DATED 7TH DECEMBER, 2001: 8(A). The scheme is applicable to all the employees of the commercial establishments of Mumbai who were on the permanent rolls of the company on 1st November, 2001 and who had either completed ten years of service or forty years of age. 27th December, 2001, is stipulated to be the effective date i.e. the date on which the employee was to be released from the Petitioner’s services. The Scheme states that it is drawn up to effect an overall reduction in the existing strength of the employees. The Scheme clarifies that the employees opting for the same will also qualify for various other benefits such as gratuity, leave encashment, bonus, provident fund, savings in long range, saving scheme wherever 8 applicable and benefits, if any, available under the pension schemes mentioned therein. Clauses 5, 6, 7, 8.0, 8.4, 8.8, 8.9 and 9 of the scheme read as under :- 5.0. TAXES BENEFITS : 5.1. The Company has formulated the Scheme in accordance with the guidelines and parameters of Section 10(10C) of the Income Tax Act, 1961 and Rule 2BA of the Income-Tax Rules, 1962. Accordingly, the lumpsum payment under the VRS-Mumbai-2001 (PART A) will be exempt from income-tax within the parameters of the said provisions. 6.0. PERIOD OF OPERATION 6.1. The Scheme will remain open for receiving applications from eligible employees between 10th Dec., 2001 to 14th Dec., 2001. 7.0. PROCEDURE : 7.1. Eligible employees should make an application in the prescribed format and submitted to the Company. 7.2. An employee whose application for voluntary retirement has been accepted under the Scheme, will be informed in writing to that effect and also intimated about the date of release from the services of the Company. 7.3 An application for voluntary retirement under the Scheme, once submitted and accepted in writing, will not be allowed to be withdrawn subsequently under any circumstances. 9 8.0. GENERAL CONDITIONS : 8.1. The Scheme is not applicable to any employee who has earlier availed of any lumpsum benefit under any voluntary retirement scheme or any other employer which had been approved by the Income Tax authorities within the parameters of Section 10(10C) of the Income Tax Act, 1961 and Rule 2B A of the Income Tax Rules, 1962 and/or was formulated as per the guidelines therein. ............ 8.4. The retiring employee will not be employed in another company or concern belonging to the same management. 8.8. An employee who retires under the Scheme shall have no claim whatsoever on the Company for re- employment at a later stage. 8.9. Eligible employees who have opted for the scheme and have been released and whose accounts have been settled will have no recourse to dispute and payment received under the scheme on any ground whatsoever and they and their nominees or legal heirs shall have no right, claims or demand against the company whatsoever. Further, they will not be eligible for any compensation payable under the provisions of the Industrial Disputes Act, 1947 or any other labour legislation or any other legislation, for the time being in force. 9.0. BENEFITS 9.1. Lumpsum Benefit as detailed in Annexure-I, VRS- MUMBAI-2001-PART A. 9.2. Pension as detailed in Annexure-II VRS- MUMBAI-2001-PART B. 10 PROVIDED THAT the amounts payable shall not exceed Either Three months’ salary for each completed year of service (rounded of to the nearest year); Or Salary multiplied by the number of months of service remaining before h is normal date of retirement.” (B). Annexures I and II referred to in clause 9 of the scheme are important and read as under :- ANNEXURE I VRS-MUMBAI-2001-PART A 1. LUMPSUM BENEFIT : 1.1 A Retiree below the age of 55 under the Scheme will receive a lumpsum which shall not exceed; EITHER Three Months’ salary for each completed year of service (rounded off to the nearest year) OR Salary multiplied by the number of months of service remaining before his normal date of retirement. AND The payment under part A will have an overall ceiling of Rs.5,00,000/- (Rupees five lakhs only). 1.2 A Retiree over the age of 55 under the Scheme will receive a lumpsum which shall not exceed his Gross salary multiplied by the remaining months of service from 01.11.2001 subject to the condition that this also 11 does not exceed. EITHER Three Months’ salary for each completed year of service (rounded off to the nearest year) OR Salary multiplied by the number of months of service remaining before his normal date of retirement. AND The payment under part A will have an overall ceiling of Rs.5,00,000/- (Rupees five lakhs only). ANNEXURE II VRS-MUMBAI-2001-PART B 1. PENSION BENEFIT : In addition to the lumpsum benefit in terms of Part A (Annexure I) the Retirees under VRS-MUMBAI-2001, will also be eligible to pension benefit. 1.1 For Employees under 55 years of age on 01.11.2001 Either 60 months or 120 months as per the option exercised by them. Rs.9670 in case of a 60 month pension or Rs.6109 in case of a 120 month pension. 1.2 For Employees above 66 years of age on 01.11.2001 Either 60 months or 120 months as per the option exercised by them. In case of 60 months pension Rs.9670 per month or .021489 X (Gross Salary X Future months of service minus Part A) per month whichever is lower. In case of 120 months pension Rs. 6109 per month or . 013576 X (Gross Salary X Future months of service 12 minus Part A) which ever is lower. 2. For providing pension benefits under Part B, the company reserves its rights to secure such pension through a group pension scheme of LIC. The Group pension scheme of LIC gives the retirees an option to commute a part (not exceeding 33 1/3%) of his pension. The commuted value of the pension will be determined by the scheme’s actuary after taking into account the retiree’s age, state of health and other actuarial factors including discounting. For retirees who would opt for commutation, two thirds of the individual’s corpus would be used by LIC to provide annuity for the chosen term. The commuted value thus decided by the actuary and paid by LIC will be taken as final and it will not be open to the retirees to dispute this in any forum whatsoever. 3. The pension benefit to the retirees will commence from February 1, 2002. “ (C). The draft of the letter to be executed by an employee opting for the scheme is as under : - “Re:- Application for Voluntary Retirement under the Company’s VRS-Mumbai 2001. I have decided to take voluntary retirement from the services of the Company under the above mentioned scheme. I have read and understood the terms and conditions of the voluntary retirement scheme and hereby submit my application for voluntary retirement for your kind consideration and acceptance. 13 I further state that I have taken this decision to opt for early voluntary retirement of my own free will. I request you to pay all other benefits and legal dues including gratuity, lease encashment at an early date. Yours faithfully, (Signature )” The letter actually executed by each of the employee was not as per this format, but as I will indicate later. MEMORANDUM OF SETTLEMENT DATED 10TH DECEMBER, 2001 : 9. As I noted earlier, the execution of this Memorandum of Settlement is not denied. The Petitioner, in fact, admits the applicability thereof. It only contends that the agreement between the parties was a composite one contained in the VRS-MUMBAI-2001 dated 7th December, 2001 as well as the Memorandum of Settlement dated 10th December, 2001. The Respondent, on the other hand, have contended that the rights of the parties are governed only by the MOS dated 10th December, 2001. The following provisions of the MOU dated 10th December, 2001, are relevant :- 14 “A. It is clearly understood that the benefits as detailed above are gross amounts inclusive of any benefits available under Mumbai-VRS-2001 Scheme. It will be clearly noticed that the pension amounts mentioned above are higher than the pension amounts available under Mumbai-VRS-2001. Such additional amounts of pension are in lieu of and/or for the full and final settlement of the following pending issues : 1] Pending Charters of Demands of the Union and the Notices of Change given by the management. 2] Various litigation pending in different Courts of Law between the Union and/or the employees and the Company. 3] Facilities at Vashi and Bhiwandi including employees transport and canteen no longer being required. B] The appropriate payment of Income Tax will be the responsibility of each employee and the Company shall not be held liable at any point of time for payment of the same. C] All the employees will be paid their other legal dues separately on the date of retirement. D] Both the parties agree that the objective of the new scheme is to bring about operational efficiencies through restructuring of the work force and this can be achieved only when all the employees opt for Voluntary Retirement benefits, and both the parties will conscientiously work towards this objective. E] Both the parties agree that all the issues pertaining to all earlier and/or pending Charters of Demands and 15 related matters stand resolved amicably and Union and its members shall not have any claim or right to agitate the matters or issues raised in their charters before any Court, Tribunal, or other judicial or quasi-judicial forum. The Union categorically reiterates and undertakes that it/the employees will not agitate or espouse any such issue in future before any forum or authority. F] In view of the understanding reached between the parties vide Memorandum of Settlement dated 10th December 2001, both the parties agree to unconditionally withdraw all the cases filed by them in various Courts and other judicial and quasi-judicial forums as per terms and conditions agreed by the parties in the Minutes dated 10th December 2001, without any right to raise and/or reagitate the issue anytime in future. G] This Memorandum of Settlement is applicable exclusively for Mumbai establishments and shall not form a precedent for any of the Company’s other units in India. H] This scheme will be open from 10th December 2001 till 14th December 2001. The Union agrees to collect the individual applications/consent letters/letter of Authority, from the member employees and submit the same to the management on or before 19th December 2001. All employees will be relieved on 27th December 2001 after the close of office hours and thus the employer-employee relationship would come to an end as of 27th December, 2001. I] Management continues to reserve its right to promote any of the bargainable staff, who may not opt for the scheme, to management cadre and consequently transfer them to its units outside Mumbai establishments as per its business requirements and exigencies as and when necessary. J] This Memorandum of Settlement shall not be 16 effective until the members of the Union have opted for the new Scheme and are made payments. K] This Memorandum of Settlement covers and is applicable only to the permanent bargainable employees who are on the rolls of the Company on the date of signing of this Memorandum of Settlement. L] This Memorandum of Settlement dated 10th December 2001 is applicable to those workmen who are ready and willing to accept and abide by the terms and conditions of the Memorandum of Settlement dated 10th December 2001 and individually signify such acceptance by giving a declaration in writing as per Annexure “A”. M] The Union being a recognized union under the MRTU & PULP Act, 1971, the management confirms that, it will, as per the existing practice of check-off system for the Union for deductions of the Union dues arising out of the Memorandum of Settlement and payments of the same to the Union, deduct from the payment made to the employees under this Memorandum of Settlement dated 10th December 2001 as per the written authorization given by the employees.” 10. It is necessary now to see the manner in which the parties acted thereafter. (A). As admitted by the Petitioner in paragraph 11 of the Writ Petition, the employees who opted for the scheme addressed letters to the Petitioner in the following terms : “The General Manager – Personnel Philips India Limited Mumbai. 17 Dear Sir, I have read/I have been explained the terms & conditions of the Settlement dated 10th December, 2001. I am willing to abide by the same and hence the benefits under this Settlement be paid to me. I also agree to opt for the VRS-MUMBAI-2001 announced by the Company.” (B) In response to the letters from the employees, the Petitioner addressed relieving letters. It is, however, important to note the manner in which the text of the relieving letters was formulated is in paragraph 11 of the Writ Petition itself. (i) On 18th December, 2001, the Petitioner had forwarded a draft of the proposed relieving letter to the President of the Respondent-union for his perusal/comments, if any. The relieving letter was to be issued by the Petitioner to the concerned employees who had opted for the scheme. The following part of the draft of the relieving letter dated 18th December, 2001 is important and reads as under :- “SUB :- VOLUNTARY RETIREMENT UNDER MUMBAI VRS-2001 Dear Sir/Madam, With reference to your letter dated 10.12.01 requesting 18 for Voluntary Retirement under the Company’s Voluntary Retirement Scheme 2001-MUMBAI VRS-2001, We confirm the Company’s acceptance of your request. You will be relieved from the services of the Company after close of business hours on 27.12.01.” (ii) The President of the union, suggested a change endorsed at the foot of the draft which reads as under :- “AS PER THE TERMS AND CONDITIONS OF THE SETTLEMENT SIGNED BY DATED 10TH DEC. 2001. AND BETWEEN THE COMPANY AND PHILIPS EMPL. UNION MUMBAI.” (C) Accordingly, the relieving letters actually addressed by the Petitioner to each of the employees are as under :- “SUB :- VOLUNTARY RETIREMENT UNDER MUMBAI VRS-2001 Dear Sir, With reference to your application dated 10th December, 2001, requesting for Voluntary Retirement under the Company’s Retirement Scheme 2001-MUMBAI VRS-2001, as per the terms and conditions of the settlement dated 10th December 2001 signed by and between the Company and Philips Employee’s Union, Mumbai, we confirm the Company’s acceptance of your request. You will be relieved from the services of the Company after close of business hours on 27.12.2001.” 11. The significant difference in the draft submitted by the 19 Petitioner dated 18th December, 2001 and the final letter addressed by the Petitioner is the addition of the words “as per the terms and conditions of the settlement dated 10th December, 2001, signed by and between the company and Philips Employees Union, Mumbai.” 12. Mr. Naik submitted that VRS-Mumbai-2001 dated 7th December, 2001 (hereinafter referred to as “the VRS”) and the Memorandum of Settlement dated 10th December, 2001 (hereinafter referred to as “the MOS”) together constitute a composite scheme governing the rights of the parties. He submitted that the MOS was not a separate independent agreement. In other words, he submitted that the VRS did not cease to have effect upon the execution of the MOS. 13. Mr. Naik relied upon the letter signed by the employees accepting the scheme. He emphasized the statement : “I also agree to opt for the VRS-Mumbai-2001 announced by the company”. The letter, which I have set out earlier, initially states that the employees had been explained the terms and conditions of the settlement dated 10th December, 2001 and that they were willing to abide by the same. 20 Mr. Naik submitted that the term “also” indicated that the VRS and the MOS were applicable to the parties. 14. The argument is attractive at first blush. However, considered alongwith all the facts and circumstances of the case, I am not inclined to agree with Mr. Naik’s submission. The statement by itself does not conclude the case. Even the MOUs prior to the VRS and the MOS had the identical statement. I had noted the same while referring to the MOUs dated 2nd November, 2001 and 21st November, 2001. Each of them required the employees to address a letter accepting the scheme. Each of the letters had the identical statement viz. : “I also agree to opt for the VRS-Mumbai-2001 announced by the company.” These sentences were, therefore, there even prior to the VRS-Mumbai-2001 of 7th December, 2001. The sentence appears, therefore, merely to have been carried forward. Further if even otherwise the VRS cannot be held to apply, the mere existence of this sentence would not conclude the matter in the Petitioner’s favour. 15. Mr. Naik also relied upon the fact that in the letter of acceptance issued by the company to each of the employees who opted for the 21 settlement the subject reads : “SUB:- VOLUNTARY RETIREMENT UNDER MUMBAI-VRS-2001”. 16. That, however, would