-1- Civil Writ Petition No.10717 of 2006 and Civil Writ Petition No.6097 of 2007. IN THE HIGH COURT FOR THE STATES OF PUNJAB & HARYANA AT CHANDIGARH ... Date of Decision: April 03, 2008. Civil Writ Petition No. 10717 of 2006. Ashok Goswami ... Petitioner VERSUS Commissioner and Secretary to Government, Haryana -cum- Chairman, Haryana State Small Industries and Export Corporation Limited and another ... Respondents CORAM : HON'BLE MR.JUSTICE HEMANT GUPTA. HON'BLE MR. JUSTICE MOHINDER PAL. Present: Mr.Manu K. Bhandari, Advocate, for the petitioner. Mr.Deepak Balyan, Advocate, for the respondents. Civil Writ Petition No.6097 of 2007. Ranbir Singh and others ... Petitioners VERSUS Haryana State Small Industries and Export Corporation Limited and others ... Respondents -2- Civil Writ Petition No.10717 of 2006 and Civil Writ Petition No.6097 of 2007. Present: Mr. Rajbir Sehrawat, Advocate, for the petitioners. Mr.Deepak Balyan, Advocate, for the respondents. -.- 1. Whether Reporters of Local papers may be allowed to see the judgment ? 2. To be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest ? -.- MOHINDER PAL, J. This judgment will dispose of afore-stated two Civil Writ Petitions as the point involved therein is common i.e whether the petitioners, who are employees of the Haryana State Small Industries and Export Corporation Limited (hereinafter referred to as `the Corporation') are entitled to payment of Dearness Allowance, merger of 50 % Dearness Allowance in Basic Pay, House Rent Allowance etc, as admissible to the employees of Haryana Government and other benefits occurring to the employees of the Corporation because of revision of the pay scales of all its employees by the Haryana Government with effect from January 01, 1996 by implementing Haryana Civil Services (Revised Pay) Rules, 1998 (for short `the Rules of 1998') and Haryana Civil Services (Assured Career Progression) Rules, 1998 (for short `A.C.P. Rules of 1998') and their adoption by the Corporation. The case of the petitioners is that the Corporation -3- Civil Writ Petition No.10717 of 2006 and Civil Writ Petition No.6097 of 2007. implemented both the Rules of 1998 and the A.C.P. Rules of 1998 and benefits flowing from the implementation of these Rules were granted to various employees by the Corporation. However, the petitioners were not extended this benefit. In the year 2000, the Corporation had issued a list of surplus employees. The names of the petitioners were included in the said list. Thereafter, the petitioners filed various Civil Writ Petitions in this Court and their termination was stayed. Those Civil Writ Petitions stand admitted for final hearing. The petitioners are continuing in service of the Corporation due to stay orders passed by this Court. It is the case of the petitioners that the petitioners have not been granted the benefit of the Rules of 1998 and the A.C.P. Rules of 1998, the instalments of Dearness Allowance, merger of 50 % Dearness Allowance with Basic Pay and other benefits solely on the ground that they were put in the list of surplus employees and are continuing in service because of the aforesaid stay orders. The Board of Directors of the Corporation, vide its Resolution No.5 dated March 19, 2007 decided that the benefit of the instalments of Dearness Allowance after July 01, 2003 and merger of 50 % Dearness Allowance with the Basic Pay, as is allowed by the State Government, cannot be allowed to the employees of the Corporation in view of the poor financial position of the Corporation. It is the case of the petitioners that this executive decision of the Board of Directors cannot be allowed to -4- Civil Writ Petition No.10717 of 2006 and Civil Writ Petition No.6097 of 2007. operate retrospectively to deprive the petitioners of the benefits which they are entitled to receive as per law, especially when these benefits have already been granted to other employees of the Corporation. It is averred in the petition that the action of the Corporation in not granting the benefit of merger of 50 % Dearness Allowance in the Basic Pay, Dearness Allowance instalments after July 01, 2003, benefits flowing from the implementation of the Rules of 998 and the A.C.P. Rules of 1998 and not clearing the dues of the petitioners before filing of the winding up petition is arbitrary, unreasonable and violative of the statutory provisions/instructions of the State Government and Service Bye-Laws of the Corporation applicable in the matter. In reply, it has been stated by the Corporation that its employees are regulated by the By-laws, namely, the Haryana State Small Industries & Export Corporation Employees Service By-laws framed by the Corporation in exercise of the powers conferred by Article 86 of its Articles of Association and made effective from March 15, 1972. Reference has been made to By-law 4.3, which is as below:- “ 4.3. Dearness and other allowances shall be admissible to the employees of the Corporation at Haryana Government rates or as decided by the Board of Directors of the Corporation from time to time.” -5- Civil Writ Petition No.10717 of 2006 and Civil Writ Petition No.6097 of 2007. It has been further pleaded that instructions issued by the Haryana Government from time to time are not ipso facto binding on the Corporation. However, keeping in view the circumstances and capacity of the Corporation, the same were adopted by the Corporation. The Board of Directors of respondent- Corporation in their meeting held on April 22, 2002 took a decision to close it down in view of heavy losses suffered by it. The respondent-Corporation was not having the funds to pay salary to its employes and it had borrowed money from the Government for doing the same. The respondent-Corporation closed down its business activities with effect from June 30, 2002. Thereafter, it is functioning with minimal staff to discharge its various statutory obligations under the law. The Board of Directors of the Corporation in their meting held on March 19, 2007 have decided and resolved that the benefit of Dearness Allowance instalments after July 01, 2003 and 50 % merger of Dearness Allowance with Basic Pay, as allowed by the State Government, cannot be allowed to the employees of the Corporation in view of the poor financial position of the Corporation. In the replication filed by the petitioners in Civil Writ Petition No.6097 of 2007, it has been denied that the Corporation is borrowing money from the Government for disbursing the salaries to its employes. The Corporation is paying the salaries from its own resources/management of the properties. The Corporation has not been wound up so far. It is further -6- Civil Writ Petition No.10717 of 2006 and Civil Writ Petition No.6097 of 2007. pleaded that because of the losses allegedly suffered by the Corporation, the petitioners cannot be denied the benefits occurring to them because of the services rendered by them in the Corporation. We have heard the learned counsel for the parties and perused the records. Admittedly, the Corporation has adopted the Rules of 1998 and A.C.P. Rules of 1998 with effect from January 01, 1996 and has granted the same to its employees. However, the petitioners have been declined these benefits without assigning any reason. The petitioners are, therefore, held entitled to the grant of the benefits occurred to them by way of implementation of the Rules of 1998 and the A.C.P. Rules of 1998. Rule 5 of the A.C.P. Rules of 1998 deals with the grant of 1st and 2nd A.C.P. Scales after ten and twenty years' service, respectively, and it lays-down as under:- “ Rule 5.Eligibility for grant of A.C.P Scales- (1) Every Government servant who, after a regular satisfactory service for a minimum period of 10 years, if the minimum period is not otherwise prescribed to be different than 10 years either in these rules or by the Government for any class or categories of Government servant from time to time, -7- Civil Writ Petition No.10717 of 2006 and Civil Writ Petition No.6097 of 2007. has not got any financial upgradation in terms of grant of a pay scale higher than the functional pay scale prescribed for the post as on 31.12.1995, on which he was recruited as a direct recruited fresh entrant:- (a) Either as a consequence of his functional promotion in the hierarchy, or (b) As a consequence of the revision of pay scale for the same post, or ( c ) As a consequence of any other event through which the functional pay scale of the post has been upgraded, with respect to the functional pay scale prescribed for the post as on 31.12.1995, shall for the purposes of drawal of pay, be eligible for placement into the First ACP Scale with reference to him. (2) Every Government servant who, after a regular satisfactory service for a minimum period of 20 years, if the minimum period is not otherwise prescribed to be different than 20 years either in these rules or by the Government for any class or categories of Government servant from time to time, has not got more than one financial upgradation in terms of grant of a pay scale -8- Civil Writ Petition No.10717 of 2006 and Civil Writ Petition No.6097 of 2007. higher than the functional pay scale prescribed for the post as on 31.12.1995, on which he was recruited as a direct recruited fresh entrant:- (a) Either as a consequence of his functional promotion in the hierarchy, or (b) As a consequence of the revision of pay scale for the same post, or ( c ) As a consequence of any other event through which the functional pay scale of the post has been upgraded, with respect to the functional pay scale prescribed for the post as on 31.12.1995, shall for the purposes of drawal of pay, be eligible for placement into the Second ACP scale with reference to him: Provided that grant of ACP Scale shall also be considered as financial upgradation for the purposes of this rule. NOTE: For the purposes of these rules “regular satisfactory service” would mean continuous service counting towards seniority under Haryana Government including continuous service in Punjab Government before re-organization, commencing from the date on which the -9- Civil Writ Petition No.10717 of 2006 and Civil Writ Petition No.6097 of 2007. Government servant joined his service after being recruited through the prescribed procedure or rules etc. for regular recruitment, in the cadre in which he is working at the time of being considered his eligibility for grant of ACP Scales under these rules and further fulfilling all the requirements prescribed for determining the suitability of grant of ACP Scales. EXPLANATION: The ACP scale upgradation will come into play only if due to functional promotion or upgradation of sale for the same post as specified above, the Government servant has not got the benefit of at least one pay scale upgradation within the prescribed period of 10 years or any other prescribed period for the grant of 1st ACP scale or two such financial upgradations within a period of 20 years or within the period otherwise specified for grant of second ACP scale. If within 10 years of service or within the prescribed period of service for the grant of 1st ACP, the employee has already got at least one financial upgradation or within 20 years of service, as the case may be, or otherwise prescribed period of service for the -10- Civil Writ Petition No.10717 of 2006 and Civil Writ Petition No.6097 of 2007. grant of second ACP scale, the Government servant has already got at least two financial upgradations, benefit of these rules will not be extended to such employees save if otherwise provided in these rules. (3) For determining the eligibility of grant of ACP scale, following conditions must also be fulfilled by the Government servant: (a) After completing the respective prescribed period for eligibility for the grant of ACP scales the Government servant should be fit to be promoted to the next higher post in the functional hierarchy in his cadre, but could not be functionally promoted due to lack of vacancy in the promotional post in the hierarchy to which he is eligible to be promoted; (b) If such promotion involves test of any departmental post or other test etc such condition should also be fulfilled by such Government servant. (4) The eligibility for grant of the ACP scales shall further be subject to any other restriction as may be prescribed by the Government from time to time including the restriction of the number of Government -11- Civil Writ Petition No.10717 of 2006 and Civil Writ Petition No.6097 of 2007. servant to be granted the respective ACP scales in terms of percentage of posts in the cadre to which such ACP placements shall be limited: Provided that till the time such restrictions are not imposed by the Government - (a) there shall be no restriction on the number of Government servants to be grated the first or second ACP scales with reference to the Government servants covered in sub-rule (2) of rule 4. (b) For the Government servants covered in sub-rule (1) of rule 4, there shall be no restriction on the number of Government servants for grant of first ACP scale. However, the grant of the second ACP scale for such Government servants as covered in sub-rule (1) of rule 4 shall be limited to 20 % of the total posts in the cadre.” Along with the replication filed by the petitioners in Civil Writ Petition No.6097 of 2007, they have annexed the order dated October 12, 2001 as Annexure P-16 whereby one Anil Kumar Sharma, Accountant has been allowed the 2nd A.C.P. -12- Civil Writ Petition No.10717 of 2006 and Civil Writ Petition No.6097 of 2007. Scale on completion of 20 years service in the Corporation with effect from October 01, 1999 in terms of the A.C.P. Rules of 1998. The petitioner are also held entitled for the grant of 1st and 2nd A.C.P scales after completion of ten years and twenty years' service, respectively, if they did not get any financial upgradation in terms of grant of a pay scale higher than the functional pay scale prescribed for the posts they were holding as on December 31, 1995, during this period of twenty years either as a consequence of their functional promotions in the hierarchy or as a consequence of the revision of pay scales for the same posts or as a consequence of any other event through which the functional pay scale of the posts held by them had been upgraded and, of course, they fulfil all the requirements prescribed for determining the suitability of grant of A.C.P. Scales. A perusal of By-law 4.3 of the Haryana State Small Industries & Export Corporation Employees Service By-laws, quoted above, makes it clear that Dearness Allowance and other allowances are admissible to the employees of the Corporation at Haryana Government rates or as decided by the Board of Directors of the Corporation from time to time. The Corporation should have extended the benefit of Dearness Allowance in favour of its employees in view of the provisions of By-law 4.3 ibid by taking a positive decision in this regard. However, the Board of Directors of the Corporation in the meeting held on March 19, 2007, resolved not to allow to its employees the benefit of -13- Civil Writ Petition No.10717 of 2006 and Civil Writ Petition No.6097 of 2007. Dearness Allowance instalments after July 01, 2003 and 50 % merger of Dearness Allowance with Basic Pay, as was allowed by the State Government of Haryana to its employees. These allowances were not the concessions which were to be granted by the Corporation. These were the allowances/benefits which were to be paid by the Corporation to its employees in lieu of the duties performed by them and which were admissible to them after they had been brought at par in the matter of pay scales and other allowances with the employees of the Haryana Government. They were to be considered at par with the employees of the Haryana Government for all intends and purposes after the Corporation had adopted the Rules of 1998 and A.C.P. Rules of 1998 with effect from January 01, 1996. The Corporation could not curtail the allowances of its employees. Moreover, the Board of Directors of the Corporation on March 19, 2007, resolved not to allow to its employees the benefit of Dearness Allowance instalments from a retrospective date i.e July 01, 2003. It is well-settled that reduction in remuneration with retrospective effect cannot be done. However, the Corporation will be within its rights to withhold the benefit of Dearness Allowance instalments from March 19, 2007 i.e the date of passing the Resolution. For the aforesaid reasons, this writ petition is allowed and the Corporation is directed to release Dearness Allowance and other allowances of the petitioner after July 01, 2003 and allow 50 % merger of Dearness Allowance with Basic Pay to the -14- Civil Writ Petition No.10717 of 2006 and Civil Writ Petition No.6097 of 2007. petitioners. The Corporation is further directed to fix the pay of the petitioners in 1st and 2nd A.C.P scale by counting their service of 10 and 20 years as per the A.C.P. Rules of 1998. It is made clear that the dues of the petitioners will be paid by the Corporation within three months from the date of receipt of a copy of this order failing which they shall be entitled to interest at the rate of nine per cent per annum. ( HEMANT GUPTA ) ( MOHINDER PAL ) JUDGE JUDGE April 03, 2008. ak