IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 17.08.2011 CORAM THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.No.11819 of 2010 and M.P.No.1 of 2010 The Management of Elgi Equipments Limited Industrial Complex, Singanallur, Coimbatore, Rep. By its Manager - Employee Relations, S.Kanakaraj ...Petitioner Vs. 1.The Presiding Officer, Labour Court, Coimbatore. 2.A Jeyaraj ...Respondents Writ Petition is preferred under Article 226 of the Constitution of India praying for the issue of a writ of Certiorari, calling for the records of the first respondent in CP No.82/2007 and quash its order dated 23.02.2010. For Petitioner : Mr.S.Ravindran for M/s.T.S.Gopalan & Co., For Respondents : Mr.G.B.Saravanabhavan for R2 O R D E R The petitioner is the Management. They have come forward to file the present writ petition, challenging an order passed by the first respondent Labour Court, Coimbatore in C.P.No.82 of 2007, dated 23.02.2010. By the impugned order, the Labour Court computed a sum of Rs.1,80,000/- as due and payable to the second respondent workman with future interest at the rate of 9% per annumm from 01.01.2007 till the date of payment together with litigation costs of Rs.1000/-. 2. The writ petition was admitted on 09.06.2010. Pending the writ petition, this Court granted an interim stay on condition that the petitioner deposits 50% of the amount ordered by the Labour Court. Upon such deposit, the Labour Court was directed to keep the amount in a Fixed Deposit with the Indian https://hcservices.ecourts.gov.in/hcservices/ Overseas bank's Branch situated within the premises of the District Court for a period of three years and thereafter to renew the same from time to time. 3. On notice from this Court, the second respondent has filed a counter affidavit dated 03.08.2011 together with supporting documents. 4. It is seen from the records that the second respondent had submitted his resignation letter dated 18.08.2003 and the same was accepted by the petitioner Management on 30.09.2003. In the light of the Voluntary Retirement Scheme (VRS) extended to the workmen, the amount payable to the second respondent towards Leave Salary, Gratuity, Ex-Gratia, Bonus, Profit Share as well as VRS amount was calculated and paid to him. The same was also received by the second respondent and he had passed on a stamped receipt stating that he has no further claim from the employer and he will also not claim any employment or service continuity. A Service Certificate was also given on being relieved by the petitioner Management. In the certificate dated 09.10.2003, it was indicated that the second respondent had worked as a Fitter in the Reciprocating Compressor Division from 01.04.1989 to 30.09.2003. 5. Notwithstanding the acceptance of VRS and receiving the amounts and passing a stamped receipt and also availing a Service Certificate, the second respondent filed a Claim Statement under Section 33-C(2) of the Industrial Disputes Act, 1947, claiming a sum of Rs.1,80,000/-. This was on the basis that while the second respondent had put in 18 years of service in calculating the VRS compensation package amount only 14 years was given credit and therefore, for the balance period of four years, for each year of service, the second respondent had claimed Rs.45,000/- and thus a total sum of Rs.1,80,000/- was claimed. 6. The petition filed by the second respondent was taken on file as C.P.No.82 of 2007 and notice was issued to the petitioner. The petitioner Management filed a counter statement dated 02.04.2008. In the counter statement, it was contended that in a petition under Section 33-C(2) of the I.D.Act, a workman cannot claim any alleged amount payable under VRS Scheme. It was further contended that since he had passed on a full and final settlement receipt, he is no longer a workman to come within the term 'Workman' under Section 2(s) of the I.D.Act. The period of service claimed by him from 01.01.1985 is not correct and his services were confirmed only on 01.04.1989. Therefore, the Management had rightly calculated the benefits under the VRS Scheme from 01.04.1989 to 30.09.2003. The payment under the VRS is a package and nothing remains payable to the second respondent. 7. Before the Labour Court, on behalf of the second respondent, he had examined himself as W.W.1 and filed 9 https://hcservices.ecourts.gov.in/hcservices/ documents, which were marked as Exs.W1 to W9. On the side of the petitioner Management, one N.Mohanasundar, Assistant Manager was examined as M.W.1 and on their side, 7 documents were filed and marked as Exs.M1 to M7. 8. The Labour Court on an analysis of documents (both oral and documentary) held that the contention of the Management that the second respondent's service from 01.01.1985 to 01.04.1989 cannot be counted was erroneous on the following grounds:- i) The workman had claimed gratuity in G.A.No.270 of 2005 and the Controlling Authority had computed 18 years of completed service, which was marked as Ex.W3. ii) In respect of the Provident Fund, the second respondent's service was counted for the entire period as evidence from Ex.W5. Therefore, the workman's service is 18 years and not 14 years as computed by the petitioner Management. iii) With reference to the service certificate given under Ex.M5, it merely mentioned the date of confirmation and not the date of his joining the service and therefore, no credence can be given to Ex.M5. 9. The Labour Court held that since the compensation under the VRS was paid only for 14 years of service and it has been established that the workman had worked for 18 years, he is eligible to get compensation for the balance 4 years at the rate of Rs.45,000/- per year. The Labour Court also held that there was no delay in the workman moving the Labour Court and hence, he is eligible for the delayed payment of interest at the rate of 9% per annum. Challenging the same, the writ petition came to be filed as noted already. 10. Mr.S.Ravindran for M/s.T.S.Gopalan and Co., learned counsel for the petitioner Management submitted that the VRS Scheme is a contract and on being announced by the Management which in turn accepted by the employee, then it becomes a concluded contract and there is no further payment payable. The service rendered and calculated for the purpose of gratuity, PF and ESI has no relevance because the term "continuous service" or length of service in those enactments are different. In the present case, the petitioner employer was obliged to pay only for the wages after his confirmation. 11. The learned counsel placed reliance upon the judgment of the Supreme Court in ITI Ltd., v. ITI Ex/VR Employees/ Officers Welfare Association and others reported in (2010) 12 SCC 347 for the purpose of contending that if an employee had accepted the VRS Scheme and received payment, he cannot subsequently claim higher amount because of any subsequent wage revisions made with retrospective effect. Reliance was placed upon the following passages found in paragraphs 10 and 11, which are as follows:- "10. Learned counsel for the respondents submitted that wages had subsequently been https://hcservices.ecourts.gov.in/hcservices/ revised with retrospective effect and hence in the eye of the law it has to be deemed that at the time when an employee got the benefits under the VRS Scheme, the calculation was done wrongly and the amount should have been calculated on the higher pay. 11. We do not find substance in this submission. In our opinion, at the most it can be said that a wrong calculation was done when the benefits were paid to an employee under the VRS Scheme. This will not benefit the employees because Clause 23.1 of the circular, quoted above, does not speak of only valid calculations but it refers to all calculations under the VRS Scheme, irrespective of whether they are valid or invalid calculations, and they shall not be reopened. In other words, if an employee has got the benefits under the VRS Scheme, whether right or wrong, it cannot be reopened and an employee cannot claim any higher amount on account of subsequent revision in the wages retrospectively." 12. In the present case, it is not a re-opening of the terms of the VRS Scheme. A copy of the VRS Scheme dated 25.04.2005, though not marked before the Labour Court was produced before this Court. In paragraph 2 of the said notice, it was stated that an employee who accepts the VRS, for the first three years of his service will be paid Rs.1,50,000/- lakhs and thereafter, for every computed year of service, Rs.45,000 will be paid for each year. In that notice, nowhere it was stated that the completed service refers to the service rendered only after confirmation and not before. On the other hand, the said notice referred to the term 'service' and not any completed or permanent service. If the employer wants to offer amounts towards VRS for every completed year of service, they should have mentioned specifically in their offer. Further, industrial employment is not akin to Government service in which case the term 'temporary' and 'permanent' would have denoted different connotation. But in the industrial employment whether it is under the I.D.Act or under the Gratuity Act or under the PF Act or under the ESI Act, the service is used in a loose sense namely it takes into account all types of service, temporary, casual, permanent etc., In the absence of any specific bar from counting the entire length of service, the first respondent Labour court had correctly counted the entire service of the second respondent. In fact, there was no dispute regarding the total length of service as evidenced by the order passed by the gratuity authority and the letter sent by the PF Department. Therefore, the second respondent is entitled to ask for the payment towards VRS for the services not taken into account by the petitioner Management namely for a period of 4 years which worked out to Rs.1,80,000/- https://hcservices.ecourts.gov.in/hcservices/ 13. The contention that in the service certificate, it was indicated that his service was from 01.04.1989 and therefore he is estopped from claiming any amount was rightly rejected by the Labour Court by stating that the Service Certificate do not contain the actual date of entry of the workman and hence, that cannot be put against the workman. Further the plea like estoppel and acquiescence are not applicable to industrial law as held in Bennett Coleman and Co. (Private) Ltd. v. Punya Priya Das Gupta reported in (1969) 2 SCC 1. In that case, similar objections raised by the employer were dealt with by the Supreme Court. In paragraphs 7 and 8, it was observed as follows:- " 7. The next contention was that the respondent, having signed the said receipt in full settlement of all his claims and having thereby induced the company to accept his resignation without insisting on a full month's notice, was estopped from making claims in respect of his leave for one month, the car allowance and the free telephone and newspapers and for including them as part of his wages for calculating gratuity. Certain decisions of this Court seem, however, to have expressed doubt whether technical pleas such as acquiescence, estoppel and waiver suitably apply to industrial adjudication. But assuming that the rule of estoppel, as incorporated in Section 115 of the Evidence Act, were to apply, the foundation of that rule is that it is inequitable and unjust to a person, that if another person by a representation induces him to act as he would not have otherwise acted, the person who made the representation should be allowed to deny the effect of his former statement to the loss and injury of the person who has acted on it (see Sarat v. Gopal13). The rule is one of evidence only and does not create any substantive right or confer any cause of action on the other. It comes into operation if a statement as to the existence of a fact has been made with the intention that the other person to whom it is made should believe and act on it and that that another person does in fact act upon the faith of it... 8. We next examine the question whether the respondent was precluded front making the rest of his claim. The burden of proving the ingredients of Section 115 of the Evidence Act lies on the party claiming estoppel. The representation which is the basis for the rule must be clear and unambiguous and not indefinite, upon which the party relying on it is said to have, in good faith and in belief of it, acted.....In these circumstances it becomes doubtful whether he https://hcservices.ecourts.gov.in/hcservices/ could be said to have been estopped from making the said claims on the ground only of the said receipt, if that receipt was obtained, as alleged by him, under the stress of circumstances. In this connection the fact that he kept the said cheque uncashed is not totally without relevance. Under Section 115 of the Evidence Act the representation which estop a person making it from acting contrary to it is one on the belief of which the other person acts in a manner he would not have done but for it and on believing it to be true. Such a conclusion is difficult in face of the uncontradicted statements in the letter, Ext. W-4 that the management would not give him the letter of acceptance of his resignation unless he signed the said receipt in full settlement of all his claims. The plea of estoppel made on behalf of the company, therefore, cannot be accepted." Therefore, there is no illegality or irregularity in the order passed by the Labour Court. 14. However, it was contended by Mr.S.Ravindran that the Labour Court while ordering the unpaid amount of VRS to the workman had also ordered interest without there being any right for such claim on the part of the workman. 15. The learned counsel also referred to the decision of this Court in Nathan's Press v. K.Krishnan and others reported in 1988 II LLN 95. In that case, this Court held that in the absence of any provision for payment of interest, in an Award, there could not be any awarding of interest. The claim for interest cannot be said to be an incidental to computation of the backwages given under the Award. In paragraph 4, it was held as follows:- "4. ...I find the view expressed in Krishnamurthy v. The Mail (vide supra) has been taken note of and followed by a Single Judge of the High Court of Delhi in Union of India v. Central Government Labour Court, Delhi, and others [1985 - I L.L.N.279]. In this view, the award of interest by the second respondent has got to be discountenanced. Accordingly, this writ petition is allowed to this limited extent in the sense in the impugned order passed by the second respondent, the sum of Rs.843.86 representing leave salary for national and festival holidays and a sum of Rs.350 representing the interest shall stand deleted." Mr.G.B.Saravanabhavan, counsel for the second respondent was unable to counter this argument. https://hcservices.ecourts.gov.in/hcservices/ 16. In view of the above, while sustaining the claim of the second respondent to get Rs.1,80,000/- being the unpaid VRS amount for four years' service from 1985 to 1989 at the rate of Rs.45,000/- per year, works out to Rs.1,80,000/-, ordering of interest at the rate of 9% per annum stands deleted. This Court is not inclined to set aside the litigation cost of Rs.1000/-. Therefore, it is declared that the second respondent is entitled to get Rs.1,81,000/- 17. The writ petition stands partly allowed. However, there will be no order as to costs. Connected miscellaneous petition stands closed. In view of the right of the second respondent to claim the VRS amount for four years is upheld and already 50% of the amount is lying in deposit, it is open to the second respondent to withdraw the same from the first respondent Labour Court. The petitioner Management is also directed to pay the balance amount to the second respondent within a period of eight weeks from the date of receipt of a copy of this order. svki Sd/- Asst. Registrar //True Copy// Sub Asst. Registrar To The Presiding Officer, Labour Court, Coimbatore. + 1 cc to M/s. T. S. Gopalan, Advocate SR No.50463 RB(CO) SR/6.9.2011 ORDER IN W.P.No.11819 of 2010 https://hcservices.ecourts.gov.in/hcservices/