IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.9631 of 2008 Hindustan Fertilizer Corporation Ltd.(HFCL), Barauni Fertilizer Factory, a Government of India Undertaking, At & P.O. Barauni Urvarak Nagar, P.S. Barauni, District Begusarai (Bihar)- through it‟s Incharge, Siya Sharan Sharma, son of late Basant Kumar Sharma …………. Petitioner Versus 1. Regional Labour Commissioner (Central) –cum-Appellate Authority, Maurya Lok Complex, P.S. Kotwali, Town & District-Patna 2. Assistant Labour Commissioner (Central)-cum-Controlling Authority (Under the Payment of Gratuity Act), Maurya Lok Complex, P.S. Kotwali, Town & District-Patna 3. Sri Triloki Nath Verma, father‟s name not known, Ex-Assistant Engineer, HFCL, Barauni, C/o, Sri V.K.Srivastava, Near Devi Chaura Mandir, Bhatta Road, Bibiganj, Danapur, Patna ……………. Respondents. with CWJC No.9728 of 2008 Hindustan Fertilizer Corporation Ltd.(HFCL), Barauni Fertilizer Factory, a Government of India Undertaking, At & P.O. Barauni Urvarak Nagar, P.S. Barauni, District Begusarai (Bihar)- through it‟s Incharge, Siya Sharan Sharma, son of late Basant Kumar Sharma …………. Petitioner Versus 1 Regional Labour Commissioner (Central) –cum-Appellate Authority, Maurya Lok Complex, P.S. Kotwali, Town & District- Patna 2 Assistant Labour Commissioner (Central)-cum-Controlling Authority (Under the Payment of Gratuity Act), Maurya Lok Complex, P.S. Kotwali, Town & District-Patna 3 Sri Mahendra Prasad, father‟s name not known, Ex-AFM, HFCL, Barauni, At & P.O. Piprahi, Via Janakpur Road, District- Sitamarhi ……………. Respondents. with CWJC No.9696 of 2008 2 Hindustan Fertilizer Corporation Ltd.(HFCL), Barauni Fertilizer Factory, a Government of India Undertaking, At & P.O. Barauni Urvarak Nagar, P.S. Barauni, District Begusarai (Bihar)- through it‟s Incharge, Siya Sharan Sharma, son of late Basant Kumar Sharma …………. Petitioner Versus 1 Regional Labour Commissioner (Central) –cum-Appellate Authority, Maurya Lok Complex, P.S. Kotwali, Town & District- Patna 2 Assistant Labour Commissioner (Central)-cum-Controlling Authority (Under the Payment of Gratuity Act), Maurya Lok Complex, P.S. Kotwali, Town & District-Patna 3 Sri R.B.Bhagat, father‟s name not known, Ex-Sr. Operator, HFCL, Barauni, At & P.O. & P.S. Gamharia Bazar, District- Madhepura ……………. Respondents. with CWJC No.9718 of 2008 Hindustan Fertilizer Corporation Ltd.(HFCL), Barauni Fertilizer Factory, a Government of India Undertaking, At & P.O. Barauni Urvarak Nagar, P.S. Barauni, District Begusarai (Bihar)- through it‟s Incharge, Siya Sharan Sharma, son of late Basant Kumar Sharma …………. Petitioner Versus 1 Regional Labour Commissioner (Central) –cum-Appellate Authority, Maurya Lok Complex, P.S. Kotwali, Town & District- Patna 2 Assistant Labour Commissioner (Central)-cum-Controlling Authority (Under the Payment of Gratuity Act), Maurya Lok Complex, P.S. Kotwali, Town & District-Patna 3 Sri Ramakant Kumar, father‟s name not known, Ex-Sr. Tech., HFCL, Barauni, Village Bharaul, P.O. & P.S. Agapur, Via Manswichak, District-Begusarai ……………. Respondents. with CWJC No.9951 of 2008 Hindustan Fertilizer Corporation Ltd.(HFCL), Barauni Fertilizer Factory, a Government of India Undertaking, At & P.O. Barauni Urvarak Nagar, P.S. Barauni, District Begusarai (Bihar)- through it‟s Incharge, Siya Sharan Sharma, son of late Basant Kumar Sharma …………. Petitioner 3 Versus 1 Regional Labour Commissioner (Central) –cum-Appellate Authority, Maurya Lok Complex, P.S. Kotwali, Town & District- Patna 2 Assistant Labour Commissioner (Central)-cum-Controlling Authority (Under the Payment of Gratuity Act), Maurya Lok Complex, P.S. Kotwali, Town & District-Patna 3 Sri K.N.Mishra, father‟s name not known, Ex-Sr. Operator, HFCL, Barauni, At & P.O. Fatehpur, Via Narpatganj, District- Begusarai ……………. Respondents. with CWJC No.10554 of 2008 Hindustan Fertilizer Corporation Ltd.(HFCL), Barauni Fertilizer Factory, a Government of India Undertaking, At & P.O. Barauni Urvarak Nagar, P.S. Barauni, District Begusarai (Bihar)- through it‟s Incharge, Siya Sharan Sharma, son of late Basant Kumar Sharma …………. Petitioner Versus 1 Regional Labour Commissioner (Central) –cum-Appellate Authority, Maurya Lok Complex, P.S. Kotwali, Town & District- Patna 2 Assistant Labour Commissioner (Central)-cum-Controlling Authority (Under the Payment of Gratuity Act), Maurya Lok Complex, P.S. Kotwali, Town & District-Patna 3 Sri Sachidanand Prasad Sinha, father‟s name not known, Ex-Sr. Tech. , HFCL, Barauni, Chandra Patel Chowk, Bijay Nagar, p.O. P.V. College, Patna ……………. Respondents. with CWJC No.10807 of 2008 Hindustan Fertilizer Corporation Ltd.(HFCL), Barauni Fertilizer Factory, a Government of India Undertaking, At & P.O. Barauni Urvarak Nagar, P.S. Barauni, District Begusarai (Bihar)- through it‟s Incharge, Siya Sharan Sharma, son of late Basant Kumar Sharma …………. Petitioner Versus 1 Regional Labour Commissioner (Central) –cum-Appellate Authority, Maurya Lok Complex, P.S. Kotwali, Town & District- Patna 4 2 Assistant Labour Commissioner (Central)-cum-Controlling Authority (Under the Payment of Gratuity Act), Maurya Lok Complex, P.S. Kotwali, Town & District-Patna 3 Sri Surendra Pathak, father‟s name not known, Ex-Sr. Operator, HFCL, Barauni, At & P.O. Raghunandanpur, District Begusarai ……………. Respondents. with CWJC No.11190 of 2008 Hindustan Fertilizer Corporation Ltd.(HFCL), Barauni Fertilizer Factory, a Government of India Undertaking, At & P.O. Barauni Urvarak Nagar, P.S. Barauni, District Begusarai (Bihar)- through it‟s Incharge, Siya Sharan Sharma, son of late Basant Kumar Sharma …………. Petitioner Versus 1 Regional Labour Commissioner (Central) –cum-Appellate Authority, Maurya Lok Complex, P.S. Kotwali, Town & District- Patna 2 Assistant Labour Commissioner (Central)-cum-Controlling Authority (Under the Payment of Gratuity Act), Maurya Lok Complex, P.S. Kotwali, Town & District-Patna 3 Sri Nagendra Kumar Singh, father‟s name not known, Ex- Assistant Engineer, HFCL, Barauni, „Nagendra Madhuri Niwas‟, At Makhdumpur, P.O. Anishabad, P.S. Gardanibagh, District- Patna ……………. Respondents. with CWJC No.11477 of 2008 Hindustan Fertilizer Corporation Ltd.(HFCL), Barauni Fertilizer Factory, a Government of India Undertaking, At & P.O. Barauni Urvarak Nagar, P.S. Barauni, District Begusarai (Bihar)- through it‟s Incharge, Siya Sharan Sharma, son of late Basant Kumar Sharma …………. Petitioner Versus 1 Regional Labour Commissioner (Central) –cum-Appellate Authority, Maurya Lok Complex, P.S. Kotwali, Town & District- Patna 2 Assistant Labour Commissioner (Central)-cum-Controlling Authority (Under the Payment of Gratuity Act), Maurya Lok Complex, P.S. Kotwali, Town & District-Patna 3 Sri S.S.Chaudhary, Ex-Sr. Tech., HFCL, Barauni, At & P.O. Pupari Singhai Road, District-Sitamarhi ……………. Respondents. ----------- 5 For the petitioner: M/s. Umesh Prasad Singh, Sr. Advocate and Bijay Kumar Pandey, Advocate For Respondent No. 3: M/s. Arbind Nath Pandey & Shubh Narayan Singh, Advocates For the Union of India: M/s. Sudhir Singh,(ASG) and Sarvdeo Singh, Advocate ------------ O R D E R 5. 07.09.2010 All the nine writ petitions raise a common question and have accordingly been heard together, and are being disposed of by this common order. The writ petitions have been filed for quashing the orders/judgments dated 5.6.2008, 9.6.2008, 4.6.2008, 4.6.2008, 4.6.2008, 5.6.2008, 6.6.2008, 4.6.2008 and 9.6.2008 of the Regional Labour Commissioner (Central) ( in short „RLC) passed in Case Nos. 36/13/04- Appeal/RLC, 36/15/04-Appeal/RLC, 36/14/04- Appeal/RLC, 36/23/04-Appeal/RLC, 36/24/04- Appeal/RLC, 36/3/05-Appeal/RLC, 36/11/05- Appeal/RLC, 36/12/04-Appeal/RLC and 36/10/05- Appeal/RLC by which he has dismissed the appeals preferred by the petitioner Hindustan Fertilizers Corporation Limited while affirming the orders passed by the Assistant Labour Commissioner (Central) (in 6 short „ALC‟) and further to quash the orders dated 22.9.2004, 7.10.2004, 30.9.2004, 24.11.2004, 10.11.2004, 15.9.2004, 11.3.2005, 8.10.2004 and 11.3.2005 passed in LAC Case Nos. 36(35)/03, 36(31)/03, 36(30)/03, 36(8)/03, 36(10)/03, 36(34)/03, 36(14)/03, 36(33)/03 and 36(12)/03 passed by the ALC. The only point in issue between the parties is as to whether the ad hoc payment made in terms of the interim order dated 18.8.2000 of the Supreme Court in the case of A.K.Bindal and anr. Vs. Union of India and ors., the final judgment of which was delivered on 25.4.2003 and reported in (2003) 5 SCC 163, ought to be included in the wages of the respondent no. 3 employees of the company for the purpose of calculation of the gratuity payable to them. The ALC in all the aforesaid cases has held that the same should be included while calculating the wages, which orders have been affirmed by the aforesaid appellate orders of the RLC. The petitioner contests the said conclusion in the aforesaid orders. Briefly stated, the petitioner-Hindustan Fertilizer Corporation Limited was a Government of 7 India Company incorporated under the Companies Act, 1956 in terms of Section 617 of the said Act, one of its three units being situated at Barauni in the State of Bihar which was producing Urea. The petitioner-company suffered heavy losses continuously from year to year and ultimately it was referred to the Board for Industrial and Financial Re-construction (BIFR) in terms of Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) and was declared a sick unit under the said Act. The Central Government, which was the sole shareholder of the company, ultimately decided to close down the petitioner-Corporation. The Corporation through its Personnel Department issued a Circular dated 19.9.2002 approved by the Department of Public Enterprises, by which Voluntary Separation Scheme (VSS) was extended to all the employees of the Corporation to opt for it between the period 21.9.2002 and 20.12.2002. Clause 5.1 and 5.2 of the said VSS provided as under:- “5.1 Ex-gratia payment in respect of the employees computed on the existing pay scales in accordance with the extant Scheme shall be increased by 100% under both the schemes since employees of HPCL are 8 drawing pay scales of 1/1/1987. 5.2 Salary for the purpose of calculation of ex-gratia will consist of basic pay and D.A. only. The ad-hoc amount being paid to the employees as per the direction of Hon‟ble Supreme Court shall not be included in the salary for purpose of computation of ex-gratia.” Prior to introduction of the VSS, when the matter was pending before the BIFR, the Government of India in the Department of Public Enterprises, Ministry of Industry came out with an office memorandum dated 19.7.1995 in which it was provided that for sick PSEs registered with BIFR, pay revision and grant of other benefits will be allowed only if it is decided to revive the unit. Aggrieved by the same, the President, Federation of Officers‟ Association of FCI and the authorized representative of the Federation of Officers‟ Association of HFC filed writ petitions before the High Court praying that the aforesaid provisions and connected clauses of the said memorandum of the Government be quashed and consequently the practice of uniform treatment of the Officers in the profit-and-loss-making companies in FCI/HFC be revived. There was another 9 prayer to grant interim relief of at least 60% of the benefit of the revision of pay and perks which their counterparts have been given, pending final decision of the writ petition. The writ petitions were transferred to the Supreme Court and in the said transferred cases headed by the case of A.K.Bindal and another Vs. Union of India and others, an interim order dated 19.4.2000 was passed in which certain revised salaries were directed to be paid to the employees of the FCI and the petitioner- Corporation. The Central Government moved an application for clarification/modification of the said order and by the interim order dated 18.8.2000, the Apex Court modified the same by passing the following order which has been mentioned in para-25 of the final judgment in A.K.Bindal‟s case (supra): “Having heard learned Solicitor-General, for the applicant Union of India and learned Senior Counsel Mr. Sanyal, for the contesting respondents, purely as an ad hoc measure and without prejudice to the rights and contentions of the parties in the main matter, we deem it fit in the interest of justice to modify our order dated 19.4.2000 to the following effect: (i) The authorities shall pay as an ad hoc measure and on account Rs. 1500/- to Class I employees; Rs. 1000 to Class II employees; Rs. 750/- to Class III employees and 10 Rs. 500 to Class IV employees consisting of various categories in each of the classes, per month with effect from 1.4.2000. This payment will be without prejudice to the rights and contentions of the parties in the pending matters. (ii) We make it clear that this order will not affect whatever payment by way of HRA is being released or was released by the authorities to the employees concerned. (iii) The direction that payments as earlier issued by us on 19.4.2000 will stand modified by the present order. (iv) According to this order, all arrears with effect from 1.4.2000 to 31.7.2000 will be cleared within ten weeks from today and the current payment be made with effect from 1.8.2000 along with the salary payable for the month of August, 2000. (v) Future payments shall accordingly be made from month to month regularly along with usual salaries payable to them. This order is passed purely as an ad hoc measure and will not come in the way of the ultimate decision of this Court. This order will also not be treated as a precedent in any matter in view of the special facts of the present case. We express no opinion about the nature of the order passed by the learned Single Judge of the High Court. That question will abide by the decision in the 11 main matter. In view of the present order, IAs are disposed of.” The said transferred writ petitions were ultimately dismissed by the Supreme Court holding in paras 32 to 35 and 37 of the said judgment as follows:- “32. The units of the Companies have already suspended their operations quite some time back and as on date no unit is functioning nor is any production being made. There is also no denial of the fact that the Companies have suffered huge losses and salaries of the employees who were practically doing no work have been paid by the Government for a considerably long period. The employees accepted VRS with their eyes open without making any kind of protest regarding their past rights based upon revision of pay scale from 1.1.1992. 33. The Voluntary Retirement Scheme (VRS) which is sometimes called Voluntary Separation Scheme (VSS) is introduced by companies and industrial establishments in order to reduce the surplus staff and to bring in financial efficiency. The office memorandum dated 5.5.2000 issued by the Government of India provided that for sick and unviable units, the VRS package of the Department of Heavy Industry will be adopted. Under this Scheme an employee is entitled to an ex gratia payment equivalent to 45 days‟ emoluments (pay + DA) for each 12 completed year of service or the monthly emoluments at the time of retirement multiplied by the balance months of service left before the normal date of retirement, whichever is less. This is in addition to terminal benefits. The Government was conscious about the fact that the pay scales of some of the PSUs had not been revised with effect from 1.1.1992 and therefore it has provided adequate compensation in that regard in the second VRS which was announced for all Central public sector undertakings on 6.11.2001. Clause (a) of the Scheme reads as under: (a) Ex gratia payment in respect of employees on pay scales at 1.1.1987 and 1.1.1992 levels, computed on their existing pay scales in accordance with the extant Scheme, shall be increased by 100% and 50% respectively. 34. This shows that a considerable amount is to be paid to an employee ex gratia besides the terminal benefits in case he opts for voluntary retirement under the Scheme and his option is accepted. The amount is paid not for doing any work or rendering any service. It is paid in lieu of the employee himself leaving the services of the company or the industrial establishment and foregoing all his claims or rights in the same. It is a package deal of give and take. That is why in the business world it is known as “golden 13 handshake”. The main purpose of paying this amount is to bring about a complete cessation of the jural relationship between the employer and the employee. After the amount is paid and the employee ceases to be under the employment of the company or the undertaking, he leaves with all his rights and there is no question of his again agitating for any kind of his past rights with his erstwhile employer including making any claim with regard to enhancement of pay scale for an earlier period. If the employee is still permitted to raise a grievance regarding enhancement of pay scale from a retrospective date, even after he has opted for Voluntary Retirement Scheme and has accepted the amount paid to him, the whole purpose of introducing the Scheme would be totally frustrated. 35. The contention that the employees opted for VRS under any kind of compulsion is not worthy of acceptance. The petitioners are officers of the two Companies and are mature enough to weigh the pros and cons of the options which were available to them. They could have waited and pursued their claim for revision of pay scale without opting for VRS. However, they in their wisdom thought that in the fact situation VRS was a better option available and chose the same. After having applied for VRS and taken the money it is not open to them to contend that they exercised the option under any kind of compulsion. In view of the fact that nearly ninety- nine per cent of employees have 14 availed of the VRS Scheme and have left the Companies (FCI and HFC), the writ petition no longer survives and has become infructuous. 37. For the reasons discussed above, we find no merit in the transferred petitions which are accordingly dismissed. No costs.” In view of the aforesaid interim order dated 18.8.2000 the petitioner-Corporation started paying to the respondent-employees as an ad hoc measure, Rs. 1500/- per month. Subsequently, in terms of the VSS out of 1134 employees in the roll of Barauni Unit in September, 2002, nearly all employees exercised the option in favour of VSS and only 6 were retained on the roll of the petitioner-Company at Barauni Unit for finalizing closure activities, i.e., clearance of ex-employees dues, processing of pension cases of the said employees and the dues of contractor labours. As a matter of fact, out of 4881 employees of the petitioner-Corporation only 45 employees were retained on the roll for finalizing closure activities. The ad hoc payments ordered by the Supreme Court by its interim order dated 18.8.2000 continued to be paid to the employees including the respondent- 15 employees till 20.1.2003 when they left the services of the petitioner-Corporation on their release under the VSS. Subsequently, some of the employees including the private respondents in these writ petitions filed their complaints before the ALC claiming that the gratuity has not been properly paid to them since the ad hoc payment of Rs. 1500/- per month has not been included in their wages. 248 employees, including the private respondents herein, started as trainee in the petitioner-Corporation and raised claim with respect to stipend/salary received by them for inclusion of their three years training period as service period. The Corporation initially resisted the claim but under the directions of the Central Government, the matter was compromised and the said period was accepted to be calculated for the purpose of gratuity. All the other 239 similarly situated employees thereafter accepted the gratuity and gave up their claims with regard to inclusion of ad hoc payment of Rs. 1500/- per month except the nine respondents in these writ petitions. The ALC by the aforesaid impugned orders accepted the contention of the respondents and directed the inclusion of ad hoc payment of Rs. 1500/- per month for the 16 purpose of calculation of the gratuity and ultimately held that the petitioner-company was liable to pay the said amount. Aggrieved by the said orders, the petitioners filed appeal before the appellate authority under the Payment of Gratuity Act, 1972 but the appeals were dismissed by the RLC by the aforesaid orders and hence, it has filed the present writ petitions. Learned counsel for the petitioner submits that the ad hoc payment of Rs. 1500/- per month to the private respondents was given only on the directions of the Supreme Court in which it was clearly stated that the payment will be without prejudice to the rights and contentions of the parties in the pending matters and that the said interim order will not come in the way of ultimate decision of the Court. Ultimately, the transferred writ petitions were dismissed by the Apex Court without granting any relief to the petitioners therein and thus the claim of pay revision of the employees also stood rejected. In the said circumstances, the ad hoc payment could never be treated as a part of the salary of the employees. It is urged by learned counsel that the interim 17 order itself stood vacated on the dismissal of the transferred writ petitions but since nothing was mentioned with regard to the same in the final order, an interlocutory application was moved for clarification/modification of the interim order dated 18.8.2000 in which after referring to the interim order the Apex Court held as follows:- “By the final order dated 25.4.2003 the transferred petition stood dismissed. When the final order is passed the interim order automatically comes to an end. Therefore, it does not need any further clarification when the transferred petition was finally dismissed, the interim order stood vacated.” It is the contention of learned counsel that the amounts paid as per the interim direction of the Supreme Court did not form part of salary of the respondent- employees and were in addition to salary, and the petitioner always treated and paid the same separate from salary. Thus, according to learned counsel, the same would not come within the definition of wages under Section 2(s) of the Payment of Gratuity Act, 1972. Section 2(s) of the Act is as follows:- 18 2(s).- “wages” means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employments and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance”. Learned counsel for the respondents, on the other hand, submits that the amount directed to be paid by the Supreme Court as an ad hoc measure, was in addition to the salary of the respondent-employees. The said payments continued to be made to the respondent- employees at the rate of Rs. 1500/- per month up to the date of their VSS i.e. 20.1.2003 and thus the amount was part of salary of the respondent-employees and would therefore, come under the definition of wages. It is urged that the amount was included in the gross yearly income and income tax was also deducted from the same every year. It is further submitted that although the main case for pay revision was dismissed by the Supreme Court since more than 99% of the employees opted for VSS but the Apex Court did not pass any order to deduct the 19 previous amount which was paid to the employees of the petitioner-Corporation. In that view of the matter, the said amount actually received by respondent-employees has rightly been included in the wages for the purpose of calculation of the gratuity. Learned counsel further submits that the employees who are still continuing after the others had left on account of VSS, have continued to get the interim relief which is evident from the order dated 15.7.2004 (Annexure-A) passed by the petitioner-Corporation in which interim relief as directed by the Supreme Court has been restored with effect from 1.7.2004. I have considered the submissions of learned counsels for the parties and the orders of the ALC and the appellate orders of the RLC. It is evident from the definition of wages in Section 2(s) of the Payment of Gratuity Act that it would include all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment. The crucial issue for considering the present question would therefore be whether the ad hoc payment as an interim measure directed by the Supreme Court by 20 its order dated 18.8.2000 can be considered to be a payment received by the respondent-employees in accordance with the terms and conditions of their employment. From the interim order of the Apex Court as quoted above, it is clear that the payment was to be without prejudice to the rights and contentions of the parties in the pending transferred petitions. Thus the