Case: A.K. Bindal &amp; Another Vs. Union of India &amp; Others

3. In January, 1961 two Fertilizer companies, namely Sindri Fertilizers and Chemicals Ltd. and Hindustan Fertilizer and Chemicals Ltd. were merged and a new company named as Fertilizer Corporation of India Ltd. (for shortwas created. Between 1961 and 1977, FCI, came to have 17 Fertilizer Units, 7 of which were in operation while remaining 10 were at various stages of implementation. In 1978 the Government of India set up a Committee to work out the modalities for reorganisation of its Fertilizer Industry. On the basis of the recommendation of the Committee, the Government of India approved the bifurcation and reorganisation of FCI and National Fertilizer Ltd. (for shortwhich was an independent and separate undertaking at that time and allocated the various units to the newly created undertakings which were five in number. Namrup, Haldia, Barauni and Durgapur units were allocated to the newly formed Hindustan Fertilizer Corporation Ltd. (for shortand Sindri, Gorakhpur, Ramagundam, Talcher, Korba and Jodhpur Mining Organization were retained with FCI. The other units were allocated to newly created Rashtriya Chemicals and Fertilizers Ltd. and National Fertilizers Ltd. while a fifth company dealing exclusively with planning and development was created which was known as Project and Development (India) Ltd. After reorganization, the industrial pattern of pay and DA was introduced and it was made effective from 1.9.1977. The Department of Chemicals and Fertilizers, Government of India issued a circular on 3.9.1979 which provided that revision of pay scales and fringe benefits of the officers of the entire FCI/NFL would be the same and consequently all the officers in the five companies were treated alike with reference to revision of their pay scales and fringe benefits etc. The revision of pay scales of officers which was due from 1.8.1986 could not be given as the Government did not take steps in that regard. However, a decision was taken by the Government to give ad hoc relief to all the officers working in the Public Enterprises, following the Industrial DA pattern and related scales of pay and accordingly ad hoc relief was paid to all the officers of FCI and HFC with effect from 1.1.1986 at uniform rate. Since the Government did not take any decision regarding the revision of pay scales and perks of the officers of the entire public sector in the country, the Bureau of Public Enterprises (for shortwhich is a policy making division of the Government of India, recommended for payment of second relief to the officers of Public Enterprises following the industrial DA pattern on 13.1.1990. Consequently FCI/NFL issued circulars on 24.1.1990 for giving ad hoc relief to the officers. During this period the Government of India and also the Management of FCI and HFC made no distinction on the basis of ‘losscompanies in the matter of revision of pay scale and fringe benefits to the officers of the companies and they were treated alike irrespective of the fact that the companies in which they were working had been making losses. The period of validity of the revised pay scales made applicable from 1.1.1987 was for five years and thereafter the next revision of pay scales became due from 1.1.1992 but the same was not done for the officers employed in FCI and HTC on the ground that the two companies were incurring losses. However, the other companies in erstwhile FCI/NFL group of companies were given revised pay scale and fringe benefits with effect from 1.1.1992. According to the petitioners an unfair and unjust policy of discrimination in the matter of revision of pay scales based upon profits and losses of the company commenced at this stage. Thereafter the Department of Public Enterprises, Ministry of Industry, Government of India issued an Officer Memorandum on 12.4.1993 on Wage Police for the fifth round of wage negotiations in Public Sector Enterprises (for shortwhereby the ban imposed by D.O. No. 2(3)/91-DPE (WC) dated 17.10.1991 was withdrawn and it was directed that the management of PSEs may commence their wage negotiations with the Trade Unions/Associations. It further provided that under the new Wage Policy the Managements were free to negotiate the wage structure keeping in view and consistent with the generation of resources/ profits by the individual enterprises/units but the Government will not provide any budgetary support for the wage increase and the respective managements will have to find the requisite resources from within their own internal generation. Para 5 of this Office Memorandum specifically said that the wage settlement should be negotiated by thein accordance with the above parameters. This was followed by the impugned Office Memorandum dated 19.7.1995 issued by the Department of Public Enterprises on the subject of revision of scales of pay the Executives holding post below the Board level and non-unionised supervisors with effect from 1.1.1992. The petitioners are basically aggrieved by para 13 of this Office Memorandum which provides that for sick PSEs registered with the Board for Industrial and Financial Reconstruction (for shortpay revision and grant of other benefits will be allowed only if it is decided to revive the unit and the revival package should include the enhanced liability on this account.4. The stand of the respondents in the counter-affidavit filed by them is that FCI and HFC which were under the administrative control of Department of Fertilizers (for shortwere referred to BIFR and were declared as sick companies on 6.11.1992 and 12.11.1992 respectively. Out of the four units of FCI the unit at Gorakhpur was lying closed since 10.6.1990. The commercial production in the Haldia unit of FCI which is located in West Bengal did not commence at all ever since its mechanical completion in 1981. The equity base of both the companies had been totally eroded as a result of continuous losses. The FCI and HFC had projected net losses of Rs. 562.51 crores and Rs. 438.99 crores respectively for the year 1996-1997. The BIFR had appointed Industrial Credit and Investment Corporation of India Ltd. (for shortas the Operating Agency in March 1994 to examine various options and work out unit wise rehabilitation plans for these companies. The ICICI submitted its report in January 1995 and thereafter, the matter was taken up by Group of Ministers which set up a Committee of officers to evaluate all the available alternatives for revival of the companies. The Department of Fertilizers, keeping in view the report of the Operating Agency as well as suggestions received from various other bodies including the employees unions/associations formulated revival packages. The package envisaged revamp of the functional units of these companies namely, Sindri, Ramagundam and Talcher of FCI and Durgapur, Barauni and Namrup units of HFC at a total investment of Rs. 2201.13 crore (Rs. 1736.20 crores for FCI and Rs. 464.93 crore for HFC) without providing for wage revision of the employees. However, due to prior commitment of funds of Public Sector Units/ Cooperative Societies in the Fertilizer Sector for their ongoing expansion and reluctance of Financial Institutions to fund the revival packages of sick PSUs, the funding arrangements for these packages could not be tied up. The ICICI also expressed serious reservation on the viability of these packages necessitating a review of the same.5. The details of the budgetary support given by the government since 1991-1992 till 1995-1996 have been given in para 12 of the counter-affidavit. It is averred in para 14 of the counter-affidavit that in case the pay scales and other benefits of the employees are directed to be revised with effect from 1.1.1992 it would involve additional financial implication of Rs. 120 crores (Rs. 60 crores each for FCI and HFC) for the five year period. The revival packages for both FCI and HFC have not been approved for implementation by the BIFR because the Operating Agency, the Department of Fertilizers and the Promoters have not been able to mobilize funds required the revival package. Pay revision of the employees will further add to the financial requirements for the revival package, which is held up for want of funding.6. It is also pleaded in the counter affidavit that the Government guidelines do not prohibit BIFR referred companies from revising their pay scales and other benefits with effect from 1.1.1992 but has linked it with the basic issue of revival packages of such companies. This revival package is to be approved by the BIFR after it is agreed to by the Operating Agency and funding institutions. It has thus been submitted that no decision could be taken on revision of pay scales of the employees of FCI and HFC as it is linked to the revival packages being formulated for these companies for approval of BIFR. The Office Memorandum dated 19.7.1995 has been issued with the approval of the Cabinet Committee on Economic Affairs. The basic thrust of the policy as contained in office memorandum dated 12.4.1993 is that PSUs should generate their own resources for meeting the enhanced liability on account of pay revision and no budgetary support shall be extended to them by the Government.7. After transfer of writ petitions, this Court issued several directions to BIFR to submit reports regarding viability of the units of the companies. The BIFR by its order dated 2.11.2001 recommended winding up of FCI. A similar order for winding up of HFC has also been passed. The FCI preferred an appeal before AAIFR which has been dismissed. The Delhi High Court is now proceeding with winding up of both the companies namely, FCI and HFC.

Court's reasoning:
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 forgoing all his claims or rights in the same. It is a package deal of give and take. That is why in business world it is known as Golden 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 totallypetitioners 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 those 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 availed of the VRS Scheme and have left the companies (FCI & HFC), the writ petition no longer survives and has become infructuous.