Case: Tamil Nadu Electricity Board Vs. TNEB-Thozhilalar Aykkiya Sangam

3. These appeals relate to the claim of employees of the appellant-Board for the payment of difference of Dearness Allowance (DA) for a period of nine months as under:-- 4% of DA (difference of 49% - 45%) from 01.01.2002 to 30.06.2002- 7% of DA (difference of 52% - 45%) from 01.07.2002 to 30.09.20024. Brief facts giving rise to these appeals are as under:-A Memorandum of Settlement dated 08.07.1998 was recorded under Section 18(1) of the Industrial Disputes Act, 1947 between the appellant-T amil Nadu Electricity Board (Board) and its workmen represented by unions for settlement of pay related issues. The Settlement covered about eighty thousand employees of the Board in Class III and IV service and it was for a period of four years from 01.12.1996 to 30.11.2000. The terms of settlement also dealt with the payment of Dearness Allowance. As per Clause 5 of the terms of settlement agreement, it was agreed that the Dearness Allowance rates will be revised twice in a year i.e. on 1 st January and on 1 st July taking into account the variations in the previous twelve months average of the All India Consumer Price Index numbers, adopting the same formula as followed by the State Government. In pursuance of the said settlement, order dated 18.07.1998 was issued by the appellant- Board in Board Proceedings BP (FB) No.58 wherein, it was inter alia provided that the revised Dearness Allowance would be sanctioned to the employees of the Board as granted by the State Government to their employees at the same rate and from the same date. The Board by its various proceedings has been adopting the revised rate of Dearness Allowance payable to State Government employees at the same rate and from the same date5. The Government of India, Ministry of Finance, Expenditure Department vide Office Memorandum dated 20.03.2002 enhanced the Dearness Allowance payable to Central Government employees from the existing rate of 45% to 49% w.e.f. 01.01.2002. The State Government faced acute financial crisis during the period 2001-2002 due to which, Government of T amil Nadu was paying Dearness Allowance at the rate of 45% on that date to its employees. The appellant-Board also followed the same rate of DA at 45%. On 07.05.2002 and 12.07.2002, the respondent-CITU submitted representations to the Board. After giving personal hearing to the representatives of the respondent, the Chairman of the Board rejected the representation on 13.09.2002 stating that as per the settlement dated 08.07.1998, Dearness Allowance would be sanctioned to the employees of the Board as granted by the State Government to their employees at the same rate and from the same date6. The Government of T amil Nadu subsequently vide G.O.Ms. No.346 dated 21.10.2002 issued an order revising the Dearness Allowance from existing rate of 45% to 49% w.e.f. 01.10.2002 in view of its difficult financial position. The appellant-Board also adopted G.O. Ms. No.346 dated 21.10.2002 and issued orders in BP(FB) No.58 dated 29.10.2002 revising the Dearness Allowance to 49% from 01.10.2002 to its employees on par with the State Government employees7. The Central Government revised the rates of payment of Dearness Allowance to Central Government employees from the existing rate of 49% to 52% w.e.f. 01.07.2002. The Government of T amil Nadu vide G.O. No.215 dated 27.06.2003 revised the rate of Dearness Allowance to its employees w.e.f. 01.07.2003 from the existing rate of 49% to 52%. The appellant-Board adopting the G.O. No.215 dated 27.06.2003 revised the Dearness Allowance to its employees to 52% from 01.07.2003 on par with the State Government employees8. Respondent-Union filed the writ petition in WP No.9525 of 2003 before the High Court of Madras seeking direction to pay Dearness Allowance at the rate of 49% of the basic pay w.e.f. 01.01.2002 to 30.06.2002 and at the rate of 52% of the basic pay w.e.f. 01.07.2002 respectively. Similarly, another respondent union-CITU filed the writ petition in WP No.36197 of 2002 with the same prayer. By order dated 14.09.2012, the learned Single Judge allowed the Writ Petition No.36197 of 2002 observing that the question involved was already concluded in W.P . No.10474 of 1999 and held that it is not open to the Board to postpone the arrears of Dearness Allowance and credit the same to the General Provident Fund account of the employee without the consent of the employees9. By order dated 22.03.2013, Writ Petition No.9525 of 2003 was also allowed in terms of the order passed in Writ Petition No.36197 of 2002 by holding that the Board cannot postpone the arrears of Dearness Allowance and credit the same to the General Provident Fund of the employee without the consent of the employees. The appeal preferred by the appellant-Board also came to be dismissed with the direction that the appellant-Board was liable to pay Dearness Allowance at the revised rate w.e.f. 01.01.2002 to 30.09.2002.

Court's reasoning:
19. As discussed earlier, payment of Dearness Allowance is governed by the Wage Settlement dated 08.07.1998 and the Board Proceedings BP (FB) No.58 dated 18.07.1998. The increases in Dearness Allowance which fell due w.e.f. 01.07.1998, 01.01.1999, 01.07.1999, 01.01.2000, 01.07.2000, 01.01.2001 and 01.07.2001 were all paid as per the above agreed term only. As per settlement dated 08.07.1998, the Dearness Allowance rates will be revised twice in a year i.e. on 1 st January and on 1 st July taking into account the variations in the previous twelve months average of the All India Consumer Price Index numbers adopting the same formula as followed by the State Government. The Board Proceeding BP(FB) No.58 dated 18.07.1998 stipulated that the revised Dearness Allowance would be sanctioned to the employees of the Board as granted by the State Government to their employees at the same rate and from the same date. It is pertinent to note that in the subsequent wage settlement entered into between the appellant-Board and the respondent-union on 15.10.2005 (w.e.f. 01.12.2002) stipulates the existing practice of sanction of Dearness Allowance to the employees of the Board as granted by the State Government to their employees at the same rate and from the same date. The subsequent settlement also reiterates that all along the revision of Dearness Allowance to the employees of the Board was on par with the employees of the State Government. The respondent(s) union having agreed that the revised Dearness Allowance will be sanctioned as granted by the State Government to their employees, the appellant-Board has been consistently adopting the revised rates of Dearness Allowance following various State Government orders. Having agreed for the grant of revised Dearness Allowance on par with the State Government employees, the respondent(s) union cannot seek for revision in Dearness Allowance at a higher rate than what was granted by the State Government to its employees20. The appellant-Board has been adopting the formula of the State Government in revising the rate of Dearness Allowance, which was settled under Section 18(1) of the Indian Disputes Act, 1947 and the settlement between the appellant-Board and the respondent union. The appellant-Board is not bound to adopt the revised rate of Central Government, when the settlement prescribes the formula to be adopted from the rates of the State Government21. The High Court, in our view, did not keep in view the well settled principles that the revision of wage or Dearness Allowance would depend upon the ability and the financial position of the employer. In G.O. Ms. No.346 in and by which the Government of TN revised the Dearness Allowance from 45% to 49% (w.e.f. 01.10.2002), it was made clear that the Government of TN was facing extremely difficult financial position and therefore, decided to sanction additional four per cent (45% to 49%) of Dearness Allowance to the employees of the State Government w.e.f. 01.10.2002. Having regard to the difficult finance situation which the State and the Board were facing and having regard to the terms of the settlement, respondent(s) union cannot seek for sanction of enhanced rate of Dearness Allowance on par with the Central Government employees22. Each State Government following their own rate of Dearness Allowance payable to their employees may be adopting the revised Dearness Allowance of the Central Government. There is no rule or obligation on the State Government to always adopt the Dearness Allowance as revised by the Central Government. It is absolutely not necessary for the State Government to adopt the Dearness Allowance rates fixed by the Central Government. It should be looked from the financial position of the State Government to adopt its own rates/revised rates of Dearness Allowance. The Board, being the State Government undertaking, the money has to come from the State Government. Keeping in view the extremely difficult financial position of the State Government, Boards order revising the Dearness Allowance rate from 45% to 49% only from 01.10.2002 cannot be said to be arbitrary or in violation of the terms of the settlement23. The main source of finance of the Electricity Board is the State Government; the Board is run by the State Government. Unless the funds are provided by the State Government, the Electricity Board would not have sufficient funds of its own to pay the wages and the revised Dearness Allowance to its employees. Considering the financial difficulties which the State Government was facing, the revision of the Dearness Allowance from the above said dates at above said rate cannot be said to be arbitrary or without any reason24. While considering the grievance of wage structure or Dearness Allowance, the importance of considering the financial implications while providing benefits to employees has been noted by the Supreme Court in number of judgments. The Supreme Court in Workmen of Gujarat Electricity Board, Baroda v. Gujarat Electricity Board, Baroda (1969) 1 SCC 266   while dismissing the appeal preferred by the workmen, has confirmed the view taken by the Tribunal which rejected the demand of the employees of the Board for Dearness Allowance that it should be fixed with the scale prescribed for the Ahmedabad Mill Owners Association on the ground that the Board does not have the capacity to meet the additional expenditure that would have to be incurred if such demands are acceded to28. It is within the power of the Board to set a cut-off date for payment of revised Dearness Allowance keeping in view its financial constraints. Moreover, the settlement agreement and the decisions taken by the Board in the Board Proceedings are to be harmoniously construed. Having regard to the financial difficulties which the State Government was facing, appellant-Board being a State Government undertaking, decided to adopt the State Governments revised Dearness Allowance at the same rate and from the same date. In view of extremely difficult financial situation, not only the State Government employees but all the employees of various other corporations were granted revised Dearness Allowance at the rate of 49% only w.e.f. 01.10.2002 and 52% w.e.f. 01.07.2003. The respondent(s) union cannot insist for revision of Dearness Allowance at a higher rate than what was being paid to the State Government employees30. There is no merit in the contention that by BP (FB) No.58 dated 18.07.1998, the Board has unilaterally altered the terms of settlement between the parties. On perusal of Boards proceeding BP (FB) No.58 dated 18.07.1998, it is seen that Clause 2 of the Board proceedings inter alia provides for various other terms like work norms, retrenchment etc. It is not the case of the respondent(s) union that those terms of the settlement were not acted upon. The respondent(s) union are not right in taking one clause from the Board proceeding dated 18.07.1998 and contending that in so far as payment of Dearness Allowance is concerned, the Settlement dated 08.07.1998 has been unilaterally altered. It is pertinent to note that the respondent(s) have not challenged that portion of the Boards proceeding BP(FB) No.58 dated 18.07.1998; the respondent(s) cannot approbate and reprobate the Board Proceedings dated 18.07.1998. Therefore, the contention that revision of Dearness Allowance as granted by the State Government to their employees is the unilateral alteration of the terms of settlement lacks merit31. Contention of the respondent(s) is that the employees of the appellant-Board are not State Government employees and they cannot be treated on par with the State Government employees. It is not the contention of the appellant-Board that the employees of the Board are to be treated on par with the State Government employees nor the same is the issue for consideration before us. It is not disputed that Board is run by the State Government and unless the funds are provided by the State Government, the Electricity Board would not have adequate funds of its own to pay the wages. In that factual scenario, the decision of the Board to adopt the rate of Dearness Allowance as granted by the State Government cannot be said to be arbitraryThe orders of the High Court in those earlier writ petitions were only against crediting of the arrears of the Dearness Allowance in the respective provident fund account of the employees, wherein, the court directed the Board to pay arrears in cash and restrained the Board from deducting any arrears of the Dearness Allowance and crediting the same into the General Provident Fund account of the workmen34. The learned Single Judge as well as the Division Bench did not keep in view that in the present dispute, settlement dated 08.07.1998 was followed by BP(FB) No.58 dated 18.07.1998 which clearly stipulates that the Dearness Allowance would be paid to the employees of the Board as granted by the State Government to its employees. It is pertinent to note that the representation of respondent-CITU dated 12.07.2002 was rejected by the Board vide order dated 13.09.2002 which refers to BP(FB) No.58 dated 18.07.1998 to the effect that the revised Dearness Allowance would be sanctioned to the employees of the Board as granted by the State Government to their employees at the same rate and from the same date. The learned Single Judge and the Division Bench erred in not considering the matter in the proper perspective and erred in holding that the issue has been covered by the earlier judgment in Writ Petition No.10474 of 1999 dated 11.08.199935. The learned Single Judge and the Division Bench did not keep in view the terms of the Settlement and the Board Proceeding BP(FB) No. 58 dated 18.07.1998 which stipulates that Dearness Allowance would be revised on par with the State Government employees and that it has been consistently followed by the appellant-Board. The High Court erred not keeping in view the extremely difficult financial position of the State Government and the Board and also the additional financial burden which would be imposed upon the appellant-Board if the demands of the respondent(s)-union are acceded to. The High Court, in our view, was clearly in error in allowing the writ petition and the impugned judgment cannot be sustained and liable to be set aside.