Chairman-Cum-M.D. Iti Limited vs K.Muniswamy .

NON­REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 13398 OF 2015

Chairman­cum­M.D. ITI Limited …Appellant

versus

K. Muniswamy & Ors. ...Respondents

J U D G M E N T

ABHAY S. OKA, J.

FACTUAL ASPECTS

1. This Civil Appeal raises a very narrow controversy. The

issue concerns the interpretation of clause 17(7)(iii) of the

Certified Standing Orders (for short, ‘the Standing Orders’) under

the Industrial Employment (Standing Orders) Act, 1946 in

respect of the appellant – company. The appellant – company is

a Public Sector Undertaking (PSU) of the Government of India.

On 11th June 1998, by a circular, an amendment was made to Signature Not Verified Digitally signed by Indu Marwah 17:00:33 IST Reason: Rule 35 of the ITI Conduct, Discipline and Appeal Rules, 1975 Date: 2023.03.02

(for short, ‘the said Rules’). Amended clause 2(d) of Rule

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35 of the said Rules provided that an employee completing

the age of 58 years, will continue in service till the

completion of the age of 60 years, subject to medical fitness

at the end of each year. On 22 nd August 2001, the

Department of Public Enterprises issued an Office

Memorandum (O.M.) directing that the Hon’ble Minister­in­

charge of the concerned administrative Ministry would have

the authority to approve the rollback of the retirement age

for all PSUs, on the basis of the decision of the Board of

Directors of the concerned PSU. The Board of Directors of

the appellant – company proposed to roll back the age of

retirement from 60 to 58 years. The said proposal was

approved by the concerned Ministry on 20 th November

2001.

2. A writ petition was filed by the respondents before the High

Court of Karnataka for challenging the rollback. The writ

petition was partly allowed by the learned Single Judge by

setting aside the circular dated 27 th March 2002 by which the

effect was given to the decision of rollback by carrying out

necessary amendments to the said Rules and in particular, to

Rule 35. The learned Single Judge directed the appellant to take

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note of various factors as indicated in the judgment while

considering the issue of the reduction in the retirement age from

60 to 58 years. Pending the decision of the appellant, a

direction was issued to the appellant to continue its employees

till the age of 60 years. However, it was clarified that those who

have already attained the age of 58 years, will not get any relief.

Both parties filed writ appeals for challenging the judgment of

the learned Single Judge. By the impugned judgment, a

Division Bench of the High Court held that the learned Single

Judge was not right in setting aside the decision to roll back the

age of retirement. However, it was held that the rollback cannot

have the effect of affecting the existing rights of employees and

the company recognised in terms of clause 17(7)(iii) of the

Standing Orders.

SUBMISSIONS

3. The submission of the learned counsel appearing for the

appellant is that clause (17)(7)(iii) does not confer any right on

any of the employees. His submission is that the said clause

gives discretion to the appellant–employer to consider the case

of any employee to permit him to serve up to the age of 60

years, subject to medical fitness at the end of each year. This

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clause does not confer any right on any employee to be

considered for continuation till the age of 60 years. His

submission is that the said clause enables the appellant to

continue the employment of certain employees, if after

considering the exigencies of work, the appellant was desirous

of continuing with their employment. The learned counsel also

invited our attention to material placed on record indicating

reasons for effecting rollback from 60 to 58 years. The learned

counsel, therefore, submitted that the direction issued in

paragraph 28 of the judgment, needs to be set aside.

4. The learned counsel appearing for the respondents

and/or intervenors urged that all that paragraph 28 of the

impugned judgment directs is that the effect should be given to

clause 17(7)(iii) and therefore, there is no reason for this Court

to interfere with the said direction.

OUR VIEW

5. On 11th June 1998, the appellant amended Rule 35 of the

said Rules by which, the age of retirement of the employees

was extended to 60 years. Considering the losses suffered by

the appellant, in the year 2001, the appellant engaged services

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of M/s. Price Waterhouse Coopers to make recommendations

regarding restructuring the company. Based on the figures of

manpower cost incurred by the appellant, the said consultant

recommended that the age of retirement should be reduced to

58 years, which will achieve the objective of reduction of

manpower cost. In fact, the recommendation of the consultant

was also to reduce the age of retirement to 55 years by March,

2003. According to the case of the appellant, in December

2001, the issue of rollback of the age of retirement was

discussed with the recognised Unions and office bearers of the

Officers’ Association. The Division Bench of the High Court in

the impugned judgment has held that the decision of the

appellant to roll back the age of retirement from 60 to 58 years

cannot be faulted. This part of the impugned judgment has

not been assailed by the respondents. Therefore, what remains

for consideration is only the interpretation of clause 17(7)(iii) of

the Standing Orders. For ready reference, we are quoting sub­

clause (7) of clause 17 of the Standing Orders, which reads

thus:

“17.Service­Termination of­by the Company: 1……………

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2…………… 3…………… 4…………… 5…………… 6……………

7. (i) The age of Superannuation shall be 58 years but the Company, however, may require an employee to retire at any time after he attains the age of 55 years on three months’ notice without assigning any reasons;

(ii) The employee may also at any time after attaining the age of 55 years voluntarily retire after giving three months’ notice to the Company.

(iii) The employee who attains the age of 58 years may be continued in service upto the age of 60 years subject to medical fitness at the end of each year.”

(emphasis added)

6. First part of sub­clause (7) lays down that the age of

superannuation shall be 58 years. However, it gives an option

to the appellant to retire an employee after he or she attains

the age of 55 years on three months’ notice without giving any

reasons. It also gives an option to employees to take voluntary

retirement on completion of the age of 55 years. The word

‘may’ has been used in sub­clause (7)(iii) of clause 17. It is

only an enabling provision that enables the appellant to

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continue an employee in service who has attained the age of 58

years, up to the age of 60 years, provided he or she is medically

fit. This clause does not entitle any employee to seek

continuation after completion of 58 years of age as a matter of

right. The aforesaid clause does not create any right in any of

the employees to seek their continuation after 58 years.

However, discretionary power has been conferred on the

appellant to continue an employee who has attained 58 years

of age, till completion of the age of 60 years.

7. Paragraph 28 of the impugned judgment reads thus:

“Therefore, while holding that the roll back from 60 to 58 years cannot be interfered with by this Court in exercise of judicial review power, we make it clear that the roll back cannot have the effect of affecting the existing rights recognised in the employees and the company in terms of clause 17(7) of the Standing Orders. Point No.3 is answered accordingly.”

(emphasis added)

8. On a plain reading of clause 17(7)(iii), it does not create

any right in favour of any employee. The use of the word ‘may’

indicates that it gives discretion to the appellant to continue

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some of the employees after completing the age of 58 years, till

they complete 60 years of age.

9. Therefore, we hold that clause 17(7)(iii) of the Standing

Orders only enables the appellant – company to continue any

employee in service till he or she attains the age of 60 years

subject to medical fitness at the end of each year. We also

make it clear that the aforesaid clause does not confer any

right on the employees to seek extension till the completion of

60 years. To this extent, paragraph 28 of the impugned

judgment stands modified.

10. The appeal is partly allowed on the above terms with no

order as to costs. Pending applications, if any, stand disposed

of.

……..…………………J. (Abhay S. Oka)

……..…………………J. (Rajesh Bindal)

New Delhi;

March 2, 2023.

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