Paradeep Phosphates Limited vs State Of Orissa

CIVIL APPEAL Nos.3997-3998 of 2018 (Arising out of Special Leave Petition (C) Nos. 35347-35348 of 2016)

Paradeep Phosphates Limited ….Appellant(s)

Versus

State of Orissa & Ors. …. Respondent(s)

JUDGMENT

R.K. Agrawal, J.

1) Leave granted.

2) The above appeals have been preferred against the

impugned common judgments and orders dated 30.08.2016

and 06.10.2016 passed by the High Court of Orissa in WPC

No. 9180 of 2010 and RVWPET No. 236 of 2016 respectively

whereby the Division Bench of the High Court dismissed the

appeal and the review petition filed by the appellant herein Signature Not Verified Digitally signed by ASHA SUNDRIYAL Date: 2018.04.19 17:26:36 IST Reason: 1 while upholding the decision dated 17.04.2010 passed by the

Industrial Tribunal, Bhubaneswar in I.D. Case No. 16 of 2003.

3) Brief facts:-

(a) In the year 1981, the appellant-Company was

incorporated as a joint venture between the Government of

India and Republic of Nauru with an objective to manufacture

Di-Ammonium Phosphates.

(b) Later on, in the year 1993, the Republic of Nauru

disinvested its entire equity stake to the Government of India

and the appellant-company became a wholly owned Public

Sector Undertaking of the Government of India having its

corporate and registered office at Bhubaneswar.

(c) Due to deteriorating financial position of certain Public

Sector units, the Government of India on 19.05.1998 decided

to temporarily enhance the age of retirement of all Central

Public Sector Employees from 58 years to 60 years with a view

that the same may help industries to cut down their losses.

Pursuant to the said order dated 19.05.1998, the

2 appellant-Company implemented the said order vide order

dated 19.11.1998 in Company with retrospective effect from

27.05.1998.

(d) Inspite of the enhancement of retirement age, the

financial performance of the appellant-Company still not

improved. As a result, the Government of India issued an

Office Memorandum dated 22.08.2001 to all Central Public

Undertakings including the appellant intimating its decision to

roll back the age of retirement of all the employees of Public

Sector Undertaking from 60 years to 58 years. Before this

Memorandum, the Government of India, on 08.06.2000, had

advised the appellant-Company to review the decision on

enhancement of age of retirement. However, the

appellant-Company did not take any decision on the said

advisory.

(e) In the meanwhile, the Government of India, on

28.02.2002, divested its 74% shareholding in the appellant

company in favour of one M/s Zuari Maroc Phosphates Ltd.

(“Zuari”), thereby, keeping only 26% shareholding in its favour.

3 As per the share holding agreements, under Clause 7.2 (j) it

was provided that all the decisions taken by the Board of

Directors of the appellant-Company, prior to the date of the

disinvestment, shall be binding on all concerned.

(f) On 17.07.2002, the appellant-Company, by office order,

withdrew the earlier office order dated 19.11.1998 and

restored the age of retirement to 58 years in respect of all the

employees in terms of Certified Standing Orders and Services

Rules of the appellant-Company.

(g) Being aggrieved, the Trade Union raised dispute with

regard to the above and as a consequence of the same, the

Government of Orissa, Labour and Employment Department

made Reference under Section 12 read with Section 10 of the

Industrial Disputes Act, 1947 (in short “the Act”) to the

Industrial Tribunal, Bhubaneswar. The Industrial Tribunal,

vide order dated 17.04.2010, disposed off the Reference and

invalidated the action of the appellant-Company of rolling

back the age of retirement from 60 years to 58 years due to

contravention of Section 9A of the Act which says prior notice

4 must be given to the employees by the employer which the

employer intentionally omitted to give in the present case.

(h) Being dissatisfied, the appellant-Company challenged the

decision of the Industrial Tribunal by way of filing writ petition

in the High Court of Orissa. The Division Bench of the High

Court, vide order dated 30.08.2016, dismissed the writ

petition and held, inter alia, that there was no error apparent

in the decision of the Industrial Tribunal. Thereafter, the

appellant-Company also preferred a review petition but the

same again got dismissed vide order dated 06.10.2016.

(i) Consequently, the appellant-Company has filed these

appeals by way of special leave before this Court.

4) We have given our solicitous consideration to the

submissions of learned senior counsel for the parties and

perused the relevant material placed before us.

Point(s) for consideration:-

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5) Whether in the light of present facts and circumstances

of the case, any intervention of this Court is required in the

impugned decision of the High Court?

Rival contentions:-

6) At the outset, leaned senior counsel for the

appellant-Company contended that the High Court failed to

appreciate that the age of retirement laid down in the

appointment letters, the Service Rules and the Certified

Standing Orders framed under the Industrial Employment

(Standing Orders) Act, 1946 are binding upon all workmen

governed by the same and, therefore, a temporary concession

of allowing persons to continue to serve until the age of 60

years pursuant to a government circular issued as a

temporary measure to combat losses in Central Public Sector

Undertakings cannot amount to a change in the settled service

conditions.

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7) In other words, contention of the appellant-Company is

that even if the benefit of enhancement of age of

superannuation from 58 years to 60 years has been extended

in favour of the workmen, they have got no right to retain the

same for the reason that the Service Rules and the Certified

Standing Orders applicable to the workmen stipulates a

condition of superannuation on attaining the age of 58 years

and since the same has not been amended in accordance with

law, hence, the provisions of Service Rules and the Certified

Standing Orders are binding upon the workmen and merely

because the benefit has been given to superannuate on

attaining the age of 60 years instead of the age of 58 years for

a period of four years i.e., 1998 to 2002, it will not ipso facto

replace the age of superannuation as has been provided in the

Service Rules or the Certified Standing Orders. Hence, no

question of applicability of Section 9A of the Act arises in any

case. Therefore, the impugned decision of the High Court is

liable to be set aside.

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8) Per contra, learned senior counsel for the respondent

submitted that the present appeals have been filed against the

well reasoned impugned judgments dated 30.08.2016 and

06.10.2016 which were rightly passed by the Division Bench

of the High Court. Further, it was also submitted that the

action of the appellant-Company amounts to contravention of

Section 9A of the Act read with Fourth Schedule which

postulates the necessity of prior notice to the workers if

employer proposes to effect any change in the conditions of

service. Hence, this appeal is devoid of merits and deserves to

be dismissed.

Discussion:-

9) The relationship of the employer and employee is of

utmost faith and, as a result, it falls under the ambit of

fiduciary relationship. In order to regulate such relationship,

legislature came up with legislation i.e., the Industrial

Disputes Act, 1947. The purpose of the Act is to protect the

interest of employees as they are the weaker sections since

time immemorial. In order to safeguard the rights of the

8 employees, certain amendments have been made subsequently

in the Statute. In 1956, legislature inserted Section 9A of the

Act which makes it obligatory on the part of the employer that

he is bound to give advance notice to the employee if he

intends to change certain things as envisaged under Section

9A of the Act read with Fourth Schedule. For the sake of

convenience, it is apt to re-produce Section 9A of the Act

which is as under:-

“9A. Notice of change-No, employer, who proposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the fourth Schedule shall effect such change,-

(a) without giving to the workmen likely to be affected by such change a notice in the prescribed manner of the nature of the change proposed to be effected: or

(b) within twenty-one days of giving such notice:

Provided that no notice shall be required for effecting any change-

(a) where the change is effected in pursuance of any settlement or award: or

(b) where the workmen likely to be affected by the change are persons to whom the Fundamental and Supplementary Rules, Civil Services (Classification, Control and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Service Regulations, Civilians in Defence Services (Classification, Control and Appeal) Rules or the Indian Railway Establishment Code or any other rules or regulations that may be notified in this behalf by the appropriate Government in the official Gazette, apply.”

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10) At the first sight of the provision, prima facie, it appears

that the employer is bound to give minimum 21 days’ notice to

the employee if employer intends to change any material terms

of service. Section 9A of the Act is a provision in consonance

with the Constitutional mandate which assures the protection

of principles of natural justice i.e., no one shall be condemned

unless heard. For the guidance, legislature prescribed the

Fourth Schedule and it is clearly mentioned in Section 9A of

the Act that before changing either of the things as envisaged

in the Fourth Schedule, prior notice must be given to the

employee. In the instant case, the grievance of the Trade

Union before the Tribunal was that withdrawal of the age of

superannuation i.e., restoration of the age from 60 years to 58

years, amounts to contravention of Clause 8 of the Fourth

Schedule, hence, employer was bound to give prior notice

which employer cannot escape. Therefore, the action of the

employer is bad in law and liable to be set aside which was

eventually upheld by the Tribunal and the High Court.

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11) Undoubtedly, it is a cardinal principle of law that

beneficial laws should be construed liberally. The Industrial

Dispute Act, 1947 is one of the welfare legislations which

intends to provide and protect the benefits of the employees.

Hence, it shall be interpreted in a liberal and broad manner so

that maximum benefits could reach to the employees. Any

attempt to do strict interpretation would undermine the

intention of the legislature. In a catena of cases, this Court

has held that the welfare legislation shall be interpreted in a

liberal way.

12) The grievance of the appellant-Company before this

Court is that the increase in the superannuation age of the

employees was temporary in nature in order to combat the

losses and in no circumstances, it can be said that withdrawal

of it amounts to withdrawal of customary concession or

privilege or change in usage. Eighth clause of the Fourth

Schedule says “withdrawal of any customary concession or

privilege or change in usage”. The whole dispute revolves

around the interpretation of the terms customary concession,

11 privilege or change in usage. In the instant case, we are mainly

concerned with the term ‘privilege’. The word “privilege” as

such is not defined in the Act. In the absence of statutory

definition, we have to take recourse of the dictionary or

general meaning of the term “privilege”. The Dictionary

meaning of the word privilege means a “special right,

advantage or immunity granted or available only to a particular

person or ground”. In other words, a particular and peculiar

benefit or advantage enjoyed by a person, company, or class,

beyond the common advantages of others.

13) It is admitted position that the Board of Directors took

the decision of enhancement of age of retirement and it came

into force with retrospective effect from 27.05.1998 as

mentioned in the order dated 19.11.1998. Though, this

decision implemented without the amendment in the Standing

Orders and Rules, yet impliedly it got the force as a service

condition since it directly relates with the service condition of

the employees. Age of superannuation is an integral part of the

service condition of the employee. Also, enhancement of

12 superannuation age would impliedly amount to a privilege

since it was provided particularly for the central public sector

employees. At this juncture, the Division Bench of the High

Court held as under:

“However the facts of this case is little bit different because the necessary modification has not been incorporated either in the Service Rules or in the Certified Standing Order enhancing the age of superannuation from 58 years to 60 years, but the Central Government being the competent authority has directed the Board of Directors to enhance the age of superannuation and accordingly it has been enhanced in the year 1998 and thereafter it has been reduced vide order dtd 17.7.2002 by the same process, hence we are of the considered view that by passing the order dtd 17.7.2002 the privilege has been granted to the workmen has been recalled by altering the same by reducing the age of superannuation from 60 years to 58 years is alteration which is detrimental to the interest of the workmen.”

14) No doubt, the enhancement of the superannuation age

was temporary in nature in order to achieve certain objectives

and also it is not deniable that yet employees would be

governed by the Service Rules and the Certified Standing

Orders which were not amended. However, if we allow the plea

of the appellant-Company then it would defeat the object of

legislature because legislature could never have intended that

employees would be condemned without giving them right of

reasonable hearing. Naturally, every employee is under the

13 expectation that before reducing his superannuation age, he

would be given a proper chance to be heard. Right to work is a

vital right of every employee and in our view, it shall not be

taken away without giving reasonable opportunity of being

heard otherwise it would be an act of violation of the

Constitutional mandate.

15) Moreover, the contention of the appellant-Company that

the object of enhancement of superannuation age was just to

save the industries from huge losses, therefore, it does not

violate any statutory right of the employees, cannot be

sustained in the eyes of law and also it does not give the

license to the appellant-Company to act in contravention of

law since it is a cannon of law that everyone is expected to act

as per the mandate of law.

16) To sum up, we are of the view that at the very moment

when the order of enhancement of superannuation of the

employees came into force though temporary in nature, it

would amount to privilege to employees since it is a special

right granted to them. Hence, any unilateral withdrawal of

14 such privilege amounts to contravention of Section 9A of the

Act and such act of the employer is bad in the eyes of law.

17) In view of above detailed discussion, we are of the

considered view that there is no error in the impugned

judgment of the High Court, hence, we are not inclined to

interfere in it. Accordingly, these appeals are hereby dismissed

leaving parties to bear their own cost.

...…………………………………J. (R.K. AGRAWAL)

.………….………………………J. (ABHAY MANOHAR SAPRE)

NEW DELHI;

APRIL 19, 2018.

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