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Sureshchandra Singh & Ors vs Fertilizer Corpn. Of India Ltd. & Ors

Supreme Court16 December 2003S. Rajendra Babu · Ruma Pal

Ratio decidendi

The rule this decision rests on

An Office Memorandum issued by the Department of Public Enterprises in the nature of a guideline, rather than a Presidential Directive, is advisory in character and does not have the force of law; accordingly, a court cannot issue a writ to enforce such an administrative instruction, and the Board of Directors of a Public Sector Undertaking may in its discretion adopt or decline to adopt the guidelines set out therein, provided it records its reasons in writing. A Public Sector Undertaking may lawfully decline to implement a government policy regarding enhancement of retirement age where the Board of Directors, after considering the enterprise's particular financial circumstances and operational needs—such as accumulated losses, daily operating deficits, negative net worth, declaration as a sick unit, and surplus manpower—determines that implementation would jeopardize the enterprise's financial position and revival prospects. The Board-level employees of a Public Sector Undertaking form a distinct class from other employees and cannot be equated or compared with them in regard to conditions of service, since Board members are appointed directly or as nominees by the President of India for fixed terms and hold positions of a fundamentally different character. Each Public Sector Undertaking is an independent entity free to formulate its own service conditions in accordance with law, and employees of different corporations cannot be treated alike or compared for purposes of determining discrimination, since each corporation must formulate its policy in light of its separate circumstances.

Written by Miss Lucy from the judgment below, not taken from a headnote.

Judgment

As delivered

CASE NO.:Appeal (civil) 717-719 of 1999Writ Petition (civil) 133 of 200
PETITIONER:Sureshchandra Singh & Ors.
RESPONDENT:Fertilizer Corpn. Of India Ltd. & Ors.
DATE OF JUDGMENT: 16/12/2003
BENCH:S. RAJENDRA BABU & RUMA PAL.
JUDGMENT:
J U D G M E N T
RAJENDRA BABU, J. :
Pursuant to the recommendations of the FifthCentral Pay Commission, Government of Indiaissued an Office Memorandum (OM) No. 25012/2/87 Col (A) dated 13th May, 1998 enhancing theretirement age of Central Government Employees tosixty years from fifty-eight years. It was alsoprovided that OM would come into force with effectfrom the date of Notification of amendment to therelevant rules and regulations. To a similar effectDepartment of Public Enterprises, Ministry ofIndustry, Government of India issued another OMNo. 18(6)/98-GM-GL-002 dated 19th May, 1998making it clear that such increase in age ofretirement would come into force from the date therelevant rules and regulations of the PSEs concernedare amended by the concerned Public SectorEnterprises. As per this OM the Board of Directors ofthe Fertilizer Corporation of India Ltd (FCIL)considered the matter and passed a resolution on6th July 1998. Relevant portion of which reads:
"The Board noted that FCIL wasreferred to BFIR in April 1992 anddeclared sick in November 1992. Norevival package has been approvedby BFIR so far. Gorakpur Unit isclosed since June 1990 carryingsurplus of 1322 men as on 1-7-1998and Korba, which was wound up, iscarrying surplus of 54 men. Besides,FCIL is carrying surpluses in theCorporation all over for which avoluntary retirement schemeproviding special financial incentiveto induce employees to seek earlyretirement is in operation since 1998and so far 1524 persons have availedthe benefit under the scheme as on30-6-1998. FCIL is totally dependenton Govt. support for critical capitalexpenditure, working capital and tomeet the huge operating losses byits units. Wages of the employeeshave not been revised; as a resultthere has been a flight of talent. Theonly little incentive was promotionwhich will also be blocked in caseage of retirement is enhanced from58 years to 60. Enhancing the age ofretirement involves financialimplications, which will furtherjeopardize the revival proposal of theCorporation before the BIFR.In view of the above the Boardunanimously decided not to raise theage of retirement from 58 to 60years"
This decision was communicated to the concernedMinistry on 21st August 1998 and the Department ofFertilizers, Ministry of Chemicals and Fertilizers,Government of India granted exemption vide itsletter dated 30th December 1999 from increasing theage of retirement from 58 to 60 years.
In the meanwhile the appellants hereinsuperannuated on their attaining the age of 58years as per the terms of the service contract.Appellants herein moved the High Court for adirection to the Respondents herein not to retirethem from services before they attained the age ofsixty years and till such time not to interfere withthe functioning and discharge of their duties. TheHigh Court dismissed the petition and hence thisappeal by special leave.
It is urged on behalf of appellants that the OMdated 13th May 1998 by itself increased theretirement age and the policy set out therein ismandatory and binding on FCIL to enhance theretirement age. This OM is applicable only toemployees in Government Civil Services and not toemployees in the Public Sector Enterprises. Henceby reason of this OM, the appellants cannot contendthat they are entitled to continue in service till theyattain the age of 60 years. It is only by OM issuedby the Department of Public Enterprises dated 19thMay 1998 the said policy was made applicable to beeffective from the date of modification of relevantRules regarding the same.
By OMs dated 25th January 1991 and 08th April1991, the Ministry of Program Implementation andDepartment of Public Enterprises made it clear thatall instructions/guidelines issued by the Governmentof India would be of two kinds  a) Directivesissued in the name of President of India and b).Guidelines. Directives would be issued by theAdministrative Ministry in the name of the Presidentwhile all other instructions issued by theDepartment of Public Enterprise or by theAdministrative Ministry are only advisory which theBoard of Directors of the concerned Public SectorUndertakings may in their discretion adopt or not forreasons to be recorded in writing.
Here the Government of India took a policydecision to increase the retirement of CentralGovernment employees. Application of that decisionin respect of employees of Public Sector Enterprisesis dependent upon so many factors that are to betaken into account in the light of the peculiarcharacteristics of each company or corporation ordepartment. So the first OM itself provides that theorder will come into force only with effect from thedate of Notification of amendment to the relevantrules and regulations. So it is for the concernedauthority to make necessary changes in the rulesand regulations after taking into account of all therelevant aspects. Immediately after the first OMdated 13 May 1998 the Department of PublicEnterprises, Ministry of Industry, Government ofIndia issued OM dated 19th May 1998 wherein themodalities of the implementation of first OM in thisdepartment was detailed. Here it is pertinent to notethat the OM dated 19th May 1998 is not aninstruction issued in the name of the President. Onthe other hand, it was issued by the Department ofPublic Enterprise, which is advisory in nature. Itaccorded a broad discretion to the corporations orcompanies for the implementation of the enhancedretirement age after taking into account all therelevant factors. Pursuant to this direction the Boardof Directors of FCIL took the decision not to increasethe retirement age of its employees. The relevantfactors that prevailed upon the Board of Directorsare fully sset out in its resolution and they are: thatthe company is one of the highest loss makingcompany in the country; that the accumulated losstill the relevant date was to the tune of 5049 crores;that the company is incurring financial losses ofroughly Rupees 2.35 crores everyday; that thecompany has no capacity to pay salaries to itsemployees; that the company was referred to BIFRand was declared as sick in 6/11/1992; that as onthe relevant date the company has the negative networth to the tune of Rupees 4316.21 crores and;that the company has surplus manpower; that it isnot taking any new employees but on the contraryit is making conscious efforts to reduce the surplusmanpower.
It is also to be noted that the OM dated 19thMay 1998 itself does not raise the retirement age tosixty years. It is only an administrative direction andCourt cannot issue a writ to enforce suchadministrative instructions that is not having theforce of law. The Appellants do not have any rightto continue in service till the age of sixty years. Thedecision of the Board of Directors is not arbitrary orunreasonable or unrelated to the question ofenhancement in age of retirement. Hence the firstcontention stands rejected.
The Appellants assail the decision of the Boardon the ground of violation of principles of equality.It is alleged that the Board level employees wereallowed to continue in service till the age of sixtyand the employees like appellants who were belowthe Board level were forced to retire at the age offifty-eight. In reply respondents submitted thatboard level employees could not be equated andcompared with the other employees. Whole timedirectors, who are two in numbers, are directlyappointed by the President of India for a fixed termof five years that could be reviewed even earlier;and that other members of the board aregovernment servants and are nominees orrepresentatives from various ministries and areappointed by the President of India for a term ofthree years. In these circumstances we find thatboard of directors themselves form a different classand cannot be compared with other employees inregard to conditions of service applicable to them.Allegation of discrimination is also raised by theAppellants vis-`-vis employees of othercorporations. Each Public Sector Undertaking is anindependent body/entity and is free to have its ownservice conditions as per law. However, allemployees in the FCIL who are working in itsvarious Units and Divisions retire at the age of fifty-eight as per the relevant rules; and that even thefuture employees will retire at the age of fifty-eight.We also find that since the employees of differentcorporations could not be treated alike since everycorporation will have to take into account itsseparate circumstances so as to formulate its policyand consequently the argument that there isdiscrimination of Appellants vis-`-vis employees ofother corporation also cannot be accepted. Thus,appellants have failed on all grounds. The Appealsstand dismissed.
A writ petition was also filed with the prayer toissue appropriate writ or order or direction  (a) toimplement OM dated 19/05/1998 and 21/08/1998and (b) for quashing the order dated 30/12/1999 ofthe department of Fertilizers on identical groundsconsidered by us in the appeals.
For the very reasons stated therein this petitionalso stands dismissed.

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LAKSHMANAN. ###Appeal (crl.)#Appeal (crl.) 104-106 of 2003#2003#Bikau Pandey andS Appeal (civil)#Appeal (civil) 4051 of 1996#1996#M/s Pepsi Foods Limited #Collector of Central Excise, Chandigarh #2003-11-25#25622#4051#P. VENKATARAMA REDDI#Dr. AR. LAKSHMANAN. ###Appeal (crl.)#Appeal (crl.) 104-106 of 2003#2003#Bikau Pandey andS Appeal (civil)#Appeal (civil) 4051 of 1996#1996#M/s Pepsi Foods Limited #Collector of Central Excise, Chandigarh #2003-11-25#25622#4051#P. VENKATARAMA REDDI#Dr. AR. LAKSHMANAN. ###Appeal (crl.)#Appeal (crl.) 104-106 of 2003#2003#Bikau Pandey andS Appeal (civil)#Appeal (civil) 4051 of 1996#1996#M/s Pepsi Foods Limited #Collector of Central Excise, Chandigarh #2003-11-25#25622#4051#P. VENKATARAMA REDDI#Dr. AR. LAKSHMANAN. ###Appeal (crl.)#Appeal (crl.) 104-106 of 2003#2003#Bikau Pandey andS Appeal (civil)#Appeal (civil) 4051 of 1996#1996#M/s Pepsi Foods Limited #Collector of Central Excise, Chandigarh #2003-11-25#25622#4051#P. VENKATARAMA REDDI#Dr. AR. 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