2001 (9) TMI 994 - SC - Companies Law

Preparation and sanction of Scheme - difficulties in implementing the scheme before the BIFR - Held that - Appeal dismissed. It is only after due deliberation and after considering the financial and administrative implications that the previous orders of the Government had been passed leading to a scheme framed by the BIFR, has not been duly appreciated in the proper perspective by the Government. Hence, challenge to the order of BIFR made on 12-5-1999, is unsustainable. In that view of the matter, if the Government was merely guided by the reports of the bureaucracy and not on the ground realities and thereafter, the Ordinance has been promulgated under a misconception thinking that it would be applicable to the present employees, we think, the attempt of the Government has misfired.

Issues Involved:
1. Overriding effect of Section 32 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) over the Andhra Pradesh Prohibition of Absorption of Employees of State Government Public Sector Undertakings into Public Service Act, 1997.
2. Interpretation of Para 9(c) of the BIFR scheme in light of Section 18(1)(da) of SICA.
3. Commitment of the State Government to permanently absorb 1,486 employees.
4. Availability of work as a pre-condition for absorption.
5. Permanent absorption of workmen and the inherent right of the Government to retrench surplus staff.
6. Application of the doctrine of promissory estoppel.
7. Compensation for retrenched employees under the Industrial Disputes Act versus G.O. Ms. No. 192.
8. Modification of the BIFR scheme to facilitate a golden handshake.

Detailed Analysis:

1. Overriding Effect of Section 32 of SICA:
The appellants contended that Section 32 of SICA cannot override the provisions of the Andhra Pradesh Act, which falls within the scope of entry 41 of List II of the Seventh Schedule to the Constitution of India. The High Court's finding to the contrary was deemed erroneous. However, the Supreme Court did not delve into this issue, considering it academic since the absorption of employees was already complete before the enactment of the Andhra Pradesh Act.

2. Interpretation of Para 9(c) of the BIFR Scheme:
The appellants argued that Para 9(c) of the BIFR scheme should be read subject to Section 18(1)(da) of SICA, implying no permanent absorption contrary to statutory provisions. The Supreme Court upheld the High Court's finding that the scheme's implementation was complete, and the employees were absorbed into the State services.

3. Commitment to Permanently Absorb Employees:
The appellants claimed no firm commitment was made by the State Government to permanently absorb the 1,486 employees. The Supreme Court found that the modalities for placement were completed as per the BIFR scheme, thus rejecting this argument.

4. Availability of Work:
The appellants argued that absorption required the availability of work, which was not present due to existing surplus employees. The Supreme Court dismissed this contention, emphasizing the completed placement under the BIFR scheme.

5. Permanent Absorption and Retrenchment:
The appellants contended that the High Court's finding of permanent absorption was incorrect and that retrenchment of surplus staff is an inherent right of the Government. The Supreme Court upheld the High Court's decision, affirming the employees' absorption into State services and stating that retrenchment could be addressed under the Industrial Disputes Act if necessary.

6. Doctrine of Promissory Estoppel:
The appellants argued that promissory estoppel could not compel the Government to act contrary to law or beyond its authority. The Supreme Court did not address this issue in detail, focusing instead on the completed absorption under the BIFR scheme.

7. Compensation under Industrial Disputes Act vs. G.O. Ms. No. 192:
The appellants highlighted that compensation under G.O. Ms. No. 192 was more beneficial than under the Industrial Disputes Act. The Supreme Court upheld the High Court's quashing of the G.O., noting the completed absorption and the irrelevance of retrenchment due to the industry's sickness.

8. Modification of BIFR Scheme:
The appellants argued that the BIFR should have allowed modification of the scheme for a golden handshake. The Supreme Court found the BIFR's rejection of the modification request justified, emphasizing the completed absorption and the Government's failure to appreciate the scheme's implications properly.

Conclusion:
The Supreme Court dismissed the appeals, affirming the High Court's findings that the surplus employees were absorbed into State services under the BIFR scheme and that the Andhra Pradesh Act could not retroactively affect their rights. The Court emphasized the Government's failure to consider the scheme's financial and administrative implications properly and upheld the BIFR's decision against modifying the scheme.

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