2014 (12) TMI 1395 - SC - Companies Law

Denial of benefit of Wage Revision by notional fixation and re-computation of their retiral dues (severance package) - HELD THAT - The Central Administrative Tribunal and the High Court have erred in law in allowing the wage revision benefits to the employees, who were not covered either under communication dated 8.8.2006 issued by the Government of India or the consequential Office Order dated 25.8.2006 whereby the wage revision is implemented. In Sudhir Kumar Consul v. Allahabad Bank 2011 (2) TMI 1372 - SUPREME COURT , which also pertains to the question of fixing of cut-off date for granting retirement benefits, this Court has laid down that the cut-off date may be justified on the ground that additional outlay as involved or the fact that under the terms of appointment, the employee was not entitled to the benefit of pension or retirement. Thus, it is not found that the cut-off date, i.e., 1.4.2003 for granting wage revision, in the facts and circumstances of the present case, is arbitrary nor we find it violative of Article 14 of the Constitution - the employees, who were superannuated or voluntarily retired prior to 01.04.2003 from Appellant Corporation, are not entitled to notional wage revision as directed by the Central Administrative Tribunal, and the High Court - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Applicability of wage revision to employees retired before the cut-off date.
2. Arbitrary or irrational nature of the cut-off date for wage revision.
3. Financial implications and the economic capability of the employer.
4. Legal precedents on wage revision and pensionary benefits.

Detailed Analysis:

1. Applicability of Wage Revision to Employees Retired Before the Cut-off Date:
The primary question addressed was whether the wage revision effective from 1.4.2006 for employees of Mineral Exploration Corporation Limited (MECL) should also apply to those who retired before 1.4.2003. The Tribunal held that employees who retired on or after 1.4.2003 were entitled to actual benefits of the wage revision, while those who retired before 1.4.2003 were only entitled to notional benefits. The Supreme Court, however, found that the wage revision was intended for employees on roll as of 1.4.2003, as per the Government of India's communication and the Corporation's Office Order dated 25.8.2006. Thus, the employees who retired before 1.4.2003 were not entitled to the wage revision benefits.

2. Arbitrary or Irrational Nature of the Cut-off Date for Wage Revision:
The respondents argued that the cut-off date of 1.4.2003 was arbitrary and irrational. The Supreme Court referred to precedents where cut-off dates were upheld based on financial constraints and policy decisions. The Court found that the cut-off date in this case was justified due to the financial restructuring measures and the need to stabilize the Corporation's financial condition. Therefore, the cut-off date was neither arbitrary nor irrational.

3. Financial Implications and the Economic Capability of the Employer:
The Corporation had been incurring losses since 1992 and underwent financial restructuring, including a Voluntary Retirement Scheme (VRS) that reduced manpower significantly. The wage revision was part of a broader financial restructuring plan approved by the Government of India, which included waiving interest and converting loans into equity. The Supreme Court emphasized that the economic capability of the employer is crucial in such decisions, and allowing wage revision for employees retired before 1.4.2003 would undermine the financial recovery efforts.

4. Legal Precedents on Wage Revision and Pensionary Benefits:
The Court cited several precedents, including A.K. Bindal and Anr. v. Union of India and Ors. and Officers and Supervisors of I.D.P.L. v. Chairman and M.D., I.D.P.L., which established that employees of government companies are not civil servants and do not have a legal right to demand wage revisions from the government. The Court also referenced cases like State of Punjab and Ors. v. Amar Nath Goyal and Ors. and Sudhir Kumar Consul v. Allahabad Bank, which supported the validity of cut-off dates based on financial constraints and policy decisions.

Conclusion:
The Supreme Court concluded that the employees who retired before 1.4.2003 were not entitled to the wage revision benefits. The cut-off date of 1.4.2003 was justified and not arbitrary. The financial implications and the economic capability of the employer were crucial factors in this decision. The appeals were allowed, and the judgments of the High Court and the Central Administrative Tribunal were set aside. There was no order as to costs.