1. Dispute over Dearness Allowance arrears — Settlement tying rates to State Government formula — Claim for parity with Central Government rates. (Para 4 , 5 , 6 , 7 )
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2019 Supreme(SC) 156
SUPREME COURT OF INDIA
R. BANUMATHI, INDIRA BANERJEE, JJ.
TAMIL NADU ELECTRICITY BOARD REP. BY ITS CHAIRMAN – Appellant
VERSUS
TNEB-THOZHILALAR AYKKIYA SANGAM BY ITS GENERAL SECRETARY – Respondent
CIVIL APPEAL NO. 1653 OF 2019 (Arising out of SLP(C) No.25005 of 2015) WITH CIVIL APPEAL NO. 1654 OF 2019 (Arising out of SLP(C) NO.14627 OF 2016)
Decided On : 13-02-2019
Important Points
IMPORTANT POINT
It is within power of Board to set a cut-off date for payment of revised Dearness Allowance keeping in view its financial constraints.
It is within power of Board to set a cut-off date for payment of revised Dearness Allowance keeping in view its financial constraints.
Subject
WAGE - DEARNESS ALLOWANCE
Act Referred
Headnote
Industrial Disputes Act, 1947 – Section 18(1) – Memorandum of Settlement – Direction to pay Dearness Allowance – It is within power of Board to set a cut-off date for payment of revised Dearness Allowance keeping in view its financial constraints – Settlement agreement and decisions taken by Board in Board Proceedings are to be harmoniously construed – Having regard to financial difficulties which State Government was facing, appellant-Board being a State Government undertaking, decided to adopt State Government’s revised Dearness Allowance at the same rate and from same date – In view of extremely difficult financial situation, not only State Government employees but all employees of various other corporations were granted revised Dearness Allowance at the rate of 49% only w.e.f. 01.10.2002 and 52% w.e.f. 01.07.2003 – Respondent(s) union cannot insist for revision of Dearness Allowance at a higher rate than what was being paid to State Government employees – High Court erred not keeping in view extremely difficult financial position of State Government and Board and also additional financial burden which would be imposed upon appellant-Board – Impugned judgments of High Court set aside. (Paras 28, 35 and 36)
Facts of Case:
By impugned judgment, High Court affirmed order of Single Judge directing appellant-Board to pay Dearness Allowance at the rate of 49% w.e.f. 01.01.2002 to members of respondent(s)-union at par with Central Government employees. Board by its various proceedings has been adopting revised rate of Dearness Allowance payable to State Government employees at the same rate and from same date.
Findings of Court:
Single Judge and Division Bench did not keep in view terms of Settlement and Board Proceeding BP(FB) No. 58 dated 18.07.1998 which stipulates that Dearness Allowance would be revised on par with State Government employees and that it has been consistently followed by appellant-Board. High Court erred not keeping in view extremely difficult financial position of State Government and Board and also additional financial burden which would be imposed upon appellant-Board if demands of respondent(s)-union are acceded to. High Court was clearly in error in allowing writ petition and impugned judgment cannot be sustained and liable to be set aside.
Result : Appeals allowed.
Legal Category Hierarchy
- labour and industrial law
- administrative law
Advocates Appeared:
For Petitioner(s): Mr. K. Ramamoorthy,Sr.Adv. Mr. C. Paramasivam,Adv. Mr. Pushkin Rajkumar,Adv. Mr. Vinodh Kanna B., AOR Ms. S. Valarmathi,Adv.
For Respondent(s): Mr. Gautam Narayan, AOR Mr. S. R. Setia, AOR
For Petitioner(s): Mr. K. Ramamoorthy,Sr.Adv. Mr. C. Paramasivam,Adv. Mr. Pushkin Rajkumar,Adv. Mr. Vinodh Kanna B., AOR Ms. S. Valarmathi,Adv.
For Respondent(s): Mr. Gautam Narayan, AOR Mr. S. R. Setia, AOR
Table of Contents
2. Appellant asserts adherence to settlement and financial constraints — Respondents claim unilateral alteration of settlement and demand parity with Central Government rates. (Para 10 , 11 , 29 )
3. The Board followed the agreed State Government formula — Employer's financial capacity is a material factor in determining wage and allowance revisions. (Para 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 30 , 31 , 32 , 33 , 34 , 35 )
4. An employer is not bound to adopt Central Government allowance rates if a binding settlement specifically ties such rates to a State Government formula. (Para 19 , 20 )
5. High Court judgments set aside — Appeals allowed. (Para 36 )
6. Can an employer be compelled to pay Dearness Allowance at Central Government rates if a settlement ties them to State Government rates?
No. If a settlement specifically stipulates that Dearness Allowance will be sanctioned as granted by the State Government at the same rate and date, the employer is not bound to adopt Central Government rates, regardless of whether those rates are higher. (Para 19 , 20 )
7. Is the financial position of an employer a valid legal consideration in revising wages or Dearness Allowance?
Yes. The ability and financial position of the employer are material and relevant factors. Financial constraints can justify the decision not to implement certain pay recommendations or the introduction of a cut-off date for benefits. (Para 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 )
8. Does adopting a government formula for calculating Dearness Allowance establish parity in all service conditions with that government's employees?
No. Adopting a specific government's formula for calculating Dearness Allowance does not mean the employees are treated as government servants or that parity in all service conditions and status is established. (Para 31 )
9. Can a party challenge a single clause of a Board proceeding as a unilateral alteration of a settlement while accepting other clauses?
No. A party cannot approbate and reprobate; they cannot accept the general terms of a proceeding while challenging only one clause as a unilateral alteration without having previously challenged the validity of the proceeding itself. (Para 30 )
JUDGMENT :
R. BANUMATHI, J.
Leave granted.
2. These appeals arise out of the judgment dated 27.03.2015 in W.A. No.497 of 2015 and judgment dated 21.08.2015 in W.A. No.1166 of 2015 in and by which the High Court affirmed the order of the learned Single Judge directing the appellant-Board to pay Dearness Allowance at the rate of 49% w.e.f. 01.01.2002 to the members of respondent(s)-union on par with the Central Government employees.
3. These appeals relate to the claim of employees of the appellant-Board for the payment of difference of Dearness Allowance (DA) for a period of nine months as under:-
- 4% of DA (difference of 49% - 45%) from 01.01.2002 to 30.06.2002
- 7% of DA (difference of 52% - 45%) from 01.07.2002 to 30.09.2002
4. Brief facts giving rise to these appeals are as under:-
A Memorandum of Settlement dated 08.07.1998 was recorded under Section 18(1) of the Industrial Disputes Act, 1947 between the appellant-Tamil Nadu Electricity Board (Board) and its workmen represented by unions for settlement of pay related issues. The Settlement covered about eighty thousand employees of the Board in Class III and IV service and it was for a period of four years from 01.12.1996 to 30.11.2000. The terms of settlement also dealt with the payment of Dearness Allowance. As per Clause 5 of the terms of settlement agreement, it was agreed that the Dearness Allowance rates will be revised twice in a year i.e. on 1st January and on 1st July taking into account the variations in the previous twelve months average of the All India Consumer Price Index numbers, adopting the same formula as followed by the State Government. In pursuance of the said settlement, order dated 18.07.1998 was issued by the appellant-Board in Board Proceedings BP (FB) No.58 wherein, it was inter alia provided that the revised Dearness Allowance would be sanctioned to the employees of the Board as granted by the State Government to their employees at the same rate and from the same date. The Board by its various proceedings has been adopting the revised rate of Dearness Allowance payable to State Government employees at the same rate and from the same date.
5. The Government of India, Ministry of Finance, Expenditure Department vide Office Memorandum dated 20.03.2002 enhanced the Dearness Allowance payable to Central Government employees from the existing rate of 45% to 49% w.e.f. 01.01.2002. The State Government faced acute financial crisis during the period 2001-2002 due to which, Government of Tamil Nadu was paying Dearness Allowance at the rate of 45% on that date to its employees. The appellant-Board also followed the same rate of DA at 45%. On 07.05.2002 and 12.07.2002, the respondent-CITU submitted representations to the Board. After giving personal hearing to the representatives of the respondent, the Chairman of the Board rejected the representation on 13.09.2002 stating that as per the settlement dated 08.07.1998, Dearness Allowance would be sanctioned to the employees of the Board as granted by the State Government to their employees at the same rate and from the same date.
6. The Government of Tamil Nadu subsequently vide G.O.Ms. No.346 dated 21.10.2002 issued an order revising the Dearness Allowance from existing rate of 45% to 49% w.e.f. 01.10.2002 in view of its difficult financial position. The appellant-Board also adopted G.O. Ms. No.346 dated 21.10.2002 and issued orders in BP(FB) No.58 dated 29.10.2002 revising the Dearness Allowance to 49% from 01.10.2002 to its employees on par with the State Government employees.
7. The Central Government revised the rates of payment of Dearness Allowance to Central Government employees from the existing rate of 49% to 52% w.e.f. 01.07.2002. The Government of Tamil Nadu vide G.O. No.215 dated 27.06.2003 revised the rate of Dearness Allowance to its employees w.e.f. 01.07.2003 from the existing rate of 49% to 52%. The appellant-Board adopting the G.O. No.215 dated 27.06.2003 revised the Dearness Allowance to its employee
