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2001 Supreme(Kar) 581

Karnataka High Court
I.T.I.Limited - Appellant
Versus
I.T.I.Ex / VR Employees - Respondent
Decided On : 09-13-01
W.A. : 2626 of 1998

Advocates:
HARIKRISHNA S.HOLLA, UDAYA HOLLA

Officers retired under the VRS are entitled to additional ex gratia payment based on the revised pay and allowances with retrospective effect. They are also entitled to incentives under the circulars dated May 28, 1994, even though they have retired under the VRS.

Headnote:

VRS - Employee Benefits - [Scheme dated May 21, 1992, June 5, 1993, April 9, 1994, June 20, 1994, and July 7, 1994] - [Gratuity, Provident Fund, Encashment of Privilege leave, TA/DA, Ex gratia payment] - The court held that officers retired under the VRS are entitled to additional ex gratia payment by recalculating the amount based on the revised pay and allowances with retrospective effect from January 1, 1992. The court also declared that the officers are entitled to incentives under the circulars dated May 28, 1994, even though they have retired under the VRS.

Fact of the Case:

ITI Limited introduced a Voluntary Retirement Scheme (VRS) to reduce surplus manpower. Officers and workmen opted for VRS. The Ministry of Industries directed public sector companies to revise pay-scales with retrospective effect. The officers sought recalculation of ex gratia amount and incentives under the VRS scheme.

Finding of the Court:

The court found that officers retired under the VRS are entitled to additional ex gratia payment based on the revised pay and allowances with retrospective effect. The court also declared that the officers are entitled to incentives under the circulars dated May 28, 1994, even though they have retired under the VRS.

Issues: 1. Entitlement of officers retired under the VRS to additional ex gratia payment and incentives based on revised pay and allowances. 2. Applicability of the rider introduced by the appellant-Management.

Ratio Decidendi: The court held that officers retired under the VRS are entitled to additional ex gratia payment by recalculating the amount based on the revised pay and allowances with retrospective effect from January 1, 1992. The court also declared that the officers are entitled to incentives under the circulars dated May 28, 1994, even though they have retired under the VRS.

Final Decision: The court dismissed the appeals, upholding the findings of the learned single Judge.

( 1 ) THESE appeals are filed by the ITI Limited which was the Respondent No. 1 before the learned single Judge in the Writ Petitions filed by the employees who had opted for voluntary retirement pursuant to the scheme evolved by the ITI.

( 2 ) THESE appeals are filed by the appellant, aggrieved by the order of the learned single judge, granting relief in favour of the officers of ITI who had opted for Voluntary Retirement scheme (hereinafter referred to as 'vrs' or 'vr Scheme' ). The said scheme was introduced by the appellant to reduce the surplus manpower and bring down the strength of employees to optimum levels. In pursuance of it, different public sector companies formulated different VRS to encourage employees to retire from services. As per the scheme introduced by the appellant, certain benefits were conferred in the persons who opted for VR. The benefits under the scheme are as hereunder:"'benefits Under the Scheme: 4. 1 An employee whose request for voluntary Retirement is accepted will be entitled to the following normal terminal benefits: a) Gratuity b) Provident Fund c) Encashment of admissible Privilege leave, if any, at credit. d) Payment of TA/da to the employee and his family members to move to the employer's hometown as per TA Rules. 4. 2 In addition to the normal terminal benefits, they will be entitled to ex gratia payment equivalent to: 1. 5 month's emoluments (Basic Pay Plus da) for each completed year of service. OR the monthly emoluments (Basic Pay Plus da) at the time of retirement multiplied by the balance months of service left before normal date of retirement, whichever is less.

( 3 ) PURSUANT to this scheme, officers as well as workmen of the ITI, opted for VRS. Accordingly, the ITI settled the amount payable to the persons who opted for VRS and their resignations were also accepted. Thereafter, as per Annexure-F to the Writ petition, the Ministry of Industries department of Public Enterprises. New delhi, by its order dated July 19, 1995, revised the scales of pay of the executives holding posts below the Board level and non-unionised Supervisors with effect from january 1, 1992. As per the orders of the government of India, the Government decided that the pay-scales of the above two categories would stand revised with effect from January 1, 1992 and directed all the public sector companies to give effect to the office memorandum dated July 19, 1995. Pursuant to the said office memorandum, the appellant-ITI revised the pay-scales and allowances of executives in Grade I to X as if per the office circular, and the revision of pay scale was given with effect from january 1, 1992, certain rider has been introduced by the appellant-Company as hereunder:calculations relating to compensation paid under Voluntary Retirement Scheme. Incentive for not availing house building advance/interest subsidy for housing loan and/or vehicle advance, shall not be reopened"

( 4 ) BEING aggrieved by this rider, the respondents who are the executives between grade I to X of the appellant-Company, approached this Court by filing several Writ petitions seeking the following reliefs:a) directing the Respondents to pay incentive given to other staff members for not availing House Building Advance and vehicle Advance in accordance with incentive scheme framed by respondents. B) directing the respondents to pay difference in HRA, fixed DA, variable DA, managerial incentive and other benefits to the employees who have retired from service under the VR scheme and those who retired on superannuation. C) and grant such other and further relief as may deem fit in the circumstances of the case.

( 5 ) ALONG with the officers, some of the workmen of the ITI have also joined in the aforesaid Writ Petitions. However, the learned single Judge has granted relief only in favour of the officers pursuant to Annexure-F to the writ Petition and rejected the claim of the workmen. Aggrieved by the said order of the learned single Judge, the appel













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