2019 Supreme(All) 1878

IN THE HIGH COURT OF ALLAHABAD
Sudhir Agarwal,J.
Smt. Dulari Devi and Others – Petitioners
Versus
Union of India Through Secretary and Others – Respondents
WRIT A No. 21944 of 2003
Decided On : 14-11-2019

Employees of Government Companies are not Government servants and have no legal right to claim absorption in other Public Sector Enterprises, Central Government Companies or Departments of Central Government.

Headnote:

RETIREMENT - VOLUNTARY SEPARATION SCHEME - RETRENCHMENT - INDUSTRIAL DISPUTES ACT, 1947 - SECTION 25-N - SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985 - SECTION 3(1)(O) - COMPANIES ACT, 1956 - SECTION 619 - CONSTITUTION OF INDIA - ARTICLE 77 - ARTICLE 311 - ARTICLE 12 - CENTRAL GOVERNMENT COMPANY - EMPLOYEES - ABSORPTION IN OTHER COMPANIES - RIGHT TO - CONDITIONS PRECEDENT TO RETRENCHMENT OF WORKMEN - NOTICE - PERMISSION OF APPROPRIATE GOVERNMENT - ENQUIRY - ORDER - REVIEW - COMPENSATION.

Fact of the Case:

FCIL, a Government of India undertaking, was declared sick by BIFR in 1992. BIFR recommended winding up of FCIL in 2001. Delhi High Court set aside the order of BIFR and remanded the matter to BIFR to reconsider whether FCIL could have been rehabilitated or not. BIFR again passed an order for winding up in 2004. Government of India approved revival package of FCIL by providing for closure of FCIL and hiving off the Jodhpur Mining Organization into a separate entity; disposal of the assets of the company; extension of VSS benefits to all the employees of the company; and grant of retrenchment compensation under ID Act to employees not availing of this offer within three months, after obtaining the required permission from the competent authority. Almost all the employees of FCIL opted for VSS. Petitioners, who did not opt for VSS, were served with notices proposing retrenchment. Petitioners challenged the circular conveying decision of Government of India to close FCIL, letter sent by FCIL to Government of India seeking approval for retrenchment, notices proposing retrenchment, and retrenchment orders passed on the ground of non-compliance with Section-25-N of ID Act and non-payment of retrenchment compensation.

Finding of the Court:

1. Circular dated 16.09.2002 conveying decision of Government of India to close FCIL and to extend VSS benefit to all the employees of FCIL was not arbitrary and illegal. 2. Termination of petitioners amounted to retrenchment and was made in compliance of Section 25-N of ID Act, 1947. 3. Petitioners were not entitled to be considered for absorption in other Public Sector Enterprises, Central Government Companies or Departments of Central Government.

Issues: 1. Whether Circular dated 16.09.2002 (Annexure-4 to the writ petition) circulating VSS is arbitrary and illegal. 2. Whether termination of petitioners amounts to retrenchment and has been made in compliance of Section 25-N of Act, 1947. 3. Whether petitioners are entitled to be considered for absorption in other Public Sector Enterprises, Central Government Companies or Departments of Central Government.

Ratio Decidendi: 1. VSS was a well recognized mode of “Golden Handshake” principle known in the business world. The main purpose of paying this amount was to bring about a complete cessation of the jural relationship between the employer and the employee. 2. Employees of Government Companies are not Government servants, they have absolutely no legal right to claim that Government should pay their salary or that additional expenditure incurred on account of revision of their pay-scales should be met by Government. 3. A company may be an agency or instrumentality of Government for limited purpose may be “State” within the ambit of Article 12 of the Constitution but it can not be said to be a Government or department of Government. 4. No workman employed in any industrial establishment to which Chapter VB of ID Act, 1947 applies, who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until, (a) the workman has been given three months’ notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice; and (b) the prior permission of the appropriate Government or such authority as may be specified by that Government by notification in the Official Gazette has been obtained on an application made in this behalf.

Final Decision: Writ petition dismissed.