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2017 Supreme(Megh) 68
IN THE HIGH COURT OF MEGHALAYA
Dinesh Maheshwari, S.R. Sen, JJ.
The Managing Director, Mecofed – Appellant
Versus
Shri Tikender Singh – Respondent
Writ Appeal No. 37 of 2012 and Review Petition No. 9 of 2016
Decided On : 04-08-2017
For the Appellant :Shri. P. Yobin, Advocate
For the Respondent:Shri. A. Khan, Advocate
Employees are entitled to Leave Encasement and Gratuity under the Golden Handshake Scheme, even if the employer had not been forthright and unequivocal in its propositions and had avoided decision on representations before enforcing the Scheme of retirement.
Headnote:
The Court held that the employees were entitled to Leave Encasement and Gratuity. The Court found that the employer had not been forthright and unequivocal in its propositions and had avoided decision on representations before enforcing the Scheme of retirement. The Court held that the employees were not entitled to turn around and claim any other payment after having derived the benefit under VRS. The Court also held that the employees were entitled to Leave Encasement for the reason that this component had been stated in the draft Cabinet Memorandum. The Court further held that the employees were entitled to Gratuity for the reason that the organisation in question, i.e. MECOFED is covered under the Act of 1972 and had not been exempted under Section 5 thereof.
Fact of the Case:
The employees of MECOFED, a co-operative society registered under the Meghalaya Co-operative Societies Act, were offered a Voluntary Retirement Scheme ('VRS') also referred to as 'the Golden Handshake Scheme' or 'the Scheme', that was mooted by the Programme Implementation Department of the Government of Meghalaya to downsize several of the Public Sectors Undertakings/Enterprises ['PSUs'/'PSEs'], which were registering regular losses. The employees raised doubts and grievances by way of a representation dated 18.06.2004 and asserted their rights, inter alia, to receive the payment towards Gratuity as also Leave Encasement apart from the due salary when leaving the service under the Golden Handshake Scheme. Thereafter, on 07.07.2004, the respondent No.1 made yet another communication on behalf of the concerned employees to the applicant/appellant, the Managing Director MECOFED, as under, Annexure-A-12 in WPC No. 320 (SH) of 2010:- "The Managing Director, MECOFED, Shillong. Subject : Golden Handshake (Reminder-I) Reference : Your Order under Memo No. MSFE.1/99/253 dated 10.6.2004 and our letter dated 18.6.2004. Sir, With reference to the above subject, we would request you to kindly let us know the exact method adopted for calculation of the entitlements of the Golden Handshake Scheme referred to in your above order. This has also the reference to our petition dated 18.6.2004. In the above context, the specific Notification of the Government the said Scheme applies to, may kindly be indicated for our information. Further, as a goodwill gesture, the Management may kindly release the back duty salary which is more than eight months in arrears now. In view of the above, a line in response would be highly appreciated. Thanking you, Yours faithfully, for and on behalf of Golden Handshake Employees Phase I, MECOFED Sd/- (T. Singh)"
Finding of the Court:
The Court found that the employees were entitled to Leave Encasement and Gratuity. The Court found that the employer had not been forthright and unequivocal in its propositions and had avoided decision on representations before enforcing the Scheme of retirement. The Court held that the employees were not entitled to turn around and claim any other payment after having derived the benefit under VRS. The Court also held that the employees were entitled to Leave Encasement for the reason that this component had been stated in the draft Cabinet Memorandum. The Court further held that the employees were entitled to Gratuity for the reason that the organisation in question, i.e. MECOFED is covered under the Act of 1972 and had not been exempted under Section 5 thereof.
Issues: Whether the employees were entitled to Leave Encasement and Gratuity under the Golden Handshake Scheme.
Ratio Decidendi: The Court held that the employees were entitled to Leave Encasement and Gratuity. The Court found that the employer had not been forthright and unequivocal in its propositions and had avoided decision on representations before enforcing the Scheme of retirement. The Court held that the employees were not entitled to turn around and claim any other payment after having derived the benefit under VRS. The Court also held that the employees were entitled to Leave Encasement for the reason that this component had been stated in the draft Cabinet Memorandum. The Court further held that the employees were entitled to Gratuity for the reason that the organisation in question, i.e. MECOFED is covered under the Act of 1972 and had not been exempted under Section 5 thereof.
Final Decision: The Court dismissed the employer's appeal and review petition and upheld the orders of the lower courts granting the employees Leave Encasement and Gratuity.
JUDGMENT :
Dinesh Maheshwari, J.
Preliminary and brief outline : These two matters, Writ Appeal No. 37 of 2012 and Review Petition No. 9 of 2016, involving the same set of parties and common set of basic facts, have been considered together; and are taken up for disposal by this common judgment.
2. The dispute herein had its genesis in a retirement package, termed as the Voluntary Retirement Scheme ['VRS'] also referred to as 'the Golden Handshake Scheme' or 'the Scheme', that was mooted by the Programme Implementation Department of the Government of Meghalaya to downsize several of the Public Sectors Undertakings/Enterprises ['PSUs'/'PSEs'], which were registering regular losses. The Meghalaya State Co-operative Marketing and Consumers Federation Limited ['MECOFED'] had also been one such sick Public Sector Undertaking that proceeded to apply such retirement package for its employees. However, several of the grey areas in the retirement package of MECOFED, particularly on the aspects related with the amount payable to the concerned employees (the respondents herein), gave rise to several litigation's and have ultimately led to the infra-court appeal and the review petition before us. The employees claim for Leave Encasement benefit forms the subject-matter of Writ Appeal No. 37 of 2012 [arising out of WP(C) No. 320 (SH) of 2012] whereas their claim for payment of Gratuity is the subject-matter of Review Petition No. 9 of 2016 [arising out of WA No. 34 of 2013].
3. Briefly put, the basic common facts concerning both these matters are as follows: MECOFED is a co-operative society registered under the Meghalaya Co-operative Societies Act, as adopted and modified by the Meghalaya Adaptation of Laws Order of 1973. The service conditions of the employees of MECOFED are governed by the Meghalaya State Co-operative Marketing and Consumers Federation Limited Services Classification, Appointment, Control and Appeal Rules, 1980 ['the Rules of 1980']. It is not in dispute that the State Government, having approximately 95% investment in the share capital of MECOFED, is having deep and pervasive control over this organization.
4. In or about the year 2003, the Government of Meghalaya noticed that except four or five, all other PSUs/PSEs were incurring huge losses and were suffering varying degrees of sickness. It was also noticed that such PSUs/PSEs were regular defaulters in the matters of salary payments. In order to revive the financial health of those sick PSUs/PSEs, the Programme Implementation Department of the State Government mooted the idea of providing retirement packages for downsizing such sick PSUs/PSEs and hence, circulated a Cabinet Memorandum that formed the basis of retirement schemes in the said sick PSUs/PSEs. The relevant parts of the said Cabinet Memorandum, proposing the Golden Handshake Scheme for the employees of State PSUs/PSEs, had been as under:-
"Subject: Voluntary Retirement Scheme/golden Handshake Scheme For Employees Of State Public Sector Enterprises.
With the exception of the Mawmluh Cherra Cements Limited, the Meghalaya State Warehousing Corporation, the Meghalaya Co-operative Apex Bank Limited, the Meghalaya State Agricultural Marketing Board and the Meghalaya Industrial Development Corporation, all other Public Sector Enterprises and Departmental Undertakings/Boards in the State of Meghalaya are loss-making and can be considered as sick PSUs/PSEs. They are in varying degrees of sickness. At the time when they were created, all of them were expected to be engines of growth in the State and to generate enough resources, which would at least help them to be self-sustaining in the long run. However, it is quite unfortunate that many of them have acted as a drain on the meager and precious resources of the State. Frankly and plainly speaking, most of the State PSUs can be said to have become white elephants, which the State Government can ill afford to keep. A number of factors are responsible for this sorry state
