IMPORTANT POINT
Employees of public sector enterprises have no legal right to claim revision of wages that though the industrial undertakings or the companies in which they are working did not have the financial capacity to grant revision in pay scale, yet the Government should give financial support to meet the additional expenditure incurred in that regard.

Headnote:Service Law-Revision of wages-Public Sector Enterprises-Revision of scales of pay and allowances of Central Government employees as recommended by Fifth Pay Commission-69 Public Enterprises were directed to revise pay scales of employees following CDA pattern w.e.f. 1.1.1996-Writ Petition filed by petitioners, officers and supervisors employed in Indian Drugs and Pharmaceuticals Ltd. claiming revision of pay and allowances as directed-Petitioners were not given any of these monetary benefits whereas employees of other public sector undertakings received all instalments of interim relief-Respondents case that IDPL was undergoing unprecedented financial crunch-Whether employees of public sector enterprises have any legal right to claim revision of wages that though industrial undertakings or the companies in which they are working did not have financial capacity to grant revision in pay scale, yet the Government should give financial support to meet additional expenditure incurred in that regard-(No)-Employees under public sector enterprises cannot be treated as Central Government employees-If the company does not have enough funds no way the revision can be given-Petitioners having availed VRS held not entitled to any relief.
       Held : In our opinion, since the employees of government companies are not government servants, they have absolutely no legal right to claim that the Government should pay their salary or that the additional expenditure incurred on account of revision of their pay-scales should be met by the Government. Being employees of the companies, it is the responsibility of the companies to pay them salary and if the company is sustaining losses continuously over a period and does not have the financial capacity to revise or enhance the pay-scale, the petitioners, in our view, cannot claim any legal right to ask for a direction to the Central Government to meet the additional expenditure which may be incurred on account of revision of pay-scales. We are unable to countenance the submission made by Mr. Sanghi that economic viability of the industrial unit or the financial capacity of the employer cannot be taken into consideration in the matter of revision of pay-scales of the employees. (Para 8)
       The economic capability of the employer also plays a crucial part in it; as also its capacity to expand business or earn more profits. The contention of Mr. Sanghi, if accepted, that granting higher remuneration and emoluments and revision of pay to workers in other governmental undertakings and, therefore, the petitioners are also entitled for the grant of pay revision may, in our opinion, only lead to undesirable results. Enough material was placed on record before us by the respondents which clearly show that the first respondent had been suffering heavy losses for the last many years. In such a situation the petitioners, in our opinion, cannot legitimately claim that their pay-scales should necessarily be revised and enhanced even though the organization in which they are working are making continuous losses and are deeply in the red. As could be seen from the counter affidavit, the first respondent company which is engaged in the manufacture of medicines became sick industrial company for various reasons and was declared as such by the BIFR and the revival package which was formulated and later approved by the BIFR for implementation could not also be given effect to and that the modifications recommended by the Government of India to the BIFR in the existing revival package was ordered to be examined by an operating agency and, in fact, IDBI was appointed as an operating agency under Section 17(3) of SICA. It is also not in dispute that the production activities had to be stopped in the major two units of the company at Rishikesh and Hyderabad w.e.f. October, 1996 and the losses and liabilities are increasing every month and that the payment of three instalments of interim relief could not also be made due to the threat of industrial unrest and the wage revision in respect of other employees is also due w.e.f. 1992 which has also not been sanctioned by the Government of India. In the instant case, it is also not in dispute that the units of the companies have already suspended their operations and as on date no unit is functioning. (Paras 11 and 12)
       Further held : In view of the said position and keeping in view the huge staff of appropriately 6582, the parent ministry decided to introduce Voluntary Retirement Scheme (VRS) dated 20.9.2002 under which the VRS was open for three months with a clear-cut understanding to the employees that if one does not opt for VRS within three months the VRS will not be given in future and only retrenchment compensation will be applicable. At the time of hearing, it was submitted that all the petitioners have already opted for the said VRS before 31.3.2002 and they are likely to be relieved any day after receiving of the funds from the Ministry of Chemicals and Fertilizers. It has also been decided that all the employees would be relieved and subsequent decision would be taken by the parent Ministry. (Para 14)

JUDGMENT

Dr. AR. Lakshmanan, J.-The petitioners are officers and supervisors employed in the Indian Drugs and Pharmaceuticals Ltd. (hereinafter referred to as "the IDPL"). They filed writ petition No. 678 of 1985 in this Court challenging the directions given by the Secretary, Ministry of Industry (the third respondent herein). This Court passed an order to comply with the orders passed by this Court. Thereupon the Government appointed Fifth Pay Commission in 1993 to consider revision of pay and allowances of the Central Government employees and pending final report, the Pay Commission granted three instalments of interim relief. According to the petitioners, the benefit was extended to the employees of all 69 Public Enterprises. The grievance of the petitioners was that they were not given any instalment of interim relief and as there was no response from the Chairman and Managing Director of the IDPL, they filed contempt petition No. 490 of 1996 for violation of directions given by this Court s order dated 3.5.1990. The contempt petition was dismissed as there was unprecedented financial crunch. On 24.10.1997, the Fifth Pay Commission recommended revision of scales of pay and allowances of the Central Government employees and the third respondent herein directed 69 Public Enterprises to revise the pay-scales of the employee following C.D.A. pattern w.e.f. 1.1.1996. As the first respondent did not take any action, the present writ petition No. 222 of 1998 was filed in this Court.

2. Mr. G.L. Sanghi, learned senior counsel, appearing for the petitioners placed strong reliance on a judgment of this Court dated 3.5.1990 in Jute Corporation of India Officers Association vs. Jute Corporation of India Ltd. & Anr. (1990) 3 SCC 436. He invited our attention to the terms of reference of the High Power Pay Committee and also its recommendations by its final report of 2.11.1988. Learned senior counsel has also invited our attention to the five directions given by this Court in the above judgment which read as follows :-

(i) The scales of pay and dearness allowance as recommended in the Report will be extended to those employees who have been appointed with specific terms and conditions for grant of Central dearness allowance. This will be equally applicable to the employees who by rules laid down by the public sector enterprises are being paid Central dearness allowance.

(ii) The employees appointed on or after January 1, 1989, will be governed by such pay scales and allowances as may be decided by the government in its discretion. Those appointed earlier with IDA pattern will continue to be governed in accordance with the terms and conditions of their appointment.

(iii) The pay revision for those employees in respect of whom the recommendations are hereby being directed to be implemented hereafter, will take place only as and when similar changes are effected for the Central Government employees. These employees will, however, continue to enjoy the option to switch over the IDA pattern of the scales of pay etc. on a voluntary basis.

(iv) The various recommendations made in the Report will be implemented with effect from the dates as follows. These dates are broadly in conformity with those specified in the Report.

Item To be implemented w.e.f.

1. Revised pay scales and revised DA formula January 1, 1986 (Para 16.1)

2. First instalment of interim relief June 1, 1983 (Para 16.3)

3. Second instalment of interim relief March 1, 1985 (Para 16.3)

4. CCA as per revised slabs (Para 11.6 of Chapter 11 of the Report) January 1, 1989 (From January 1, 1986 to December 31, 1988 CCA will be paid at the existing rate at notional pay in the revised pay scales (Para 11.7 of the Report)

5. House Rent Allowance Percentage rates as per BPE s OM No. 1(3)/83-BPE (WC) dated July 1, 1983

Click Here to Read the rest of this document

2003 Supreme(SC) 648

Cases Referred (4)