AI Structured Summary
Not yet generated for this judgment
Judgment
S. Nagamuthu, J.—The petitioner/Food Corporation of India is a statutory body. The members of the first respondent trade union are its
employees. The petitioner introduced two schemes granting special increments which are known as ""Small Family Norms and Acquiring Additional
Professional Qualification"". The said increments were paid in the form of personal pay. From the time of introduction of the schemes, the above
special increments granted under the schemes were added to the basic pay of an individual employee for the purpose of calculating quantum of
House Rent Allowance and City Compensatory Allowance (HRA & CCA). Subsequently, the Government of India issued a clarification to the
effect that the said increments should not be added to the basic pay for the purposes of calculating HRA & CCA. Based on the said clarification,
the petitioner Corporation issued Circular No. 37/92 dated 21.12.1992, thereby withdrawing the proportionate HRA & CCA paid to the
employees on the special increments. The HRA & CCA paid already was proportionately ordered to be recovered.
Aggrieved over the said action of the petitioner, the first respondent Union raised an Industrial Dispute and the same was referred to the
Industrial Tribunal, Tamil Nadu, Chennai By the Government of India by order dated 07.06.1993 u/s 10(1)(d) and Section 2(A) of the Industrial
Disputes Act, 1947 (hereinafter referred to as ""the Act''). The terms of reference are as follows:
Whether the action of the management of F.C.I. In discontinuing the payment of HRA/CCA on personal pay sanctioned to its employees for
adopting small family norms and obtaining higher education with effect from 01.01.1987 is justified?
If not, to what relief they are entitled to?
The Industrial Tribunal, Chennai took up the case in I.D. No. 54 of 1993. The first respondent Union filed a claim statement mainly contending
that the impugned circular is void for want of service of notice u/s 9-A of the Act ,on the employees. It was further contended that the personal pay
granted under the schemes should be treated as part and parcel of the basic pay for the purposes of calculating HRA & CCA and therefore,
withdrawal of the proportionate HRA & CCA holding that the special pay should not have been added to the basic pay is illegal. It is further
contended that if once an employee is granted the above special pay, consequently, the corresponding HRA & CCA, the Management unilaterally
cannot withdraw the same.
In the counter filed before the Industrial Tribunal, the petitioner Corporation mainly contended as follows:
(i) The incentives granted to the employees under the above schemes do not form part of the basic pay and therefore, the same should not be
added to the basic pay while calculating HRA & CCA.
(ii) However, the petitioner Corporation inadvertently added the special pay granted under the schemes to the basic pay for the purpose of
calculating HRA & CCA.
(iii) When the Government of India clarified that the same should not have been done, in order to rectify the above mistake committed, the
impugned circular was issued withdrawing the proportionate HRA & CCA and also ordering to recover the proportionate HRA & CCA paid
already.
(iv) Since excess amount of HRA & CCA was paid to the employees by a wrong assumption and since the said mistake alone is rectified in the
circular, there is no change in condition of service and therefore, notice u/s 9-A of the Act is not required.
(v) The question of natural justice does not arise in respect of the impugned circular since the same was passed only in accordance with the
clarification issued by the Central Government and that no prejudice has been caused to the employees.
Before the Tribunal, one Mr. V.M. Damodharan was examined as W.W.1 on the side of the Union and one Mr. S. Madhavan was examined
as M.W.1 on the side of the Managenet. As many as six documents were exhibited on the side of the Union and five documents were exhibited on
the side of the petitioner Corporation. Having considered all the above materials, the Tribunal by award dated 24.12.1997, has held that the action
of the petitioner Corporation in discontinuing payment of HRA & CCA on personal pay sanctioned to its employees for adopting Small Family
Norms and obtaining Additional Professional Qualification w.e.f. 01.01.1987, is not justified and the Tribunal further directed the management to
repay the amounts which had been recovered from the employees and that any alteration of service would be done only by mutual understanding
or by way of settlement. Challenging the said award, the petitioner has come forward with the present writ petition.
I have heard the learned Counsel for the petitioner and the learned Counsel for the respondent and also perused the records carefully.
With a view to intensify the family planning programme, the petitioner Corporation introduced the incentive scheme with effect from 17.03.1976.
As per the Scheme, the employees who are less than 50 years of age having not more than two or three children and who undergo sterilisation
operation are entitled for a special increment in the form of personal pay. The Scheme further stipulates that such personal pay shall not be
absorbed in future increase in pay either in the same post or on promotion to higher post. The rate of personal pay would be equal to the amount
of next increment due at the time of grant of concession and remain fixed during the entire service.
Similarly, for acquiring higher qualification while in service, one increment for each such acquisition of additional qualification, subject to a
maximum of two such increments, was introduced under another Scheme. As per the said scheme also, the incentives would be paid in the form of
special pay (vide Ex.M.3).
A perusal of the above schemes (Exs.MM.1 to 3), would make it manifestly clear that the increments which are paid under the above schemes
are only special in nature in the sense they are fixed and they are paid in the form of special pay. Indisputably, these schemes were effectively
implemented by the petitioner Corporation and so, many employees were benefited by the same.
Admittedly, HRA & CCA are based on the basic pay of an individual employee. But after introduction of these schemes, the special pay paid
under these schemes was added to the basic pay while calculating HRA & CCA. As a result, the employees were getting more than HRA & CCA
for which they are entitled to, it is contended by the petitioner.
But the contention of the first respondent is that HRA & CCA form part of the basic pay and therefore, all these years, it was rightly added to
the basic pay for the purpose of calculating HRA & CCA. When the dispute so remains, a clarification came to be issued by the Central
Government in respect of its employees thereby clarifying that the special pay paid under the schemes shall not be added to the basic pay for the
purpose of calculating HRA & CCA. Though the said clarification is not binding on the petitioner Corporation, taking clue from the same, the
petitioner Corporation issued the impugned circular.
Now the following questions emerge for consideration:
(i) Whether the special pay forms part of the basic pay;
(ii) Whether for the purpose of calculating HRA & CCA, the same could be added to the basic pay and
(iii) Whether discontinuance of HRA & CCA on the above special pay would amount to change in the condition of service requiring notice u/s 9-A
of the Act.
Clause (1) of IV Schedule to the Industrial Disputes Act would make it clear that the payment of wages would fall within the conditions of
service and for change of the same, notice u/s 9-A of the Act is required. Section 2(rr) of the Act would define that HRA shall fall within the
definition of wages. Similarly, Clause 8 of IV Schedule to the Industrial Disputes Act would show that a customary concession or privilege is also a
condition of service falling within the ambit of Section 9-A of the Act. CCA is such a privilege given to an employee. Therefore, to change the said
privilege and to change the HRA which is a wage, notice u/s 9-A of the Act is mandatory. In the case on hand, no such notice u/s 9-A of the Act,
was issued and therefore, the impugned circular is void under law.
But the learned Counsel for the petitioner Corporation would submit that since the entire HRA & CCA is not withdrawn and since what was
paid erroneously as HRA & CCA alone is proportionately withdrawn, it will not amount to change in conditions of service. He would interpret the
provisions of the Act to say that conditions of service would mean the benefit for what the employees are legally entitled to. If only, there is change
in legal entitlement, notice u/s 9-A of the Act is required.
But the learned Counsel for the first respondent would submit that HRA & CCA or the special pay granted under the schemes was paid for
several years and suddenly if the same is to be withdrawn, certainly notice u/s 9-A of the Act is required. The question whether the employees are
legally entitled for HRA & CCA on the special pay granted under the schemes or not, can be gone into only after the notice u/s 9-A of the Act is
issued. Without such notice, according to the learned Counsel for the first respondent, it cannot be decided as to whether the employees are
entitled for HRA & CCA on the special pay. Therefore, according to him, the employees are entitled for HRA & CCA on the special pay and so,
withdrawal of the same would amount to change in conditions of service, for which, notice u/s 9-A of the Act is required.
I have given due consideration to the above rival submissions.
In my considered opinion, the question whether the special pay is to be added to the basic pay as per the law is a question to be decided only
after notice u/s 9-A of the Act. After such notice and after hearing the grievance of the employees, if the petitioner Corporation takes a decision
holding that special pay cannot be added to the basic pay for the purpose of calculating HRA & CCA then it would give a cause of action for the
employees to raise an industrial dispute. The right granted u/s 9-A of the Act is a valuable right and the same cannot be lightly dealt with. Because,
such an opportunity was not given, the first respondent trade union could not explain to the petitioner Corporation that the special pay paid under
the schemes are also to be added to the basic pay for the purpose of calculating HRA & CCA. The petitioner is not in a position to explain as to
how the special pay is not liable to be added to the basic pay for the purpose of calculating HRA & CCA.
The learned Counsel would further submit that the Tribunal had erroneously framed points for consideration which are totally irrelevant to the
terms of reference, considered the same and answered the same. He would take me through the award to point out that the Tribunal has mis-
directed itself as if the issue involved in the case is withdrawal of the entire special pay paid under these schemes.
Ofcourse there is some force in the argument of the learned Counsel for the petitioner in this regard. The learned Counsel is right in saying that
the Tribunal has framed erroneous points for consideration and answered them accordingly. But, ultimately, the Tribunal has held that the
withdrawal of HRA & CCA on the special pay is not sustainable. Though the reasons stated by the Tribunal cannot be sustainable, in my
considered opinion, for the foregoing discussions and conclusions arrived at by me, the ultimate conclusion arrived at by the Tribunal does not
require any interference.
The learned Counsel for the first respondent would rely on a judgment of the Hon''ble Supreme Court in B. Kumar v. Management of National
Institute of Port Management 2005(4) L.L.N 658 wherein it has been held as follows:
A contention was raised by the learned Counsel for the writ-petitioner that in the absence of any categorical finding by the Tribunal, this Court
while exercising jurisdiction under Article 226 of the Constitution should not arrive at any particular finding and the matter should be remanded to
the Labour Court for fresh disposal to render a finding on such particular aspect.
Even though such is the normal position, there is no inexorable rule that in every case the matter has to be remanded to the Tribunal to render a
particular finding. In order to avoid further litigation, the matter can be concluded by the High Court, particular, when all the materials are available
on record. In the present case, it is not the contention of the counsel for the petitioner that apart from the statement made by the management
witness and the documents proved by the workman, there is any other material to prove that the resolution of the Board had been circulated or
brought to the notice of the workmen by any other method. The management witness has merely stated that such resolution was orally brought to
the notice of the workman. Such a stand is merely to be noted to be rejected.
There is ample authority for the proposition that by applying the principles of Order 41 Rule 22 Civil Procedure Code, a Writ Court can
sustain the ultimate decision of the Tribunal by additional reasons, of course based on material available on record....
Relying on the said judgment, the learned Counsel would submit that though it is true that the Tribunal, in the instant case, had gone on wrong
footing, since the ultimate conclusion arrived at for different reasons is sustainable and this Court should not interfere with the same. In my
considered opinion, as I have already held, applying the above ratio laid down, the ultimate conclusion arrived at by the Tribunal in the instant case
does not require any interference.
Though technically, the learned Counsel for the petitioner is right in saying, as I have already stated, that the entire discussion made by the
Tribunal is irrelevant for the reference involved in the case, on such a technical ground, I am not inclined to disturb the award. It should be noticed
that the reference was made by the Government on 09.06.1992, the award of the Tribunal was made on 21.12.1992 this writ petition was filed in
the year 1999 and the same is disposed of only in 2009. At this length of time, on technical grounds, if the award of the Tribunal is set aside and
the matter is remitted back to the Tribunal for fresh consideration, in my considered opinion, it would not be in the interest of justice.
The Hon''ble Supreme Court in Sadhu Ram Vs. Delhi Transport Corporation,
has held as follows:
Nor we do think that it was right for the High Court to interfere with the award of a Labour Court under Article 226 on a mere technicality. Article
226 is a device to secure and advance justice and not otherwise. In the result, we allow the appeal, set aside the judgement of the High Court and
restore the award of the presiding Officer, Labour Court.
The learned Counsel for the first respondent would further contend that under Ex.M.5, a settlement was reached and as per the said
settlement, the concessions which the employees have already been drawing shall not be withdrawn. The said settlement is dated 06.11.1992 and
the same has not been superseded by any other subsequent settlement. The learned Counsel for the first respondent would further submit that if
once such settlement is in force, no change in condition of service can be effected. Regarding this proposition, there cannot be any quarrel.
The Hon''ble Supreme Court in Life Insurance Corporation of India v. D.J. Bahadur and Ors. 19980 (2) LLN 575 has observed that even if
notice under Sections 9A and 19(2)(6) of the Industrial Disputes Act, 1947 was given the settlement does not suffer death merely on giving such
notice. The ward or settlement will continue to be operative quo-contract.
The said judgment was followed in Karnataka State Road Transport Corporation v. Karnataka State Road Transport Corporation Staff
Worker''s Federation and Anr. 1999(2) LLN 16 wherein the Hon''ble Supreme Court has observed that in the absence of a fresh settlement
superseding the earlier one, the efficacy and binding nature of the earlier settlement will continue to survive. Hence, the unilateral order of the
Government was illegal and uncalled for. The Hon''ble Supreme Court has further observed that the State Government cannot issue directions to
the Corporation to commit breach of a binding settlement operative between the parties.
A Division Bench of this Court in T.N. Cements Corporation Ltd. v. N. Pandurangan 2005(1) LLN 964 has referred to the above two
judgments and has held that the management is bound by the settlement.
In the case on hand, admittedly, there was settlement under which, it was agreed upon that there shall be no change in the conditions of
service. For this reason also, the impugned circular discontinuing HRA & CCA on the special pay paid under the schemes is not sustainable under
law.
In any view of the matter, the award of the tribunal does not require any interference at the hands of this Court. In the result, the writ petition
fails and accordingly, the same is dismissed. No costs.