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Judgment
A.P. Shah, C.J.—The appellant, M/s. Food Corporation of India, has preferred this appeal, challenging the order dated 17-4-2006 passed
by the learned single Judge in W.P. No. 4421 of 2006.
The facts, in brief, leading to this appeal are as follows:
Respondents herein entered into the services of the appellant Corporation as Assistants-Grade III, who were subsequently promoted as
Assistants-Grade II and then as Assistants-Grade I in the year 1977-78. One Rajan C. Abraham, who was junior to the respondents, was
promoted as Assistant-Grade I in the year 1985. Subsequent to the wage revision, which took place with effect from 1-2-1992, Rajan C.
Abraham started drawing more pay than the respondents with effect from 2-1-1993.
In the circumstances, the respondents herein as well as other senior employees working in the Kerala Region made representations to the
Regional/Zonal/Head Office for rectification of the pay anomaly by stepping up their pay on par with that of the above junior. The appellant
Corporation issued a circular in the year 1997 laying down certain conditions for rectifying the pay anomaly. Since the respondents and other
senior employees working in the Kerala Region satisfied the conditions, their pay in the post of Assistant-Grade I was stepped up on par with that
of their junior Rajan C. Abraham with effect from 2-1-1993 and they were also paid the arrears of salary upon refixation of their pay.
After a gap of more than four years, the appellant Corporation initiated action for cancelling the order stepping up the pay passed in respect of
certain senior employees working in the Kerala Region since the appellant Corporation felt that those employees were not entitled for stepping up
of their pay on par with Rajan C. Abraham.
Challenging the action of the appellant Corporation a petition, O.P. No. 13651 of 2001 (A), was filed before the Kerala High Court. The said
petition was allowed by the learned single Judge by order dated 20-10-2003. Against the above order, the appellant Corporation preferred an
appeal, W.A. No. 293 of 2004. A Division Bench of the Kerala High Court, by order dated 2-6-2005, confirmed the order of the learned single
Judge and held that the petitioners therein, viz. the senior employees were entitled for stepping up of their pay on par with that of their junior and
quashed the pay step down order passed by the appellant Corporation. Aggrieved by the aforesaid order, the appellant Corporation preferred a
SLP (S.L.P. (C) No. 20319 of 2005) before the Supreme Court and the same was dismissed by order dated 18-10-2005.
Consequently, the original order of stepping up of pay issued in favour of the senior employees, whereby their pay was brought on par with that of
their junior Rajan C. Abraham, was restored and the arrears of pay were also paid. In the mean while, the respondents herein, who are similarly
placed like the petitioners before the Kerala High Court and whose pay was also stepped up on par with that of their junior Rajan C. Abraham,
were issued with a notice by the appellant Corporation for re-fixing their pay. The respondents gave a reply to this notice on merits and also
brought to the notice of the appellant Corporation that the cases filed by the identically placed persons were pending adjudication before the
Division Bench of the Kerala High Court and till such time no order may be passed to cancel the original order of stepping up of pay. Despite this
request the appellant Corporation cancelled the original order of stepping up of pay and recovered the excess pay allegedly drawn by the
respondents.
All the respondents, except respondents 3, 17, 18 and 19, opted for voluntary retirement in the year 2004. The alleged excess pay drawn was
recovered in one lump sum from their retiral benefits. The amount recovered on an average comes to Rs. 75,000/- to Rs. 80,000/-.
It is the case of the respondents that they are senior to Rajan C. Abraham and in fact some of them are senior to those employees who have filed
the petition before the Kerala High Court. It is also their case that by letters dated 8-11-2005, 22-11-2005 and 7-12-2005 addressed by the
Zonal Office in Chennai to the Head Quarters in New Delhi, it has been clearly mentioned that the respondents are identically situated to the
petitioners before the Kerala High Court and advice was sought as to whether the benefit of the Kerala High Court judgment may be extended to
the petitioner as well.
It appears that the respondents made a number of representations to rectify the anomaly in the pay and to restore the step-up pay in the light of the
decision of the learned single Judge of the Kerala High Court, which has been confirmed by the Division Bench of the Kerala High Court and by
the Supreme Court of India. Despite the representations given by the respondents, no orders were passed by the appellant Corporation to restore
the original order of stepping up their pay on par with that of their junior Rajan C. Abraham. The respondents, therefore, filed the aforesaid writ
petition seeking a Writ of Mandamus, directing the appellant Corporation to extend the benefits arising from the judgment of the Kerala High Court
in O.P. No. 13651 of 2001 dated 20-10-2003 and confirmed by the Division Bench of the Kerala High Court in W.A. No. 293 of 2004 as well
as by the Supreme Court of India In SLP (C) No. 20319 of 2005 to the respondents herein who are identically situated by stepping up of their
pay on par with that of their junior Rajan C. Abraham with effect from 2-1-1993 with all consequential benefits including arrears of pay, etc. By
the order under appeal, the learned single Judge has allowed the writ petition.
Mr. R. Muthukumarasamy, learned senior counsel appearing for the appellant Corporation contended that the Kerala High Court in the order
passed in O.P. No. 13651 of 2001 did not declare any law nor has it decided any principle of law so as to render the same applicable to all
similarly placed employees of the appellant Corporation and, therefore, the learned single Judge has committed an error in granting the relief to the
respondents relying upon the decision of the Kerala High Court. Learned senior counsel submitted that Circular No. 13 dated 9-7-1997 was
wrongly applied and the said mistake having been found, the stepping up of pay was cancelled and recovery was made. As an alternative plea,
learned senior counsel, relying upon the decision of the Supreme Court in A.K. Bindal and Another Vs. Union of India (UOI) and Others, ,
contended that respondents 1 to 16 having accepted the special compensation amount under the Voluntary Retirement Scheme, which brought
about a cessation of employer-employee relationship, have foregone all their rights and it is not open to them to contend that they had to exercise
their option under any compulsion. In that connection, learned senior counsel also drew our attention to the undertaking given by the respondents 1
to 16 as per the Voluntary Retirement Scheme that amount payable by the employees towards the House Building Advance/Conveyance
Allowance/Leave Travel Concession and other dues may be recovered from them.
At the out set, we may mention that there is no dispute that the respondents before us are similarly placed like the petitioners in O.P. No. 13651
of 2001 before the Kerala High Court, who were granted the relief of stepping up of their pay on par with that of their junior Rajan C. Abraham
with effect from 2-1-1993. The respondents in their affidavit have categorically asserted that they are also similarly placed and that their salary was
also stepped up from 2-1-1993 and subsequently the order of recovery was made by the appellant Corporation by cancelling the order of
stepping up of their salary. In the counter-affidavit filed by the appellant Corporation, it is nowhere stated that the claim of the respondents are not
similar to that of the petitioners before the Kerala High Court. Therefore, the respondents are entitled to be treated equally with the petitioners
before the Kerala High Court.
We are unable to accept the contention of the learned senior counsel for the appellant Corporation that the Kerala High Court in O.P. No.
13651 of 2001 has not declared any law nor decided any principle of law. A perusal of the order passed by the learned single Judge of the Kerala
High Court reveals that the sanction of higher salary to the petitioners therein on par with Rajan C. Abraham was held to be in order and
cancellation of the same was held not justifiable. The Division Bench of the Kerala High Court, while confirming the order of the learned single
Judge, observed as follows:
... the fact remains that Rajan C. Abraham was promoted much later than the petitioners, but he was given a higher scale of pay as Assistant
Grade-I. Petitioners were seniors to Rajan C. Abraham and merely because Rajan C. Abraham was involved in a vigilance case, he cannot be
given a higher scale than his seniors. The stepping up of pay given to the petitioners as per Ex.P-3 is correct. We fully agree with the reasoning of
the learned single Judge.
The SLP filed by the appellant Corporation against the judgment of the Division Bench of the Kerala High Court was also dismissed on 18-10-
2005. There is also no dispute that pursuant to the dismissal of the SLP by the Supreme Court, the order of the Kerala High Court has been
implemented and the arrears of pay have been paid to the respective senior employees of the Kerala Region of the appellant Corporation.
It appears that some of the respondents before us submitted a representation on 31-10-2005 for refund of the amount recovered pursuant to
the cancellation order and also prayed for restoring their pay. The Law Department of the appellant Corporation gave an opinion that when
similarly placed persons are denied the benefit for want of court order, it will lead to multiplicity of proceedings and the order passed in W.A. No.
293 of 2004 by the Division Bench of the Kerala High Court is likely to be followed and that would lead to infructuous/avoidable expenses for
legal cases. The relevant portion of the report of the legal division is as follows:
... Legal Division has, therefore, opined that it would be appropriate to extend similar benefit to all similarly placed persons to that of the
petitioners. Zonal Finance also concurred with the above views. As the Headquarters has been monitoring the progress of the case from time to
time and issuing directions and guidelines at the various stages right from the beginning in the case filed by Shri C. Madhavan Pillai and others.
W.P. No. 10651/2000 filed by Shri B. Gurumurthy and 8 others, W.P. No. 26440/2001 filed by Jacob Zachariah, W.P. No. 21084/2003 filed
by Shri L.L.N. Murthy and 4 others, it is felt that the Head Office may consider the case of non-petitioners in South Zone for extension of similar
benefits on par with the petitioners in O.P. No. 13651/2001 and also to the petitioners in various W.Ps. W.P. No. 10651/2000 filed by Shri B.
Gurumurthy and others 26440/2001 filed by Jacob Zachariah and 21084/2003 filed by Shri L.L.N. Murthy and 4 others in A.P. High Court and
communicate decision with regard to extension of the benefits in terms of Supreme Court in SLP No. 20319/2005 or otherwise at an early date.
The Finance Department of the appellant Corporation also concurred with the view expressed by the Law Department and the same is made
clear in the letter dated 22-11-2005. It is thus clear that the issue is squarely covered by the decision of the Kerala High Court, which has been
confirmed by the Supreme Court.
Learned senior counsel for the appellant Corporation next argued that the respondents 1 to 16 having accepted the compensation under the
Voluntary Retirement Scheme, they are not entitled to maintain the writ petition. In support of his submission, learned senior counsel relied on the
decision of the Supreme Court in A.K. Bindal case, cited supra. In that case, the petitioners before the Supreme Court were the employees of the
Fertilizer Corporation of India (FCI) and Hindustan Fertilizer Corporation Limited (HFC), which were continuously sustaining losses. When the
Government announced a liberalised Voluntary Retirement Scheme for the employees of the Central Public Sector Undertakings on 6-11-2001
under which the voluntary retirement compensation on the basis of their existing pay (basic + DA) was increased by 100% and 50% respectively,
almost 99 per cent of the employees of FCI and HFC had opted for the Voluntary Retirement Scheme. Before the Supreme Court, it was
contended by the employees that under the Scheme the total compensation amount has to be calculated on the basis of existing pay scale and as
there was no revision of pay scales since 1992, the petitioners therein had got a very small amount. It was further contended that there can be no
waiver of fundamental rights and even if an employee has opted for the voluntary retirement scheme, has taken the amount and left the company, it
would not mean that he has forgone his right to claim the salary which he was entitled to get during the period when he was an employee of the
company. The Court found that while framing the Voluntary Retirement Scheme the grievance of the employees regarding non-revision of their pay
scale has been taken into consideration and it was for this reason that in the second Voluntary Retirement Scheme announced on 6-11-2001 ex
gratia payment in respect of employees on pay scales at 1-1-1987 level has been increased by 100% and for employees on pay scales at 1-1-
1992 level, it has been increased by 50%. Under the circumstances, the Court held that the petitioners, with their eyes wide open and without any
demur, having accepted the special compensation under the liberalised Voluntary Retirement Scheme, resulting in the complete cessation of the
jural relationship of employer-employee, are not entitled now to make any kind of protest regarding their past rights based upon revision of pay
scale. The relevant observations of the Supreme Court are found in paragraphs 33 and 34, which read as follows:
The Voluntary Retirement Scheme (VRS) which is sometimes called Voluntary Separation Scheme (VSS) is introduced by companies and
industrial establishments in order to reduce the surplus staff and to bring in financial efficiency. The office memorandum dated 5-5-2000 issued by
the Government of India provided that for sick and unviable units, the VRS package of the Department of Heavy Industry will be adopted. Under
this Scheme an employee is entitled to an ex gratia payment equivalent to 45 days'' emoluments (pay + DA) for each completed year of service or
the monthly emoluments at the time of retirement multiplied by the balance months of service left before the normal date of retirement, whichever is
less. This is in addition to terminal benefits. The Government was conscious about the fact that the pay scales of some of the PSUs had not been
revised with effect from 1-1-1992 and therefore it has provided adequate compensation in that regard in the second VRS which was announced
for all Central Public Sector undertakings on 6-11-2001. Clause (a) of the Scheme reads as under:
(a) Ex gratia payment in respect of employees on pay scales at 1-1-1987 and 1-1-1992 levels, computed on their existing pay scales in
accordance with the extant Scheme, shall be increased by 100% and 50% respectively.''
This shows that a considerable amount is to be paid to an employee ex gratia besides the terminal benefits in case he opts for voluntary retirement
under the Scheme and his option is accepted. The amount is paid not for doing any work or rendering any service. It is paid in lieu of the employee
himself leaving the services of the company or the industrial establishment and foregoing all his claims or rights in the same. It is a package deal of
give and take. That is why in the business world it is known as ''golden handshake''. The main purpose of paying this amount is to bring about a
complete cessation of the jural relationship between the employer and the employee. After the amount is paid and the employee ceases to be under
the employment of the company or the undertaking, he leaves with all his rights and there is no question of his again agitating for any kind of his
past rights with his erstwhile employer including making any claim with regard to enhancement of pay scale for an earlier period. If the employee is
still permitted to raise a grievance regarding enhancement of pay scale from a retrospective date, even after he has opted for Voluntary Retirement
Scheme and has accepted the amount paid to him, the whole purpose of introducing the Scheme would be totally frustrated.
In the instance case, the respondents are not claiming any new right and their claim is only to refund the recovered amount, which was rightly
sanctioned and paid by the appellant Corporation. Therefore, the only issue in the present case is whether the appellant Corporation was justified
in deducting the amount from the salaries of the respondents on the basis that they are not eligible for stepping up pay.
We are of the view that the respondents'' claim is similar to the claim of the petitioners before the Kerala High Court. When the petitioners
before the Kerala High Court were paid the recovered amount pursuant to the order passed by the Kerala High Court, which has been confirmed
by the Apex Court, the respondents herein are also entitled for the refund of the recovered amount and the arrears of pay. Even assuming that the
appellant Corporation had stepped up the pay of the respondents on the wrong understanding of the circular dated 9-7-1997 as contended by the
learned Counsel for the appellant Corporation, the respondents have not misrepresented anything and the higher pay having been given, it is not
open to the appellant Corporation to recover the amount as held by the Supreme Court in the decision in Sahib Ram v. State of Haryana 1995
Suppl. SCC 18 and the decision of this Court in S.A. Kanthimathi v. Director of School Education, Madras and Ors. 2006 [1] MLJ 695. The
undertaking given by the employees relates to House Building Advance, Conveyance Allowance, Leave Travel Concession, etc. and cannot be
used to justify unauthorised and illegal deductions made from the amounts payable to the employees.
In the result, the appeal fails and accordingly it is dismissed with costs. The appellant Corporation is directed to implement the order of this
Court within a period of six weeks from today. Connected miscellaneous petition is closed.