NALCO Retired Employees Welfare Association vs Union Of India & Ors.

PRAMOD KUMAR DAS, MEMBER (A):

Sub Rule (5) (b) of Rule 4 of Central Administrative Tribunal (Procedure) Rules, 1987, mandates that permission may also be granted to an association representing the person desires of joining in a similar application provided, however, that the application shall disclose the class/grade/category or persons on whose behalf it has been filed provided that atleast one affected person joins in the said application.

The instant OA has been filed through Sri Gokulananda Jena representing in the capacity of President of NALCO retired employees Welfare Association, Nalco Nagar, Angul, Odisha [hereinafter called as ‘Applicant’]. According to the Applicant in the pleadings so also in course of hearing is that:

2(a) The management of NALCO decided to implement the Performance Related Pay [PRP] as executed on 05.03.2019 during Sixth Long Term Wage Settlement. As agreed to, the Respondents-management was to implement the Scheme within a period of six months commencing from 01.01.2017 onwards. Though, the Scheme was made applicable retrospectively from 01.01.2017, the Management did not allow the benefits in a timely manner and, therefore, many of the senior non-executive employees retired from service without receiving any benefits fall due under PRP Scheme. The Respondents-management issued a circular dated 28.09.2019, extending the benefit of PRP Scheme to Board level and below Board level executives w.e.f 01.04.2017.

2(b) As per the circular, individual’s basic pay is the foundation for PRP computation in respect of executive employees. The structure of PRP Scheme expressly provides that the PRP benefits would be computed on the basis of the annual basic pay of the executives, subject to the respective grade-wise ceiling. Pursuant to the 345^th meeting of the Board of Directors held on 27.10.2023, the Respondents-management vide its Inter Office Memorandum dated 17.11.2023 approved the revision of the PRP scheme for non-executive employees for the period from 01.01.2017 to 31.12.2026. Since the benefits of the PRP Scheme was not extended as per the yardstick decided by the Respondents-management, on 13.10.2023, 25.12.2023, & 13.02.2024. Respondent management issued a Memorandum of Understanding dated 16.02.2024 in respect of the Performance Related Pay scheme for nonexecutive employees of the Respondent company. On 27.04.2024 and 20.05.2024 representations were again submitted through retired non-executive employees praying for release of PRP dues with effect from 01.01.2017, together with interest.

2(c) As per the Scheme "basic pay" was the basis for computation of PRP but respondents-management unilaterally substituted the expression "basic pay" to that of "average annual basic pay" for all non-executive employees of the company. Such substitution has the direct and inevitable effect of substantially reducing the PRP entitlement of senior non-executive employees with higher basic pay, while conferring an undue and disproportionate benefit upon junior employees with lower basic pay; thereby defeating the very object of the PRP which is intrinsically linked to individual service, pay structure, and performance, rendering the impugned action arbitrary, discriminatory, and contrary to the scheme agreed under the Sixth Long Term Wage Settlement as against which on 31.08.2025, 23.09.2025, 2.11.2025 & 16.12.2025 representations were filed seeking removal of injustice caused to the members of the association but not attended to.

2(d) Respondents have been paying ad-hoc adjustable payments to non-executives vide circular dated 10.10.2023 till finalization of the PRP scheme; however, such ad- hoc payments have been disbursed on the basis of average basic pay instead of actual basic pay, which is per se illegal, arbitrary, and contrary to sprit of the PRP scheme. The Ministry of Heavy Industries and Public Enterprises, through its Office Memorandum dated 01.07.2020 categorically stipulated that Performance Related Pay for Board level and below Board level executives shall be calculated on the basis of one hundred percent of the basic pay for the purpose of PRP computation, and that the said principle is uniformly applicable across Public Sector Undertakings. The recommendations of the HR Committees framed in accordance with the said Office Memorandum have been consistently adopted and implemented by PSUs. However, the Respondents, for reasons best known to them, have arbitrarily altered the very meaning of "basic pay" in the case of non-executive employees by substituting it with "average basic pay", thereby departing from the settled and uniform policy framework governing PRP disbursement. Nowhere in any Public Sector Undertaking, PRP scheme is implemented in respect of non-executive employees by computing the average basic pay. PRP, by its very nature, is an individual-centric performance-based incentive, linked to the pay structure, length of service, and individual contribution of each employee. Since performance assessment is necessarily individual and not collective, the benefit cannot be computed on an aggregated or averaged basis without defeating the very object of the scheme.

2(e) In the Memorandum of Understanding dated 16.02.2024, the Respondents for the first time altered the fundamental basis for computation of Performance Related Pay by substituting individual basic pay with average basic pay. Such alteration was neither contemplated under the Sixth Long Term Wage Settlement dated 05.03.2019 nor approved in the Inter Office Memorandum dated 17.11.2023 or the recommendations of the HR Committee. The impugned change was sought to be applied retrospectively with effect from 01.01.2017, thereby divesting the retired non-executive employees of monetary benefits which had already accrued and crystallized in their favour. It is settled law that accrued and vested financial rights cannot be taken away or diluted by a subsequent executive or administrative decision, much less with retrospective effect. The retrospective application of the impugned methodology is therefore arbitrary, illegal, and violative of the principles of natural justice and fair play.

2(f) The senior non-executive employees of the Respondents-company are those who have rendered decades of service and have substantially contributed to the production, productivity, and profitability of the Respondent over the years. Despite the Respondents having earned profits year after year on the strength of the labour and contributions of the members of the Association, the lawful PRP dues of senior retired employees remained unpaid. Instead, by the Memorandum of Understanding executed in 2023, the Respondents retrospectively altered the basis of PRP computation from individual basic pay to average basic pay, which is wholly unjustified, arbitrary, and violative of the principles of natural justice.

2(g) Hence this OA has been filed through association praying for the reliefs as under:

Respondents filed preliminary objection questioning the very maintainability of this OA being hit by the law of limitation/provision enshrined under Section 21 of the AT Act, 1985 so also for non-joinder of necessary party. According to them, the Association, in this OA filed on 03.02.2026, have prayed for quashing of the MoU dated 16.02.2024 executed between the NALCO management and the workmen representatives through their registered unions, i.e. after a lapse of two years, i.e. beyond the period provided under Section 21(1) of the Administrative Tribunal Act, 1984 without any such application for condonation of delay and, therefore, this OA is liable to be dismissed and to substantiate, they have also placed reliance on the decisions of the Hon'ble Supreme Court in the case of S.S. Rathore Vs. State of Madhya Pradesh (1989) 4 SCC 582, and D.C.S. Negi Vs. Union of India & Ors., [Special Leave (Civil) CC No. 3709/2011) on 07.03.2011. In support of the stand of non-joinder of parties, it is stated that the prayer of the members of the Association is to quash the MoU dated 16.02.2024, which was executed between the NALCO management and the workmen representatives through their registered unions but without arraigning workmen representative, who executed the MoU dated 16.02.2024 with the management by way of giving them opportunity of being heard before quashing the MoU adversial to their interest. Ld. Counsel for the respondents in course of hearing also submitted that basically the challenge made in this OA is to the policy decision taken by the management and, therefore, on merit also the Bench should not interfere on the same. Also, it was contended that in terms of the provision under Sub Rule (5) (b) of Rule 4 of Central Administrative Tribunal (Procedure) Rules, 1987. Therefore, according to Respondents’ counsel, this OA is liable to be dismissed on merits so also Rule 4 of CAT (Procedure) Rules, and being hit by Section 21.

Association have filed reply to preliminary objection of the respondents by stating that the action of the respondents Management is the nature of continuing wrong, therefore, the delay and laches stated by the respondents has no application to the case in hand, more so, when they were trying to set the matter right by making repeated representations. The MoU is not a concluded or final settlement but is expressly subject to execution of a tripartite agreement whereas the respondents management continued to act upon the methodology without finalizing the scheme in accordance with law. Their challenge against the action of the respondents-management in substituting the individual basic pay with that of average basic pay for computation of PRP and, therefore, it is not necessary to make any workmen of the registered union as party respondents. Ld. Counsel for the applicant in course of hearing, reiterating he above stand prayed for the relief claimed in the OA.

Heard. After giving due consideration to the arguments and the submission made in the respective pleadings, we have perused the records.

Performance Related Pay (PRP) operates as a multi-layered financial framework designed to align individual efforts with corporate profitability and macro strategic goals. Implementing, calculating, and distributing PRP requires blending financial constraints (budgeting caps and corporate margins) with objective performance management metrics. The Hon’ble Supreme Court in very many cases in past repeatedly held that interference by the Judiciary in a policy decision having financial implications and/or having a cascading effect is not at all warranted and justified. It has also been held in numerous decisions that fixation of pay scales, salary structures, and job evaluations are purely executive and administrative policy decisions because these matters require specialized expertise and carry severe, recurring financial implications and the courts and tribunals must practice judicial self-restraint and avoid intervening in them lightly. The Court/Tribunal are meant to review the legality and fairness of the decision-making process and not to substitute the government’s policy choices with their own opinions. Fixation of cut off date relating to implementation of a scheme came for judicial scrutiny before the Hon’ble Apex Court in the case of Government of Andhra Pradesh and Ors. vs. N. Subbarayudu and Ors., 2008(14) SCC 702. The court must maintain judicial restraint in matters relating to the legislative or executive domain vide Aravali Golf Club vs. Chander Hass, 2008(1) SCC 683, and Govt. of A.P. vs. P. Laxmi Devi, 2008(4) SCC 720. It is needles to state, as observed by the Hon’ble Apex Court that a policy decision taken by the Government is not liable to interference, unless the court is satisfied that the rule making authority has acted arbitrarily or in violation of the fundamental rights guaranteed under Article 14 and 16. (K Narayana v. State of Karnataka; AIR 1994 SC 55). In this case, we do not see that in any manner the action of the respondents suffers from the vice of the arbitrariness affecting the fundamental right of the any member of t he Association.

Apart from the above, according to the members of the Association, PRP involves financial benefits and, thus, is a perpetual act and since the members of the Association were pursuing their grievance through repeated representations, law of limitation has no application. We are not impressed on the said submission because by virtue of the MoU the members of the Association were debarred of the benefits. It is not their case that they were entitled to as per MoU but were debarred. Had it been the later one, then we would have accepted their perception that it is a continuing cause of action. Since, the case falls within the former one, the argument of continuing wrong is not acceptable. Insofar as submitting repeated representations are concerned, law is well settled that the repeated representations shall not save the limitation. In the circumstances stated above, this OA is also liable to be dismissed being hit by Section 21 of the AT Act, 1985.

Last but not the least, we may also place on record, that Sub Rule (5) (b) of Rule 4 of Central Administrative Tribunal (Procedure) Rules, 1987, mandates that permission may also be granted to an association representing the person desires of joining in a similar application provided, however, that the application shall disclose the class/grade/category or persons on whose behalf it has been filed provided that atleast one affected person joins in the said application whereas in the instant case, no such individual affected person is arraigned as applicant. Thus, we are of the considered view that since Statute provides something to be done on a particular manner, in not doing the same in that manner, this OA is liable to be dismissed.

As an epilogue to this chronicle, we must state that this is a fit case where judicial intervention, is not at all warranted. Hence, this OA, along with pending MAs, if any, stand dismissed.

Costs made easy.