Central Administrative Tribunal - Madras
Steel Plant Employees Uion vs Steel Authority Of India on 13 December, 2024
1 OA /310/01487/2016
CENTRAL ADMINISTRATIVE TRIBUNAL
CHENNAI BENCH
OA/310/01487/2016
Dated this the 13thday of December, Two Thousand Twenty Four
CORAM :
HON'BLE MR M. SWAMINATHAN, MEMBER(J)
AND
HON'BLE MR. SANGAM NARAIN SRIVASTAVA, MEMBER(A)
1. Steel Plant Employees Union, Salem,
Reg No.267/SLM,
Rep by its General Secretary, K.P. Sureshkumar,
No.C-27/1, Mohan Nagar,
Salem.
2. R. Venkataraman,
S/o Late V. Rengasamy,
Senior Operator Gr V,
Centralised Mechanical Maintenance Department,
Salem steel Plant, SAIL, Salem
R/o 13/27, Gananpathy Nagar,
Ganapathipalayam, Mohan Nagar (PO), Salem. .. Applicants
By Advocate M/s Row & Reddy
Vs
1. Government of India,
Owning Steel Authority of India Limited,
Rep by its Director (Personnel),
Ispat Bhawan, Lodi Road,
P.O. Box No.3049, New Delhi.
2. The Executive Director,
Salem Steel Plant,
Steel Authority of India,
Salem. .. Respondents
By Advocate M/s. A V. Arun
: assisted by Mr. M A Aruneshe
2 OA /310/01487/2016
ORDER
(Pronounced by Hon'ble Mr. M. Swaminathan, Judicial Member) This OA have been filed by the applicants seeking the following relief:
"(i) To set aside the pay fixation order dated 25.04.2016 issued by the 2nd respondent Management in refixing and proposed recovery of the excess pay granted to them as being illegal, arbitrary and contrary to the corporate instructions and;
(ii) For a direction to the 2 nd respondent Management to give appropriate notice calling for their individual explanation and to consider the same after giving fair opportunity of hearing to the applicants and to pass a reasoned order and;
(iii) To pass such other orders or directions as this Hon'ble Tribunal may deem fit and proper in the circumstances of the case, award cost and thus render justice."
2. The facts leading to the filing of the OA are as follows:
The Respondent is a Public Sector Company owned by the Government of India. Employees wages are revised based on a Memorandum of Agreement (MOA) entered into by the National Joint Committee for the Steel Industry, which includes both Central Trade Unions and Employers, including the Respondent. This agreement is valid for a five-year period.
The most recent MOA was signed on July 1, 2014, covering the period from 01.01. 2012, to 31.12 2016. The wage revisions were made based on this agreement. However, the Respondents have refixed the pay for non-
3 OA /310/01487/2016 executive employees, who are members of the Petitioner union, without prior notice, a hearing, or issuing a notice as required under Section 9A of the Industrial Disputes Act, 1947. This has resulted in a reduction of wages, dearness allowance, perks, and house rent allowance, effective from the wages payable for April and May 2016. Consequently, the Original Application has been filed.
3. The learned counsel for the applicants contended that the respondents is a Public Sector Company owned by the Government of India. Employees wages are revised based on a Memorandum of Agreement (MOA) entered into periodically between the National Joint Committee for the Steel Industry, which includes Central Trade Unions and Employers, such as the Respondent. These agreements are typically valid for a period of five years, after which fresh negotiations are held to determine the terms and conditions of employment, including pay scales. The most recent agreement was signed in 2007 and expired in December 2011.
4. The counsel further contended that a new MOA was entered into on July 1, 2014, covering the period from 01.01. 2012, to 31.12. 2016. This agreement was implemented by both the employer (the Respondent) and 4 OA /310/01487/2016 the employees, represented by the first applicant's Union and the second applicant, an affected employee and also a member of the said Union. The pay scales established under the MOA clearly reflect the fixation of personal pay effective from 01.01. 2012, resulting in higher wages for the employees.
5. The learned counsel further submitted that, in violation of Article 14 of the Constitution of India, an order dated 25.04.2016, was issued reducing the pay scale with retrospective effect from April 1, 2005. This not only led to a reduction in pay but also triggered a recovery process, all without prior notice or a hearing. As an example, he pointed out that the pay of Matheswaran, who had his pay fixed according to the agreement dated July 1, 2014, was reduced from a personal pay of Rs. 11,060/- as of 1st July, 2012, to Rs. 5,820/-, and similarly, pay reductions and recovery actions were implemented for all affected employees without any notice.
6. He also contended that the order, dated 25.04.2016, challenged in the present Original Application, does not provide any justification for the retrospective reduction in pay, which not only reduces wages but also demands recovery. Additionally, he emphasized that the workmen involved in this case are covered by the provisions of the Industrial 5 OA /310/01487/2016 Disputes Act, 1947. Once the pay is fixed based on an agreement, and both parties have acted on it, it becomes part of the service conditions as outlined in Schedule IV, Item 1, in conjunction with Section 9A of the Industrial Disputes Act. Any changes to this pay structure cannot be made without notice as per Section 9A of the ID Act, making such changes void ab initio.
7. The learned counsel further submitted that many employees who have drawn wages based on the agreement dated 1.7.2014 have retired from service and got better terminal benefits as well as higher wages. On the contrary, the serving employees who have been given the benefit of the agreement will suffer as a result of arbitrary action of the respondent in unilaterally reducing the wages with effect from 01.04.2012 which is exfacie illegal and contrary to Article 14 and 21 of the Constitution of India. There is no provision which gives a right to the respondent to reduce the wages either in the agreement dated 1.7.2014 or as per service rules governing the service conditions of the employees.
8. The learned counsel relied on the judgment of the Hon'ble Supreme Court in Telecom District Manager and Ors. v. Keshab Deb (2008) 8 SCC 402 to address the preliminary objection raised by the respondents in their reply, asserting that this Tribunal does not have the jurisdiction to hear the 6 OA /310/01487/2016 present Original Application. The counsel argued that the Central Administrative Tribunal has jurisdiction not only in cases of constitutional rights violations but also in matters where statutory provisions under the Industrial Disputes Act are infringed. Additionally, the counsel referred to the judgment in LIC of India v. D.J. Bahadur & Others (1981) 1 SCC 315, which holds that a settlement remains in force until it is replaced by a new settlement, even if the original settlement's term has expired. He further emphasized that any change to the terms of employment requires a notice under Section 9A of the Industrial Disputes Act, making such a notice mandatory for any modifications. Based on these precedents, the counsel requested the relief sought in the present Original Application.
9. Per contra, the learned counsel for the respondents contended that the applicant's claim, asserting that the respondent management failed to issue a notice as required under Section 9-A of the Industrial Disputes Act, 1947, is unfounded. The applicants cannot rely on Section 9-A of the Act, as the issue, if it indeed pertains to Section 9-A, renders the Original Application before this Hon'ble Tribunal not maintainable. Furthermore, the wages for each category of employee are determined based on the Memorandum of Agreement between the respondent and its employees, 7 OA /310/01487/2016 and as such, Section 9-A of the Industrial Disputes Act does not apply. Pay fixation is instead governed by the proviso to Section 9-A of the said Act.
10. The learned counsel further contended that the refixation of pay for the employees of the Respondent Management follows the procedure outlined in Clause 12 of the Pay Fixation Rules in the SAIL Personal Manual. He emphasized that the pay fixation order for each individual employee is distinct and individualized, meaning the Union cannot maintain an application on behalf of all the employees. Clause 12 of the Pay Fixation Rules provides for the stepping up or levelling up of pay scales for employees, and this process must be applied to each case individually. In the case of Salem Steel Plant, when implementing the Percentage Increment System effective from 1 st April, 2005, the basic pay of employees was levelled up without applying the principles of stepping up. Specifically, it was not considered whether a senior employee in a lower grade was drawing a higher or equal pay compared to a junior employee.
11. The counsel further submitted that while stepping up and leveling up were carried out, they were applied incorrectly, and some employees received multiple leveling up benefits. As a result, a two-member team from Bhilai Steel Plant was formed to investigate the errors. The team submitted a report stating that discrepancies had occurred during the pay 8 OA /310/01487/2016 anomaly rectifications at SSP when the PIS was introduced in SAIL from April 1, 2005, and also after the implementation of the wage revision on January 1, 2007. Subsequently, a pay anomaly committee was formed, and based on the report, the errors were rectified. The counsel emphasized that the pay fixation was carried out in accordance with the agreements made under the Memorandum of Agreement (Wage Revision Agreement), and the basic pay of the employees was fixed according to their entitlements, with no deviation from the terms of the agreement.
12. The learned counsel also pointed out that the employer is entitled to rectify any mistakes and adjust the pay in accordance with the wage revision agreement between the parties. Therefore, the pay fixation has been carried out correctly as per the agreement, and any errors were rectified during the refixation process. Given this adjustment, the employer is also entitled to recover any excess amounts that were previously paid to the employee.
13. In support of his contentions, the learned counsel relief upon the judgments of the Hon'ble Supreme Court in the case of Chandi Prasad Uniyal & Others Vs. State of Uttarakhand and Others (2012) 8 SCC 417) and in the case of M. Kandan Vs Indian Bank rep by its Chairman, Managing Director & Others (2018) SCC OnLine Mad 6231) 9 OA /310/01487/2016
14. In the case of Chandi Prasad Uniyar, the Hon'ble Apex Court held as follows:
"16. We are concerned with the excess payment of public money which is often described as "tax payers' money" which belongs neither to the officers who have effected over-payment nor that of the recipients. We fail to see why the concept of fraud or misrepresentation is being brought in such situations. Question to be asked is whether excess money has been paid or not may be due to a bona fide mistake. Possibly, effecting excess payment of public money by Government officers, may be due to various reasons like negligence, carelessness, collusion, favouritism etc. because money in such situation does not belong to the payer or the payee. Situations may also arise where both the payer and the payee are at fault, then the mistake is mutual. Payments are being effected in many situations without any authority of law and payments have been received by the recipients also without any authority of law. Any amount paid/received without authority of law can always be recovered barring few exceptions of extreme hardships but not as a matter of right, in such situations law implies an obligation on the payee to repay the money, otherwise it would amount to unjust enrichment".
15. In the case of M. Kandan v. Indian Bank, it was held that, "6. It requires to be pointed out here that the aforesaid decision passed by the Two Judges Bench of the Hon'ble Supreme Court of India, relied by the learned Counsel for the Petitioner, is a consequential order to the earlier order passed by a Three Judges Bench of the Hon'ble Supreme Court of India in the same case in State of Punjab vs. Rafiq Masih (White Washer ) [(2014) 8 SCC 883), in which it has been ruled that there is no principle that any excess payment to employees could not be recovered and the earlier decisions in Registrar of Co-operative Societies, Haryana vs Israil Khan [(2010) 1 SCC 440] and Chandi Prasad Uniyal vs State of Uttarakhand 10 OA /310/01487/2016 [(2012) 8 SCC 417), supporting that view have been approved. It has also been explained therein that directions issued by the Hon'ble Apex Court in the exercise of powers under Article 142 of the Constitution, relaxing the application of law, was in view of the peculiar circumstances which do not comprise the ratio decidendi and therefore, do not make binding precedent. Viewed from that perspective, it can be seen that the subsequent judgment in State of Punjab and Others vs Rafiq Masih (White Washer) and Others [(2015) 4 SCC 334], were only containing illustrations where the Court had exercised its power under Article 142 of the Constitution and the same could not be taken as any ratio decidendi unconditionally exempting recovery from retired persons from the rigour of the law recognised in Section 72 of the Indian Contract Act, 1872, that a person to whom money has been paid by mistake must repay it."
16. The learned counsel concluded by submitting that the employer has the authority to determine employee salaries in accordance with the wage revision agreement. If any mistake occurred during the pay fixation, it can be rectified, and the pay can be adjusted accordingly. The employee cannot claim prior notice for such refixation, as it has been duly communicated to each individual. If an employee is aggrieved by the refixation, they must challenge it individually, providing an explanation for the adjustments made in their specific case. However, the Union cannot seek an omnibus order to quash the refixation for all employees. Regarding recovery, the judgments cited earlier support the employer's right to recover excess payments. In the case of retiring employees, recovery is sought only from their Provident Fund and Leave Encashment.
11 OA /310/01487/2016 Therefore, the counsel requested the dismissal of the Original Application.
17. We have heard both the parties at length perused the pleadings and the materials placed on record. We have also gone through the written submissions of all the parties and also the judgments relied upon by the respective parties.
18. Before delving into the merits of the issue, we must first address the preliminary objection raised by the respondents regarding the maintainability of the OA, as the pay fixation order is different and distinct for each ad every employee of the Union.
19. The said issue has been considered by the Hon'ble Apex Court in the case of Telecom District Manager & Others Vs Keshab Deb reported in (2008) 8 SCC 402 and the relevant para is extracted below:
"14. In a case of the present nature where inter alia an employee maintains a writ petition not only on the ground of violation of equality clause enshrines underArticle 14 of the Constitution of India but also on the ground of violation of the provisions of the Industrial Disputes Act, 1947, he has an option to choose his own forum. Section 28 does not bar the jurisdiction of the Central Administrative Tribunal. It saves the jurisdiction of the Industrial Tribunal. An employee who claims himself to be a workman, therefore, will have a right of election in the matter of choice of forum. It is, therefore, not correct to contend that the Central Administrative Tribunal had no jurisdiction to pass the 12 OA /310/01487/2016 impugned judgment. Furthermore, the respondent claimed regularization in services. Such an application was maintainable. As to whether he would be entitled to such a relief or not, however, is a different question.
15. A Tribunal indisputably was entitled to exercise its jurisdiction for enforcement of a fundamental right".
19. Thus, we can conclude that this Tribunal indisputably has powers to exercise its jurisdiction for enforcement of a fundamental right, hence we answer the question in affirmative in favour of the applicants, that the present OA is maintainable.
20. The main issue to be decided in the present OA is "Whether the employer Management is entitled to pass an order refixing the wages of the employee after rectifying the mistake earlier committed and whether prior notice to the employee is mandatory for recovery"
21. This issue is no longer res integra, as it has been addressed by the Hon'ble Supreme Court and various High Courts. In the case of Col. B.J. Akkara (Retd.) v. Government of India and Others, reported in (2006) 11 SCC 709, the Hon'ble Supreme Court considered a similar question and ruled as follows:
"27. The last question to be considered is whether relief 13 OA /310/01487/2016 should be granted against the recovery of the excess payments made on account of the wrong interpretation/understanding of the circular dated 7.6.1999. This Court has consistently granted relief against recovery of excess wrong payment of emoluments/allowances from an employee, if the following conditions are fulfilled (vide Sahib Ram v. State of Haryana [1995 Supp (1) SCC 18 :
1995 SCC (L&S) 248], Shyam Babu Verma v. Union of India [(1994) 2 SCC 521 : 1994 SCC (L&S) 683 : (1994) 27 ATC 121] , Union of India v. M. Bhaskar [(1996) 4 SCC 416 : 1996 SCC (L&S) 967] and V. Gangaram v. Regional Jt. Director [(1997) 6 SCC 139 : 1997 SCC (L&S) 1652] ):
(a) The excess payment was not made on account of any misrepresentation or fraud on the part of the employee.
(b) Such excess payment was made by the employer by applying a wrong principle for calculating the pay/allowance or on the basis of a particular interpretation of rule/order, which is subsequently found to be erroneous.
28. Such relief, restraining back recovery of excess payment, is granted by courts not because of any right in the employees, but in equity, in exercise of judicial discretion to relieve the employees from the hardship that will be caused if recovery is implemented. A government servant, particularly one in the lower rungs of service would spend whatever emoluments he receives for the upkeep of his family. If he receives an excess payment for a long period, he would spend it, genuinely believing that he is entitled to it. As any subsequent action to recover the excess payment will cause undue hardship to him, relief is granted in that behalf. But where the employee had knowledge that the payment received was in excess of what was due or wrongly paid, or where the error is detected or corrected within a short time of wrong payment, courts will not grant relief against recovery. The matter being in the realm of judicial discretion, courts may on the facts and circumstances of any particular case refuse to grant such relief against recovery.
29. On the same principle, pensioners can also seek a 14 OA /310/01487/2016 direction that wrong payments should not be recovered, as pensioners are in a more disadvantageous position when compared to in-service employees. Any attempt to recover excess wrong payment would cause undue hardship to them. The petitioners are not guilty of any misrepresentation or fraud in regard to the excess payment. NPA was added to minimum pay, for purposes of stepping up, due to a wrong understanding by the implementing departments. We are therefore of the view that the respondents shall not recover any excess payments made towards pension in pursuance of the circular dated 7.6.1999 till the issue of the clarificatory circular dated 11.9.2001. Insofar as any excess payment made after the circular dated 11.9.2001, obviously the Union of India will be entitled to recover the excess as the validity of the said circular has been upheld and as pensioners have been put on notice in regard to the wrong calculations earlier made."
22. In Syed Abdul Qadir and Others v. State of Bihar and Others (2009) 3 SCC 475, the issue arose when excess payments made to the appellants, who were teachers, were sought to be recovered due to a mistake in interpreting the Bihar Nationalised Secondary School (Service Conditions) Rules, 1983. The appellants argued that even if they were not entitled to the additional increment upon promotion, the excess amount should not be recovered, as it was paid without any misrepresentation or fraud on their part. The Hon'ble Supreme Court ruled that the appellants could not be held responsible in such circumstances and that recovery of the excess payment should not be ordered, particularly since the employees had already retired. The Court further observed that, in general, recovery is prohibited where there is no misrepresentation or fraud by the employee, and the excess payment results from an incorrect interpretation 15 OA /310/01487/2016 of a rule or order. The Court held as follows:"
"59.Undoubtedly, the excess amount that has been paid to the appellant teachers was not because of any misrepresentation or fraud on their part and the appellants also had no knowledge that the amount that was being paid to them was more than what they were entitled to. It would not be out of place to mention here that the Finance Department had, in its counter affidavit, admitted that it was a bona fide mistake on their part. The excess payment made was the result of wrong interpretation of the Rule that was applicable to them, for which the appellants cannot be held responsible. Rather, the whole confusion was because of inaction, negligence and carelessness of the officials concerned of the Government of Bihar. Learned counsel appearing on behalf of the appellant teachers submitted that majority of the beneficiaries have either retired or are on the verge of it. Keeping in view the peculiar facts and circumstances of the case at hand and to avoid any hardship to the appellant teachers, we are of the view that no recovery of the amount that has been paid in excess to the appellant teachers should be made."
23. In State of Punjab and Others v. Rafiq Masih (White Washer) and Others, reported in (2015) 4 SCC 334, wherein the Hon'ble Apex court examined the validity of an order passed by the State to recover the monetary gains wrongly extended to the beneficiary employees in excess of their entitlements without any fault or misrepresentation at the behest of the recipient. This Court considered situations of hardship caused to an employee, if recovery is directed to reimburse the employer and disallowed the same, exempting the beneficiary employees from such recovery. It was held thus:
"8. As between two parties, if a determination is rendered in 16 OA /310/01487/2016 favour of the party, which is the weaker of the two, without any serious detriment to the other (which is truly a welfare State), the issue resolved would be in consonance with the concept of justice, which is assured to the citizens of India, even in the Preamble of the Constitution of India. The right to recover being pursued by the employer, will have to be compared, with the effect of the recovery on the employee concerned. If the effect of the recovery from the employee concerned would be, more unfair, more wrongful, more improper, and more unwarranted, than the corresponding right of the employer to recover the amount, then it would be iniquitous and arbitrary, to affect the recovery. In such a situation, the employee's right would outbalance, and therefore eclipse, the right of the employer to recover.
xxx xxx xxx
18. It is not possible to postulate all situations of hardship which would govern employees on the issue of recovery, where payments have mistakenly been made by the employer, in excess of their entitlement. Be that as it may, based on the decisions referred to hereinabove, we may, as a ready reference, summarise the following few situations, wherein recoveries by the employers, would be impermissible in law:
(i) Recovery from the employees belonging to Class III and Class IV service (or Group C and Group D service).
(ii) Recovery from the retired employees, or the employees who are due to retire within one year, of the order of recovery.
(iii) Recovery from the employees, when the excess payment has been made for a period in excess of five years, before the order of recovery is issued.
(iv) Recovery in cases where an employee has wrongfully been required to discharge duties of a higher post, and has been paid accordingly, even though he should have rightfully been required to work against an inferior post.
(v) In any other case, where the court arrives at the conclusion, that recovery if made from the employee, would be iniquitous or harsh or arbitrary to such an extent, as would far outweigh the equitable balance of the employer's right to recover."
17 OA /310/01487/2016
24. The Hon'ble Madras High court of Madurai Bench on identical issue in WP.No.12626/2002, vide order, dated 21.06.2022 held as follows:
"3. The Hon'ble Supreme Court in the case of State of Punjab and others Vs. Rafiq Masih (white washer) reported in 2015 (4) SCC 334, has held that recovery from the pensioners, for the mistake committed by the Department, is impermissible in law. Moreover, any order of recovery without prior notice to the pensioner would be in violation of the principles of natural justice and this legal position has been ratified in the various decisions of the Hon'ble Supreme Court as well this Court. As such, the present unilateral action of recovery without notice also is in violation of the principles of natural justice. On both these grounds, the petitioner is entitled to succeed.
25. It is evident from the various decisions cited above that recovery from the applicants for the mistake made by the Department is not permissible under the law. Furthermore, any order for recovery without prior notice to the pensioner would violate the principles of natural justice, a legal stance upheld by both the Hon'ble Supreme Court and the Hon'ble High Courts. Therefore, we answer the main question affirmatively, in favor of the applicants and against the respondents.
26. In light of the above, we issue the following directions/orders:
(i) The pay fixation order, dated 25.04.2016, issued by the 2nd respondent Management, is set aside, and the proposed recovery of excess pay granted to the applicants is quashed as illegal, arbitrary, and contrary to Corporate Instructions. If any amount recovered already, 18 OA /310/01487/2016 the same shall be refunded to the applicants immediately without interest.
(ii) The 2nd respondent Management may issue an appropriate notice for recovery/pay fixation requesting individual explanations from the applicants, considering their responses after providing a fair hearing, and issue a reasoned order, if necessary. The whole exercise shall be completed within a period of four months from the date of receipt of a copy of this order.
27. The OA is disposed of as per the above terms. No order as to costs.
(SANGAM NARAIN SRIVASTAV) (M. SWAMINATHAN)
MEMBER(A) MEMBER(J)
13 .12.2024
mas
19 OA /310/01487/2016