Calcutta High Court (Appellete Side)
For The vs V.R. Rudani & Ors. Reported In (1989) 2 ... on 13 March, 2020
Author: Rajasekhar Mantha
Bench: Rajasekhar Mantha
1
13-03-2020
Court no.14
Sl. 2
sp W. P. No. 3292 (W) of 2019
with
W. P. No. 12082 (W) of 2019
Mr. Soumya Majumdar,
Ms. Atasi Ghosh
...for the petitioners.
Mr. Kishore Dutta, learned Advocate General
Mr. Biswaroop Bhattacharya,
Mr. Ayan De,
Mr. Victor Chatterjee,
Mr. Sandip Dasgupta
... for the Respondents.
The question raised in the writ applications by employees of the WBSETCL and WBSEDCL in the writ petitions is whether an admitted term of contract indicating that D.A. would be paid from the year 2009 at Central Government rate is vested right and whether the same can be reduced by the employer on the basis of any changed financial condition.
The brief facts relating to the case are that the two employers in the two writ petitions, i.e., WBSEDCL and WBSETCL were formed pursuant to a scheme on January 25, 2007 after the business of the existing WBSEB was bifurcated and the two new companies floated and created. It was 2 stipulated at Clause 3 of the scheme read with Clause 5 as follows.
Clause 3. On such transfer and subject to the provisions of the Act and provisions of this Scheme, the personnel shall form a part of the services of WBSEDC and then rank, scale of pay and inter-seniority as existing in WBSEB on the effective date of transfer shall be maintained.
Clause 5. The transfer of personnel shall be further subject to the following conditions, namely:-
(a) that the terms and conditions of service applicable to the personnel on the effective date of transfer shall not, in any way, be less favourable than those applicable to them immediately before the said effective date of transfer."
It followed from the above that the service benefits payable to the then existing employees of WBSEB would be continued even in favour of the migrating employees of the two new companies.
Since after formation of the two companies, there respective Boards adopted by Office Order dated February 16, 2009, a revision of pay and allowances (ROPA) for the two companies. The relevant part of the said ROPA that is the subject matter of the instant writ applications is Clause 9 which is set out herein below.
Clause 9. Dearness allowance (DA) The Dearness Allowance admissible to all categories of employees of the Company shall be payable on Band Pay + Grade Pay + Non practicing allowance (NPA), if any, from the dates mentioned below at the following rates:-
3
Date from which payable Rate of Dearness Allowance per month From 1.1.2006 No Dearness Allowance From 1.7.2006 2% of basic pay+NPA, where applicable From 1.1.2007 6% of basic pay+NPA, where applicable From 1.7.2007 9% of basic pay+NPA, where applicable Henceforth, Dearness Allowance will be applicable to the employees of the Company at such rate and from such date as may be notified by the Central Government from time to time."
Admittedly, the employees of the two companies received Dearness Allowances in terms of the said scheme of 2009, both arrears as wells as current until the year 2016. To be must specific, the Central Government rates of D.A. were paid until 2016. Since after 2016, the company paid only 125% of the basic and post July, 2019, the employees were paid 135%.
In both cases from 2016, Central Government rates of D.A. were not paid. The principal argument of the writ petitioners is that Dearness Allowances once agreed to be paid and subsequently paid at Central Government rates, cannot be reduced post 2016 for whatever be the reasons advanced by the companies or the State.
On a question being raised by the Management-
respondents as also this Court, a large number of judgments were placed on behalf of the petitioners indicating that the control and management of the employer primarily restricting the State Government and the employer being a Government 4 company within the meaning of the Companies Act, 1956 and its current version of the year 2013, the employer is other authority under Article 12 of the Constitution of India.
There is, in fact, no dispute to the fact that the majority of the shareholding if not be entitled to companies is with the State Government.
In this regard, the learned Counsel for the petitioners relied upon the following judgements.
On the question as to whether a resolution of the Board of Directors of the two companies under which the claim for D.A. is led, is enforceable under Article 12 of the Constitution of India. Paragraph 22 of the decision of the Hon'ble Supreme Court in the case of Andi Mukta Sadguru Shree Mudtajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust & Ors. vs. V.R. Rudani & Ors. reported in (1989) 2 SCC
691. In that regard paragraph 22 is set out herein below.
Paragraph 22: Here again we may point out that mandamus cannot be denied on the ground that the duty tot be enforced is not imposed by the statute. Commenting on the development of this law, Professor de Smith states: "To be enforceable by mandamus a public duty does not necessarily have to be one imposed by statute. it may be sufficient for the duty to have been imposed by charter, common law, custom or even contract." We share this view. The judicial control over the fast expanding maze of bodies affecting the rights of the people should not be put into watertight compartment. It should remain flexible to meet the requirements of variable circumstances. Mandamus is a very wide remedy which must be easily available 'to 5 reach injustice wherever it is found'. Technicalities should not come in the way of granting that relief under Article 226. We, therefore, reject the contention urged for the appellants on the maintainability of the writ petition. It, therefore, followed from the above decision and the other decisions cited by the petitioners that the right sought to be enforced by the petitioners clearly arises out of a contract between two was accepted pursuant to resolution passed by the Board of Directors of the said company and order issued pursuant thereto on February 16, 2009.
Reciting the claim of the petitioners, Sri Kishore Dutta, learned Advocate General representing the company would argue as follows.
The claim for D.A. cannot specifically be enforced even under contract inasmuch as the same is contingent upon various factors one of which the financial condition of the employer.
He relies upon the following decisions. The first of such decision in the case of State of Madhya Pradesh vs. C. Mandawar reported in AIR 1954 SC 493 in which the State of West Bengal had participated as inter winner. At paragraphs 4 and 5 it was laid down as follows.
Paragraph 4. It is argued on behalf of the appellant firstly that grant of dearness allowance is a matter ex gratia and not justiciable, and that neither a writ of mandamus nor any direction could be issued with reference thereto, and secondly, that the Resolution 6 dated 16th September, 1948, is not hit by Article 14 of the Constitution. In our opinion, both these contentions are well founded.
Paragraph 5. On the first question, Rule 44 of the Fundamental Rules runs as follows:
"Subject to any restrictions which the Secretary of State-in-Council may by order impose upon the powers of the Governor-General-in-Council or the Governor in Council, as the case may be, and to the general rule that the amount of a compensatory allowance should be so regulated that the allowance is not on the whole a source of profit to the recipient, a local Government may grant such allowance to any government servant under its control and may make rules prescribing their amounts and the conditions under which they may be drawn."
Under this provision, it is a matter of discretion with the local Government whether it will grant dearness allowance and if so, how much. That being so, the prayer for mandamus is clearly misconceived, as that could be granted only when there is in the applicant a right to compel the performance of some duty cast on the opponent. Rule 44 of the Fundamental Rules confers no right on the government servants to the grant of dearness allowance; it imposes no duty on the State to grant it. It merely confers a power on the State to grant compassionate allowance at its own discretion, and no mandamus can issue to compel the exercise of such a power. Nor, indeed, could any other writ or direction be issued in respect of it, as there is no right in the applicant which is capable of being protected or enforced.
A portion of paragraph 9 is also relied upon which is quoted herein below.
Paragraph 9. ....................on these provisions, the position is that when a law is impugned under Article 13, what the court has to decide is whether that law contravenes any of the provisions of Part III. If it 7 decides that it does, it has to declare it void; if it decides that it does not, it has to uphold it. ..........The result, therefore, is that the scale of dearness allowance recommended by the Commission and sanctioned by the Central Government can furnish no ground for holding that the scale of dearness allowance recommended by the Committee and adopted by the appellant is repugnant to Article 14."
The said decision is one where certain employees of the Government of Central Provinces and Berar (Madhya Pradesh) fixing the scale of Dearness Allowances to be paid contrary to less than the rates being paid by the Central Government was challenged. The Hon'ble Supreme Court rejected the challenge and upheld the right of the State of Madhya Pradesh and its predecessor, Central Provinces and Berar to frame D.A. schemes and rates payable, in terms of its own financial assessment. It is in this context that the Supreme Court held that Dearness Allowances is a matter of ex gratia and not justifiable and no mandamus could be issued to enforce the same.
The next decision relied upon by Mr. Dutta is the case of Bengal Chemical & Pharmaceutical Works Ltd. vs. Workmen & Anr reported in (1969) 1 LLJ 751. He specifically relied upon paragraph 21 wherein the Hon'ble Supreme Court after discussing the various decisions that summarized broad principle to be followed for determining and 8 payment of Dearness Allowances. Paragraph 21 is set out herein below.
Paragraph 21. In Kamani Metals and Alloys Ltd. v. Workmen it has been noted that one-hundred per cent neutralisation is not advisable as it will lead to inflation and therefore dearness allowance is often a little less than one-hundred per cent neutralisation.
The following principles broadly emerge from the above decisions :
1. Full neutralisation is not normally given, except to the very lowest class of employees.
2. The purpose of dearness allowance being to neutralise a portion of the increase in the cost of living, it should ordinarily be on a sliding scale and provide for an increase on the rise in the cost of living and a decrease on a fall in the cost of living.
3. The basis of fixation of wages and dearness allowance is industry-cum-region.
4. Employees getting the same wages should get the same dearness allowance, irrespective of whether they are working as clerks or members of subordinate staff or factory workmen.
5. The additional financial burden which a revision of the wage structure or dearness allowance would impose upon an employer, and his ability to bear such burden, are very material and relevant factors to be taken into account."
The matter before the Court arose out of an award passed by the Industrial Tribunal, West Bengal dated January 14, 1965 where one of the points of reference made by the State was the rate on which the revision of Dearness Allowances would be made.
By reference to the aforesaid decision, the learned Advocate General would submit that since Dearness Allowance is itself dependant on financial condition, there cannot be 9 vested rights claimed to enforce any rates even of the same was agreed to by the management of the company. The next decision relied upon by the company/employer is the case of the Workmen of Gujarat Electricity Board vs. The Gujarat Electricity Board, Baroda reported in 1969 (1) SCC 266 particularly, paragraph 8 thereof. Paragraph 8 is set out herein below.
Paragraph 8. The Tribunal, after holding that there was no justification for granting the demands of the workmen because the Board had no capacity to bear the additional burden, proceeded further to examine whether the Board's existing scheme of payment of dearness allowance was reasonable and took into account various factors for arriving at its finding that it could not be held that the terms offered by the Board were unreasonable. In this connection, reliance was placed on behalf of the appellants on the fact that two Electric Supply Companies were paying wages which were much higher than the wages being paid by the Board, and there was no justification for refusing the demand for additional dearness allowance which would place the employees of the Board on par with the employees of those Electric Supply companies. One of those Electric Supply companies is the Ahmedabad Electricity Co. Ltd., Ahemedabad, in whose case wages were fixed by an Award published in 1956, Industrial Court Reporter at p.746. The other is the Viramgam Electric Supply Co. Ltd. Viramgam, the award relating to which is published in 1958 Industrial Court Reporter at page 1010. The argument was that wagers paid by the Board should not be lower than those paid by these two Electric Supply companies which were engaged in the same line of business of production and supply of electricity. The Tribunal brushed aside these examples by stating that they were not comporable with the Board. In taking this view, we do not think that the Tribunal committed any error.
10The issue being considered at that time is whether the employees of Gujarat State Electricity Board were entitled to the same rates of Dearness Allowance being paid to other licensees within the State of Gujarat, i.e. Ahmedabad Electricity Company Limited or Viramgam Electric Supply Company Limited. The Hon'ble Supreme Court negated the plain condition of the Workmen thereat by holding that the circumstances under which the business and income generation of one licensee cannot be equated with another one. The rate of Dearness Allowance was held to be dependent on the business and the financial condition of the employer. The reliance is also placed on the decision of the Hon'ble Supreme Court in the case of Precision Bearings India Ltd. vs. Baroda Mazdoor Sabha & Anr. reported in (1978) 1 SCC 235, particularly, paragraph 8 thereof.
Paragraph 8. We find that the Tribunal has exhaustively gone into the whole matter with care and kept in view the five principles laid down by this Court in the Bengal Chemical & Pharmaceutical Works Ltd. Vs. Its Workmen, the fifth one being the additional financial burden which dearness allowance would impose upon the employer and his ability to bear such burden. We are unable to find any infirmity in the Tribunal dealing with the point of the financial capacity of the employer to bear the burden. The Tribunal finally observed as follows:
On a careful consideration of all the relevant factors, in my opinion, the dearness allowance paid tot he PBI (Precision Bearing India) workmen 11 at the minimum level of basic pay from Rs. 26 - upto Rs. 100 - should be from 80 per cent, of the textile D.A. to 89 per cent of the textile D.A. phased over a period of three years. The dearness allowance in the higher pay scale of Rs. 101 - to Rs. 200 - should be 40 per cent and in the still higher slab of Rs. 201 and above, should be 20 per cent, the percentage for the higher two slabs remaining the same.
Specific reference is made to the decision of the Hon'ble Supreme Court in the case of Workmen represented by Secretary vs. Reptakos Brett. & Co. Ltd. & Anr. reported in (1992) 1 SCC 290. At paragraphs 28 and 33, the Hon'ble Supreme Court has held as follows.
Paragraph 28. The ratio which emerges from the judgments of this Court is that the management can revise the wage structure tot he prejudice of the workmen in a case where due to financial stringency it is unable to bear the burden of the existing wage. But in an industry or employment where the wage structure is at the level of minimum wage, no such revision at all, is permissible not even on the ground of financial stringency. It is, therefore, for the management which is seeking restructuring of D.A. scheme to the disadvantage of the workmen to prove to the satisfaction of the tribunal that the wage structure in the industry concerned is well above minimum level and the management is financially not in a position to bear the burden of the existing wage structure.
Paragraph 33. From the above finding it was sought to be shown that the Company has proved to the satisfaction of the Tribunal that financially it was not in a position to bear the burden of the existing DA scheme. We do not agree with the learned counsel. The Tribunal gave the above finding in the reference made 12 on behalf of the workmen asking for bonus increase and various other monetary benefits. While rejecting the demands of the workmen the Tribunal gave the above finding which related to the additional burden accruing in the event of acceptance of the workers' demands. The tribunal nowhere considered the financial position of the Company vis-à-vis the existing DA scheme. The Company neither pleaded nor argued before the tribunal that its financial position had so much deteriorated that it was not possible for it to bear the burden of the slab system of DA. The Tribunal has not dealt with this aspect of the matter while considering the demand of the Company for restructuring the DA scheme.
In the said case, the employees claimed that since their settlement with the employer provided with the rates of Dearness Allowances at the rate being paid to State Government employees. The facts of the said case was that whether an existing slab of D.A. being paid to the employees could be revised the prejudice of the workmen or whether the fact that the workmen's general wage level was higher than other employees of the same industry, could be a relevant consideration for the said purpose. The Hon'ble Supreme Court went on to hold at paragraphs 28 to 33 that the financial condition of the employer would be a relevant consideration in determining as to whether an existing slab of D.A. could be reduced by an Industrial Tribunal. In the said case, however, the Industrial Tribunal despite having received evidence as regards the poor financial condition of the 13 employer did not go to make any conclusive pronouncement in that regard.
Mr. Dutta finally relied upon the decision of the Hon'ble Supreme Court in the case of Tamil Nadu Electricity Board Rep. By its Chairman vs. TNEB-Thozhilalar Aykkiya Sangam by its General Secretary reported in (2019) 15 SCC 235. In the said decision, the age-old principle that the Dearness Allowance is determined on the basis of financial condition of an employer has been reiterated. In reply, Mr. Soumya Majumder, represented the employee has dealt with each of the aforesaid judgments. This Court has carefully considered the rival arguments advanced by the writ petitioners/employees and the management. Insofar as the C. Mandawar case (supra), it appears from the facts of the said case was that a future proposal of the Government of Madhya Pradesh was being considered by the Supreme Court and the issue was whether Dearness Allowance was required to be paid in terms of Central Government rates or not. The said case did not have anything to do with an existing right for D.A. that was admitted and acted upon by the management dated August, 2009. The instant writ applications are concerned with an undertaking by the management to pay, inter alia, D.A., the 14 said decision cannot come to the aid of the management. Even on the next decision bearing of the decision of the Industrial Tribunal settling a proposed D.A. to be allowed by the company was being considered by the Hon'ble Supreme Court of existing agreement that has already been acted by the management. Similarly even in the Gujarat Electricity Board decision (supra), the issue was whether D.A. being paid to other licensees in the State of Gujarat could be enforced on the Gujarat Electricity Board, admittedly a licensee. The existing arrangement of payment of D.A. being paid by the employees did not come into the question. Similar is the case of Bengal Chemical judgment (supra) where an award of the Industrial Tribunal deciding future revision of Dearness Allowance was referred by the State Government for decision of the Industrial Tribunal.
Insofar as the decision of the Hon'ble Supreme Court in the case of TNEB (supra), the issue was whether the employees of TNEB could claim D.A. that was not implemented by the State of Tamil Nadu from the date claimed by the employees, a decision by the Madras High Court was interfered with by the Hon'ble Supreme Court on the ground that since the State Government itself had not paid the revised D.A. from the year 2002, the same could not be claimed by the 15 employees of TNEB. The agreement between management and the employer of TNEB would be entitled to D.A. at the rate being paid by the Government of Tamil Nadu. On the question as to whether a writ can be maintained against the WBSEDCL and WBSETCL who are, admittedly, Government company. Mr. Dutta relied upon a decision of a Co-ordinate Bench of this Court in the case of Mithai Lal Passi vs. C.E.S.C. Ltd. & Ors. reported in (2003) 3 CHN
357. In the said decision, the Co-ordinate Bench had held that while the licensee-CESC was stayed within the meaning of Article 12 of the Constitution, insofar as the discharge of functions under the Electricity Act is concerned, a writ could not be filed by an employee challenging order of termination of service by the CESC Ltd.
This Court with due respect to His Lordship in the said decision, finds the decision of Supreme Court in the case of Andi Mukta Sadguru (supra), particularly paragraph 22 has not been considered. Admittedly, the said decision is even the licensee not applicable as the control and management of the CESC Ltd. is completely different from the control and management of the WBSEDCL and WBSETCL. The latter being wholly and completely being controlled by the State Government.
16Having considered the cases cited by the respective parties, this Court finds that the order dated February 16, 2009 has been issued pursuant to a resolution of the terms of the two companies has not only been given effect to but also acted on from the year 2006 till the year 2016. The slabs rates prescribed retrospectively from 2006 to 2009, Central Government rates of D.A. were admittedly paid to the employees of WBSEDCL and WBSETCL.
The same, therefore, cannot be denied to the writ petitioners even if the management of the two companies can demonstrate poor financial condition. The reasons for this is that the same has formed part of an irrecoverable contract, undertaking agreement that the management has entered into and acted upon with the employees.
While D.A. as a concept is ex gratia and the rate of the same cannot be claimed as a matter of right would same assumes a form of enforceable right once the same is agreed to and acted upon by the parties in question, there is, in fact, promissory estoppel on the part of the management and they cannot be allowed to resile from the guarantee of D.A. made under the order dated August 2009 referred to herein above. 17 The decisions cited by Mr. Dutta, learned Advocate General definitely relevant when the next ROPA would come into play as admitted by Mr. S. Majumder, learned Counsel for the petitioners post 2020. The management can definitely argue and demonstrate its financial condition after duly proving the same.
It would not be out of place to refer the tariff order annexed to the writ applications, issued by a Statutory Authority, being the Central Electricity Commission approving parade to be followed by the WBSEDCL and WBSETCL in conducting its business and discharge of statutory responsibilities. Such factors in all overheads and liabilities of any licensee within the meaning of the Electricity Act, 2003/ The WBSETCL and WBSEDCL are deemed to have the average increasing Wholesale Price Index which is generally linked by calculating D.A., both for the State Government and Central Government employees.
The last argument advanced on behalf of the management is that even assuming for the sake of argument that the D.A. component in the ROPA has been acted upon, by reason of the use of the words "admissible", the same becomes contingent undertaking which contingency must factor in the current financial condition of the company.
18This Court on a plain reading of Clause 9 as a whole, is of the view that the expression "admissible" must be treated as synonymous expression "applicable" and the employer cannot be allowed to resile from the said Clause, which has admittedly been acted upon the differences in language of the first and second paragraph of Clause 9, where the expression "employees of companies" applicable all categories of the company shall be payable in the first and the expression "will be applicable" cannot change the entitlement of the workmen. The expression "will be" in the second part of Clause 9, must, according to this Court, be read as "shall". At the risk of repetition, the use of the word "admissible" in the first part and applicable in the second part, cannot in any way defeat the claim of the employees/writ petitioners to Central Government rates as already undertaken by the company and paid to the employees from 2009 till 2016. For the reasons stated above, this Court is inclined to direct the WBSEDCL and WBSETCL to pay all arrears of D.A. from the year 2016 till the date of life of the order dated February 16, 2009. The arrears from 2016 till date shall be paid in a phased manner in four instalments to each of the employees of the two companies spread over a period of six months.
19The current D.A. shall be payable at Central Government rates from April 1, 2020.
As already ordered by a Division Bench of this Court on March 11, 2020 passed in MAT 109 of 2020, the arrears shall carry interest from the date on which accrued till the date of payment @ 10% per annum.
After the judgment has been dictated, Mr. Biswaroop Bhattacharjee, learned Counsel for the respondents seeks stay of operation of the same. Judgment shall remain stayed for a period of 15 days.
With the aforesaid observations, the writ petitions are allowed.
There shall, however, be no order as to costs. Urgent photostat certified copy of this order, if applied for, be given to the parties.
(Rajasekhar Mantha, J.)