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JUDGMENT With T.C.(C) Nos.2, 4, 3, 9, 10, 11, 12, 13, 15 of 2000, T.C. (C) No.35 of 2000, and T.P. (C) No.326 of 2002 G.P. MATHUR,J.

The issue raised in these Transfer Petitions is regarding revision of pay scale of officers of Fertilizer Corporation of India and Hindustan Fertilizer Corporation and, therefore, they are being disposed of by a common order. For the sake of convenience, we will refer to the pleadings in Transfer Case No. 8 of 2000 whereby Writ Petition No. 2108 of 1996 which was filed in Delhi High Court was transferred to this Court. A.K. Bindal, President, Federation of Officers' Association of Fertilizer Corporation of India (for short 'FCI') and Dr. K.P. Sinha, authorised representative of Federation of Officers' Associations of Hindustan Fertilizer Corporation Ltd. (for short 'HFC') filed Writ Petition No. 2018 of 1996 in Delhi High Court praying that Clauses 11,12 and 13 of the Memorandum dated 19.7.1995 issued by Government of India, Ministry of Industry, Department of Public Enterprises and connected clauses of Annexure V of the said Memorandum be quashed and consequently the practice of uniform treatment of the officers in the profit and loss making companies in the FCI/HFC be revived. The other prayer made is that the respondents be directed to pay to the petitioners by way of interim relief at least 60% of the benefit of the revision of pay and perks which their counterparts have been given, pending final decision of the Writ Petition. The respondents arrayed in the Writ Petition are (1) The Union of India through the Secretary, Department of Fertilizers, in the Ministry of Chemicals & Fertilizers; (2) The Secretary, Department of Public Enterprises, Ministry of Industry, Government of India; (3) The Fertilizer Corporation of India Ltd.; and (4) Hindustan Fertilizers Corporation of India Ltd. The pleadings of the parties are fairly long and the documents filed are bulky but we will refer only to basic facts which are necessary for the decision of the controversy.

In January, 1961 two Fertilizer companies, namely Sindri Fertilizers and Chemicals Ltd. and Hindustan Fertilizer and Chemicals Ltd. were merged and a new company named as Fertilizer Corporation of India Ltd. (for short 'FCI') was created. Between 1961 and 1977, FCI, came to have 17 Fertilizer Units, 7 of which were in operation while remaining 10 were at various stages of implementation. In 1978 the Government of India set up a Committee to work out the modalities for reorganisation of its Fertilizer Industry. On the basis of the recommendation of the Committee, the Government of India approved the bifurcation and reorganization of FCI and National Fertilizer Ltd. (for short 'NFL') which was an independent and separate undertaking at that time and allocated the various units to the newly created undertakings which were five in number. Namrup, Haldia, Barauni and Durgapur units were allocated to the newly formed Hindustan Fertilizer Corporation Ltd. (for short 'HFC') and Sindri, Gorakhpur, Ramagundam, Talcher, Korba and Jodhpur Mining Organization were retained with FCI. The other units were allocated to newly created Rashtriya Chemicals and Fertilizers Ltd. and National Fertilizers Ltd. while a fifth company dealing exclusively with planning and development was created which was known as Project and Development (India) Ltd. After reorganization, the industrial pattern of pay and DA was introduced and it was made effective from 1.9.1977. The Department of Chemicals and Fertilizers, Government of India issued a circular on 3.9.1979 which provided that revision of pay scales and fringe benefits of the officers of the entire FCI/NFL would be the same and consequently all the officers in the five companies were treated alike with reference to revision of their pay scales and fringe benefits etc. The revision of pay scales of officers which was due from 1.8.1986 could not be given as the Government did not take steps in that regard. However a decision was taken by the Government to give ad hoc relief to all the officers working in the Public Enterprises, following the Industrial DA pattern and related scales of pay and accordingly ad hoc relief was paid to all the officers of FCI and HFC with effect from 1.1.1986 at uniform rate. Since the Government did not take any decision regarding the revision of pay scales and perks of the officers of the entire public sector in the country, the Bureau of Public Enterprises (for short 'BPE') which is a policy making division of the Government of India, recommended for payment of second relief to the officers of Public Enterprises following the industrial DA pattern on 13.1.1990. Consequently FCI/NFL issued circulars on 24.1.1990 for giving ad hoc relief to the officers. During this period the Government of India and also the Management of FCI and HFC made no distinction on the basis of "loss making" or "profit making" companies in the matter of revision of pay scale and fringe benefits to the officers of the companies and they were treated alike irrespective of the fact that the companies in which they were working had been making losses. The period of validity of the revised pay scales made applicable from 1.1.1987 was for five years and thereafter the next revision of pay scales became due from 1.1.1992 but the same was not done for the officers employed in FCI and HFC on the ground that the two companies were incurring losses. However, the other companies in erstwhile FCI/NFL group of companies were given revised pay scale and fringe benefits with effect from 1.1.1992. According to the petitioners an unfair and unjust policy of discrimination in the matter of revision of pay scales based upon profits and losses of the company commenced at this stage. Thereafter the Department of Public Enterprises, Ministry of Industry, Government of India issued an Office Memorandum on 12.4.1993 on Wage Policy for the fifth round of wage negotiations in Public Sector Enterprises (for short 'PSEs') whereby the ban imposed by D.O. No.2(3)/91-DPE (WC) dated 17.10.1991 was withdrawn and it was directed that the management of PSEs may commence their wage negotiations with the Trade Unions/Associations. It further provided that under the new Wage Policy the Managements were free to negotiate the wage structure keeping in view and consistent with the generation of resources/profits by the individual enterprises/units but the Government will not provide any budgetary support for the wage increase and the respective managements will have to find the requisite resources from within their own internal generation. Para 5 of this Office Memorandum specifically said that the wage settlement should be negotiated by the PSEs in accordance with the above parameters. This was followed by the impugned Office Memorandum dated 19.7.1995 issued by the Department of Public Enterprises on the subject of revision of scales of pay of the Executives holding post below the Board level and non-unionised supervisors with effect from 1.1.1992. The petitioners are basically aggrieved by para 13 of this Office Memorandum which provides that for sick PSEs registered with the Board for Industrial and Financial Reconstruction (for short 'BIFR'), pay revision and grant of other benefits will be allowed only if it is decided to revive the unit and the revival package should include the enhanced liability on this account.

The stand of the respondents in the counter-affidavit filed by them is that FCI and HFC which were under the administrative control of Department of Fertilizers (for short 'DOF') were referred to BIFR and were declared as sick companies on 6.11.1992 and 12.11.1992 respectively. Out of the four units of FCI the unit at Gorakhpur was lying closed since 10.6.1990. The commercial production in the Haldia unit of FCI which is located in West Bengal did not commence at all ever since its mechanical completion in 1981. The equity base of both the companies had been totally eroded as a result of continuous losses. The FCI and HFC had projected net losses of Rs.562.51 crores and Rs.438.99 crores respectively for the year 1996-1997. The BIFR had appointed Industrial Credit and Investment Corporation of India Ltd. (for short 'ICICI') as the Operating Agency in March 1994 to examine various options and work out unit wise rehabilitation plans for these companies. The ICICI submitted its report in January 1995 and thereafter, the matter was taken up by Group of Ministers which set up a Committee of officers to evaluate all the available alternatives for revival of the companies. The Department of Fertilizers, keeping in view the report of the Operating Agency as well as suggestions received from various other bodies including the employees unions/associations formulated revival packages. The package envisaged revamp of the functional units of these companies namely, Sindri, Ramagundam and Talcher of FCI and Durgapur, Barauni and Namrup units of HFC at a total investment of Rs.2201.13 crore (Rs.1736.20 crore for FCI and Rs.464.93 crore for HFC) without providing for wage revision of the employees. However, due to prior commitment of funds of Public Sector Units/Cooperative Societies in the Fertilizer Sector for their ongoing expansion and reluctance of Financial Institutions to fund the revival packages of sick PSUs, the funding arrangements for these packages could not be tied up. The ICICI also expressed serious reservation on the viability of these packages necessitating a review of the same. The details of the budgetary support given by the government since 1991-1992 till 1995-1996 have been given in para 12 of the counter- affidavit. It is averred in para 14 of the counter-affidavit that in case the pay scales and other benefits of the employees are directed to be revised with effect from 1.1.1992 it would involve additional financial implication of Rs.120 crores (Rs.60 crores each for FCI and HFC) for the five year period. The revival packages for both FCI and HFC have not been approved for implementation by the BIFR because the Operating Agency, the Department of Fertilizers and the Promoters have not been able to mobilize funds required for the revival package. Pay revision of the employees will further add to the financial requirements for the revival package, which is held up for want of funding.

After transfer of writ petitions, this Court issued several directions to BIFR to submit reports regarding viability of the units of the companies. The BIFR by its order dated 2.11.2001 recommended winding up of FCI. A similar order for winding up of HFC has also been passed. The FCI preferred an appeal before AAIFR which has been dismissed. The Delhi High Court is now proceeding with winding up of both the companies namely, FCI and HFC.

Shri R. Venkataramani, learned senior counsel for the petitioners, has submitted that just as pension is not bounty or a matter of grace depending upon the sweet will of the employer, so also, a fair and reasonable return for employment is neither a bounty nor a matter of grace. This is a right arising out of the relationship of employment and in the determination of the same particularly if the employer is the State, fair and reasonable criteria will have to be adopted and to the extent a fair and reasonable return is denied on the sole ground of the need to take a decision regarding continued existence of the establishments in question, the fundamental right of the petitioners guaranteed under Articles 14 and 21 read with Article 39(a) and 43 of the Constitution is violated. Learned counsel has submitted that the impugned Office Memorandum is discriminatory in as much as PSUs which follow the Central Dearness Allowance pattern are getting the benefit of periodical pay revision regardless of the position of the undertaking, namely whether running in losses or making profits. The PSUs, such as the establishments in question, which are governed by the Industrial Dearness Allowance pattern are singled out and are denied periodical pay revision since 1992. It has been urged that having regard to socio-economic objectives sought to be realized by the establishment of the fertilizer industry in the public sector and the fact that the said industry has served the aforesaid purpose of production and distribution of fertilizers at affordable prices and augmenting agricultural and rural productivity, it was inappropriate on the part of the Government of India to postpone the revision of pay from 1992 and to link it up in the year 1995 with the decision to refer the companies to BIFR. Learned counsel has further submitted that when it is not demonstrated that the incident of loss is attributable to the conduct of employees or workers and when it is acknowledged that several factors which could have been conveniently dealt with to eliminate loss making condition (viz. old plants and obsolete technology) and to do so was within the competence of the Government of India, it will be gross injustice to the employees to deny their pay revision by relating it with profitability. Sickness of PSU without consideration of the causes of sickness, it is urged, can be no ground for denial of fair pay revision particularly when the Government of India has failed to take relevant and efficient steps to promote the health of the industry.