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National Confederati... v. Union Of India And O...
Factual and Procedural Background
The petition, filed under Article 32 of the Constitution, concerns the release of the revised Industrial Dearness Allowance (IDA) pay scales to employees of British India Corporation Ltd. (BIC) and its two units—Cawnpore Woollen Mills, Kanpur and New Egerton Woollen Mills, Dhariwal (Punjab). By Office Memorandum dated 19-7-1995, the Department of Public Enterprises (DPE) denied the benefit of the revised IDA pay scales to public-sector undertakings (PSUs) referred to the Board for Industrial and Financial Reconstruction (BIFR). BIC, a Government company under the Ministry of Textiles, is a sick PSU registered with BIFR.
On 7-5-1999, this Court—while dealing with SLP (C) No. 16732 of 1997 filed by the NTC (IDA) Employees Association—directed that the officers/employees of National Textile Corporation (NTC) and its subsidiaries be granted the revised IDA scales with effect from 1-1-1999 on an ad-hoc basis. Relying on that order, the present petitioners sought identical relief for BIC employees but received no response from the Central Government, prompting the instant writ petition.
Legal Issues Presented
- Whether employees of British India Corporation Ltd. and its two units are entitled to the revised IDA pay scales notwithstanding the DPE Office Memorandum dated 19-7-1995 that denies such benefit to sick PSUs referred to BIFR.
- Whether the Supreme Court’s interim order dated 7-5-1999 in NTC (IDA) Employees Assn. (2) v. Union of India furnishes a basis to extend the same benefits to BIC employees.
Arguments of the Parties
Petitioners’ Arguments
- Denial of the revised IDA scales violates Article 14 because similarly placed employees of other PSUs, including NTC, have received the benefit.
- The Supreme Court’s order dated 7-5-1999 in SLP (C) No. 16732/1997 entitles BIC employees to the same relief.
- BIC was nationalised to secure proper management and protect employment; as a Government company, its employees should not be discriminated against.
- Representations dated 31-5-1999 (Annexure P-4) and the Chairman’s supporting letter dated 2-6-1999 (Annexure P-5) remain unanswered by the Central Government.
Respondents’ Arguments
- DPE’s order dated 19-7-1995 explicitly withholds the revised IDA scales from PSUs referred to BIFR; BIC falls within that category.
- BIC was ordered to be wound up by BIFR on 31-10-1994 and the order was affirmed by AAIFR; therefore, it cannot claim the benefit extended to NTC.
- The Supreme Court’s interim order of 7-5-1999 applied only to eight subsidiary corporations of NTC and expressly excluded other entities.
- A revival package presently under consideration before BIFR does not contemplate revision of pay scales; until revival is approved and implemented, no IDA revision is admissible.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| NTC (IDA) Employees Assn. (2) v. Union of India, SLP (C) No. 16732 of 1997, order dated 7-5-1999 | Granted ad-hoc implementation of revised IDA pay scales to employees of NTC and its subsidiaries w.e.f. 1-1-1999. | The Court treated BIC employees as similarly situated and decided to extend the same benefit, subject to the sanctioned BIFR revival scheme. |
| Order in SLP (C) No. 16732 of 1997 dated 27-9-2002 | Directed implementation of the sanctioned BIFR schemes for NTC’s sick subsidiaries. | Reinforced the Court’s view that once BIFR approves a revival scheme, employees may receive benefits contemplated therein; relied upon to justify relief for BIC employees. |
Court's Reasoning and Analysis
After examining the rival submissions and the record of BIFR proceedings, the Court noted that:
- BIC had submitted a revival proposal to BIFR, and the operating agency (IDBI) prepared a Draft Revival Scheme which received consensus from all stakeholders.
- The Government of India had approved the revival proposal, and BIFR had consequently sanctioned the scheme under Section 18 of the Sick Industrial Companies (Special Provisions) Act, 1985.
- Given that BIFR approval placed BIC on the path of revival, the rationale for denying revised IDA pay scales—namely, the bar under the DPE memorandum for PSUs pending before BIFR—no longer carried the same weight.
- The employees of BIC were similarly situated to those of NTC who had already been granted the benefit by the Supreme Court’s order dated 7-5-1999.
On this basis, the Court concluded that there was no justification to withhold the revised IDA scales from the petitioners and that parity required extension of the same benefit, harmonised with the sanctioned BIFR scheme.
Holding and Implications
The writ petition is DISPOSED OF with directions to implement the BIFR-sanctioned revival scheme in so far as it concerns the petitioners. The Court recorded the respondents’ statement that the scheme would be completed by March 2005 and that discussions on pay fixation would follow.
Implications: The decision compels the Central Government and BIC to accord the revised IDA pay scales in line with the sanctioned revival scheme, thereby granting financial relief to BIC employees. The ruling is confined to the parties and does not articulate a broader legal precedent beyond ensuring parity with the earlier NTC order.
Dr. Ar. Lakshmanan, J.— The present writ petition under Article 32 of the Constitution is concerning release of revised IDA pay scale in respect of British India Corporation (a government undertaking) and its two units situated at Cawnpore Woollen Mills, Kanpur and New Egerton Woollen Mills, Dhariwal (Punjab). The employees of Cawnpore Woollen Mills, Kanpur and New Egerton Woollen Mills, Dhariwal have authorised the National Confederation of Officers' Association of Central Public Sector Undertakings to submit this petition on their behalf in this Court and, therefore, the petitioners are jointly submitting this petition.
2. The brief controversy involved in this matter is that by order dated 19-7-1995, the Central Government has denied the benefit of revised IDA pay scale to those sick public sector undertakings which are registered with BIFR. This Court on 7-5-1999 in SLP (C) No. 16732 of 1997 ordered that National Textile Corporation and its subsidiaries be given benefits under OM dated 19-7-1995, at least from 1-1-1999. The said order reads thus:
“SLP (C) No. 16732 of 1997 and IAs Nos. 1-9 in SLP (C) No. 16732 of 1997
We heard learned counsel for the parties. In our view till these matters are finally decided, interest of justice requires that the officers/employees of NTC and its subsidiaries whose cases have been cleared by the Board of Industrial and Financial Reconstruction by order dated 21-4-1998/28-4-1998 and which would cover 518 employees of the IDA pattern working in NTC and its subsidiaries should be given without prejudice to the rights and contentions of all the contesting parties in these proceedings, and purely on ad hoc basis benefits under OM dated 19-7-1995 at least from 1-1-1999.
All arrears on the basis of that OM will be worked out and paid over to the aforesaid employees only w.e.f 1-1-1999 and in future during the pendency of these proceedings the monthly payments will also be continued to be made on the enhanced rate till the final disposal of these proceedings.
The aforesaid arrears shall be computed and paid w.e.f 1-1-1999 within eight weeks from today.
It is made clear that the aforesaid order is passed subject to the ultimate decision in these proceedings and subject to the adjustment, if any, as directed by this Court ultimately and all such employees shall have no objection to such adjustment to be made from their future salaries or other retiral benefits, if any.
For compliance with the aforesaid order, the Central Government will make available necessary funds to NTC, if required.
The SLP along with the other matters will stand over to 17-8-1999. In the meantime, counter-affidavit and the rejoinder-affidavit, if any, are to be filed by the parties concerned are permitted to be filed.”
The above order was passed in the petition filed by the NTC (IDA) Employees Association.
3. According to the petitioners, British India Corporation and its two units referred to above are also sick undertakings and they are also entitled to the release of revised IDA pay pattern in compliance with the order dated 19-7-1995 and the benefits given by this Court in order dated 7-5-1999 in SLP (C) No. 16732 of 1997 should also be given to the petitioners and the employees of Cawnpore Woollen Mills and New Egerton Woollen Mills, Dhariwal and the employees of British India Corporation. Thus Petitioners 1 and 2 have submitted this writ petition in representative capacity for looking after the employees of the said units.
4. Mr Sanjib Sen, learned counsel appearing for the petitioners, submitted that (sic denial of) the revision of pay scales of IDA pattern to the petitioners is a clear violation of Article 14 of the Constitution as the employees of other public sector undertakings including employees of British India Corporation should have been given the benefit of revised pay scales on IDA pattern, but the petitioners were denied. After the order dated 7-5-1999 passed by this Court in SLP (C) No. 16732 of 1997, the petitioners submitted a representation through their President on 31-5-1999 which is marked as Annexure P-4 in this writ petition on which the Chairman of British India Corporation Ltd. (Respondent 3) suggested by letter dated 2-6-1999 marked as Annexure P-5 in this writ petition, to the Central Government for granting the benefit of IDA pay pattern to the employees of British India Corporation Ltd. (Respondent 3) also but the Central Government has not accepted the representation of the petitioners and neither has any reply been given nor any relief granted to the petitioners. It is important to note that the Company was nationalised for securing proper management and for development of production, modernisation of plant and machinery and to protect thousands of employees for their employment. The Company is at present under the control of the Ministry of Textiles and is an undertaking of the Central Government and that the Company is a government company under the Companies Act. Since in an identical matter, this Court by order dated 7-5-1999, passed in SLP (C) No. 16732 of 1997 [Ntc (Ida) Employees Assn. (2) v. Union Of India .], granted the benefit of revised pay scale to NTC and its subsidiaries, the petitioners are also claiming the same relief for the employees of British India Corporation and for its employees working in Cawnpore Woollen Mills and New Egerton Woollen Mills, Dhariwal.
5. It is pertinent to notice that in an identical matter when the employees of NTC (IDA Pattern) Employees Association, submitted a writ petition before the High Court of Bombay, registered as WP No. 43 of 1997, the High Court dismissed the petition observing that if the directions issued by this Court have not been complied with, remedy does not lie before the High Court. Aggrieved by that order, the said Association filed SLP (C) No. 16732 of 1997 before this Court.
6. This Court by order dated 27-9-2002 passed the following order:
“Petition for Special Leave to Appeal (Civil) No. 16732 of 1997
(From the judgment and order dated 24-6-1997 in WP No. 43 of 1997 of the High Court of Bombay)
NTC (IDA) Employees Assn. . . Petitioner;
versus
Union of India . . Respondent.
With TPs (C) Nos. 409 and 490 of 1997
Date: 27-9-2002. These petitions were called on for hearing today.
Coram:
Hon'ble Mr Justice U.C Banerjee
Hon'ble Mr Justice B.N Agrawal
Upon hearing counsel, the Court made the following
Order
Intervention application is dismissed.
We have been informed that BIFR has already formulated eight schemes which stand approved by all concerned and agencies. Let the scheme as sanctioned by BIFR be implemented. The special leave petition and the transfer petitions stand disposed of accordingly.”
7. The respective respondents filed their counter-affidavits. According to them, the Department of Public Enterprises has, vide its Order No. 2(50)/86-DPE(WC) dated 19-7-1995 denied the benefit of revised IDA pay scales to those public sector undertakings, which are referred to BIFR. It was submitted that British India Corporation Limited and its two units are a sick public sector undertaking and had been referred to BIFR and BIFR had issued (sic) winding up of these units vide its order dated 31-10-1994. The appeal preferred by the Company in AAIFR was also dismissed and AAIFR confirmed the order of winding up of these units. It was, therefore, submitted that as per the Department of Public Enterprises order dated 19-7-1995, the petitioners are not entitled to the benefit of revised pay scales w.e.f 1-1-1999.
8. It was further argued that an interim order dated 7-5-1999 in SLP (C) No. 16732 of 1997 was passed directing that the eight sick subsidiary corporations of National Textile Corporation Ltd. be given the benefits under revised pay scales w.e.f 1-1-1999, purely on ad hoc basis, subject to ultimate decision and adjustment, if any, as directed by the Court ultimately and all such employees shall have no objection to such adjustment to be made from their future salaries or other retiral benefits and this decision of the Court was applicable to only these eight subsidiary corporations of NTC and not to British India Corporation, especially because British India Corporation was ordered to be wound up and its case was pending before the High Court of Allahabad for liquidation. At present, the case of British India Corporation has been remanded to BIFR for consideration of revival package, which also does not include any revision of pay scales. Hence, no revision of IDA pay scales is possible or admissible.
9. We heard Mr Sanjib Sen, learned counsel appearing for the petitioners and Mr N.N Goswami, learned Senior Counsel appearing for the respondents. At the time of hearing, our attention was drawn to the order passed by BIFR in Reconstruction Case No. 518 of 1992 re: British India Corporation Ltd. dated 18-6-2002. It is seen from the said order that British India Corporation filed application with BIFR on 24-1-2001 along with revival proposal and Techno-Economic Viability Plan of 1998. BIFR at its hearing held on 13-6-2001 appointed IDBI as the operating agency under Section 17(3) of the Act and directed the Company to submit a revival proposal within one month. The revival proposal was submitted by BICL in July 2001. The proposal envisaging one-time settlement of dues of institutions and SBI was discussed at a joint meeting of involved agencies on 4-1-2002. On 15-2-2002, IDBI (OA) submitted its final report along with rehabilitation scheme conveying consensus of all present in the joint meeting. On the basis of the aforesaid report received from the operating agency, a Draft Revival Scheme of the Company was circulated to all concerned for getting consent as required under Section 19(2) read with Section 19(1) of the Sick Industrial Companies (Special Provisions) Act, 1985. The matter was adjourned for hearing objections/suggestions at the subsequent hearing.
10. It is seen from the above proceedings that the Government of India had given approval for the revival proposal. After considering the representation of all concerned and the suggestions made in the draft revival proposal, BIFR approved the Scheme to be circulated as sanctioned scheme under Section 18 of the Act. Now that the revival proposal has been approved by BIFR, the petitioners in the present writ petition, in our opinion, would also be entitled to the same benefits as given to NTC (IDA) Employees Association in SLP (C) No. 16732 of 1997 dated 27-9-2002 (sic 7-5-1999).
11. We, therefore, dispose of the writ petition by directing the implementation of the Scheme as sanctioned scheme by BIFR insofar as the petitioners are concerned. We place on record the statement made by the respondents in their counter-affidavits and the submission made by Mr N.N Goswami, learned Senior Counsel appearing for the respondents, that the Scheme sanctioned by BIFR would be completed by March 2005 and further talks regarding fixation of pay would be held thereafter. There shall be no order as to costs.
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