Prafulla C. Pant, J.— Leave granted. These appeals, by way of special leave petitions, are directed against the judgment and order dated 30-3-2012 WP No. 3116 of 2011, passed by the High Court of Judicature of Bombay, Nagpur Bench, whereby writ petitions, challenging the order dated 4-8-2010 delivered by the Central Administrative Tribunal, Bombay, in Transferred Applications Nos. 2001, 2002 and 2004 to 2035 of 2009, were disposed of. In the said order the Tribunal has extended actual financial benefits to the applicants (present private respondents) by holding that they cannot be denied benefit of “wage revision” by notional fixation and recomputation of their retiral dues (severance package).
2. We have heard the learned counsel for the parties at length.
3. In the above appeals, the following common question of law is raised: whether wage revision implemented with effect from 1-4-2006 to employees of Mineral Exploration Corpn. Ltd., who were superannuated/voluntarily retired from service on or after 1-4-2003, is also applicable to those employees of the Corporation who were superannuated/voluntarily retired before the said date (1-4-2003), particularly, when no benefit whatsoever is paid to any employee prior to the cut-off date i.e 1-4-2003. In other words, whether fixing cut-off date 1-4-2003 by the Corporation in the matter is arbitrary or irrational.
4. Briefly stated, the present appellant is a public sector undertaking registered under the Companies Act, 1956, wholly owned by the Government of India. It was established for various exploration activities of mineral resources throughout the country. The Corporation incurred losses since 1992 onwards till 2009. As such, due to the stringent financial condition of the Corporation, it could not make any provision for capital investment and improvements, and the productivity went on deteriorating. In 1995, the Government of India constituted a High-Powered Committee which suggested various measures for revival of the Corporation. A Review Committee for monitoring financial condition recommended drastic measures for revival of the Corporation downsizing the manpower through voluntary retirement scheme. Some 2300 officers and members of the staff availed the benefit of the scheme reducing the total manpower less than 50% of what existed in 1991. With the implementation of the measures suggested by the High-Powered Committee, the appellant Corporation reduced its loss from Rs 73.28 crores in 2005-2006 to Rs 16.20 crores in 2006-2007. Consequently, the workmen started pressing their demand of wage revision. The Ministry of Mines, Government of India, considered the measures for financial restructuring and wage revision which was communicated by its Letter No. 40(1)/2004-MI (Vol III) dated 8-8-2006, and the appellant Corporation was informed by the Government of India that by way of financial restructuring, it would waive the interest, penal interest and outstanding loan of Rs 30.80 crores, and the same would be converted into equity. Similarly, non-plan loan of Rs 15 crores was agreed to be converted into equity, thereby raising the paid-up capital of the Corporation from Rs 73.75 crores to Rs 119.55 crores.
5. The Communication of the Government of India dated 8-8-2006 made it clear that the wage revision would be effective from 1-4-2003 but shall be implemented with effect from 1-4-2006. It was also provided that the arrears of the year 2005-2006 be paid to the employees subject to achieving gross profit of Rs 15.64 crores in the said year. It was also stipulated that the Government would review physical and financial performance of the appellant Corporation, and may allow permitting it to pay arrears for the years 2003-2004 and 2004-2005 in the year 2007-2008. The Ministry of Mines, Government of India, vide its Letter dated 17-8-2006, instructed the appellant Corporation to take action in pursuance to the approval in terms of Letter dated 8-8-2006. Consequently, the Corporation issued its Office Order dated 25-8-2006, stating therein that even though the wage revision was due from 1-1-1997, but it would be effective only from 1-4-2003, and would be implemented from 1-4-2006.
6. The contesting respondents are the persons, who opted for voluntary retirement before 1-4-2003 (but subsequent to 1997). They claimed wage revision by making representations to the appellant Corporation, and filed various writ petitions. The said writ petitions were transferred to the Central Administrative Tribunal, Mumbai, which were registered as transferred applications, as mentioned in the first paragraph of this judgment. The Tribunal divided the applications into two categories—first, petitions of those employees who were superannuated or voluntarily retired prior to 1-4-2003 and second, petitions of those employees who retired on 1-4-2003 or afterwards but prior to the date of implementation (1-4-2006). By a common judgment dated 4-8-2010, the Tribunal held that the employees who retired on or after 1-4-2003 shall be entitled to the actual benefits of the wage revision, and the employees who retired on or before 1-4-2003 would be given similar treatment by revision in notional pay (with actual pensionary benefits).
7. The operative portion of the Tribunal's order reads as under:
“In the conspectus of facts and circumstances of the case, we have no doubt in holding that the 30 applicants are entitled to actual benefits of arrears, etc., as per the order dated 25-8-2006 only from 1-4-2003 and not prior to that. They will not be entitled to actual financial benefits for the period from 1-1-1997, except grant of notional benefits which have been extended to all other similarly situated officials who are in service. Similarly, we hold that the nine applicants of the first category are entitled to notional benefits from 1-1-1997 till the date of their respective retirement either on superannuation or voluntary retirement, entitling them to actual upward revision of their retiral benefits i.e severance package, on their respective date of retirement. Accordingly, the respondents are directed to rework and pay the amounts payable to all the applicants within a period of four months from the date of receipt of a copy of this order.”
8. Aggrieved by the above order dated 4-8-2010, passed by the Tribunal, the Minerals Exploration Corpn. Ltd. (the present appellant) challenged the decision of the Tribunal before the Nagpur Bench of the Bombay High Court by filing Writ Petitions Nos. 3116-18, 3241, 3253, 3256, 3276, 3278 and 3281 of 2011, which were dismissed WP No. 3116 of 2011 by a common judgment challenged before us.
9. The learned counsel for the appellant submitted before us that after the appellant, a public sector undertaking of the Government of India, started incurring losses every year from 1992, the Government of India constituted a High-Powered Committee in the year 1995 to suggest various measures in order to improve financial condition of the Corporation. A Review Committee for monitoring financial condition of the Corporation recommended drastic measures, including cutting down size of manpower by floating voluntary retirement scheme. Some 2300 officers and members of the staff availed the benefit of the scheme. After reduction in the staff, loss of Rs 73.28 crores in the year 2005-2006 could be brought down to Rs 16.20 crores in the year 2006-2007. This made employees' unions to press their demand of wage revision. As such, the Government of India, vide Letter dated 8-8-2006, promised certain assistance by way of financial restructuring. It is pointed out on behalf of the appellant that it was specifically communicated by the Government that wage revision would be effective from 1-4-2003, and would be implemented from 1-4-2006. It is, therefore, argued on behalf of the appellant that the contesting respondent who voluntarily retired prior to 1-4-2003 were not covered for the purposes of benefit of the wage revision.
10. Before further discussion, we would like to reproduce Letter dated 8-8-2006 (Annexure P-12), issued by the Government of India to the appellant, to understand as to what were the conditions for allowing wage revision. The letter is reproduced as under:
“Government of India
Ministry of Mines
No. 40(1)/2004-MI (Vol III) New Delhi, 8-8-2006
To
The Chairman-cum-Managing Director,
Mineral Exploration Corpn. Ltd.,
High Land Drive Road,
Nagpur.
Sub.: Financial Restructuring of Mineral Exploration Corpn. Ltd. (MECL)
Sir,
I am directed to convey the approval of the Government to the financial restructuring and wage revision proposal of MECL as detailed below:
A. Financial restructuring
(i) Waiver of interest of Rs 51.56 crores and penal interest of Rs 7.28 crores as on 31-3-2005. Further, no interest would be levied beyond the cut-off date of 31-3-2005.
(ii) Conversion of outstanding government loan of Rs 30.80 crores into equity effective from 31-3-2005 and also similar conversion of non-plan loan of Rs 15.00 crores into equity effective from 31-3-2005, thus raising the paid-up capital from Rs 73.75 crores to Rs 119.55 crores.
(iii) Increase of authorised capital of the Company from Rs 100.00 crores to Rs 125.00 crores.
B. Wage revision
(1) Wage revision of employees to be effective from 1-4-2003 and to be implemented w.e.f 1-4-2006.
(2) The arrears of wage revision for 2005-2006 will be paid in 2006-2007 subject to achieving a gross profit (gross margin less depreciation and deferred revenue expenditure) of Rs 15.64 crores in 2005-2006. With regard to the payment of arrears of wages revision for the balance period of 2003-2004 and 2004-2005. The Government will review physical/financial performance of MECL as outlined in Para 13 of the recommendations of Brpse and its fund flow position and may permit MECL to pay the same in 2007-2008 from the internal resources, subject to achievement of physical/financial projections and availability of sufficient cash to meet the liability.
(3) The increased obligation for salary and wages would be met through internal resources of the Company and no budgetary support will be provided for the same.
You are requested to take necessary action to implement the above under intimation to this Ministry.
Yours faithfully,
sd/-
(A.K Singh)
Director”
11. From the above Letter dated 8-8-2006, it is clear that wage revision of the employees, effective only from 1-4-2003, was to be implemented w.e.f 1-4-2006. In this connection, when the clarification is sought by the appellant Corporation, the Government of India vide Letter dated 17-8-2006 (Annexure P-13), clarified its stand on the recommendations of the Board for Reconstruction of Public Sector Enterprises (Brpse). Accordingly, Office Order dated 25-8-2006 was issued by the appellant Corporation allowing wage revision to those who were on employment roll on 1-4-2003. The conjoint reading of the letters issued by the Government of India makes it amply clear that the wage revision was to be implemented with effect from 1-4-2006 allowing the employees who were superannuated/voluntarily retired with effect from 1-4-2003. As such, we find no difficulty in accepting the argument advanced on behalf of the appellant that only those employees are entitled to the wage revision who were on roll as on 1-4-2003 as mentioned in the Office Order dated 25-8-2006 (Annexure P-14).
12. On behalf of the contesting respondents it is contended that the respondents are not claiming the actual benefits but only notional wage revision for the period between 1-1-1997 till their date of superannuation/voluntary retirement (prior to 1-4-2003); as such the Tribunal and the High Court have committed no error of law in allowing the same.
13. Mr Gourab Banerji, learned Senior Counsel for the appellant, responded to the above contention stating that if such notional wage revision is permitted prior to 1-4-2003, the actual difference in computation of pension would practically take back the appellant Corporation to the position where it was continuously running into huge losses. It is vehemently argued that if the wage revision office order is interpreted to include all the employees who were superannuated/voluntarily retired between 1-4-1997 to 1-4-2003, it would frustrate the measures taken, including the voluntary retirement scheme, to improve the condition of public sector undertaking.
14. We have considered the rival submissions of the parties. It is relevant to discuss here what is the law laid down by this Court in such matters. In A.K Bindal v. Union of India (2003) 5 SCC 163, this Court has observed as under:
“17. The legal position is that identity of the government company remains distinct from the Government. The government company is not identified with the Union but has been placed under a special system of control and conferred certain privileges by virtue of the provisions contained in Sections 619 and 620 of the Companies Act. Merely because the entire shareholding is owned by the Central Government will not make the incorporated company as Central Government. It is also equally well settled that the employees of the government company are not civil servants and so are not entitled to the protection afforded by Article 311 of the Constitution (Pyare Lal Sharma v. J&K Industries Ltd. (1989) 3 SCC 448). Since employees of government companies are not government servants, they have absolutely no legal right to claim that the Government should pay their salary or that the additional expenditure incurred on account of revision of their pay scale should be met by the Government. Being employees of the companies it is the responsibility of the companies to pay them salary and if the company is sustaining losses continuously over a period and does not have the financial capacity to revise or enhance the pay scale, the petitioners cannot claim any legal right to ask for a direction to the Central Government to meet the additional expenditure which may be incurred on account of revision of pay scales. It appears that prior to issuance of the office memorandum dated 12-4-1993 the Government had been providing the necessary funds for the management of public sector enterprises which had been incurring losses. After the change in economic policy introduced in the early nineties, the Government took a decision that the public sector undertakings will have to generate their own resources to meet the additional expenditure incurred on account of increase in wages and that the Government will not provide any funds for the same. Such of the public sector enterprises (government companies) which had become sick and had been referred to BIFR, were obviously running on huge losses and did not have their own resources to meet the financial liability which would have been incurred by revision of pay scales. By the office memorandum dated 19-7-1995 the Government merely reiterated its earlier stand and issued a caution that till a decision was taken to revive the undertakings, no revision in pay scale should be allowed. We, therefore, do not find any infirmity, legal or constitutional in the two office memorandums which have been challenged in the writ petitions.”
15. In Officers & Supervisors of I.D.P.L v. I.D.P.L (2003) 6 SCC 490, this Court has held as under:
“11. In our view, the economic capability of the employer also plays a crucial part in it, as also its capacity to expand business or earn more profits. The contention of Mr Sanghi, if accepted, that granting higher remuneration and emoluments and revision of pay to workers in other governmental undertakings and, therefore, the petitioners are also entitled to the grant of pay revision may, in our opinion, only lead to undesirable results. Enough material was placed on record before us by the respondents which clearly shows that the first respondent had been suffering heavy losses for the last many years. In such a situation the petitioners, in our opinion, cannot legitimately claim that their pay scales should necessarily be revised and enhanced even though the organisation in which they are working are making continuous losses and are deeply in the red.”
16. The abovementioned cases, in our opinion, substantiate the argument of the appellant. Therefore, we are of the view that the Central Administrative Tribunal and the High Court have erred in law in allowing the wage revision benefits to the employees, who were not covered either under communication dated 8-8-2006 issued by the Government of India or the consequential Office Order dated 25-8-2006 whereby the wage revision is implemented.
17. It is also contended on behalf of the respondents that the cut-off date i.e 1-4-2003 fixed in the above orders is arbitrary and irrational. As to the cut-off date fixed for the purposes of pensionary benefits to the employees, who have retired or died, in State of Punjab v. Amar Nath Goyal (2005) 6 SCC 754, paras 26 and 37 read as under:( & 766)
“26. It is difficult to accede to the argument on behalf of the employees that a decision of the Central Government/State Governments to limit the benefits only to employees, who retire or die on or after 1-4-1995, after calculating the financial implications thereon, was either irrational or arbitrary. Financial and economic implications are very relevant and germane for any policy decision touching the administration of the Government, at the Centre or at the State level.
***
37. In the instant case before us, the cut-off date has been fixed as 1-4-1995 on a very valid ground, namely, that of financial constraints. Consequently, we reject the contention that fixing of the cut-off date was arbitrary, irrational or had no rational basis or that it offends Article 14.”
18. In Sudhir Kumar Consul v. Allahabad Bank (2011) 3 SCC 486, which also pertains to the question of fixing of cut-off date for granting retirement benefits, this Court has laid down, in para 18, as under:
“18. Moreover, the fixing of the cut-off date for granting retirement benefits such as gratuity or pension under the different schemes incorporated in the subordinate legislation, thereby, creating two distinct and separate classes of employees is well within the ambit of Article 14 of the Constitution. The differential treatment of two sets of officers appointed prior to the notified date would not offend Article 14 of the Constitution. The cut-off date may be justified on the ground that additional outlay as involved or the fact that under the terms of appointment, the employee was not entitled to the benefit of pension or retirement.”
19. In view of the above law laid down by this Court, we do not find that the cut-off date i.e 1-4-2003 for granting wage revision, in the facts and circumstances of the present case, is arbitrary nor do we find it violative of Article 14 of the Constitution.
20. For the reasons, as discussed above, we hold that the employees, who were superannuated or voluntarily retired prior to 1-4-2003 from the appellant Corporation, are not entitled to notional wage revision as directed by the Central Administrative Tribunal, and the High Court. Therefore, we allow these appeals, and the impugned judgment WP No. 3116 of 2011 of the High Court and that of the Central Administrative Tribunal are hereby set aside. There shall be no order as to costs.