HMT Kamgar Sangh V. Union of India and HMT Watches Ltd.

WPMS/2964/2019

AI Insights

The case involves the HMT Kamgar Sangh, a trade union representing 143 ex-employees of HMT Watch Ltd., who filed a writ petition against the Union of India and others, seeking a mandamus for a VRS package based on the 2007 notional pay scale and challenging the closure orders of HMT Watches Ltd. The petitioners argued that their training period should be included in the calculation of qualifying service for VRS benefits, and contested the closure of the company which they claimed was not conducted following due procedure under the Industrial Disputes Act, 1947. The court dismissed the petition, affirming that the training period and the period of litigation do not count towards qualifying service for VRS.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 692462 (HC-UTTARAKHAND)
• Appeal Type: Others
• Pronouncement Date: 29-11-2022
• Assessment Year: misc
• Other Referred Cases: Madhya Pradesh Road Transport Corporation Vs. Manoj Kumar and another, Union of India Vs. K. V. Janakiraman, State Bank of India Vs. State Bank of Patiala, State Bank of Patiala Vs. Romesh Chander Kanoji
• Laws Referred To: Industrial Disputes Act, 1947
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: PINKY ANAND; BALENDU SHEKHAR; DEVESH GHILDIYAL; SAUDAMINI SHARMA; CHETAN JOSHI; RAJESH RANJAN
• Assessee Lawyers: A S RAWAT; K H GUPTA
• Keywords: Certiorari; Certiorari; Mandamus; Trade union; Voluntary Retirement Scheme; Closure order; VRS package; Notional pay scale
• Section: 25-O; 25F

Judgement Text

"IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Writ Petition (MS) No. 2964 of 2019 HMT Kamgar Sangh. .......…......Petitioner. Through: Shri A.S. Rawat, learned Sr. Advocate assisted by Shri K.H. Gupta, learned counsel for the petitioner. -Versus- Union of India and others. ……...Respondents. Through: Ms. Pinky Anand, learned Sr. Advocate Special Counsel with Shri Balendu Shekhar, Shri Devesh Ghildiyal and Ms. Saudamini Sharma, learned counsel for the Union of India. Shri Chetan Joshi and Shri Rajesh Ranjan, learned counsel for the HMT / respondent no. 4 and 5. Date of Hearing & Judgment : 29.11.2022 Shri Sanjaya Kumar Mishra, J. 1. By filing this writ petition, petitioner, which is a Trade Union of 143 ex-employees of the HMT Watch Ltd., Ranibagh, has prayed for the following reliefs: “i. To issue a writ, order or direction in the nature of Mandamus directing the respondents to offer the petitioner members attractive VRS / VSS package on 2007 notional pay scale in compliance of the Government of India Closure Policy 2016 revised in 2018. ii. To issue a writ order or direction in the nature of Certiorari, calling for the records, and quash the permission of closure order dated 17.11.2016 passed by the Joint Secretary (IR), Ministry of Labour and Employment, Government of India, granting 2 permission to close the HMT Watches Ltd., Ranibagh, District – Nainital, Uttarakhand (Annexure No. 1). iii. To issue a writ, order or direction in the nature of Certiorari, calling for records, and quash the representation decision order dated 05.02.2018 passed by Joint Secretary (IR), Ministry of Labour and Employment, Government of India (Annexure No. 1). iv. To issue a writ, order or direction in the nature of Certiorari, calling for the records, and quash the final closure order dated 22.03.2019 passed by Authorised Signatory, HMT Watches Ltd., Bangaluru (Annexure No. 1).” 2. The facts of the case are as follows: In the year 1953, the respondent Company was incorporated by Government of India as a public sector company fully owned by it. A unit at Ranibagh was engaged in production of wrist watches. In between 1985 – 86, members of the petitioner Trade Union (total 143 employees) were appointed. Appointment letters of the petitioner’s members were issued on various dates, between the period of two years. However, terms and conditions were issued once and for all times by way of same appointment order. In 1987, the petitioner Trade Union representing 143 employees was registered as Trade Union bearing registration No. 7010/1987-88. The present petition has been filed by the said registered Trade Union. 3 On 13.01.2016, the respondent Company passed a closure order, as the unit had become non-viable and uneconomic. It offered VRS package to the willing employees. The claim of the petitioner is that the closure order was passed without following due procedure, prescribed under the Industrial Disputes Act, 1947 (hereinafter referred to as “ID Act”, for brevity). The members of the petitioner Trade Union were unwilling for the closure and did not opt for any VRS. On 16.05.2016, an application under section 25-O of the ID Act was filed by the respondent Company to the Secretary, Department of Labour, Ministry of Labour, Government of India – respondent no. 1. The petitioner raised a dispute before the Assistant Labour Commissioner, Bareilly inter alia asserting that training period of its members should be included in the total length of service for the purpose of calculating the qualifying service for grant of VRS. However, the Assistant Labour Commissioner, did not adjudicate the same and referred the dispute for resolution to be decided in the proceedings of closure of respondent Company to the Labour Ministry, Government of India. On 17.11.2016, the application under Section 25-O of the ID Act was decided and order was passed for closure of the respondent Company with immediate effect subject to certain conditions in it. On 29.11.2016, on the basis of permission of closure, a notice of closure was published by the respondent Company. On the same date, termination of service consequent to closure was effected. 4 On 30.11.2016, notice of closure and service termination orders were withdrawn by respondent Company with immediate effect. On 08.12.2016, the petitioner challenged the closure of the Company before this Court in WPMS No. 3292 of 2016. An order of stay was passed on the date of hearing on admission. During the pendency of the writ petition, the stay remained effective and during the pendency of the writ petition, this Court passed another order directing the Ministry of Labour, Government of India to decide the representation of the petitioner. The Regional Provident Fund Commissioner also raised a demand of Rs. 3,05,58,569/- towards EPF and allied dues for wages and salaries of the employees. On 18.03.2019, while hearing the writ petition referred to above, the petitioner sought an adjournment for filing an application for amendment to the writ petition to challenge the order dated 05.02.2018, which was allowed. However, the Court vacated the interim order passed earlier. Learned counsel for the petitioner also contended that its members were being paid salary and taxes & contributions towards EPF are being deducted from their salary during the entire period. On 22.03.2019, a final order of closure was passed by respondent Company closing the Company with effect from 17.11.2016, retrospectively. On 11.06.2019, petitioner sought leave of this Court to withdraw the writ petition with a liberty to file fresh with better particulars. The prayer was allowed and writ petition was allowed to be withdrawn with liberty to file afresh. Hence, this writ petition has been filed. 5 3. In the course of hearing of the writ petition, Shri A.S. Rawat, learned Sr. Advocate appearing for the petitioner would raise two substantial mixed questions of fact and law. Firstly, it is contended that the period of probation / training has not been considered by the Management of respondent Company for calculating the qualifying years of service for grant of VRS, which would entail them higher amount of retirement benefits. The second substantial mixed question of fact and law is that in between first closure 17.11.2016 and 22.03.2019, a stay order was operating and EPF contributions and income tax were deducted from the salaries of the members of petitioner Trade Union. Hence, this period should be calculated for the purpose of determining the total number of years qualifying service for the purpose of calculating retiral dues under the VRS. 4. It may be stated here that in the VRS, proposed by the Management under the aegis of the Union of India, there were two categories of employees. First, those employees, who had completed more than 30 years of service. They were entitled to higher retirement benefit of about 65 months of salary whereas in the second category those employees, who had less than 30 years of qualifying service, were entitled to 40 months of salary as retirement benefit under the VRS. Thus, if the training / probation period of the members of the petitioner Trade Union is considered, then they would be entitled to higher amount of retirement compensation. Their grievance is that they are being offered lesser amount of compensation on the ground that they do not have qualifying service of 30 years. 5. The question whether the training or probation period should be considered while calculating the qualifying service is no more res integra. It has already been decided by the Division 6 Bench of this Court headed by the then Chief Justice in Special Appeal No. 225 of 2017 (HMT Watches Ltd. and others Vs. Naresh Chandra and others) and batch of appeals decided on 11.07.2017. For the purpose of clarity, we take note of the following observations made by the Division Bench of this Court in paragraph 9 of the judgment: “09. We may notice that the Scheme, certainly, is meant for permanent employees. The Scheme also appears to us to clearly provide for calculation of the amounts on the basis of Basic Pay and DA. It is, thereafter, that Clause 6.2 provides for the persons, who are termed as trainees, but who are in receipt of emoluments in the form of Basic Pay, DA, HRA, CCA, etc. in the regular grade, being given the benefit in the manner provided therein. We would think that, noting that the very basis for the judgment passed by the learned Single Judge is flawed, insofar as the same is contrary to the true facts as neither the Engineering nor the Technical staff was given the benefit of the training period in the calculation of VRS amount and as the issues, which were raised in the writ petitions, have not received consideration, the judgment cannot be sustained and, at the same time, we feel that the matter should be remitted back so that the matter is considered by the learned Single Judge.” 6. In the aforesaid case, the Division Bench of this Court while hearing an intra-court appeal, set aside the order passed by the learned Single Judge and held that training period, for such employees, who are termed as trainees, but draw the emoluments as Basic Pay, DA, HRA, CCA etc. in the regular Grade, may not be reckoned for the computation of VRS / ex-gratia. Thus, the first question is answered in negative against the petitioner and it 7 is held that training period for the members of the petitioner Trade Union cannot be taken into consideration for calculating the length of service for granting benefit of voluntary retirement scheme / ex-gratia. 7. Shri A.S. Rawat, learned Sr. counsel for the petitioner would very emphatically argues that in spite of the fact that the petitioners have not applied for Voluntary Retirement Scheme / ex-gratia, the respondent company is under an obligation to provide them ex-gratia after calculating a period of VRS. 8. Ms. Pinky Anand, learned Special Sr. Counsel for Union of India, however, would argue that Voluntary Retirement Scheme is a contractual obligation. The publication of the Voluntary Retirement Scheme is, in fact, invitation to offer. It is an offer in itself, and therefore, the employees, who are entitled to Voluntary Retirement Scheme / ex-gratia have to file an application for Voluntary Retirement Scheme. In this case, it is not disputed that the members of the petitioner Trade Union had not applied for Voluntary Retirement Scheme. They had been granted certain amount under Section 25F of the ID Act as retrenchment compensation, which was directly credited to their bank accounts. Therefore, Ms. Pinky Anand, learned Special Sr. Counsel for the Union of India would very emphatically argue that once, they have accepted the compensation, they are estopped from raising any further dispute. 9. This Court is of the opinion that the contention raised by the learned counsel for the respondents is acceptable and correct. Her contention is also fortified by the judgment of the Hon’ble Supreme Court in the case of “Madhya Pradesh Road Transport Corporation Vs. Manoj Kumar and another (2016) 9 SCC 375. 8 10. However, Shri A.S. Rawat, learned Senior Counsel appearing for the petitioner has pointed out that the facts of the reported case and the facts of the present case are different in the sense that in the aforesaid case, the Voluntary Retirement Scheme was offered while the Corporation was not closed down. 11. This Court takes into consideration the facts of the present case and reported case and notices that the submission made by Shri A.S. Rawat, learned Senior counsel is erroneous in the sense that the Madhya Pradesh State Road Transport Corporation - a public sector undertaking of the State of M.P. was running into losses and therefore, the State Government obtained permission from the Department of Road Transport & Highways of the Ministry of Shipping, Road Transport and Highways, Government of India for winding up of the Corporation and the permission was given and in pursuance to such winding up a Voluntary Retirement Scheme was floated. Some of the employees applied for the Voluntary Retirement Scheme. However, till the last date of the Scheme, the offers were not accepted. After the last date, they filed application for withdrawal of the Voluntary Retirement Scheme benefit. Such withdrawal was not accepted by the Corporation instead it communicated acceptance of the application for the Voluntary Retirement Scheme. That order was challenged by filing various writ petitions in the High Court of M.P. It came before a learned Single Judge. The learned Single Judge dismissed the application holding that the Voluntary Retirement Scheme is a contractual matter. Intra-court appeals were preferred and the Division Bench reversed the findings and conclusion arrived at by the learned Single Judge. The Madhya Pradesh State Road Transport Corporation appealed against the order passed by the High Court. While considering the appeal against the judgment of the 9 Madhya Pradesh High Court, the Hon’ble Supreme Court took into consideration the cases of New India Assurance Company Limited Vs. Raghuvir Singh Narang, (2010) 5 SCC 335 and Bank of India Vs. O.P. Swarnakar, (2003) 2 SCC 721 and held that the aforesaid judgments would clearly demonstrate that in cases where the scheme is contractual in nature (and not statutory in character as was seen in State Bank of India’s case), provisions of the Contract Act would apply. The Hon’ble Supreme Court has further held that the Voluntary Retirement Scheme floated by the employer would be treated as invitation to offer and the application submitted by the employees pursuant thereto is an offer which does not amount to resignation in praesenti and the offer can be withdrawn during the validity period. This would be the position even when there is a clause in the Scheme that offer once given cannot be withdrawn at all. However, exception to this principle is that in such cases offer is to be withdrawn during the validity period of the Scheme and not thereafter even when if it is not accepted during the period of the Scheme. That is the clear mandate of State Bank of Patiala Vs. Romesh Chander Kanoji, (2004) 2 SCC 651. The rational which is given for carving out this exception is contained in para 9 of the said judgment, which has already been reproduced above. To put it pithily, what is highlighted is that such schemes are funded schemes and time is given to every employee to opt for voluntary retirement. Because these are funded schemes, the management is required to create a fund. The creation of this fund depends upon a number of applications; the cost of the Scheme; liability to which this Scheme would impose on the employer and such other variable factors. In this situation, the Hon’ble Supreme Court has further held that if the employees are allowed to withdraw from the Scheme at any time even after its closure, it would not be possible to work out the Scheme as all calculations of the employer would fail. Thus, the Special Leave Petition filed by Dinesh Chand Yadav and the 10 other respondents were dismissed and they were held to be not entitled to reappointment. 12. Thus, this Court is of the firm opinion that the learned Senior Advocate appearing for the petitioner has made an erroneous submission that even if the members of the petitioner Trade Union have not applied for VRS, then also they should be considered for the purpose of Voluntary Retirement Scheme / ex- gratia. This Court is not in agreement with the learned Senior Counsel appearing for the petitioner. 13. The other question that arises whether the period between 17.11.2016 and 22.03.2019 can be included in the calculation of the qualifying period. 14. Shri A.S. Rawat, learned Sr. Counsel for the petitioner would very emphatically argue that since for the aforesaid period salaries were paid, taxes were deducted and EPF dues were paid by the Corporation, that period should be calculated for the purpose of calculating the total qualifying service. However, Ms. Pinky Anand, learned Special Sr. Counsel for the Union of India would submit that such a period cannot be included as for the said period, members of the petitioner Trade Union had not actually worked. It is because there was litigation and stay orders, the Company was making payments and salary etc. 15. We take note that the case of “Union of India Vs. K. V. Janakiraman, (1991) 4 SCC 109” wherein it is held by the Hon’ble Supreme Court that the principle of “no work no pay” is applicable only when the employee has discharged his duties. If the employee is notionally employed and is not actually discharging his duties as a servant of the employer, then this period should not be calculated for the purpose of payment of salary etc. As a natural corollary to the said principle, this Court 11 is of the opinion that since the Voluntary Retirement Scheme / ex-gratia is to be paid to the employees of the respondent Company only on the basis of actual work done and not on the basis of notional or supernumerary work, that period should not be included for the purpose of calculating the qualifying years of service for the Voluntary Retirement Scheme / ex-gratia. 16. In that view of the matter, this Court is of the opinion that writ petition should be dismissed being devoid of any merit. Accordingly, the writ petition is dismissed. There shall be no order as to costs. (Sanjaya Kumar Mishra, J.) (Grant urgent certified copy of this judgment, as per Rules) SKS "