Supreme Court of India
MINERAL EXPLORATION CORPORATION. LTD.versusARVIND KUMAR DIXIT AND ANOTHER
- Citation
- 2014 INSC 1036
- Decided
- 3 December 2014
- Disposal
- Appeal(s) allowed
- Bench
- VIKRAMAJIT SEN
Holding
The cut‑off date of 1 April 2003 is valid and employees who retired before that date are not entitled to wage‑revision benefits.
Summary
The Mineral Exploration Corporation Ltd, a government-owned public sector undertaking, faced severe financial losses and, under a government‑approved restructuring plan, announced a wage revision effective from 1 April 2003 and to be implemented from 1 April 2006. Employees who had voluntarily retired before 1 April 2003 (but after 1997) claimed notional wage‑revision benefits. The Central Administrative Tribunal and the Bombay High Court granted them such benefits, holding that they were entitled to notional pay. The corporation appealed, arguing that the cut‑off date was a valid financial constraint and that extending benefits would defeat the restructuring. The Supreme Court held that the cut‑off date was neither arbitrary nor violative of Article 14, and that retirees before 1 April 2003 were not entitled to wage‑revision benefits. Consequently, the orders of the Tribunal and High Court were set aside.
Issues considered
- Whether the cut‑off date of 1 April 2003 for granting wage revision is arbitrary, irrational or violative of Article 14 of the Constitution.
- Whether employees who voluntarily retired before the cut‑off date are entitled to notional wage‑revision benefits.
Legislation cited
- Companies Act, 1956s. 619, s. 620
Subjects
wage revisioncut‑off dateArticle 14public sector undertakingCentral Administrative Tribunalnotional benefitsvoluntary retirementconstitutional law
Judgment
• [2014] 11 S.C.R. 255
MINERAL EXPLORATION CORPORATION. LTD. A
v.
ARVIND KUMAR DIXIT AND ANOTHER
(Civil Appeal No. 10697 of 2014 etc.)
DECEMBER 03. 2014
B
[VIKRAMAJIT SEN AND PRAFULLA C. PANT, JJ.]
Service law - Wage revision - Benefit of - Government
letter that wage revision due from 01.01.1997, would be
effective qua employees in service on 01.04.2003 - C
Challenge to, by respondents who voluntarily retired prior to
01 04.2003 but subsequent to 1997 since they were not
covered for the purposes of wage revision - Tribunal holding
that since the employees who retired on or after 01.04.2003
entitled to the actual benefits of the wage revision and D
employees who retired on or before 01.04.2003 to be given
similar treatment by revision in notional pay - Upheld by the
High Court - Held: On facts, cut-off date-01.04.2003 for
granting wage revision, neither arbitrary nor violati•·e of Art.
14 of the Constitution - Order of the High Court and the E
tribunal set aside.
Allowing the appeals, the Court
HELD: The Central Administrative Tribunal and the
High Court erred in law in allowing the wage revision F
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. The cut-off date, i.e., 1.4.2003 for granting G
wage revision, in the facts and circumstances of the
instant case is neither arbitrary nor violative of Article 14
of the Constitution. The employees, who were
superannuated or voluntarily retired prior to 01.04.2013
255 H
256 SUPREME COURT REPORTS [2014] 11 S.C.R.
A from appellant-Corporation, are not entitled to notional
wage revision as directed by the Central Administrative
•
Tribunal, and the High Court. Therefore, the judgment of
the High Court and that of the Central Administrative
Tribunal are set aside. [Paras 15, 18, 19] [266-8-C; 267-E-
B G]
A.K. Bindal and another v. Union of India and others
2003 (3) SCR 928:(2003) 5 SCC 163; Officers & SupeNisors
of ID.PL v. Chairman and & M.D, 1.0.P.L. and others 2003
(1) Suppl. SCR 720:(2003) 6 SCC 490; State of Punjab and
C others v. Amar Nath Goyal and others 2005 (2) Suppl. SCR
549:(2005) 6 SCC 754; Sudhir Kumar Consul v. Allahabad
Bank 2011 (2) SCR 1119:(2011) 3 SCC 486 - referred to.
Case Law Reference:
D 2003 (3) SCR 928 Referred to Para 13
2003 (1) Suppl. SCR 720 Referred to Para 14
2005 (2) Suppl. SCR ~49 Referred to Para 16
E 2011 (2) SCR 1119 Referred to Para 17
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
10697 of 2014.
From the Judgment & Order dated 30.03.2012 of the High
F Court of Judicature at Bombay, Nagpur Bench in Writ Petition
No. 3116 of 2011.
WITH
C.A. Nos. 10698, 10699, 10700, 10701, 10702, 10703, 10704
G and 10705.of 2012.
Gourab Banerji, T.G. Narayanan Nair, K.N.
Madhusoodhanan for the Appellant.
P .D. Meghe, S.A. Desai, Anagha S. Desai, S. Kumar for
H the Respondents.
• MINERAL EXPLORATION CORPORATION. LTD. v. 257
ARVIND KUMAR DIXIT
The Judgment of the Court was delivered by A
PRAFULLA C. PANT, J. 1. Leave granted.
2. These appeals, by way of special leave petitions. are
directed against judgment and order dated 30.3.2012, passed
B
by the High Court of Judicature at Bombay, Nagpur Bench,
whereby writ petitions, challenging order dated 4.8.2010
delivered by Central Administrative Tribunal, Bombay, in
Transferred Application Nos. 2001 of 2009, 2002 of 2009 and
2004 to 2035 of 2009, were disposed of. In said order the
Tribunal has extended actual financial benefits to the applicants C
(present private respondents} by holding that they cannot be
denied benefit of 'Wage Revision' by notional fixation and re-
computation of their retiral dues (severance package).
3. We have heard learned counsel for the parties at length. D
4. In the above appeals, following common question of law
is raised: -
Whether wage revision implemented with effect from
1.4.2006 to employees of Mineral Exploration Corporation E
Limited, 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 said date (1.4.2003), particularly,
when no benefit whatsoever is paid to any employee prior F
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.
5. Briefly stated the present appellant is a pµblic sector G
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 H
A
258 SUPREME COURT REPORTS [2014] 11 S.C.R.
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 Power Committee which suggested various
measures for revival of the Corporation. A Review Committee
B 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
C existed in 1991. With the implementation of the measures
suggested by the High Power Committee, the appellant-
Corporation reduced its loss from Rs.73.28 crores in 2005-06
to Rs.16.20 crores in 2006-07. Consequently, the workmen
started pressing their demand of wage revision. The Ministry
o of Mines, Government of India, considered the measures for
financial restructuring and wage revision which was
communicated by its letter No. 40(1)/2004-M.I. (Vol.Ill) dated
8.8.2006, and the appellant-Corporation was informed by the
Government of India that by way of financial restructuring, it
E 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. The
F Communication of the Government of India 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 2005-06 be paid to the employees
subject to achieving gross profit of Rs.15.64 crores in said year.
G 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 2003-04 and 2004-05 in the year 2007-08. The Ministry
of Mines, Government of India, vide its letter dated 17.8.2006,
H instructed the appellant-Corporation to take action in pursuance
• MINERAL EXPLORATION CORPORATION. LTD. v. 259
ARVIND KUMAR DIXIT [PRAFULLA C. PANT, J.]
to the approval in terms of letter dated 8.8.2006. Consequently, A
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.
B
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.
Said writ petitions were transferred to the Central Administrative C
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
0
second, petitions of those employees who retired on 1.4.2003
or afterwards but prior to the date of implementation (1.4.2006).
By 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 E
retired on or before 1.4.2003 would be given similar treatment
by revision in notional pay (with actual pensionary benefits). 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 F
entitled to actual benefits of arrears, etc., as per the order
dated 25.08.2006 only from 01.04.2003 and not prior to
that. They will not be entitled to actual financial benefits for
the period from 01.01.1997, except grant of notional
benefits which have been extended to all other similarly G
situated officials who are in service. Similarly, we hold that
the nine applicants of the first category are entitled to
notional benefits from 01.01.1997 till the date of their
respective retirement either on superannuation or voluntary
retirement, entitling them to actual upward revision of their H
A
260 SUPREME COURT REPORTS [2014] 11 S.C.R.
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."
B
7. Aggrieved by the above order dated 4.8.2010, passed
by the Tribunal, the Minerals Exploration Corporation Limited
(present appellant) challenged the decision of the Tribunal
before the Nagpur Bench of the Bombay High Court by filing
C Writ Petition Nos. 3116 of 2001, 3117 of 2011, 3118 of 2011,
3241 of 2011, 3253 of 2011, 3256 of 2011, 3276 of 2011,
3278 of 2011 and 3281 of 2011, which were dismissed by a
common judgment challenged before us.
8 ..Learned counsel for the appellant submitted before us
D that after the appellant, a public sector undertaking of
Government of India, started incurring losses every year from
1992, the Government of India constituted a High Power
Committee in the year 1995 to suggest various measures ,in
order to improve financial condition of the Corporation. A
E 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
F Rs.73.28 crores in the year 2005-06 could be brought down to
Rs.16.20 crores in the year 2006-07. 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
G 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
H
• MINERAL EXPLORATION CORPORATION. LTD. v. 261
ARVIND KUMAR DIXIT [PRAFULLA C. PANT, J.]
1.4.2003 were not covered for the purposes of benefit of the A
wage revision.
9. 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 B
were the conditions for allowing wage revision. The letter is
reproduced as under: -
"GOVERNMENT OF INDIA
Ministry of Mines
No.40(1)/2004-M.l.(Vol.lll) New Delhi, the 8.8.2006 c
To
The Chairman-cum-Managing Director,
Mineral Exploration Corporation Ltd.,
High Land Drive Road, D
Nagpur.
Sub.: Financial Restructuring of Mineral Exploration
Corporation Limited (MECL)
Sir, E
I am directed to convey the approval of the
Government to the financial restructuring and wage
revision proposal of MECL as detailed below: -
F
A. Financial Restructuring
(i) Waiver of interest of Rs.51.56 crores and penal
interest of Rs.7.28 crores as on 31.03,2005.
Further no interest would be levied beyond the cut-
off date of 31.03.2005. G
(ii) Conversion of outstanding Government loan of
Rs.30.80 crores into equity effective from
31.03.2005 and also similar conversion of Non-
Plan loan of Rs.15.00 crores into equity effective H
A
262 SUPREME COURT REPORTS [2014) 11 S.C.R.
from 31.03.2005, thus raising the paid up capital
•
from Rs.73.75 crores to Rs.119.55 crores.
(iii) Increase of authorized capital of the Company from
Rs.100.00 crores to Rs.125.00 crores.
B B. Wage Revision
(1) Wage Revision of employees to be effective from
01.04.2003 and to be implemented w.e.f.
01.04.2006.
c (2) The arrears of wage revision for 2005-06 will be
paid in 2006-07 subject to achieving a gross profit
(gross margin less depreciation and deferred
revenue expenditure) of Rs.15.64 crores in 2005-
06. With regard to the payment of arrears of wages
D
revision for the balance period of 2003-04 and
2004-05. 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
E
2007-08 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
F 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
G the above under intimation to this Ministry.
Yours faithfully,
Sd/-
(A.K. SINGH)
Director"
H
. • MINERAL EXPLORATION CORPORATION. LTD. v. 263
ARVIND KUMAR DIXIT [PRAFULLA C. PANT, J.]
10. From the above letter, it is clear that wage revision of A
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 Board for B
Reconstruction of Public Sector Enterprises (BRPSE).
Accordingly, o;nce 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 c
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 0
to the wage revision who were on roll as on 1.4.2003 as
mentioned in Office Order dated 25.8.2006 (Annexure P-14).
11. 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 E
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.
12. Mr. Gourab Banerji, learned senior counsel for the F
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 in to huge losses. It is vehemently argued G
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. H
A
264 SUPREME COURT REPORTS [2014) 11 S.C.R.
13. We have considered 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 and anotherv. Union
of India and others', this Court has observed as under: -
"17. The legal position is that identity of the government
B
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.
c 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
D afforded by Article 311 of the Constitution (Pyare Lal
Sharma v. Managing Director2 ). 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
E 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
F 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
wh!ch may be incurred on account of revision of pay
scales. It appears that prior to issuance of the office
G 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.
1. (2003) s sec 163.
H 2. (1989)3SCC 448.
• MINERAL EXPLORATION CORPORATION. LTD. v.
ARVIND KUMAR DIXIT [PRAFULLA C. PANT, J.]
265
After the change in economic policy introduced in the early
nineties, the Government took a decision that the public
A
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 B
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 c
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 0
memorandums which have been challenged in the writ
petitions".
14. In Officers & Supervisors of f.D.P.L. v. Chairman
and & M.D., l.D.P.L. and others", this Court has held as
under:- E
"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 Sang hi,
if accepted, that granting higher remuneration and F
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 G
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
3. (2003) 6 sec 490 (para 11). H
/
A
266 SUPREME COURT REPORTS [2014] 11 S.C.R.
enhanced even though the organization in which they are
•
working are making continuous losses and are deeply in
the red ............... ".
15. The above mentioned cases, in our opinion,
8 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
C India or the consequential Office Order dated 25.8.2006
whereby the wage revision is implemented.
16. It is also contended on behalf of the respondents that
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
D pensionary benefits to the employees, who have retired or died,
in State of Punjab and others v. Amar Nath Goyal and
others" paragraphs 26 and 37 read as under: -
26. "It is difficult to accede to the argument on behalf of
E the employees that a decision of the Central GovernmenV
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
F relevant and germane for any policy decision touching the
administration of the Government, at the Centre or at the
State level.
Xxx xxx xxx
G 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,
H 4. (2005) 6 sec 754.
• MINERAL EXPLORATION CORPORATION. LTD. v. 267
ARVIND KUMAR DIXIT [PRAFULLA C. PANT, J.]
irrational or had no rational basis or that it offends Article A
14".
17. In Sudhir Kumar Consu/v. Allahabad Bank5, which
also pertains to the question of fixing of cut-off date for granting
retirement benefits, this Court has laid down, in paragraph 18,
B
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 C
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 D
or the fact that under the terms of appointment, the
employee was not entitled to the benefit of pension or
retirement".
18. In view of the above law laid down by this Court, we
E
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 we find it violative of Article 14 of the Constitution.
19. For the reasons, as discussed above, we hold that the
employees, who were superannuated or voluntarily retired prior F
to 01.04.2003 from 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 of the High Court and that of the
Central Administrative Tribunal are hereby set aside. There G
shall be no order as to costs.
Nidhi Jain Appeals allowed.
s. (2011) 3 sec 486.
J
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "wage revision"Sign in to search