Holding

Employees of government companies are not government servants and cannot compel the Central Government to fund pay revisions; the petition is dismissed as the petitioners have opted for voluntary retirement.

Summary

The petitioners, officers and supervisors of Indian Drugs and Pharmaceuticals Ltd (IDPL), a public sector undertaking declared a sick unit by the BIFR, sought direction to revise their pay scales and to receive three instalments of interim relief as recommended by the Fifth Pay Commission and mandated by the Ministry of Industry. The respondents argued that IDPL’s severe financial losses, its sick status under the Sick Industrial Companies (Special Provisions) Act (SICA), and the failure of the revival package precluded any pay revision, and that the petitioners had already opted for a Voluntary Retirement Scheme (YRS). The Court held that employees of government companies are not government servants and have no legal right to compel the Central Government to meet additional expenditure for pay revision; the economic viability and financial capacity of the employer are decisive factors. Since the petitioners had taken the YRS, the writ petition could not survive and was dismissed.

Issues considered

The employees of a public sector undertaking have a legal right to claim pay revision and interim relief when the undertaking is a sick unit with financial constraints.
Whether the Central Government is obligated to meet the additional expenditure incurred due to pay revision in a public sector company declared sick.
Whether the direction issued by the Ministry of Industry to revise pay scales under the Fifth Pay Commission applies to IDPL.
Whether petitioners who have opted for a Voluntary Retirement Scheme can still claim pay revision.

Legislation cited

Sick Industrial Companies (Special Provisions) Act, 1985s. 17(3), s. 3(1)(o)

Subjects

pay revisionpublic sector undertakingsick industrial companyBIFRFifth Pay Commissionvoluntary retirement schemeinterim reliefwage fixationeconomic viabilitygovernment employees

Judgment

A OFFICERS AND SUPERVISORS OF l.D.P.L.
v.
CHAIRMAN AND M.D. I.D.P.L. AND ORS.

JULY 24, 2003

B [M.B. SHAH AND DR. AR. LAKSHMANAN, JJ.]

Service law:

Revision of wages-Pay Commission revising pay-scale and allowances
C ofCentral Government employees-Respondent being a public sector enterprise
unable to revise pay and allowances to its employees due to financial crunch
and declared sick unit by B!FR-Employees claiming revision-Justification
of-Held: Employees of Government companies not Government servants-If
their company is facing financial crunch they cannot ask for a direction to
D the Central Government to meet the additional expenditure incurred on
account of revision of pay-scales-Moreover, petitioners having applied for
VRS, not entitled to pay revision.

Government appointed Fifth Pay Commission to consider revision of pay-
scales and allowances of Central Government employees. During pendency,
E the Commission granted three instalments of interim relief. Writ petitioners-
Officers and Supervisors employed in the public sector company were not
given these benefits whereas employees of all other companies were granted
installment of interim relief. This led to violation of dire~ns given by this
Court in Jute Corporation of India Officers' Association case*. Petitioners
filed contempt petition. Petition was dismissed as the company was undergoing
F unprecedented financial crunch. Thereafter, Fifth Pay Commission
recommended revision of scales of pay and allowances of the Central
Government employees and the third respondent-Secretary, Ministry of
Industry directed all the Public Enterprises to revise the pay-scales of the
employees following C.D.A. pattern w.c.f. 01.01.1996. However, the first
G respondent-Chairman and M.D. of the company did not take any action. Hence
the present writ petition.

Writ petitioners contended that since the Government had revised the
scales of its employees, the respondent-ID PL is bound to revise the pay-scales
of the petitioners also; that the directions issued by the third respondent are
H 720
OFFICERSANDSUPERVISORSOFl.D.P.L.1·. CHAIRMAN AND M.D. l.D.P.L. 72 \

binding on the first respondent which is one of the undertakings; that the A
economic viability of the industrial unit or the financial capacity of the
employer cannot be taken into consideration in the matter of revision of pay-
scales of the employees; that the entire expenditure on salaries payable to
the employees of the first respondent is borne by the Government and,
therefore, financial constraints cannot be pleaded as an excuse for not paying
the instalments of interim relief and not revising the pay-scales; and that some B
undertakings which have been incurring losses and which are before the
Board for Industrial and Financial Reconstruction (BIFR) have also adopted
the revised scales of pay recommended by the Pay Commission.

Respondents contended that the payment of the interim relief which was C
declared during the pendency of the Fifth Pay Commission from time to time
was not released to the petitioners due to threat of industrial unrest; that
IDPL became a sick industrial company and was declared as such by BIFR;
that after protracted negotiations with the promoters, State Governments,
banks and the employees an agreed revival package was formulated and
approved by BIFR for implementation in the company; that the interim relief D
was to be adjusted in the future wage revision by the Fifth Pay Commission
in view of the express undertakings by the petitioners that they will not claim
any wage revision for a period of four years from the date of implementation
of agreed revival package; that the Gcvernment of India recommended that
the modifications proposed by IDPL in the existing revival package be E
examined by an operating agency; that consequently, BIFR declared that the
agreed revival package has failed and appointed IDBI as an operating agency
for suggesting measures for the revival of the respondent company; that the
Government oflndia could not provide sufficient budgetary support to the IDPL
and consequently the production activities had to be stopped in two major
units; that the respondent company has no means of generation offunds and F
the Government of India was continuing to give financial assistance for
payment of salaries only and the decision for the revival of the respondent
company is still pending before the Government of India and the BIFR; that a
company which is already dependent upon the Central Government for the
wage bill even at the existing rate may not further increase its liabilities by G
granting the revised pay-scales; and that the public sector undertakings
making losses cannot be put at par with the undertakings making profits in
extending the pay benefits; that the petitioners constitute only 5 per cent of
the total strength of the employees of the respondent company; and that the
wage revision in respect of other employees has not been sanctioned by the
Government of India so far. H
722 SUPREME COURT REPORTS [2003] SUPP. I S.C.R.

A Dismissing the writ petition, the Court

HELD: I.I. Since the 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-scales should be met by the Government
B 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
C incurred on account of revision of pay-scales. (729-B-D(

1.2. The economic viability of the industrial unit or the financial capacity
of the employer is an important factor which cannot be ignored in the matter
of revision of pay-scales of the employees. Material placed on record clearly
show that the first respondent had been suffering heavy losses for the last
D many years. In such a situation the petitioners cannot legitimately claim that
their pay-scales should necessarily be revised and enhanced even though the
organization in which they are working are making continuous losses and
are deeply in the red. The first respondent company became sick industrial
company for various reasons and was declared as such by BIFR and the revival
package which was formulated and later approved by BIFR for implementation
E could not also be given effect to and that the modifications recommended by
the Government of India to BIFR in the existing revival package was ordered
to be examined by an operating agency and, in fact, IDBI was appointed as an
operating agency under Section 17(3) of SICA. Furthermore, the production
activities had to be stopped in the major two units of the company and the
p losses and liabilities are increasing every month and that the payment of three
instalments of interim relief could not also be made due to threat of industrial
unrest and the wage revision in respect of other employees is also due which
has also not been sanctioned by the Government of India. The submission that
the workers in other governmental undertakings are granted higher
remuneration and emoluments and revision of pay and, therefore, the
G petitioners are also entitled for the grant of pay revision may only lead to
undesirable results. (730-E-H, 731-A(

A.K. Binda/ and Anr. v. Union of India and Ors., 120031 5 SCC 163,
relied on.

H Express Newspaper (Private) ltd. and Anr. v. Union of India and Ors.,
OFFICERS AND SUPERVISORS OFI.D.P.L. 1•. CHAIRMAN AND M.D. l.D.PL [LAKSHMANAN, l. J723

AIR 119581SC578 and Hindustan Times Ltd., New Delhi v. Their Workmen A
AIR 119631 SC 1332, referred to.

1.3. The Scheme under the SICA has failed to revive the Company. When
the Company cannot be revived because of large losses, there is no question
of enhancing scales of pay and dearness allowances. Further, since this Court
has already decided with regard to revision of pay scales and the petitioners B
have opted for Voluntary Retirement Scheme nothing survives in this petition
and is liable to be dismissed. The petitioners having applied for YRS it is not
open to them to contend that they are entitled for pay revision. (733-8, DI

*Jute Corporation of India Officers' Association v. Jute Corporation of C
India ltd. and Anr., (199013 SCC 436, distinguished.

CIVIL ORIGINAL JURISDICTION : Writ Petition (C) No. 222 of 1998.

(Under Article 32 of tire Constitution of India.)

G.L. Sanghi, K. Ramamoorthy, M.A. Krishnamoorthy and Harishankar K. D
for the Petitioner.

Ms. Anjana Gosain for the Respondent No. I.

P.P. Malhotra, K.C. Kaushik, B. Krishna Prasad, D.S. Chauhan and V.K.
Verma him for the Respondent Nos. 2-4. E
The Judgment of the Court was delivered by

DR. AR. LAKSHMANAN, J. The petitioners are officers and supervisors
employed in the Indian Drugs and Pharmaceuticals Ltd. (herein after referred
to as "the IDPL"). They filed writ petition No. 678 of 1985 in this Court F
challenging the directions given by the Secretary, Ministry of Industry (the
third respondent herein). This Court passed an order to comply with the
orders passed by this Court. Thereupon the Government appointed Fifth Pay
Commission in 1993 to consider revision of pay and allowances of the Central
Government employees and pending final report, the Pay Commission granted G
three instalments of interim relief. According to the petitioners, the benefit
was extended to the employees of all 69 Public Enterprises. The grievance of
the petitioners was that they were not given any instalments of interim relief
and as there was no response from the Chairman and Managing Director of
the IDPL, they filed contempt petition No. 490 of 1996 for violation of directions
given by this Court's order dated 03.05.1990. The contempt petition was H
724 SUPREME COIJRT REPORTS (2003) SUPP. I S.C.R.

A dismissed as there was unprecedented financial cruch. On 24.10.1997, the
Fifth Pay Commission recommended revisions of scales of pay and allowances
of the Central Government employees and the third respondent herein directed
69 Public Enterprises to revise the pay-scales of the employees following
C.D.A. pattern w.e.f. ofOl.OJ.1996. As the first respondent did not take any
action, the present writ petition No. 222 of 1998 was filed in this Court.
B
Mr. G.L. Sanghi, learned senior council, appearing for the petitioners
placed strong reliance on a judgment of this Court dated 03.05.1990 in Jute
Corporation of India Officers' Association v. Jute Corporation of India ltd.,
and Anr., [ 1990] 3 SCC 436. He invited our attention to the terms of reference
C of the High Power Pay Committee and also its recommendations by its final
report of 02.11.1998. Learned senior counsel has also invited our attention to
the five directions given by this Court in the above judgment which read as
follow:-

"(I) The scales of pay and dearness allowance as recommended in
the Report will be extended to those employees who have been
D
appointed with specific terms and conditions for grant of Central
dearness allowance. This will be equally applicable to the
employees who by rules laid down by the public sector enterprises
are being paid Central dearness allowance.
(2) The employees appointed on or after January I, 1989 will be
E
governed by such pay scales and allowances as may be decided
by the government in its discretion. Those appointed earlier with
IDA pattern will continue to be governed in accordance with the
terms and conditions of their appointment.
(3) The pay revision for those employees in respect of whom the
F recommendations are hereby being directed to be implemented
hereafter, will take place only as and when similar changes are
effected for the Central Government employees. These employees
will, however, continue to enjoy the option to switch over to the
IDA pattern of the scales of pay etc. on a voluntary basis.
G (4) The various recommendations made in the Report will be
implemented with effect from the dates as follows. These dates
are broadly in conformity with those specified in the Report :

H
OFFICERS AND SUPERVISORS OF l.D.P.L.)'. CHAIRMAN AND M.0.1.D.P.L. [LAKSHMANAN, l. J 725

Item To be implemented w.e.f. A
I. Revised pay scales and January I, 1986 (para 16.1)
revised DA formula

2. First instalment of June I, 1983 (para 16.3)
interim relief
B
3. Second instalment of March I, 1985 (para 16.3)
interim relief

4. CCA as per revised slabs January I, 1989 (from January
(para 11.6 of Chapter 11 of I, 1986 to December 31, 1988 c
the Report) CCA will be paid at the existing
rate at notional pay in the revised
pay scales (Para 11. 7 of the
Report)

5. House Rent Allowance Ceiling on payment of HRA D
Percentage rates as per BPE's without production of rent
OM No. 1(3)/83 BPE(WC) receipt to be revised from
dated July I, 1983, subject December I, 1988. The existing
to overall cealing of Rs. 1250, HRA structure to be reviewed
1000, 680, 340 and 310 for by BPE and revised norms and E
Delhi/Bombay. A, Bl and B2, rates fixed from a prospective
C and unclassified cities date (Ref. Para 11.15)
respectively.

6. Medical facilities in terms of From a prospective date to be
Para 11.21 of the Report decided by the management of F
the PSEs

7. Leave Travel Concession -do-

8. Other allowance and The quantum of benefits to be G
perquisites as per decided by the management of
recommendations contained in PSEs shou Id be given effect to
Chapters 12 and 13 of the prospectively in terms of Para
Report Ill, 7 Para III of the Report

H
726 SUPREME COURT REPORTS [2003] SUPP. I S.C.R.

A (v) The arrears arising on account of pay, DA and other allowances
etc. would be adjustable against and payments made from time
to time."

However, the petitioners were not given any of these monetary benefits
whereas the employees of other public sector undertakings received all
B instalments of interim relief. Finally, the petitioners issued a legal notice dated
05.08.1996 calling upon the management of the IDPL to release instalments of
interim relief and dearness allowance as already stated. The petitioners did
not receive any reply to the said notice, therefore, they filed Contempt
Petition No. 490of1996 for violation of this Court's judgment dated 03.05.1990.
C When the contempt petition was listed on 29 .11.1996, the respondents informed
the Court that the IDPL was undergoing unprecedented financial crunch and,
therefore, was unable to pay the employees the two instalments of interim
relief which were due by that date. It was also submitted that another set of
employees had earlier approached this Court and no relief was given. In view
of the submissions made, this Court dismissed the contempt petition, which
D is marked as Annexure-P IV. Mr. Sanghi contended that the reasons given by
the respondents for non-payment of interim relief are not at all sound and that
the notifications issued by the Government of India require all the undertakings
to comply with the directions given by this Court and implement the
recommendations of the Pay Committee and therefore no exception has been
made in favour of those undertakings which incur losses every year. According
E to the petitioners, the Fifth Pay Commission revised pay and allowances of
the Central Government employees and that the Government decided to
implement the recommendations of the Fifth Pay Commission w.e.f. 01.01.1996
and that the third respondent issued O.M. dated 24. I0.1997 to 69 public
undertakings directing them to revise the pay-scales of employees following
F C.D.A. pattern w.e.f. 01.01.1996. Mr. Sanghi also submitted that some
undertakings like the National Textile Corporation, the Engineering Projects
India Ltd. which have been incurring losses and which are before the Board
for Industrial and Financial Reconstruction (hereinafter referred to as "the
BIFR") have also adopted the revised scales of pay recommended by the Pay
Commission. Concluding his arguments, learned senior counsel for the petitioner
G submitted that the directions contained in O.M. date 24. I0.1997 issued by the
third respondent are binding on the first respondent, IDPL, which is one of
the 69 undertakings and that officers of all 69 undertakings following CDA
pattern of pay-scales form a class and withholding of the benefit of revision
of scales from a section of the class is discriminatory and violative of Articles
H 14 and i 6 of the Constitution and that it is incumbent upon the respondents
OFFICERS AND SUPERVISORS OF l.D.P.L. 1·. CHAIRMAN AND M.D. l.D.P.L. [LAKSHMANAN,J. J 727

to ensure that IDPL carries out the directions issued by them. Arguing further A
the learned senior counsel submitted that the entire expenditure on salaries
payable to the employees of the first respondent is borne by the Government
and, therefore, financial constraints cannot be pleaded as a excuse for not
paying the instalments of interim relief and not revising the pay-scales.
Placing reliance on the clause (iii) of the directions issued by this Court,
which has been extracted above in the Jute Corporation of India Officers' B
Associations (supra), Mr. Sanghi submitted that since the Government had
revised the scales of its employees, the respondent-IDPL is bound to revise
the pay-scales of the petitioners also.

With the above contentions, the petitioner filed the above writ petition C
with the following prayers :-

(a) direct the respondents to revise scales of pay of the petitioners
w.e.f. 01.01.1996 and pay the arrears immediately :
(b) direct the respondents to pay three instalments of interim relief
w.e.f. the dates the payment become due. D
Separate counter affidavits were filed by the IDPL - respondent no. I
and respondent nos. 2, 3 and 4 respectively. The first respondent submitted
that for various reasons the IDPL became a sick industrial company and was
declared as such by the BIFR vide its order dated 12.08.1992 in BIFR case No,
503 of 1992 under Section 3(1 )(0) of SICA and that after protracted negotiations · E
with the promoters, State Governments, banks and the employees an agreed
revival package was formulated and was later approved by the BIFR under
Section 17(2) of SICA vide its orders dated I 0.02.1994 for implementation in
the company w.e.f. 01.04.1994 and that during the formulation of the agr,ed
revival package all the employees including the petitioners gave a written F
undertaking sacrificing various facilities and also categorically agreed for the
deferment of wage revision for a period of four years w.e.f. 01.04.1994. Ms.
Anjana Gosain, learned counsel appearing for the IDPL, submitted that the
payment of the interim relief which was declared during the pendency of the
Fifth Pay Commission time to time was not released to the petitioners mainly
because there was a threat of industrial unrest and it was to be adjusted in G
the future wage revision by the Fifth Pay Commission in view of the expressed
undertakings by the petitioners that they will not claim any wage revision for
a period of four years from the date of implementation of agreed revival
package. She would further submit that a modified package for consideration
and approval of the Ministry of Chemical and Fertilizer, Govern merit of India H
728 SUPREME COURT REPORTS [2003) SUPP. I S.C.R.

A and the BIFR was submitted and the Government of India vide its letter dated
17.01.1996 addressed to the Chairman of BIFR recommended that the
modifications proposed by the !DPL in the existing revival package be examined
by an operating agency. Consequently, the B!FR vide its order dated 23.01.1996
declared that the agreed revival package has failed and appointed IDBI as an
operating agency under section 17(3) of SICA for suggesting measures for
B the revival of the respondent company. Learned counsel for the first,
respondent also submitted that the Government of India could not provide
sufficient budgetary support to the !DPL and consequently the production
activities had to be stopped in major two units of the company at Rishikesh
and Hyderabad w.e.f. October, 1996 and that the respondent company has no
C means of generation of funds and the Government of India was continuing
to give financial assistance for the payment of salaries only and the decision
for the revival of the respondent company is still pending before the
Government of India and the BIFR. It was also brought to our notice by the
leaned counsel for the first respondent that the petitioners who are officers
and supervisors constitute only 5 per cent of the total strength of the
D employees of the respondent company and that the wage revision in respect
of other employees has not been sanctioned by the Government of India so
fur.

Mr. P.P. Malhotra, learned senior counsel appearing for respondent Nos.
2, 3 and 4 after inviting our attention to the submissions made in the counter
E affidavit submitted that for various reasons the !DPL became a sick industrial
company and was declared as such by the BIFR and that the first respondent
company has no means of generation of funds and the Government of India
is continuing to give financial assistance for the payment of salaries only and
the decisions for the revival of the respondent company is still pending
F before the Government if India and BIFR. He would further submit that it does
not stand to the reason that a company which is already dependant upon the
Central Government for the wage bill even at the existing rate may further
increase its liabilities by granting the revised pay-scales and that the public
sector undertakings making losses cannot be put a par with the undertakings
making profits in extending the pay benefits.
G
In the above background, the question, which arises for consideration,
is whether the employees of public sector enterprises have any legal right to
claim revision of wages that though the industrial undertakings or the
companies in which they are working did not have the financial capacity to
H grant revision is pay-scale, yet the Government should give financial support
OFFICERS AND SUPERVISORS OF l.D.P.L. r. CHAIRMAN AND M.D. l.D.P.L. [LAKSHMANAN. J. ]729

to meet the additional expenditure incurred in that regard. A
We have carefully gone through the pleadings, the Annexures filed by
both sides and the orders passed by the BIFR and the judgments cited by
the counsel appearing on either side. Learned counsel for the contesting
respondent drew our attention to a recent judgment of this Court in A.K.
Bindal and Anr. v. Union of India and Ors., [2003] 5 SCC 163 in support of B
her contention. We have perused the said judgment. ln our opinion, since the
employees of government companies are not govc11n;cnt 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-
scales should be met by the Government, Being employees of the companies, C
it is the responsibility of the companies to pay them salary and ifthe company
is sustaining losses continuously over a period and does not have the
financial capacity to revise or enhance the pay-scale, the petitioners, in our
view, 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. We are unable to countenance the D
submission made by Mr. Sanghi that economic viability of the industrial unit
or the financial capacity of the employer cannot be taken into consideration
in the matter of revision of pay-scales of the employees.

A Constitution Bench of this Court had examined the questions of
revision of wages of workmen in Express Newspaper (Private) ltd. and Anr. E
v. Union of India and Ors., AIR (1958) SC 578. This Court laid down the
following principles for fixation of rates of wages :-

(I) that is the fixation of rates of wages which include within its
compass the fixation of scale!> of wages also, the capacity of the
industry to pay is one of the essential circumstances to be taken into
F
consideration except in cases of bare subsistence or minimum wage
where the employer is bound to pay the same irrespective of such
capacity.

(2) that the capacity of the industry to pay is to be considered on an G
industry-cum-region basis after taking a fair cross-section of the
industry, and

(3) that the proper measure for gauging the capacity of the industry
to pay should take into account the elasticity of demand for the
product the possibility of tightening up the organization so that the H
730 SUPREME COURT REPORTS [2003] SUPP. I S.C.R.

A industry could pay higher wages without difficulty and the possibility
of increase in the efficiency of the lowest-paid workers resulting in
increase in production considered in conjunction with the elasticity of
demand for the product-no doubt against the ultimace background
that the burden of the increased rate should be such as to drive the
employer out of business."
B
The same questions was again examined in Hindustan Times Ltd New
Delhi v. Their Workmen, AIR (1963) SC 1332 and this Court gave the following
reascns.

7. While industrial adjudication will be happy to fix a wage structure
c which would give the workmen generally a living wage, economic
considerations make that only dream for the future. That is why the
Industrial Tribunals in this country generally confine their horizon to
the target of fixing a fair wage. But there again, the economic factors
have to be carefully considered. For these reasons, this Court has
D repeatedly emphasized the need of considering the problem on an
industry-cum-region basis and of giving carefull consideration to the
ability of the industry to pay."

In our view, the economic capability of the employers also plays a
crucial part in it, as also its capacity to expand business or earn more profits.
E The contention of Mr. Sanghi, if accepted that granting higher remuneration
and emoluments and revision of pay to workers in the other governmental
undertakings and, therefore, the petitioners are also entitled for 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
show that the first respondent had been suffering heavy losses for the last
F 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 organization in which they are working are making
continuous losses and are deeply in the red. As could be seen from the
counter affidavit, the first respondent company which is engaged in the
G manufacture of medicines became sick industrial company for various reasons
and was declared as such by the BIFR and the revival package which was
formulated and later approved by the BIFR for implementation could not also
be given effect to and that the modifications recommended by the Government
of India to the BIFR in the existing revival package was ordered to be
examined by an operating agency and, in fact, IDBI was appointed as an
H operating agency under Section I 7(3) of SICA. It is also not dispute that the
OFFICERS AND SUPERVISORS OF 1.D.P.L. .-. CHAIRMAN AND M.D. l.D.P.L. [LAKSHMANAN.J. 173 J

production activities had to be stopped in the major two units of the company A
at Rishikesh and Hyderabad w.e.f. October, 1996 and the losses and liabilities
are increasing every month and that the payment of three instalments of
interim relief could not also be made due to the threat of industrial unrest and
the wage revision in respect of other employees is also due w.e.f. 1992 which
has also not been sanctioned by the Government of India.
B
In the instant case, it is also not in dispute that the units of the
companies have already suspended their operations and iS ..;r, date no units
is functioning. It is also observed in the order dated 23.01.1996 that the
company's sales were of the order of Rs. 215 crore against th•: projected sales
of Rs. 305.65 crore for the year ended 31.03.1995 and the company incurred C
a net loss of Rs. 69.80 crore against the projected profit of Rs. 0.08 crore. The
major reasons for the poor performance of the company was stated to be
constrained in working capital, power supply probiems, reduction of custom
tariff on import on bulk drugs, highly competitive marketing in formulation
and high wage bills besides withdrawal of price preference. The progress
period ended on 30.09.1995 and as per the company's balance sheet were Rs. D
77 crore against the envisaged sales of Rs. 177.4 7 crores for the period ended
30.09.1995 and the company incurred a net loss of Rs. 47 crores against the
projected net profit of Rs. 7.69 crores. The accumulated loss stood at Rs.
577.10 crores against the projected accumulated loss of Rs. 499.30 crores as
on 31.03.1995 and Rs. 624.10 crores against Rs. 478.66 crores as on 30.09.1995. E

We have already reproduced the directions passed by this Court in Jute
Corporation of India Officer's Association (supra). However, after the said
judgment in which conditional directions were issued, as is apparent, the
Central Government vide its O.M. dated 19.07.1995 decided as follows :-

"13. For SICK PSC registered with the BIFR pay revision and grant
F
of other benefits will be allowed only if it is decided to revive the unit.
The revival package should include the enhanced liability on this
account. The benefit of pay revision etc. shall be extended to IISCO
and financial liability thereof shall be met by SAIL."
G
In view of the said position and keeping in view the huge staff of
approximately 6582, the parent ministry decided to introduce Voluntary
Retirement Scheme (YRS) dated 20.09.2002 under which the YRS was open for
three months with a clear-cut understanding to the employees that if one does
not opt for YRS within three months the YRS will not given in future and only
retrenchment compensation will be applicable. At the time of hearing, it was H
732 SUPREME COURT REPORTS [2003] SUPP. I S.C.R.

A submitted that all the petitioners have already opted for the said YRS before
31.03.2002 and they are likely to be relieved any day after receiving of the
funds from the Ministry of Chemicals and Fertilizers. It has also been decided
that all the employees would be relieved and subsequent decision would be
taken by the parent Ministry.

B The position of the employees is as follows :-

"31.12.2002
I. Total employees including plants Gurgaon,
Rishikesh, Hyderabad, Muzafarpur, Chennai
including CDA employees : 6582
c 2. Opted for YRS by 31.12.2002 : All
3. Relieved employees (Including CDA employees)
upto 15.07.2003 : 1166
Position of 1166 employees as on 15.07.2003 :-
D a. Corporate office : 48
b. Regional sales office (Marketing) : 198
c. Gurgaon Plant :34
d. Hyderabad Plant : 97
e. Muzafarpur Plant : 25
( IDPL, Chennai : 25
E g. Rishikesh Plant : 739
Total : 1166

Total 1166
Under CDA 200
F Under IDA 966"

We have already referred to the judgment of this Court in A.K. Bindal
and Anr., (supra) in which this Court had decided that the employees under
public sector enterprises cannot be treated as Central Government employees
G and if the company does not have enough funds no way the revision can be
given.

In A.K. Bindal (supra) this Court specifically held that the economic
viability or the financial capacity of the employer is an important factor which
cannot be ignored while fixing the wages structure otherwise the unit itself
H may not be able to function and may have to close down which will inevitably
OFFICERS AND SUPERVISORS OF 1.D.P.L. "·CHAIRMAN AND M.0.1.D.P.L. [LAKSHMANAN, J.] 733

have disastrous consequences for the employees themselves. The Court also A
negatived other contentions raised by the employees and referred to and
relied upon the fact that the company was a sick unit. Facts in the present
case are similar.

Further directions issued in Jute Corporation of India Officers
Association (supra) would have no bearing in the present case as the Scheme B
under the SICA has failed to revive the Company. When the Company cannot
be revived because of large losses, there is no question of enhancing scales
of pay and dearness allowances. Direction No. (ii) issued in that case indicates
that the employees appointed on or after January I, 1989 will be governed by
such pay scales and allowances as may be decided by the Government in its C
discretion. If the company itself is dying, the government has discretion not
to grant enhanced pay scales or dearness allowances and for the same reason
Direction No. (i) cannot be implemented.

Since this Court has already decided the very issue in question and the
petitioners have opted for the YRS nothing survives in this petition and the D
same is liable to be dismissed. The petitioners having applied for YRS it is
not open to them to contend that they are entitled for pay revision.

It is also pertinent to notice that one of the units of the company,
namely, IDPL Kamgar Union, Rishikesh filed a special leave petition no. 23361
of 1994 challenging the orders of the BIFR dated 10.02.1994 and of AAIFR E
dated 18.07.1994 and claimed the deferred facilities, the special leave petition
was dismissed by this Court vide its judgment dated 07.01.1995.

For the foregoing reasons, we see no merit in the writ petition. We,
therefore, dismiss the same. However, there will be no order as to costs.
F
N.J. Petition dismissed .

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