Case Law Details
Union of India Vs Hindustan Photo Films Workers Welfare Centre (CITU) & Ors. Etc. (Supreme Court of India)
The proceedings arose from litigation concerning the Voluntary Retirement Scheme (VRS) implemented for employees of Hindustan Photo Films Manufacturing Company Limited, a Public Sector Undertaking declared a Sick Industrial Company. The Board for Industrial and Financial Reconstruction (BIFR), by order dated 30 January 2003, recommended winding up of the company, and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) confirmed that recommendation on 7 June 2005. Subsequently, the Ministry of Heavy Industries and Public Enterprises, by letter dated 20 March 2014, approved a VRS package for the employees, following which the company issued a circular dated 21 March 2014 for its implementation. The employees’ union challenged both the Government’s letter and the company’s circular through writ petitions, seeking, among other reliefs, 72 months’ salary on the 2007 pay scales, arrears of pay on the 2007 pay scales, non-deduction of specified recoverable advances and allowances, and permission to continue occupying staff quarters until 1 May 2016.
Read HC Judgment in this case: VRS Scheme Appeals Dismissed; Single Judge Order Modified on Company Liability: Madras HC
The learned Single Judge rejected the employees’ challenge to the validity of the Government proceedings dated 20 March 2014 and the company’s circular dated 21 March 2014, but directed implementation of the severance package within one month. The employees, after receiving the severance package, were directed to vacate and hand over possession of the staff quarters within one month. The learned Single Judge also held that no income tax was recoverable from the severance package. These directions gave rise to writ appeals filed by the management and by the Government of India.
Before the High Court in appeal, it was noted that the Cabinet Committee on Economic Affairs had approved the VRS package and sanctioned ₹181.54 crore as a non-plan loan for implementation of the VRS on 2007 notional pay scales without arrears as a one-time relaxation of Department of Public Enterprises guidelines. The High Court recorded that Hindustan Photo Films Manufacturing Company Limited was a Public Sector Undertaking and that the Central Government had floated the VRS as a policy decision. While most workers initially opted for the scheme, the remaining workers exercised their option later. Referring to earlier proceedings, the High Court observed that the Central Government had assured that VRS funds would be released to all workmen. It held that the subsequent stand taken on behalf of the Central Government, limiting the benefit, appeared inconsistent with the Cabinet Committee’s policy decision and earlier assurance.
The High Court further noted the company’s submission that possession of the residential quarters was necessary for proceeding with liquidation. It also referred to the Income Tax Department’s claim regarding deduction of tax at source from the VRS amount and recorded that the Department’s counsel had indicated that a representation by the employees’ union would be placed before the Central Board of Direct Taxes for consideration. The High Court observed that TDS would not be applicable to the case and further directed that, in line with earlier directions relating to other workers, the TDS amount should be deposited in an ESCROW Account. It clarified that its observations should not affect the Department’s right to challenge the learned Single Judge’s finding on the issue.
The High Court dismissed the Government’s appeals, directed the company not to initiate proceedings to wind up the company so as to create a charge on another person, and held that the first charge over the company’s assets was in favour of the workmen. Since the Central Government had undertaken to settle the workmen’s claims through the VRS scheme, the High Court observed that the rights of the workmen stood transferred to the Central Government to that extent. The Court described the Government’s appeals as unsustainable and stated that the decision to file them had been taken without placing the matter before the Cabinet. It directed the Central Government to expedite implementation of the VRS scheme, preferably within two months, and modified the learned Single Judge’s order to clarify that there would be no burden on the company to that extent. It further held that, in the liquidation proceedings, the first charge over the company’s assets would be on the Central Government, with the remaining issues to be decided by the liquidator.
The matter reached the Supreme Court through a Special Leave Petition. The Supreme Court first dismissed the application for intervention/impleadment, condoned the delay, and held that no ground for interference was made out under Article 136 of the Constitution of India. Consequently, the Special Leave Petition was dismissed. The Court, however, clarified that the benefits should be given at par with those given to others. Thus, the Supreme Court declined to interfere with the High Court’s judgment while issuing the above clarification.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Application for intervention/impleadment is dismissed.
2. Delay condoned.
3. No ground for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India.
4. The special leave petition is accordingly dismissed. Pending application, if any, stands disposed of.
5. However, it is clarified that the benefits, to be given at par, which were given to others.
Author Bio
