CHAIRMAN CUM MANAGING DIRECTOR FERTILIZER CORPORATION OF INDIA LTD. AND ANR VS RAJESH CHANDRA SHRIVASTAVA AND ORS.

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.2260 OF 2022

(Arising out of Special Leave Petition(C) NO. 26844 OF 2016)

CHAIRMANCUMMANAGING DIRECTOR

FERTILIZER CORPORATION OF INDIA LTD.

AND ANR. …APPELLANT(S)

VERSUS

RAJESH CHANDRA SHRIVASTAVA AND

ORS. ...RESPONDENT(S)

WITH

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J U D G M E N T

V. RAMASUBRAMANIAN, J.

1. The common question that arises for consideration in this batch

of appeals, is as to whether an ad hoc payment made to the workers

pursuant to the interim orders passed by this Court in a previous

round of litigation could form part of “wages” within the meaning of

the expression under Section 2(s) of the Payment of Gratuity Act, 1972

(hereinafter referred to as the “Act”), for the purpose of calculating

gratuity.

2. We have heard learned counsel for the parties.

3. The scales of pay of the employees of public sector undertakings

were revised w.e.f. 01.01.1992. When the benefit of such revision was

not made available to the employees of Fertiliser Corporation of India

Limited and Hindustan Fertiliser Corporation Limited, their employees

moved writ petitions in various High Courts, in the year 1996.

4. At the instance of the Union of India, the writ petitions pending

on the file of various High Courts were transferred to this Court. By an

interim order dated 18.08.2000, this Court directed an ad hoc monthly

payment of Rs.1500/, Rs.1000/, Rs.750/ and Rs.500/,

respectively to four different categories of employees, as an interim

measure, subject to the final outcome of the writ petitions which stood

transferred to this Court. The said interim order dated 18.08.2000

reads as follows:

“Having heard learned Solicitor General for the applicantUnion of India and Learned Senior Counsel, Mr. Sanyal, for

the contesting Respondents, purely as an adhoc measure

and without prejudice to the rights and contentions of the

parties in the main matter, we deem it fit in the interest of

justice to modify our order dated 19.01.2000 to the following

effect:

(i) The authorities shall pay as an adhoc measure and

on account Rs. 1,500/ to ClassI employees; Rs.

1,000/ to ClassII employees; Rs. 750/ to ClassIII

employees; Rs. 500/ to ClassIV employees

consisting of various categories in each of the

Classes; per month with effect from___. This

payment will be without prejudice to the rights and

contentions of the parties in the pending matters.

(ii) We make it clear that this order will not affect

whatever payment by way of HRA is being released

or was released by the authorities to the employees

concerned.

(iii) The direction about payments as earlier issued by us

on 19.04.2000 will stand modified by the present

order.

(iv) According to this order all arrears with effect from

01.04.2000 to 31.07.2000 will be cleared within ten

weeks from today and the current payment he made

with effect from 01.08.2000 along with the salary

payable for the month of August, 2000.

(v) Future payments shall accordingly be made from

month to month regularly along with usual salaries

payable to them.

This order is passed purely as an ad hoc measure and will

not come in the way of the ultimate decision of this Court.

This order will also not be treated as a precedent in any

matter in view of the special facts of the present case. We

express no opinion about the nature of the order passed by

learned Single Judge of the High Court. That question will

abide by the decision in the main matter. In view of the

present order, I.A.S. are disposed off…”

5. In the year 2002, the Government of India ordered the closure of

the fertiliser units of these public sector undertakings and introduced

a Voluntary Separation Scheme (for short “the Scheme”). According to

the Management of these companies, 5675 out of 5712 employees of

Fertiliser Corporation opted to go out under the Scheme. Due to this

development, the writ petitions which got transferred to this Court

were eventually dismissed by a final order dated 25.04.2003. In the

said final order, this Court recorded that economic viability or the

financial capacity of the employer is an important factor which cannot

be ignored while fixing the wage structure and that the materials on

record clearly revealed that both these companies were suffering heavy

losses for several years. It was also recorded in the final order passed

by this Court that the interim relief was purely an ad hoc measure.

The relevant portion of the final order of this Court dated 25.04.2003

reads as follows:

“…The order passed by this Court on 19.04.2000

clearly recorded that a limited relief to all the

employees of the two companies was being granted

purely as ad hoc measure and without prejudice to the

rights and contentions of all concerned. This was

reiterated in the subsequent order dated 18.08.2000

when it was said that the order was being passed

purely as ad hoc measure and will not come in the way

of the ultimate decision of the Court. The principal

relief claimed by the petitioners is against Union of

India and Secretary, Department of Public Enterprises

(respondent nos. 3 and 4) as it is they who have issued

the impugned memorandum dated 19.07.1995 which

places embargo upon the revision of pay scale of

employees of sick PSUs registered with BIFR.

Factually there being no compromise or settlement on

behalf of respondent nos. 3 and 4 for payment of

revised salary as they had never agreed to do so and

the orders passed by this Court on 19.04.2000 and

18.08.2000 having clearly indicated that they were

being passed by way of ad hoc measure and were not

to come in any way in the ultimate decision of the

case, it is not possible to hold that there was any

compromise or settlement at any earlier state which

entitled the petitioners to get revised salary…”

6. Once the curtain was finally drawn on their very employment,

the employees started filing applications before the Controlling

Authority under the Act. In their applications before the Controlling

Authority, the employees included the ad hoc payment made pursuant

to the interim orders of this Court, as part of the wages.

7. The Controlling Authority started passing orders in the

applications filed by the employees individually, treating the ad hoc

payment as part of the wages.

8. One of the orders so passed by the Controlling Authority was in

respect of an employee by name Shri Kashi Prasad Tripathi.

9. Since the orders of the Controlling Authority were contrary to the

interim orders as well as the final orders passed by this Court, the

Management of these companies moved an application before this

Court for clarification/modification of the order. But by an order dated

01.05.2008, this Court disposed of the interim application by just

observing that when the final order is passed, the interim order

automatically comes to an end.

10. Understanding the said order differently, the Appellate authority

under the Act dismissed the appeals filed by the Management.

Therefore, the Management filed writ petitions on the file of the High

Court.

11. In so far as the case of Shri Kashi Prasad Tripathi is concerned,

the Management filed a writ petition in W.P.No.798 of 2009 which

came to be allowed by a learned Single Judge of the Allahabad High

Court, based upon a judgment of a Division Bench of the Patna High

Court. Shri Kashi Prasad Tripathi, unsuccessfully challenged the

orders of the learned Single Judge before a Division Bench. Therefore,

Shri Kashi Prasad Tripathi filed a special leave petition in SLP(C)

No.972 of 2014. This SLP was allowed by this Court by an order dated

05.05.2015 in C.A.No.4258 of 2015. The order of this Court in the

case of Shri Kashi Prasad Tripathi in C.A.No.4258 of 2015 dated

05.05.2015 reads as follows:

“Leave granted.

The appellant, aggrieved by the order of the High Court

wherein the controlling authority and the appellate authority

have calculated the payment of gratuity payable to the

appellant herein, in exercise of its power under Article 227 of

the Constitution, without considering the computation made

which, in our considered opinion, is not under the

jurisdiction of the High Court. Having regard to the facts and

circumstances of the case, the material available on record

and the rival legal submissions, we are of the view that the

High Court should not have interfered with the calculation of

payment of gratuity and ad hoc payment with interest.

Hence, the appellant shall succeed 2 in this appeal.

Accordingly, the appeal is allowed.

It is needless to mention that the question raised by

respondent no. 2 is kept open.”

12. The Management filed a petition for review. It was dismissed on

13.08.2015. The curative petition was also dismissed on 03.03.2016.

13. Following the order passed by this Court in C.A.No.4258 of 2015

on 05.05.2015, in the case of Shri Kashi Prasad Tripathi, the High

Court of Allahabad dismissed all the writ petitions filed in respect of

the other employees. Therefore, challenging such orders in the case of

other employees, the Management of the Fertiliser Corporation has

come up with a batch of 98 appeals. The Hindustan Fertiliser

Corporation has come up with one appeal that arises out of similar

judgment of the Calcutta High Court.

14. Therefore, the short question that arises for consideration is as to

whether the ad hoc monthly payment made by the Management

pursuant to the interim orders passed by this Court on 18.08.2000, is

liable to be treated as part of the wages within the sweep of the said

expression under Section 2(s) of the Act, especially in the light of the

order passed by this Court in the case of Shri Kashi Prasad Tripathi.

15. We have already extracted the order passed by this Court on

05.05.2015 in C.A.No.4258 of 2015 in the case of Shri Kashi Prasad

Tripathi. The said order does not deal with this question. The said

order has gone on the basis that the computation of the quantum of

gratuity is exclusively within the domain of the authorities under the

statute and that the High Court is not competent to interfere with the

same. Therefore, the order passed in the case of Kashi Prasad Tripathi

cannot be taken to have laid down any law to the effect that the ad

hoc payment will form part of wages. The respondents, therefore,

cannot really take advantage of the order passed in the case of Kashi

Prasad Tripathi, merely on the ground that the very same question of

law was raised by the Management in the civil appeal and thereafter in

the petition for review and curative petition. At times, this Court

refuses to go into the questions of law, when a single individual armed

with an order in his favour from the High Court is pitted against the

State. Whenever the State or instrumentalities of State come up

with appeals challenging small benefits granted to individual

litigants, this Court applies the test of proportionality to see

whether the quantum of benefits granted to the individual

concerned, justifies the examination of the question of law, at

the cost of that little man from a far off place. The refusal of

this Court to go into the question of law in such cases, cannot be

treated as tantamounting to answering the question of law in a

particular manner. Therefore, dehors order of this Court in Kashi

Prasad Tripathi, we are obliged to deal with the question of law that

arises in this batch.

16. Section 2(s) of the Act defines wages, as follows:

“2. Definitions.—In this Act, unless the context

otherwise requires,—

Xxx xxx xxx

(s) “wages” means all emoluments which are earned by

an employee while on duty or on leave in accordance

with the terms and conditions of his employments and

which are paid or are payable to him in cash and

includes dearness allowance but does not include any

bonus, commission, house rent allowance, overtime

wages and any other allowance.”

17. The definition of the expression is in 3 parts, the first part

indicating the meaning of the expression, the second part indicating

what is included therein and the third part indicating what is not

included therein. In the first part of the definition, the emphasis is on

what is earned by the employee “in accordance with the terms and

conditions of employment” .

18. Irrespective of whether what was earned has been paid or

remained payable, the same is included in the definition, provided it

is in accordance with the terms and conditions of his employment.

19. Keeping in mind the above definition, if we go back to historical

facts, it would be clear that the employees initiated the first round of

litigation before various High Courts, for the grant of the benefit of

revision of pay scales, way back in the year 1996, on the ground that

the employees of other PSUs have been granted revision on par with

the Government servants. It will thus be clear that what was claimed

in the first round of litigation was not what was payable in

accordance with the terms and conditions of employment. Therefore,

this Court was clear in its interim order dated 18.08.2000 as to how

the ad hoc payment ordered there under should be treated. Even in

the final order, this Court made it clear that what was paid was only

ad hoc.

20. It is a fundamental principle of law that a party who is in

enjoyment of an interim order, is bound to lose the benefit of such

interim order when the ultimate outcome of the case goes against

him. Merely because of the fortuitous circumstance of the Voluntary

Separation Scheme coming into effect before the transferred cases

were finally dismissed by this Court by an order dated 25.04.2003,

creating an illusion as though the last drawn pay included this ad

hoc payment, it is not possible to go against the fundamental rule

that the benefits of an interim order would automatically go when the

party who secured it, failed in the final stage.

21. In The Straw Board Manufacturing Co. Ltd. vs. Its Workmen1

this Court clarified the meaning of the expression “wages” under

Section 2(s) of the very same enactment, as follows: “We clarify that

1 (1977) 2 SCC 329

wages will mean and included basic wages and Dearness

Allowance and nothing else”.

22. In view of the above, the appeals are allowed and the orders of

the High Court, the Controlling Authority and the Appellate Authority

under the Act, holding that the ad hoc payment made pursuant to the

interim orders by this Court will form part of the wages, are set aside.

However, in view of the efflux of time and taking into account the fact

that few employees are now no more, we direct the Management not

to effect any recovery, if payment has already been made to any of the

respondents or their families. There will be no order as to costs.

………………………………….J.

(Hemant Gupta)

………………………………….J.

(V. Ramasubramanian)

New Delhi

April 7, 2022

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