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

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
Civil Appeal No. 2275 of 2022
(@ SLP(C) No. 35008/2016)
Civil Appeal No. 2305 of 2022
(@ SLP(C) No. 35713/2016)
Civil Appeal No. 2306 of 2022
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Civil Appeal No. 2310 of 2022
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Civil Appeal No. 2357 of 2022
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Civil Appeal No. 2311 of 2022
(@ SLP(C) No. 35735/2016)
Civil Appeal No. 2313 of 2022
(@ SLP(C) No. 35732/2016)
1
Civil Appeal No. 2315 of 2022
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Civil Appeal No. 2318 of 2022
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Civil Appeal No. 2320 of 2022
(@ SLP(C) No. 435/2017)
Civil Appeal No. 2321 of 2022
(@ SLP(C) No. 443/2017)
Civil Appeal No. 2322 of 2022
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Civil Appeal No. 2323 of 2022
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Civil Appeal No. 2324 of 2022
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Civil Appeal No. 2325 of 2022
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Civil Appeal No. 2326 of 2022
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Civil Appeal No. 2327 of 2022
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Civil Appeal No. 2328 of 2022
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Civil Appeal No. 2329 of 2022
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Civil Appeal No. 2330 of 2022
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Civil Appeal No. 2331 of 2022
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Civil Appeal No. 2332 of 2022
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Civil Appeal No. 2333 of 2022
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2
Civil Appeal No. 2334 of 2022
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Civil Appeal No. 2335 of 2022
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Civil Appeal No. 2336 of 2022
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Civil Appeal No. 2337 of 2022
(@ SLP(C) No. 476/2017)
Civil Appeal No. 2338 of 2022
(@ SLP(C) No. 447/2017)
Civil Appeal No. 2339 of 2022
(@ SLP(C) No. 459/2017)
Civil Appeal No. 2340 of 2022
(@ SLP(C) No. 460/2017)
Civil Appeal No. 2341 of 2022
(@  SLP(C) No. 471/2017)
Civil Appeal No. 2342 of 2022
(@ SLP(C) No. 450/2017)
Civil Appeal No. 2343 of 2022
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Civil Appeal No. 2344 of 2022
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Civil Appeal No. 2345 of 2022
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Civil Appeal No. 2346 of 2022
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Civil Appeal No. 2347 of 2022
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Civil Appeal No. 2348 of 2022
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Civil Appeal No. 2349 of 2022
(@ SLP(C) No. 481/2017)
Civil Appeal No. 2350 of 2022
(@ SLP(C) No. 480/2017)
Civil Appeal No. 2351 of 2022
3
(@ SLP(C) No. 464/2017)
Civil Appeal No. 2352 of 2022
(@ SLP(C) No. 474/2017)
Civil Appeal No. 2353 of 2022
(@ SLP(C) No. 473/2017)
Civil Appeal No. 2354 of 2022
(@ SLP(C) No. 479/2017)
Civil Appeal No. 2355 of 2022
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Civil Appeal No. 2356 of 2022
(@ SLP(C) No. 475/2017)
Civil Appeal Nos. 2358­2359 of 2022
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Civil Appeal No. 2317 of 2022
(@ SLP(C) No. 35728/2016)
Civil Appeal No. 2262 of 2022
(@ SLP(C) No. 31207/2016)
Civil Appeal No. 2269 of 2022
(@ SLP(C) No. 31475/2016)
Civil Appeal No. 2268 of 2022
(@ SLP(C) No. 31408/2016)
Civil Appeal No. 2264 of 2022
(@ SLP(C) No. 31264/2016)
Civil Appeal No. 2263 of 2022
(@ SLP(C) No. 31256/2016)
Civil Appeal No. 2267 of 2022
(@ SLP(C) No. 31374/2016)
Civil Appeal No. 2265 of 2022
(@ SLP(C) No. 31319/2016)
Civil Appeal No. 2261 of 2022
(@ SLP(C) No. 31156/2016)
Civil Appeal No. 2266 of 2022
(@ SLP(C) No. 31354/2016)
Civil Appeal No. 2270 of 2022
(@ SLP(C) No. 31987/2016)
4
Civil Appeal No. 2271 of 2022
(@ SLP(C) No. 33083/2016)
Civil Appeal No. 2272 of 2022
(@ SLP(C) No. 33085/2016)
Civil Appeal No. 2273 of 2022
(@ SLP(C) No. 33084/2016)
Civil Appeal No. 2274 of 2022
(@ SLP(C) No. 33086/2016)
Civil Appeal No. 2276 of 2022
(@ SLP(C) No. 35015/2016)
Civil Appeal No. 2285 of 2022
(@ SLP(C) No. 35009/2016)
Civil Appeal No. 2286 of 2022
(@ SLP(C) No. 35021/2016)
Civil Appeal No. 2287 of 2022
(@ SLP(C) No. 35011/2016)
Civil Appeal No. 2288 of 2022
(@ SLP(C) No. 35010/2016)
Civil Appeal No. 2289 of 2022
(@ SLP(C) No. 35023/2016)
Civil Appeal No. 2290 of 2022
(@ SLP(C) No. 35022/2016)
Civil Appeal No. 2291 of 2022
(@ SLP(C) No. 35013/2016)
Civil Appeal No. 2284 of 2022
(@ SLP(C) No. 35047/2016)
Civil Appeal No. 2292 of 2022
(@ SLP(C) No. 35025/2016)
Civil Appeal No. 2280 of 2022
(@ SLP(C) No. 35031/2016)
Civil Appeal No. 2278 of 2022
(@ SLP(C) No. 35019/2016)
Civil Appeal No. 2293 of 2022
(@ SLP(C) No. 35048/2016)
Civil Appeal No. 2294 of 2022
5
(@ SLP(C) No. 35020/2016)
Civil Appeal No. 2277 of 2022
(@ SLP(C) No. 35017/2016)
Civil Appeal No.2283 of 2022
(@ SLP(C) No. 35043/2016)
Civil Appeal No. 2295 of 2022
(@ SLP(C) No. 35032/2016)
Civil Appeal No. 2282 of 2022
(@ SLP(C) No. 35041/2016)
Civil Appeal No. 2279 of 2022
(@ SLP(C) No. 35029/2016)
Civil Appeal No. 2296 of 2022
(@ SLP(C) No. 35039/2016)
Civil Appeal No. 2297 of 2022
(@ SLP(C) No. 35034/2016)
Civil Appeal No. 2298 of 2022
(@ SLP(C) No. 35027/2016)
Civil Appeal No. 2299 of 2022
(@ SLP(C) No. 35037/2016)
Civil Appeal No. 2300 of 2022
(@ SLP(C) No. 35038/2016)
Civil Appeal No. 2281 of 2022
(@ SLP(C) No. 35035/2016)
Civil Appeal No. 2301 of 2022
(@ SLP(C) No. 35033/2016)
Civil Appeal No. 2303 of 2022
(@ SLP(C) No. 35718/2016)
Civil Appeal No. 2307 of 2022
(@ SLP(C) No. 35723/2016)
Civil Appeal No. 2302 of 2022
(@ SLP(C) No. 35716/2016)          
Civil Appeal No. 2308 of 2022
SLP(C) No. 35719/2016
Civil Appeal No. 2309 of 2022
(@ SLP(C) No. 35721/2016)
6
Civil Appeal No. 2312 of 2022
(@ SLP(C) No. 35724/2016)
Civil Appeal No. 2304 of 2022
(@ SLP(C) No. 35727/2016)
Civil Appeal No. 2314 of 2022
(@ SLP(C) No. 35720/2016)
Civil Appeal No. 2316 of 2022
(@ SLP(C) No. 35725/2016)
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
7
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  
8
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
9
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…”
10
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.
11
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
12
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
13
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
14
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.”
15
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
16
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
17
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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