Chairman ­cum ­M.D. ITI Limited versus K. Muniswamy & Ors.

Chairman ­cum ­M.D. ITI Limited  versus K. Muniswamy & Ors. 

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

Civil Appeal No.13398 of 2015
NON­REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 13398 OF 2015

Chairman­ cum ­M.D. ITI Limited              …Appellant
versus
K. Muniswamy & Ors.   ...Respondents
    J  U  D  G  M  E  N  T
ABHAY S. OKA, J.
FACTUAL ASPECTS
1. This Civil Appeal raises a very narrow controversy.   The
issue   concerns   the   interpretation   of   clause   17(7)(iii)   of   the
Certified Standing Orders (for short, ‘the Standing Orders’) under
the   Industrial   Employment   (Standing   Orders)   Act,   1946   in
respect of the appellant – company.  The appellant – company is
a Public Sector Undertaking (PSU) of the Government of India.
On 11th June 1998, by a circular, an amendment was made to
Rule 35 of the ITI Conduct, Discipline and Appeal Rules, 1975
(for short, ‘the said Rules’).  Amended clause 2(d) of Rule 
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Civil Appeal No.13398 of 2015
35 of the said Rules provided that an employee completing
the   age   of   58   years,   will   continue   in   service   till   the
completion of the age of 60 years, subject to medical fitness
at   the   end   of   each   year.     On   22nd  August   2001,   the
Department   of   Public   Enterprises   issued   an   Office
Memorandum (O.M.) directing that the Hon’ble Minister­incharge of the concerned administrative Ministry would have
the authority to approve the rollback of the retirement age
for all PSUs, on the basis of the decision of the Board of
Directors of the concerned PSU.  The Board of Directors of
the appellant – company proposed to roll back the age of
retirement from 60 to 58 years.   The said proposal was
approved   by   the   concerned   Ministry   on   20th  November
2001.
2. A writ petition was filed by the respondents before the High
Court   of   Karnataka   for   challenging   the   rollback.     The   writ
petition   was   partly   allowed   by   the   learned   Single   Judge   by
setting aside the circular dated 27th March 2002 by which the
effect   was   given   to   the   decision   of   rollback   by   carrying   out
necessary amendments to the said Rules and in particular, to
Rule 35.  The learned Single Judge directed the appellant to take
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Civil Appeal No.13398 of 2015
note   of   various   factors   as   indicated   in   the   judgment   while
considering the issue of the reduction in the retirement age from
60   to   58   years.     Pending   the   decision   of   the   appellant,   a
direction was issued to the appellant to continue its employees
till the age of 60 years.  However, it was clarified that those who
have already attained the age of 58 years, will not get any relief.
Both parties filed writ appeals for challenging the judgment of
the   learned   Single   Judge.     By   the   impugned   judgment,   a
Division Bench of the High Court held that the learned Single
Judge was not right in setting aside the decision to roll back the
age of retirement.  However, it was held that the rollback cannot
have the effect of affecting the existing rights of employees and
the   company   recognised   in   terms   of   clause   17(7)(iii)   of   the
Standing Orders.
SUBMISSIONS
3. The submission of the learned counsel appearing for the
appellant is that clause (17)(7)(iii) does not confer any right on
any of the employees.  His submission is that the said clause
gives discretion to the appellant–employer to consider the case
of any employee to permit him to serve up to the age of 60
years, subject to medical fitness at the end of each year.  This
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Civil Appeal No.13398 of 2015
clause   does   not   confer   any   right   on   any   employee   to   be
considered   for   continuation   till   the   age   of   60   years.     His
submission is that the said clause enables the appellant to
continue   the   employment   of   certain   employees,   if   after
considering the exigencies of work, the appellant was desirous
of continuing with their employment.  The learned counsel also
invited our attention to material placed on record indicating
reasons for effecting rollback from 60 to 58 years.  The learned
counsel,   therefore,   submitted   that   the   direction   issued   in
paragraph 28 of the judgment, needs to be set aside.
4. The   learned   counsel   appearing   for   the   respondents
and/or intervenors urged that all that paragraph 28 of the
impugned judgment directs is that the effect should be given to
clause 17(7)(iii) and therefore, there is no reason for this Court
to interfere with the said direction.
OUR VIEW
5. On 11th June 1998, the appellant amended Rule 35 of the
said Rules by which, the age of retirement of the employees
was extended to 60 years.  Considering the losses suffered by
the appellant, in the year 2001, the appellant engaged services
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Civil Appeal No.13398 of 2015
of M/s. Price Waterhouse Coopers to make recommendations
regarding restructuring the company.  Based on the figures of
manpower cost incurred by the appellant, the said consultant
recommended that the age of retirement should be reduced to
58   years,   which   will   achieve   the   objective   of   reduction   of
manpower cost.  In fact, the recommendation of the consultant
was also to reduce the age of retirement to 55 years by March,
2003.   According to the case of the appellant, in December
2001,   the   issue   of   rollback   of   the   age   of   retirement   was
discussed with the recognised Unions and office bearers of the
Officers’ Association.  The Division Bench of the High Court in
the   impugned   judgment   has   held   that   the   decision   of   the
appellant to roll back the age of retirement from 60 to 58 years
cannot be faulted.   This part of the impugned judgment has
not been assailed by the respondents.  Therefore, what remains
for consideration is only the interpretation of clause 17(7)(iii) of
the Standing Orders.  For ready reference, we are quoting subclause (7) of clause 17 of the Standing Orders, which reads
thus:
“17.Service­Termination   of­by   the
Company:
1……………
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Civil Appeal No.13398 of 2015
2……………
3……………
4……………
5……………
6……………
7. (i) The age of Superannuation shall be
58 years but the Company, however, may
require an employee to retire at any time
after he attains the age of 55 years on
three   months’   notice   without   assigning
any reasons;
(ii)  The employee may also at any time
after   attaining   the   age   of   55   years
voluntarily   retire   after   giving   three
months’ notice to the Company.
(iii) The employee who attains the age
of   58   years   may   be   continued   in
service upto the age of 60 years subject
to  medical   fitness   at   the   end  of   each
year.”
                 (emphasis added)
6. First part of sub­clause (7) lays down that the age of
superannuation shall be 58 years.  However, it gives an option
to the appellant to retire an employee after he or she attains
the age of 55 years on three months’ notice without giving any
reasons.  It also gives an option to employees to take voluntary
retirement on completion of the age of 55 years.   The word
‘may’ has been used in sub­clause (7)(iii) of clause 17.   It is
only   an   enabling   provision   that   enables   the   appellant   to
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Civil Appeal No.13398 of 2015
continue an employee in service who has attained the age of 58
years, up to the age of 60 years, provided he or she is medically
fit.     This   clause   does   not   entitle   any   employee   to   seek
continuation after completion of 58 years of age as a matter of
right.  The aforesaid clause does not create any right in any of
the   employees   to   seek   their   continuation   after   58   years.
However,   discretionary   power   has   been   conferred   on   the
appellant to continue an employee who has attained 58 years
of age, till completion of the age of 60 years.
7. Paragraph 28 of the impugned judgment reads thus:
“Therefore, while holding that the roll back
from 60 to 58 years cannot be interfered
with by this Court in exercise of judicial
review power, we make it clear that the
roll   back   cannot   have   the   effect   of
affecting  the  existing  rights  recognised
in   the   employees   and   the   company   in
terms   of   clause   17(7)   of   the   Standing
Orders.  Point   No.3   is   answered
accordingly.” 
(emphasis added)
8. On a plain reading of clause 17(7)(iii), it does not create
any right in favour of any employee.  The use of the word ‘may’
indicates that it gives discretion to the appellant to continue
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Civil Appeal No.13398 of 2015
some of the employees after completing the age of 58 years, till
they complete 60 years of age. 
9. Therefore, we hold that clause 17(7)(iii) of the Standing
Orders only enables the appellant – company to continue any
employee in service till he or she attains the age of 60 years
subject to medical fitness at the end of each year.   We also
make it clear that the aforesaid clause does not confer any
right on the employees to seek extension till the completion of
60   years.     To   this   extent,   paragraph   28   of   the   impugned
judgment stands modified. 
10. The appeal is partly allowed on the above terms with no
order as to costs.  Pending applications, if any, stand disposed
of.
……..…………………J.
(Abhay S. Oka)
……..…………………J.
 (Rajesh Bindal)
New Delhi;
March 2, 2023. 
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