Friday, 5 June 2015

Salient rulings by the Supreme Court regarding the Wage Revision Charter




An order passed by the Hon'ble Supreme Court in Civil Appeal No. 1289 of 2007 - Life Insurance Corporation of India and others v. Retirement L.I.C. Officers Association and others, decided on 12.2.2008
Revision of scales of pay as also other allowances is technical in nature. When a benefit is extended to a group of employees the effect of such benefit, if otherwise comes within the purview thereof must be held to be applicable to other groups of employees also. An employee is entitled to gratuity. It is not a bounty. It is payable on successful tenure of service. Regulation 77 provides as to how the amount of gratuity is to be calculated. Regulation 51 provides for a rule of measurement. Only because it employed the word “permanent basic pay”, the same will not itself lead to the conclusion that once an employee has retired, he would not be entitled to any revision of the amount of gratuity.
26. The Chairman of the Corporation has himself given a retrospective effect to revision in scales of pay. Such a retrospective effect has also been given so as to benefit a class of employees. The employees, irrespective of the fact whether they had superannuated or not, were given the benefit of arrears of pay from Ist August, 1993. By reason of grant of such benefit both to serving employees as also the superannuated employees, both the class of employees became entitled thereto as of right. If by reason thereof, even a retired employee, as on the date of retirement, became entitled to the benefit of the revised scale of pay, the same for all intent and purpose must be taken to be the permanent basic pay, apart from other allowances, if any, which are required to be taken into consideration for the purpose of computation of the amount of gratuity.”
Later, the Hon'ble Supreme Court found that fixation of cut off date by the Chairman of the Corporation is beyond the powers conferred upon him by the Statute.
In view of the aforesaid judgment, the present writ petition is allowed in the same terms as ordered by the Hon'ble Supreme Court, with directions to the respondents to grant the consequential benefits to the petitioners within a period of three months.
04-07-2008
ds
(HEMANT GUPTA)
JUDGE
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The cases of:
V. Kasturi Vs. State Bank of India (supra)
Dr. Vijayappurapu Subhayamma (supra), Subrata Sen(supra)
All India Reserve Bank Retired Officers' Association Vs. Union of India reported in1992 Suppl. (1) SCC 664.
D.S. Nakara Vs. Union of India (AIR 1983 SC 130).

The question now comes as to whether such Board's resolution requires Central Government's approval or can be implemented at the level of the respondent Corporation itself. If we look to Section 21 of the LIC Act, things become very clear. For ready reference Section 21 of the LIC Act is quoted hereunder:-
“Section 21. In the discharge of its functions under this Act, the Corporation shall be guided by such directions in matters of policy involving public interest as the Central Government may give to it in writing; and if any question arises whether a direction relates to a matter of policy involving public interest, the decision of the Central Government shall be final”.
Perusal of the aforesaid Section reveals that it is only in regard to discharge of its functions under the Act, the Corporation shall be guided by such directions of the Central Government, which involve public interest and is otherwise matter of policy. In the present matter, it has not been shown that any guideline was issued by the Government of India as a policy decision in public interest. Thus, the position herein is reverse. It is the Board which passed a resolution and sent it for approval of the Government of India, which cannot be said to be as per Section 21 of the LIC Act. In fact, position would be different if the Government of India would have issued guidelines on policy matters in the public interest. This is apart from the fact that on realizing the mistake, the Board had taken a cautious decision even for administrative convenience. Thus, there was no reason to seek approval because day-to-day decisions are not required to be sent for approval of the Central Government. The law, in this regard, is settled in view of various judgments cited by learned counsel for petitioners and has not otherwise been debated by learned counsel for the respondent Corporation. Even learned counsel for Union of India had accepted the aforesaid proposition and submitted that it is only a policy decision, that too, involving public interest and not every decision of Board, which needs approval by the Central Government. It is otherwise not made clear as to what is the element of public interest involved herein, if the resolution of the Board is implemented. In fact, implementation of the Board's resolution would take away discriminatory treatment amongst the pensioners apart from keeping the LIC away from the administrative inconvenience. Thus, in the light of the aforesaid discussion, there cannot be a cut off date for existing pensioners for providing benefits but further fact is that to cure the aforesaid mistake, the Board's resolution should have been given effect to, which will otherwise redress the entire grievance of the petitioners. In the facts and circumstances of the case, I am of the view that resolution passed by the Board of LIC does not need approval of the Central Government thus the Corporation may give effect to its resolution dated 24.11.2001 to avoid discrimination amongst existing pensioners.
In light of the discussion made above, both the writ petitions are allowed. The respondent Corporation is directed to take a decision for implementation of the resolution dated 24.11.2001 passed by the Board. The respondent Corporation cannot provide different criteria for grant of dearness allowance to the existing pensioners based on cut off date i.e. 31.7.1997. The benefit arising out of the directions above would, however, be considered by the respondent Corporation so that every retired employee may get the same benefit. Costs made easy.
(M.N. BHANDARI) J.
Sunil,JrPA
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Supreme Court - Gratuity Case of LIC
Head Notes
CASE NO.: Appeal (civil) 1289 of 2007
PETITIONER: Life Insurance Corporation of India and others
RESPONDENT: Retired L.I.C. Officers Association and others
DATE OF JUDGMENT: 12/02/2008
BENCH: S.B. SINHA & HARJIT SINGH BEDI JUDGMENT:
JUDGMENT CIVIL APPEAL NO. 1289 OF 2007 S.B. SINHA, J.

1. Jurisdiction of the Chairman of the Life Insurance Corporation of India (Corporation) to issue instructions in terms of Regulation 51 of the Life Insurance Corporation of India Class-I Officers (Revision of Terms and Conditions of Service) Instructions, 1996 is in question in this appeal which arises out of a judgment and order dated 29th September, 1995 passed by a Division Bench of the Kerala High Court in Writ Appeal No. 32 of 2004.

Contention of Mr. Patwalia that the Chairman of the Corporation having power even to fix the cut off dates for different purposes, the jurisdiction exercised by him to do so for payment of gratuity, which has a direct nexus with the revised pay of scale cannot be accepted. Once he fixes a cut off date for the purpose of giving effect to the agreement vis-a-vis the payment of arrears in terms thereof, he cannot exercise further jurisdiction in respect of a matter which is not controlled by Chapter IV but is controlled by other provisions of statutes and Parliament Acts governing the field. A delegatee must exercise its powers within the four-corners of the statute. The power of a sub-delegatee is more restricted. A delegatee cannot act in violation of a statute. A sub-delegatee cannot exercise any power which is not meant to be conferred upon him by reason of statutory provisions. It must conform not only to the provisions of the Regulations and the Act but also other Parliamentary Acts.
We, therefore, do not find any merit in this appeal which is accordingly dismissed with costs. Counsel's fee assessed at Rs.25,000/-.
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SHIMLA - SVRS OPTEE CASE
IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA
CWP No.: 189 of 2006.
Reserved on: 2.11.2007.
Decided on: 3.12.2007.
K. S. Raina.                                                                                       -------------Petitioner.
                        Versus
Union of India and others.                                                                         --------Respondents.
Coram:
The Hon’ble Mr. Justice Rajiv Sharma, Judge.
Whether approved for reporting?*                                    Yes.
For the Petitioner:                                                  Ms. Ranjana Parmar, Advocate.
For Respondent No. 1:                                         Ms. Shilpa Sood,
Central Government Counsel.
For Respondents No. 2 & 3:                                Mr. Ashwani Sharma, Advocate.

It has come in the supplementary affidavit filed on behalf of respondent No. 2 that the wage revision of the employees of the nationalized insurance companies follows a periodicity of five years, i.e. 1st August 1987, 1st August 1992, 1st August 1997 and 1st August 2002. Thus, it is evident that in normal circumstances wage revision should have taken place in the year 2002 instead of 2005.
The General Insurance (Rationalisation of Pay Scales and other Conditions of service of Officers) second Amendment Scheme, 2005 has come into force with effect from 1st August 2002. The petitioner had sought retirement with effect from 15th March 2004. In the normal circumstances the petitioner was entitled to get the wage revision in the basis of the Notification on 21st December 2005 since the same had been made applicable with effect from 1st August 2002, but the petitioner and similarly situate persons who had sought voluntary retirement under the Special Voluntary Retirement Scheme 2004 had been excluded from getting the benefit of revision in pay scales on the basis of Para 3.
The only ground taken to deny the benefit of revision of pay scale is that the petitioner had agreed to the terms and conditions of 2004 scheme and after his retirement under the Special Voluntary Retirement Scheme the contract has come into existence between the employer and the employee. The ground taken to deny the petitioner the benefit of revised pay scale with effect from 1st August 2002 is not sustainable on the following grounds:
Firstly, the persons who had sought voluntary retirement either under the General Insurance (Employees’) Pension Scheme 1995 or under 2004 Scheme constitute a homogeneous class. It is evident from the contents of para 3 of 2005 Scheme that the persons who are governed under the General Insurance (Employees’) Pension Scheme 1995 are not precluded from getting the benefit of revised pay scale and it is only the petitioner and similarly situate persons who had sought the retirement under 2004 scheme, who have been excluded from getting the revised pay scales. There is no intelligible differentia so as to distinguish the employees who had sought the voluntary retirement under 2004 Scheme or under the General Insurance (Employees’) Pension Scheme 1995. Classification made by the employer on the basis of seeking premature retirement on the basis of two sets of retirement schemes is not sustainable being irrational and discriminatory. The petitioner had submitted his papers for seeking retirement on 4th February 2004, which was accepted by the employer on 5th March 2004 and he was permitted to seek retirement with effect from 15th March 2004. The wage revision as per the pleadings of respondents No. 2 and 3 takes place every five years. The pay scales were to be revised in the year 2002, but for the reasons mentioned in the reply it took place in the year 2005. A conscious decision has been taken to implement the same with effect from 1st August 2002. Undoubtedly the petitioner was in employment in 1st August 2002 with respondent No. 2 – Company. He cannot be deprived of the revision of the pay scales with effect from 1st August 2002 to 15th March 2004 only on the ground that he had sought voluntary retirement in the year 2004 and had agreed to the terms and conditions of the Scheme. Learned counsel appearing on behalf of respondents No. 2 and 3 has not placed any contemporaneous record to substantiate that the petitioner has agreed to waive to get the benefits of the revised pay scale. This position was not visualized by the employer in the year 2004 since no revision has taken place on that date i.e. 15th March 2004. The matter can be viewed from another angle also. The petitioner has a constitutional right to get his pay including the revision in the pay scale and it is settled law by law the fundamental rights can neither be waived off nor bartered away.
Secondly, it is also held that the petitioner had never acquiesced even as per 2004 Scheme to get the revised pay scale which had been made applicable with effect from 1st August 2002.
Thirdly, the object sought to be achieved by the issuance of the Notification dated 21st December 2005 was to give the revised pay scales which were due in 2002. In fact, this has been done by giving retrospective effect vide Notification dated 21st December 2005. It is, thus, held that classification created on the basis of insertion of sub-clauses (a) and (b) in second proviso of Para 3 is violative of Articles 14 and 16 of the Constitution of India.
Their Lordships of the Hon’ble Supreme Court in State of Haryana and Another versus Jai Singh, (2003) 9 SCC 114 have laid down the following tests for valid classification under Article 14 of the Constitution of India:
“We will first take up for consideration the argument accepted by the High Court in the impugned judgment that the impugned classification is arbitrary, unreasonable and violative of Article 14 of the Constitution. While considering the challenge based on Article 14 as to the arbitrariness in the impugned classification, the court has to examine whether the impugned classification satisfies certain constitutional mandates or not. They are (i) that the classification must be founded on an intelligible differentia which distinguish persons or things that are grouped together from others left out of the group; (ii) that the differentia must have a rational relationship with the objects sought to be achieved by the Act. (See Kathi Raning Rawat v. State of Saurashtra.)
Fourthly, the respondent No.2 being the “State” within the meaning of Article 12 of the Constitution of India its actions are subject to the constitutional limits and the same are to be judged in the light of the fundamental rights granted by Part-III of the Constitution. The action of an instrumentality or the agency of the State must be in conformity with Article 14 of the Constitution. The option given by the petitioner cannot bind him as it is violative of Article 14 of the Constitution of India and it also runs against the public policy. The action of the respondents is not supported by any rational basis or intelligible differentia.
The ratio of the judgment of (2006) 3 SCC 708 cited by Mr. Ashwani Sharma is not applicable to the facts of the present case for the simple reason that in the present case the petitioner was in fact in employment as on 1st August 2002, the date from which the Notification (Annexure P-4) dated 21st December 2005 has been made applicable.
Consequently, in view of the observations made above, send proviso of Para 3 of the Notification dated 21st December 2005 is struck sown being ultra vires to the extent it deprives the petitioner and other similarly situate persons to get the benefit of revised pay scale with effect from 1st August 2002 after applying the principle of severability.
According, the petition is allowed. The petitioner is held entitled to get the revised pay scale corresponding to his post he was occupying as on 1st August 2002 till 15th March 2004. The respondents are directed to work out the arrears etc. within six weeks from today.
December 3, 2007                                                                                       (Rajiv Sharma), J.

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