PARADEEP PHOSPHATES LIMITED versus STATE OF ORISSA & ORS. on 19 April 2018

[2018] 3 S.C.R. 507

PARADEEP PHOSPHATES LIMITED

v.

STATE OF ORISSA & ORS.

(Civil Appeal Nos. 3997-3998 of 2018)

APRIL 19, 2018

[R. K. AGRAWAL AND ABHAY MANOHAR SAPRE, JJ.]

Industrial Disputes Act, 1947: s.9A – Change in conditionsof service – In 1998, due to financial crunch, Government decidedto enhance retirement age from 58 to 60 – Appellant-companyimplemented the said decision of government – However, since thefinancial position of appellant-company did not improve, governmentrolled back retirement age – Appellant-company restored the age ofretirement to 58 years – Industrial dispute – Industrial Tribunalinvalidated the action of appellant-company of rolling back theage of retirement from 60 years to 58 years due to contravention ofr.9A which says prior notice must be given to employees by employerwhich the employer intentionally omitted to give in the instant case– High Court upheld the order of Industrial Tribunal – On appeal,Held: s.9A is a provision in consonance with the Constitutionalmandate which assures the protection of principles of natural justicei.e., no one shall be condemned unless heard – s.9A provides thatbefore changing either of the things as envisaged in the FourthSchedule, prior notice must be given to the employee – Eighth clauseof the Fourth Schedule says “withdrawal of any customaryconcession, privilege or change in usage” – The order ofenhancement of superannuation of the employees though temporaryin nature amounted to privilege to employees since it is a specialright granted to them – Therefore, any unilateral withdrawal ofsuch privilege amounts to contravention of s.9A of the Act and suchact of the employer is bad in the eyes of law – Right to work is avital right of every employee and it shall not be taken away withoutgiving reasonable opportunity of being heard otherwise it wouldbe an act of violation of the constitutional mandate – There is noerror in the order of High Court – Service law.

Industrial Disputes Act, 1947: Fourth Schedule, eighthclause – Eighth clause of the Fourth Schedule says “withdrawal of

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Aany customary concession or privilege or change in usage” – Terms“privilege” – Interpretation of – Held: The word “privilege” assuch is not defined in the Act – The Dictionary meaning of the word“privilege” means a “special right, advantage or immunity grantedor available only to a particular person or ground” – In other words,a particular and peculiar benefit or advantage enjoyed by a person,Bcompany, or class, beyond the common advantages of others – Orderof enhancement of superannuation of the employees would amountto privilege to employees since it is a special right granted to them.

Service law: Change in conditions of service – Enhancementof retirement age – Held: Age of superannuation is an integral partCof the service condition of the employee – Also, enhancement ofsuperannuation age would impliedly amount to a privilege since itwas provided particularly for the central public sector employees.

Interpretation of statutes: Beneficent law – Liberalconstruction – Held: Beneficial laws should be construed liberallyD– The Industrial Dispute Act, 1947 is one of the welfare legislationswhich intends to provide and protect the benefits of the employees– Therefore, it should be interpreted in a liberal and broad mannerso that maximum benefits could reach to the employees – IndustrialDispute Act, 1947.EWords and phrases: Privilege – Meaning of.

Dismissing the appeals, the Court

HELD: 1. The Industrial Dispute Act, 1947 is one of thewelfare legislations which intends to provide and protect thebenefits of the employees. Hence, it shall be interpreted in aFliberal and broad manner so that maximum benefits could reachto the employees. Any attempt to do strict interpretation wouldundermine the intention of the legislature. [Para 11] [514-F]

Conclusion

2. The grievance of the appellant-Company before this Courtis that the increase in the superannuation age of the employeesGwas temporary in nature in order to combat the losses and in nocircumstances, it can be said that withdrawal of it amounts towithdrawal of customary concession or privilege or change inusage. Eighth clause of the Fourth Schedule says “withdrawal ofany customary concession or privilege or change in usage”. TheHwhole dispute revolves around the interpretation of the terms customary concession, privilege or change in usage. The word“privilege” as such is not defined in the Act. In the absence ofstatutory definition, recourse is taken of the dictionary or generalmeaning of the term “privilege”. The Dictionary meaning of theword privilege means a “special right, advantage or immunitygranted or available only to a particular person or ground”. Inother words, a particular and peculiar benefit or advantage enjoyedby a person, company, or class, beyond the common advantagesof others. [Para 12] [514-G-H; 515-A-B]

3. Though the decision of enhancement of age of retirementwas implemented without the amendment in the Standing Ordersand Rules, yet impliedly it got the force as a service conditionsince it directly relates with the service condition of theemployees. Age of superannuation is an integral part of theservice condition of the employee. Also, enhancement ofsuperannuation age would impliedly amount to a privilege sinceit was provided particularly for the central public sectoremployees. [Para 13] [515-D]

4. No doubt, the enhancement of the superannuation agewas temporary in nature in order to achieve certain objectivesand also it is not deniable that yet employees would be governedby the Service Rules and the Certified Standing Orders whichwere not amended. However, if the plea of the appellant-Companyis allowed then it would defeat the object of legislature becauselegislature could never have intended that employees would becondemned without giving them right of reasonable hearing.Naturally, every employee is under the expectation that beforereducing his superannuation age, he would be given a properchance to be heard. Right to work is a vital right of every employeeand it shall not be taken away without giving reasonableopportunity of being heard otherwise it would be an act of violationof the Constitutional mandate. The contention of the appellant-Company that the object of enhancement of superannuation agewas just to save the industries from huge losses, however, it doesnot give the license to the appellant-Company to act incontravention of law since it is a cannon of law that everyone isexpected to act as per the mandate of law. [Paras 14-15] [515-H;516-A-B]

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ACIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3997-3998 of 2018.

From the Judgment and Order dated 30.08.2016 and 06.10.2016by the Division Bench of the High Court of Orissa at Cuttack in W.P.(C) No. 9180 of 2010 and RVWPET No. 236 of 2016 respectively.

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Dhruv Mehta, Sr. Adv., Snehal Kakrania, Ms. Anushka Sharda,Sanjeev Kumar (For M/s. Khaitan & Co.), Advs. for the Appellant.

Sanjay R. Hegde, Mahabir Singh, Sr. Advs., S. S. Pratap, SachinDas, Azim H. Laskar, Chandra Bhushan Prasad, R. Santhnan Krishnan,D. Mahesh Babu, Aditya Kr. Archiya, C. S. N. Mohan Rao, Som RajCChoudhury, Advs. for the Respondents.

The Judgment of the Court was delivered by

R. K. AGRAWAL, J. 1. Leave granted.

2. The above appeals have been preferred against the impugnedDcommon judgments and orders dated 30.08.2016 and 06.10.2016 passedby the High Court of Orissa in WPC No. 9180 of 2010 and RVWPETNo. 236 of 2016 respectively whereby the Division Bench of the HighCourt dismissed the appeal and the review petition filed by the appellantherein while upholding the decision dated 17.04.2010 passed by theIndustrial Tribunal, Bhubaneswar in I.D. Case No. 16 of 2003.

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3. Brief facts:-

(a) In the year 1981, the appellant-Company was incorporated asa joint venture between the Government of India and Republic of Nauruwith an objective to manufacture Di-Ammonium Phosphates.

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(b) Later on, in the year 1993, the Republic of Nauru disinvestedits entire equity stake to the Government of India and the appellant-company became a wholly owned Public Sector Undertaking of theGovernment of India having its corporate and registered office atBhubaneswar.

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(c) Due to deteriorating financial position of certain Public Sectorunits, the Government of India on 19.05.1998 decided to temporarilyenhance the age of retirement of all Central Public Sector Employeesfrom 58 years to 60 years with a view that the same may help industriesto cut down their losses. Pursuant to the said order dated 19.05.1998, H

the appellant-Company implemented the said order vide order dated19.11.1998 in Company with retrospective effect from 27.05.1998.

(d) Inspite of the enhancement of retirement age, the financialperformance of the appellant-Company still not improved. As a result,the Government of India issued an Office Memorandum dated 22.08.2001to all Central Public Undertakings including the appellant intimating itsdecision to roll back the age of retirement of all the employees of PublicSector Undertaking from 60 years to 58 years. Before this Memorandum,the Government of India, on 08.06.2000, had advised the appellant-Company to review the decision on enhancement of age of retirement.However, the appellant-Company did not take any decision on the saidadvisory.

(e) In the meanwhile, the Government of India, on 28.02.2002,divested its 74% shareholding in the appellant company in favour of oneM/s Zuari Maroc Phosphates Ltd. (“Zuari”), thereby, keeping only 26%shareholding in its favour. As per the share holding agreements, underClause 7.2 (j) it was provided that all the decisions taken by the Board ofDirectors of the appellant-Company, prior to the date of the disinvestment,shall be binding on all concerned.

(f) On 17.07.2002, the appellant-Company, by office order,withdrew the earlier office order dated 19.11.1998 and restored the ageof retirement to 58 years in respect of all the employees in terms ofCertified Standing Orders and Services Rules of the appellant-Company.

(g) Being aggrieved, the Trade Union raised dispute with regardto the above and as a consequence of the same, the Government ofOrissa, Labour and Employment Department made Reference underSection 12 read with Section 10 of the Industrial Disputes Act, 1947 (inshort “the Act”) to the Industrial Tribunal, Bhubaneswar. The IndustrialTribunal, vide order dated 17.04.2010, disposed off the Reference andinvalidated the action of the appellant-Company of rolling back the ageof retirement from 60 years to 58 years due to contravention of Section9A of the Act which says prior notice must be given to the employees bythe employer which the employer intentionally omitted to give in thepresent case.

(h) Being dissatisfied, the appellant-Company challenged thedecision of the Industrial Tribunal by way of filing writ petition in theHigh Court of Orissa. The Division Bench of the High Court, vide order AB

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Adated 30.08.2016, dismissed the writ petition and held, inter alia, thatthere was no error apparent in the decision of the Industrial Tribunal.Thereafter, the appellant-Company also preferred a review petition butthe same again got dismissed vide order dated 06.10.2016.

(i) Consequently, the appellant-Company has filed these appealsBby way of special leave before this Court.

4. We have given our solicitous consideration to the submissionsof learned senior counsel for the parties and perused the relevant materialplaced before us.

Point(s) for consideration:-C

5. Whether in the light of present facts and circumstances of thecase, any intervention of this Court is required in the impugned decisionof the High Court?

Rival contentions:-

6. At the outset, leaned senior counsel for the appellant-CompanyDcontended that the High Court failed to appreciate that the age ofretirement laid down in the appointment letters, the Service Rules andthe Certified Standing Orders framed under the Industrial Employment(Standing Orders) Act, 1946 are binding upon all workmen governed bythe same and, therefore, a temporary concession of allowing persons toEcontinue to serve until the age of 60 years pursuant to a governmentcircular issued as a temporary measure to combat losses in Central PublicSector Undertakings cannot amount to a change in the settled serviceconditions.

7. In other words, contention of the appellant-Company is thatFeven if the benefit of enhancement of age of superannuation from 58years to 60 years has been extended in favour of the workmen, theyhave got no right to retain the same for the reason that the Service Rulesand the Certified Standing Orders applicable to the workmen stipulatesa condition of superannuation on attaining the age of 58 years and sincethe same has not been amended in accordance with law, hence, theGprovisions of Service Rules and the Certified Standing Orders are bindingupon the workmen and merely because the benefit has been given tosuperannuate on attaining the age of 60 years instead of the age of 58years for a period of four years i.e., 1998 to 2002, it will not ipso factoreplace the age of superannuation as has been provided in the ServiceHRules or the Certified Standing Orders. Hence, no question of applicability of Section 9A of the Act arises in any case. Therefore, the impugneddecision of the High Court is liable to be set aside.

8. Per contra, learned senior counsel for the respondent submittedthat the present appeals have been filed against the well reasonedimpugned judgments dated 30.08.2016 and 06.10.2016 which were rightlypassed by the Division Bench of the High Court. Further, it was alsosubmitted that the action of the appellant-Company amounts tocontravention of Section 9A of the Act read with Fourth Schedule whichpostulates the necessity of prior notice to the workers if employerproposes to effect any change in the conditions of service. Hence, thisappeal is devoid of merits and deserves to be dismissed.

Discussion:-

Discussion:-

9. The relationship of the employer and employee is of utmostfaith and, as a result, it falls under the ambit of fiduciary relationship. Inorder to regulate such relationship, legislature came up with legislationi.e., the Industrial Disputes Act, 1947. The purpose of the Act is to protectthe interest of employees as they are the weaker sections since timeimmemorial. In order to safeguard the rights of the employees, certainamendments have been made subsequently in the Statute. In 1956,legislature inserted Section 9A of the Act which makes it obligatory onthe part of the employer that he is bound to give advance notice to theemployee if he intends to change certain things as envisaged underSection 9A of the Act read with Fourth Schedule. For the sake ofconvenience, it is apt to re-produce Section 9A of the Act which is asunder:- “9A. Notice of change-No, employer, who proposes to effectany change in the conditions of service applicable to any workmanin respect of any matter specified in the fourth Schedule shalleffect such change,- (a) without giving to the workmen likely to be affected by suchchange a notice in the prescribed manner of the nature of thechange proposed to be effected: or (b) within twenty-one days of giving such notice:

Provided that no notice shall be required for effecting any change-(a) where the change is effected in pursuance of any settlementor award: or AB

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A(b) where the workmen likely to be affected by the change arepersons to whom the Fundamental and Supplementary Rules, CivilServices (Classification, Control and Appeal) Rules, Civil Services(Temporary Service) Rules, Revised Leave Rules, Civil ServiceRegulations, Civilians in Defence Services (Classification, Controland Appeal) Rules or the Indian Railway Establishment Code orBany other rules or regulations that may be notified in this behalf bythe appropriate Government in the official Gazette, apply.”

10. At the first sight of the provision, prima facie, it appears thatthe employer is bound to give minimum 21 days’ notice to the employeeif employer intends to change any material terms of service. Section 9ACof the Act is a provision in consonance with the Constitutional mandatewhich assures the protection of principles of natural justice i.e., no oneshall be condemned unless heard. For the guidance, legislature prescribedthe Fourth Schedule and it is clearly mentioned in Section 9A of the Actthat before changing either of the things as envisaged in the FourthDSchedule, prior notice must be given to the employee. In the instantcase, the grievance of the Trade Union before the Tribunal was thatwithdrawal of the age of superannuation i.e., restoration of the age from60 years to 58 years, amounts to contravention of Clause 8 of the FourthSchedule, hence, employer was bound to give prior notice which employercannot escape. Therefore, the action of the employer is bad in law andEliable to be set aside which was eventually upheld by the Tribunal andthe High Court.

11. Undoubtedly, it is a cardinal principle of law that beneficiallaws should be construed liberally. The Industrial Dispute Act, 1947 isone of the welfare legislations which intends to provide and protect theFbenefits of the employees. Hence, it shall be interpreted in a liberal andbroad manner so that maximum benefits could reach to the employees.Any attempt to do strict interpretation would undermine the intention ofthe legislature. In a catena of cases, this Court has held that the welfarelegislation shall be interpreted in a liberal way.G

12. The grievance of the appellant-Company before this Court isthat the increase in the superannuation age of the employees wastemporary in nature in order to combat the losses and in no circumstances,it can be said that withdrawal of it amounts to withdrawal of customaryconcession or privilege or change in usage. Eighth clause of the FourthHSchedule says “withdrawal of any customary concession or privilege

or change in usage”. The whole dispute revolves around theinterpretation of the terms customary concession, privilege or change inusage. In the instant case, we are mainly concerned with the term‘privilege’. The word “privilege” as such is not defined in the Act. In theabsence of statutory definition, we have to take recourse of the dictionaryor general meaning of the term “privilege”. The Dictionary meaning ofthe word privilege means a “special right, advantage or immunitygranted or available only to a particular person or ground”. Inother words, a particular and peculiar benefit or advantage enjoyed by aperson, company, or class, beyond the common advantages of others.

13. It is admitted position that the Board of Directors took thedecision of enhancement of age of retirement and it came into forcewith retrospective effect from 27.05.1998 as mentioned in the orderdated 19.11.1998. Though, this decision implemented without theamendment in the Standing Orders and Rules, yet impliedly it got theforce as a service condition since it directly relates with the servicecondition of the employees. Age of superannuation is an integral part of the service condition of the employee. Also, enhancement ofsuperannuation age would impliedly amount to a privilege since it wasprovided particularly for the central public sector employees. At thisjuncture, the Division Bench of the High Court held as under:

“However the facts of this case is little bit different because thenecessary modification has not been incorporated either in theService Rules or in the Certified Standing Order enhancing theage of superannuation from 58 years to 60 years, but the CentralGovernment being the competent authority has directed the Boardof Directors to enhance the age of superannuation and accordinglyit has been enhanced in the year 1998 and thereafter it has beenreduced vide order dtd 17.7.2002 by the same process, hence weare of the considered view that by passing the order dtd 17.7.2002the privilege has been granted to the workmen has been recalledby altering the same by reducing the age of superannuation from60 years to 58 years is alteration which is detrimental to the interestof the workmen.”

14. No doubt, the enhancement of the superannuation age wastemporary in nature in order to achieve certain objectives and also it isnot deniable that yet employees would be governed by the Service Rulesand the Certified Standing Orders which were not amended. However, AB

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Aif we allow the plea of the appellant-Company then it would defeat theobject of legislature because legislature could never have intended thatemployees would be condemned without giving them right of reasonablehearing. Naturally, every employee is under the expectation that beforereducing his superannuation age, he would be given a proper chance tobe heard. Right to work is a vital right of every employee and in ourBview, it shall not be taken away without giving reasonable opportunity ofbeing heard otherwise it would be an act of violation of the Constitutionalmandate.

15. Moreover, the contention of the appellant-Company that theobject of enhancement of superannuation age was just to save theCindustries from huge losses, therefore, it does not violate any statutoryright of the employees, cannot be sustained in the eyes of law and also itdoes not give the license to the appellant-Company to act in contraventionof law since it is a cannon of law that everyone is expected to act as perthe mandate of law.

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16. To sum up, we are of the view that at the very moment whenthe order of enhancement of superannuation of the employees cameinto force though temporary in nature, it would amount to privilege toemployees since it is a special right granted to them. Hence, any unilateralwithdrawal of such privilege amounts to contravention of Section 9A ofEthe Act and such act of the employer is bad in the eyes of law.

17. In view of above detailed discussion, we are of the consideredview that there is no error in the impugned judgment of the High Court,hence, we are not inclined to interfere in it. Accordingly, these appealsare hereby dismissed leaving parties to bear their own cost.

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Devika Gujral

Appeals dismissed.

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