In the High Court of Jharkhand at Ranchi - NIC Jharkhand

In the High Court of Jharkhand at Ranchi - NIC Jharkhand

In the High Court of Jharkhand at Ranchi W.P.(S) No.5314 of 2008 1. Dhanraj Mahto, son of late Bhikho Mahto, resident of C/o Sidheshwar Singh, Bishunp...

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In the High Court of Jharkhand at Ranchi W.P.(S) No.5314 of 2008 1. Dhanraj Mahto, son of late Bhikho Mahto, resident of C/o Sidheshwar Singh, Bishunpur Road, Ward No.13, P.O & P.S.Jhumri Tilaiya, District-Koderma 2. Samir Jumuar son of late Narendra Nath Jamuar, resident of State Bank Road, Makatpur, P.O, P.S. and District-Giridih, at present resident of 32/9, Ella Allman Koli Street, 1st floor in the House of Smt. Shanti, near Aman Temple, Ennore, Chennai-57, Tamil Nadu. 3. Umesh Kumar Sinha, son of late Parmanand Prasad resident of Chitragupt Colon, Barganda, P.O, P.S. and District-Giridih, at present MMTC Limited, Kakinada, A.P. 4. Imtiaz Ahmad son of late Ghulam Rasool, resident of Gaddi Mohalla, Goenka Hospital Road, P.O, P.S and DistGiridih, at present MMTD Ltd. Sub-Regional Office, Cochin, Kerala. 5. Ashok Kumar Singh, son of late Deep Narayan Singh, resident of Power House Road, Barganda, P.O, P.S and District-Giridih, at present MMTD Ltd, Sub-Regional Office, Kakinada, Andhra Pradesh. 6. Gulab Thakur, son of Satish Chandra Thakur, resident of Sir J.C.Bose Road, Barganda, P.O, P.S. and District – Giridih, at present MMTC Ltd, Visakhapatnama, A.P. 7.Thakur Prasad Mahto, son of late Chhatru Mahto, resident of Mohanpur, Tola Ambadin, P.O.Udnabad, P.S. and District-Giridih, at present MMTC Limited, Hospet, Karnataka. 8.Nasir Ahmad Aansari, son of late Abbas Ansari, Resident of Barwadih Karbala Maidan, P.O, P.S and District- Giridih, at present MMTC Limited, Jaipur. 9. Md. Maqusood Ansari, son of late Md. Abbas Ansari, resident of Paharidih, near Bhoot Bangla, Barwadih, P.O, P.S and District- Giridih, at present MMTC Limited, Kakinada, Andhra Pradesh……………………………………….Petitioners VERSUS 1. MMTC Limited, 7, Institutional Area, Core-1, SCOPE Complex, Lodi Road, New Delhi-110003 through its Managing Director, MMTC. 2. Chairman-cum-Managing Director,MMTC Limited, 7, Institutional Area, Core-1,SCOPE Complex, Lodi Road, New Delhi-110003. 3. Director (Personnel), MMTC Limited, 7, Institutional Area, Core-1, SCOPE Complex, Lodi Road, New Delhi-110003 4. Chief General Manager (Personnel), MMTC Ltd. 7, Institutional Area, Core-1, SCOPE Complex, Lodi Road, New Delhi-110003. 5. General Manager (Personnel), MMTC Limited, 7, Institutional Area, Core-1, SCOPE Complex, Lodi Road, New Delhi-110003. 6.Manager-in-Charge, MMTC Limited, Abhraknagar, Chandwara, Jhumri Tilaiya, District- Koderma 7.Union of India, through the Director, Ministry of Commerce and Industry, Department of Commerce, Udyog Bhawan, New Delhi. Director, Government of India, Ministry of

2 Commerce and Industry, Department of Commerce, Udyog Bhawan, New Delhi………………………………….. Respondents CORAM: HON’BLE MR. JUSTICE R.R.PRASAD For the Petitioners: M/s. Anil Kumar Sinha, Sr. Advocate, Abhishek Sinha and Satish Kumar, Advocate For the Respondents: M/s. Tusher Mehta and Raj Nandan Sahay,Sr. Advocate,R.Dhawan & Yashvardhan, Advocate Reserved on 7.5.2015 18.6.15.

Delivered on 18.6.2015

Mica Trading Corporation Limited (MITCO) was incorporated under the

Companies Act in the year 1973 as a subsidiary of Minerals and Metal Trading Corporation (MMTC). MITCO was formed for manufacturing and marketing of mica powder, mica paper, mica capacitors etc. and also for exporting mica to erstwhile USSR and to eastern European countries like Bulgaria, Romania, Germany etc. The manufacturing activities got started in the year 1981 at Abhraknagar situated within the territory of Jharkhand. Much before it in the year 1974, MMTC vide its order as contained in letter dated 9.9.1974 (Annexure 1) delegated several powers to its subsidiary company MITCO including the power to frame its own rules relating to service conditions with the prior approval of the MMTC. At the same time, it also stipulated that all the rules/orders governing the service conditions of MMTC employees will be applicable to the employees of MITCO. In the year 1984, there was wage settlement with the federation of MMTC employees with the approval of the Ministry of Commerce. Thereupon the General Manager (P) of the Minerals and Metals Trading corporation of India Limited (MMTC) wrote a letter dated 7.8.1984 (Annexure 2) to the Chairman, Mica Trading Corporation of India Limited (MITCO) regarding revision of pay scales etc. of staffs in MITCO stating therein that Ministry of Commerce has been intimated that the pay scales of staffs of MMTC and MITCO are identical and therefore, the revised scale of pay will be applicable to the staffs of MITCO as well. In course of time, on account of global changes in eastern European countries and disintegration of USSR affected the business of MITCO adversely. The changes in ratio of rupee/ruble, further affected the business of MITCO. Its miseries further got

3 aggravated when a decision was taken in the year 1990 by the Government of India to the effect that export of mica could be undertaken by any individual exporter and thereby income of MITCO a canalizing agency got halted. In that eventuality, the case of MITCO was referred to Board for Industrial and Financial Reconstruction (BIFR) on 21.12.1992 in terms of the provision of Sick Industrial Companies Act (SICA),1985. In 1993, MITCO was declared as sick company by BIFR. The Bench examined various possibilities of its revival on stand alone basis but could not succeed in its efforts. However, it considered merger/amalgamation to be the best solution for long term viability of the company. For that purpose, State Bank of India was appointed as an operating agency (OA), who after taking into account several factors submitted a draft rehabilitation-cum-amalgamation/merger scheme (DRAM) for revival of the aforesaid company which upon finding its approval by BIFR, was circulated to all concerned parties for their consent as required under Section 19(2) read with Section 19(1) of the Sick Industrial Companies (Special Provisions) Act, 1985. At the same time, schemes were published in two local dailies inviting objections/suggestions.

Under

the

draft

rehabilitation-cum-

amalgamation/merger scheme, stipulation was made that all the employees, who are not surplus to requirements being retained in service as per Annexure 2, shall become the employees of MMTC from the effective date of merger/amalgamation without interrupting their services in any manner and the terms and conditions of service applicable to such employees on the effective date will not in any way be less favourable to them than those applicable immediately before the appointed date, i.e. 1.4.1994. When the matter again came up before a Bench of BIFR, a representative of the Government of India (Ministry of Commerce) stated that the Ministry will have no objection to the relief envisaged in draft rehabilitation-cum-merger/amalgamation Scheme (DRAM). However, it was pointed out that the Group of Ministers while approving the scheme had, however, pointed out that the rationalization of workforce of the company

4 should be duly carried out and the employees of the company, who were to continue in employment, would not insist on getting the pay scales of MMTC. The representative of MMTC also reiterated that the company’s employees should not agitate for the scale of MMTC. On such objection being taken, it was observed by the Bench that stipulation is there in the DRAM to the effect that the employees being retained in service would become employees of MMTC without interruption of their services in any manner. The terms and conditions of their service will not less favourable to them than those applicable immediately before the effective date of merger/amalgamation. Certain other objections were also taken care of and ultimately, the Bench of BIFR with certain modification approved the DRAM under Section 18(4) Read with Section 19(3) of the Sick Industrial Companies Act (SICA),1985. Thereupon MMTC in its extraordinary general meeting held on 2.5.1996 approved the draft rehabilitation-cum-merger/amalgamation scheme and accordingly, an order as contained in annexure 5 was drawn on 10.6.1996 declaring therein that the MITCO stand merged with MMTC effective date of which would be as 1.4.1994.

Subsequently, after fulfillment of certain

conditions, which had been put in by the Bench of BIFR while approving the draft rehabilitation-cum-merger/amalgamation scheme, passed an order on 21.4.1997 (as contained in Annexure 6) declaring that MITCO stand amalgamated with MMTC with effect from 1.4.1994. In spite of that order, when, according to the case of the petitioners, pay scales of employees of MITCO were not revised either in the year 1992 or 1997, some of the petitioners made representation before the Chairman-cum-Managing Director, MMTC Limited, respondent no.2 for revision of their pay scales and also for granting seniority, promotion and other benefits at par with the employees of MMTC Limited but when nothing was done, petitioner no.1 working as Operator in MMTC at Abhraknagar , petitioner no.2 initially working at Giridih but transferred to Channai working as Deputy Manager at Ennor Port, MMTC Limited, petitioner no.3, Office Manager at Kakinada, Andhra Pradesh, petitioner no.6, working as Assistant at Visakhapatnam in MMTC Limited,

5 petitioner no.7 working as Operator in MMTC Limited posted at Hospet, petitioner no.9 working as Operator at Palm Oil Operation at Kakinada, Andhra Pradesh, all initially were posed at Abhraknagar have filed this writ application along with petitioner nos. 4 and 8 but since they have taken voluntarily retirement, their cases are not being pursued, wherein prayer has been made to direct the respondents to grant pay scales/revised pay scales as per pay revision in the year 1992, 1997 and 2007 and also the seniority and promotion at par with the employees of MMTC. However, during pendency of this writ application, representation of one of the petitioners was rejected which order was communicated to that petitioner by Deputy Manager (IR), MMTC Limited, vide its letter dated 10.3.2009 as contained in Annexure 9 holding therein that

the petitioner is

an employees of MICA Division of MMTC and is governed by the service conditions and pay scales as applicable in the erstwhile Mica Trading Company which was prevailing at the time of merger of MITCO with MMTC. That order was challenged by way of interlocutory application and has been sought tobe quashed. At the same time, an order was passed on 4.5.2009 as contained in Annexure 11 with respect to revision of scales of pay with effect from 1.1.2007 of the Executives of the MMTC but the pay revision would not be applicable to the Executives of Mica Division. That part of the order has also been challenged. It be stated that when a counter affidavit was filed, it was brought to the notice that Ministry of Commerce and Industry, Government of India did consider the issue of grant of wage parity between the employees of MMTC and Mica Division of MMTC whereby decision has been taken that status quo be maintained in respect of employees who do not opt for VRS. Upon filing of such affidavit, that order regarding maintenance of status quo as contained in Annexure 12 has also been challenged. The stands which have been taken in the counter affidavit filed on behalf of the respondent no.1 MMTC Limited are that according to the scheme

6 of amalgamation/merger approved by the BIFR, the employees of Mica Division of MMTC (erstwhile MITCO) retained in service subject to a maximum number of stipulated manpower planned (220 employees) in the scheme without interruption in any manner along with the terms and condition of service being not less favourable to them than those applicable to them immediately before the effective date of merger/amalgamation.

In other

words, the terms of their employment and/or pay scales would continue to remain in force as they were prior to the date of merger and Representatives of unions/officers associations of erstwhile MITCO were parties to the deliberations that took place before the Hon’ble BIFR. Further it has been stated that BIFR did not direct for revision of pay scale nor provided

for in the revival package. Furthermore, in terms of

circular no.2(50)/86-DPE(WC) dated 19.7.1995 issued by DPE, “no employees of PSE, registered with BIFR, could get the benefit of Pay Revision unless: (i)

BIFR decides to revive the Unit; and

(ii)

The revival package should embrace and indicate the enhanced liability on this account.”

In this regard, it has also been stated that a Group of Ministers in their meeting held on 8.3.1995 accorded in principle approval to merger with MITCO subject to the rationalization of the workforce of MITCO so as to bring it down to the minimum required level by offering on attractive package of VRS. The Group of Ministers decided that on merger, MITCO employees will not get the MMTC pay scales. Further it has been decided that Voluntary Retirement Scheme (VRS) be offered to the employees of Mica Division and status quo be maintained in respect of employees who do not opt VRS. In the additional affidavit filed on behalf of the MMTC, it has been sated that at the time of merger, the employees of MMTC had its scale of pay which were different from the scale of pay prevalent in MITCO. Further it has been stated that MITCO has become sick unit, it did not have any pay package

7 after 1987 whereas employees of MMTC were given the said wage revision. Moreover, the revival/merger package of MITCO did not provide for any additional expenditure which would have been incurred if such wage revision had been given to the employees of MITCO. Mr. Anil Kumar Sinha, learned Sr. counsel appearing for the petitioners submits that when the case of MITCO was referred to BIFR, it prepared a draft rehabilitation-cum-amalgamation/merger

scheme

(DRAM).

stipulations was there in respect to service condition

One

of

the

of the employees of

MITCO wherein it has been stated that all the employees who are retained in service upon merger/amalgamation of MITCO into MMTC Limited shall become employees of MMTC Limited

without interrupting their services

in any

manner and the terms and condition of service applicable to such employees on the effective date will not in any way

be less favourable to them than

those applicable to them immediately before the appointed date of merger/amalgamation, i.e. 1.4.1994 and therefore, the petitioners, who, were earlier posted as Abhraknagar but after merger had been posted in different units of MMTC situated in different places, are entitled the same pay scale to which the officers of the MMTC holding corresponding post are getting and at the same time, they are also entitled to pay revision, seniority and promotion but the respondent under the garb of the order dated 10.3.2009 as contained in Annexure 9 passed by the Deputy MGR (IR) and also under office order dated 4.5.2009 as contained in Annexure 11 has denied pay revision to the petitioners, though it was allowed the pay revision to the employees of MMTC in the year 1992, 1997 and 2007. Furthermore, Ministry of Commerce and Industry, Department of Commerce, vide its order dated 12.2.2008 as contained in Annexure 12 has denied wage parity in between the employees of MMTC and Mica Division of MMTC (erstwhile MITCO) and has passed an order for maintaining status quo in respect of employees of Mica Division of MMTC, as a result of which, the petitioners are getting salary which they were getting in the year 1987 on the basis of 1987 pay revision and thereby the

8 petitioners, who are in the officers grade are getting less salary than the peon and class IV staffs of the MMTC, though officers of the MMTC holding corresponding post to the petitioners are getting salary more than four times as they had been given benefit of 1992, 1997 and 2007 pay revision which action of the respondent is violative of the Articles 14 and 16 of the Constitution of India. Thus, it has been submitted that under the circumstances, the writ petition is fit to be allowed by directing the authorities to pay the same scale and revision of pay and also other benefits such as seniority, promotion at per with the employees of MMTC. As against this, Mr.Tushar Mehta, learned Sr. counsel appearing on behalf of the respondent no.1

by referring to that part of the draft

rehabilitation-cum-amalgamation/merger scheme (DRAM) as formulated by BIFR stipulating therein that ‘the terms and condition of service applicable to such employees on the effective date will not in any way be less favourable to them than those applicable to them immediately before the appointed date’ submits that a clear stipulation is there that the terms of the employment and pay scale of the employees of the then MITCO would continue to remain in force as they were prior to the date of merger and thereby BIFR in categorical, unequivocal and unambiguous terms protected the existing terms and condition of the service and under the circumstances Group of Ministers of the Central Government took a decision that on merger MITCO employees would not get the MMTC pay scale and subsequently, Ministry of Commerce and Industry by taking the same stand passed an order for maintaining status quo with respect to revision of pay in case of the employees of Mica Division of MMTC. Thus, the petitioners are not entitled to get anything which is inconsistent with the scheme formulated by BIFR under Sick Industrial Companies Act (SICA) which has got force of law and thereby the prayer sought for is fit to be rejected as the same is in direct conflict with the scheme framed by BIFR.

9 Further submission is that once undertaking given by the employees of the MITCO before BIFR to the effect that they would not claim pay parity with the MMTC employees, the petitioners would be stopped from praying anything contrary to the undertaking under the “doctrine of estoppel”. Learned counsel in this regard has referred to a decision rendered in a case of Rajasthan State Industrial Development and Investment Corporation

and

Another

vs.

Diamond

&

Gem

Development

Corporation Limited and Another [(2013) 5 SCC 470] and also in a case of B.L.Sreedhar vs. K.M.Munireddy (Dead) and others [(2003) 2 SCC 355]. Further it was submitted that when the pay revision was made in respect of employees of the MMTC , the employees of Mitco never claimed any parity and thereby they are not now entitled to pay for pay parity under the “doctrine of acquiescence”. In this regard, learned counsel has referred to a decision rendered in a case of M/s. M.Ramnarain Private Limited and Another vs. State Trading Corporation of India Limited [(1983) 3 SCC 75]. Thus, it was submitted that the writ application is fit to be quashed. Having heard learned counsel appearing for the parties and looking to the respective pleading of the parties admitted fact

which appears to be

there is that Mica Trading Corporation Limited (MITCO) was incorporated under the Companies Act in the year 1973 as subsidiary of MMTC.

MITCO

was engaged in export of Mica as well as manufacturing and marketing of mica powder, mica paper, mica capacitors etc. The manufacturing activities were being carried by MITCO in its factory at Ahbraknagar situated in the state of Jharkhand. In course of time, on account of the reason as has been stated above, it became sick. On account of that, case of MITCO was referred to BIFR on 21.12.1992 under the provision of Sick Industrial Companies Act (SICA), 1985. During proceeding BIFR formulated a draft rehabilitation-cum-

10 amalgamation/merger scheme (DRAM) wherein one of the clauses relating to service condition of the employees of MITCO was as follows:‘terms and condition of service applicable to such employees on the effective date will not in any way be less favourable to them than those applicable to them immediately before the appointed date’. Besides that, other stipulations with respect to amalgamation/merger were also there. On such draft, objections were invited.

After hearing the

parties, the said draft rehabilitation-cum-amalgamation/merger (DRAM) was made absolute by BIFR under order dated 21.4.1997 holding therein that MITCO stand amalgamated with MMTC with effect from 1.4.1984 and has since become a division of MMTC. Since it was held as one of the units of MMTC, the parity is being sought by the petitioners in the matter of pay scales, pay revision, seniority, promotion etc. as that of employees of MMTC, as according to the learned counsel appearing for the petitioners, when there has been merger, any discrimination in the pay scale or pay revision or other service condition with the employees of MMTC would be violative of Articles 14 and 16 of the Constitution of India. In this regard, a decision rendered in a case of Railway Board and Another vs. A. Pitchumani (AIR 1972 SC 508) has been referred to. At the same time, such parity in the pay scale, pay revision etc. is being sought by virtue of the stipulation which has been made in the draft rehabilitation-cum-amalgamation/merger scheme (DRAM)

wherein it had

been stated that the terms and condition of service applicable to such employees on the effective date will not in any way be less favourable to them than those applicable to them immediately before the appointed date. However, according to learned counsel appearing for the respondents, said clause made in the draft rehabilitation-cum-amalgamation/merger scheme (DRAM) has never given any entitlement to the employees of MITCO

11 to have have future benefit of the pay scale or revision of the pay scale, rather it has only protected the existing right of the employees of the MITCO. Thus, the question does arise as to whether the plea which is being taken on behalf of the respondents is worth acceptable ? It be stated that when the scheme of merger/amalgamation by way of draft

rehabilitation-cum-amalgamation/merger

formulated, objections were invited. Government

of

India

(Ministry

of

scheme

(DRAM)

was

Thereupon the representative of the Commerce)

did

raise

point

that

rationalization of workforce of the company should be carried out and the employees of the company, who were to continue in employment, would not insist on getting the pay scale of MMTC. On such plea being taken, it was observed by the Bench of BIFR that the employees retained in service would become employees of MMTC without interruption in their services in any manner with terms and condition of their services being not less favourable to them than those applicable immediately before the effective date of merger/amalgamation, i.e, 1.4.1994. By going through the said observation, one would easily come to the conclusion that unequivocally it has been held that upon merger service conditions of the employees of MITCO would not be varied, rather it would be the same which were there before the merger. The Bench of BIFR had never put any restriction over the future benefits or entitlements to the employees of MITCO in terms of their existing service conditions. Since that order is being interrupted as is being reflected from the order as contained in Annexure 9 and also Annexure 12 that the petitioners would not be entitled to pay revision which interpretation is not only against the norms of service jurisprudence but would be violation of Article 14 and 16 of the Constitution of India . If plea taken on behalf of the respondent is accepted, then the petitioners would never get any increment even of single paise, though new incumbents if would be joining the service in Mica Division of MMTC, he on account of being given benefit of pay revision would be getting more than the petitioners. Therefore, the interpretation which is being

12 given by the respondent to the clauses as aforesaid not only appears to be illogical, unjustified but unacceptable. Now the question does arise as to whether the petitioners are entitled to have pay revision? In this respect, it be stated that much before the matter was referred to BIFR , an order was passed on 7.8.1984 as contained in Annexure 2 by the General Manager (P) of the Mineral and Metal Trading Corporation of India Limited that pay scale of staff of MMTC and MITCO are identical

and

therefore, the revised scales of pay will be applicable to the staff of MITCO as well, though the said letter speaks that pay scale of the staff of MMTC and MITCO are identical but from the pleading made on behalf of MMTC, it does appear that the pay scale of the employees of MMTC and MITCO were different and this assertion seems to be correct on account of the fact that when

objection

was

sought

on

the

draft

rehabilitation-cum-

amalgamation/merger scheme (DRAM), representative of MMTC put forth the point that company’s employees (MITCO) should not agitate for the scale of MMTC which is indicative of the fact that pay scale of employees of the then MITCO was different from the pay scale of the employees of MMTC. However, the said order dated 7.8.1984 speaks

that the employees of MITCO are

entitled to revised pay scale which, as per the case of the petitioners, was, in fact, given till 1987 which fact also seems to have been admitted by the respondents in his additional affidavit filed on 3.9.2010. Accordingly, the petitioners are entitled to have pay revision as has been done in the case of the employees of MMTC of the year 1992, 1997 and 2007 as in terms of service conditions of the employees of the then MITCO pay revision was admissible and thereby under the order of BIFR the same is admissible to the petitioners and hence, the petitioners are entitled to have their pay revised as per the pay revision made inn the year 1992, 1996 and 2007.

13 Under the circumstances, that part of the order as contained in Annexure 9 and also Annexure 11 as well as Annexure 12 whereby pay revision has been denied to the petitioners is hereby quashed. So far as submission made on behalf of the respondent that since representatives of the employees had given undertaking before the BIFR that they would not claim pay parity with the employees of MMTC is concerned that appears to be misconceived as from para 6 of the order (Annexure 4) passed by BIFR it appears that the representative of the company (MITCO) had made statement to the effect as under. 6.’The representative of employees Association submitted that the Association had all along been supportive of the merger/amalgamation of the company with MMTC. He submitted that the Association agreed with DRAM. In the entire DRAM nowhere it has been stipulated that on account of the fact that undertaking has been given on behalf of the employees of the company the employees would not claim pay parity’. So far as submission relating to application being barred on account of application of doctrine of acquiescence is concerned that is not tenable for the reason that it is never the case of the respondent that denial to pay revision was accepted passively rather the case is that when the pay was not revised as per the pay revision made in the year 1992 and 1997, the representation was made for granting pay revision which prayer was rejected only during pendency of the writ application which was also challenged. Therefore, it can not be said to be a case of passive or tacit acceptance of denial of any right of the petitioners. Consequently, the respondent no.1 is hereby directed to do needful in the matter relating to pay revision of the petitioners as per revision of pay made in the year 1992, 1997 and 2007 within eight weeks from the date of receipt/production of a copy of this order and so far rest of service conditions

14 relating to promotion, seniority etc. is concerned, it be granted with six months Thus, this application stands allowed. ( R. R. Prasad, J.) ND/