Dismissed

Punjab State Fedrn. of Coop. Sugar Mills Limited v. Pavitar Kaur and Ors.

Punjab & Haryana HC4 Aug 2010LPA/906/2010

Case brief

AI extract

What is this about?

This Letters Patent Appeal concerns the quashing of a Single Judge order reinstating employees who had volunteered for retirement under a Voluntary Retirement Scheme. The High Court held that since the single Judge found retirement arbitrary due to retention of junior staff, the High Court dismissed the appeals. The court ruled that no refund of gratuity and leave encashment was necessary as these

What did the court decide?

No refund of amounts was ordered; instead, it was directed to be adjusted at the time of final retirement payment.

Punjab State Fedrn. of Coop. Sugar… — Pension and Retirement Benefits | Punjab & Haryana HC (2010)

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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

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Letters Patent Appeal No.906 of 2010(O&M) Date of decision: 4.8.2010

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Punjab State Federation of Cooperative Sugar Mills Limited

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…..Appellant

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versus

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Smt.Pavitar Kaur and another

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……Respondents

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CORAM: Hon’ble Mr.Justice Jasbir Singh

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Hon’ble Mr.Justice

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Augustine George Masih

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Present: Mr.Govind Goel, Advocate with Mr.Saurabh Goel, Advocate for the appellant Mr.Pawan Kumar, Senior Advocate with Mr.Saqib Ali Khan, Advocate for the caveators

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Jasbir Singh, J. (Oral)

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This order will dispose of nine appeals bearing LPA Nos. 906 to 914 of 2010, arising out of common impugned order dated 7.7.2010, involving same question of law and facts . For facility of reference, facts are being taken from LPA No.906 of 2010.

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Vide order dated 8.12.2005,

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respondent Nos.1 and 2 were ordered to voluntarily retire from service, in consequent to Voluntary Retirement Scheme Annexure P2 (in short VRS Scheme). They came to this Court by filing CWP No. 255 of 2006. In the above said writ petition, they made the following prayers:-

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i) issue a writ in the nature of mandamus, prohibition or any other writ, order or direction, directing the

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Letters Patent Appeal No.906 of 2010(O&M)

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respondents not to dispense with the services of the petitioners by retaining in service the persons junior to them on structuring of the staff of the Sugarfed.

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ii) It is further paid that a writ in the nature of certiorari may also the issued for quashing the letter Nos.4089, 4090 dated 8.12.2005, Annexures P-6 and P-7, vide which the option of adopting VRS scheme by the petitioners has been accepted by retaining the persons junior to them being totally discriminatory and violating of Articles 14 and 16 of the Constitution of India.

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iii) It is further prayed that the petitioners may be permitted to continue on the posts which they are occupying till such time the respondent Department – Sugarfed is wound up.”

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It is an admitted fact that vide

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the above said letters dated 8.12.2005, the respondents were relieved from service, the amount due to them, as per alleged VRS Scheme was deposited in their bank accounts which they had accepted under protest.

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Upon notice, reply was filed by the respondents, where in it was stated that retirement of the petitioners from service was justified because they had opted for the same under VRS Scheme. The learned single Judge, after hearing both the parties, came to a conclusion that when letter of retirement was issued on 8.12.2005, the socalled VRS scheme was not in operation and further that some employees junior to the respondents, were retained in service without any justification. The writ petitions were allowed. The relevant portion of the order passed reads thus:-

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Letters Patent Appeal No.906 of 2010(O&M)

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“The facts which are not disputed are that the petitioners were employees of the respondent-Sugarfed and were posted in the head office.

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They constituted a group of seventy employees in all. The respondent- Sugarfed circulated the V.R.S. with the ostensible purpose of tiding over the financial crisis and also for achieving optimum human resource utilization. The V.R.S. was to remain operational for a period of six months.

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All the seventy employees posted in the head office of the respondent- Sugarfed exercised their options under the V.R.S. The respondent-Sugarfed, who had brought its own employees to the brink of unemployment, was, therefore, required to act with some element of promptitude so as to lessen the impact of uncertainty with which the employees were confronted. Rather, it chose a path of inaction. The reason which has been propounded before this Court for such an inaction was that the decision to accept the options of the employees and retire them involved huge financial implications for which necessary sanction and approval had to come from the State Government.

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The Court is not enamoured of the explanation which has been put forward for the simple reason that the decision of the government and its functionaries which affects the rights of an employee, even though involving financial implications, should have been taken within a reasonable time and the employees could not have been left with sword of impending unemployment for all times to come. The laudable object of the

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Letters Patent Appeal No.906 of 2010(O&M)

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V.R.S. was disinvestment and optimum utilisation of the human resource and the delay in taking a decision defied both as it neither resulted in utlisation of the human resource nor it achieved the objective of reducing financial burden on the resources of the respondent-Sugarfed. Rather, the respondentSugarfed burdened itself with its inaction on account of payment of salary and allowances to the employees for another two years. In any eventuality, even if these aspects are to be ignored and some leverage is to be given to the respondentSugarfed on account of inaccuracies and the ways of the decision taking process in the government, causing delays, yet, the core question would be that once the respondent-Sugarfed took the decision of re-structuring the organisation by retaining certain employees, then whether such a decision was enforced by making a coherent and logical policy or not. Annexure P4 which has been attached with C.W.P.No.255 of 2006 shows that the respondent-Sugarfed took a decision to retain 27 employees

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when it evaluated its needs which is reflected in Annexure-II attached therewith. Strangely enough, at the time of implementation of the said decision, forty one employees were retained. This not only reveals a complete departure from the earlier decision, but also exemplified the complete arbitrariness on the part of the respondent- Sugarfed when it chose to accept the options of certain employees while retaining the others. What has been contended by the learned counsel for the respondent-Sugarfed is that only those

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Letters Patent Appeal No.906 of 2010(O&M)

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employees were retained whose career record was good and that entire action was taken pursuant to the V.R.S. itself which contemplated retention of the skilled employees.

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I am afraid, no such criteria has been revealed to the Court as to on what basis and how was the assessment of the career record of the employees done? Even though it has been stated that a Committee was formed, yet, the whole exercise should have been reflective of a justiciable criteria which should have been manifested itself in the decision of the respondentSugarfed to retain such employees.

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It is a settled proposition of law that action of a public authority should be fair and able to withstand judicial scrutiny. In my opinion, the decision of the respondentSugarfed to retain forty one employees without adopting any criteria to evaluate either their career record or to display its needs is totally arbitrary, discriminatory and violative of Articles 14 and 16 of the Constitution of India and hence, unsustainable.

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Much has been said by the counsel for the respondentSugarfed that once the petitioners have accepted the amounts which were deposited in their accounts on account of acceptance of their applications under the V.R.S. and, therefore, they were estopped from making any grouse on that account. Reliance has also been placed on the judgment in the case of Punjab and Sind Bank and another Versus S.Ranveer Singh Bawa and another (supra) to say that once the amounts were deposited by the respondent-Sugarfed and accepted by

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Letters Patent Appeal No.906 of 2010(O&M)

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the petitioners, the V.R.S. became effective and the employees had no option, but to go out of the organisation.

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I have gone through the judgment referred above, but find that the same is of no assistance to the case of the respondentSugarfed as it was a case where the voluntary retirement scheme was to commence w.e.f. 1.2.2000 and remain operational till 31.12.2000 and during this period, respondent no.1 therein exercised option on 6.12.2000,but sought to withdraw it on 22.12.2000. The scheme was modified on 23.12.2000 and the employee continued to press the withdrawal of his option on 30.12.2000 and 17.1.2001 and followed it up by various reminders, but that was not accepted in view of the clauses thereof which prohibited such withdrawal and also in view of the fact that the bank had deposited the amount on 31.3.2001. Thus, the facts themselves reveal that the entire exercise undertaken by the bank was with promptitude as within few months of the time when the option was exercised by such employee, he was handed over the amount which was contemplated in the voluntary retirement scheme, but in the instant case, the respondent-Sugarfed took no action on the options exercised by the employees for as many as two years and continued to treat them as its regular employees even though the V.R.S. contemplated a life of only six months. The action of the respondent-Sugarfed was, therefore, palpably unjustified, compounded further by its decision to retain certain

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Letters Patent Appeal No.906 of 2010(O&M)

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employees which exercise again was conducted arbitrarily without laying down any cogent criteria for the same.

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Moreover, there is material on record to show that the petitioners had accepted the amounts under protest. Even otherwise, in view of the reasoning which has been given above, when the V.R.S. in pursuance of which the petitioners had responded was kept in abeyance for more than two years and was virtually substituted by another decision of restructuring the organisation by retaining certain employees, I am of the view that merely because the respondent-Sugarfed had unilaterally deposited the amounts in the accounts of the petitioners would not, in any way, prejudice their case and bind them to such an unilateral decision.

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Looking at it from any angle, the action of the respondentSugarfed cannot be termed to be sustainable in the eyes of law. As a result thereof, the impugned orders/ letters in all the writ petitions are quashed and the petitions stand allowed. The petitioners are directed to be taken back in service and except for salary & allowances, they shall be entitled to all other such benefits as are admissible to them under the relevant service rules.”

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Hence, this appeal.

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It is apparent from the records that VRS Scheme was circulated amongst employees of the appellant vide letter dated 1.9.2003. Record reveals that above said scheme was approved by the State of Punjab for employees working in various public sector undertakings. The Registrar Co-operative Society Punjab has approved that

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Letters Patent Appeal No.906 of 2010(O&M)

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scheme for all Sugarfed Employees posted at Head Office and in the Coop. Sugar Mills as resolved by the Board of Directors of Sugarfed, Punjab. The applications were to be submitted upto 30.9.2003. It is an admitted fact that in response to the letter mentioned above all the petitioners i.e. 17 in number (respondents herein), working in the head office of the appellant, opted for voluntary retirement under VRS Scheme and moved applications accordingly. It is also an admitted fact that no action was taken within the period stipulated in VRS Scheme and the employees were allowed to continue in service till 8.12.2005, when impugned orders were issued.

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It is contention of counsel for

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the appellant that once the employees have failed to withdraw their option for voluntary retirement, it was open to the appellant to accept the same at any time, as has been done in this case.

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After hearing counsel for the

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appellant, we are not inclined to accept the argument raised.

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Before proceeding further, it is

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necessary to note down some relevant provisions of the VRS Scheme.

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2. OBJECTIVE

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i) to achieve optimum human resource utilization. ii) to optimize return on investment in PSU. iii) in implementing the VRS scheme, managements shall ensure that it is extended primarily to such employees whose services can be dispensed with without detriment to the company. Care shall be exercised to ensure that highly skilled and qualified workers and staff are not given the option. As there shall be no recruitment against vacancies arising due to VRS, it is important

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Letters Patent Appeal No.906 of 2010(O&M)

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that the organization is not denuded of talent. The managements of the PSUs shall introduce the VRS with the approval of their Boards and the administrative departments. Under no circumstances shall grant of VRS be construed as a right.

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xxx xxx xxx

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xxx

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4. OPERATION OF THE SCHEME:

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The scheme shall remain in operation for six months from the date of issuance of notification to this effect. The Govt. may extend it from time to time. (emphasis supplied)

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i) within the period of operation:

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a) In the case of a PSU which does not require budgetary or other external support to implement the scheme, it shall come into operation upon the approval by the Administrative Department of a resolution of the Board of Directors and the scheme be brought into effect with specified eligibility criteria.

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b) In the case of a PSU, which requires budgetary or any external sport to implement the scheme, it shall continue operation only after the Department of Finance’s approval of the Administrative Department based on a resolution of the Board of Directors as in (a) above to this effect.

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ELIGIBILITY

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Letters Patent Appeal No.906 of 2010(O&M)

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All persons employed on permanent/regular basis working against the sanctioned graded post of Public Sector Undertakings will be eligible to Voluntary Retirement provided they have completed a minimum five years service and have at least five years of service remaining before superannuation.

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However, the employees falling in the following categories determined by the concerned PSUs are not eligible to seek voluntary retirement under the scheme:

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(a) specialist employees have executed service bonds and have completed the period prescribed therein;

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(b) Employees serving abroad under special arrangements/bonds

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(d) Employees appointed on contract basis;

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(e) Any other category of employees as may be specified debarring the Public Sector Undertaking from seeking retirement under the scheme.

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Note:

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In case disciplinary action is pending against an employee, who sought voluntary retirement, c shall after considering all facts, convey to the Competent Authority whether the request of the employee should be accepted or not. In case Disciplinary Authority decides that the request of such an employee for Voluntary Retirement be not accepted, the same shall be communicated to the employee in writing and he shall have a right to make an appeal as provided under section 9(v).

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xxx xxx xxx

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Letters Patent Appeal No.906 of 2010(O&M)

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xxx

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*9. PROCE*	*DURE:*	xxx
xxx	xxx xxx
		xxx xxx
(ii)	the Competent Authority may after conside	ring
	the application, after giving an opportunity to	the
	applicant of being heard, speaking order with	in a
	period of three months, either accepting	or
	rejecting the request (emphasis supplied)
xxx	xxx xxx
		xxx
		xxx
*10.*	*GENERAL CONDITIONS*
xxx	xxx xxx
		xxx
		xxx
(v)	No employee shall be allowed to withdraw	the
	request made for voluntary retirement under	the
	scheme after it has been accepted by	the
	competent authority.

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Letters Patent Appeal No.906 of 2010(O&M)

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(vi) The competent Authority shall have absolute discretion either to accept or reject the request of an employee seeking Voluntary Retirement under the Scheme. The reasons for rejecting the request of any employee seeking Voluntary Retirement shall be recorded in writing by the Competent Authority.”

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A reading of the provisions, mentioned above, clearly indicates that the applications were to be made within one month from the date of notification of the Scheme i.e. 1.9.2003, which the respondents did as per the norms prescribed. It is apparent from the records that the scheme was to remain in operation for a period of six months from the date of issuance of the notification unless the time is extended by the government. It is not in dispute that both the respondents were eligible for voluntary retirement. It is also not coming out from the records that request of an employee for voluntary retirement was to be processed within a period of three months by either accepting or rejecting the same. It was further provided that in case the competent authority fails to pass an order, rejecting request by the due date, as given in the scheme, the request would be deemed to have been accepted and the employee would be deemed to have retired from service. It is apparent from the records that no action was taken under the provisions of the Scheme. Its period was not extended by the government. It was allowed to lapse. The matter continued to remain pending between various authorities and ultimately decision was taken to retire the private respondents vide order dated 8.9.2005. At that time, no VRS Scheme was in operation. It was incumbent for the authorities to ask the employees again to apply under the VRS Scheme by extending its time. It was not

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Letters Patent Appeal No.906 of 2010(O&M)

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done. Some employees, who were junior to the petitioners retained in service. Appellant has failed to show any rationality in retaining the junior employees.

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It is contention of counsel for the appellant that in the event of reinstatement of the employees, it was necessary to direct the respondents to return the money, which they had accepted when they were retired from service.

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It is an admitted fact that to all of the employees, involved in all these nine appeals, an amount of Rs.74.23 lacs was paid. Out of this amount, Rs.16.97 lacs were paid towards gratuity and Rs.8.38 towards leave encashment. So far as amount towards gratuity and leave encashment is concerned, this was the right of the employees, which they were entitle to get even otherwise, if they had continued in service. However, instead of asking return of this amount, the appellant can adjust the same at the time of final payment towards those benefits, at their retirement. So far as rest of the amount is concerned, we are of the opinion that it is not necessary to issue any direction to the respondents to refund that money because due to wrong action on the part of the respondents, they were kept out of service for a long period of five years. They were ready and willing to work and if back wages etc. are counted, at least an amount to the extent of Rs.10 lacs would fall due, to each of the employees, thrown out of service.

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No case is made out for interference.

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Consequently, all the nine appeals stand dismissed.

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(Jasbir Singh) Judge

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04.08.2010 (Augustine George Masih) gk Judge

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Letters Patent Appeal No.906 of 2010(O&M) 14

Punjab State Fedrn. of Coop. Sugar Mills Limited v. Pavitar Kaur and Ors.

Case brief

What is this about?

What did the court decide?

Punjab State Fedrn. of Coop. Sugar Mills Limited v. Pavitar Kaur and Ors.

Case brief

What is this about?

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