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Judgment
Gita Mittal, J.—By these writ petitions, employees of the National Textile Corporation (Delhi, Punjab & Rajasthan) Ltd. are impugning the action of the respondents in offering Voluntary Retirement Scheme (hereinafter referred to as ''VRS'') to be implemented in 20 mills in violation of a scheme of rehabilitation of several units of the National Textile Corporation (''NTC'' for short) which stands approved by the Board for Industrial Financial Reconstructions (''BIFR'' for short). There is no dispute to the factual matrix which is identical in both petitions and to the extent necessary is noticed hereinafter. The prayers made in both the writ petitions are identical and therefore they are being taken up together for disposal.
It appears that on an issue relating to revision of wages of the employees of NTC, a matter was pending before the Supreme Court of India since 1997. The National Textile Corporation (Delhi, Punjab & Rajasthan) Limited (hereinafter referred to as NTCDPRL) made a reference to the BIFR u/s 15(1) of the Sick Industrial Companies (Special Provision) Act, 1985 (hereinafter referred to as ''SICA''). This company was declared sick u/s 3(o) of SICA on 15th April, 1994. The Industrial Development Bank of India (''IDBI'' for short) was appointed as an operating agency u/s 17(3). It formulated a draft revival scheme and submitted the same to the Board which was circulated on 17th December, 1994.
In the meanwhile, a proposal was prepared by the Northern India Textile Research Association (hereinafter referred to as "NITRA") at the behest of the Ministry of Textiles, Government of India and was given approval by the BIFR on the 10th May, 1995. The respondent/NTCDPRL assailed this order passed by the BIFR in an appeal before the Appellate Authority for Industrial & Financial Reconstruction and the matter was remanded to the BIFR pursuant to the order of the Appellate Authority in August, 1995.
In these circumstances, this proposal also could not materialise and a revised draft scheme was prepared by IDBI for the subsidiaries and was circulated by BIFR in March, 1996. This scheme could not be sanctioned mainly due to lack of Government of India, the promoters, to give commitment to provide bridge finances.
Faced with a situation where no revival proposal was being approved, the BIFR, at one stage, issued notice to show cause as to why the NTCDPRL not be wound up. This show cause order was kept in abeyance vide order dated 23rd March, 2001 in public interest. Finally, a Draft Revival Scheme was closely scrutinised and was approved. The summary record of the proceedings of the hearing held on 22nd February, 2002 contained the Scheme which was finally approved by the BIFR. The clauses of scheme relevant to the issues raised before this Court read as under:
The MD of the NTCDPRL observed that the company NTCDPRL would offer VRS in terms of the GOI Notification dated 6.11.2001 to all the employees of unviable mills and in the event of non-acceptance of VRS, the compensation as per the Industrial Disputes Act would be allowed, for which necessary input would be made in the VRS offer. NTCDPRL would also offer VRS for surplus labour of the viable mills and had entered into an MoU with the labour unions concerned in terms of Labour Law.
Shri K.M. Chadha for NTCHCL informed all concerned that the VRS would be offered as per the terms of the Notification of the GOI dated 6.11.2001 and after the approval of the Government, they had circulated the same to all the mills. He added that earlier if a worker was to get Rs. 100 as VRS, under the new scheme he would get Rs. 140-180 against the same because earlier the formula for compensation was based on 26 days in a month while in the new scheme, thirty days average had been taken. The labour would get the benefits accordingly as the number of days had been increased. He also stated that the option would be given to the workers to opt for the VRS and if the workers would not opt for the same, they would be paid as per the Industrial Disputes Act norms. Further, the VRS would be given to all the workers of unviable mills and the mills to be closed and to the surplus workers of the viable mills. He mentioned that no discrimination in this regard would be done and a uniform policy would be adopted for all the subsidiaries.
It appears that on the 22nd February, 2002, a written submission was also made by the NTCDPRL before the BIFR wherein it was stated thus:
THAT, a Memorandum of Understanding has to be reached between the workers/unions and the management of mills of NTC (DP & R) Ltd, as per Order dated 23.10.2001 circulated by BIFR forwarding therewith Draft Rehabilitation Scheme to the applicant company and the other concerned parties.
THAT, it was inter-alia envisaged in para 6(F) read with para 7.01 (iv) of the DRS, that NTC (DP & R) Ltd. should enter into MOU with workers/unions for rationalization of labour, adoption of workload/productivity norms, redeployment/transferability, VRS, moratorium of wage revision, etc.
THAT in pursuance of the aforesaid direction, bilateral discussions were held between representative unions and the unit representatives of Kharar Textile Mills, Kharar (Punjab), Suraj Textile Mills, Malout (Punjab), Mahalakshmi Mills, Beawar (Rajasthan); Shre Bijay Cotton Mills, Bijainagar (Rajasthan) and Udaipur Cotton Mills, Udaipur, the five mills proposed for revival and accordingly in the meetings held on 08.02.2002, 11.02.2002, 14.02.2002; 13.02.2002 and 27.12.2001 at respective mills, the following agreement is reached between the management and the unions:
i) It is agreed that the various norms for computation of workload for rationalization of manpower, as laid down by NITRA/industry norms will be adopted.
xxx xxx xxx
A prayer was made for approval of the rehabilitation scheme of the NTCDPRL before the BIFR. In order to appreciate as to whether any surplus labour existed in the mills which had been considered as viable in the Scheme before the BIFR, it becomes necessary to examine the reports submitted by the North India Textile Research Association (NITRA) at the behest of NTCDPRL. This report included the norms for computation of workload for rationalisation of manpower. The report and modernisation proposal was given by the NITRA to NTCDPRL. The BIFR has noticed that a Group of Ministers was constituted by the Ministry of Textiles Act of the Government of India headed by the then Finance Minister for revival of the sick NTCDPRL subsidies. This group had approved a project plan for revival of these subsidiaries. In accordance with this approved project plan, the NTCDPRL had updated the techno-economic viability studies and submitted an updated report to NITRA for further scrutiny. The revival proposal was prepared by the NTCDPRL based on the upto date reports vetted by NITRA submitted to the IDBI in April, 2001. Extract of this report has been placed before this Court as well. Five mills were considered viable by all concerned. In the modernisation proposal put forth the NITRA, the manpower projections were projected thus:
--------------------------------------------------------------------------- Viable Mills Unviable Mills --------------------------------------------------------------------------- Kharar Textile Mills, Kharar, Edward Mills, Beawar, Punjab Rajasthan --------------------------------------------------------------------------- Suraj Textile Mills, Malaut, Dayalbagh Spinning & Punjab Weaving Mills, Amritsar, Punjab --------------------------------------------------------------------------- Udaipur Cotton Mills, Panipat Woolen Mills, Udaipur, Rajasthan Kharar, Punjab --------------------------------------------------------------------------- Shri Bijay Cotton Mills, Ajudhia Mills, New Delhi. Bijaynagar, Rajasthan --------------------------------------------------------------------------- Mahalaxmi Mills, Beawar, Rajasthan --------------------------------------------------------------------------- (i) Kharar Textile Mills:
The on-roll strength after modernisation has been reflected as 572 workers and it was stated that shortage of labour, if any, would be managed by employing overtime and/or casual labourers.
(ii) Suraj Textiles Mills:
On roll strength of workers on 31st March, 2000 was noticed as numbering 576. It was observed that shortage of labour, if any, would be managed by employing overtime and/or casual labourers. While working out the on-roll strength required after modernisation, improved work assignment have been adopted.
(iii) Udaipur Cotton Mills:
In this mill, against the existing on-roll strength on 31st March, 2000 of 311 workers, the worker strength required after modernisation of workers alone was projected as 680.
(iv) Shree Bijay Cotton Mills:
531 employees on its whole strength on its rolls as on 31st March, 2000. The strength as on 31st March, 2000 of workmen (permanent and badli) were numbering 470. According to NITRA, since the real strength has considerably reduced on account of superannuation and resignation, fresh recruitment shall be required of the working force to effectuate the modernisation.
(v) Mahalakshmi Mills at Beawar (Rajasthan):
As on 31st March, 2000, this mill had 330 workers on its strength. The on-roll strength of workers required after modernisation projected as 645 workers.
The petitioner has relied on this modernisation proposal submitted by NITRA which was placed before the BIFR. The projections have been noticed for the reason that it has been brought to this Court''s notice that according to projections which formed the basis of the draft scheme which was finally approved by the BIFR on 22nd February, 2002, so far as the five viable mills of the NTCDPRL are concerned, there was no surplus labour and NITRA had itself projected that additional labour would be required.
It is contended that the scheme of rehabilitation approved by the BIFR has to be implemented and that the respondents have unreasonably dragged their feet. Further, according to the petitioners, the NTCDPRL is purporting to revise the approved scheme without any sanction or permission thereof by the BIFR.
A letter dated 13th January, 2005 issued by the Ministry of Textiles of the Government of India has been placed on record wherein it was thus directed:
No. 18011/9/96-NTC
Government of India
Ministry of Textiles
Udyog Bhavan, New Delhi
Dated the 13th January, 2005
OFFICE MEMORANDUM
Subject: Implementation of Rehabilitation Schemes of NTC
Government has reviewed the rehabilitation schemes of NTC and with a view to take the process forward, directed as follows:
i) VRS scheme should be introduced in the 20 NTC mills where workers have been asking for the same. If majority of the employees opt for VRS in these mills, they should be closed under ID Act. An amount of Rs. 500 Cr. Required for VRS in these mills should be mobilised by floating government guaranteed Bonds.
ii) A fully tied up, mill-wise proposal for modernisation of 15 best performing mills should be submitted for consideration of Government.
iii) In regard to the rest, VRS should be introduced to reduce the surplus workforce following Industry standards. Simultaneously, offers from reputed private entrepreneurs to take over and modernise the mills should be invited. The terms for such a private partnership should need to be carefully crafted to ensure continuation of the mills while preserving their asset base. The response in this regard should be reported to Government.
iv) Sale of surplus land should be done as per Consultants'' advice in a way as to maximize returns to NTC.
v) NTC should be restructured into a single Company by merging all the 9 subsidiaries with the Holding Company.
vi) The budgetary support for meeting the actual shortfall in wages of NTC should be continued till completion of the rehabilitation Scheme.
NTC should take expeditious action on the above decisions after taking approvals of BIFR, wherever required and send monthly reports on implementation of the above directions.
It is noteworthy that this communication mandates that the NTCDPRL was required to take expeditious action on the afore-stated only after taking approvals of the BIFR wherever required. The NTCDPRL held a meeting of workers union of all the mills of the company on the 27th January, 2005. In this meeting, the Chairman-cum-Managing Director of the NTCDPRL presided over the meeting. So far as the issues raised in the present writ petition are concerned, Clause 7 of the minutes of this meeting are important which reads as follows:
The CMD invited the attention of the Trade Union representatives to the provisions of the BIFR Revival Scheme where it is indicated to defer demand for any wage revision and additional facilities/allowances, except normal increase in quantum of DA consequent upon increase in the price index/annual increments in basic pay, at least during the implementation of the scheme or till the respective units achieve break/even level, whichever is later.
The CMD also added that the Trade Unions had entered into an agreement with the management to the effect that during the implementation period there will be no wage revision. He wanted that if modernisation is undertaken, the work load of the employees have to be revised as per the BIFR norms. In respect of KTM and STM, it was informed that the percentage of net contribution to wages is around 20% whereas in the case of other 3 mills it is just 5-10% only and the remaining amount for the wages are provided by the Govt. by way of budgetary support. The CMD also informed that in any case an integrated scheme in respect of the proposed revised scheme, will be submitted to the BIFR for its approval and that there are only two options before the Company either to agree for the revised scheme or the option may, perhaps before the winding of the Company by the BIFR in case the Revival Scheme does not succeed.
However, after the opinions by Trade Unions, there was a general consensus among the representatives and requested the management that the notice of MVRS be displayed in all the five mills of NTC (DP & R) Ltd., so that those employees who want to go may go under the MVRS. The response of the Trade Unions to the MVRS notice will also become more clear, once it is notified. The Trade Unions were unanimous in their opinion that in the absence of any wage revision, it is better to offer MVRS and it is not necessary to discuss the same with the Trade Unions. It was, therefore, finally decided that their request will be favorably considered by the management and MVRS notice will be put up in all the five mills once the matter is taken up with the BIFR.
It is, therefore, explicit that so far as the proposal of offering a Modified Voluntary Retirement Scheme (`MVRS'' for short) to the workers in the five mills which are viable is concerned, the same was to be proceeded with only once the matter had been taken up with the BIFR.
Without filing any proceedings before the BIFR to seek its approval with regard to the modification proposed by the NTCDPRL, in a purported effort to assess the response of the workers in the five viable mills, vide a letter dated 9th February, 2005 issued by the General Manager (Technical) of the NTCDPRL, it was communicated to the five mills that "it had been decided that MVRS would be put up in all the mills to assess the response, subject to obtaining approval of the BIFR".
There can be no dispute that any proposal received or any action taken by the NTCDPRL which was not in consonance with the sanctioned scheme was subject to obtaining prior approval of the BIFR.
Concerned with the dilution of the revival scheme which was sanctioned by the BIFR on 22nd February, 2002, the National Federation of NTC Employees addressed a letter dated 22nd March, 2005 to the BIFR stating that the Government of India was acting in contravention of the Scheme and was proceeding for revival only 15 mills and closure of the remaining. It was pointed out that the Scheme to modernise and revive the viable mills was approved by the Cabinet of the Union Government in its meeting held on 4th September, 2000. It was based on this approval, the BIFR had sanctioned the Scheme on the earlier occasion. The Cabinet is stated to have approved the scheme after a unit by unit assessment and that only non-revivalable units would be closed. An attractive VRS option was to be made available to the surplus employees only.
According to the National Federation of NTC Employees, the NTC had not induced any funds for modernisation during the last three years to effectuate implementation of the approved revival scheme and, therefore, it could not have possibly treated any mill as non-viable. It was also pointed out that this VRS option was being made against the threat of closure of the mill and as a result their workmen would not be exercising a free option who may accept the offer of the VRS proposal under the threat of closure of the mill. Large number of workmen would opt for such a scheme in order to have financial security. Resultantly, on the sole ground of want of a workforce, NTCDPRL could plead that it had become necessary to close the mills.
Reliance was placed on an order dated 8th December, 2004 in Case No. 535/1992 entitled M/s NTC (Gujarat) Limited passed by the BIFR holding that neither the holding company nor any other authority had any jurisdiction to deviate from rehabilitation scheme sanctioned by the BIFR.
Faced with objections from workers in respect of the VRS option to workers in different viable mills, the NTCDPRL was left with no option but to make an application before the BIFR dated 8th April, 2005 wherein it was stated thus:
Considering the constraints stated in Para 6 above and the performance of the mills, it is proposed that the rehabilitation process is best carried forward in the following manner:
i) xxx xxx xxx xxxii) xxx xxx xxx xxx iii) Wherever workers have been demanding for VRS, it should be allowed. Accordingly, VRS Scheme should be introduced in the 19 mills which were earlier proposed for revival.
On these averments, the NTC had made the following prayer before the BIFR:
Closure of additional 19 mills after giving the benefits under VRS to the employees as in Para 8(iii) and to
xxx xxx xxx xxx
There is no dispute that even at the time of hearing of this writ petition, this application of the NTCDRL is pending before the BIFR and no steps have been taken to get the same listed and heard.
In the meantime, on the 20th April, 2005, the General Manager (Technical) of the NTCDPRL addressed a letter dated 20th April, 2005 to the General Manager of all the five viable mills. The material contents in this communication which throws much light on the intent of the NTCDPRL read as follows:
Trade Unions of our units met the Chairman and Managing Director, NTC Ltd. on 19.4.05 wherein the discussion was held on the issue of MVRS. In this context, reproduced below is the extract from OM No. 18021/8/2002-NTC dated 24.3.2005 from the Ministry of Textiles on the issue of MVRS:
The number of applications for VRS are pending and employees are seeking relief. Since NTC has got money for expending on VRS, VRS should be given to whoever applies....
Further, you may also recall the discussions held in the meeting of the General Managers on 15.4.2005 whereby it had been advised that the General Managers should call all the unions and convey that workmen desirous of availing VRS should submit their applications to the management for consideration. The discretion of approval will rest with the Management dependent upon the nature of post and its necessity/or otherwise.
Faced with an almost ''fait accompli'' situation and apprehending the consequences of the VRS option being offered, accepted and implemented, the petitioners rushed to this Court with the writ petition being WP (C) No. 9887-9891 of 2005 on 27th May, 2005 seeking the following prayers:
a) quashing and setting aside the office memorandum dated 13th January, 2005 issued by Respondent No. 4;
b) quashing and setting aside letter dated 20th April, 2005 issued by Respondent No. 1 offering Modified Voluntary Retirement Scheme to the workers of the viable mills of NTC (DP&R) Ltd.:
c) quashing and setting aside the Modified Voluntary Retirement Scheme being offered by Respondent No. 1 to the workers of viable mills of NTC (DP & R) Ltd.
d) restraining the respondents from implementing the Modified Voluntary Retirement Scheme offered to the workers by office memorandum dated 13th January, 2005 and 20th April, 2005; and any subsequent action.
e) granging such other and further relief and passing such and further orders as may be necessary in the facts of the case; and
f) Awarding cost of this petition.
So far as the prayers (a) to (c) are concerned, there is no dispute that the same would require consideration by the BIFR and that the application of the respondent in this behalf is pending even on date.
The respondents had entered appearance on advance copy in answer to notice to show cause. The respondents have placed a detailed counter affidavit on record. In the counter affidavit filed before this Court, so far as the Modified Voluntary Retirement Scheme is concerned, the respondents stated thus:
2.13 That MVRS applications received from workmen/employees of these five Mills indicate that while a significant majority of the employees of these Mills have made requests for MVRS, the Respondent has not acceded to the request of all these employees. It has in fact acting in accordance with the mandate of the sanctioned scheme which also, as noticed hereinabove, permits the respondent No. 1 to grant MVRS to employees of these five Mills. The Respondent submits that its actions of course are subject to the final outcome of the application for modification of the scheme itself made by Respondent No. 2 before the learned BIFR. The very fact that these Mills are continuing to function smoothly, indicates that the Respondent No. 1 has been judicious in exercising its discretion in allowing/accepting the MVRS requests. (Chart indicating the Muster Roll/MVRS position in the five Mills is annexed hereto and marked as ANNEXURE-2).
The counter affidavit filed on 9th September, 2005 shows that the respondents had taken a stand that there was no indiscriminate acceptance of applications made by the workmen for seeking voluntary retirement and that according to the respondents, the mills are actually functioning even on date.
During the pendency of this writ petition, the Government of India has addressed a letter dated 7th September, 2005 to the Chairman and Managing Director of the NTC holding company. It was stated in this letter that despite the letter of the Government of India dated 24th March, 2005 directing that the VRS should be given to all the employees of the NTCDPRL who desired to avail of this scheme, workers have been approaching the Ministry seeking direction to NTC to extend the facility of VRS to them. In these circumstances, the Government directed as hereunder:
xxx xxx xxx xxx 3. In accordance with the instructions of Govt. in the matter, you are requested to take immediate action for giving VRS in these mills and to ensure relief of such workers with effect from 30.9.2005. It may be noted that the amount released by the Government for meeting wage shortfall in NTC should not be spent on these mills w.e.f. 1.10.2005.
Action taken in this regard may be intimated immediately.
The directions of the Government of India have been effectuated by the respondent No. 1 in view of the afore-stated communications and notices. So far as the proposal to offer Voluntary Retirement Scheme is concerned, the NTCDPRL itself on 8th April, 2005 wrote to the BIFR to the effect that:
the Government of India, Ministry of Textiles, has, on review of the Rehabilitation Scheme of NTC, taken certain decisions. These decisions, on implementation, would result in the modification of the approved Revival Scheme. The proposal also includes restructuring of NTC into a single company by merging all the 9 Subsidiary Corporations with the Holding Company.
Herein is to be found the Government understanding of the impact of its actions.
It has also been brought to notice that the present Voluntary Retirement Scheme contains several benefits which are beyond the benefits available to a workman under the normal voluntary schemes. I find that the respondent had a Voluntary Retirement Scheme dated 26th March, 1992 whereunder the following benefits were available:
4.1 An employee whose offer for voluntary retirement is accepted, shall be entitled to the following benefits:
(a) Balance in his Provident Fund Account payable as per Employees Provident Fund Act and rules made thereunder.
(b) Cash equivalent of accumulated earned leave/privilege leave as per the rules of the mills/office, concerned.
(c) Gratuity as per Payment Act or the Gratuity Scheme, if any.
(d) Ex-gratia payment equivalent to one and a half month (1-1/2 months) emoluments (pay + DA/VDA and IR, whichever admissible) for each completed year of service or the monthly emoluments at the time of voluntary retirement multiplied by the remaining months of service before normal date of retirement, whichever is lower.
Against this, the Modified Voluntary Retirement Scheme being offered to the workmen by the NTCDPRL provides the following:
3.0 BENEFITS UNDER THE SCHEME
An employee whose offer for Modified Voluntary Retirement is accepted, shall be entitled to the compensation, details of which are given in the succeeding paragraphs.
Modified Voluntary Retirement Scheme (MVRS):
3.1.1 Ex-gratia payment equivalent to 35 days for every completed year of service and 25 days for the balance of service left until superannuation. The compensation will be subject to a minimum of Rs. 2,5000/- or 250 days salary whichever is higher. However, this compensation shall not exceed the sum of the salary that the employee would draw at the prevailing level for the balance of the period left before superannuation.
3.1.2 The Additional Ex-gratia compensation payable to an employees shall be as under:
(i) There the was no wage revision after 1.1.87 additional compensation of 100% of the eligible Ex-gratia amount as per para 3.1.1.
(ii) Where there was no wage revision after 1.1.92 additional compensation of 50% of the eligible Ex-gratia amount as per para 3.1.1.
3.1.3 Salary for purpose of VRS will consist of basic Pay + DA + HRA only. Any amount of adhoc/award will not be taken into account for this purpose.
3.1.4 Arrears of salary/wages paid due to revision, etc. will be included in computing the eligible amount and difference would be paid.
3.1.5 Payment of Bonus as per provisions in the Act.
3.1.6 For the purpose of reckoning a month while calculating Ex-gratia amount, it shall be reckoned as 30 days in a month. Further, compensation for proportionate month is also to be taken in to account for calculation for the Ex-gratia.
3.1.7 In the case of Badli workers compensation will be paid @ 35 days for every completed year and 25 days compensation for the remaining service irrespective of minimum requirement of 240 days service in a year (as in the case of permanent employees) once their names are borne on the muster roll of the mill.
The difference between two schemes is glaring and the Modified Voluntary Retirement Scheme offers much more financial benefits than the Voluntary Retirement Scheme which was in vogue.
Apart from this submission in law to the effect that the respondents had no power to modify a sanctioned scheme which had the approval of the BIFR or to implement it, I find force in the submission of learned Counsel for the petitioners to the effect that the most material difference in the schemes for voluntary retirement otherwise offered and the present scheme is that the respondents had stipulated that a post falling vacant as a result of an employee''s Voluntary Retirement Scheme under the scheme would stand abolished simultaneously. Stipulation to this effect is to be found in Clause 5 of the Modified Voluntary Retirement Scheme which reads thus:
5.0 PROCEDURE
5.1 An eligible employee may submit an application in the prescribed form for voluntary retirement under the scheme by tendering resignation from the post held and service in NTC to the Competent Authority. The post falling vacant as a result of an employee''s voluntary retirement under the scheme shall in all cases stand abolished simultaneously while accepting resignation and order to that effect issued simultaneously before disbursing retirement benefits to employees under this scheme and no person (Permanent/badli/substitute/temporary, etc. shall be engaged in his/her place.
5.2 The abolition of a vacant post shall not be treated as a substitute for abolition for an occupied post. In exceptional cases and for reasons to be recorded in writing a corresponding manned post (Not vacant post) can also be abolished. Orders to the effect shall be issued before accepting resignation and disbursing retirement benefits.
I find that the VRS option being offered by the respondent No. 1 does not contain any of the nuances of the usual Voluntary Retirement Scheme where the result of the retirement is not abolition of the post.
There can therefore be no dispute that the spirit, intendment and purpose of the respondents in implementing the Modified Voluntary Retirement Scheme is to reduce the work force irrespective of whether they are or are not surplusage even in the five viable mills, without drawing any distinction between the viable and unviable mills. Wielding the "stick" of the threatened closure and dangling the "carrot" of the huge monetary benefits before the workmen, the purpose is to induce the workers into opting for the VRS to facilitate and effectuate mill closure.
The impact of the offer for VRS is to be found in the figures placed by the respondents before this Court which are as follows:
---------------------------------------------------------------------------------- Name On Roll On Roll MVRS No. of No. of Total No. of of the position position application workers workers workers mills as on as on of workers relieved relieved relieved 31.5.2005 22.9.2005 received by under under under MVRS the mills MVRS upto MVRS upto upto 22.9.2005 upto 30.9.2005 10.5.2005 30.9.2005 ---------------------------------------------------------------------------------- MLM 324 225 223 99 109 208 ---------------------------------------------------------------------------------- SBCM 446 294 319 151 180 331 ---------------------------------------------------------------------------------- UCM 377 217 344 151 180 331 ---------------------------------------------------------------------------------- KTM 629 408 551 200 336 536 ---------------------------------------------------------------------------------- STM 126 + 2 staff 506 + 2 staff 524 397 464 380 ---------------------------------------------------------------------------------- Total 2300 1541 1901 729 1238 1965 + 2 staff ----------------------------------------------------------------------------------
An extract of the worker strength position placed before this Court by the petitioner is as follows:
---------------------------------------------------------------------------------- Name of the Mills On roll at the time Required strength in Present on roll Sho- of the scheme the scheme position as on tage (Modernisation) 21.9.2005 ----------------------------------------------------------------------------------- 1 2 3 4 (3-4) ----------------------------------------------------------------------------------- Worker Total Worker Total Worker Total ----------------------------------------------------------------------------------- Kharar Textile Mills, Kharar, Punjab 740 811 572 643 408 466 177 ----------------------------------------------------------------------------------- Suraj Textile Mills, Muktsar, Punjab 576 645 572 637 397 451 186 ----------------------------------------------------------------------------------- Udaipur Cotton Mills, Udaipur, Rajasthan 475 544 680 750 217 264 486 ----------------------------------------------------------------------------------- Shree Bijay Cotton Mills, Bijaynagar, Rajasthan 470 531 709 775 345 407 368 ----------------------------------------------------------------------------------- Mahalaxmi Mills, Beawar, Rajasthan 330 416 645 726 225 304 422 ----------------------------------------------------------------------------------- Grand Total 2591 2947 3178 3531 1592 1892 1639 -----------------------------------------------------------------------------------
It is, therefore, apparent that the employees have been persuaded by the threat of closure of the mills and have post haste accepted the offer communicated by the respondents. The offer by the respondents itself was required to state that the offer was subject to the orders by the BIFR as was stipulated by the Government of India in its letters dated 13th January, 2005 and 27th January, 2005. The only reason for putting up the notice for the VRS is to be found in the communication dated 9th February, 2005. Such notice was to be put up only to assess the response of the workmen to such proposal for VRS subject to obtaining prior approval of the BIFR. In its communication dated 20th April, 2005, the NTC had reserved the right to grant approval on the VRS application of the workmen in its absolute discretion.
In the counter affidavit filed before this Court, the respondents have unequivocally stated that the action is subject to outcome of the proceedings before the BIFR. The respondents itself understood the impact of the exercise of the VRS option by the employees on its modification and revival proposals.
There is no order passed by the BIFR till date modifying the original scheme, the scheme which was sanctioned by it on 22nd February, 2005.
I find that the proceedings were pending before the Apex Court at that time and an order dated 27th September, 2003 passed by the Apex Court in SLP (Civil) No. 16732 of 1997 wherein the following order was passed by the court:
UPON hearing Counsel the Court made the following:
Intervention application is dismissed.
We have been informed that BIFR has already formulated eight schemes which stand approved by all concerned and agencies. Let the schemes as sanctioned by BIFR be implemented. The SLP and the transfer petitions stand disposed of accordingly.
The respondents are bound by the directions given by the Apex Court to the effect that the eight schemes sanctioned by the BIFR are required to be implemented.
The Sick Industrial Companies (Special Provisions) Act, 1985 has been enacted with the object of extensive proceedings which conducted to examine the possible revival of a company which has complained that its net worth stands eroded and it is unable to make profit consistently. The issue as to whether financial sacrifices are required to be made by financial institutions, banks etc, in order to facilitate revival of the company or the appropriateness of directing its winding up are considered by the BIFR before orders are passed in this behalf. An operating agency is appointed which formulates schemes which are before the Board. Once a scheme has the approval of the BIFR, the statute itself contains the effect of non-implementation thereof. Relevant extract of Section 18 and 32 of the statute read as follows:
Preparation and sanction of schemes- (1) Where an order is made under Sub-section (3) of Section 17 in relation to any sick industrial company, the operating agency specified in the order shall prepare, as expeditiously as possible and ordinarily within a period of ninety days from the date of such order, a scheme with respect to such company providing for any one or more of the following measures, namely:
(2) xxxx
(3) xxxx
(4) The scheme shall thereafter be sanctioned, as soon as may be, by the Board (hereinafter referred to as the ''sanctioned scheme'') and shall come into force on such date as the Board may specify in this behalf.
(5) The Board may on the recommendations of the operating agency or otherwise, review any sanctioned scheme and make such modifications as it may deem fit or may by order in writing direct any operating agency specified in the order, having regard to such guidelines as may be specified in the order, to prepare a fresh scheme providing for such measures as the operating agency may consider necessary.
Effect of the Act on other laws- (1) The provisions of this Act and of any rules or schemes made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law except the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973) and the Urban Land (Ceiling and Regulation) Act, 1976 (33 of 1976) for the time being in force or in the Memorandum or Articles of Association of an industrial company or in any other instrument having effect by virtue of any law other than this Act.
(2) Where there has been under any scheme under this Act an amalgamation of a sick industrial company with another company, the provisions of Section 72A of the Income Tax Act, 1961 (43 of 1961) shall, subject to the modifications that the power of Central Government under that section may be exercised by the Board without the Central Government under that section may be exercised by the Board without any recommendation by the specified authority referred to in that section, apply in relation to such amalgamation as they apply in relation to the amalgamation of a company owning an industrial undertaking with another company.
Perusal of the scheme placed before the BIFR shows that the minutes of the meeting between the trade union and the respondents show that the workmen have sacrificed wage revision for several years in order to facilitate modernisation of the five viable mills. The petitioners have claimed that upon sanction of the scheme, the workers have vested rights for revival of the five viable mills.
The bindingness of the scheme which has the sanction and approval of the BIFR fell for consideration before the Apex Court in the judgment reported at Government of Andhra Pradesh and Others Vs. V.S.R. Murthy and Others, wherein the Court held as under:
Whether absorption of the employees by the Government would be a drain on the public exchequer was a matter certainly present to the mind of the Government before taking various steps culminating in the Scheme sanctioned by BIFR. In trying to solve various steps culminating in the Scheme sanctioned by BIFR. In trying to solve various problems, the Government has to balance several interests and devise methods to suit the needs of the situation. In the present case, when certain industries had become "sick" and a large number of employees were likely to be uprooted and thus a human problem arose, the Government sought to work out certain solutions which resulted in a scheme framed by BIFR, now to say that such a Scheme could not have been framed and that Scheme would affect the rights of the other employees of the Government or likely to affect the finances of the Government is only the result of unimaginative narrow thinking on the part of the Government by relying on bureaucracy used to the usual red tapism. To depend upon the reports of the bureaucracy, which cannot take decision of such large magnitude involving human problem, would only indicate that the realities of the matter are ignored. It is only after due deliberation and after considering the financial and administrative implications the previous orders of the Government had been passed leading to a scheme framed by BIFR which has not been duly appreciated in the proper perspective by the Government. Hence, challenge to the order of BIFR made on 12.5.1999 is unsustainable. In that view of the matter, if the Government was merely guided by the reports of the bureaucracy and not on the ground realities and thereafter the ordinance has been promulgated under a misconception thinking it would be applicable to the present employees, we think, the attempt of the Government has misfired.
In 109 (2004) DLT 504 (DB) entitled Biogenics India Limited v. B.I.F.R. and Ors., the Division Bench of this Court held as follows:
In view of the afore-noted background facts, were are of the view that the BIFR was fully justified in declining to grant further time to the petitioner-company to deposit Rs. 145 lacs. A rehabilitation scheme sanctioned under the Act binds the Industrial Company, the promoters and the creditors and in the nature of a contract. If one of the participants in the scheme fails to discharge his obligation, the entire scheme falls apart.
The consequences of violating the terms of the scheme entails a stringent penalty including imprisonment which are to be found u/s 33 of this enactment.
I have no manner of doubt and hold that the respondent have no authority or jurisdiction to vary or modify a scheme of revival sanctioned by the BIFR. The action of the respondent No. 1 in acting upon the modification proposal without BIFR approval is wholly in contravention of law.
Learned Counsel appearing for the respondents has contended that though the scheme stipulated that surplus labour in the viable mills could be offered the VRS, the scheme did not provide as to which workman was surplus and who was not. It has further been urged that in this view of the matter, the writ petition raises disputed questions of fact as to who was surplus and who was not. According to Mr. Ghose, learned Counsel for the respondent No. 1, these questions cannot be agitated before this Court.
I have noticed hereinabove the reports submitted by NITRA which was relied upon by the NTCDPRL for formulating the scheme which was placed before the BIFR and which was sanctioned on the 22nd February, 2005. The NITRA, after a detailed consideration, set out the projection which has been noticed in the preceding paragraphs. No workman was found to be a surplusage in the five viable mills. The respondent No. 1 acted on this report and the scheme of revival based thereon was approved by the BIFR.
This Court is not being required to examine any issue as to the identification of surplus labour. There is no dispute that the respondents have restricted the VRS option to only surplus labour in the five mills which were viable. Indiscriminately the option has been made available to all workmen.
For this reason, in my view, there are no disputed questions of facts which require adjudication. For this reason, I find no force in the submissions made before this Court.
In contradistinction to the previous submissions and the counter affidavit filed before this Court, the respondents have now in the oral submissions urged before this Court that hundred of workers came up for exercising the VRS option and a vested right has accrued in their favour.
I find that in this behalf, the Government of India had itself directed in the communication noted above, that the offer was to be made subject to outcome of the proceedings before the BIFR. In my view, it was not open for the NTC to have accepted any offers which are in violation of the sanctioned scheme and also in violation of the specific government directive in this behalf.
This Court is not being called upon to adjudicate upon the legality, validity or the correctness of the modification proposed by the respondents in the sanctioned scheme. Undoubtedly, applications in this behalf are pending before the BIFR and that the jurisdiction with regard to the schemes or its modification lies wholly within the scope of the proceedings before the BIFR. It is made clear that nothing contained herein is any expression on the relative merit or demerit of any aspect of the modification sought by the respondents in the sanctioned scheme.
On a query by the court, learned Counsel for the respondents had submitted that in the event of otherwise effecting closure of the mill, the NTCDPRL would be required to comply with the provisions of Section 25FF of the Industrial Disputes Act, 1947. It is admitted that the financial liability of the respondents under this statutory provision is more onerous as compared to the VRS option being given to the workmen.
Looked at from any angle, there can be no manner of doubt that large number of workmen exercising the voluntary retirement option would have the result of non-availability of a work force which is essential for running a mill. The direct and inevitable result of such an exercise would be closure of the mill.
The view I have taken is fortified by a judgment of the Division Bench of the High Court of Gujarat in Letters Patent Appeal No. 2500/2004 entitled National Textile Corporation (Gujarat) Limited v. NTC Mills Technicians and Officers Staff Union (Gujarat) and Ors. It appears that in circumstances similar to those of the respondent No. 1 in the present case, the National Textile Corporation (Gujarat) Limited (`NTCGL'' for short) is before the Board for Industrial and Financial Reconstruction (BIFR) in case No. 335 of 1992 under the Sick Industrial Companies (Special Provisions) Act, 1985. The NTCGL had a large number of units which were not viable and the BIFR came to the conclusion that out of them, only two units viz. Ahmedabad New Textile Mills, Ahmedabad and Rajnagar Textile Mills were required to be revived and other mills of the Company were required to be closed down. The BIFR, accordingly, passed the rehabilitation scheme on 19.2.2002 for revival and rehabilitation of the aforesaid two units of the NTCGL. During the pendency of the rehabilitation proceedings before the BIFR, the Managing Director of the NTCGL issued notices for Modified Voluntary Retirement Scheme (MVRS) on 22nd and 29th September, 2004 offering Voluntary Retirement Scheme (VRS) to all the workers of the aforesaid two units also.
This action of the NTCDPRL was challenged by the workmen on issues similar to the issues raised before this Court in a writ petition. The learned Single Judge of the High Court of Gujarat had held in favour of the workmen and had directed the NTCGL to approach the BIFR by filing an application for obtaining a decision on the issues as to whether VRS or MVRS scheme was to be operated by the NTCGL before the different mills. A writ of prohibition was issued by the learned Single Judge against the NTCHCL not to act upon the option furnished by the workmen for VRS without prior permission of the court. Inter alia it was directed.
...that the NTCGL shall approach the BIFR by filing an application before the BIFR for obtaining the decision of the BIFR on the question of VRS or MVRS scheme to be operated by the NTCGL qua the employees of Ahmedabad New Textile Mills, Ahmedabad and Rajnagar Textile Mills.;
...directed the NTCGL not to act upon the options furnished by the workmen for VRS without prior permission of the Court and directed that the restriction shall operate for a period of four weeks from the date of the order which order came to be passed on 4.11.2004;
...and clarified that such injunction shall not weigh with the BIFR at the time of considering the application of the NTCGL or the workmen''s association/unions and the BIFR shall decide the matter on merits in accordance with law.
These directions of the learned Single Judge were impugned before the Division Bench which rejecting the challenge, observed as follows:
Having heard the learned Counsel for the parties, it appears to us that when the BIFR is still seized of the matter, the appellants cannot be permitted to do anything which would come in the way of effective implementation of the rehabilitation scheme sanctioned by the BIFR on 19.2.2002 in respect of the Ahmedabad New Textile Mills and Rajnagar Textile Mills.
Mr. Nanavati''s submission, that any such clarification is not warranted, cannot be accepted because the BIFR has specifically observed in para 7 of its summary record of proceedings of the hearing held on 8.12.2004 that neither the Company, NTCGL, nor the holding Company, NTCHCL, had any authority under the law to deviate from the rehabilitation scheme sanctioned on 19.2.2002 by the Board, which was a quasi-judicial authority. The Bench directed the Company/GOI to ensure that the number of workers in the Ahmedabad New Textile Mills and Rajnagar Textile Mills does not fall below 641 and 634 respectively as per the approved sanctioned scheme and after maing aforesaid observations, the BIFR specially directed issuance of notice under Sections 33 and 34 of the Sick Industrial Companies (Special Provisions) Act, 1985 to the Managing Director of the NTCGL to show cause why action should not be taken against him for issuing the MVRS notices dated 22.9.200 and 29.9.2004 offering VRS to all the workers, instead of only to the workers of those departments/streams where surpluses had been identified.
Without making any observations on the issue/s pending before the BIFR, it would be incongruous to hold that the NTCGL can still implement the notices dated 22.9.2004 and 29.9.2004 and act upon the options furnished by the employees, which process would result into a large number of employees leaving the aforesaid two units of the NTCGL, more particularly when the NTCGL has not even given any letter or undertaking to the BIFR to the effect that not less than 641 and 634 workers would continue to be employes as per the rehabilitation scheme for the above two units of the NTCGL and that the vacancies created, if any, would be filled through new recruitment.
We, therefore, see no merit in this appeal in so far as it challenges the two orders of the learned Single Judge - the order dated 4.1.2004 in SCA No. 14445 of 2004 and the order dated 31.1.2005 in MCA No. 104 of 2005.
In this view of the matter, I find no force in the submissions made by the respondent No. 1. A plea has been urged that the VRS option has been made available to the workmen only after full consideration of the cost benefit to the workmen as well as the concerned industry. It has been submitted that public funds are at stake and that any prohibition in implementing the VRS would have grave consequences.
I have noticed that the respondent was aware that it could not have modified the sanctioned scheme without approval of the BIFR. The Government of India was also aware of this requirement in law and had clearly notified the respondent to this effect as back as on 13th January, 2005. The respondents have filed an application before the BIFR on 8th April, 2005. Though it is stated that the BIFR was not functioning at that time, however, it is admitted before this Court that the BIFR had started functioning since June, 2005. In case there was such grave expediency in implementing the VRS, the respondents would have ensured hearing in this application.
I find that WP (C) No. 9887-91/2005 are pending before this Court since as back as on 30th May, 2005. Still the respondents have not been persuaded to act in accordance with law. The mandate of the statute is clear and unambiguous. The respondents cannot avoid the same on any pleas whatsoever.
Placing reliance on the pronouncement of the Apex Court in Jai Singh Vs. Union of India and Others, . Executive Engineer, Bihar State Housing Board Vs. Ramesh Kumar Singh and others, & Sree Kumar R. Vs. Union of India (UOI) and Another, , an argument was also raised on behalf of the respondent No. 1 that the petitioner has filed an application before the BIFR and it has an alternative efficacious remedy and consequently, should be non-suited.
It is well settled that availability of an alternative remedy is a rule of convenience and is not an absolute prohibition to exercise of writ jurisdiction. In the instant case, in the face of the scheme for revival being sanctioned as back as on 22nd February, 2002 by the BIFR, the respondents were bound by the same. Any violation of the scheme amounts to violation of the provisions of Section 32 of the SICA. The respondents have also accepted this position and had moved an application before the BIFR which is pending.
The apprehension of the petitioners are fully justified in the light of the figures placed before this Court by the respondents in terms of the number of persons who have been permitted to exercise the VRS option. The effect of such acceptance is inevitable and would have drastic consequences on persons who are unwilling to accept this option. The financial consequences of implementing the VRS option are as drastic as the apprehension expressed by the respondents in case the implementation of the scheme was delayed. 24. The NTC is stated to be a holding company with eight subsidiaries. Eight schemes were sanctioned for the eight units/subsidiaries.
Perusal of the scheme approved on 22nd February, 2002 would show that the revival scheme was arrived at after obtaining extreme sacrifices by the financial instructions and other several concerns. These are public funds sacrificed to revive the respondent No. 1. So far as Delhi, Punjab & Haryana were concerned, it was even agreed that lands of unviable units would be sold and the funds be provided to viable units.
The action of the respondents without appropriate orders by the BIFR, is wholly illegal and without jurisdiction and, therefore, assuming that the petitioners had available an alternative efficacious remedy, the present writ petition cannot be held to be not maintainable.
The prayers made at serial Nos. (a), (b) & (c) are wholly within the purview of the application to be considered by the BIFR. As such, no order is being passed in respect thereof in the present writ petitions.
There is no prayer (d) in the writ petition. However, in prayer (e), the petitioners have prayed for an appropriate order restraining the respondents from implementing the Modified Voluntary Retirement Scheme offered to the workers by the Office Memorandum dated 13th January, 2005 and 20th April, 2005.
In view of the position in law, this prayer would deserve to be granted but restricted till consideration and orders by the BIFR on the application filed by the respondent No. 1 dated 8th April, 2005.
Accordingly, the respondents are prohibitted from taking further action upon the option exercised by the workmen for the VRS/MVRS without prior permission of the BIFR or till any order is passed by the BIFR either on the application dated 8th April, 2005 of the respondent No. 1 or otherwise.
It is made clear that nothing contained in the present judgment shall weigh with the merits of the contentions made before the BIFR in support of or against the proposed modification to the revival scheme and the same shall be decided by the BIFR on the merits of the materials laid before it by the concerned parties and submissions made before it in accordance with law.
These writ petitions are, accordingly, allowed to the afore-stated extent.
There shall be no order as to costs.