In the year 1981, the Phosphates Company Limited was incorporated as a joint venture between the Government of India and Rupublic of Nauru with the objective of manufacturing of Di-Ammonium Phosphates. Later on, in the y

CS Professional · Multidisciplinary Case Studies · PYQS · December 2021
In the year 1981, the Phosphates Company Limited was incorporated as a joint venture between the Government of India and Rupublic of Nauru with the objective of manufacturing of Di-Ammonium Phosphates. Later on, in the year 1993, the Republic of Nauru disinvested its entire equity stake to the Government of India and the company became a wholly-owned public sector undertaking of the Government of India having its corporate and registered office at Bhubaneswar. (Odisha) Due to deteriorating financial position of certain public sector units, the Government of India on 19.05.1998 decided to temporarily enhance the age of superannuation of all central public sector employees from 58 years to 60 years on the premise that the move may help industries to cut down their losses. Pursuant to the said order dated 19.05.1998, the Company implemented the said order vide order dated 19.11.1998 with retrospective effect from 27.05.1998. Inspite of the enhancement of age of superannuation, the financial performance of the company still did not improve. The Government of India issued an Office Memorandum dated 22.08.2001 to all central public undertakings including the said company intimating its decision to roll back the age of superannuation of all the employees of public sector undertakings from 60 years to 58 years. Before this Memorandum, the Government of India, on 08.06.2000, had also advised the company to review the decision on enhancement of age of superannuation but the company did not take any decision on the said advisory. In the meanwhile, the Government of India, on 28.02.2002, divested its 74% shareholding in the said company in favour of M/s Zuari Maroc Phosphates Ltd. ("Zuari"), thereby, keeping only 26% shareholding in its favour. As per the shareholding agreements, it was provided that all the decisions taken by the Board of directors of the company, prior to the date of the disinvestment, shall be binding on all concerned. In order to revive its financial health, the Board of directors of the Company decided to fill-up the vacancies of Security Guards by engaging an outsourcing agency. As many as 27 Security Guards were employed through outsourcing against vacant posts. In the month of April 2002, some robbers attacked in midnight with arms weapons. Five security guards who were on duty and safeguarding the property were injured. The robbers could not succeed in their nefarions designs. One security guard lost his hand during the firing and another security guard lost his eye. The Union of Security Guards moved an application for regularization of their jobs and also demanded the same pay scale as given to para-military forces under the principle of Equal Pay for Equal Work. The Union also demanded compensation to injured security guards. The Company rejected their claim on the plea that they were contractual labour. As a consequence, the Union filed a petition. Thereafter, on 17.07.2002, the Company, by office order, withdrew the earlier office order dated 19.11.1998 and restored the age of superannuation to 58 years in respect of all the employees in terms of Certified Standing Orders and Service Rules of the Company. Being aggrieved, the Trade Union raised dispute with regard to the above and the Odisha Government also made a reference under Section 12 read with Section 10 of the Industrial Disputes Act, 1947 to the Industrial Tribunal. Can an employer change the service conditions of the employees by amending, modifying or cancellation of certified Standing Orders? If so, what is the procedure to be followed by the employer? Is there any contravention of the provisions of the Industrial Disputes Act, 1947 in the present case? Give reasons in support of your answer.

Answer & Explanation:

The present case is similar to the case of Paradeep Phosphates Limited vs. State Of Orissa & Ors, Civil Appeal Nos. 3997-3998 of 2018 (Arising out of Special Leave Petition (C) Nos.35347-35348 of 2016). In this case the Hon'ble Supreme Court held that the relationship of the employer and employee is of utmost faith and, as a result, it falls under the ambit of fiduciary relationship. In order to regulate such relationship, legislature came up with legislation i.e., the Industrial Disputes Act, 1947(the Act). The purpose of the Act is to protect the interest of employees as they are the weaker sections since time immemorial. In order to safeguard the rights of the employees, certain amendments have been made subsequently in the Statute. In 1956, legislature inserted Section 9A of the Act which makes it obligatory on the part of the employer that he is bound to give advance notice to the employee if he intends to change certain things as envisaged under Section 9A of the Act read with Fourth Schedule. At the first sight of the provision, prima facie, it appears that the employer is bound to give minimum 21 days' notice to the employee if employer intends to change any material terms of service. Section 9A of the Act is a provision in consonance with the Constitutional mandate which assures the protection of principles of natural justice i.e., no one shall be condemned unless heard. Undoubtedly, it is a cardinal principle of law that beneficial laws should be construed liberally. The Industrial Dispute Act, 1947 is one of the welfare legislations which intends to provide and protect the benefits of the employees. Hence, it shall be interpreted in a liberal and broad manner so that maximum benefits could reach to the employees. Any attempt to do strict interpretation would undermine the intention of the legislature. In a catena of cases, this Court has held that the welfare legislation shall be interpreted in a liberal way. No doubt, the enhancement of the superannuation age was temporary in nature in order to achieve certain objectives and also it is not deniable that yet employees would be governed by the Service Rules and the Certified Standing Orders which were not amended. However, if we allow the plea of the appellant Company then it would defeat the object of legislature because legislature could never have intended that employees would be condemned without giving them right of reasonable hearing, naturally, every employee is under the expectation that before reducing his superannuation age, he would be given a proper chance to be heard. Right to work is a vital right of every employee and in our view, it shall not be taken away without giving reasonable opportunity of being heard otherwise it would be an act of violation of the Constitutional mandate. Moreover, the contention of the appellant-Company that the object of enhancement of superannuation age was just to save the industries from huge losses, therefore, it does not violate any statutory right of the employees, cannot be sustained in the eyes of law and also it does not give the license to the appellant-Company to act in contravention of law since it is a cannon of law that everyone is expected to act as per the mandate of law. To sum up, we are of the view that at the very moment when the order of enhancement of superannuation of the employees came into force though temporary in nature, it would amount to privilege to employees since it is a special right granted to them. Hence, any unilateral withdrawal of such privilege amounts to contravention of Section 9A of the Act and such act of the employer is bad in the eyes of law. In view of above detailed discussion, we are of the considered view that there is no error in the impugned judgment of the High Court, hence, we are not inclined to interfere in it. Accordingly, these appeals are hereby dismissed leaving parties to bear their own cost.

Topics: Industrial Law

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