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The Indian Rare Earths Limited, Mumbai, Represented by Its Chairman & Managing Director & Another v/s Ire Staff & Workers Union, Represented by General Secretary (Mohandas) & Others

    W.A. Nos. 1900 of 2013 & 129 of 2014

    Decided On, 19 March 2018

    At, High Court of Kerala

    By, THE HONOURABLE MR. JUSTICE K. VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON

    For the Petitioners: M. Gopikrishnan Nambiar, P. Gopinath, P. Benny Thomas, K. John Mathai, Advocates. For the Respondents: R1, K.S. Madhusoodanan, Advocate, R2 & R3, N. Nagaresh, Assistant Solicitor General.



Judgment Text

Vinod Chandran, J.

1. The Writ Appeals have been filed by the Indian Rare Earths Ltd. (IRE) and Government of India, both of them, respondents before the learned Single Judge. The issue arose in the context of a pay revision, which was agreed to by the employer and the representative unions of the employees, by a settlement under Section 18 of the Industrial Disputes Act, 1947 ('the Act' for brevity). The period in which the dispute arose was between 01-07-2003 to 30-06-2008. There was a specific clause in the agreement, which granted 100% neutralization of the quarterly average increase or decrease of the All India Consumer Price Index (AICPI) for persons drawing basic pay upto Rs.6,500/- and those drawing above, had 75% neutralization.

2. Clause 5(3) of the long term settlement is extracted below for ready reference:

'It is agreed that if the Government of India approves 100% D.A. neutralization irrespective of any Basic Pay to similarly placed PSU of DAE, IREL will also adopt 100% of the D.A. neutralization system subject to obtaining specific Government approval.'

3. Earlier, the Company had made a recommendation to the Department of Atomic Energy (DAE), which was declined by Ext.P2 as produced in the writ petition. Ext.P2 was challenged before this Court, in which Ext.P5 judgment was passed. A learned Single Judge found that the issue, as to approval, has to be considered by the Department of Public Enterprises (DPE) and not the DAE. The DPE in Government of India considered the issue again and passed Ext.P8 order, which was challenged in the Writ Petitions before the learned Single Judge.

4. The learned Single Judge, in the impugned judgment, observed that Ext.P5 judgment specifically set aside non-approval of 100% D.A. neutralization based on the periodicity of wage revision. It was also found that the ground of periodicity of revision, as found by the DAE; would have no application in so far as Uranium Corporation of India Ltd. (UCIL) also had periodicity of five years for pay revisions. It was presumed that this Court in Ext.P5 had taken a view that notwithstanding any policy of the DAE or the DPE, the conditions in the long term settlement and clause 5(3) thereof has binding effect on both the employer and the employee. It was hence held that, the respondents 1 and 2 were not entitled to reject the approval based on the very same reasoning contained in Ext.P2, regarding periodicity of wage revision. Clause 5(3) was noticed to find that when the Government approves 100% neutralization in any of the Public Sector Undertakings (PSUs.) under the DAE, then necessarily the appellant-Company is bound to implement the said clause subject to the specific approval from the Government. It was found that 100% neutralization, irrespective of the amount of basic pay, was allowed in UCIL, with the approval of the Government, where the periodicity of pay revision was also identically positioned at five years. The approval sought for cannot be denied on the basis of the 100% neutralization having not been adopted in the other PSU's under DAE.

5. The appellant-Company was also found to be disentitled in taking a different stand, especially, when it had made the recommendations and agreed to the conditions in a binding settlement entered into under the Act. The learned Single Judge found that one of the grounds in Ext.P8 for declining approval for 100% neutralization in the appellant-company was that it is not a similarly situated PSU when compared with UCIL. The Court took note of the contention of the learned Counsel appearing for the petitioners in the Writ Petition that only a small portion of the workers are engaged in underground mining operation and the neutralization in the case of UCIL was approved for the entire work force. The reason based on the capital grant to the UCIL was also found to be equally unsustainable. The finding that 100% neutralization for the entire work force would cast heavy burden on the appellant-company making it commercially un-viable, was held to be irrelevant, in the teeth of a binding settlement. The learned Single Judge found that there was a better reasoning available in Ext.P2, which already had been set aside through Ext.P5 judgment. The reasons stated in Exts.P7 and P8 for declining the approval were held to be unsustainable and the said orders were quashed, against which the above Appeals are filed.

6. There was a preliminary question raised of maintainability of the appeal by the IRE, for reason of the recommendation having been made and the employer being bound by the settlement under the Industrial Disputes Act, 1947. A Division Bench while admitting the appeals had taken note of the argument raised by the respondents in the appeal, the representative Union and left it open to be considered at the final hearing. We notice that the issue though raised as a preliminary ground is inextricably connected with the merits of the matter and will be answered in the course of the judgment.

7. The learned Counsel for the appellants contended that the learned Single Judge sat in appeal over the order declining the approval, which was not permissible. The principles as stated in Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation, (1947) 2 All ER 680 (CA), commonly known as Wednesbury's case, does not permit a better reasoning to be adopted in substitution of that arrived at by the original authority. The appellant-company would also place reliance on the decisions of the Honourable Supreme Court in (2004) 11 SCC 213, Delhi Development Authority v. UEE Electricals Engg.(P) Ltd. and (2007) 4 SCC 737, Directorate of Film Festivals v. Gaurav Ashwin Jain .

8. The learned Counsel for the respondents per contra would argue that there is nothing in Ext.P8 to permit classification of UCIL and IRE as distinct and un-comparable. Both are involved in the processing of uranium, which is sold to the DAE and the mere fact that some of the workers in UCIL are engaged below the ground is inconsequential, in so far as the entire work force in the UCIL has been given 100% neutralization. It is also pointed out that the earlier reasoning of periodicity of wage revision has again been reiterated in Ext.P8, which is not permissible for reason of Ext.P5 having acquired finality. It is pointed out that in so far as the representative unions and the employer are concerned, there is a binding settlement and the employer cannot take a different stand of financial hardship to deny a right, which has been agreed to by a binding settlement.

9. We have to caution ourselves, keeping in mind the Wednesbury's principles, which has full play in so far as the power of judicial review, which is sought to be invoked by the representative union in the above writ petition. Ext.P2, at the earlier instance, was set aside by Ext.P5 judgment. Ext.P2 reads as here under:

'In terms of the existing DPE guidelines, the benefit of 100% DA neutralization for all workmen is allowed only those CPSEs who revise wage for their workmen for a period of 10 years. The benefit cannot be extended to those CPSEs which opted for a 5 year periodicity in wage negotiation. As IREL has opted 5-year periodicity for wage revision for their workers, the request for 100% DA neutralization irrespective of the basic pay, cannot be agreed to. The issue was re-examined in detail in the Department and it was decided not to take up the issue with DPE. The special dispensation granted in the case of workmen of Uranium Corporation of India Limited as a special case cannot be quoted as a precedent in the case.'

10. Therein, the specific grounds to decline a recommendation to the Central Government for approval was that the appellant-company had opted 5 year periodicity for wage revision and hence cannot be allowed 100% DA neutralization since none with the said periodicity of revision is so permitted. The case of UCIL was noticed as a special case, which cannot be quoted as a precedent. Ext.P2 was set aside in Ext.P5 but on grounds of the DAE being not competent to consider the approval. Ext.P5 has been relied on by the learned Single Judge in the judgment impugned in this appeal and the same has to be looked at in-depth.

11. We do not see any detailed reasoning in Ext.P2, and the two reasons cited are quite distinct and not interconnected. The respondents here would argue that the rejection was merely for the periodicity of revision of wages which is identical to that of UCIL. The order at Ext.P2 quoted the periodicity of revision as a ground to decline recommendation and then stated that UCIL, is a special case; quite aware of the periodicity being identical. There is also no reference in Ext.P5 as to the periodicity or a declaration that the periodicity of revision being identical, IRE is to be similarly treated as UCIL. In the earlier round the challenge was on the grounds of denial to seek approval of the Government. The respondents resisted on the ground that the representative Unions having agreed to neutralization only on approval of the Central Government there could be no claim raised during the validity of the binding settlement. Ext.P5 found that any issue which was not finally agreed upon cannot be said to be covered by the binding settlement, especially when there is an agreement between the parties that if the benefit is conferred on any PSU under DAE; approval would be sought for. The clause was held to bind the employer in so far as seeking an approval and hence the refusal made by the DAE, which could not be deemed to be the Central Government was set aside and there was a direction to send the issue for approval to the DPE. The finding was that it is for the DPE to consider the approval and not the DAE. There cannot be any further declaration found from Ext.P5 or a negation of any of the grounds in Ext.P2. Ext.P2 was set aside finding the DAE, incompetent to decline the approval sought.

12. We also have to examine the clause, which has given rise to the said dispute. The employer and the employee's Unions agreed to seek Government approval if neutralization at 100% is granted to all employees in any PSU under the DEA. The Union is bound, and cannot seek any neutralization at 100% if no other PSU under DAE, is so granted a benefit. The employer, IRE, is bound to seek approval of the Government if it is granted to any other specified PSU. What has to be emphasised is that the approval is mandatory and both the management and unions agreed to concede to the decision of the Central Government. The Central Government is not bound by the settlement and there is no obligation to grant approval to the recommendation made, merely because it has been granted in another PSU. The Government if reiterating the reasons in Ext.P2, the issue would have to be examined on the reasons cited; especially the merits of the reasoning having not gone into in Ext.P5. On the above reasoning it has also to be held that the appeal by IRE is maintainable. The management of IRE had as per the binding settlement recommended the neutralization as has been granted in UCIL. The Government having declined approval, which it was entitled to do on valid grounds; the management being a PSU, fully owned by the Government of India is duty bound to defend the policy of the Government as discernible from the order refusing approval.

13. Ext.P7 is the rejection by the DPE dated 16-08-2012, based on Ext.P8 statement of case forwarded by the DAE. In Ext.P8, the DAE had made out a case that the consideration given to UCIL was for reason of the special circumstances existing, in so far as UCIL is concerned. The UCIL, engaged in the strategic activity of mining Uranium, a radioactive element was carrying out underground mining and it is stated that for all practical purposes, UCIL is an extended arm of DAE. The shortage of Uranium was specifically noticed and 100% neutralization granted to the entire work force, was with the intend of substantial increase in production of Uranium, which has been held to be the key to success of nuclear programme of the Nation. The specific intention of granting 100% neutralization in UCIL was to keep the morale of the employees of the UCIL high, especially in the circumstance of similar workers employed in Coal India, operating mines in the same location, having been granted the benefit. The mere fact that IRE and UCIL are under common administrative jurisdiction of the DAE, was found to be not an adequate ground for extending the very same facilities in both the units. The IRE is a commercial entity competing with the private sector companies, who is in the rare earth sector of mining and processing of ilmenite. The IRE does not receive any grants from Government of India for any of its projects, except for small grants for research and development. On the other hand, all the projects of UCIL are supported by DAE by way of capital grant and UCIL has the sole monopoly of mining and processing of Uranium in the Country. UCIL and IRE were found to be not comparable and the burden of 100% naturalization was not possible in IRE merely for the reason that it was granted in UCIL. The contribution of IRE in terms of Uranium produced was found to be negligible as compared with UCIL. Coal India and UCIL were companies following 5 year wage revision periods and only because of their special status, 100% D.A. neutralization was granted. The purpose behind limiting D.A. neutralization at 75% in case of PSU's opting for 5 year period, was to encourage them for wage settlement in extended period of 10 years. The grant of 100% neutralization to IRE would generate further requests from other PSU's. The financial condition in IRE was also not one favouring a 100% neutralization regardless of basic pay limits. Ext.P7 has been passed by the DPE, declining the approval on grounds of distinctive facts as noticed in Ext.P8.

14. As has been observed by us at the outset, we are not sitting in appeal and are on judicial review. Each of the distinguishing factors as has been laid out by the DAE, has been noticed by us herein above. We cannot sit in appeal over the decision of the DPE and necessarily it is a policy decision. There can be no dispute that there is a binding settlement between the employer and the representative unions, who have agreed to 100% neutralization even for persons drawing wages above Rs.6,500/- if the same has been allowed in other PSU's, subject however, to the approval of the Government. The mere fact that there has been 100% neutralization allowed to the entire work force in another PSU alone would not create a right on the employees to seek for enforcing the same in the appellant company also. Especially since the enforcement of the terms would be subject to the approval of the Government. The Central Government, through the DPE, has considered the issue and found the neutralization @ 100% to be not possible. The approval of such neutralization in UCIL was due to the special circumstances as is seen from Ext.P8. There can be no equation of the two PSUs. There cannot also be a contention taken that the benefit if allowed in another specified PSU has to be allowed in the appellant-company, since the representative Union as per the binding settlement had agreed to the specific condition and requirement of an approval from the Central Government.

15. We notice paragraphs 11 and 12 from the Delhi Development Authority v. UEE Electricals Engg.(P) Ltd. , which is extracted below:-

'11. One can conveniently classify under three heads the grounds on which administrative action is subject to control by judicial review. The first ground is 'illegality', the second 'irrationality' and the third 'procedural impropriety'. These principles were highlighted by Lord Diplock in Council of Civil Service Unions v. Minister for the Civil Service (commonly known as CCSU case).

12. Courts are slow to interfere in matters relating to administrative functions unless decision is tainted by any vulnerability such as lack of fairness in procedure, illegality and irrationality. Whether action falls within any of the categories has to be established. Mere assertion in that regard would not be sufficient.'

Paragraph 16 from

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Directorate of Film Festivals v. Gaurav Ashwin Jain is extracted below:- '16. The scope of judicial review of governmental policy is now well defined. Courts do not and cannot act as Appellate Authorities examining the correctness, suitability and appropriateness of a policy, nor are courts advisors to the executive on matters of policy which the executive is entitled to formulate. The scope of judicial review when examining a policy of the Government is to check whether it violates the fundamental rights of the citizens or is opposed to the provisions of the Constitution, or opposed to any statutory provision or manifestly arbitrary. Courts cannot interfere with policy either on the ground that it is erroneous or on the ground that a better, fairer or wiser alternative is available. Legality of the policy, and not the wisdom or soundness of the policy, is the subject of judicial review (vide Asif Hameed v. State of J&K, Sitaram Sugar Co.Ltd. v. Union of India, Khoday Distilleries Ltd. v. State of Karnataka, BALCO Employees' Union v. Union of India, State of Orissa v. Gopinath Dash and Akhil Bharat Goseva Sangh (3) v. State of A.P.' 16. We are not satisfied that there was sufficient reason for the learned Single Judge to interfere with the findings as disclosed from Exts.P7 and P8. There is no arbitrariness nor is there any illegality or irregularity in having declined approval to IRE, which plea was solely based on such approval having been granted to UCIL. Finding no illegality, irrationality or procedural impropriety, we cannot, but set aside the judgment of the learned Single Judge. We affirm the denial of approval as taken by Exts.P7 and P8. On the above reasoning, the Writ Appeals are allowed, setting aside the judgment of the learned Single Judge. No order as to costs.
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