REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL Nos.3997-3998 of 2018 (Arising out of Special Leave Petition (C) Nos.  35347-35348 of 2016)

 Paradeep Phosphates Limited                           ….Appellant(s)

        Versus

State of Orissa & Ors.                              …. Respondent(s)

    J U D G M E N T

R.K. Agrawal, J.

1) Leave granted.

2) The  above  appeals  have  been  preferred  against  the

impugned common judgments and orders dated 30.08.2016

and 06.10.2016 passed by the High Court of Orissa in WPC

No. 9180 of 2010 and RVWPET No. 236 of 2016 respectively

whereby the Division Bench of the High Court dismissed the

appeal  and the review petition filed by the appellant  herein

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while upholding the decision dated 17.04.2010 passed by the

Industrial Tribunal, Bhubaneswar in I.D. Case No. 16 of 2003.

3) Brief facts:-

(a) In  the  year  1981,  the  appellant-Company  was

incorporated as  a  joint  venture  between the  Government  of

India and Republic of Nauru with an objective to manufacture

Di-Ammonium Phosphates.

(b) Later  on,  in  the  year  1993,  the  Republic  of  Nauru

disinvested its entire equity stake to the Government of India

and  the  appellant-company  became  a  wholly  owned  Public

Sector  Undertaking  of  the  Government  of  India  having  its

corporate and registered office at Bhubaneswar.

(c)  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  retirement  of  all  Central

Public Sector Employees from 58 years to 60 years with a view

that the same may help industries to cut down their losses.

Pursuant  to  the  said  order  dated  19.05.1998,  the

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appellant-Company  implemented  the  said  order  vide  order

dated 19.11.1998 in Company with retrospective effect  from

27.05.1998.

(d) Inspite  of  the  enhancement  of  retirement  age,  the

financial  performance  of  the  appellant-Company  still  not

improved.  As  a  result,  the  Government  of  India  issued  an

Office  Memorandum dated  22.08.2001 to  all  Central  Public

Undertakings including the appellant intimating its decision to

roll back the age of retirement of all the employees of Public

Sector  Undertaking  from 60 years to 58 years.  Before this

Memorandum, the Government of India, on 08.06.2000, had

advised  the  appellant-Company  to  review  the  decision  on

enhancement  of  age  of  retirement.  However,  the

appellant-Company  did  not  take  any  decision  on  the  said

advisory.

(e) In  the  meanwhile,  the  Government  of  India,  on

28.02.2002,  divested  its  74% shareholding  in  the  appellant

company in favour of one M/s Zuari Maroc Phosphates Ltd.

(“Zuari”), thereby, keeping only 26% shareholding in its favour.

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As per the share holding agreements, under Clause 7.2 (j) it

was  provided  that  all  the  decisions  taken  by  the  Board  of

Directors of the appellant-Company, prior to the date of the

disinvestment, shall be binding on all concerned.

(f) On 17.07.2002, the appellant-Company, by office order,

withdrew  the  earlier  office  order  dated  19.11.1998  and

restored the age of retirement to 58 years in respect of all the

employees in terms of Certified Standing Orders and Services

Rules of the appellant-Company.

(g) Being  aggrieved,  the  Trade  Union  raised  dispute  with

regard to the above and as a consequence of the same, the

Government of Orissa, Labour and Employment Department

made Reference under Section 12 read with Section 10 of the

Industrial  Disputes  Act,  1947  (in  short  “the  Act”)  to  the

Industrial  Tribunal,  Bhubaneswar.  The  Industrial  Tribunal,

vide order dated 17.04.2010, disposed off the Reference and

invalidated  the  action  of  the  appellant-Company  of  rolling

back the age of retirement from 60 years to 58 years due to

contravention of Section 9A of the Act which says prior notice

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must be given to the employees by the employer which the

employer intentionally omitted to give in the present case.

(h) Being dissatisfied, the appellant-Company challenged the

decision of the Industrial Tribunal by way of filing writ petition

in the High Court of Orissa. The Division Bench of the High

Court,  vide  order  dated  30.08.2016,  dismissed  the  writ

petition and held, inter alia, that there was no error apparent

in  the  decision  of  the  Industrial  Tribunal.  Thereafter,  the

appellant-Company  also  preferred  a  review  petition  but  the

same again got dismissed vide order dated 06.10.2016.

(i) Consequently,  the  appellant-Company  has  filed  these

appeals by way of special leave before this Court.

4) We  have  given  our  solicitous  consideration  to  the

submissions  of  learned  senior  counsel  for  the  parties  and

perused the relevant material placed before us.

Point(s) for consideration:-

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5) Whether in the light of present facts and circumstances

of the case, any intervention of this Court is required in the

impugned decision of the High Court?

Rival contentions:-

6) At  the  outset,  leaned  senior  counsel  for  the

appellant-Company contended that  the  High Court  failed to

appreciate  that  the  age  of  retirement  laid  down  in  the

appointment  letters,  the  Service  Rules  and  the  Certified

Standing  Orders  framed  under  the  Industrial  Employment

(Standing  Orders)  Act,  1946 are  binding  upon all  workmen

governed by the same and, therefore, a temporary concession

of allowing persons to continue to serve until  the age of  60

years  pursuant  to  a  government  circular  issued  as  a

temporary measure to combat losses in Central Public Sector

Undertakings cannot amount to a change in the settled service

conditions.  

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7) In other words, contention of the appellant-Company is

that  even  if  the  benefit  of  enhancement  of   age  of

superannuation from 58 years to 60 years has been extended

in favour of the workmen, they have got no right to retain the

same for the reason that the Service Rules and the Certified

Standing  Orders  applicable  to  the  workmen  stipulates  a

condition of superannuation on attaining the age of 58 years

and since the same has not been amended in accordance with

law, hence, the provisions of Service Rules and the Certified

Standing Orders are binding upon the workmen and merely

because  the  benefit  has  been  given  to  superannuate  on

attaining the age of 60 years instead of the age of 58 years for

a period of four years i.e., 1998 to 2002, it will not ipso facto

replace the age of superannuation as has been provided in the

Service  Rules  or  the  Certified  Standing  Orders.  Hence,  no

question of applicability of Section 9A of the Act arises in any

case. Therefore, the impugned decision of the High Court is

liable to be set aside.

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8) Per  contra,  learned  senior  counsel  for  the  respondent

submitted that the present appeals have been filed against the

well  reasoned  impugned  judgments  dated  30.08.2016  and

06.10.2016 which were rightly passed by the Division Bench

of  the  High Court.  Further,  it  was  also  submitted  that  the

action of the appellant-Company amounts to contravention of

Section  9A  of  the  Act  read  with  Fourth  Schedule  which

postulates  the  necessity  of  prior  notice  to  the  workers  if

employer proposes to effect any change in the conditions of

service. Hence, this appeal is devoid of merits and deserves to

be dismissed.

Discussion:-

9) 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 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

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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.  For  the  sake  of

convenience,  it  is  apt  to  re-produce  Section  9A  of  the  Act

which is as under:-

“9A. Notice of change-No, employer, who proposes to effect any change  in the  conditions  of  service  applicable  to  any workman in  respect  of  any matter  specified  in the  fourth Schedule shall effect such change,-

(a)  without giving to the workmen likely  to be affected by such change a notice in the prescribed manner of the nature of the change proposed to be effected: or

(b) within twenty-one days of giving such notice:

Provided that no notice shall  be required for effecting any change-

(a)  where  the  change  is  effected  in  pursuance  of  any settlement or award: or

(b) where the workmen likely to be affected by the change are persons  to  whom  the  Fundamental  and  Supplementary Rules,  Civil  Services  (Classification,  Control  and  Appeal) Rules,  Civil  Services  (Temporary  Service)  Rules,  Revised Leave Rules, Civil Service Regulations, Civilians in Defence Services  (Classification,  Control  and  Appeal)  Rules  or  the Indian  Railway  Establishment  Code  or  any  other  rules  or regulations  that  may  be  notified  in  this  behalf  by  the appropriate Government in the official Gazette, apply.”

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10)  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.  For  the  guidance,  legislature  prescribed  the

Fourth Schedule and it is clearly mentioned in Section 9A of

the Act that before changing either of the things as envisaged

in  the  Fourth  Schedule,  prior  notice  must  be  given  to  the

employee.  In  the  instant  case,  the  grievance  of  the  Trade

Union before the Tribunal was that withdrawal of the age of

superannuation i.e., restoration of the age from 60 years to 58

years,  amounts  to  contravention  of  Clause  8  of  the  Fourth

Schedule,  hence,  employer  was  bound  to  give  prior  notice

which employer  cannot  escape.  Therefore,  the  action of  the

employer is bad in law and liable to be set aside which was

eventually upheld by the Tribunal and the High Court.  

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11)  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.  

12) The  grievance  of  the  appellant-Company  before  this

Court is that the increase in the superannuation age of the

employees was temporary in nature in order  to  combat the

losses and in no circumstances, it can be said that withdrawal

of  it  amounts  to  withdrawal  of  customary  concession  or

privilege  or  change  in  usage.  Eighth  clause  of  the  Fourth

Schedule  says  “withdrawal  of  any  customary  concession  or

privilege  or  change  in  usage”.  The  whole  dispute  revolves

around the interpretation of the terms customary concession,

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privilege or change in usage. In the instant case, we are mainly

concerned  with  the  term ‘privilege’.  The  word  “privilege”  as

such is  not  defined in the Act.  In the absence of  statutory

definition,  we  have  to  take  recourse  of  the  dictionary  or

general  meaning  of  the  term  “privilege”.  The  Dictionary

meaning  of  the  word  privilege  means  a  “special  right,

advantage or immunity granted or available only to a particular

person or ground”.  In other words, a particular and peculiar

benefit or advantage enjoyed by a person, company, or class,

beyond the common advantages of others.  

13) It is admitted position that the Board of Directors took

the decision of enhancement of age of retirement and it came

into  force  with  retrospective  effect  from  27.05.1998  as

mentioned  in  the  order  dated  19.11.1998.  Though,  this

decision implemented without the amendment in the Standing

Orders and Rules, yet impliedly it got the force as a service

condition since it directly relates with the service condition of

the employees. Age of superannuation is an integral part of the

service  condition  of  the  employee.  Also,  enhancement  of

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superannuation  age  would  impliedly  amount  to  a  privilege

since it was provided particularly for the central public sector

employees. At this juncture, the Division Bench of the High

Court held as under:

“However the facts of this case is little bit different because the necessary modification has not been incorporated either in the Service Rules or in the Certified Standing Order enhancing the age  of  superannuation  from  58  years  to  60  years,  but  the Central Government being the competent authority has directed the Board of  Directors  to  enhance the age of  superannuation and accordingly  it  has  been  enhanced  in  the  year  1998  and thereafter it has been reduced vide order dtd 17.7.2002 by the same process,  hence  we  are  of  the  considered  view  that   by passing the order dtd 17.7.2002 the privilege has been granted to  the  workmen  has  been  recalled  by  altering  the  same  by reducing the age of superannuation from 60 years to 58 years is alteration which is detrimental to the interest of the workmen.”

14) 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

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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.

15)  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.

16) 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

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such privilege amounts to contravention of Section 9A of the

Act and such act of the employer is bad in the eyes of law.

17) 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.  

...…………………………………J.                                (R.K. AGRAWAL)

                                                 .………….………………………J.                                                (ABHAY MANOHAR SAPRE)

NEW DELHI; APRIL 19, 2018.  

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