A.K. BINDAL AND ANR. versus UNION OF INDIA AND ORS.

Citation: [2003] 3 S.C.R. 928 · Decided: 25-04-2003 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Directions issued
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Judgment (excerpt)

A 
B 
c 
A.K. BINDAL AND ANR. 
v. 
UNION OF INDIA AND ORS. 
APRIL 25, 2003 
[S. RAJENDRA BABU AND G.P. MATHUR, JJ.] 
Service Law: 
Constitution of India, I 950; Articles I 3, 14, 21 and 311: 
Transfer Petitions-Sick Public Sector Undertakings-Revision of Pay 
scale-Issuance of Memorandum by the Central Government not providing 
any budgetary support for the wage increase-PSEs generate internal resources 
to meet additional expenditure-Issuance of another Memorandum by the 
D Board of Public Enterprises clarifYing that revision in pay scale and other 
benefits would be subject to revival of PSEs by BIFR-Cha//enge to--
Employees' legal right to revision in pay vis-a-vis financial capacity of the 
Government-Held: Generally, financial capacity of the Industry is a germane 
consideration for determination of the wage structure of the employees-Since 
PSEs have been s11ffering heavy losses contin11011s/y, the employees could not 
E legitimately claim revision in their pay sea/es-Non-revision of pay-scales 
wo11ld not amount to violation of f11ndamenta/ rights under Article 21-
Companies Act-Sections 619 and 620. 
F 
Employees of PSEs-Stat11s of-They are not Government Servants-
Hence not entitled to protection afforded 11nder Article 31 I. 
Employees exercising their option for 'Voluntary Retirement Scheme' 
and accepting payment thereof-S11bsequent claim for revision in pay scale-
Justification of-Held: Since the employees accepted VRS witho11t any protest 
regarding revision of pay-scale from back date, there was a complete cessation 
of the Jura/ relationship between employer and employee-Hence employees 
G cannot claim revision of pay scale. 
Words and Phrases: 
'Voluntary Retirement Scheme', 'Government Servant', 'Jura! 
H relationship between employer and employee', 'Financial capacity of the 
928 
A.K. llll\D.·\L ». lJ.0.1. 
929 
!ndus1ry' and 'Golden Handshake '~Meaning of 
Petitioners, employees of two sick Public Sector Undertakings-
Fertilizer. Corporation of India (FCI) and Hindustan Fertilizer Corporation 
(HFC), filed writ petitions in the High Court which were transferred to 
this Court. They have challenged the Memorandum dated 19.7.1995 issued 
by the Government of India that no budgetary support for wage increase 
would be provided to sick PSEs and these Undertakings were directed to 
A 
B 
generate their own resources to meet such expenditure, and another 
Memorandum dated 19.7.1995 issued by the Department of Public 
Enterprises whereby the revision of pay-scales and grant of other benefits 
were to be allowed only after revival of the Units of these PSEs by BIFR. C 
The questions which arose for consideration were whether the 
employees of sick Public Sector Enterprises have any legal right to revision 
in pay scales though the PSEs did not have financial capacity and whether 
the Government should continuously provide financial support to meet the 
additional expenditure due to such revision in pay scales. 
It was contended for the petitioners that employees have right to get 
fair and reasonable wage in return for employment and denial of such right 
D 
on the ground of uncertainty of existence of the establishment would be 
violative of Articles 13 and 14 of the Constitution of India; that it was E 
inappropriate to postpone revision of pay scales subject to revival of the 
PSEs by B.l.F.R.; that since losses incurred by the PSEs were not directly 
attributed to its employees, it would be unreasonable to deny revision by 
linking it to profitability; that sickness of PSEs without consideration of 
causes of sickness by the Government could be no ground to .iustify denial 
of wage revision; that there was a compromise on the issue of pay revision F 
and the same was recorded by the High Court and modalities had to be 
worked out but due to adjournment of the matter and later transferring it 
to the Supreme Court, the compromise could not be implemented; and that 
since the emplo)•ees had accepted the VRS under compulsion, there could 
not be any waiver of their fundamental right to claim arrears of salary G 
for the past period by revision in pay scale. 
On behalf of the Union of India, it was submitted that since most of 
the employees of the PSEs having opted for VRS and having availed the 
benefits without any demur, the relationship of employer and employee had 
ceased to exist and they could not agitate for revision in pa)' scale. 
H 
930 
SUPREME COl !Jn Rl:l'ORlS 
11003 I 3 S.C.R. 
A 
Answcri
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