CHENNAI: The sum received by the employees of Hindustan Photo Film (HPF) Manufacturing Co Ltd, Indu Nagar, Ooty, in light of the severance package announced by the Union Government is held to be a special privilege/protection granted to the employees and income tax cannot be deducted from the sum, the Madras High Court has ruled.
Justice TS Sivagnanam gave the ruling while partly allowing the writ petitions filed by the HPF Workers’ Welfare Centre, attached to the CITU, challenging the voluntary retirement scheme announced by the company in March 2014 as unfair and illegal and for consequential benefits and exemption from the Income Tax applicability on the package.
The judge, however, rejected the workers’ claim to declare the notification and the circular issued about VRS as illegal and unconstitutional.
The notification had stated that the VRS was optional and there was no compulsion. No evidence was produced by the petitioners to prove that the workers were forced to opt for VRS.
The staff only wanted to leave the company, but on better terms.
They demanded payment of 72 months’ salary, based on the 2007 pay scales to each employee, arrears, non-deduction of income tax on the severance package, non-recovery of the advance amounts, payment of special performance allowance and to permit the employees to occupy the staff quarters till May 1, 2016, at the same rent.
The package was an outcome of a decision of the Cabinet Committee on Economic Affairs, which approved the proposal for providing non-plan budgetary support of `181.54 crores for the VRS at the 2007 notional pay scale.
This Cabinet approval had been translated into a notification on March 20, 2014 and the same made known to the employees by the HPF vide the circular dated Mach 21.
The judge noted that the undisputed fact was that the HPF, which in the initial years enjoyed a monopoly in X-ray films, later became a ‘white elephant’ for the Centre.
It crashed under its own weight, the contribution being several factors not to be named.
The net result was that the entire capital of the company stood eroded, the rehabilitation schemes sanctioned by BIFR/AAIFR became unworkable and they were withdrawn.
Later, a decision was taken to close down the company on June 28, 2013. The Centre, considering the plight of employees, came forward to offer succour to them. This proposal was approved by the Cabinet Committee on Economic Affairs as a non-plan budgetary support, the judge said.
Assuming for the sake of argument that the impugned circular was held to be illegal and unconstitutional, then the court could not order payment of 72 months’ salary together with arrears, as such quantum was liable to be paid only after an industrial adjudication under the Industrial Disputes Act, the judge pointed out.
“Therefore, this court could safely conclude that the employees of HPF were in a quandary. On the one hand they wanted to leave the organisation after receiving the compensation, and on the other were not agreeable to accept the quantum of compensation fixed by the Centre.”
Such a relief cannot be agreed upon on the grounds raised by the petitioner, the judge said.