Writ Petition No.381 of 2004

5th April, 2004

Petitioner Counsel: Mr. A. C. DHARMADHIKARI
Respondent Counsel: Mr. N. W. ALMELKAR

Cases Cited:
Dy. Chief Controller of Imports and Exports, New Delhi Vs. Kt. Kosalram, AIR 1971 SC 1283 [Para 4]
Reserve Bank of India Vs. Peerless General Finance and Investment Co. Ltd., AIR 1987 SC 1023 [Para 4]
W. Devis & Sons Vs. Atkins, (1977)3 All ER 40 [Para 4]

JUDGMENT

Dr. D. Y. CHANDRACHUD, J.:- Rule, returnable forthwith. The learned AGP appearing on behalf of Respondent No.1 and the learned counsel appearing on behalf of the Second and Third Respondents waive service. By consent taken up for hearing and final disposal.

2. Pulgaon Cotton Mill was a subsidiary of Maharashtra State Textile Corporation, a Government of Maharashtra undertaking. The Textile Mill was in financial difficulties. On 10th January, 2001, the Government took a decision to close down all Mills, including Pulgaon Cotton Mill, which were under the control of Maharashtra State Textile Corporation. A scheme of Voluntary Retirement was propounded. On 10th January, 2001, closure permission under the Industrial Disputes Act, 1947 was granted. On 22nd November, 2002, an agreement was entered into between the Second Respondent and the Rashtriya Mill Mazdoor Sangh, which was the representative Union under the Bombay Industrial Relations Act, 1946. The agreement stipulates that after discussions between the representative Union and the Second Respondent, an agreement had been arrived at in supersession of all earlier agreements, awards and settlements prevailing in the Cotton Textile Industry in general and in Pulgaon Cotton Mill specifically with an intention to record and register the agreement under the Bombay Industrial Relations Act, 1946 with the Appropriate Authorities. In clause (2) of the agreement, it was stipulated that the Mill shall introduce a Voluntary Retirement Scheme on the Gujarat Pattern. The Scheme was opened to all workers including clerical, technical and supervisory staff who were on the muster roll of the Mill as on the date of the agreement. Clause 1 of the agreement stipulates that for each completed year of service, an amount of ex-gratia shall be paid to every workman equivalent to 35 days' wages/salary from the date on which each workman had joined service. The dispute in the present case relates to Clause 2 of the agreement and therefore, it would be necessary to extract the aforesaid provision in its entirety.

"1) "For each completed year of service, 35 days wages/salary will be paid as Ex-gratia from the date of joining the services."

2) "The date of superannuation is 60 years and the same will be determined on the basis of date of birth recorded by the employees in the Mill's record and there will be no change for whatsoever reason at this stage. For the remaining years of service till the date of superannuation for each remaining year the employee concerned shall get the following benefits.

(A) Rs.2,500/- (Rs.Two Thousand Five Hundred Only)

OR

(B) @ 25 days' wages salary per year. However minimum of Rs.25,000/- (Rs.Twenty Five Thousands Only) as an incentive

OR

(C) 250 days' wages/salary.

Whichever is higher among A, B & C will be paid, while calculating the number of years rendered, the service will be considered continuous from the date of joining and till the date of relieving."

The agreement came to be registered with the Assistant Registrar of Trade Unions on 27th November, 2002. The implementation of the agreement took place on 31st August, 2003. Thereby the Third Respondent Mill was permanently closed. In October, 2003, the dues of the employees including ex-gratia which was payable under the Scheme of Voluntary Retirement came to be settled. The Textile Mill had 850 workmen, of which, 43 have instituted these proceedings under Article 226 of the Constitution of India. The representative Union under the Bombay Industrial Relations Act, 1946, has neither instituted any proceedings, nor challenged the manner in which the Scheme has been implemented. The representative Union has not been impleaded as a party to these proceedings.

3. The short question which arises before the Court in these proceedings is in relation to the interpretation which has been placed by the Second and Third Respondents on clause 2 of the agreement and on the basis whereof, the dues payable under the Scheme for Voluntary Retirement have been computed. According to the Petitioner, under clause 2 of the agreement, there are three different eventualities which have been prescribed. The First is that a workman can receive an amount of Rs.2,500/- per year; the second is that he would be entitled to receive 25 days' wages/salary per year of completed service subject to a minimum of Rs.25,000/-; while the third is that he would be entitled to 250 days' wages/salary for every remaining year of service. The workmen, according to the Petitioners, should be entitled to the highest out of these three amounts. On the other hand, according to the Second and Third Respondents, sub-clause (3) of Clause 2 of the agreement is not qualified by the expression "per year" and that it consequently, refers to 250 days' of wages and salary in the aggregate and not for every year remaining in service.

4. While considering as to which of these rival contentions should be accepted, the Court must at the outset, have regard to the settled principles of law in regard to the interpretation of a contract. The Court, it must be borne in mind, is construing the provisions of a consensual instrument that was arrived at between the parties. In Dy. Chief Controller of Imports and Exports, New Delhi Vs. Kt. Kosalram reported in AIR 1971 SC 1283, the Supreme Court formulated the governing principles which must apply to the construction of a contract. Even while interpreting the provisions of a statute, the Supreme Court held that the interpretation must depend on text and context and that "text is the texture, while the context gives colour". An interpretation that matches the text with the context is what must be preferred and no part of a statute and no word of a statute can be construed in isolation. The provisions of a statute must be regarded in their entirety so as to provide a meaning which is consistent with the object and scheme. (Reserve Bank of India Vs. Peerless General Finance and Investment Co. Ltd., AIR 1987 Supreme Court 1023). In W. Devis & Sons Vs. Atkins, reported in (1977)3 All ER 40, Lord Diplock, speaking for the House of Lords held that "the ordinary grammatical meaning of a provision would have to give way "if justice and common sense were not to be flouted".

5. In the present case, before entering upon the interpretation that must be placed on clause (2) of the agreement, it would be necessary for the Court to have regard to the background and the circumstances in which the agreement had been arrived at. The agreement specifically adverts to the Gujarat Pattern under which a Voluntary Retirement Scheme was brought into effect in regard to the Mills which were in financial difficulty. The Gujarat Pattern, in so far as the benefits of Voluntary Retirement are concerned, has been placed before the Court. An agreement dated 31st August, 1996 that was entered into by the Gujarat Textile Corporation in pursuance of a scheme for Voluntary Retirement is on the record and in so far as is material, the agreement provides as follows :

"B.1. Unemployment compensation of 35 days per each year of service from the date of joining service and an amount as per Rs.2,500/- (in words Rupees Two Thousand and Five Hundred Only) per each year of remaining service till the period of super-annuation age or salary of 25 days per each year of remaining service, the amount whichever is more of both shall be given. However, Minimum incentive amount of Rs.25,000/- (in words Rupees Twenty Five Thousand Only) or salary of 250 days, the amount whichever is more out of both the service, till he has been relieved as per this agreement shall be considered as continuous period."

The Gujarat Pattern provides unemployment compensation of 35 days for each completed year of service from the date on which an employee had joined service. In addition thereto, an amount of Rs.2,500/- was payable to each employee for each year of remaining service or a salary of 25 days per year of remaining service was to be allowed subject to a minimum of Rs.25,000/- or a salary of 250 days whichever was higher would be provided.

6. Clause 2 of the agreement in the present case specifically provides that the Textile Mill was to introduce a scheme for Voluntary Retirement on the Gujarat Pattern. In the affidavit-in-reply to the present proceedings, certain averments have been made on which there is no dispute and which are not controverted before the Court. The first, is the averment in para 40 that computations of V.R.S. of the Second Respondent were compared with those made by G.S.T.C. Ltd. by Senior Officials of the Respondent Corporation by visiting the Office of G.S.T.C. Ltd. or, as the case may be G.I.D.C. at Ahmedabad. Secondly, under the Gujarat Pattern the ex-gratia which has been paid by G.S.T.C. to the employees of its Textile Mills is in the same manner in which the Second Respondent has paid benefits to the employees of its Textile Mills including the Third Respondent. Thirdly, apart from this, it has been averred in the reply that dues on account of ex-gratia payable under V.R.S. were settled in October, 2003. None of the employees, nor the representative Union raised any grievance in the matter of the calculations made in respect of the payment of ex-gratia and all employees including the Petitioners accepted the amount without protest. Moreover, all employees acknowledged in writing that they had received their dues by way of full and final settlement. On 5th July, 2001, a notice was published by Pulgaon Cotton Mill Ltd. notifying the workmen the terms on which the Scheme for Voluntary Retirement was being announced. In pursuance of the agreement which was then entered into on 22nd November, 2002 with the Representative Union, each employee tendered his resignation from service with effect from 31st August, 2003 and the letter of resignation specified that the employee should be given benefits in accordance with the settlement and the Gujarat Pattern. Thereafter, the Textile Mill issued relieving orders to each employee. In pursuance thereof, receipts were executed by all the aforesaid employees including the Petitioners before the Court. Calculation sheets in respect of each of the Petitioners before the Court have been placed on the record. Each of these calculation sheets contains details in regard to the payment of ex-gratia including what was paid for the service that had already been rendered; and what was payable in respect of the remaining years of service. Each employee issued a receipt for the benefits which had been made over as and by way of ex-gratia under the Scheme of Voluntary Retirement in full and final settlement. The Second and Third Respondents have further stated in the reply that before signing the agreement on 22nd November, 2002, with the Representative Union, identical agreements were entered into between the Respondent Corporation and the Representative Union at the unit levels in as many as six Textile Mills under the management of the Respondents.

7. In view of this background, it would now be necessary to interpret clause 2 of the agreement that was arrived at between the Second Respondent and the Representative Union on 22nd November, 2002. The agreement specifies in clause 1 thereof that in respect of service which has been rendered in the past, each employee would be entitled to 35 days' wages/salary from the date of joining service, clause 2 of the agreement specifies what the employee would be entitled to for the remaining years of service. Three contingencies have been spelt out in the agreement.

(i) Rs.2,500/- (Rs.Two Thousand Five Hundred Only).

(ii) 25 days' wages/salary per year with a minimum of Rs.25,000/-.

(iii) 250 days' wages/salary.

Each of these three eventualities is obviously independent and exclusive and the employee would be entitled to whatsoever is the highest amongst these three contingencies. On behalf of the Petitioners, reliance has been placed on the words that precede sub-clauses A, B & C of Clause 2 namely that for the remaining years of service till the date of superannuation, the benefits that follow are granted. In our view, however, there is intrinsic evidence in clause 2 itself that militates against the construction that clauses A & C should also be regarded as defining payments for every year of service that remains. Sub-clause B of clause 2 is specifically qualified by the phrase 'per year'. Such a qualification has not been introduced in so far as clauses A & C are concerned. In fact, it is only in Clause B that the words 'per year' have been introduced subject to the employee receiving a minimum payment of Rs.25,000/-. Indeed the minimum payment of Rs.25,000/- is separate and independent of the first part of Clause B. The amount of Rs.25,000/- is, therefore, not qualified by the words 'per year'. In so far as Clause C is concerned, it is not qualified by the words 'per year'. Hence, in our view, it would not be permissible to read Clause C to mean that the employee shall be entitled to 250 days' wages/salary for every year remaining in service. An employee would be entitled to the benefit of sub-clauses A, B or C of clause 2 whichever is higher. In our view, this construction must necessarily be adopted if clause 2 is not to lead to an absurdity. If Clauses A and C as suggested were also to be qualified by the phrase 'per year' then essentially, there was no reason to introduce sub-clauses A & B in the case. If clause A as well as clause C defined payments that are to be made 'per year' of service remaining, then in such a case, Clauses A and B were not required to be introduced in the first place.

8. Learned Counsel appearing on behalf of the Second and Third Respondents has placed on record a detailed chart which is annexed as Annexure-G to the Petition. This statement relates to 8 employees whose remaining period of service is one year or less than one year i.e. between 3 months and one year two months. In case of such employees, apart from the payment of 35 days of salary for every completed year of service under Clause-1, the amount which has been paid is of 250 days' wages/salary. We are of the view that the construction which has been placed by the Second and Third Respondents on the terms of the settlement is correct and does not warrant interference in proceedings under Article 226 of the Constitution. The Court must be mindful of the circumstance that the Gujarat Pattern was avowedly being implemented by the terms of the agreement that was entered into on 22nd November, 2002. Clause 2 of the agreement specifically states that the Mills shall introduce a Scheme for Voluntary Retirement on the Gujarat Pattern. The Gujarat Pattern as we have noted is consistent with the interpretation which has been placed by the Second and Third Respondents. The same interpretation which has been placed in the case of the Third Respondent Mill has been placed on similar agreements which were entered into by the Second Respondent with its other six Textile Mills. In the present case, neither the Representative Union nor any of the other employees sought to challenge the manner in which the scheme has been implemented. Even the Petitioners have accepted the payments which were made to them in full and final settlement. Learned Counsel appearing for the Petitioners has stated that the defence of the Petitioners is that they were told that unless they accept what is being paid to them, they would not be in receipt of what was being offered to them. This defence cannot be accepted. Finally, the Court must be guided by the necessity of reading the terms of clause 2 in a manner which would give effect to the intention of the parties and in a manner which would be consistent with the context and text. The interpretation which has been suggested on behalf of the Petitioners manifestly results in a part of clause 2 becoming redundant. We are of the view that if the words "for each remaining year" in clause 2 of the agreement is held to qualify clause C as well, that would result in a manifest absurdity. To use the words of Lord Diplok, in the Judgment noted earlier, "the ordinary grammatical meaning of one or other of these provisions had to give way if justice and common sense were not to be flouted". The implementation of the agreement cannot be struck down on the basis of a stray illustration. Before concluding, we must record that we have proceeded to entertain and dispose of the Petition with the consent and at the request of Learned Counsel appearing on behalf of all the parties who have joined in submitting that the Petitioners do not seek to avail of their remedies under the Industrial law and would desire a finality to the dispute.

9. In the circumstances, we do not find any merit in the Petition. The Petition is accordingly dismissed. There shall be no orders as to costs.

Petition dismissed.