The Delhi High Court upheld the Labour Court judgements that disposed of petitions filed by Food Corporation of India (FCI) Workers Union, Food Corporation of India Handling Union and Food Corporation of India Shramik Union challenging the modifications made by FCI in relation to piece rate incentives scheme for handlings bags by the workers.

A single-judge bench of Justice Anu Malhotra recently passed a judgment in a matter pertaining to Food Corporation of India and its worker union. The issue goes back to March 13, 1999, wherein an incentive scheme was framed to loaders and un-loaders of the corporation,  which was approved by the management and union. The Food Corporation of India issued a circular dated December 15, 2005, wherein they modified the piece rate incentive scheme for handling bags, therefore, altering the bipartite settlement dated March 13, 1999, without involving labour union. The alteration in the circular dated December 15, 2005, affected the circular dated March 13, 1999, to an extent that the base for calculation of the weight of grain sack reduces from 66 Kg to 50 Kg. Consequently, the number of loading/unloading of the sack per day per labour also increased.

Labour union challenged the circular dated Dec 15, 2005, saying it was not justified in the view of the fact that the said circular was issued in pursuance of Saxena Committee Report and also in the view of the recommendation of International Labor Organization. It further stated that circular of Dec 15, 2005, does not amount to change in the condition of service. In other words, the observations of the Nagpur Bench of the Bombay High Court, it showed there is no justification for the withdrawal of the circular dated Dec 15, 2005. Government and FCI are entitled to take a policy decision regarding norms to be followed in loading and unloading operations. However, the judgment did not talk about anything relating to the effect from retrospectively against those labours who have got advantaged due to non-effectiveness of the circular dated Dec 15, 2005. Just after the judgement, the Food Corporation of India issued two circulated dated Feb 20, 2016, and Aug 17, 2016, exhibiting the effect of the circular and post-impact from Dec 15, 2005, and demanded back the extra money whosoever earned due to respective calculations.

The petitioners have submitted that the Food Corporation of India on Dec 15, 2005, unanimously came with a revised rate incentive scheme superseding the earlier scheme settled between the workmen and the respondent No.1 vide the bipartite settlement agreement dated Mar 13, 1999. It has been contended on behalf of the petitioners that the settlement arrived at on Mar 13, 1999 between the workmen and respondent No.1 reached at is a complete composite whole of the working conditions which goes to the root of the working conditions and cannot be looked at in piecemeal, disjointed from the working conditions and that the incentive is as much a core component of working conditions as the basic wages and that in a given negotiation between the parties, the basic wage may have been agreed to be based on incentives that were to be granted as a composite whole. The argument of the Petitioner continued that the settlement dated Mar 13, 1999, which provided for the payment of incentives for loading/unloading of bags of food grains has never been terminated and that the circular dated Dec 15, 2005, as issued by the respondent proposed to change the terms of the incentive scheme so as to adversely affect the workmen. At last, the petitioner reminded the court that it has been submitted that the award cannot be implemented retrospectively unless it says so expressly and that furthermore, the FCI had not required the Tribunal to make the award retrospective.

The respondents while arguing put forward the contention that impugned award cannot have retrospective effect since the Tribunal had not stated so was misconceived and that in the instant case, the Tribunal had not given any such direction that the impugned award would be prospective in nature and rather the Tribunal had only declared that the demand of the Union was neither justified nor legal and that the petitioners were not entitled to any relief and thus confined itself to the reference. He further submitted that the only option before it was to file an application under Section 33 of the Industrial Disputes Act, 1947 seeking permission to implement the Circular dated Dec 15, 2005, which application was so filed by the respondent, which was registered as ID No.239/2011 under Section 33 of the Industrial Disputes Act, 1947 before the Tribunal and that the petitioner had sought permission to implement the circular with its written statement and that the learned CGIT had disposed off . It was further submitted on behalf of respondents that since the embargo imposed vide Section 33 of the Industrial Disputes Act, 1947 had ceased to exist, the Corporation/ respondent no.1 was free to implement the circular and make recoveries of undue payments drawn by the workmen and that the workmen had notice and knowledge of undue payments as incentive being received by them due to operation of Section 33 of the Industrial Disputes Act, 1947.

Finally, the respondent submitted that the Corporation only seeks to recover the unearned amount drawn by the workmen towards incentives and that the workmen during the period in question had withdrawn incentive amounts to which they were not entitled and that the question of payment of incentives arose only after a workman handles bags in excess of the minimum number of bags as per norm or datum and that the workmen would have been entitled to draw incentives after handling 135 bags of 50 kgs but they had drawn the incentive after handling 105 bags of 50 kgs and thus incentives drawn by the workmen for 30 bags were unearned and the payment was in the nature for work not done but rather it was not a case of higher/ W.P.(C) No. 8495/2016, 9260/2016 and 9412/2016 Page 33 of 107 lower payment but it was a case of payment for work not done and that the total amount of recovery is around Rs 1500 crores, which is a direct loss to the public exchequer.

The Court taking the consideration of the entire record held that the there is no infirmity in the impugned award dated July 5, 2016 of the Tribunal Court remain as it is and effective. However, the recoveries sought to be effected by the respondent No.1 from the petitioners /workmen as also the retired personnel of the Food Corporation of India whose cases are espoused by the petitioners, cannot be allowed to be effected pursuant to the circulars No.18/05 dated 15.12.2005, circular No.8/16 dated 17.8.2016 and circular No. 1/17 dated Jan 17, 2017, which talk about the retrospective effect of circular dated Dec 15, 2005 issued by the respondent No.1 in any manner nor can the respondent No.1 withhold the release of the retiral benefits to the retired personnel in relation thereto.

—India Legal Bureau