AIR INDIA LIMITED vs ALL INDIA AIRCRAFT ENGINEERS ASSOCIATION
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on:-12.10.2023.
Date of Decision:-08.11.2023.
+ O.M.P. 33/2016, I.A. 10716/2016, I.A. 7625/2022 & I.A. 14936/2023, I.A. 2583/2017 & I.A. 16467/2019 & I.A. 14937/2023, I.A. 3059/2022
AIR INDIA LIMITED ….. Petitioner
versus
ALL INDIA AIRCRAFT ENGINEERS ASSOCIATION ….. Respondent
+ O.M.P. 34/2016 & I.A. 10718/2016 (stay)
NATIONAL AVIATION COMPANY OF INDIA NOW AIR INDIA LIMITED ….. Petitioner
versus
INDIAN AIRCRAFT TECHNICIANS ASSOCIATION & ORS. ….. Respondents
Appearances:
For petitioners/decree holders:
Mr.Harish N Salve, Sr.Adv with Ms.Anuradha Dutt, Mr.Lynn Pereira, Ms.Priyanka M.P., Ms.Shivangi Sud, Ms. Srishti Prakash, Mr.Arkaprava Das, Advs. in O.M.P. 33/2016.
Mr.Rajiv Nayyar, Sr. Adv with Mr.Amit Mishra, Mr.Shivam Singhania, Mr.Azeem Samuel, Ms.Mitakshara Goyal, Mr.Akhil Kulshrestha, Mr.Kaustubh Seth, Mr.Aditendra Singh, Ms.Manjira, Advs. for applicant in OM P 34/2016.
For respondents/judgement debtors:
Mr.Jay Savla, Sr. Adv. with Mr.Sameer Kumar, Mr.Shah Rukh Ahmad, Mr.Mandeep Baisla & Mr.Ritik Dwivedi, Advs. in O.M.P. 33/2016.
Mr.Rakesh Kumar with Mr.Suhail Sehgal & Mr.Chandan, Advs. for R-1 in O.M.P. 34/2016.
Ms.Anjana Gosain with Ms.Nippun Sharma, Advs. for R-2 in O.M.P. 33/2016.
Mr.K.C.Mittal, Mr.Vaibhav Yadav & Mr.Sagar Mittal, Advs. for intervenor in O.M.P. 33/2016, EX.APPL.(OS) 966/2023 & I.A. 14936/2023.
Mr.Sandeep Sharma, Mr.Bijender Singh & Mr.Karan Saini, Advs. in O.M.P. 33/2016.
CORAM:
HON’BLE MS. JUSTICE REKHA PALLI
REKHA PALLI, J
JUDGMENT
1. The present decision disposes of two petitions that have been filed by Air India Ltd. under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter referred to as the Act). These petitions challenge two distinct Arbitral Awards dated 25.05.2016, granted in favor of the first respondents in OMP (COMM) 33/2016 and OMP (COMM) 33/2016, i.e., All India Aircraft Engineers Association and Indian Aircraft Technicians Association, respectively, regarding their claims. The impugned awards issued the following directions to the Petitioner:
OMP (COMM) 33/2016: Award in favour of Claimant/Respondent No.1
OMP (COMM) 34/2016:Award in favour of Claimant/Respondent No.1
49. In view of the foregoing discussions, award is passed allowing the claims of the claimants with directions to the respondents to pay to them
a) Rs.57,92,47,222/- being the principal amount within three months;
b) Simple interest at the rate of 12% per annum upon Rs.57,92,47,222/- from 1.9.2006 till the date of the Award within three months from the date of the award.
c) Interest at the rate of 18% per annum from the date of award till payment upon the principal sum and interest accrued thereon till the date of the award in case, of failure of the respondents to make the above payments at (a) and (b), within three months from the date of the award.
d) Costs of the arbitration proceedings to the tune of Rs 14,53,250/- payable within three months.
55. In view of the foregoing discussions, award is passed directing
a) Payment by the respondents to Arup Kumar Bagchi a sum of Rs.7,81,768/- together with simple interest at the rate of 12% per annum from 1.8.2006 till the award within three months and interest at the rate of 18% per annum from the date of award till payment not only upon the said sum but interest accrued thereon as well till the award in case, of failure of the respondents to make payments, as aforesaid, within the time granted for the same.
b) Air India to calculate wage arrears payable to other members of the Claimant-Union for the period 1.1.1997 to 31.7.2006 within three months.
c) the respondents to pay:
(i) sums found due on calculation within three months thereafter
(ii) Simple interest at the rate of 12% per annum on the sums found due on calculation from 1.8.2006 till the date of the award within the time provided in (i) above
(iii) Interest at the rate of 18% per annum from the date of the award till payment not only upon the sums found due on calculation but on interest accrued thereon as well till the award in case of failure of the respondents to make the payments at (i) and (ii) within the time granted thereunder
(iv) Costs of arbitration proceeding to the tune of Rs. 46,61,250/- within three months
2. The assailed Awards relate to a long-standing dispute that arose almost 15 years ago between the Petitioners predecessor-in-interest, Indian Airlines Limited, and its employees. The 2nd Respondent named in both petitions is a proforma party, and is the Union of India through the Ministry of Civil Aviation. The contesting respondents are two trade unions registered in accordance with the Trade Union Act of 1926. The first respondent named in OMP(COMM) 33/2016 is the All India Aircraft Engineers Association, a trade union consisting of aircraft engineers employed by the Petitioner and its predecessor-in-interest. The Association is organized into five regional chapters located in Delhi, Mumbai, Calcutta, Chennai, and Hyderabad and asserts that it represents the interests of 480 members who served as engineers either under the Petitioner or its predecessor-in-interest. The first respondent named in OMP(COMM) 34/2016 is the Indian Aircraft Technicians Association that represents about 2000 aircraft technicians who were previously employed or are currently employed by the Petitioner and/or its predecessor-in-interest.
3. Before dealing with the rival submissions of the parties, a brief overview of relevant facts as emerging from the record may be noted. ,
(i) When India attained independence, there were eight airlines operating in the country. Pursuant to the enactment of the Air Corporation Act in 1953, the Indian air transport industry was nationalized and two self-governing corporations named Indian Airlines and Air India, fully owned by the Government of India, were created. The previously existing eight domestic airlines were merged into Indian Airlines to ply on domestic routes, whereas Air India plied on the international routes. In 1994, upon liberalization, the Air Corporations Act, 1953 was repealed by the Air Corporations (Transfer of Undertakings and Repeal) Act, 1994; all undertakings of Air India and Indian Airlines were transferred and vested in public limited companies named Air India Ltd. and Indian Airlines Limited (IAL for short) respectively. Members of the Respondent No.1 served as Chief Aircraft Engineers, Deputy Aircraft Engineers, Senior Aircraft Engineers and Aircraft Engineers in the Petitioner Company and its predecessor-in-interest.
(ii) Against this backdrop on 14.01.1999 the Department of Public Enterprises (hereinafter referred to as DPE) called for the commencement of the Sixth Round of Wage Negotiations in Public Sector Enterprises and issued guidelines therefor (hereinafter referred to as DPE guidelines). This was novel for the nascently formed Air India Limited and Indian Airlines Limited; the last pay revision effected for five years in 1992 had been carried out by the Government of India. The Managements of these public sector aviation enterprises were now charged with conducting wage negotiations with their respective workers, in accordance with the DPE guidelines.
(iii) In the aforesaid guidelines, Section (a) of Chapter IV titled Wage Policy/Pay Revision/HPPC Recommendations began by noting that wage negotiations for Central Public Sector Enterprises had fallen due on 01.01.1997. The Managements were urged to commence negotiations with workers trade unions/associations subject to certain conditions. These conditions were clearly set out. Paragraph 3 recorded that the managements were at liberty to implement the negotiated wages after verifying with DPE and the concerned Ministry that the revisions were within approved parameters and not in conflict with wage revisions of officers and non-unionized supervisors.
(iv) Subsequently on 25.06.1999, the DPE supplemented the aforesaid guidelines by way of OM No. 2(49)/98-DPE(WC) which specified inter alia that (i) in enterprises which had adopted pay scales different from those prescribed in the DPE guidelines or had effected increment rates higher than those provided by the DPE, the management was at liberty to introduce certain intermediary scales or appropriately modify the scales provided by the guidelines, so long as the minimum and maximum limits of the individual pay scales remained unaltered. The modifications however could be introduced only in consultation with the administrative Ministries and the DPE; and that (ii) all Ministries/Departments would issue presidential directives in the format prescribed in Annexure IV of the OM and these directives would set out ceilings for pay scales and perquisites, and provide for dearness allowances. As per these guidelines, the next pay scale was to be due after 10 years.
(v) On 11.08.2004, after five years had lapsed since the bell for wage revision was sounded by the DPE, the Respondent No.2 Ministry of Civil Aviation issued a presidential directive to Air India Limited to begin wage negotiations with its workers. The presidential directive given by the Ministry to Air India Limited stated as under:
It is suggested that Air India may commence wage negotiations with the Unions/Associations/Guilds etc. subject to the following conditions:
(i) Air India should not deviate in any manner from the various DPE guidelines issued from time to time, in case, any deviation is envisaged during the process of negotiations, Air India would inform the Ministry for appropriate action in consultation with DPE.
(ii) The actual progress in achieving the tangible benefit of Rs. 162 crores as well as the intangible benefits projected by Air India should be intimated to the Board and Ministry before a settlement is finalized with different Unions/Associations/Guilds etc. The various issues discussed in the meeting held on 30.07.2004 at Mumbai should be fully taken into consideration during the negotiations. It should be ensured that the organisations interest are fully protected.
(iii) The Management should also have a clear agenda during the negotiations and present their own, Charter of Demands to the Unions/Associations/Guilds these should be rationalization of manpower in specific areas, restraining and redeployment, stoppage of wasteful practice, right to outsource services in (illegible), rationalization of numerous allowances, meaningful (illegible) limited incentives, etc.
(vi) On 21.07.2006, the Respondent No.2 issued a presidential directive to Indian Airlines Limited to begin wage negotiations with its workers. The Ministry directed the airlines to conduct these negotiations within certain parameters and the contents of the presidential directive read as under:
It has been decided that M/s Indian Airlines Limited may commence wage negotiations with the Union/Associations etc. subject to the following conditions:
(i) Wage revision would be in conformity to DPE guidelines dated 14th January, 1999 and 25th June, 1999 (copies enclosed).
(ii) IAL to adopt norms similar to the ones adopted by Air India
(iii) IAL to work out savings in allowances/PLI payments in real terms in negotiations with the employees.
(iv) Revisions would be prospective i.e. from the date of issue of Presidential Directive
(v) Notional fixation will be w.e.f. 01.01.1997 and fitment benefit will be made up out of existing allowances including PLI
(vi) Payouts will be contingent upon cash flow and will be staggered over time.
(vii) No budgetary support for wage increase shall be provided by the Government
(viii) Payment of perquisites and allowances shall be a maximum of 50% of basic pay.
(ix) Payment over and above the ceiling of 50% of the basic pay should be entirely in the nature of performance related payments which should not exceed 5% of the distributable profits of the enterprises
(x) All efforts should be made to review manpower reduction and cost cutting should be done while negotiating the wage increase.
(xi) The wage negotiations may be done keeping in view and consistent with the generation of resources/profit by IAL.
(vii) As was practice since 1960, the relationship between the Petitioner and its workers/ Respondent No.1 members was governed by Agreements/Settlement Memorandum they entered into. In accordance the presidential directive, the Petitioner commenced wage negotiations with its engineers union represented by the Air Corporations Employees Union who are being represented by the Respondent No.1 in these proceedings. The negotiations resulted in a Memorandum of Settlement dated 29.03.2007 crystallizing the terms of their agreement for wage revision. Clause 1 of the Memorandum set out the agreed upon pay scales for each designation, but Clauses (1.1) and (1.3) recorded that the fixation of pay in the revised scales of pay would be effected from 01.01.1997. However, this fixation will be notional from 01.01.1997 and the actual payment would commence from 01.08.2006 in the revised scales of pay. The express language of the Memorandum of Settlement reiterates everywhere that the revised wages were payable w.e.f. 01.08.2006, barring variations against select wage components. On 28.03.2007, a day after executing this Memorandum, the Respondent No.1 addressed a letter to the Petitioner stating as under:
To
The Director (P&IR),
Indian Airlines Ltd.,
Head Qtrs.,
New Delhi
Dear Sir,
Sub: Arrears w.e.f. 01.01.1997 for Wage Settlement reached between AIAEA and IA Management on 29.03.2007
During the negotiations of the subject settlement the Association has raised the issue of the wage arrears w.e.f. 1.1.1997 as a legitimate right of the Association. However the Management has expressed its inability to concede to the demand of the Association owing to the fact that the mandate given by the Ministry for arrears payment is only w.e.f. 1.8.2006.
In view of the above the Association by means of this letter appeals to the Management to further pursue this matter with the Ministry to fulfill our legitimate demand for the subject arrears. However, pending the necessary approval from the Ministry we enter into the subject settlement without prejudice to our claim for the arrears with effect from 1.1.1997. On obtaining the necessary approval from the Ministry, the same may be extended to us from 1.1.1997. Kindly acknowledge the receipt.
(viii) The Petitioner replied to the aforesaid letter the very same day with the following response addressed to the General Secretary of Respondent No.1:
Dear Sir,
During the course of discussions, you had raised the issue with regard to payment of arrears w.e.f. 1.1.1997. You have been informed by the Management that arrears are payable effective 01st August 2006 only as provided for in the Understanding in line with the directions issued by the Ministry of Civil Aviation, Govt. of India. However, in case there is any review of the above by the Government of India, Ministry of Civil Aviation corresponding modification to the Settlement arrived at will be effected.
The above is with reference to your letter No. AIAEA-Hyd/GS/07/05 dated 29th March, 2007 on the subject.
(ix) Given this issue, the Petitioner informed the Respondent Ministry of the aforementioned correspondences by way of letter dated 22.05.2007. In response, the Respondent No.2 issued a modified presidential directive to Indian Airlines on 06.06.2007 in respect of wage negotiations with the Air Corporation Employees Union (ACEU). The letter dated 22.05.2007 stated as under:
I am directed to refer to your d.o. letter No. CMD/07 dated 22.5.07 and d.o. letter No. CMD/07/386 dated 28.5.07 on the above mentioned subject and to say that Indian Airlines may reach a settlement with the ACEU only within the parameters of DPEs O.M. dated 14.01.99 and O.M. No. 2(49)/98-DPE(WC) dated 25.6.99, subject to the conditions laid down in this Ministrys letter of even No. dated 21.7.2006 as modified below:
1. Fixation of pay will be notional w.e.f. 1.1.97 and arrears will be payable w.e.f. 1.1.2000; excluding HRA & CCA, as proposed in CMDs letter dated 28.5.2007
2. Norms similar to the ones adopted by Air India be adopted.
3. Savings in allowances/PLI payments in real terms be worked out on adoption of revised scales of pay.
4. Payouts on account of wage revision will be contingent upon cash flow and will be staggered over time taking into account the financial position of IAL and that of the merged entity and its ability to absorb such expenditure as prescribed by DPE Guidelines.
5. IAL should take into account its committed liabilities and future liabilities.
6. Payment of perquisites and allowances shall be a maximum of 50% basic pay.
7. Payment over and above the ceiling of 50% of the basic pay should be entirely in the nature of performance related payments which should not exceed 5% of the distributable profits of the enterprise
8. All efforts should be made to review manpower reduction and cost cutting should be done while carrying out the wage revision.
9. The wage settlement may be done keeping in view and consistent with the generation of resources/profit by IAL.
10. No budgetary support for wage increase shall be provided by the Government.
In view of the impending merger of IA & AI, all career progression issues should be decided comprehensively after the merger of the two companies.(emphasis supplied)
(x) On 27.07.2007, the Petitioner Indian Airlines entered into a Memorandum of Settlement for wage revision with its technicians, represented by the Indian Aircraft Technicians Association. The recital to this Memorandum stated that, Whereas Indian Aircraft Technicians Association a trade union registered under the Indian Trade Unions Act, 1925 (hereinafter called Association) representing the Aircraft Technicians of Indian Airlines and the Management of Indian Airlines Limited (hereinafter called the Company) have been holding discussions regarding the Associations Demand for the wage period 01.01.1997 to 31.12.2006. Pursuant to the negotiations between the representatives of the Company and the Association the parties hereto agree as follows. Just like the Memorandum executed with the ACEU, Clause 1 of this Memorandum also reiterated that fixation of revised pay scales, albeit effected from 01.01.1997, was notional from 01.01.1997 and actual payment would only commence from 01.08.2005.
(xi) This led discontent to rise amongst the ranks of IAL employees. Given that IAL had agreed in its settlement with ACEU to make wage arrears payable w.e.f. 1.1.2000, and its counterpart Air India Limited had arrived upon Settlements/Understandings with its own Unions/Associations providing payment of wage arrears w.e.f. 1.1.1997 (excluding HRA and CCA components), the IAL employees who had been denied wage arrears for the period between 1.1.1997 till 30.07.2005 in their respective settlements began seriously agitating the matter with the IAL Management. The aggrieved Unions/Associations of IAL formed a Joint Action Committee (JAC) and issued an agitational action plan. The Chairman and Managing Director of IAL held a meeting with the representatives of the JAC on 06.03.2008, which led to the JAC partially deferring the action plan but holding on to the call for a one-day strike.
(xii) These events resulted in the office of Chief Labour Commission (Central) taking up the issue for conciliation. Pursuant to meetings held between the IAL Management and the JAC before the Chief Labour Commission (Central) [hereinafter referred to as the CLC(C)], the plan for strike was kept in abeyance. Conciliation proceedings were held on 13.03.2008, 17.03.2008, 04.04.2008, 22.04.2008, 22.05.2008 and 23.06.2008. The JAC strongly emphasized their demand for payment of wage arrears to the employees of IAL, and submitted a justification therefor before the Chief Labour Commission (Central) CLC(C). The CLC(C) found merit in the grounds for payment made out by the JAC and on 22.05.2008, advised the Management of IAL to take up the issue with the Union in order to arrive upon a resolution. However, IAL reiterated at this meeting that it was bound by the Presidential directive issued by the Respondent No.2 and there was no scope for the renegotiations being demanded by JAC.
(xiii) In the meanwhile, the Government of India had in 2006 proposed merging IAL and Air India Limited. During conciliation, the CLC(C) took note of this fact and observed that failure to address the demands of the JAC before the merger would greatly aggravate the situation since the merger would increase the difficulty of resolving HR disputes. The CLC(C) noted that the existing wage disparity between IAL and Air India Limited workers would be detrimental for a successful merger since the lesser paid IAL employees and higher paid Air India employees would be merged into a single cadre. The CLC(C) further observed that the merger ought to be on an equal footing and provided IAL time till 23.06.2008 to discuss the matter with Respondent No.2 and arrive upon a resolution.
(xiv) Acting on these instructions by the learned CLC(C), on 18.06.2008 the proposed merged entity, National Aviation Company of India Limited (NACIL) who is the Petitioners predecessor-in-interest wrote to the Respondent No.2 exhaustively setting out particulars of the dispute and the suggestions made by the CLC (C) and sought directions in the matter. The directions never came and notwithstanding the pendency of this dispute, the Government of India formalized the merger of IAL and Air India as the NACIL on 24.08.2008.
(xv) Meanwhile in the pending conciliation proceedings before the CLC(C), on 15.04.2009 the NACIL Management gave an assurance that it was persistently pursuing the Respondent No.2 for a resolution but could not provide a time frame for it.
(xvi) This was at variance with the contents of the letter dated 24.05.2010 addressed by Respondent No.2 to the NACIL specifically referring to past letters dated 26.8.2008, 10.10.2008, 21.10.2008, 25.2.2009, 12.3.2009 and 17.4.2009 whereby it had sought recommendations of NACIL with respect to the demands of the JAC for payment of wage arrears w.e.f. 01.01.1997. The Respondent No.2 stated in that letter that despite its several invitations to do so, the NACIL had not made any recommendations of its own regarding the demands of JAC which was compelling it to once again call upon NACIL to make appropriate recommendations.
(xvii) From the record, it transpires that the NACIL did proceed to make recommendations by way of a letter dated 04.06.2010 in which it proposed accommodating the demands of the JAC, but on 04.08.2010 the Respondent No.2 wrote back to NACIL that the proposal submitted by it had not worked out savings in allowances/PLI payments in accordance with the DPE Guidelines dated 14.01.1999 and 25.06.1999. The Respondent No.2 further reminded the NACIL that its financial health was deteriorating, before rejecting the NACIL proposal entirely.
(xviii) On 25.10.2010, NACIL replied to the Respondent No.2s rejection and prefaced it by saying that the proposal submitted by it was not for wage revision of employees of NACIL, but in respect of residual employees of erstwhile IAL who had been denied revision for the period between 01.01.1997 and 31.12.2006. The letter pointedly noted that while denying these employees the revision, the Respondent No.2 had allowed arrears to be paid to approximately 17,000 Air India employees for this period and 13,000 IAL employees for the period effective from 01.01.2000. It was further stated that there was no ground to say that the conditions set out in its previously submitted proposal made it not possible to agree to the demand for payment of arrears by IAL employees. The letter reiterated that the residual employees of the erstwhile IAL had alleged discrimination at various forums, and the rejection of the proposal by Respondent No.2 on 04.08.2010 only confirmed their allegations. NACIL concluded the letter by urgently requesting the Respondent No.2 to convey its approval for payment of the arrears w.e.f. 01.01.1997 as proposed by it.
(xix) In response to the aforementioned letter, Respondent No.2 communicated on 01.12.2010 that due to the payment of Performance Linked Incentives (PLI) to the NACIL employees (in violation of DPE Guidelines), there was no room to grant the JAC’s demand for wage arrears as it would result in additional costs for the Company. Respondent No.2 further communicated that, only after withdrawal of PLI, the demand for wage arrears could be considered.
(xx) At the same time, in the Minutes of the conciliation proceedings recorded on 19.01.2012, the CLC(C) recorded the submissions of Respondent No.1 that Respondent No.2 had agreed in principle during various meetings to pay wage arrears and that only the payment modalities needed to be determined.
(xxi) Meanwhile, at the forefront of this conversation was the Ministrys insistence that the airlines were faring poorly. As a part of its Turn Around Plan (TAP) for IAL and Air India Ltd., the Respondent No.2 decided to hive off/demerge the engineering department of NACIL to a newly created subsidiary company, Air India Engineering Services Limited (AIESEL). This decision was made without providing any prior notice thereof to the affected NACIL employees, which made them wary of its possible ramifications on their employment status. In its capacity as their representative, Respondent No.1 herein preferred a writ petition under Article 226 of the Constitution of India before the Honble High Court of Judicature at Bombay assailing the demerger on the ground that it violated inter alia fundamental rights of the workers under Articles 14 and 21, principles of natural justice and specific provisions of the Industrial Disputes Act, 1947. In paragraph 13 of this petition, the Respondent No.1 mentioned the dispute in respect of outstanding wage arrears in the following manner:
Further, as a matter of fact, at present, Respondent No.1 owes a staggering amount of approximately Rs. 50 crores by way of arrears due for the period 01.01.1997 to 31/12/2006 which as per the Memorandum of Settlement dated 07.05.2007, should have been paid in specified installments in October 2009, May 2010, and 2010-2011. Further, till date, last three months PLI (Productivity Linked Incentive), amongst other amounts and benefits have not been paid to the employees of the Engineering Department.
(xxii) The aforesaid petition, along with other writ petitions filed by similarly aggrieved Unions/Associations of the NACIL, was disposed of by the Honble Bombay High Court by way of a common order dated 02.04.2013. The Honble High Court dismissed the petitions on the ground that the demerger was an executive decision made by the Government which did not merit interference, but observed that no prejudice was caused to the aggrieved employees on account of the Petitioners statements that their service conditions were protected and continuity of service to protect their past period of service was assured as well.
(xxiii) Subsequently Respondent No.1assailed the aforesaid judgment of the Honble High Court by way of a special leave petition numbered as SLP (C)No.16397/2013. On 09.05.2013, when the petition was taken up for hearing with other connected petitions, the Apex Court noted that:
3. Before the High Court, in the Writ Petition filed by the petitioners, the grievance has been raised that the respondent No. 1 – Air India Limited owes a staggering amount of Rs. 50 crores by way of arrears due for the period 1.1.1997 to 31.12.2006 which should have been paid in specified installments in October, 2009, May, 2010 and 2010-2011 but has not been paid so far.
4. On behalf of respondent No. 1 through Mr. S. Venkat – Director (Finance), an undertaking has been filed before this Court today i.e. May, 9, 2013 which reads as under:
“In respect of workman belonging to All India Aircraft Engineers Association and another, who have been transferred to Air India Engineering Services Limited (AIESL), a claim was raised in Writ Petition No 2896/12 (SLP No. 16397 of 2013) on arrears from 1.1.1997 to 31.12.2006. In this regard respondent No. 1 Air India Limited undertakes to clear all admitted dues, if any, within a period of 18 months from the date of transfer in equal monthly installment under the following head:
1. Basic pay
2. Conveyance Allowance
3. House Rent Allowance
4. City Compensatory Allowance
5. Shift Maintenance Allowance
6. Education Allowance
7. Uniform Maintenance Allowance
8. Telephone Allowance
9. Certificate of Competency Allowance
10. RT Allowance
11. Direct Reading Contact Fringe Allowance.
Sd/-
(S.Venkat)
Director-Finance
5. A further undertaking has been filed by the Union of India through Ms. Puja Jindal, Director, Ministry of Civil Aviation which reads as under:
” UNDERTAKING
I have seen the undertaking given by Air India in SLP (C) No. 16397 of 2013 arising out of W.P. No. 2896 of 2012, which is annexed hereto. I, on behalf of Union of India, do hereby undertake and ensure that Air India discharges its obligation under the said undertaking failing which the Government of India would provide the necessary funds for discharging this undertaking.
New Delhi Sd/
09.5.2013 (Puja Jindal)
Director
M/O Civil Aviation”
6. Mr. Ranjit Kumar, learned senior counsel for the petitioners submits that since the parties are not ad idem about the quantum/heads of arrears from 1.1.1997 to 31.12.2006, a mediator may be appointed to adjudicate the amount payable by respondent No. 1 to the concerned employees.
7. Mr. Girish Kulkarni is not opposed to the above proposal made by Mr. Ranjit Kumar.
8. Learned senior counsel for the petitioners and learned counsel for the respondent Nos. 1 and 2 agree that for this purpose, Mr. Justice B.N. Agarwal, a former Judge of this Court, may be appointed as a mediator to adjudicate the quantum/heads of arrears from 1.1.1997 to 31.12.2007 payable by respondent No.1 to the concerned employees. We order accordingly.
(xxiv) Thus, the aforesaid extract from the Order passed by the Honble Supreme Court shows that the SLP was disposed of in view of several undertakings given in Court by the Petitioner and Respondent No.2. The Petitioner undertook that all employees will be assured and protected with all current service conditions, including continuity of service. Additionally, the Petitioner pledged to clear all admitted dues of Respondent No.1s workmen members in equal installments within 18 months from their transfer to Air India Engineering Services Limited. Respondent No.2undertook that in the event Air India Limited failed to meet its obligations, the Union of India would provide the necessary funds to fulfill the undertaking given by it. Be that as it may, given the dispute between the parties concerning the quantum/heads of arrears for the period between 01.01.1997 to 31.12.2006, the Apex Court appointed Mr. Justice B.N. Agarwal, former Judge of the Supreme Court of India as a Mediator with the consent of the parties to determine the quantum/heads of arrears payable by the Petitioner to the affected employees during the said period. Similar directions were given by the Honble Supreme Court in relation to the claims of Respondent No.1 on 16.08.2013 in the special leave petition filed by it.
(xxv) In the preliminary hearing before the esteemed Mediator on 17.08.2013, the Petitioner asserted a preliminary objection as to the extent of the reference before the Mediator. The Petitioner contended that the learned Mediator could not assume responsibility for resolving disputes between the parties, as the reference made by the Apex Court only sought to facilitate negotiations towards determining the amount and types of arrears and did not entail adjudicating their respective claims. Nonetheless, given that the learned Mediator directed the parties to submit their statements of claim and defense, the Petitioner submitted an application before the Apex Court requesting clarification of the Order dated 09.05.2013. In its application, the Petitioner stated that since Respondent No.1 had sought a reference under the Industrial Disputes Act, 1947 for adjudication of its claim for payment of arrears towards wage revision for the period between 01.01.1997 and 31.12.2006, it had already availed of a statutorily available legal remedy which was now pending; therefore, the proceedings before the learned Mediator should not be converted into an adjudicatory process.
(xxvi) On 09.05.2014, while disposing of the aforesaid application, the Apex Court clarified that the word Mediator would be construed to mean Arbitrator and that Mediation would be construed to mean Arbitration.
(xxvii) Upon receiving the aforementioned clarification, the learned Arbitral Tribunal entered upon reference on 13.06.2014. Respondent No.1 subsequently filed a Statement of Claim arraying Air India Engineering Services Ltd. as Respondent No.2 and Union of India as Respondent No.3. By 16.09.2014, pleadings stood completed and the learned Tribunal framed the issues arising for its consideration. However, in pursuance of a request to that effect made by the Respondent No.1/Claimant, the learned Tribunal permitted deletion of Air India Engineering Services Limited and Respondent No.2 from the array of parties.
(xxviii) In a subsequent reversal, on 15.11.2014 the Arbitral Tribunal heard the parties, with their consent, on the advisability of serving notice to the Union of India once again. After hearing their submissions on this point, the learned Tribunal found it fit to issue notice to the Union of India and grant it time to file its statement of defense. Once pleadings stood completed, the learned Tribunal framed the following issues for its consideration:
“1. Whether the Respondent has admitted the dues of the Claimants w.e.f. 01.0l.1997 ?
2. If the answer to Issue No. 1 is in the negative, whether the Claimants are otherwise also entitled for payment of arrears w.e.f. 01.01.1997 to 31.12.2006?
3. Whether the Claimants are entitled to interest as claimed?
4. Relief.”
(xxix) On 12.08.2015, the parties concluded their arguments and the Tribunal reserved orders. The awards in both arbitrations came to be pronounced on 25.05.2016.
(xxx) Upon considering the submissions and evidence presented by the parties, the learned Tribunal concluded that the Petitioner had unequivocally admitted the wage arrears claimed by the Respondent No.1. It was further held that even otherwise, without such an admission, the employees were held entitled to the arrears as of 01.01.1997, and that the presidential directive issued by the Respondent No.2 on 21.07.2006 could not come in the way of their claim to these arrears which fell due to them w.e.f. 01.01.1997. The learned Tribunal also considered the given made by both parties before the Apex Court, and rejected the Petitioners argument that payment of the arrears was contingent on its financial condition. Accordingly, vide the impugned Award in OMP (COMM) 33/2016, the Petitioner has been ordered to pay the sum of Rs. 57,92,47,222/- along with interest at a rate of 12% from 01.09.2006 until the date of award, plus arbitration costs of Rs. 14,53,250/-.In OMP (COMM) 34/2016, the Petitioner has been directed to pay Mr. Anup Kumar Bagchi the sum of Rs. 7,81,768/- plus interest at a rate of 12% from 01.08.2006 until the date of the impugned Award. The learned Tribunal further ordered that if the awarded amount was not paid within three months, the amount owed will accrue interest at a rate of 18%.
4. Aggrieved by the decision of the learned Tribunal, the Petitioner approached this Court in 2016 by way of the present petitions under Section 34 of the Act, assailing the Awards dated 25.05.2016.
5. In support of the petition, Mr. Harish Salve learned senior counsel for the Petitioner began by urging that the impugned Award was manifestly unlawful as the learned Tribunal rendered decisions on disputes which lay beyond the scope of its mandate. By drawing my attention to the writ petition filed before the Bombay High Court, and the assertions made in the SLP, he contended that the purview of the matter before the Bombay High Court and the Supreme Court was limited to the acknowledged dues, if any, payable to the employees. The parties had not envisaged adjudicating on the claims of the employees, seeking the benefit of wage revision for the period between 01.01.1997 to 31.12.2006. He contended that the usage of the term “arrears” not only in the writ petition but also in the SLP, by the employees themselves, demonstrated that the learned Tribunal was only expected to compute the quantum of the amount already admitted as a liability. This interpretation, he contended, did not authorize the learned Tribunal to determine whether the employees were entitled to demand the benefits of wage revision for the period preceding 31.12.2006. The learned Tribunal was only obliged to evaluate the quantum of the amount previously ascertained, either under the law or under a settlement between the parties. He contended that the learned Tribunal, by venturing to determine the eligibility of the employees to demand the benefit of wage revision for the period between 01.01.1997 to 31.12.2006, had not acted in accordance with his lawful authority, and therefore, the award, only on this basis, was liable to be quashed.
6. The learned Senior Counsel then submitted that the learned Tribunal had committed a grave error in rendering a decision that the Presidential Directive issued on 21.07.2006 pursuant to Section 9 of the Air Corporations (Transfer of Undertaking and Repeal) Act, 1994 was subject to being set aside. He submitted that the learned Tribunal lacked the authority to assert that a statutory directive was unlawful or ought to be disregarded, particularly when this issue was already a matter before the Industrial Tribunal. Therefore, the impugned award, which overlooked a valid reference under the Industrial Disputes Act to determine the eligibility of employees to obtain the benefit of the wage revision anterior to 31.12.2006, was unsound.
7. The final submission of Mr. Salve was that the Respondent No.1 employees did in fact concede the validity of the Memorandum of Settlement dated 29.03.2007 which recorded their concession that any arrears related to wage revision will only be paid prospectively w.e.f. 01.08.2006. Therefore, it was clear that no agreement existed between the concerned parties in this regard. It is irrelevant that the said settlement was agreed upon without prejudice to the employees right to seek legal remedies for the grant of arrears for the period prior to 31.12.2006. The learned Tribunal, therefore, lacked the authority to determine the aforementioned claim because the same could have been adjudicated upon only by a competent court of law.
8. Mr. Rajiv Nayyar, learned Senior Counsel representing the Petitioner in OMP(COMM) 34/2016, while adopting the arguments of Mr. Salve, averred that the impugned award was wholly perverse on the grounds that the learned Tribunal failed to grasp that the presidential directive issued in respect of the employees in question differed from the presidential directive applicable to Air India Ltd. employees. He contended that the matter of wage revision concerning the Air India employees was subject to the presidential directive of 11.08.2004, which included a direction for retrospective date wage revision, while the IAL employees were subject to the presidential directive of 21.07.2006, which specifically provided for prospective wage revision to apply from the date of the presidential directive’s issuance, i.e., 21.07.2006. Although the learned Tribunal was cognizant of the fact that the presidential directive of 21.07.2006 issued under Section 9 of the Aircrafts Act was legally binding in nature, the impugned Award equated the statuses of the Air India and Indian Airlines employees and erroneously recorded that a different presidential directive could not be applied to IAL employees.
9. The learned Senior Counsel further submitted that, notwithstanding the failure of other employees to proffer evidence on the matter, the amount and categories of the alleged wage arrears accruing from 01.01.1997 to 31.12.2006 have been computed by the learned Tribunal solely on the uncorroborated submissions of one employee, Shri Anup Kumar Bagchi. In addition, the learned Tribunal wrongly placed the onus of proving the quantum of arrears on the Petitioner and, citing the absence of any calculation sheets from the Management, proceeded to assume the veracity of Mr. Bagchi’s claim.
10. The learned Senior Counsel also submitted that the impugned award was manifestly illegal due to the fact that the learned Tribunal has only addressed a portion of the terms of the reference. As per the directions given by the Apex Court on 09.05.2013, the learned Tribunal was obligated to settle the magnitude/characteristics of outstanding payments from 01.01.1997 to 31.12.2006 purportedly due by the Petitioner to the workers. Once the Apex Court had specifically mandated that the learned Tribunal rule on the calculation of arrears payable to the affected employees, it was required to evaluate each employee’s demand individually, which it failed to do – thus rendering the award liable to be set aside.
11. The final submission of Mr. Nayyar was that the application of an interest rate of 18% to the entirety of the claim amount, inclusive of any pre-existing interest, was unlawful on account of essentially being a direction to pay interest on interest – a disallowed practice. In support of this contention, he placed reliance on the decision of the Honble Supreme Court in Vedanta Ltd. v. Shenzhen Shandong Nuclear Power Construction Co. Ltd. (2019) 11 SCC 465.
12. On the other hand, Mr. Jay Savla, learned Senior Counsel representing Respondent No.1 in OMP (COMM) 33/2016, opposed the petitions by contending that none of the grounds taken by the Petitioner were covered under Section 34 of the Act. He submitted that the Petitioner and Respondent no.2 had assured the Apex Court that there was no contention concerning the duration for which the workers were to receive payment for their overdue wage revision, nor was there any dispute regarding their entitlement to said payment. The sole subject of disagreement between the parties, as recorded in the Supreme Court order dated 09.05.2013, was restricted to the quantum/heads of arrears. Once the petitioner had expressly undertaken to pay the accepted dues of its employees, if any, relating to claims for the period from 01.01.1997 to 31.12.2006, it was precluded from denying that any amount was payable for the aforementioned period. Correspondingly, Respondent No.2 had also assented to guarantee that the Petitioner execute its duty to pay the overdue wages, failing which the Government of India would provide funds required by the Petitioner to discharge this commitment. The fact was that notwithstanding the application filed by the Petitioner before the Supreme Court later on, asking for a clarification of the Order dated 09.05.2013 in view of the steps taken under the Industrial Disputes Act and the grievance that the Mediator was erroneously acting as an adjudicator, the Petitioners application was disposed of by clarifying that the mediation was in fact arbitration.
13. The learned Senior Counsel then submitted that the Petitioner’s claim that pursuant to the presidential directive dated 21.07.2006, the revised wage arrears could only be paid prospectively to Respondent No.1 w.e.f. 21.07.2006, was wholly misconceived. He submitted that the presidential directive must be taken as a whole and that clause (i) thereof specified that the revision must comply with the guidelines set forth by the Department of Public Sector Enterprise (DPE Guidelines) on 14.01.1999, and 25.06.1999. He referred to paragraph 1 of O.M. dated 14.01.1999, and paragraph 3 of O.M. dated 25.06.1999to argue that the DPE Guidelines unequivocally stated that wage revisions were to be granted to all employees w.e.f. 01.01.1997. He contended that even the draft directive provided by DPE in O.M. dated 25.06.1999 stipulated that wage revision would be applicable from 01.01.1997.Therefore, Mr. Savla contended that since the Petitioner was mandated to issue the presidential directive in conformity with the DPE Guidelines, the direction given by Respondent No. 2 in the subject PD to make the wage revision prospective was beyond the powers conferred by the Government and contravenes DPE guidelines.
14. Insofar as the Petitioners contention regarding sanctity of the presidential directive dated 21.07.2006 was concerned, the learned Senior Counsel submitted that the directive, even if deemed to have been issued pursuant to Section 9 of the Act, was simply a directive of an administrative nature and lacked statutory force and was not a law under Article 13 of the Constitution of India. Only statutes, regulations, and bylaws have statutory force, and therefore the said presidential directive dated 21.07.2006 was not outside the purview of adjudication by arbitration.
15. Mr. Savla further submitted that the Petitioners contention that the claim for payment of arrears was barred in view of the Memorandum of Understanding dated 07.03.2007, lacked merit. Inasmuch as the Memorandum did state that the employees had agreed to be paid prospectively, Clause 9 thereof explicitly stated that the settlement reached between the parties did not entail any concession or relinquishment of their rights, claims, and contentions, before the NIT, and a clarification to this end was also issued by Respondent No.1 in a letter of the same date which stated that the settlement was executed without prejudice to the right of the employees to claim arrears w.e.f. 01.01.1997. He submitted that in any event, once Air India Ltd. and the Union of India had given their express undertakings before the Apex Court to clear all admitted dues of their employees, the directive issued on 21.07.2006 could not come to the aid of the Petitioner in avoiding the liability to pay wage arrears w.e.f. 01.01.1997.
16. The learned Senior Counsel also submitted that the learned Tribunal was justified in holding that despite the employees of Air India Limited and IAL being covered by two separate presidential directives issued on 11.08.2004 and 21.07.2006 respectively, they were entitled to be treated equally in view of the DPE guidelines and the admitted position that wage revision was due from 01.01.1997. He submitted that once it is an admitted position that the prior wage settlement between the parties expired w.e.f. 31.12.1996, wage revision ought to have been directed retrospectively w.e.f., 01.01.1997 itself. However, the Central Government delayed issuing a directive on wage revision for nine years until 21.07.2006, and thereafter arbitrarily mandated that the revision shall apply only on a prospective basis. He contended that the decade long delay of the Central Government should not be allowed to cause undue hardship on the affected employees, especially since 17,000 Air India employees and 13,000 former Indian Airlines employees had already received pay revisions with retroactive effect to January 1st, 1997, and January 1st, 2000, respectively. With only 400 members, Respondent No. 1’s employees could not be denied arrears of revised wages w.e.f. 01.01.1997.
17. The learned Senior Counsel then submitted that the Petitioners plea that Respondent No.1 had not led any evidence to show that it was entitled to claim arrears of wage revision w.e.f. 01.01.1997,was without any basis. Before the learned Tribunal, Respondent No.1 had presented a comprehensive chart illustrating the complete amount of wage arrears payable to each employee, along with another chart detailing the claims made under different heads. The Petitioner neither disputed the chart filed by them nor produced any other chart to refute the amount of arrears claimed by them. Instead of submitting a separate chart to challenge the amount of arrears, the Petitioner simply denied the claim of wage revision, citing the presidential directive effective dated 21.07. 2006 and the Settlement Memorandum dated 29.0.2007 that stated the wage revision was notional and retrospectively payable. He contended that the learned Tribunal, after considering the documents presented before it, accepted the calculations presented by Respondent No.1. Thus, the Petitioner could not be permitted to argue at this belated stage that the Respondent No.1s computation was incorrect, having failed to present any calculations of its own.
18. Lastly, Mr. Savla submitted that the learned Arbitrator was justified in awarding interest on the awarded amount. He submitted that once the interest component was included in the awarded amount, the learned Tribunal had the power to give directions for payment of post-Award interest on the entirety of the awarded amount. He placed reliance on the decisions of the Apex Court in Hyder Consulting (UK) vs. State of Orrisa 2015 (2) SCC 189 and UHL Power Company Ltd. vs. State of Himachal Pradesh(2022) 4 SCC 116 in support of this plea. In conclusion, he submitted that the impugned Award, being a well-reasoned award, did not suffer from any infirmities and therefore prayed that the present petitions be dismissed.
19. Mr. Rakesh Kumar, learned counsel for Respondent No.1 in OMP (COMM) 34/2016 adopted the aforesaid submissions of Mr. Jay Savla, and submitted that there was never any dispute regarding these workmens entitlement to pay revision. He relied upon the Order of the Honble Supreme Court to submit that the Petitioner gave an express undertaking to the Apex Court that it would clear in equal installments all admitted dues of Respondent No.1 for the period between 01.01.1997 to 31.12.2006 within a period of 18 months. He contended that this undertaking was made because the Petitioner was always aware of its liability to pay arrears of the revised wages for that period. The Petitioners letter dated 18.05.2010 sent to Respondent No.2 makes it clear that it had no dispute regarding Respondent No.1s entitlement to these arrears. In fact, the Petitioner had admitted this liability, and its Director (Finance) was tasked by the Conciliator to draw up a payment schedule thereof, subject to the sole condition that payment of arrears would depend on the Petitioners financial capacity to pay. He submitted that the Petitioner had neither pleaded before the Apex Court nor this Court that it did not have the financial wherewithal to make these payments. Nevertheless, the Petitioner and Respondent No. 1 continued to be bound by their undertaking made before the Apex Court.
20. The learned counsel further submitted that the Petitioners contention that the impugned award is patently illegal is also without any merit. He submitted that the findings of the learned Tribunal, regarding the Managements unequivocal admission in respect of the claim for arrears of revised wages, were findings of fact based on a correct appreciation of evidence. He submitted that since the scope of review under Section 34 of the Act is limited, if the arbitrator has taken a possible or a probable view, the same cannot be interfered with by this Court. He also submitted that once it was evident from the various communications placed on record, which were exchanged between the Petitioner and Respondent No.1, that there was an admission all along in respect of Respondent No.1s claim for arrears, then the only limited question that remained unresolved were the modalities of payment of the arrears. It was for this purpose that the parties had agreed before the Apex Court to be sent for mediation/arbitration. The Petitioner, having paid the arrears of revised wages to all other categories of employees, was estopped from now disputing the admission it made in respect of the claims of these employees.
21. Lastly, Mr. Kumar contended that the Petitioners plea that as per the Presidential Directive dated 21.07.2006, the wage revision was to be prospective in nature was wholly misplaced. He contended that Section 9 of the Act, whereby the Presidential Directive was issued, empowered the Central Government to give directions to a public sector enterprise to carry out certain functions, which would then bind the enterprise. This however did not imply that the Central Government could issue directions to a public sector enterprise to not pay the wages due to its employees, especially when these dues were admitted. The right to receive wages, being a fundamental right under Article 300 A of the Constitution of India, could not be denied to these workmen by way of executive directions. In view of the aforesaid, he prayed for dismissal of these petitions.
22. I have considered the submissions of the learned counsel for the parties and perused the record. What emerges is that the Petitioner has challenged the impugned Awards on the following grounds:
(i) The conclusion of the learned Tribunal that Respondent No.1 employees were entitled to be paid arrears of revised wages from 01.01.1997 to 31.07.2006, notwithstanding the admitted Presidential Directive dated 21.07.2006, the Memorandum of Settlement dated 29.03.2007, and the pendency of the proceedings under the Industrial Disputes Act, 1947, was patently illegal.
(ii) The directions passed by the learned Tribunal effectively supersede the directions given in the Presidential Directive dated 21.07.2006 which holds statutory force, and therefore directions of such nature passed in arbitration are entirely untenable in law.
(iii) The learned Tribunal had erred by treating the employees of Indian Airlines Limited and Air India Limited at par without considering the distinct presidential directives applicable to each of them.
(iv) The learned Tribunal had committed a patent illegality by accepting the Respondent No.1s unsubstantiated statement to quantify the arrears, without directing them to produce supporting evidence therefor.
(v) The learned Tribunal gravely erred in awarding compound interest at the rate of 18% per annum on the entire adjudged amount, inclusive of the 12% per annum interest on the arrears of wage revision, without justification.
23. It is evident that the Petitioner’s entire case hinges on the presidential directive issued on 21.07.2006. An important line of argument taken by the Petitioner is that the learned Tribunal rendered decisions on disputes which lay beyond its mandate inasmuch as it lacked the authority to assert that a statutory directive in the form of the Presidential Directive was unlawful or ought to be disregarded, particularly when this issue was already a matter before the Industrial Tribunal. It is therefore considered fitting and proper to begin assessing the Petitioner’s case from that point.
24. The Guidelines issued by Department of Public Enterprises (DPE) on 14.01.1999 state that the pay revision undertaken in 1992 was valid for a duration of five years, and as such, has since lapsed. Hence, it is imperative to commence negotiations towards a wage revision that is satisfactory, agreeable, and fitting, under the circumstances. The guidelines clarified that no budgetary support was going to be provided by the Government, and directed the Ministries/Departments to negotiate wage settlements in accordance with parameters stipulated in the guidelines. By Clause 5 of the guidelines contained in the notification numbered as DPE/Guidelines/IV(a)/11, the Ministries/Departments were requested to issue suitable instructions to the public sector enterprises under their administrative control, under intimation to the Department of Public Enterprises (DPE).
25. The DPE Supplementary Guidelines on Wage Policies and Related Matters, issued on 25.06.1999 provided helpful clarifications and additional instructions on wage policies and related matters. Clause 9 of the Guidelines, contained in Notification DPE/Guidelines/IV(a)/14, states that Administrative Ministries/Departments shall issue Presidential directives indicating salary scales as a maximum limit, with actual payments dependent on the enterprise’s capacity to pay. It was clarified that salary and wage increases must be funded by the public sector enterprise internally from improved productivity and profitability, rather than government funding. It was further provided that presidential directiveswill include guidelines for dearness allowances and perquisite ceilings, and a format for the presidential directive was set out in Annexure IV of this guideline.
26. It is apposite to take a look at the format for a Presidential Directive (hereinafter referred to as PD) provided by the DPE in Annexure IV of the Notification DPE/Guidelines/IV(a)/14.
ANNEXURE IV
Draft directive to be issued by the administrative Ministries/Departments to the Central Public Sector Enterprises under their administrative control regarding pay revision and other benefits for Board level and below Board level executives.
The scale of pay of the incumbents of the Board level and below Board level executives were last revised by the Government w.e.f. 1.1.92. Government have now decided that the pay revision and other benefits for these executives w.e.f. 1.1.97 may be implemented through Presidential Directives.
2. In exercise of the powers conferred by Article ______ of Articles/* of Associations of ________/* Section ______ of the ______ Act setting up ________ (name of the PSE), the President is pleased to direct the ________ (name of the PSE) that the approved pay scales, fitment formula, DA, guidelines and ceiling on perquisites for Board level and below Board level executives w.e.f. 1.1.97 may be implemented.
*delete whichever is not applicable
27. The PD issued by the Petitioner in respect of Respondent No.1s employees on 21.07.2006 has been extracted in Paragraph 3(v) hereinabove. Upon comparison, it is apparent that the PD dated 21.07.2006 issued by Respondent No.2 deviated significantly from the format outlined by the DPE on 25.06.1999. While such deviation was permissible as the format was only suggestive, the question arises as to what elements of the DPE guidelines were mandatory for the Ministry to adhere to when issuing presidential directives.
28. The O.M. dated 25.06.1999 stated that the Ministry must indicate in the PD the ceiling limits for revised pay scales, dearness allowance, and perquisites that should be observed by enterprises during wage negotiations with workers unions. The O.M. dated 14.01.1999 stated that after conducting wage negotiations in accordance with the PD, the public enterprises were to confirm with the Ministry and the DPE that the proposed revisions were within approved parameters.
29. Notably, the guidelines did not provide for the Ministry to make prohibitions on wage payments for certain periods in the PD; rather the guidelines appear to recognize categorically that worker wages were due from 01.01.1997 as a matter of right. Yet the PD issued by Respondent No.2 on 21.07.2006 states that revisions would only apply from the date of issue of the presidential directive while notional fixation will be effective from 01.01.1997. It also provides that fitment benefit will be made up out of existing allowances, including Performance Linked Incentives (PLI).
30. As a consequence of the mandate given to the IAL in PD dated 21.07.2006, during negotiations for wage revisions conducted between the Respondent No.1’s members and the IAL Management, the Management expressly informed the former that they were fully precluded from requesting any wage arrears for the period between 01.01.1999 and 31.07.2006 and the Management had no intention of providing the same. Should any wage revisions occur, they must be made in accordance with the PD, and for the period beginning on 01.08.2006. As a result, the Memorandum of Settlement executed between Management and workers noted that the pay fixation was notional as of 01.01.1997, while actual payment would begin on 01.08.2006.Respondent No.1, as a precautionary measure, undertook certain actions to safeguard its entitlement to pursue the payment of outstanding wages. This was accomplished by incorporating a provision within the General Clauses of both Memoranda, stipulating that the executed Memorandum of Settlement does not signify any form of concession or waiver on the part of the workers’ union regarding their concerns, rights, and arguments before the National Industrial Tribunal. Furthermore, Respondent No.1, in the first petition, corresponded with IAL on the same day, explicitly indicating that “we agree to the settlement without prejudice to our claim for the arrears with effect from 01.01. 1997.
31. Having examined where the presidential directive came from, how it was issued, and the impact thereof, it is important to ask whether the learned Tribunal exceeded its mandate in giving a ruling that rendered the presidential directive null and void. But that begs the question, what exactly was the mandate of the learned Tribunal?
32. The learned Arbitral Tribunal was constituted as per the directions of the Honble Supreme Court in special leave petitions filed against a judgment of the Bombay High Court in several writ proceedings instituted by employees’ unions of Air India Limited and Indian Airlines, opposing the amalgamation of the two airline companies. On 09.05.2013, in response to a plea for appointment of a Mediator to adjudicate the quantum/heads of arrears payable from 01.01.1997 to 31.12.2007 by the Petitioner, the Honble Apex Court had appointed a Mediator with the consent of all parties herein.
33. Once mediation began, the Petitioner disagreed with the manner in which it was being conducted. The Petitioner thus approached the Honble Supreme Court with an application seeking modification/clarification of the Order dated 09.05.2013. The following paragraphs of the Petitioners aforesaid application numbered as IA 2/2014 in SLP(C) No. 16397/2013 are relevant to this discussion:
7. That the Applicant-Respondent at the very first opportunity strenuously raised an objection to the practice/procedure adopted by the Learned Mediator which in actuality amounted to adjudication of the disputes by applying judicial mind as this was never intention or the purpose for which the parties were referred to mediation by this Hon’ble Court and also as the Petitioners have already invoked the legal remedy available to them as per law and proceedings under the Industrial Disputes Act, 1947 are pending between the parties. However, the learned Mediator orally brushed aside the said concern so raised by stating that this Hon’ble Court vide order dated 09.05.2013 has directed the Mediator to adjudicate upon the quantum/heads of arrears payable by the Applicant-Respondent No.1 to the Petitioner which in letter and spirit amounted to settlement of sum legally payable which necessarily requires taking in to consideration relevant documents/evidence presented by the parties.
8. That it is most humbly submitted that when IA No. 2/2014 preferred in SLP (C) 16181 of 2013 came up for hearing before this Hon’ble Court on 14.03.2014, the Applicant-Respondent opposed the plea of the Applicant therein to refer the grievances raised to mediation for the reason that the Learned Mediator has been adjudicating upon the disputes which is not permissible in process like mediation. At that stage, this Hon’ble Court orally clarified that the Mediator is proceeding on a wrong premise if he undertakes adjudication while carrying out mediation proceedings. In the said IA, this Hon’ble Court eventually referred the claimed raised therein for settlement through mediation. The Copy of the order dated 14.03.2014 passed by this Honble Court in SLP(C) 16181 of 2013 is annexed herewith and marked as ANNEXURE A-3.
9. That it is settled proposition in law that mediation is an alternative dispute resolution technique where disputes are resolved by concrete efforts of the mediator who lends assistance to the parties in order to arrive at an amicable settlement. Mediation is a negotiation process and not an adjudicatory process. The purpose of mediation is to arrive at an agreeable resolution by providing parties a uniform platform where they could successfully enter into dialogues with each other which facilitates them to reach at an agreement. The p