Apex court to PSU: 'Hire and fire' clause arbitrary | delhi | Hindustan Times
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Apex court to PSU: 'Hire and fire' clause arbitrary

SC agrees with Calcutta HC verdict on a PSU, says it is a state and thereby, amenable to writ jurisdiction. Satya Prakash reports.

delhi Updated: Feb 25, 2013 01:27 IST
Satya Prakash

Thirty two years after an employee of a public sector undertaking was fired arbitrarily, the Supreme Court has ordered the company to pay 60% of his back wages to his legal heirs.

Declaring the 'hire and fire' clause in the appointment letter issued by Balmer Lawrie Investments Ltd's (BLIL) to Partha Sarathi Sen Roy as "void", a bench of justice BS Chauhan and justice V Gopala Gowda ordered that the employee's legal heirs shall also be entitled to all statutory benefits like gratuity, provident fund and pension, if any.

"If it is not given within three months then interest at the rate of 9% will accrue," it added.

Roy, who was sacked on February 27, 1981 after six years of service, died during the protracted litigation. Several other sacked employees of BLIL also got similar benefit.

The case revolved around a legal question as to whether the PSU in question was a State within the meaning of Article 12 of the Constitution. If the company was not a State, then no writ petition could be filed against it.

After considering factors such as the company's formation, objectives, functions, management and control, financial aid received by it, the SC agreed with the Calcutta High Court, saying, "the cumulative effect of all the aforesaid facts …would render it (BLIL) as an authority amenable to the writ jurisdiction of the HC."

The bench noted that BLIL was under an obligation to submit its monthly, as well as its half-yearly performance reports to the petroleum ministry.

BLIL and IBP Company Limited had a common chairman and the remuneration structure of the employees of the PSU in question was also in conformity with those which were applicable to the Indian Oil Corporation and IBP - as fixed by the Bureau of Public Enterprises of the union government.

BLIL had come to the SC against two decisions of Calcutta HC that concluded the company was a state. While deciding the case on merits, the SC said, "we cannot approve (of) the hire and fire policy adopted by the appellant company..."

"Considering the fact that such termination took place several decades ago, and litigation in respect of the same remained pending not only before the high court, but also before this Court, it is desirable that the dispute comes to quietus," the bench said.