K N SHAH Vs. PETROFILS CO OPERATIVE LIMITED

JUDGEMENT

(1.) The petitioner is the General Secretary of the Union of the employees of the Petrofils Co-op. Society LIMITED (hereinafter referred to as "the Society"). It is the case of the petitioner that the respondent-society is controlled and managed by the Government of India and, therefore, is a State within the meaning of Art. 12 of the Constitution. Thus, in submission of the petitioner, the petition under Art. 226 of the Constitution of India against the respondents is maintainable. Learned Counsel Mr. Vakharia appearing for the petitioner has pressed the following claims : (a) The employees of the respondent-society employed after 1st Sept. 1982 shall be entitled to claim reimbursement for the medical claim incurred by them for themselves or for the family members who are dependent on such employees. (b) The employees or dependent family members of such employees who take medical treatment at the place away from the headquarters shall be reimbursed irrespective of the fact whether such treatment is taken at the Government hospital or dispensary or at any other hospital or dispensary.

(2.) It is contended that earlier, under Medical Attendance and Treatment Rules, all the employees of the respondent-society were entitled to reimbursement for medical expenses incurred by them for themselves and for the members of their family [Scheme "A"]. However, on 8th October, 1982, a new scheme [Scheme "B"] of lumpsum medical allowance was introduced and was made compulsory for all the employees appointed after 31st August, 1982. However, the employees who were in service on 31st August, 1982 were given option either to continue under the earlier scheme or to opt for the new scheme. Thus, it is the grievance of the petitioner that the persons appointed after 31st August, 1982 get lumpsum reimbursement every month towards the medical expenses and they are not entitled to reimbursement for actual expenses incurred by them. Mr. Vakharia has submitted that there is no rationale in introducing Scheme- B with effect from 1st September, 1982 and in depriving the employees appointed on and after 1st September, 1982 of their right to claim reimbursement of the actual medical expenses incurred by them for medical treatment of themselves and of the dependent members of their family. He has also submitted that the employees of the society make one common class and such common class cannot be classified into two groups so as to deprive one of the groups of their right to claim reimbursement of actual medical expenses. He has further submitted that the date of 1st September, 1982 introduced by the society is arbitrary and discriminatory and requires to be quashed and set aside. He has submitted that if the employees appointed by the society prior to 1st September, 1982 have been given benefit to opt either for Scheme-A or for Scheme-B, same benefit should be extended to the employees appointed by the society on or after 1st September, 1982. All the employees of the society are entitled to allowances admissible to them in the same manner and to the same extent. In support of his claim, he has relied upon the judgment of the Hon'ble Supreme Court in the matter of State of Rajasthan v. Gurcharansinh Greval , [ AIR 1990 SC 1760]. He has submitted that in the case before the Supreme Court, employees of the State of Rajasthan State Electricity Board who were sent on deputation to Beas Construction Board were given benefit of compensatory allowance by the State of Rajasthan. With effect from 1st October, 1972, Beas Construction Board introduced uniform scale of pay for all the employees of the Board and also sanctioned cash payment for every completed year of satisfactory service on Beas Project to regular employees working on Beas Project whether drawn from the partner States or Electricity Board. In view of the said uniform scale of pay and the cash payment scheme, State of Rajasthan withdrew benefit of compensatory allowance to the employees who were sent on deputation to Beas Project after 14th September, 1972. The employees who were sent on deputation before 14th September, 1972 were allowed to opt either for compensatory allowance or to retain cash payment benefit offered by the Beas Construction Board. The Supreme Court, relying on the earlier judgment of the Constitutional Bench, in the matter of D. S. Nakara v. Union of India, [ AIR 1983 SC 130] held that the benefit of compensatory allowance was withdrawn by the State of Rajasthan under the belief that such employees would get double benefit of compensatory allowance and of cash payment. However, on the facts of the case, the Court found that such a belief was erroneous and such employees did not get double benefit as apprehended. In the circumstances, the Court held that the order denying option to the employees sent on deputation after 14th Sept. 1972 was arbitrary and discriminatory and quashed and set aside the action of the State. Relying on the aforesaid judgment, Mr. Vakharia submitted that in view of the principles laid down in the said judgment, all the employees of the respondent-society are entitled to be given option either to opt for the benefit of Scheme-A or Scheme-B under the Medical Attendance and Treatment Rules of the society.

(3.) Mr. Trivedi has submitted that the Scheme-A under the Medical Attendance and Treatment Rules was in force for a long time. The employees were enjoying the benefits of the said scheme and the scheme could not have been altered or withdrawn unilaterally by the society in view of the provisions contained in the Industrial Disputes Act. He has submitted that in view of the experience gained over the years, it was found that undue advantage was being taken of the benefit granted under the Scheme-A and with a view to curbing misuse of the benefit under the said scheme the society was constrained to introduce Scheme-B under which a lumpsum medical allowance has been given to each of the employees of the society. He, therefore, submitted that the said scheme being introduced afresh, for the first time in the month of September, 1982, it could cover only those employees appointed after the introduction of the said scheme. However, said scheme could not have been imposed upon the employees who were already in service prior to 1st September, 1982 and had been enjoying the benefits under Scheme-A. Thus, such persons were given option to opt for Scheme-B, if they desired to do so. Mr. Trivedi has submitted that in the matter of State of Rajasthan v. Gurcharansinh (supra), the Court, on facts, found that the impugned order of the State was made under the erroneous belief that but for that order, certain officers would get double benefit of the compensatory allowances as well as cash payment. Learned Judges further found that the classification made by the State of Rajasthan was not based on valid principles. According to Mr. Trivedi, any classification based on a valid principle which in itself is not irrational, unreasonable or discriminatory should be sustainable. In support of his contentions, Mr. Trivedi has relied upon the judgments of the Hon'ble Supreme Court in the matters of Krishnakumar v. Union of India , [JT 1990(3) SC 173]; Mafatlal Group Staff Association v. Regional Commissioner, Provident Fund [1994(4) SCC 58]; Indian Ex-Service League & Ors. v. Union of India, [JT 1991(1) SC 243]; All India Reserve Bank Retired Officers' Association v. Union of India , [AIR 1992 SC 76]. He has further submitted that on the same date, the Constitutional Bench of the Hon'ble Supreme Court rendered decision in the matter of Krishnakumar (supra) in which the Court had occasion to consider the judgment rendered in the matter of D. S. Nakara (supra). Considering the principles laid down in the decision of D. S. Nakara (supra), Hon'ble Judges of the Supreme Court distinguished the same. Said judgment in the matter of D. S. Nakara (supra) has, thereafter, been distinguished again and again in all the aforesaid judgments. Relying on the principles laid down in the above judgments, Mr. Trivedi has submitted that in the present case, introduction of Scheme-B for medical allowances admissible under the Medical Attendance and Treatment Rules cannot be said to be arbitrary or based on irrational or unreasonable principles. He has submitted that earlier, Scheme-A was applicable to the employees of the society and all were entitled to the actual reimbursement of the medical expenditure incurred by them. However, in course of years, it was experienced that the said indulgence was being misused and, therefore, the society was constrained to introduce Scheme-B. Scheme-B was introduced in the month of October, 1982 and, therefore, a date was required to be chosen for implementation of the said scheme in the proximity of the date of introduction of Scheme-B. It is submitted that the said scheme was introduced uniformally for all the employees of the society and is being implemented in respect of all the employees of the society without any discrimination. It is further submitted that the persons who were already in employment on 31st August, 1982 and were enjoying the benefits of the actual reimbursement of the medical expenditure could not have been affected by the introduction of the new scheme without following the procedure envisaged under the Industrial Disputes Act. In view of the protection enjoyed by such employees under the Industrial Disputes Act, they were permitted to retain the benefits under the existing scheme, if they desired to do so. In the matter of Mafatlal Group Staff Association , (supra), the Court has upheld the action of the Government of India in introducing Employees Family Pension Fund Scheme with effect from 1st August, 1971 whereunder the persons who became member of the Employees Provident Fund Scheme on or after 1st March, 1971 automatically became member of the Family Pension Fund Scheme while existing members of the Provident Fund Scheme were given, option either to come under the Family Pension Scheme or to stay out. In the matter of All India Reserve Bank Retired Officers' Association (supra), the Court was considering the introduction of the Pension Scheme in lieu of Contributory Provident Fund Scheme for the employees of the Reserve Bank of India with effect from 1-1-1986. The Court held that whenever any rule or regulation having statutory flavour is made by an authority which is a State within the meaning of Art. 12 of the Constitution, the choice of the cut-off date which has necessarily to be introduced to effectuate such benefits is open to scrutiny by the Court and must be supported on the touch-stone of Art. 14. If the choice of the date results in classification or division of members, of a homogeneous group, it would be open to the Court to insist that it be shown that the classification is based on an intelligible differentia and on rational consideration which bears a nexus to the purpose and object thereof. Similarly, in the matter of All India Ex-Service League (supra), the Court, considering the principles laid down in the matter of D. S. Nakara (supra) rejected the claim for revision of pension of all the retirees in accordance with the liberalised formula of computation and for payment of death-cum-retirement gratuity to all retired employees on the basis of revised formula. In the matter of State of Rajasthan v. Gurcharansinh (supra), the Court was considering the grant of allowance which was withdrawn for a class of employees under the erroneous belief that but for the withdrawal of such allowances, they would be getting double benefits as aforesaid. The Court further held that no valid principle was applied in introducing the cut-off date which could be said to be rational and reasonable. The above judgment, therefore, shall have no applicability on the facts of the present case. The principle laid down in the matter of D. S. Nakara v. Union of India (supra) has been considered and reconsidered by the Hon'ble Supreme Court in several later judgments and the said principle has been distinguished. The Supreme Court has held that a benefit which is granted to a class of employees, if is liberalised, even liberalised benefit should be given to the said class of employees without further classification. The Court has further held that these principles cannot apply to the benefits which are introduced for the first time. In the present case, scheme for reimbursement of medical expenditure was replaced by the scheme for lumpsum payment against the medical expenditure with effect from 1st September, 1982. Thus, all the employees who joined the service on or after 1st September, 1982 would undoubtedly be governed by the scheme introduced with effect from 1st September 1982. If the employees already in service on 31st August, 1982 are permitted to opt for continuation of the benefits under the former scheme, said action cannot be said to be discriminatory or arbitrary. The employees who joined the services on or after 1st September, 1982 cannot claim benefits of the scheme which has been replaced by Scheme-B with effect from 1st September, 1982. Hence, the claim of the petitioners for option for reimbursement of actual medical expenses requires to be rejected.