CHAPTER 23
MINISTRY OF TOURISM

India Tourism Development Corporation Limited (Company) decided (May 1998) to increase the age of retirement of its employees from 58 to 60 years based on the directives (May 1998) of the Department of Public Enterprises (DPE). Later, the Board of Directors decided (October 2000) to reduce the age of retirement from 60 to 58 years, subject to the approval of the Government of India (GOI). After receipt of approval (23 November 2000) from GOI, the Company implemented the decision with effect from 30 November 2000 and decided (27 November 2000) to give ex-gratia equivalent to three months’, two months’ and one month’s salary to the employees retiring by the end of November 2000, December 2000 and January 2001 respectively and paid Rs.90.36 lakh to 263 employees.

Audit scrutiny revealed that the payment of ex gratia was not covered under the service rules of the Company and the decision to pay the same was taken on the plea that it would be just and equitable to make payment of notice pay to the employees. Thus, payment of Rs.90.36 lakh to the employees was irregular.

The Management stated (June and August 2001) that the decision of GOI for reduction in age of retirement was received on 23rd November 2000 and it was to be implemented with immediate effect and that they had informally consulted Indian Airlines Limited also which had also paid ex gratia to its employees on roll back of the retirement age. The Management also contended that in view of (i) verbal discussions held with the legal advisors including the Additional Solicitor General of India and (ii) legal cases filed in the High Court by some of the employees challenging the roll back of the retirement age, it was considered desirable to pay ex gratia to the employees so that they did not have any ground to plead in this regard. The Ministry endorsed (September 2001) the reply of the Management.

Reply of the Management/Ministry is not acceptable as there was no provision in the service rules of the Company for the payment of ex gratia. Moreover, in the case of Indian Airlines Limited, the Additional Solicitor General of India had, in his legal opinion in writing, had advised that since the retirement age itself was being brought down, there was no requirement for any notice or pay in lieu thereof. The decision of Indian Airlines Limited paying ex gratia to such retiring employees had already been commented upon in para 4.4.2 of the Report of the Comptroller and Auditor General of India No.3 (Commercial) of 2001.