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2003(5) Supreme 32
SUPREME COURT OF INDIA
(From Karnataka High Court)
Shivaraj V. Patil & Arijit Pasayat, JJ.
State Bank of India & Ors. -Appellants
versus
K.P. Subbaiah & Ors. -Respondents
Civil Appeal Nos. 4312-4317 of 1998
With
Civil Appeal Nos. 4621-24 of 2003
(Arising out of SLP (C) Nos. 15808-15811/1998)
With
Civil Appeal Nos. 4625-26 of 2003
(Arising out of SLP (C) Nos. 2998-2999/1999)
Decided on 16-7-2003
Counsel for the Parties :
For the Appearing Parties : K.N. Raval, Solicitor General, A.V. Rangam, Buddy A. Ranganadhan, A. Ranganadhan, S. Ravindra Bhat, Naveen R. Nath, Sanjay Sharawat, Ms. Hetu Arora, Advocates.
Held : Strictly speaking, there is no fitment to a particular scale as contended by the employees. The fitment into a particular scale has to be considered in the background of the policy decision to ensure the payment of an amount not less than the last pay drawn. In that sense, it cannot be said that there was any fitment to a particular scale to attract the corresponding scale of pay in terms of subsequent settlement. In Service jurisprudence the expressions pay and Pay scale are conceptually different connotations. Pay is essentially a consideration for the services rendered by an employee and is the remuneration which is payable to him. Remuneration is the recurring payment for services rendered during the tenure of employment. Pay and salary are necessarily not interchangeable concepts. Their meanings vary depending upon the provisions providing for them. (Paras 14 and 15)
The Government of India, Ministry of Finance, Department of Economic Affairs (Banking Division) by its letter dated 28.1.1983 had indicated what was to be protected. It is clearly spelt out therefrom that for the purpose of fixation of pay of ex-servicemen re-employed in the public sector banks, protection was to be given to total emoluments i.e. pay plus D.A. (instead of only pay) last drawn by ex-servicemen before their retirement from the Armed Forces. The initial guidelines were fixed by letter dated 2.2.1980 and the Indian Banks Association Circular dated 28.4.1982. The guidelines were partially modified by letter dated 28.1.1983 and it was stipulated that pay fixation in the case of ex-servicemen who joined service after revision of pay scale in September 1978 will be on the basis of protection of pay instead of pay plus D.A. drawn by them prior to retirement. In other words, their pay fixation will be in accordance with the office memorandum issued by the Ministry of Finance, Department of Expenditure dated 25.11.1958, 16.1.1964 and 19.7.1978. The stress, as is evident from various documents noted above, was on protection of total emoluments received by the concerned employee before retirement from the Armed Forces. The obvious intention was to, as indicated supra, see that the total emoluments do not fall below what was being received by him as pay plus last D.A. in Armed Forces. (Para 24)
There was no intention to protect any particular scale of pay. That being the position, the demand of a corresponding pay scale has no rational. The High Court was, therefore, clearly in error in holding that the scale of pay was the determinative factor, the direction that while refixing the pay and D.A. the total pay fixed when the petitioner entered into the bank s service has to be protected within the corresponding scale of pay, cannot be maintained and is indefensible. (Para 25)
JUDGMENT
Arijit Pasayat, J.-Leave granted in SLP (C) Nos. 15808-15811/98 and 2998-2999/99.
2. These appeals have their base on a judgment of the High Court of Karnataka at Bangalore disposing of writ petitions Nos. 3426-27/1986 and writ petition Nos. 6432-35/1987.
3. The background scenario in which the present dispute appears, lies within a very narrow factual compass. Six persons who are the respondents in the appeal Nos. 4312-4317/98 (hereinafter referred to as the employees ) were ex-servicemen in the Indian Army. They are appellants in the other appeals. After discharge from Army service they were employed by the State Bank of India (in short the Bank ). They were discharged from defence services during the period from 1.4.1982 to 1.9.1984 and joined the Bank on different dates during the period from 11.8.1983 to 7.6.1984. In terms of the Government of India s policy, the basic pay and the dearness allowance last drawn by them while in military service was to be protected while fixing their pay on absorption into public sector banks. During the period when the employees joined the bank, the pay and allowances payable to employees of the Bank were governed by the Third Bipartite Settlement which was operative from 1.9.1978. Having regard to the Government s policy and as per the decision of the Indian Banks Association (in short the Association ), all public sector banks followed the norms in the matter of fixation of pay as per the Third Bipartite Settlement. The Fourth Bipartite Settlement became retrospectively operative from 1.7.1983. Under the said settlement, there is an upward revision in the pay scales and the basic pay of the employees were revised on stage to stage basis. The annual increments were also given to the concerned employees. When the matters stood thus, the Bank issued a Circular dated 12.10.1985 regarding fixation of pay relating to ex-servicemen employed in the public sector banks. This was the starting point of controversy. By Staff Circular dated 24.11.1986, the Bank notified that while dearness allowance and interim relief drawn by ex-servicemen shall qualify for protection as components of D.A., the other allowances like city compensatory allowance and H.R.A. did not qualify for such protection. Eleven types of emoluments admissible in defence services were to be protected on re-employment in the Bank. On the basis of the aforesaid Circulars dated 12.10.1985 and 24.11.1986 the pay last drawn by the employees stood reduced. This reduction was challenged by the employees before the High Court. Following questions were formulated by the High Court for consideration.
"(i) When the IV Bipartite Settlement was signed on 17.9.1984 bringing into force new scales of pay, with retrospective effect from 1.7.1983, what was the proper course to be adopted by the Bank, in the case of petitioners (who were appointed between 1.7.1983 and 17.9.1984) :-
(a) whether the pay of petitioners had to be revised by fitment in the new scales of pay, on a stage to stage basis, with reference to the pay fixed under the III Bipartite Settlement, retrospectively from the date of petitioners entering with service (as contended by the petitioners);
(b) Whether a fresh fitment in the new pay scales (under IV Bipartite Settlement) should have been effected to protect the pay and allowances last drawn when in Defence Service, in place of the earlier fitment in the old pay scales under the III Bipartite Settlement (as contended by the Bank).
(ii) If the revision of pay of petitioners, by fitment in the new scales of pay, on stage to stage basis, was contrary to the scheme under which petitioners were appointed, whether the Bank could subsequently rectify the error by refixation of pay of petitioners, by fitment in the new pay scales (under IV Bipartite Settlement) with reference to the last pay drawn in Defence Service.
(iii) Whether by resorting to such refixation the Bank can reduce the salary of
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