IMPORTANT POINT
No circular can override statutory rule made under proviso to Article 309 of the Constitution.

JUDGMENT

R.M. Lodha, J.

1. Leave granted.

2. The short question that arises for consideration in this appeal by special leave is : is the direction issued by the High Court that the pay fixation of the appellant and similarly situated persons be done in accordance with the Government Circular dated April 16, 1971 justified or the pay fixation of these employees ought to be done as per Rule 74(b) of the Orissa Service Code.

3. The controversy arises from the facts which may be briefly noticed first. The appellant was appointed by the Government of Orissa as Overseer (Electrical) on November 16, 1964. He was deputed to serve in the Orissa State Electricity Board (for short, "OSEB") in the then pay scale of 185-00-325. Later on, the post of Overseer was re-designated as Sub-Assistant Engineer (for short, `SER'). The pay scale of SERs in OSEB was revised from time to time. Since scale of pay of SERs appointed directly by the OSEB was higher in comparison to the Sub-Assistant Engineer on deputation with OSEB and who were initially appointed by the Government of Orissa as Overseers, it was decided to provide such SERs (erstwhile Overseers) reducible personal pay. This was done so that the SERs (erstwhile Overseers) like the appellant and similarly situated persons do not get lesser salary in comparison to the SERs appointed directly by the OSEB. The appellant was promoted to the rank of Assistant Engineer (Electrical) in 1981 and at the time of promotion he was in the pay scale of 480-970 and drawing pay of Rs. 874. However, his pay in the promotional rank of Assistant Engineer was fixed at Rs. 850/- per month. The appellant was aggrieved thereby as, according to him, his pay should have been fixed on promotion at Rs. 950/- per month in view of Rule 74(b) of the Orissa Service Code (for short, "code").

4. The appellant challenged his fixation of pay before the High Court of Orissa by filing Writ Petition but on formation of Orissa Administation Tribunal, the writ petition came to be transferred to the Tribunal. The litigation has chequered history but it is not necessary to go into that; suffice it to say that the Tribunal by its Order dated December 23, 1999 directed that the appellant's pay on his promotion to the rank of Assistant Engineer (Electrical) be fixed taking his last pay drawn in the rank of SER into account and following the provisions of Rule 74(b) of the Code. This is how the Tribunal considered the matter:

Having bestowed our anxious considerations on the submission of the learned Counsel for the applicant and perused the relevant papers on record, we are of the opinion that annexure-6 decision of the Government regarding protection of pay is in effect a negative of the concept for pay protection. It was in pursuance of Government decision that though recruited by the O.S.E.B they were promoted by the Government to the rank of Assistant Engineer when they were enjoying higher scale of pay than the Sub- Assistant Engineers under the Government. Since the applicant was drawing pay at Rs. 874.00 per month in the scale of pay of Rs. 480.00-970.00 he could not be dragged to a lower scale of pay of Rs. 410.00-840.00 and his pay was fixed at Rs. 850.00 leading to reduction in his pay to the extent of Rs. 110.00 per month. This can hardly be called protection of pay which is sought to be ensured by annexure-6 instruction to be unfair and unreasonable and direct that the applicant's pay on his promotion to the rank of Assistant Engineer (Electrical) be fixed taking his last pay drawn in the rank of S.A.E. into account and following the provisions of Rule 74(b) of the Orissa Service Code and the differential salary paid to him within a period of 4 months from the date of receipt of a copy of this order.

5. The State Government being dissatisfied with the order of the Tribunal challenged the same before the High Court. The grievance of the State Government before the High Court was that the Tribunal passed the order inconsistent with