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SUPREME COURT OF INDIA
(From the High Court of Orissa at Cuttack)
AJAY RASTOGI, SANJIV KHANNA, JJ.
Odisha State Financial Corporation – Appellant
Versus
Odisha State Financial Corporation Employees Union and Others – Respondents
Civil Appeal No. 2717 of 2022, SLP (Civil) No. 1111 of 2020
Decided On : 05-04-2022
Service Law – Salary – Orissa Revised Scales of Pay Rules, 2008 – Revised scale of pay under ORSP Rules, 2008 could not have been implemented without being approved by Administrative Department and Department of Finance, Government of Orissa – Directions of Single Judge under Order dated 10th April, 2018 in itself were not sustainable – Recommendations were neither approved by Administrative Department nor Finance Department, Government of Orissa – In given circumstances, recommendations made by Corporation/Board of Directors to implement ORSP Rules, 2008 to employees of Corporation were not available for its implementation and this has been completely overlooked by Division Bench of High Court while dismissing appeal filed by present appellant – Recommendations made by Corporation in introducing ORSP Rules, 2008 for employees of Corporation in absence of being approved by Administrative Department, i.e., MSME, in instant case, and by Finance Department were not available for implementation – Finding which has been recorded by Single Judge and affirmed in appeal, is not sustainable and deserves to be set aside – Order of Division Bench dated 31st January, 2019 quashed and set aside. (Paras 11, 13, 15 and 16)
Facts of the case:
Instant appeal has been preferred by the Odisha State Financial Corporation assailing judgment of the Division Bench of the High Court dated 31st January, 2019 directing Corporation to pay the arrear benefits under the revised scale of pay from 1st April, 2012 in terms of the decision of the Board of Directors of Corporation.
Findings of Court:
When the appeal came to be preferred at the instance of appellant, the Division Bench of High Court, even after recording statement of the counsel that the recommendations of the Corporation not being approved by the Administrative Department/Finance Department, still dismissed the writ appeal on the premise that the financial condition of a State functionary is not a ground to refuse legitimate dues of its employees without noticing the fact that the ORSP Rules, 2008 introduced for the State Government employees vide notification dated 16th December, 2008 could not have been extended to PSUs and particularly to the employees of the Corporation, unless recommendations made by PSUs being approved by the concerned administrative Department, i.e., MSME, in the instant case, and after getting approval of Finance Department for sanction of the scheme.
Result : Appeal allowed.
JUDGMENT :
AJAY RASTOGI, J.
1. Leave granted.
2. The instant appeal has been preferred by the Odisha State Financial Corporation assailing the judgment of the Division Bench of the High Court dated 31st January, 2019 directing the Corporation to pay the arrear benefits under the revised scale of pay from 1st April, 2012 in terms of the decision of the Board of Directors of the Corporation.
3. The brief facts of the case culled out from the record are that the appellant is a statutory corporation, namely, Odisha State Financial Corporation (for short “OSFC”). The State Government constituted a Fitment Committee in Finance Department Resolution dated 9th September, 2008 to examine revision in the pay scale of the State Government employees and on the recommendations made by the Committee constituted by the Government vide notification dated 16th December, 2008, revised scales of pay were introduced for the State Government employees.
4. After the revised scales of pay were introduced by the Government of Orissa for the State Government employees, as usual, there was a demand for revision of pay as per recommendations of 6th Central Pay Commission by the State Public Sector Undertakings (hereinafter being referred to as the “PSUs”). Accordingly, the Government of Orissa, consequent upon revision of scale of pay of whole time State Government employees as per recommendations of 6th Central Pay Commission by introduction of Orissa Revised Scales of Pay Rules, 2008 (hereinafter being referred to as the “ORSP Rules 2008”) considered the revision of scale of pay of State PSUs w.e.f. 1st January, 2006 vide its Resolution dated 8th May, 2009, subject to fulfilment of the eligibility criteria as per ORSP Rules 2008.
5. The Resolution dated 8th May, 2009 by Government of Orissa regarding revision of scale of pay of State Public Sector Undertakings on the basis of ORSP Rules, 2008 relevant for the purpose is reproduced as under:
(i) The Public Sector Undertakings must be a profit making one and its balance sheet must show cumulative profit at least for the last consecutive two years.
(ii) The Public Sector Undertaking must not have defaulted in payment of statutory dues of the employees such as provident Fund and ESI etc.
(iii) The Public Sector Undertaking must not have defaulted in payment of loan to any financial institution or State Government. The Public Sector Undertaking must be up to date in payment of guarantee fee/royalty/divided to the State Government, whichever is applicable.
(iv) The Public Sector Undertaking must have completed statutory audit upto date.
(v) The Public Sector Undertaking has to meet the expenditure for payment of revised scale of pay to the employees from its internal resources and must not depend on Government for any financial support on such expenditure.
The eligible PSUs who satisfy the above eligibility norms will first obtain approval of their Board of Directors regarding fitment of scale of pay of their employees post wise and cadre wise, on the basis of ORSP Rules, 2008 and send the same to their Administrative Department. The concerned Administrative Department will examine the suitable of the said PSU on the basis of above five conditions and send to this Department after getting prior approval of the Finance Department for sanction of the same will modification, if any, on case to case basis.
This has been concurred in by the Finance Department vide their UOR No. 1902 dated 14.02.2009.”
6. In terms of the Resolution of the Government of Orissa dated 8th May 2009, apart from fulfilment of the eligibility criteria
Revised scale of pay cannot be implemented without being approved by Administrative Department and Department of Finance.
Employees retired before 01.01.2011 are entitled to revised pay benefits retroactively from 01.01.2006 on notional basis, addressing inequity in pension distribution.
The revision of pay for non-unionized employees does not establish a vested right, particularly in light of the financial constraints of the employing authority.
The court established that financial constraints can justify the selection of a cut-off date for pay revisions in sick companies, provided the classification is rational.
Government approval is mandatory for extending pay scales to Corporation employees, as per established directives, negating routine claims for pay parity with State employees.
The decisions of expert bodies like the Pay Commission in the matter of pay-scale fixation are not ordinarily subject to judicial review.
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