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SUPREME COURT OF INDIA
Aniruddha Bose, S. Ravindra Bhat, JJ.
Maharashtra State Financial Corporation Ex-Employees Association & Ors. – Appellants
Versus
State of Maharashtra & Ors. – Respondents
Civil Appeal No. 778 of 2023 [@ Special Leave Petition (Civil) No.1902 of 2019]
Decided On : 02-02-2023
(A) Service Law – Pay Revision – Implementation of Fifth Pay Commission recommendations to employees of MSFC – Whether, and what should be extent of pay revision, are matters falling within domain of executive policy making – At the same time, a larger public interest is involved, impelling revision of pay of public officials and employees – State and public employers have obligation to address, as a measure of public interest, ill-effects of rise in cost of living, on account of price rise, which results in fall in real wages – This obligation should be discharged on a periodic basis – Yet, there cannot be any straitjacket formula as to when such pay revisions are to be made and to what extent revisions should take place – As a general practice, Union and State Governments have been undertaking such exercises each decade – Respondents have confined grant of revised pay scales to employees existing as on 29.03.2010 – Whilst fixation of cut-off date for grant of benefits cannot be questioned, what is within domain of court, is to examine impact of such fixation and whether it results in discrimination. (Paras 27, 29 and 30)
(B) Service Law – Pay Revision – [State Financial Corporations Act, 1951 – Section 39; Constitution of India – Article 43] – Implementation of Fifth Pay Commission recommendations to employees of MSFC – Whether classification, excluding employees who retired before 29.03.2010 and confining pay revision benefits (With effect from 01.01.2006) result in discrimination – Employees who retired prior to 29.03.2010 discharged same duties as in case of those who did thereafter – Quality and content of responsibilities assigned to them were same – Respondents’ decision not to grant arrears prior to 01.01.2006 cannot be found fault with; however, not to grant any revision to those who were not in service when order implementing pay revision was issued and confining it to those, in employment is clearly discriminatory – Rationale that granting such pay revision only to existing employees would be to enthuse them to recover NPA amounts payable to MSFC has no rational nexus with object sought to be achieved by pay revision which is to benefit employees and protect them from rise in cost of living – However, employees who secured VRS benefits and left service of MSFC voluntarily during this period, stand on a different footing – They cannot claim parity with those who worked continuously, discharged their functions, and thereafter superannuated – Likewise, those who ceased to be in employment, for reason of termination, or their dismissal, etc., would not be entitled to benefit of pay revision – Impugned judgment and order set aside – Those who retired from the services of MSFC between 01.01.2006 to 29.03.2010, and legal heirs/representatives of those who died during that period, shall be entitled to arrears based on pay revision, accepted by Corporation – Corporation directed to pay interest @ 8% p.a. on these arrears from 01.04.2010 till date of this judgment. (Paras 32, 36, 37, 38, 39 and 40)
Facts of the case:
What is involved in this case, is the fixation of date for implementation of the Fifth Pay Commission recommendations, when applied to the respondent Corporation. That framing a policy concerning fixation of pay for the salaries of its employees, the extent of its revision, and even the date of its implementation, are matters of undoubted exclusive executive decision making powers. However, the manner of its implementation, the timing of applicability of a scheme, and its impact, especially where it results in exclusion of a certain section of public employees from the benefit, are subject matters of scrutiny by the court, especially, when the complaint is of discrimination and violation of Article 14 of the Constitution. This is one such case.
Findings of Court:
Fact that the MSFC did not recover any interim relief, or ad-hoc amount disbursed between 18.09.1996 to 31.12.2005 (towards recommendations of the 5th Pay Commission), also reaffirms that these ex-employees belonged to the same class as those that received the benefit of pay revisions. The exclusion of retired employees, who retired between 01.01.2006 and 29.03.2010 on achieving their date of superannuation, is violative of Article 14 of Constitution of India.
Result : Appeal Partly allowed.
JUDGMENT
S. Ravindra Bhat, J.:
1. Special leave to appeal granted. With the consent of learned counsel for the parties, the appeal was heard finally.
2. What is involved in this case, is the fixation of date for the implementation of the Fifth Pay Commission recommendations, when applied to the respondent Corporation. That framing a policy concerning fixation of pay for the salaries of its employees, the extent of its revision, and even the date of its implementation, are matters of undoubted exclusive executive decision making powers. However, the manner of its implementation, the timing of applicability of a scheme, and its impact, especially where it results in exclusion of a certain section of public employees from the benefit, are subject matters of scrutiny by the court, especially, when the complaint is of discrimination and violation of Article 14 of the Constitution. This is one such case.
3. The appellant association (consisting of employees who had superannuated, opted for VRS, resigned, or legal heirs of expired employees of the respondent corporation) challenge a judgment1[dated 19.06.2018 in W.P. No. 1420/2013] of the Bombay High Court (Nagpur bench). In that proceeding, the appellants had complained of discrimination against the decision dated 29.03.2010, of the Industry, Energy and Labour Department, Government of Maharashtra (hereafter “the State”). That decision denied the benefit of revision of pay scales, as recommended by the Fifth Pay Commission, to the employees of the Maharashtra State Financial Corporation (hereafter “MSFC”) who had retired or died during the period of 01.01.2006 to 29.03.2010. That decision of the State made the revision of pay scale as a result of the Report of the Fifth Pay Commission applicable to 115 employees of MSFC who were working as on 29.03.2010. The revision, however, was given effect from 01.01.2006.
4. The appellants had urged before the High Court, that denying them the benefit of pay scales was discriminatory and arbitrary, because they were in continuous service, and had even received the benefit of interim revision, pending finalization of pay scales pursuant to the Pay Commission Report. It was urged that those in employment on and after 29.03.2010, and those who continued in service after 01.01.2006 but retired before 29.03.2010, belonged to the same category. The only difference between those who were in service after the latter date, was that they had longer period of service. However, the crucial date for grant of pay revision, was the date from which it was given effect to, i.e., 01.01.2006. As all the appellants were in service as on that date, the denial of pay revision, which was concededly for the period they had worked, amounted to not only hostile discrimination, but also withholding of pay revision benefits, legitimately and rightfully theirs.
5. By the impugned order, the High Court accepted the submissions of MSFC and the State, that financial considerations were of importance in regard to grant or denial of monetary benefits. The MSFC had also urged before the High Court, that the benefit was granted to those employees on the rolls of the corporation, as of 29.03.2010, in order to motivate and incentivise them for better performance.
6. After quoting the counter affidavit filed by the State Government, which approved such revision, the High Court accepted MSFC’s argument:
““…It was also considered that there were only 115 employees working in the Respondent No.2 Corporation and the said strength of said employees will further reduce in near future. An expenditure of Rs.16.00 lakhs per month was being incurred on the salary payable to the employees. It was also noted that the Respondent No.2 stopped sanctioning and disbursing loan from the year 2005 and presently only the work of recovery of loans already given is being done. It was also considered that th
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The court upheld the validity of limiting pay scale benefits to current employees as a justified administrative action, emphasizing financial constraints in determining eligibility for revised pay sc....
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