Holding

On absorption, both basic salary and total emoluments are protected; any reduction of basic pay is impermissible, rendering the fitment illegal.

Summary

The case concerned employees of the Central Hospital, Kalla who were transferred to Eastern Coalfields Ltd. (ECL) and opted for absorption under the company's pay scales. The employees were assured that neither their basic salary nor total emoluments would be reduced. After fitment, the basic salary was lowered while total emoluments were allegedly higher, prompting fresh writ petitions. The Supreme Court examined the option form, the 26‑08‑2002 order of the Single Bench, and the principle of pay protection, holding that both basic pay and total emoluments must be protected and that any reduction of basic pay is arbitrary. The Court found the fitment method violated the earlier order and the option form, and therefore set aside the Single Bench’s decision and dismissed the appeal, directing ECL to re‑fix pay without reducing basic salary and to pay arrears.

Issues considered

Whether the reduction of basic salary on fitment of absorbed employees violates the pay‑protection assurance given in the option form and the 26‑08‑2002 order.
Whether protection of total emoluments alone suffices, or basic salary must also be protected.
Whether the 26‑08‑2002 order is binding and must be complied with in pith and substance.
Whether the fitment method adopted by ECL is arbitrary and contrary to the terms of absorption.
Whether a personal adjustment is required to make up any shortfall in salary.

Legislation cited

The Coal Mines Labour Welfare Fund (Repeal) Act

Subjects

absorptionpay fixationsalary protectionbasic paytotal emolumentsservice lawfitmentdual protectionpith and substancepersonal adjustmentCoal India LimitedEastern Coalfields Ltd.

Judgment

[2017] 13 S.C.R. 85

EASTERN COALFIELDS LTD. & ORS. A
v.
PRATIVA BISWAS & ORS.
(Civil Appeal No. 8606 of2009)
OCTOBER 11, 2017 B

[ARUN MISHRA AND
MOHAN M. SHANTANAGOUDAR, JJ.]
Service Law - Absorption - Respondents-employees absorbed
in Appellant-limited company- Issue relating to fitment on absorption
-In a previous writ petition, High Court vide order dated 26.08.2002
c
had held that when employees were enjoying the Central Government
scale of pay and when they were converted and fitted in the
appellant-limited company pay scale, their pay, in any event, could
not be reduced, inasmuch as, pay protection was assured to them
by the appellant - However, when fitment was done, the basic salary D
was reduced and fixed on a lower side - Respondent filed fresh
writ petition which was dismissed by Single Judge - Order set aside
by Division Bench - Plea of appellant-limited company before
Supreme Court that they had assured protection for the total
emolument and fixation of pay has been done in the manner that
E
the total emoluments which had been drawn were more than the one
drawn by the employees earlier - Held: It was not the total
emoluments that mattered - On perusal of the option form filled by
the employees before absorption, it is clear that both basic salary
and emolument drawn by them earlier were to be protected - Salary
protection was to be ensured, it could not have been reduced apart F
from emoluments - There was dual protection; that was urifortunately
ignored and overlooked by the Appellant-limited company - When
the pay scales were converted to and paid in appellant-limited
company, respondents' pay drawn could not have been reduced,
inasmuch as pay protection had been assured to them and in view
G
of order dated 26.08.2002 that attained finality and pay fixation
was to be made in the manner that total emoluments drawn were not
less - Further, the order dated 26.08.2002 was to be complied with
in pith and substance, rather the fitment made was clearly in
violation of the order as well as the provisions of option form and
even subject to conditions on which the absorption had been made H
85
86 SUPREME COURT REPORTS (2017] 13 S.C.R.

A - Therefore. benefits be extended to all the employees who were
absorbed. whether continuing or have been retired and to the legal
representatives of deceased employees - Doctrines/Principles -
Doctrine of pith and substance.
Dismissiltg the appeal, the Court
B
HELD: l. When the pay scales were converted to and paid
in the Coal India Limited, respondents' pay drawn could not have
been reduced, inasmuch as pay protection had been assured to
them and in view of aforesaid order that attained finality and pay
fixation was to be made in the manner that total emoluments drawn
c were not less. After fitment, if it was found that lesser amount
was to be received as salary on or after 1.1.1987, it was required
that the shortfall was made good by way of personal adjustment(s).
Accordingly, protection was to be made on the fitment by grant
of personal pay meaning thereby the pay could not have been
D reduced on th4 fitment in the ECL pay scales. The order 26.8
2002 was to be complied with in pith and substance; rather it was
violated by the aforesaid method of fixation. [Para 15] [95-F-G]

2. The fitment made was clearly in violation of the order as
well as the provisions of option form and even subject to
E conditions on which the absorption had been made. Thus, the
Division Bench has rightly set aside the order passed by the Single
Bench by the order impugned; it was not the total emoluments
that matters. Salary protection was to be ensured, it could not
have been reduced apart from emoluments. There was dual
F protection; that was unfortunately ignored and overlooked by the
ECL in spite qf the clear and categorical order passed by the
Single Bench in the writ application of 1993, which order had
attained finality, and had not been questioned by any of the
parties.[Para 15] [96-A-C]

G 3. The reduction of basic pay drawn in the pay scale was
wholly arbitrary and violates the order of the Single Bench dated
26.08.2002, thus we find no merits in the appeal and we dismiss
the same. Let the benefits be extended forthwith to all the
employees who were absorbed, whether continuing today or have
H
EASTERN COALFIELDS LTD. & ORS. v. PRATNA BISWAS 87
& ORS.

been retired and to the legal representatives of deceased A
employees, within a period of two months. [Para 19) [99-CJ

High Court Employees Welfare Organisation v. State of
West Bengal (2007) 3 SCC 637 ; State Bank of India v.
K.B. Upadhyay and Ors. (2003) 11 SCC 646 : [2003)
1 Suppl. SCR 545 and K. Gopinathan v. Union of India B
(1992) 4 SCC 701 ; High Court Employees Welfare
Association v. State of West Bengal (2007) 3 SCC 637
- referred to.

Case Law Reference
c
(2007) 3 sec 637 referred to Para7

[2003] 1 Suppl. SCR 545 referred to Para 7
(1992) 4 sec 101 referred to Paras
D
(2007) 3 sec 637 referred to Para 18
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8606
of2009.

From the Judgment and Order dated 23.09.2008 of the HighCourt E
of Calcutta in F. M.A. No.956 of2007.

Kalyan Bandopadhyay, Sr. Adv., Anip Sachthey, Ms. Anjali
Chauhan, Ms. Ria Sachthey, Advs.for the Appellants.

Ashok Bhan, Sr. Adv, Subhasish Bhowmick, Ms. Goldy Goyal, F
Advs for the Respondents.

The following Order of the Court was passed :

ORDER
I. The question involved in the instant appeal is the fixation of the G
salary of the respondents, upon their absorption in the Eastern Coalfields
Limited (hereinafter referred to as "ECL"). It is one of the subsidiary
companies of the Coal India Limited (for short "CIL").

H
88 SUPREME COURT REPORTS [2017] 13 S.C.R.

A 2. The re~pondents were earlier employed in the Central Hospital,
Kalla, which was under Coal Mines Welfare Organisation, set up and
maintained by Ministry of Steel, Mines & Coal, Coal Department of the
Government of India. Under the orders of the Government of India, the
hospital in queStion was transferred to the subsidiary company of Coal
India Ltd. w.e.f. 1.8.1985, and the communication in this regard had
B
been issued on 24.12.1986.

3. Services of the respondents had been transferred to the Eastern
Coalfields Ltd., and they had opted for their absorption with the ECL.
There was a meeting on 25.7.1986, between the Joint Secretary to the
c Government ofllndia and an official of Southern Coalfields Ltd. It was
decided that fitrnent would be offered to the transferred employees in
NCWA scales, which does not entail any drop in their total emoluments,
and that uniforin procedure in this behalf should be followed. Option
form was prepated, and options had been invited in the Form (Annexure
P3) dated 24.12.1986. As the pay scale already prevailed, the very pay
D scale for technical, clerical hospital staff already existed and the
employees' salaries were to be fixed in respective grades in the
corresponding scales of pay. It was also mentioned in the Office Order
dated 9.1.1987, that protection to be provided to the salary also.

E 4. Circular had been issued by CIL that on absorption of employees
of Coal Mines Labour Welfare Organisation in Eastern Coalfields Ltd.
(ECL) that is to take place from 1.1.1987 basic pay and dearness
allowance of the opted employees until 31" December 1986 was to be
taken into consideration for their fixation in an appropriate Scale and
calculation of benefits. The Additional Chief Medical Officer, Central
F Hospital, has t;tken the decision, that pay was to be fixed in the grade
and pay scales of NCWA-IV (Four) and would be given with effect
from L 1.1987. The fitment has to be made in such a way that there was
no loss of the employees so far as pay protection was concerned.

The respondents filed a writ petition on 6.1.1983, WP No.2663/
G
1993 in which they had prayed for quashing of the decision dated
21.1.1992; it was, inter alia, also prayed not to reduce the salary which
was paid to theln, other emoluments were also claimed. The writ petition
had been decided on 29.8.2002, in which the following order had been
passed:
H
EASTERN.COALFIELDS LTD. & ORS. v. PRATIVA BISWAS 89
& ORS.

"Mr. Majumdar learned counsel appearing for the respondent A
authority, however, submits that the petitioners have given solitary
instance and there had been no categorical assertion on the part
of the petitioners that there has been any reduction in pay in respect
of other petitioners. Mr. Majumdar learned counsel, however,
has not been able to show that other petitioners' pay got increased B
with effect from 1.1.1987 or at least their pays were protected.
In my view when the petitioners were enjoying the Central
Government scale of pay and when they were converted and
fitted in the Coal India pay scale, their pay, in any event, could not
be reduced, in as much as, pay protection was assured to them.
After fitment now if it is found that ultimately lesser amount is to C
be received on or after 1" January 1987 that shortfall must be
made, need by way of a personal adjustment.

· The writ petition succeeds in part.

The Eastern Coal Fields Ltd. is directed to verify each and every D
individual case of the petitioners and if it is found that after fitment
in any of the cases lesser amount in effect was being received by
the concerned employees on or after 01.01.1987, personal
adjustment with retrospective effect from 01.01.1987 must be
given in accordance with the Coal India guideline contained in the E
office order dated 9'' January 1987.

Such benefit must be extended to the writ petitioners within a
period of six weeks from the date of communication of this order.

The Writ petition is disposed of." F

5. Thereafter, fitment was done, and for that, an order has been
placed on record, reflected in P-8, dated 20/21 May 2003, in which
fixation has been shown in the following manner:

"We have considered your case and considering the relevant items, G
we have come to a conclusion that no more further benefit is
payable to you as we have; given you much more salary in
comparison to what you were getting salary during the period of
C.M.L.W.O. The details are as follows: -
90 SUPRBME COURT REPORTS [2017) B S.C.R.

A ---
lii!lsi~~
"

DA Total Pay Basic F.D.A S.DA 10% I Total '
3 l.l2.86 ~%
011 8o/o fixcrl as en @l.795 Att. pay I
rA i
1.1.87 Bonus
Rs. 1Rs. Rs. Rs. Rs. Rs. Rs. Rs. I
1950.00 [78.00 2028.00 1834 186.00 3292 183.40 ~ 2236.63 !
I !'

D
B '
i 1

R• Rs.
115600 2106.00
--
J_____LJ
i
.
Yours faithfully,
c Sdi-
Chief Medical Officer VC
CH, Kalla
Copy to: Dy. C.P. M L&IR, ECL HQ

I TRUE COPY !"
D

6. It is apparent from the aforesaid fixation that the basic salary
had been reduc~d to Rs.1834.00 as on 1.1.1987, whereas, the basic
salary was Rs. l QSOI- as on 31.12.86; it was by way of adding the dearness
allowance and bcimus, that the total emoluments added up to be Rs.2236.63,
E
whereas, the earlier drawn salary inclusive of dearness allowance was
Rs.2028/-; but the fact remains, that basic salary had been fixed on a
lower side. It was clearly in contravention of the order passed by the
Single Bench, in the previous Writ Application, on 29.8.2002.
Thercaftor, the respondents had preferred fresh writ petition, and
F
the Single Bench dismissed the same. However, the Division Bench
has allowed the appeal preferred by the employees, and hence passed
the following order:-
"The respondent authorities failed to appreciate that the optees
including the appellants/writ petitioners herein did not exercise
G option of absorption in the Coal companies notwithstanding the
fact that their existing service benefits including the pensionary
benefits might be affected ultimately. The respondent authorities
herein all through represented before the optees that they will not
suffer any prejudice with regard to their service benefits.
H Therefor¢, by reducing the basic pay of the optees, namely the
EASTERN COALFIELDS LTD. & ORS. v. PRATIVA BISWAS 91
&ORS.

appellants herein, the respondent authorities have acted in breach A
of the specific assurance given to the optees before exercising
option.
For the aforementioned reasons, we cannot approve the decisions
of the learned Single Judge by affirming the judgment and order
under appeal and the same are, therefore, set aside. B
The respondent authorities herein are directed to refix the scale
of pay of the writ petitioners/appellants without reducing the basic
pay with retrospective effect from the date of their joining the
Coal companies after exercising option and also pay the admissible
financial benefits including the arrears. The aforesaid exercise c
should be done by the concerned respondents at an early date but
positively within a period of four weeks from the date of
communication of this order.
With the aforesaid directions, this appeal stands allowed."
7. Shri Kalyan Bandopadhyay, learned senior counsel appearing D
for the appellants, urged that what they assured was protection for the
total emoluments; the fixation of the pay has been done in the manner
that the total emoluments which had been drawn as on 1.1.1987, were
more than the one drawn by the employees as on 31.12.1986. Learned
senior counsel has taken us to the options form, to contend that protection E
was for the overall emoluments, and not to the pay. Pay scales could
vary, once the pay scales that prevailed in ECL had been opted for as
per the option exercised. Thus, the basic salary could have been reduced;
however, that was taken care of by clubbing other emoluments. Thus,
the decision rendered by the Court in the first round of litigation had
been duly complied with. The Single Bench had rightly dismissed the F
writ application. Writ-appeal has been allowed on the wrong perception
offitment required to be made. Learned senior counsel has also relied
upon the decisions of this Court in High Court Employees Welfare
Organisation vs. State of West Bengal 2007 (3) SCC 637, and State
Bank of India vs. K.B. Upadhyay and Ors. 2003(11 )SCC 646. G
8. Shri Ashok Bhan learned senior counsel appearing on behalf of
the respondents has contended that the basic principle of fitment of
absorption had been violated. The salary that was drawn was to be
protected; it has not been protected. As a matter of fact, while fixing
the salary the Single Bench judgment and order in the first round of ii
92 SUPREME COURT REPORTS [2017] 13 S.C.R.

A litigation, decided on 29.8.2002, had been violated, by issuing the
communication dated 20/21.5.2003. The Division Bench has rightly
undone the injnstice that was done. Learned senior counsel has also
relied upon the decision of this Court in K. Gopinathan vs. Union of
India 1992(4) SCC 70 l, and has also relied upon the option form in
which option was invited for grant of the fitmcnt. The option clearly
B
indicated that the salary was to be protected and overall emoluments
also could not h~ve been less than as drawn on 31.12.1986.
9. Record of note of discussion leading to taking over of the
hospitals given by Coal Mines Labour Welfare Organisation due to the
repeal effect of The Coal Mines Labour Welfare Fund (Repeal) Act,
c 1986, it was declded that terms and conditions of transfer of the staff of
CMWO would be as under:

"(B) Terms and conditions of transfer of staff ofCMWO:

CIL shoultl ensure that the fitment to be offered to the transferred
D employees in NCWA scales does not entail any drop in their total
emoluments. All subsidiaries and SCCL should follow uniform
procedure in this behalf. Standard detailed options paper should
be prepared jointly by CIL and SCCL clearly specifying the terms
especially for those who may choose to retain Government pay
E scales. The draft should then be sent to Government for
clearance."

l 0. It was clearly indicated that CIL would ensure, that the fitment
that was offered would not entail any drop in employee's total
emoluments. E1Poluments are different than the basic salary. Fitment
F in the pay scale was not to entail any drop in total emoluments on
absorption. Protection of basic pay is different connotation than the
other emoluments that arc paid. Even the emoluments were to be
protected as decided in the aforesaid meeting.
11. Coming to the option form in which options were invited on
G 24.12.1986 which gave two options; the first option was an option to be
absorbed in the company's pay scales and terms and conditions, and
another option was to be absorbed in the company but retention of the
government pay scales and revision in the ongoing pay scales and service
conditions including pcnsionary benefits. The option No.1 and No.2 are
extracted hereunder:
H
EASTERN COALFIELDS LTD. & ORS. v. PRATIVA BISWAS 93
&ORS.

OptionNo.l A

(a) Employees may opt for pay structure and terms & conditions
of service as applicable to the employees governed by National
Coal Wage Agreement as a package in lieu of their existing
remuneration, pay scales and terms & conditions of service
including retirement benefit as would be applicable on re~ision of B
pay scales with effect from l'' January, 1987, or from the
subsequent date from which the revision takes place.

(b) Such employees who opt for Company's pay scales, terms &
conditions etc. will continue to draw the same pay and allowances
as admissible to them under 3"' Pay Commission till 31" December, C
1985, and thereafter under 4'' pay Commission till 31" December,
1986, or subsequent date from which revision of pay scales for
the Coal Mining Industry takes place. However, their pay will be
refixed in the revised scales of pay from l ''January 1987 or from
the subsequent date from which general revision takes place for D
the coal mining workers.

(c) On option, the employees, shall stand absorbed in the
Company's service with effect from 1.8.1985 and will become
numbers of Coal Mines Provident Fund from the date ofabsorption.

(d) Such of the optees will continue to draw their emoluments E
under 3'd Pay Commission and 4th pay Commission till their pay is
refixed in the manner provided in Annexure 'N under revised
scales of pay. The refixation as mentioned in para 'b' will be
subject to adjustment.
F
( e) The total emoluments drawn by such optees as on
31" December 1986 will, however, be protected and they will be
placed in the Company's appropriate revised scales of pay/ grade.

(t) The General terms and conditions of such of the optees, in
brief, is pfaced at Annexure 'A'.
G
Option No. 2

(a) Employees on absorption who do not opt for Company's pay
scales and terms and conditions of service will retain their existing
pay scales and service conditions including pensionary benefits
H
94 SUPREME COURT REPORTS [20 l 7] 13 S.C.R.

A as admi$sible in Government Service as on 31" July' 85
immedia1ely prior to absorption.
(b) Such of the optees will also be governed by their existing rules
in the matter of overtime, leave, leave travel concession.
(c) In the matter of discipline, medical facilities and working hours
B
and holidays, they will be governed by the Rules of the Company
at their place of posting.
(d) Such of the optees will, however not be entitled to any career
growth opportunities at par with those optees opting for Company's
pay scales.
c
(e) Such pf the optees opting for Govt. pensionary benefits will
have to b¢come members of the Public Provident Fund with effect
from 1.8.85.
(f) Superannuation of such optees will remain 58 years of age.
D 12. It is apparent from the option No. I that the employees who
opt for the company's pay scales, terms and conditions, will continue to
draw the same pay and allowance as admissible to them under the 3''
Pay Commission till 31.12.1985 and thereafter the 4ili Pay Commission
tiil 3 l" December. l 986 or subsequent date from which the revision of
E pay scales for the Coal Mining Industry takes place. Mention of a
subsequent date for revision of pay scales for the Coal Mining Industry
clearly indicates that even when the option was exercised to be absorbed
in the company's pay scales, the pay which was drawn earlier was
required to be protected till revision. However, the basic pay was to be
protected in the revised pay scales from I. l. l 987 or from the subsequent
F date from which general revision takes place for the coal-mining workers.
We are concerned in the instant case with the fitment on absorption. As
per option No. I clause (b ), the basic salary that was being drawn clearly
had to be prote~ted, when the option for absorption in company's pay
scales had been applied for. When we consider the emolument part
G also, a separate protection was given in the Option No. I itself, in
clause(e), i.e. that the total emoluments which were being drawn by
such incumbents, as on 31.12. l 986 would, in any case, be protected, and
that they would l!>e placed in the company's appropriate pay scales/grades.
So, there was a <!lual protection, one for the basic salary, and another for
the emoluments. The ECL has wrongly confused both the issues by
H
EASTERN COALFIELDS LTD. & ORS. v. PRATIVA BISWAS 95
& ORS.

overall taking the fixation by the inclusion of the emoluments. Salary A
was required to be protected, as well as the total emoluments that were
being drawn; both could not have been reduced than what was being
drawn as on 31.12.1986. Though we are not concerned with Option
No.2, such protection was available on continuance in the government
pay scale.
B
13. The Office Order dated 9 .1.1987 has also been referred to on
behalf the employer with respect to the terms and conditions of service
in the subsidiaries of CIL in regard to the replacement of existing terms
& conditions of services of Coal Mines Welfare Organisation. There
was a clarification made with respect to Option No.2 with that we are
not concerned. Thus, wrong reliance placed on Option No.2 resulted in
c
the observation made by the single Bench that protection was only
provided for the total emoluments of the employees and that shall be
protected at the time of the re-fixation of the pay in the revised
corresponding pay under NCWA-IV with effect from 1. l.1987. As already
mentioned that Option No.I had been exercised in the instant case. Even D
in Option No.2 basic pay as well as the emoluments continued to be as
drawn.
14. As a matter of fact, in the instant case, we need not have
dilated on various issues as the matter stood concluded by the judgment
and order passed by the single Bench in the previous round oflitigation. E
The Single Bench vide order dated 26.08 2002 clearly ordered that the
pay could not have been reduced as pay protection was assured to them
and shortfall be made good if needed by way of personal adjustment.
15. When the pay scales were converted to and paid in the Coal
India Limited, respondents' pay drawn could not have been reduced, F
inasmuch as pay protection had been assured to them and in view of
aforesaid order that attained finality and pay fixation was to be made in
the manner that total emoluments drawn were not less. After fitment, if
it was found that lesser amount was to be received as salary on or after
1. l.1987, it was required that the shortfall was made good by way of
personal adjustment(s). Accordingly, protection was to be made on the G
fitment by grant of personal pay meaning thereby the pay could not have
been reduced on the fitment in the ECL pay scales. The order 26.8
2002 was to be complied with in pith and substance; rather it was violated
by the aforesaid method of fixation. As apparent from the aforesaid
H
96 SUPR!EME COURT REPORTS [2017] 13 S.C.R.

A figure of fitment, pertaining to Prathiva Biswas, Senior Staff Nurse,
Central Hospitill, Kalla. The fitment that was made on 2012 l May 2003
was clearly in v'olation of the order as well as the provisions of option
form and even subject to conditions on which the absorption had been
made. Thus, in our opinion, the Division Bench has rightly set aside the
order passed by the Single Bench by the order impugned; it was not the
B
total emoluments that matters. Salary protection was to be ensured, it
could not have been reduced apart from emoluments. There was dual
protection; that was unfortunately ignored and overlooked by the ECL in
spite of the cleatr and categorical order passed by the Single Bench in
the writ application of 1993, which order had attained finality, and had
c not been questioned by any of the parties.
16. Learn~d senior counsel for the respondent has relied upon the
decision of this Court in K. Gopinathan vs. Union of India (supra), in
which this Court has considered the concept of deduction in basic pay.
One of the Assistant Sub Inspectors of the Police of the State had been
D absorbed in CBI and on absorption; the basic pay was reduced, though
his overall pay had become higher as a deputationist. As the basic pay
had been reduced, the Tribunal observed that the dearness allowance
under the Central scale was higher, out of which a portion had been
merged with the pay and, therefore, by thus adding the merged portion
to the basic pay, the total emoluments became higher than the basic pay
E under the State Government. This Court rejected the reasoning adopted
by the Tribunal and held that such reasoning was not acceptable. The
basic pay could not have been reduced by absorption. This Court has
observed:
"8. We are afraid we cannot subscribe to this reasoning. While
F upholding the view of Central Administrative Tribunal, Principal
Bench, New Delhi in Original Application No.1680 of l 989 in
SLP(C)N o.2 l 96 of 1992, we have pointed out how the basic pay
cannot be reduced. The same principle will be applicable to this
case as well. Accordingly, the appeal is allowed. However, there
G shall be no order as to costs."
17. Shri Kalyan Bandopadhyay, learned senior counsel for the
appellant, has relied upon the decision of this Court in State Bank of
India & Ors. vs. K.P. Subbaiah & Ors. (supra); the relevant portion is
extracted hereunder:
H
EASTERN COALFIELDS LTD. & ORS. v. PRATIVA BISWAS 97
& ORS.

"22. As noted above, a pay scale has different stages starting A
with initial pay and ending with ceiling pay. Each stage in the
scale is commonly referred to as basic pay. The emoluments
which an employee gets is not only the basic pay at a particular
stage but also the additional amounts to which he is entitled as
allowances e.g. DA etc. Therefore, when a question of pay B
protection comes, the basic feature is that the fitment or fixation
of pay in a particular scale must be such as to ensure that the total
emoluments are not reduced.

25. There was no intention to protect any particular scale of pay. C
That being the position, the demand of a corresponding pay scale
has no rationale. The High Court was, therefore, clearly in error
in holding th~t the scale of pay was the determinative factor. The
direction that while refixing the pay and DA 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 D
maintained and is indefensible.
It is apparent from the aforesaid decision that this Court has
considered the facts of the particular case before it, and culled out that
there was no intention to protect a particular scale of pay. The scale of
pay was not a detenninative factor. This Court, in the aforesaid context, E
observed, that while re-fixing the pay and dearness allowance, the
direction that the total pay fixed, at the time when the petitioner entered
into the service be protected with the corresponding scale of pay, could
not be maintained. There is no dispute with the proposition, however, in
the instant case, the pay scales, as they prevailed in the ECL, had been F
opted; but the dispute arose about the fixation of the pay in that scale.
Pay was fixed lower than what had been drawn earlier, i.e. the one
which had prevailed in the erstwhile employment. In the instant case,
option clearly intended that the pay was to be protected; and the
emoluments as well. Thus, the intention in the instant case was otherwise
and fitment has not been done correctly, as such, basic pay have to be G
revised.
18. Reliance has also been placed by the appellants on a decision
of High Court Employees Welfare Association vs. State of West
Bengal 2007 (3) SCC 637 in which this Court has observed:
H
98 SUPREME COURT REPORTS [2017) 13 S.C.R.

A "26. A revision of pay scales has to be followed by fitment in
the revised pay scales, in the case of all employees who arc
receiving payments under the old pay scales. Such fitment in
the revised pay scales will have to ensure pay protection so
that the total emoluments are not reduced on fitment in the
revised pay scales. The problem of fitmcnt is noticed in
B
Samar~ditya Pal's 'Service Law' (Second Edition, Page 277)
thus:
"A pay scale has different stages. It starts with what is normally
known as initial pay and ends with a ceiling. Each stage in the
scale is represented by what is commonly referred to as basic
c pay. The emoluments which an employee takes home is not
only the basic pay at a particular stage but also other admissible
allowances viz. dearness allowance, house rent allowance etc.
When the existing pay scale (Rs. l ,000-100-1,500-200-5,000)
is revised (Rs.2,000-200-3,000-400-10,000) the question of
D fitment arises in this form. At which stage of the new pay scale
is an employee who is at the stage of Rs.1,300 in the existing
scale apd is drawing a total emolument ofRs.3,000 (including
all allowances) on the day immediately preceding the date on
which the revised pay scale becomes effective to be fitted?"

E Therefore, a formula or principle offitment is provided either in
the pay revision Rules or by a separate order. Such a formula or
principle for fitment is not reqnired in the case of new recruits as
they start at the lowest stage of the applicable pay scale or at
such stage as stated in the terms of appointment. Ruic 7 of the
State Pay Rules relating to fixation of initial pay in the revised
F scale of pay thus applies only to existing employees who have
been extended the benefit of a revised pay scale. The words
'fixation1ofinitial pay' in Ruic 7 of State Pay Rules, refers to the
first pay fixed in the revised scale, on fitment. Therefore the
contention of the petitioner that Rule 7 of State Pay Rules is intended
G to apply only to new recruits and the sole purpose of paras 9 and
l 0 of Minutes is to apply the principle of Rule 7 of State Pay
Rules to existing employees is untenable."
The decision does not espouse the cause of the appellants, as this
Court has considered in the aforesaid dictum the fitment when the revised
pay scale is made applicable and when a new entrant comes, new entrant
H
EASTERN COALFIELDS LTD. & ORS. v. PRATNA BISWAS 99
& ORS.

starts at the lowest stage of the applicable pay scale and gets the benefit A
of the pay scale. This Court has observed that the employees who are
receiving under the old pay scale, fitment in the revised pay scale has to
be made in the manner so that total emolument was not reduced in the
revised pay scale. In our opinion that would not mean the pay can be
reduced. This court considered by said decision only the question to
B
provide the protection to emoluments.
19. Thus, the reduction of basic pay drawn in the pay scale was
wholly arbitrary and violates the order of the Single Bench dated
26.08.2002, thus we find no merits in the appeal and we dismiss the
same. Let the benefits be extended forthwith to all the employees who
were absorbed, whether continuing today or have been retired and to
c
the legal representatives of deceased employees, within a period of two
months and compliance be reported to this Court. No costs.

Ankit Gyan Appeal dismissed.