Holding

A "permanent employee" under the Madhya Pradesh Standing Orders is entitled only to the minimum of the regular pay‑scale; increments and other benefits arise only upon regularisation in service.

Summary

The petitioners, originally engaged as daily‑wage workers in Madhya Pradesh, were classified as "permanent employees" under the Madhya Pradesh Industrial Employment (Standing Orders) Rules, 1963, and obtained court orders directing that their pay be fixed in the regular pay‑scale of the posts. The State Government, however, fixed only the minimum of the scale and expressly excluded any increments, prompting the petitioners to file contempt petitions alleging non‑compliance with the Supreme Court's earlier order. The Court examined whether a "permanent employee" under the standing orders is automatically a "regular employee" entitled to the full pay‑scale including increments, and held that classification as permanent does not confer regularisation or the right to increments. It reiterated that only regularisation in service, following statutory recruitment procedures, can give rise to increments and other benefits. The Court also clarified that the principle of equality under Article 14 applies to pay parity but not to the absorption of temporary employees as regular staff. Consequently, the contempt petitions were dismissed, confirming that the State’s fixation of minimum pay without increments complied with the Supreme Court’s directions.

Issues considered

The legal effect of classifying a daily‑wage worker as a "permanent employee" under the Madhya Pradesh Standing Orders.
Whether a "permanent employee" is entitled to the full regular pay‑scale, including increments, or only the minimum of the scale.
The applicability of Article 14 (equality) to the claim for increments and regularisation.
The scope of the Supreme Court's earlier order and whether the State's pay fixation constitutes contempt.

Legislation cited

Constitution of Indias. Article 14
Madhya Pradesh Industrial Employment (Standing Orders) Act, 1961s. 21(1), s. 3(c), s. 63(c)
Madhya Pradesh Industrial Employment (Standing Orders) Rules, 1963

Subjects

service lawpermanent employeeregular employeepay fixationincrementsequal pay for equal workArticle 14contempt of courtMadhya Pradesh Standing Ordersregularisation

Judgment

[2016]9S.C.R.141

RAM NARESH RAWAT A
v.
SRI ASHWINI RAY & ORS.
(Contempt Petition (Civil) No. 771 of2015)
IN B
(Special Leave Petition (C) No.'25284of2012)
DECEMBER 15, 2016
(A. K. SIKRI AND N.V. RAMANA, JJ.]
Service law: c
Madhya Pradesh Industrial Employment (Standing Orders)
Act, I961 - ss. 63(c), 21(1), 3(c) - Madhya Pradesh Industrial
Employment (Standing Orders) Rules, 1963 - Fixation ofpay in the
regular pay scale - Entitlement to increments - Classification of
. petitioners-daily wage employees as 'permanent employees' by D
standing order - Thereafter. petitioners sought pay scale attached
to the said posts - Claim allowed by the courts below as also this
Court - However. fixation of the pay at the minimum of the regular
pay-scale attached to the respective posts - Contempt petition by
the petitioners that the. pay fixation
__, not as per the order of this E
Court - Petitioners sought fixation of pay in the regular pay scale
as also increments and other emoluments attached to the said post
- Held: Though a 'per111anent e111ployee' has right to receive pay in
the graded pay-scale, at the same time, he would be getting only
minimum of the said.pay-scale with no increments - Only the
regularisation in service which would entail grant of increments F
etc. in the pay-scale - In some cases the State Government while
fixing the pay scale, granted increments as well, however. the benefit
wrongly given, would not form the b·asis of claiming the same
relief - Right to equality u!Art. 14 is not in negative terms -
Constitution of India - Article 14. G
Dismissing the contempt petitions, the Court
HELD: 1.1 Though a 'permanent employee' has right to
receive pay in the graded pay-scale, at the same time, he woul( ·
be getting only minimum of the said pay-scale with no increments.
H
141
\

142 SUPREME COURT REPORTS [2016] 9 S.C.R.

A It is only the regularisation in service which would entail grant of
increments etc. in the pay-scale. [Para 23] [161-H; 162-A]
State of Karnataka v. Uma Devi (2006) 4 SCC 1: 2006
(3) SCR 953 - relied on.
1.2 Section 3(c) of the Madhya Pradesh Industrial
B Employment (Standing Orders) Act, 1961 defines "Standing
Orders" and as per Section 6, the State Government may, by
notification, apply Standard Standing Orders to such class of
undertakings and from such date as may be specified therein.
Section 21 empowers the State Government to make rules to
c carry out the purposes of the said Act which are required to be
notified. It empowers the State Government to frame Standard
Standing Orders as well. It is in exercise of powers under Section
21(1) of the Act that the State Government has framed Madhya
Pradesh Industrial Employment (Standing Orders) Rules, 1963.
Annexure to these Rules contains standard Standing Orders for
D all undertakings in the State. Standing Order No. 2 of this Order
enumerates classification of employees. As per this classification,
an employee would be known as 'permanent employee' who has
completed six months' satisfactory service in a clear vacancy in
one or more posts whether on probation or otherwise or a person
E whose name has been entered in the muster roll and who is given
a ticket of 'permanent employee'. It follows that merely by putting
in six months' satisfactory service, an employee can be treated
as 'permanent employee'. Rights which would flow to different
categories of employees including 'permanent employee' are not
stipulated in these Rules or even in the parent Act. It can be
F gathered from Rule 11 of the said Rules, which relates to
termination of employment, that in case of a 'permanent
employee' one month's notice or wages for one month in lieu of
notice is required when the employment of a 'permanent
employee' is to be terminated. On the other hand, no such notice
G or wages in lieu thereof is needed to be given to any other
category of employees. Additional obligation casts on the
employer is to record reasons for termination of service in writing
and communicate tile same to the employee. [Para 16] [156-E-
H; 157-A-C]
H 1.3 The answer as to whether the employee, on getting the
RAM NARESH RAWAT v. SRI ASHWINI RAY & ORS. 143

designation of 'permanent employee' can be treated as 'regular' A
employee does not flow from the reading of the Standing Orders
Act and Rules. In common parlance, .normally, a person who is
known as 'permanent employee' would be treated as a regular
employee but it does not appear to be ex!}ctly that kind of situatic;m
in the instant case when it is found that merely after completing
B
six months' service an employee gets right to be treated as
'permanent employee'. Moreover, this Court has drawn a
distinction between 'permanent employee' and 'regular
employee'. [Para 21] [160-E-F]
1.4 There is no substance in the submissions raised by the
petitioners in these contempt petitions. The Court is conscious
c
of the fact that in some cases, on earlier occasions, the State
Government while fixing the pay scale, granted increments as
well. However, if some persons are given the benefit wrongly,
that cannot form the basis of claiming the same relief. It is trite
that right to equality under Article 14 is not in negative terms. D
[Para 24] (162-B]
I
Indian- Council of Agricultural Research & Anr. v. T.K
Suryanarayan & Ors. (1997) 6 SCC 766 : 1997 (3)
Suppl. SCR 322 - relied on. '
State of Madhya Pradesh & Ors. Vs. Bhasker Sharma E
Writ Appeal No. 322/2009; Order dated ~0.11.2009,
M.P. High Court, Gwalior Bench; State of Punjab and
Ors. vs . .Jagjit Singh and Ors. 2016(10) .SCALE 447;
Mahendra L. Jain & Ors. v. Indore Development
Authority & Ors. (2005) 1 SCC 639:2004 (6) Suppl.
F
SCR 242; MP. State Agro Industries Development
Corporation Ltd. & Anr. v. S.C. Pandey (2006) 2 SCC
716:2006 (2) SCR 648; State of MP. & Ors. v. La/it
Kumar Verma (2007) l· SCC 575:2006 (9) Suppl. SCR
591; State of MP. & Ors. v. Dilip Sing Patel and Others
CA No. 8431-8432 decided on August 27, 2014 - G
referred to.
Case Law Reference
2016(10) SCALE 447 referred to Paras 12, 13
200~ {3) SCR 953 relied on Para 14
2004 (6) Suppl. SCR 242 referred to Para 18 H
144 SUPREME COURT REPORTS [2016] 9 S.C.R.

A 2006 (2) SCR 648 referred to Para 19
2006 (9) Suppl. SCR 591 referred to Para 20
1997 (3) Su1ipl. SCR 322 relied on Para 24
CIVIL ORIGINAL JURISDICTION : Contempt Petition (Civil)
No. 771 of2015 in Special Leave Petition (C) No. 25284 of2012.
B
From the Judgment and Order dated 18.05.2011 of the High Court
of Madhya Pradesh Bench at Gwalior in Writ Petition No. 6588 of2010
WITH
CONTEMPT PETITION (CIVIL) NO. 838 OF 2015
c IN
SPECIAL LEAVE PETITION (C) NO. 9635 OF 2013
CONTEMPT PETITION (CIVIL) NO. 858 OF 2015
IN
SPECIAL LEAVE PETITION (C) NO. 23985 OF 2012
D
CONTEMPT PETITION (CIVIL) NO. 62 OF 2016
IN
SPECIAL LEAVE PETITION (C) NO. 31343 OF 2011
CONTEMPT PETITION (CIVIL) NOS. 82-85 OF 2016
E m
SPECIAL LEAVE PETITION (C) NOS. 18245 OF 2014, 18246,
18247 & 18249 OF 2014
CONMT.PET.(C) NO. 101/2016 IN SLP(C) NO. 19220/2014
CONMT.PET.(C) NO. 787/2015 IN SLP(C) NO. 19224/2014
F CONMT.PET.(C) NO. 788/2015 IN SLP(C) NO. 19286/2014
CONMT.PET.(C) NO. 819/2015 IN SLP(C) NO. 19217/2014
CONMT.PET.(C) NO. 823/2015 IN SLP(C) NO. 19218/2014
CONMT.PET.(C) NO. 856/2015 IN SLP(C) NO. 19230/2014
CONMT.PET.(C) NO. 121-131/2016 IN SLP(C) NO. 8473/2012,
G 19394/2012, 23980/2012,23981/2012, 23986/2012, 34868/2012, 38228/
2012, 38231/2012, 38235/2012, 38236/2012, 19236/2014.
CONMT.PET. (C) NO. 735/2015 IN SLP(C) NO. 19278/2014
CONMT.PET.(C) NO. 793-817/2015 IN SLP(C) N0.20025/2011
AND 19396/12, SLP(C) NO. 30275/2012, SLP(C) NO. 30276/2012,
H
RAM NARESH RAWAT v. SRI ASHWINI RAY & ORS. 145

SLP(C) NO. 1577/2013, SLP(C) NO. 5597/2013, SLP(C) NO. 29683/ A
2013, SLP(C)NO. 19095/2014, SLP(C)NO. 19282/2014, SLP(C)NO.
19251/2014, SLP(C) NO. 25279/2012, SLP(C) NO. 12438/2013, SLP(C)
NO. 12433/2013, SLP(C) NO. 5350/2013, SLP(C) NO. 19221/2014,
SLP(C) NO. 19260/2014, SLP(C) NO. 19257/2014, SLP(C) NO. 19206/
2014, SLP(C) N0.25277/2012, SLP(C) NO. 19094/2014, SLP(C) NO.
B
19205/2014, SLP(C) NO. 19219/2014, SLP(C) NO. 19237/2014, SLP(C)
NO. l9246/2014AND SLP(C)NO. 19255/2014
CONMT.PET.(C) NO. 215/2016 IN SLP(C) NO. 21830/2012
WITH
CONMT.PET.(C) NO. 216/2016 IN SLP(C) NO. 21835/2012 C
CONMT.PET.(C) NO. 512/2016 IN SLP(C) NO. 18413/2014
CONMT.PET.(C) NO. 475/2016 IN SLP(C) NO. 8203/2012
CONMT.PET.(C) NO. 536/2016 IN SLP(C) NO. 19393/2012
AND
CON MT. PET. (C) NO. 106/2016 IN SLP(C) N0.19292/2012. D
Mukul Rohatgi, A.G., N.K. Modi, Ravindra Shrivastava, Sr. Advs.,
Purushaindra K., AAG, Am Ian Kumar Ghosh, A.K. Upadhiya, Adarsh
Tripathi, S.M. Jadhav, M/s. S.M. Jadhav & Company, B. S. Banthia,
Ms. Rekha Pandey, R. Shrivastav, S. K. Verma, Ajay Awasthi, V.C.
Shukla, Ms. Manju Jetley, Akshat Shrivastava, K. Mathur, S. Ramesh, E
Mohan Lal Shanna,Arjun Garg, PulkitTare, C. D. Singh, Mishra Saurabh,
Ankit Kr. Lal, Advs. for the appearing parties.
The Judgment of the Court was delivered by
A. K. SIKRI, J. I. All the petitioners who have filed these
contempt petitions were engaged by the State of Madhya Pradesh on F
difterent dates on different posts but all of them were engaged as daily
wagers. They continued as daily wagers for long spell of time. According
to the petitioners, in terms of Madhya Pradesh Industrial Environment
(Standing Order) Rules, 1963, they became entitled to be classified as
'permanent employees'. However, their demand for classification as G
permanent employees was not acceded to by the State, which inaction
of the State Government provoked some of these employees to raise the
industrial dispute for their classification which resulted into award(s) of
the labour court directing their classification as 'permanent'. The labour
court also held that on their classification as permanent, they would be
H
146 SUPREME COURT REPORTS [2016) 9 S.C.R.

A entitled to the pay-scale of permanent post from dates specified in the
award. Appeals were filed by the State against those orders which
were dismissed by the industrial court and writ petitions also came to be
dismissed by the High Court. This resulted in passing of the orders by
the concerned authorities in the State Government classifying these
petitioners as permanent employees. It was also ordered that they shall
B
be entitled to minimum pay as fixed by the Labour Commission. This
led to another round of litigation as the petitioners claimed that on their
classification as' permanent' to their respective posts they were entitled
to receive the pay-scale attached to the said posts. These reliefs were
granted to them by the labour court against which appeal preferred before
C the industrial court and the writ petition before the High Court were also
dismissed. In all these cases, thereafter, special leave petitions were
filed which were dismissed by this Court by common order dated 21 51
January, 2015. This order reads as under:
':Delay condoned.
D Dismissed.
We direct the State Governmentto implement the order(s) passed
by the High Court within eight months' time from today.
If for any reason, the petitioner-State does not implement the
E order(s) passed by the High Court, the respondents are at liberty
.to approach this Court by way of filing contempt petition(s)."
The State Government has passed the orders fixing the pay of
these petitioners at the minimum of the regular pay-scale attached to the
respective posts. To demonstrate, by way of example, in the case of
Ram Naresh Rawat, who was engaged as a daily wager, the pay is
F
fixed..at Rs. 15330/- in the pay-scale of Rs. 5200/- attached to the said
post. Break up of the aforesaid salary fixing is as under:

SI. No. Particulars Amount (Rs.)
2(i) Minimum in the Regular pay scale granted 52001-
G vide order dated 11.03.2016 (per month)
2(ii) Grade pay (per month) J 800/-
2( iii) D .A. (per month) 8330/-
2(iv) Total salary and other benefits in hand I 5330/-
(i+ii+iii) per month
H
RAM NARESH RAWAT v. SRI ASHWINI RAY & ORS. 147
[A. K. SIKRI, J.]

At the time of passing the order, he was getting monthly wage of A
Rs. 11,300/- as the daily wager. His salary, therefore, stands enhanced
of Rs. 4030/-. In addition, he is given arrears in the sum of Rs. 5,93,887/-.
In similar manner, pay of all the petitioners has been fixed.
3. The petitioners are, however, not satisfied with the aforesaid
fixation and contended that the pay fixation has not been done as per the B
orders of this Court. The precise submission is that once they are
conferred the status of permanent employee by the court and it is also
categorically held that they are entitled to regular pay attached to the
said post, not only the pay should be fixed in the regular pay-scale, the
petitioners would also be entitled to the increments and other emoluments
attached to the said post. In other words, they pleaded that fixation of c
pay at the minimum of the pay-scale is uncalled for and does not amount
to complying with the directions of the Court in full measure. It is also
submitted that in some other cases where the High Court has given
similar directions, which are followed in their cases, the State Government
has not only fixed pay in the regular pay-scale but has also been granting D
increments etc. as well.
4. The case set up by the respondents, on the other hand, is that
the petitioners are daily wage employees. They have not been
'regularised' in their respective posts for want of adequate number of
regular vacancies. They are granted 'permanency' in terms of standing E
orders which, at the most, entitles them to get the pay which is given to
employees appointed on regular basis but such an entitlement is to the
minimum of the said pay-scale. It is also argued that even the direction
of the High Court was to grant pay in the regular pay-scale with effect
from the date of classification orders and there is no direction given by
the High Court to give them increments etc. which is admissible only F
when a person is appointed on regular basis or whose services are
regularised, which has not happened in the case of the petitioners.
5. Learned counsel who appeared for these petitioners have drawn
our attention to the relevant provisions of the standing orders on the
basis of which they were classified as permanent. It is standing order G
No. 2 which deals with classification of the employees and reads as
under:
"2. Classification ofEmploy~es.- Employees shall be classified
as (i) permanent, (ii) permanent seasonal, (iii) probationers, (iv)
Badlies, (v) apprentices, and (vi) temporary: H
148 SUPREME COURT REPORTS [2016] 9 S.C.R.

A (i) A 'permanent' employee is one who has completed six months'
satisfactory service in a clear vacancy in one or more posts
whether as a probationer or otherwise, or a person whose name
has been entered in the muster roll and who is given a ticket of
permanent employee;
B (ii) A 'permanent seasonal employee' is one who has completed
service for a period equal to 2/3rd of the duration or a season or
three months whichever is less in a clear vacancy and shall be
deemed to be a permanent employee for the purpose of these
order;
(iii) A 'probationer' means an employee who is provisionally
c employed to fill a clear vacancy, and who has not completed six
months' satisfactory service in the aggregate;
(iv) A 'badli', employee means an employee who is employed on
the post of a permanent seasonal employee, or a probationer or a
permanent seasonal employee who is temporarily absent.
D (v) An 'apprentice' means a learner, provided that no employee
shall be classified as an apprentice if he ha shad training for an
aggregate period of one year, provided further that a longer period
of apprenticeship shall be required if prescribed by a law or an
award, or by agreement with the representative of employees;
E (vi) 'temporary employee' means an employee who has been
employed for work which is essentially of a temporary character,
or who is temporarily employed as an additional employee in
connection with the temporary increase in the work of a permanent
nature, provided that in case such employee is required to work.
Continuously for more than six months he shall be deemed to be a
F
permanent employee, within the meaning of clause (i) above."
6. Once the labour court classified them as permanent, which
classification had attained finality, it necessarily follows that they are
entitled to all benefits which are to be given to regularly appointed
employees.
G
7. It is further submitted that the High Court specifically went into
the question as to whether, on attaining permanency, these petitioners
were entitled to the pay-scale attached to the post which is given to the
regularly recruited employee and answered the said question in the
affirmative. Our attention was drawn to one such order dated s•h May,
H
RAM NARESH RAWAT v. SRI ASHWINI RAY & ORS. 149
fA. K. SIKRI, J.l

2008 passed by the High Court in Writ Petition No. 1306 of2008 where A
this issue is specifically dealt with in detail and decided in favour of the
petitioners, after taking note of various judgments. It was further pointed
out that in some other cases, increments are also given while fixing pay
in the regular pay-scale. Example of one such case given by the petitioner
is State of Jl1(1(/11yfl Prlldesli & Ors. Vs. B/iasker Slwrm" 1 wherein
B
the Writ Appeal was also dismissed. It was submitted that after the
dismissal of the appeal, Bhasker Sharma was not only granted regular
pay-scale but is getting increments and other benefits attached to the
said post as well. It was also argued that many such employees have
been given similar benefits and the State Government has now taken a
'U' turn and is not willing to extend such benefits to the petitioners herein. c
Copies of many such orders passed by the High Court are filed by the
petitioners as additional documents in support of their submissions.
8. Mr. Mukul Rohatgi, learned Attorney General, who appeared
on behalf of the State Government and the Contemnors emphasised that
the only direction of the High Court, which has been upheld by this D
Court, is that these petitioners are entitled to pay in a regular scale. It is
argued that they have been classified as "permanent" because of the
aforesaid standing orders which means that their services would not be
terminated. However, that does not mean that the petitioners are
regularised against any posts. It was also argued that each of these
petitioners have been given substantial amount as arrears of pay in terms E
of the orders passed by the High Court and there is significant
enhancement in the monthly emoluments now drawn by these petitioners.
The learned Attorney General further submitted that there are 520 such
employees who have gained entry into the service through backdoor as
they were not appointed on regular basis against regular vacancy after F
following required selection procedure. Such employees, like the
petitioners, cannot seek regularisation and benefits emanating from such
regularisation in view of the law laid down by the Constitution Bench of
this Court in S/(l/e of K"m"t"k" Vs. Umfl Devi1• It was also argued
that instant proceedings are in the contempt cases where scope of
jurisdiction was limited. The State had complied with the directions in a G
bona fide manner on its understanding about the orders of the High
Cou11 against which SLPs have been dismissed and in case the grievance
1
Writ Appeal No. 322/2009; Order dated 30.11.2009; By High Court of M.P.,
Gwalior Bench
' (2006) 4 sec 1 H
150 SUPREME COURT REPORTS [2016] 9 S.C.R.

A of the petitioners is that they are entitled to something more than what is
granted by the State Government, they can challenge the order passed
by the Government fixing their pay, by taking recourse to substantive
proceedings but not in the form of contempt petition.
9. Mr. Rohatgi also brought to the notice of this Court a subsequent
·B event which has been brought on record by filing additional affidavit. It
was pointed out that on 7m October, 2016, the State Government has
promulgated a one-time scheme for regularisation of all daily wage
employees in the State. Copy of the said scheme is annexed, salient
features whereof are as under:

c "(I) The Daily wage employees will now be classified as
"Sthayee Karmi".
(II) They are classified in three categories, i.e., Unskilled, Semi-
ski lied, and Skilled. Their pay scale is also determined accordingly.
Pay Scale of a skilled employee is Rs. 5000-100-8000.

D (III) They will be given the benefit of seniority and their actual
pay on September l, 2016 in their pay scale will be determined
based on the years of service put in by them.
(IV) They will be entitled to Dearness Allows. (Presently at
125%)
(V) The pay fixation in the pay scale will be applicable from
E
1.9.2016. Next increment in salary will be given in September
2017.
(VI) On attaining the age of superannuation, they will be entitled
to Gratuity based on 15 days salary per year during the period of
service. Maximum limit of this amount will be Rs. 1,25,000/- for
F unskilled, Rs. 1,50,000/- for semi-skilled, and Rs. 1,75,000/- for
skilled workers.
(VII) Such daily wager employees who were working on
16.5.2007, and have also been in service as on 1.9.2016 will be
entitled to the pay scale mentioned above and other benefits.
G · 6. In view of the aforesaid scheme, the MP Daily Wages Employee
(Conditions of Service), Rules, 2013 now stands repealed.
7. The scheme also prescribes the steps to be taken for filling up
the vacant Regular posts. For this purpose the vacant Class IV
posts available.in the regular setup under various departments at
H the district level would be filled up on priority from the existing
RAM NARESH RAWAT v. SRI ASHWINI RAY & ORS. 151
[A. K. SIKRI, J.]

sthayee karmis. The workers working with various Construction A
Departments (Nirman Vibhag) will be treated as Industrial
Workers for the purposes of Standing Order Act, 1961 and Rules,
1963 and the permanent classified employees of such Departments
are also entitled to be regularised accordingly.
8. In view of the aforesaid, it is submitted that the daily wage B
employees are also~ntitled to the aforesaid benefits at the time of
superannuation as mentioned in the Scheme."
He, thus, submitted that ifthe petitioners opt forthe said scheme,
they would· get the benefits thereof after their retirement.
10. Before we consider the respective submissions, we want to
make two observations which are crucial to the issue involved. These
c
are:
(i) The matter is being examined in the contempt jurisdiction of
this Court. From the chronology of events given, it would be
clear that initially these petitioners had claimed their classification
as 'permanent' to the respective posts. They succeeded in this D
attempt and the orders- passed therein in their favour was. that
they would be classified as 'permanent' and that they would also
be entitled to pay-scale of permanent posts from the dates specified
in the award given by the labour court.
In the second round of litigation, out of which present E
contempt petitions arise, direction of the High Court is to grant
them pay-scales attached to the posts to which they are working.
This order has been upheld by this Court as well inasmuch
as Special Leave Petitions filed by the State Government have
been dismissed by common orders dated 21" January, 2015. F
However, there is no specific direction for grant of increments.
(ii) In order to implement the directions of High Court, against
which special Leave Petitions have been dismissed, the State
Government has passed order dated 11th March, 2016 vide which
the pay-scale of the petitioners has been fixed in the pay-scale
G
attached to these posts. This has also been given from the dates
to which these petitioners are held entitled to and on that basis
arrears of pay have also been paid. However, the pay is fixed at
the minimum of the said pay-scales and there is also stipulation in
the said orders dated 11 •h March, 2016 that these employees would
not be entitled to increment of salary. H
152 SUPREME COURT REPORTS [2016) 9 S.C.R.

A 11. It is clear from the above that the petitioners have been given
pay in the regular pay-scale. Petitioners, however, have joined issue by
contending that orders dated ll'h March, 2016 do not carry out the
complete compliance of the directions given by the High court that on
fixation of pay in the regular pay-scale the petitioners are also entitled to
increments of salary, as is given to the regular employees, on annual
B
basis.
Therefore, the question that arise for consideration is as to whether
the petitioners are also entitled to the increments.
12. It is not in dispute that the petitioners were initially engaged on
c daily wage basis. Their engagement was also done without following
any selection procedure. It also does not emerge from record that the
initial engagement of these petitioners was against regular vacancies.
Normally, in such a situation even if these persons, because of their long
service and also on the assumption that they are discharging the same
duties as discharged by regular employees, such employees can claim
D the salary which is being paid to regular employees holding similar posts
on the principles of 'equal pay for equal work'. This aspect has
exhaustively and authoritatively being dealt with by this Court in a recent
judgment dated 26th October, 2016 in Civil Appeal No. 213of2013, titled
S.tale of PUJ~jab and Ors. vs. Jagjit Singll mu/ Ors.-' and other
E connected appeals, though, there is one distinguished factor, viz. the
petitioners herein have been conferred the status of 'permanent'
employees. However, an important question which arises is as to whether
such 'permanent' employees are same as employees appointed on
'regular' basis or their services stand regularized. This aspect shall be
touched upon and dealt with a little later. At this stage, reference is
F made to the aforesaid judgment in the case of Jagjit Singk' for the
purpose that even if principle of'equal pay for equal work' is applicable
and the pay in the regular pay-scale is admissible to such employees,
these employees would be entitled to minimum of the regular pay-scale
and not the increments. This case is taken note of and discussed in
G Jagjit Sing Ii-' in the following manner:
"36. Secretary, State of Karnataka v. Umadevi [(2006) 4 SCC
I], decided by a five-Judge Constitution Bench: Needless to
mention, that the main proposition canvassed in the instant
judgment, pertained to regularization of government servants,
H ' Ci\il Appeal No. 213 of2013; 26th October, 2016
RAM NARESH RAWAT v. SRI ASHWlNI RAY & ORS. 153
[A. K. SIKRI, J.]

based on the employees having rendered long years of service, as A
temporary, contractual, casual, daily-wage or on ad-hoc basis. It
is, however relevant to mention, that the Constitution Bench did
examine the question of wages, which such employees were
entitled to draw. In paragraph 8 of the judgment, a reference was
made to civil appeal nos. 3595-612 of 1999, wherein, the
B
respondent-employees were temporarily engaged on daily-wages
in the Commercial Taxes Department. As they had rendered
service for more than I 0 years, they claimed permanent
employment in the department. They also claimed benefits as were
extended to regular employees of their cadre, including wages
(equal to their salary and allowances) with effect from the dates c
from which they were appointed. Even though the administrative
tribunal had rejected their claim, by returning a finding, that they
had not made out a case for payment of wages, equal to those
engaged on regular basis, the High Court held that they were
entitled to wages, equal to the salary of regular employees of
D
their cadre, with effect from the date from which they were
appointed. The direction issued by the High Court resulted in
payment of higher wages retrospectively, for a period of I 0 and
more years. It would also be relevant to mention, that in passing
the above direction, the High Court had relied on the decision
rendered by a three-Judge bench of this Court in Dharwad District E
PWD Literate Daily- Wage Employees Association v. State of
Karnataka[(l 990) 2 SCC 396]. The Constitution Bench, having
noticed the contentions of the rival parties, on the subject of wages
payable to daily-wagers, recorded its conclusions as under:-
"55. In cases relating to service in the commercial taxes F
department, the High Court has directed that those engaged
on daily wages, be paid wages equal to the salary and allowances
that are being paid to the regular employees of their cadre in
government service, with effect from the dates from which
they were respectively appointed. The objection taken was to
the direction for payment from the dates of engagement. We G
find that the High Cou11 had clearly gone wrong in directing
that these employees be paid salary equal to the salary and
allowances that are being paid to the regular employees of
their cadre in government service, with effect from the dates
from which they were respectively engaged or appointed. It H
154 SUPREME COURT REPORTS [2016] 9 S.C.R.

A was not open to the High Court to impose such an obligation
on the State when the very question before the High Court in
the case was whether these employees were entitled to have
equal pay for equal work so called and were entitled to any
other benefit. They had also been engaged in the teeth of
directions not to do so. We are, therefore, of the view that, at
B
best, the Division Bench ofthe High Court should have directed
that wages equal to the salary that is being paid to regular
employees be paid to these daily-wage employees with effect
from the date of its judgment. Hence, that part of the direction
of the Division Bench is modified and it is directed that these
c daily-wage earners be paid wages equal to the salary at the
lowest grade of employees of their cadre in the Commercial
Taxes Department in government service, from the date of
the judgment of the Division Bench of the High Court. Since,
they are only daily-wage earners, there would be no question
of other allowances being paid to them. In view of our
D
conclusion, that Courts are not expected to issue directions for
making such persons permanent in service, we set aside that
part of the direction ofthe High Court directing the Government
to consider their cases for regularization. We also notice that
the High Court has not adverted to the aspect as to whether it
E was regularization or it was givirig permanency that was being
directed by the High Court. In such a situation, the direction in
that regard will stand deleted and the appeals filed by the State
would stand allowed to that extent. If sanctioned posts are
vacant (they are said to be vacant) the State will take immediate
steps for filling those posts by a regular process ofselection.
F
But when regular recruitment is undertaken, the respondents
in C.A. Nos. 3595-3612 and those in the Commercial Taxes
Department similarly situated, will be allowed to compete,
waiving the age restriction imposed for the recruitment and
giving some weightage for their having been engaged for work
G in the Department for a significant period of time. That would
be the extent of the exercise of power by this Court under
Article 142 of the Constitution to do justice to them."
We have extracted the aforesaid paragraph, so as not to make
any inference on our own, but to project the determination rendered
H by the Constitution Bench, as was expressed by the Bench. We
RAM NARESH RAWAT v. SRI ASHWINI RAY & 0.K~. 155
rA. K. SIKRI, J.l -<"

have no hesitation in concluding, that the Constitution Bench A
consciously distinguished the issue of pay parity, from the issue of
absorption/regularization in service. It was held, that on the Issue
of pay parity, the High Court ought to have directed, that the daily-
wage workers be paid wages equal to the salary at the lowest
..
grade of their cadre. The Constitution Bench expressed the view,
B
that the concept of equality would not be applicable to the issue of
absorption/regularization in service. And conversely, on the subject
of pay parity, it was unambiguously held, that daily-wage earners
should be paid wages equal to the salary at the lowest grade
(without any allowances)."
13. Another significant reason for referring to the judgment of c
Jagjit Singh 3 is that the Court culled out the principles of'equal pay for
equal work' from the earlier judgments on the subject and collated them
at one place. Further, the Court also drew an important distinction between
the grant of benefit of'equal pay for equal work' to temporary employees .
on the one hand and the status of regular employees on the other hand. D
Insofar as parameters of principles of'equal pay for equal work' deduced
by the Court are concerned (para 42), our purpose of deduction stated in
sub-para vi thereof is important, which 'is reproduced below:
"(vi) For placement in a regular pay-scale, the claimant has to be
i(regular appointee. The claimant should have been selected, on E
the basis of a regular process of recruitment, An employee
appointed on a temporary basis, cannot claim to be placed in the
regular pay-scale (see - Orissa Un!versity of Agriculture &
Technology Vs. Manoj K. Mo/1pnty')."
14. Insofar asdistinction between pay parity and regularisation of F
service is concerned, referring to the Constitution Bench judgment in
Uma Devi1, the Court made the following observations:
"We are of the considered view, that in paragraph 44 extracted
above, the Constitution Bench clearly distinguished the issues of
pay parity, and regularization in service. It was held, that on the G
issue of pay parity, the concept of 'equality' would be applicable
(as had indeed been applied by the Court, in various decisions),
but the principle of 'equality' could not be invoked for absorbing
temporary employees in Government service, or for making
• t2003J s sec 188 H
156 SUPREME COURT REPORTS [2016] 9 S.C.R.

A temporary employees regular/permanent. All the observations
made in the above extracted paragraphs, relate to the subject of
regularization/permanence, and not, to the principle of'equal pay
for equal work'. As we have already noticed above, the
Constitution Bench unambiguously held, that on the issue of pay
parity, the High Court ought to have directed, that the daily-wage
B
workers be paid wages equal to the salary, at the lowest grade of
their cadre. This deficiency was made good, by making such a
direction."
Thus, it follows that even if principle of'equal pay for equal work'
is applicable, temporary employee shall be entitled to minimum of the
c pay-scale which is attached to the post, but without any increments.
15. Insofar as petitioners before us are concerned they have been
classified as 'permanent'. For this reason, we advert to the core issue,
which would determine the fate of these cases, viz., whether these
employees can be treated as 'regular' employees in view of the aforesaid
D classification? In other words, with their classification as 'permanent',
do they stand regularized in service?
I G. For this purpose, we would first like to refer to the provisions
of the Madhya Pradesh Industrial Employment (Standing Orders) Act,
196 I and the Rules made thereunder known as the Madhya Pradesh
E Industrial Employment (Standing Orders) Rules, 1963. Section 3(c) of
the Act defines "Standing Orders" and as per Section 6, the State
Government may, by notification, apply Standard Standing Orders to
such class of undertakings and from such date as may be specified
therein. Section 21 empowers the State Government to make rules to
F carry out the purposes of the said Act which are required to be notified.
It empowers the State Government to frame Standard Standing Orders
as we! I. It is in exercise of powers under Section 21 (I) of the Act that
the State Government has framed Madhya Pradesh Industrial
Employment (Standing Orders) Rules, 1963 (hereinafter referred to as
the 'Rules'). Annexure to these Rules contains standard Standing Orders
G for all undertakings in the State. Standing Order No. 2 of this Order
enumerates classification of employees which has already been
reproduced above. As per this classification, an employee would be
known as 'permanent employee' who has completed six months'
satisfactory service in a clear vacancy in one or more posts whether on
H probation or otherwise or a person whose name has been entered in the
RAM NARESH RAWAT v. SRI ASHWINI RAY & ORS. 157
[A. K. SIKRI, J.]

muster roll and who is given a ticket of'pennanent employee'. It follows A
from the above that merely by putting in six months' satisfactory service,
an employee can be treated as 'permanent employee'. Rights which
would flow to different categories of employees including 'permanent
employee' are not stipulated in these Rules or even in the parent Act. It
can be gathered from Rule 11 of the said Rules, which relates to
B
tennination of employment, that in case of a 'permanent employee' one
month's notice or wages for one month in lieu of notice is required when
the employment of a 'permanent employee' is to be tenninated. On the
other hand, no such notice or wages in lieu thereof is needed to be given
to any other category of employees. Additional obligation casts on the
employer is to record reasons for tennination of service in writing and c
communicate the same to the employee.
17. With this, we advert to the question posed above. In the first
blush, this question appears to be somewhat puzzling, as to how such a
question can arise because normally an employee who is given the
designation of 'permanent employee' should be treated as 'regular D
employee' as well. However, this puzzle vanishes when we examine
the standing orders, acts and rules in question under which designation
of 'permanent employee' is acquired. Fortunately for us, we are not
trading on a virgin territory.
18. This Court has already examine the issue in the context of E
these very standing orders of Madhya Pradesh. In the case of Mt1/1en<lrt1
L. Jain & Ors. v. ln<lore Development Aut/writy & Ors. 5, this Court
analyzed the Standard Standing Order in question and held that pennanent
classification does not amount to regularization, inasmuch as it was noted
that the matter relating to the recruitment is governed by a separate
statute, as can be seen from the following discussion therein: F
"28. The 1961 Act provides for classification of employees in five
categories. The 1973 Act, as noticed hereinbefore, clearly
mandates that all posts should be sanctioned by the State
Government and all appointments to the said cadre must be made
by the State Government alone. Even the appointments to the G
local cadre must be made by the Authority. The said provisions
were not complied with. It is accepted that no appointment letter
was issued in favour of the appellants. Had the appointments of
the appellants been made in terms of the provisions of the
' (2005) 1 sec 639 H
158 SUPREME COURT REPORTS [2016) 9 S.C.R.

A Adhiniyam and the Rules framed thereunder, the respondent
Authority was statutorily enjoined to make an offer of appointment
in writing which was to be accepted by the appellants herein.
Who made the appointments of the appellants to the project or
other works carried on by the Authority is not known. Whether
the person making an appointment had the requisite jurisdiction or
B
not is also not clear. We have noticed hereinbefore that in the
case of Om Prakash Mondloi, the CEO made an endorsement to
the effect that he may be tried in daily wages and should be
entrusted with the work of progress collection of ODA work.
The said order is not an "offer of appointment" by any sense of
c the term.
xxx xxx xxx
31. The Standing Orders governing the terms and conditions of
service must be read subject to the constitutional limitations
wherever applicable. Constitution being the suprema lex, shall
D prevail over all other statutes. The only provision as regards
recruitment of the employees is contained in Order 4 which merely
provides that the manager shall within a period of six months, lay
down the procedure for recruitment of employees and notify it on
the notice board on which Standing Orders are exhibited and shall
send copy thereof to the Labour Commissioner. The matter relating
E to recruitment is governed by the 1973 Act and the 1987 Rules. In
the absence ofany specific directions contained in the Schedule
appended to the Standing Orders, the statute and the statutory
rules applicable to the employees of the respondent shall prevail."
19. The issue came up again in the case of M.P. State Agro
F Industries Development Corporation Ltd. & Anr. v. S.C. Pandey6
wherein this Court held that only because a temporary employee has
completed 240 days of work, he would not be entitled to be regularized
in service. The Court also reiterated that the Standing Orders categorize
the nature of employment and do not classify individual employees in
G different post according to the hierarchy created in the Department and
thus proviso to Rule 2 does not apply to promotions or regularization in
higher grade~ We would like to reproduce following paras from the said
judgment:
"17. The question raised in this appeal is now covered by a decision
H • \2006) 2sec116
\
RAM NARESH RAWAT v. SRI ASHWINI RAY & ORS. 159
fA. K. SIKRI, J.l

of this Court in MP. Housing Board v. Mano} Shrivastava A
[(2006) 2 SCC 702] wherein this Court clearly opined that: {J)
when the conditions of service are governed by two statutes; one
relating to selection and appointment and the other relating to the
terms and conditions of service, an endeavour should be made to
give effect to both of the statutes; (2) a daily-wager does not hold
B
a post as he is not appointed in terms of the provisions of the Act
and the Rules framed thereunder and in that view of the matter
he does not derive any legal right; (3) only because an employee
had been working for more than 240 days that by itself would not
confer any legal right upon him to be regularised in service; ( 4) if
an appointment has been made~contrary to the provisions of the c
statute the same would be void and the effect thereof would be
that no legal right was derived by the employee by reason thereof.
. 18. The said decision applies on all fours to the facts of this case.
In Mahendra L. Jain [(2005) 1 SCC 639 : 2005 SCC (L&S)
154] this Court has categorically held that the Standing Orders D
governing the terms and conditions of service must be read subject
to the constitutional and statutory limitations for the purpose of
appointment both as a permanent employee or as a temporary
employee. An appointment to the post of a temporary employee
can be made where the work is essentially of temporary nature.
In a case where there existed a vacancy, the same was required E
to be filled up by resorting to the procedures known to law i.e.
upon fulfilling the constitutional requirements as also the provisions
contained in the 1976 Regulations. No finding of fact has been
arrived at that before the responqent was appointed, the
constitutional and statutory requirements were complied with. F
xx xx xx
22 ..Such appointments, in our opinion, having regard to the decisions
in Mahendra L. Jain [(2005) 1 SCC 639: 2005 SCC (L&S) 154]
and Mano} Shrivastava [(2006) 2 SCC 702] must be made in
accordance with. extant rules and regulations. It is also a well- G
settled legal position that only because a temporary employee has
completed 240 days of work, he would not be entitled to be
regularised in service. Otherwise also the legal position in this
behalf is clear as would appel!r from the decision of this Court
inDhampur Sugar Mills Ltd. v. Bhola Singh [(2005) 2 SCC
H
160 SUPREME COURT REPORTS [2016] 9 S.C.R.

A 470: 2005 SCC (L&S) 292] apart from Mahendra L. Jain [(2005)
1 sec 639: 2005 sec (L&S) 154]."
20. A direct judgment on the subject is State of M.P. & Ors. v.
La/it Kumar Verma 7 wherein it was held that a workman would be
entitled to classification as permanent or temporary employee if the
B conditions precedent are satisfied. It was held that the respondent was
not appointed against the clear vacancy, he was not appointed in a
permanent post or placed on probation. This Court, thus, held that
working on daily wages alone would not entitle him to the status of
permanent employee. Para 7 of this judgment needs to be looked into.
c "7. A workman, therefore, would be entitled to classification of
permanent or temporary employee, if the conditions precedent
therefor are satisfied. The respondent was not appointed against
a clear vacancy. He was not appointed in a permanent post or
placed on probation. He had also not been given a ticket of
permanent employee. Working on daily wages alone would not
·D
entitle him to the status of a permanent employee."
21. It is, thus, somewhat puzzling as to whether the employee, on
getting the designation of 'permanent employee' can be treated as
'regular' employee. This answer does not flow from the reading of the
Standing Orders Act and Rules. In common parlance, normally, a person
E who is known as 'permanent employee' would be treated as a regular
employee but it does not appear to be exactly that kind of situation in the
instant case when we find that merely after completing six months'
service an employee gets right to be treated as 'permanent employee'.
Moreover, this Court has, as would be noticed now, drawn a distinction
F between 'permanent employee' and 'regular employee'.
22. We may mention, at this stage that this aspect has come up
for consideration, in another context, in State ofMadhya Pradesh and
Others vs. Dilip Singh Patel and Others8 • That was a case where
similarly situated employees, who were classified as 'permanent
G employees' under the Standing Orders Act, were givenminimum of the
pay-scale attached to their posts. However, after the implementation of
Sixth Pay Commission, benefits thereof were not extended to these
employees. High Court heldthat they would be entitled to have their pay
fixed as per the revised scales in accordance with the recommendations
1
(2007) 1 sec 575
H 'Civil Appeal Nos. 8431-8432 of 2014; decided on August 27, 2014.
RAM NARESH RAWAT v. SRI ASHWINI RAY & ORS. 161
fA. K. SIKRI, J.l

of Sixth Pay Commission which were accepted qua regular employees. A
This Court, though, upheld the orders of the High Court giving them the
benefit of revision of pay-scale pertained to Sixth Pay Commission, but
at the same time made it clear that they would be entitled to minimum
salary and allowances as per the said revised scales and would not be
entitled to any increments. It was further held that such increments
B
would be admissible only after regularisation of their services which
regularisation was to take place as per the seniority list with due procedure.
Following passage from the said judgment, which captures the aforesaid
directions, is quoted hereunder:
"We have heard learned counsel for the parties and perused the
records. It appears that the respondents earlier moved before the
c
Administrative Tribunal, Gwalior by filing original applications such
asO.A. No. 648 of1995, O.A. No. 293 of1991 etc. In compliance
of the orders passed in such original applications, the Chief
Engineer, Yamuna Kachhar, Water Resources Department,
Gwalior (M.P.)( by orders issued in between April,. 2004 and June, D
2004 provided the mi8nimurn wages and allowances to the
respondents without increment as per the Schedule of the pay
scale from the date of the order of the Tribunal. It was further
ordered that the regularization of the daily wages employees shall
be made as per the seniority list with due procedure and the benefit:
'of increment and other benefits can only be -granted after the' .:. E
regularisation as per the Rules. It was ordered that the order of
the Court for benefit of minimum wages and allowances shall
be ...... .
From the aforesaid facts, it is clear that the respondents are
entitled for minimum wages and allowance as per the fixed F
Schedule of the pay scale but without any increment. In such
case, if the pay scale is revised from time to time including the
pay-scale as revised pursuant to Sixth Pay Commission, the
respondents will be entitled to minimum wages and allowance as
per the said revised scale without increment. Only after G
regularisation of their service, as per seniority and rules, they can
claim the benefit of increment and other benefits."
23. From the aforesaid, it follows that though a 'permanent
employee' has right to receive pay in the graded pay-scale, at the same
time, he would be getting only minimum of the said pay-scale with no H
i111f!
iii"I
162 SUPREME COURT REPORTS [2016] 9 S.C.R.
T I
'I

'
(2016) 9 S.C.R. 163
••
••'
II
A increments. It is only the regularisation in service which would entail
grant of increments etc. in the pay-scale.
C.I.T. & ANR. A
v.

II 24. In view of the aforesaid, we do not find any substance in the MIS YOKOGAWA INDIA LTD.
! contentions raised by the petitioners in these contempt petitions. We are
conscious of the fact that in some cases, on earlier occasions, the State (Civil Appeal No. 8498 of201J)
i B Government while fixing the pay scale, granted increments as well. B
!. DECEMBER 16, 2016
i
I
However, if some peisons are given the benefit wrongly, that cannot
[RANJAN GOGOi AND PRAFULLA C. PANT, JJ.]
fonn the basis of claiming the same relief. It is trite that right to equality
under Article 14 is not in negative terms (See Indian Council of l11come Tax Act, 1961: s.JOA (as amended) - Deduction or
A1:ricultural Researcfl & Anr. v. T.K. Suryanarayan & Ors. 9). Exemption - Held: The introduction of the word
'
'deduction' in s. l OA
.

C 25. These contempt petitions are, accordingly, dismissed. ,. by the amendment, clearly enunciates the legislative decision to alter c
its nature from one providing for exemption to one providing for
Nidhi Jain
Contempt Petitions dismissed. deductions - Though s.lOA, as amended, is a provision for
deduction, the stage of deduction would be while computing the
gross total income of the eligible undertaking under Chapter IV of
the Act and not at the stage of computation of the total income
under Chapter Vl D
Disposing of the appeals, the Court
HELD:l. The amendment of Section lOAoftheAct, by the
/1111 ~
Finance Act, 2000 with effect from 1.4.2001, specifically uses the
11 words 'deduction of profits and gains derived by an eligible unit E
lI! ...... from the total income of the assessee'. There are other
provisions of Sectio·n JOA, as amended, which could be suggestive
ii Ill
i
I ~ of the fact that by the amendment made by Finance Act, 2000,
Section• JOA had changed its colour from being an-exemption
section to a provision providing for deduction. Yet, Section JOA.
illll I i
'
I.
continued to remain in Chapter III of the Act which Chapter deals F
with incomes which do not form part of the total income. A look
i/11 at the Circulars issued from time to time shows a fair amount of
~
ambiguity therein as to the true nature and effect of .the
amendment. Specifically, Circular No. 7 dated 16.07.2013 as well
i as Circular No. 01/2013 dated 17.01.2013 which appear to be G
conflicting and contradictory to each other; in the former Circular
the provision, i.e., Section JOA is referred to as providing for
deductions whereas the later Circular uses the expression
'..
'"I
"exempti~n" while referring to the provisions of Sections JOA
I
and ton of the Act. Even the Income Tax Return Forms i.e.
'!1997) 6 sec 766 H
163

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