Holding

The Central Government must exercise its statutory power under Section 17(1) to revise the pay of Regional Rural Bank employees, and in doing so it is bound to maintain parity with the pay structure of nationalised commercial banks, but the award does not itself automatically effect future revisions.

Summary

The case arose from writ petitions under Article 32 seeking pay parity for employees of South Malabar Gramin Bank (a Regional Rural Bank) with employees of nationalised commercial banks. A National Industrial Tribunal, chaired by Justice S. Obul Reddi, awarded parity based on the 4th and 5th Bipartite Settlements and the award was implemented in 1987. Subsequent revisions of commercial‑bank pay scales under the 6th and 7th Bipartite Settlements were not extended to the Regional Rural Bank, leading the employees to approach the Kerala High Court, which ordered the revisions. The Union of India appealed, arguing that only the Central Government, under the second proviso of Section 17(1) of the Regional Rural Banks Act, 1976, could determine remuneration and that the tribunal’s award could not automatically trigger future revisions. The Supreme Court held that the Central Government must exercise its statutory power to revise pay, but it is bound to maintain parity with commercial‑bank employees and may be compelled by mandamus if it fails to act. Consequently, the Court directed the Government to determine the revised pay structure as of 1 April 2000, reflecting the 6th and 7th Bipartite Settlements, and dismissed the appeals.

Issues considered

The scope of the tribunal's award: whether it automatically obliges the Central Government to revise RRB pay whenever commercial‑bank pay is revised.
Whether the Central Government has exclusive authority under Section 17(1) of the Regional Rural Banks Act, 1976, to determine RRB remuneration.
Whether the financial condition of a Regional Rural Bank is a relevant factor in fixing its pay structure.
The legal meaning of "parity" in the context of the tribunal's award.

Legislation cited

Industrial Disputes Act, 1947s. 18
Regional Rural Banks Act, 1976s. 17(1)

Subjects

service lawpay parityRegional Rural Banks Actcentral government powertribunal awardbipartite settlementconstitutional equalitymandamus

Judgment

__
,

A SOUTH MALABAR GRAMIN BANK
v.
CO-ORDINATION COMMITTEE OF SOUTH MALABAR
GRAM IN BANK H1PLOYEES' UNION AND
SOUTH MALABAR GRAMIN BANK OFFICERS'
FEDERATION AND ORS.
B
JANUARY 31, 2001

(G.B. PATTANAIK AND B.N. AGRAWAL, JJ.]

C Service law

Regional Rural Banks Act, 1976-Section 17 (/) Proviso 2 -Pay
structure of Regional Rural Banks-Determination of-Claim of parity with
the pay strucfl/re of commercial banks-Tribunal awarding parity-Whether
D the pay would automatically get revised when pay of commercial bank
employees gets revised-Without determination by Central Government-
Held, pay structure could be revised only after the Central Government
exercises its power under the provisions of the Act and determines the same
-It would be duty bound to maintain the parity with the pay structure of
the employees of the commercial banks-Power conferred upon the Central
E Government, by the legislature cannot be taken aw0' by an award of a
tribunal.

P0' structure-Determination of-Whethe~ financial condition of the
employer bank relevant for determination-Held, no.

F Words & Phrases-'Parity'-Meaning of.

Writ petitions under Article 32 of the Constitution were filed by Gram in
Bank Workers' Association and All India Regional Rural Bank Employees'
Association claiming parity in their pay structure with the pay structure of
the employees of rural banks of nationalised commercial banks. To decide
G the issues in the matter, Tribunal was appointed. The Tribunal in its award
held that the officers and the employees of the Regional Rural Banks (RRBs)
were entitled to claim parity with the officers and other employees of the
commercial banks in the matter of pay scale, allowances and other benefits.
'
Government of India implemented the award vide its order dated
H 742
-
---Jr-
S.M.G BANK 1·. CO-ORD. COMM. OF S M.G. BANK EMPLOYEE

22.2.1991 and the employees were also extended the benefit of 4th and 5th
743

Bipartite Settlement on the basis of which the pay scale of commercial banks
A

has been determined. Thereafter pay structure of the employees of the
commercial banks got revised by 6th and 7th Bipartite Settlement, but there
was no corresponding revision of the pay structure of the employees of the
RRBs. The respondents therefore filed writ petition before the High Court,
claiming revision of their pay scale as per 6th and 7th Bipartite Settlement. B
Single Judge allowed the writ petition holding that since Government
of India, by extending 4th and 5th Bipartite Settlement in compliance of the
award, on principle having accepted the same, further consideration for
extending subsequent Bipartite Settlement was not required. Appeal to C
Division Bench wad dismissed.

In appeal to this Court, in an I.A. filed by the Central Government, it
was asserted that w.e.f. 1.4.2000 the pay scales of RRB employees would
become equal to that of their counterparts in commercial banks if they are
granted benefit of the 6th and 7th Bipartite Settlements. D
Appellants contended that under second proviso to Section 17(1) of the
Regional Rural Banks Act, 1976, it was only the Central Government who
would determine the remunerations, and the legislature having indicated
guidelines in this respect the question of giving effect to any Bipartite
Settlement could not be given effect to; and that the award of the Tribunal E
would tantamount to usurping the jurisdiction of the Central Government;
and that the expression parity would not mean the same pay structure and
therefore the question of revision would have to be re-determined by Central
Government; and that for determination of the pay structure financial
condition of the bank, which is not very affluent, had to be taken into F
consideration. Respondents contended that the Tribunal having held that the
employees of RRBs were entitled to claim parity with the employees of
commercial banks, the same must be maintained for all times to come; and
that the financial condition of the bank was not germane for determination of
the pay scale.
G
Dismissing the appeals, the Court

HELD: I.I. On the construction of the award and the provisions of the
second proviso to Section 17(1) of the Regional Rural Banks Act, 1976, the
revision of pay structure of the employees of the RRBs could be made only
after the Central Government exercises its power under the provisions of the H
744 SUPREME COURT REPORTS (2001] I S.C.R.

A Act and determines the same. If however, the Central Government fails to
discharge its obligation as in the case in hand, which would result in gross
disparity between the pay scales of the commercial banks and the Regional
Rural Bank, then a mandamus could be issued to the Central Government
for performance of its duties and the Central Government would be bound to
B perform its duties, taking into account all germane factors, including the
factor of the subsequent pay revision of the employees of the nationalised
commercial banks.1763-D-EI ~

1.2. The Legislature, while enacting a law on establishing and
incorporation of Regional Rural Bank, conferred power on the Central
C Government for determining lhe remuneration of the officers and employees
appointed by the Regional Rural Bank and that power conferred upon the
Central Government by the legislature cannot be taken away by an award of
a tribunal, constituted by the Central Government for redressing the
grievances of the employees, which were pending before a Court of law. Even
the prayer in the writ petition that ha·d filed in the Supreme Court was not for
D a declaration and mandamus that the employees of the Regional Rural Bank
would be entitled to the same scale of pay as and when the pay structure of
their counterparts in the nationalised commercial bank get revised. The
duties and powers conferred on Central Government under the Act could be
made nugatory by interpreting an award of a tribunal. The relevant findings
E of the tribunal does not in any manner even contemplate that the power and
jurisdiction of the Central Government under the second proviso to Sub-
section (1) of Section 17 would become redundant and the pay structure as
decided in 1987, pursuant to the award of the tribunal in respect of the
employees of the Regional Rural Bank would automatically get revised as
and when the pay structure of the employees of the commercial banks get :-if
F revised: 1762-G-H; ~6~~-'tl

1.3. In view of the fact that the Union of India in its Interlocutory
Application had already indicated that the employees of the RRBs will be
granted the new scales w.e.f. 01.04.2000 in line with scales granted to
commercial bank employees of equivalent level, the said determination shall
G be a determination under the second proviso to Sub-section (1) of Section 17
of the RRB Act and as such the salary of the employees of the RRB w.e.f. --.... •
01.04.2000 be determined accordingly. 1769-B-CI

t.4. In view of the definition of the expression "parity" and in the context
in which the tribunal came to hold that the employees of the Regional Rural
H Banks would be entitled to claim parity with the employees of the nationalised
S.M.G. BANK 1·. CO-ORD. COMM. OF S.~l.G. BANK EMPLOYEE 745

commercial banks, the Union Government, while exercising its power under A
J the proviso to Sub-section (I) of Section 17 would be guided by the conclusion
J-·
of the tribunal, and will not be justified in deciding the pay structure for the
employees of the Regional Rural Banks, which would bring in disparity
between the two groups of employees, even though there may be a slight
variation in the pay structure. (768-B-Cj
B
1.5. Though the contention of the appellant with regard to the power of
~
the Central Government to decide the pay structure of the employees of the
Regional Rural Banks is upheld, yet there cannot be any doubt that in so
deciding, the Central Government would be duty bound to maintain the parity
with the pay structure of the employees of the nationalised commercial banks
in the same sens·e and spirit as the Tribunal decided and as was given effect
c
to by the Union Government in the year 1987. (768-D-E(

-~
Concise Oxford Dictionary; law lexicon Dictionat)',' Webster
Comprehensive Dictionary; 'Words and Phrases' Volume 31,- referred to.
D
2. The contention that in determining the wage structure of the
employees of the RRBs, the financial condition would be a relevant factor,
cannot be sustained. The conclus.ion of the tribunal has become final, the
award in question not having been assailed and on the other hand having been
~ implemented. In the aforesaid premises, it is a futile attempt on the part of
the employer as well as the Union of India to re-agitate the dispute, which has E
already been resolved and has been given effect to. Under the Regional Rural

-- Bank Act, while conferring power upon the Central Government to determine
the pay structure of the employees of the Regional Rural Bank, there has
been no whisper that the financial condition of the bank or capacity of the
employer to pay, would be a germane consideration. (767-E-D(
~ F
Express Newspapers (Private) ltd and Anr. v. The Union of India and
Ors., (1959( SCR 12; Standard Vacuum Refining Co. of India v. Its workmen
and anr., (1961(3 SCR 536; The Hindustan Times ltd New Delhi v. Their
Workmen, (1964(1SCR234 and Jacob M. Puthuparambil and Ors. v. Kera/a
Water Authorily and Ors., (1991 (1 SCR 28, distinguished. G
__.;.... 3. Since the tribunal has devoted considerable time and has considered
all aspects of the dispute between the parties and since the notification of the
• Union Government in appointing the tribunal indicated that the decision of
the tribunal shall be final and binding, the conclusions arr~ved, at on different
questions raised by the tribunal, cannot be assailed indirectly by taking H
746 SUPREME COURT REPORTS [200 I] I S.C.R.

A recourse to a procedure either by the Union 'Government or by the Bank.
1768-F-GI

Food Corporation of India Workers' Union v. Food Corporation of
India and Ors., 119901 Suppl. SCC 29, referred to.

B !The court directed that for maintaining parity between the employees
of the commercial Banks a'nd the employees of the Regi9naf Rural Banks,
Union Government shall decide the question as to what would be the salary of
the employees of the Regional Rural Banks subsequent to the 6th Bipartite
Settlement having been gi\'en effect to in case of employees of the commercial
banks, and with effect from what date and the benefit flowing from such
C decision be given to the Regional Rural Banks employees.j j769-DI

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2218 of
1999.

From the Judgment and Order dated 25.11.98 of the Kerala High Court
D in W.A. No. 1547 of 1998.

With

C.A. No; 2219 of 1999 and T.P. (Civil) No. 403 of 1999.

H.N. Salve, P.P. Rao, S.K. Dholakia, Jitendra Sharma, D.A. Dave, D.D.
E Thakur, Rakesh Dwivedi (NP), G.L. Sanghi, T.V. Ratnam, C.L. Narasimhan, A.K.
Srivastava, Ms. Sushma Suri, R. Vasudevan, D.S. Chahar, Ms. Beena Pandey,
B.K. Pal, P.N. Jha, K.K. Rai, K.T. Anantharaman, C.K. Sasi, N. Manoj Kumar,
Rajiv Mehta, P.V. Dinesh, K.M.K. Nair, Ms. Malini Poduval, Yash Pal Dhingra
(N.P.), B.K. Sinha, B.K. Satija for the appearing parties.
F The Judgment of the Court was delivered by

PATTANAIK, J. South Malabar Gramin Bank and the Union of India,
have filed two civil appeals against the judgment of the Kerala High Court
dated 25.11.1998. The Division Bench of Kerala High Court by the impugned
G judgment, dismissed the appeals filed against the judgment of the learned
Single Judge and held that the Central Government having accepted the NIT
Award as well as the report of the Equation Committee and having given
effect to the 5th Bipartite Settlement between the employees of the sponsor
bank and the management, the employees and officers of the Regional Rural
Banks ipso facto would be entitled to the revision of their wages, as and when
H the wages of the sponsor bank employees get revised, pursuant to Bipartite
S.M.G. BANK v. CO-ORD COMM. OF S.M.G. BANK EMPLOYEE [PATTANAIK, .I.] 747

-- .Jr
Settlement and, therefore· the subsequent Bipartite Settlements, namely the A
6th and 7th Bipartite Settlements should be given effect to revise the pay
structure of the officers and employees of the Regional Rural Banks also. In
these appeals, apart from the respondents, who had filed the writ petitionI in
Kerala High Court, namely Co-ordination Committee of South Malabar Gratilin
Bank Employees Union, All India Regional Rural Bank Employees Association,
who had filed the writ petition in the Karnataka High Court had applied for B
intervention. All India Regional Rural Bank Officers Federation, who happen
...,,._ to be the petitioner in Transfer Petition No. 403/99, All India Gramin Bank
Workers Organisation, who had filed a writ petition in this Court, under
Article 32 wherein order has been passed that writ petition would come after
disposal of the civil appeals, had made their respective submissions through c
different counsel, all the respondents having supported the judgment of the
learned Single Judge of Kerala High Court, as upheld in appeal by the
¥' Division Bench. It may be noticed at this stage that the similar question had
been raised before the Calcutta High Court and a learned Single Judge of the
Calcutta High Court had dismissed those writ petitions by judgment dated
5.9.95 in C.0. No. 12653/95 and C.O. No.12869/95 and the appeal against the D
same before the Division Bench is pending. In the Karnataka High Court writ
petition No. 17905/97 had been filed by All India Regional Rural Bank
Employees' Association and that writ petition stood disposed of by judgment
~ dated 11th of November, 1998. The High Court allowed the writ petition,
quashed the appointment of the Committee as well as its Report dated 17th E
May. 1997 and issued directions to pay salary and allowances to all the
employees of Regional Rural Banks w.e.f. 1.11.1992 in accordance with the pay
and allowances and benefits implemented in respect of the employees of
Nationalised Commercial Banks as per the Memorandum of Settlement dated
14.2. I 995 and as per the wage revision given to those officers of the
·'::*: Nationalised Commercial Banks from 1.11.92 and 1.7 .1993. Against the said F
judgment, an appeal filed before the Division Bench is pending.

Writ Petitions under Article 32 of the Constitution had been filed in 1982
and 1994 in the Supreme Court, challenging the validity of Section I 7 of the
Regional Rural Banks Act, I976 (hereinafter referred to as 'the Act') on the
ground that the provision of Section 17 is ultra vires of Articles I4 and 16
G
- -+- of the Constitution. The writ petitions had been filed by All India Gramin Bank
Workers' Association and by All India Regional Rural Bank Employees'
Association. The employees of the Rural Banks had all along been making
a grievance that in .the matter of their pay structure, they are entitled to get
the same scale of pay, as is available to the employees of rural banks of H
748 SUPREME COURT REPORTS [2001) I S.C.R.

A different nationalised commercial banks. But since the Government did not·
meet their demand, they filed the writ petitions under Article 32, as stated
earlier. It was prayed in the writ petitions that Section 17 of the Regional Rural
-
Banks Act, be struck down, as being ultra vires of Articles 14 and 16( 1) of
the Constitution and writ in the nature of mandamus be issued directing the
Union oflndia to fix the emolcments of the Regional Rural Bank Employees
B in conformity with the judicial maxim of "Equal pay for equal work" and
"industry-cum-region formula" and bring about parity in emoluments between
the employees of Regional Rural Banks inter se and employees of the
Nationalised Commercial Banks. While these writ petitions were being heard
in the Supreme Court, the Government of India agreed to appoint a National
C Industrial Tribunal to decide the question relating to pay, salary, other
allowances and other benefits payable to the employees of the Regional Rural
Banks constituted under the Regional Rural Banks Act, 1976 and the counsel
for the petitioners also agreed that a reference may be made to the proposed
tribunal. This Court, therefore left all the contentions open and directed the
Central Government to refer the dispute to the tribunal, preferably to a retired
D Chief Justice of a High Court, who will pronounce its award as expeditiously
as possible. In terms of the aforesaid orders of this Court, the Central
Government appointed Justice S.Obul Reddi, retired Chief Justice of High
Court of Andhra Pradesh as Chairman of National Industrial Tribunal and
referred the disputes to the said tribunal. The Notification, appointing the
E tribunal stated that the decisions of the tribunal will be final and binding. The
tribunal thus appointed, passed an award after elaborate discussion of the
materials placed before it The ultimate directions of the tribunal were that
officers and employees of the Regional Rural Banks will be entitled to claim
parity with the officers and other employees of the sponsor banks in the
matter of pay scale, allowances and other benefits and the tribunal further
F directed that the aforesaid award should be given effect to with effect from
1st September, 1987. With regard to equation of posts and consequent fixation
of the new scales of pay, allowances and other benefits for officers and
employees of the Regional Rural Banks at par with the officers and other
employees of the comparable level in corresponding posts in sponsor banks
G and their fitment into the new scales of pay as are applicable to officers of
sponsor banks, the tribunal held that it is a matter which has to be decided
by the Central Government in consultation with such authorities as it may
consider necessary and the award, according to the tribunal will cover all the
existing Regional Rural Banks. By 1st of September. 1987, the employees of
the nationalised commercial banks were getting their pay scales on the basis
H of 5th Bipartite Settlement and by implementation of the award of Justice S.
t
S.M.G. BANK 1· CO-ORD. COMM. OF S.M.G. llANK EMPLOYEE [PATTANAIK, .I] 749

Obul Reddi, the employees of the Regional Rural Banks were also given the A

-- benefit of the said 5th Bipartite Settlement on the basis of which the pay
structure of the Nationalised Commercial Banks had been determined.
Thereafter, when pay structure of the employees of the Nationalised Commercial
0
Banks were further revised in 1992 and 1997 by means of6th and 7th Bipartite
Settlements, as there was no corresponding revision of the pay structure of
the employees of the Regional Rural Banks, the present litigation started
B
which had ultimately culminated in filing of these appeals, one by Union of
_,,.._ India and the other by the South Malabar Gramin Bank Management. Before
the High Court, the Bank took the stand that it is the Government of India,
who has to determine the salary of employees of Regional Rural Banks in
terms of Section I 7 of the Regional Rural Banks Act, 1976 and on the basis c
of the revised pay structure of the Nationalised Commercial Bank Employees,
pursuant to 6th and 7th Bipartite Settlements, the employees of the Regional
-...,.( Rural Banks ipso facto cannot get their pay structure changed. It was also
stated that in fact the Reserve Bank of India had appointed S.C. Mahalik
Committee to examine the pay structure of the employees of the Regional
Rural Banks and to suggest changes therein. The learned Single Judge of the D
High Court came to the conclusion that by the decision of the Government
of India dated 22nd February, 1991 implemented the award of Justice S. Obul
Reddi and thereby extended the benefits of 4th and 5th Bipartite Settlements
and on principle having accepted the same, further consideration by the
Government of India or any order by the Government of India is not necessary E
for extending the benefits of the subsequent Bipartite Settlements to the
employees and officers of the Regional Rural Banks and accordingly, the
impugned direction was issued, which was upheld in appeal by the Division
Bench.

~ Mr. P.P. Rao, the learned senioi' counsel, appearing for the South Malabar F
Gram in Bank, contended before us that under the provisions of the Act, more
particularly under second proviso to Section 17( 1) of the Act, it is only the
Central Government, who has been conferred with the power to determine the
remuneration of the officers and employees appointed by the Regional Rural
Bank and for determining such remuneration, the legislature has also indicated
G
the guidelines and this being the position the question of giving effect to any
Bipartite settlement arrived at between the employees of the Nationalised
-+ Commercial Banks and the Government ipso facto to the remuneration structure
of the officers and employees appointed by the Regional Rural Bank does not
arise. According to Mr. Rao, when the grievances and the anomalies that
existed prior to the appointment of Justice S. Obul Reddi Tribunal were H
750 SUPREME COURT REPORTS 12001] 1 S.C.R.

A focussed before the tribunal and the employees claimed the applicability of
''equal pay for equal work", the tribunal in no uncertain terms held that the
said principle cannot be made applicable and yet the tribunal held that the
employees of the Regional Rural Bank are entitled to claim parity with the pay
structure of the employees of the Nationalised Commercial Banks and in fact,
directed implementation of the pay structure of the employees of the
B Nationalised Commercial Banks, as it stood then in the year 1987, which had
been obtained on the basis of the 4th and 5th Bipartite Settlements and the
Government of India did implement the said award. But neither the award
anywhere indicated that all subsequent pay revision of the employees of the
Nationalised Commercial Banks would pro tanto be given effect to for
C determining the pay structure of the employees of the Regional Rural Banks,
nor such a direction could be given in law as that would be contrary to the
plain language of the second proviso to Sub-section (I) of Section 17 of the
Act and that would tantamount to usurping the jurisdiction of the Central "'-'-
Government. According to Mr. Rao, the expression "parity" would not
necessarily mean the same pay structure and therefore, the question of pay
D revision of the Regional Rural Bank employees will have to be re-determined
by the Central Government in accordance with the guidelines stipulated in the
second proviso to Sub-section (I) of Section 17 and that in making such
determination, the existing pay structure of the Nationalised Commercial Banks
on the basis of any subsequent Bipartite settlement would be undoubtedly
E a relevant factor for the Central Government in arriving at a conclusion.
Mr. Salve, the learned Solicitor General, appearing for the Union of India and
Mr. P.P. Rao, appearing for the Bank contended with vehemence that the
financial condition of the Regional Rural Banks is not that affluent so as to
enable the management to offer the pay structure, as is available to the
employees of the Nationalised Commercial Banks and in determining the pay
F structure of the employees, the financial capacity as well as the performance
of the Bank cannot be totally ignored, rather the same should also be a
germane factor in the matter of dete:rmination. According to Mr. Rao, the
revision of pay scales being a periodic exercise in all spheres of public
employment and the Act having conferred the power on the Union Government
G by virtue of the second proviso to Section 17( I) of the Regional Rural Banks
Act, 1976, it would be for the Central Government to exercise that power at
reasonable intervals, depending upon the circumstances of the case and then +-
come to a conclusion on consideration of all germane factors, as to what
would be the pay structure of the employees of the Regional Rural Banks.
Mr. Rao also submitted that the legislature having clearly indicated by use
H of the expression "shall have due regard to" in the second proviso to Stib-
S.M.G.IJANK r.CO-ORD COMM OFS.M.G.BANKEMPLOYEE[PATTANAIK.J.] 751

section (I) of Section 17, it would be obligatory for the Central Government A
to find out the pay scales of the employees of local authorities as well as the
--A-·
notified area of comparable level and status, and in this view of the matter,
if the contention of the employees is accepted, as has been accepted by the
High Court of Kerala, it would tantamount to going against the legislative
provision and such a construction is not permiss~ble. Mr. Rao, very strenuously
contend~d that the findings arrived at by the tribunal itself would indicate B
that the" tribunal never intended that as and when the pay structure of the
employees of the Nationalised Commercial Banks is changed on the basis of
any Bipartite Settlement, the same should ipso facto get reflected by revising
the pay structure of the employees of the Regional Rural Banks and in this
view of the matter, the High Court ofKerala committed serious error in issuing C
the impugned directions. Mr. Rao, the learned senior counsel further contended
that the Regional Rural Banks are separate statutory entities managed by
separate statutory Board of Directors subject to statutory controls by the
Reserve Bank of India and the Govt. of India. On the aforesaid premises on
principle, it cannot be held that the employees of the Regional Rural Banks D
are entitled to the same scales of pay, as are available to the employees of
the sponsored banks under bipartite settlements, without any further
determination by the Govt. of India or the Reserve Bank of India. According
to the learned counsel, the bipartite settlements ordinarily bind the employers
and employees who are parties to the same. Since the Regional Rural Banks
nor their employees were parties to such settlements, they cannot claim any E
benefit under the settlements in question. According to Mr. Rao, revision of
wage structure of the employees of the Regional Rural Banks will have to be
undertaken by the Govt. of India in accordance with the statutory provisions
contained in Section 17 of the Act and the Court can issue mandamus to the
Central Government for exercise of power under Section 17, ifthe said power
-,... has not been exercised and in this view of the matter, the Kerala High Court F
was wholly unjustified in directing the pay revision of the employees, on the
basis of bipartite settlements arrived at and given effect to, in respect of the
employees of the Nationalised Commercial Bank.

Mr. DD. Thakur, appearing for Respondents I to 3 in C.A. No. 2218- G
2219/99, contended before us that the facts leading to the appointment of
Justice Obul Reddi, as a National Tribunal to decide the dispute between the
employees and management of the Regional Rural Banks, unequivocally
indicates that the dispute related to pay, salary, other allowances and other
benefits payable to the employees of the Regional Rural Banks. The said
tribunal having considered the dispute raised and having determined the H
752 SUPREME COURT REPORTS [200 I J I S.C.R.

A same and that determination having been given effect to by allowing the pay
structure of the employees of the Nationalised Commerc:al Banks as it stood
on the date of the acceptance of the recommendations of the award of Justice
Obul Reddi, it is only logical that as and when the pay structure of the
employees of the Nationalised Commercial Banks get changed, the same must
be given effect to in respect of the employees of the Regional Rural Banks.
B According to Mr. Thakur, Obul Reddi Tribunal having held that the employees
of the Regional Rural Banks are entitled to claim parity with the employees
of the Nationalised Commercial Banks in the matter of pay structure, if there
is no pay revision of the employees of the Regional Rural Banks
notwithstanding such revision in case of employees of the Nationalised
C Commercial Banks, the decision of the tribunal to maintain parity would be
meaningless and the finality to the said decision of the tribunal becomes
meaningless. Consequently, even if the Central Government is required to
exercise its power under proviso to Sub-section( I) of Section 17, then the
same is a mere clerical act in implementation of the finally resolved dispute
by award of Justice Obul Reddi Tribunal and adjudged from this stand poin!,
D the High Court was fully justified in issuing the impugned direction. Mr.
Thakur also contended that the power of the Central Government under
proviso 2 to Sub-section( I) of Section 17 must be held to have got exhausted
on the date the Central Government ac1~epted the award of Justice Obul Reddi
and question of re-determining the remuneration of the employees of the
E Regional Rural Banks would not arise, since they are entitled to a parity with
the remuneration paid to the employees of the Nationalised Commercial Banks.
Mr. Thakur also urged that in giving effect to the award of the tribunal and
in maintaining the parity between the employees of the RRBs with the employees
of the Nationalised Commercial Banks, so far as their remuneration is concerned,
there can hardly be any justification to restrict the parity, only for a limited
F period proximate to the date of the award and not after that. It is contended
by Shri Thakur that the parity must be maintained for all times to come and
necessarily, therefore, as and when the remuneration of the employees of the
commercial banks is revised, pursuant to any settlement between the employees
and the management of such banks, the appropriate authority must give effect
G to the same, so far as the employees of the Regional Rural Banks are concerned.
Mr. Thakur urged that in fact by Government order dated 22nd February, 1991,
the Bipartite Settlement between the management and employees of the
Nationalised Commercial Banks, so far as their pay, allowances and other
benefits are concerned, was given effect to and extended to the employees/
officers of the Regional Rural Banks and therefore, there is no justification for
H not giving effect to the subsequent Bipartite Settlement between the employees
S.M.G. BANK v. CO-ORD. COMM. OF S.M G. BANK EMPLOYEE IPATTANAIK, l] 753

and management of Nationalised Commercial Banks on the basis of which the A
pay structure stood revised for the employees of the commercial banks. Mi.
Thakur also contended that the financial capacity as well as the performance
of the Regional Rural Banks had been placed before Justice Obul Reddi
Tribunal, but the tribunal positively came to the conclusion that the said
financial capacity cannot be a germane factor in determining the pay structure B
of the employees of the Regional Rural Banks and then decided that there
should be a parity between the employees of the Nationalised Commercial
Banks and the employees of the Regional Rural Banks. This being the position,
it is futile for the employer-management as well as the Govt. of India to
contend that the pay structure of the employees of the Regional Rural Banks
could be revised only after due consideration by the Govt. of India under C
proviso to Sub-section( I) of Section 17 and after passing of any order
thereunder. According to Mr. Thakur, such view of the matter would keep the
dispute pending notwithstanding the resolve of the dispute by a tribunal
appointed by the Govt. of India itself and notwithstanding the fact that the
Government of India and the employer-management did accept the
recommendations of the tribunal and gave effect to the said decision. D
Mr. S.K. Dholakia, the learned senior counsel, appearing for the
petitioners in Transfer Petition No. 403199, filed on behalf of All India Regional
Rural Bank Officers' Federation, contended that the lack of funds or resources
of the employer-Regional Rural Banks will not in any way affect the E
constitutional rights of the employees of such rural banks enshrined under
Article 14 of the Constitution of India. According to Mr. Dholakia, the
detennination of Obul Reddi Tribunal to maintain parity between the employees
of the commercial banks and the employees of the Regional Rural Banks is
nothing but a decision to give equal treatment to the employees of both the
organisations and, therefore, a11y treatment by the employer to the employees F
of the Regional Rural Banks which make them unequal with the employees of
the Nationalised Commercial Banks would violate the provisions of Article 14
and would be discriminatory in nature. Mr. Dholakia also contended that the
object of constituting Regional Rural Banks under the statute was not profit
making but to develop rural economy and therefore, the contention of Mr. Rao G
tha! the financial resources is a vital consideration, cannot be accepted.
According to Mr. Dholakia, the award of Obul Reddi on the basis of 4th and
5th Bipartite Settlements entered into between the employees and employer
of the Nationalised Commercial Banks is merely an index for maintaining parity
and that being the position as and when subsequent bipartite settlements are
entered into by the employees and the employer of the commercial banks, the H
754 SUPREME COURT REPORTS [2001] J S.C.R.

A same must be give·n effect to in determining the pay structure of the employees ._,.._
of the Regional Rural Banks, so that parity could be maintained. In refuting
the dismal picture of the Regional Rural Banks placed by the learned Solicitor
General, Mr. Dholakia placed before us the report of the Reserve Bank of India
which according to him gives a contrary picture.

B Mr. D.A. Dave, the learned senior counsel appearing for All India
Regional Rural Bank Employees' Association-intervenor, submitted that the
failure of the Nationalised Commercial Banks and the State Bank of India in
fulfilling their obligation in the field of rural banking resulted in the
establishment of the Regional Rural Banks. Such Regional Rural Banks have
C in fact taken over the function of the rural branches of the Nationalised
Commercial Banks. The Parliament enacted the Act for constitution of Regional
Rural Banks to augment the rural economy. When the employees of such ·"""
Regional Rural Banks had approached this Court by filing petition under
Article 32, voicing a grievance with regard to their salary structure and
remuneration and claiming 'equal pay for equal work' and 'industry-cum ..
D region formula' basis and wanted a writ of mandamus to the Union of India,
the Central Government itself chose to appoint a tribunal, who was none else
than a Chief Justice of a High Court and the Government itself decided that
the decision of such tribunal would be final and binding on the parties, with
the obvious object that the controversies would be resolved once for all. This
E is apparent from para 1.01 of the award of Justice Obul Reddi. The very nature
of the dispute was such that it cannot be limited to any specified period and
on the other hand, it must be for all times to come. This being the position
and the tribunal having considered the grievances of the parties and the
respective stand of the parties for over a period of two and a half years and
having given its findings and holding that the employees of the Regional
F Rural Banks are entitled to claim parity with the employees of the Nationalised
Commercial Banks, it would be a travesty of justice, if such parity is maintained
on the date of acceptance of the award and not thereafter. According to Mr.
Dave, having regard to the findings arrived at by Justice Obul Reddi, and the
ultimate conclusion that the employees of the Regional Rural Banks are
G entitled to claim parity with the employees of the Nationalised Commercial
Banks w.e.f. 1.9.1987 onwards, the date on which the Supreme Court disposed
of the writ petition by appointing the tribunal and the Central Government
having accepted the same and giving effect to the same after appointing the
Equation Committee for equation of posts and thereafter, extending the benefits
of the pay structure which the Nationalised Commercial Banks had received
H under the 4th and 5th bipartite settlements to the Regional Rural Banks
S.M.G. BANK v. CO-ORD. COMM. OF S.M.G. BANK EMPLOYEE(PATTANAIK, J] 755

employees, there cannot be any manner of doubt that the employees of the A
· Regional Rural Banks would be entitled to the effect of the 6th and the 7th
bipartite settlements arrived at between the employees and the employer of
the Nationalised Commercial Banks and the High Court of Kerala rightly
allowed the relief sought for. According to Mr. Dave, that an award of an
industrial tribunal and the obligations arising out of an award remains binding B
and continue to be binding on the parties which can be replaced only by a
.-r subsequent award or a settlement and that being the position, there is no
other alternative for the management of the Regional Rural Banks as well as
the Government of India to give effect to the 6th and 7th bipartite settlements
on the basis of which the pay structure of the employees of the Nationalised
Commercial Banks stood revised to maintain the parity in terms of the award C
of Justice Obul Reddi and such decision of the tribunal( Justice Obul Reddi)
cannot be whittled down by an executive order of the Central Government.
According to Mr. Dave, the claim of the Union Government, as reflected
through the submissions of the learned Solicitor General on the basis of
financial constraint and current economic policy is nothing but a colourable
exercise of power and is not available to be urged in view of the findings of D
Obul Reddi Tribunal. In fact the tribunal itself considered the alleged ground
of incapacity to pay and negatived the same while granting parity in the
matter of emoluments between the employees of the Regional Rural Banks
and the employees of the Nationalised Commercial Banks. Any method or
contraviance, according to Mr. Dave for non-maintaining the parity at any E
point of time would grossly violate the decision of the tribunal and as such
cannot be sustained by this Court. Mr. Dave also contended that the dispute
having been resolved by an adjudication of a tribunal, the issue may not be
allowed to be re-opened, unless there is material change in the circumstances
~ and in fact there has been no change in the circumstances. Mr. Dave contends
~ F
that the dictionary meaning of the word "parity" being equality, it is unthinkable
that the so-called parity which had been maintained w.e.f. 1.9.87 would be
given a go-bye by taking recourse to the exercise of power under proviso 2
to Sub-section( I) of Section 17 and even if such power exists, then that power
has to be exucised in effectuating the award and in not contravening the
award. ln this view of the matter the judgment of the Kerala High Court, G
~- according to Mr. Dave, need not be interfered with and the pay structure as
is available to the employees of the Nationalised Commercial Banks could be
given to the employees of the Regional Rural Banks. According to Mr. Dave,
non-implementation of the benefits which the employees of the Nationalised
Commercial Banks have received on the basis of the subsequent bipartite
settlement to the employees of the Regional Rural Banks, has brought about H
756 SUPREME COURT REPORTS [200 I] I S.C.R.

A gross disparity and this is contrary to the letter and the spirit of the award ,_
itself. On the language of the second proviso to Sub-section (I) of Section
17 and the expression "having regard to" used therein, Mr. Dave contends
that it merely indicates that the appropriate authority should look into those
conditions but in the present case, a national tribunal having resolved the
dispute by a long drawn process and having adjudicated the same by clearly
B indicating that the pay structure of the employees of the State Government
and the local authorities, could not be a germane factor, the same cannot be -.....
resorted to at this length of time for nullifying the award which must be held
to be binding between the parties.

c Mr. G.L. Sanghi, the learned senior counsel who was permitted to make
his submissions, since a writ petition filed under Article 32 is pending before
this Court, on behalf of All India Gramin Bank Workers' Organisation and All ~
1)
India Gramin Bank Officers' Organisation, contended that the declaration
made in award in paragraph 4.425 by virtue of a judicial adjudication, has
formed a part of the conditions of Service of the employees of the Regional
D Rural Banks and, therefore that cannot be tinkered with by any executive
order. The learned counsel further urged that by taking recourse to the power
conferred on the Central Government under the second proviso to Sub-
section (I) of Section 17, it would not be open to over ride the award and,
therefore, as a necessary consequence, any revision of pay structure of the
E employees of the Nationalised Commercial Banks has to be given effect to so
far as the employees of the Regional Rural Banks are concerned to maintain
the so-called parity as determined by the tribunal of Justice Obul Reddi.
According to Mr. Sanghi, the very idea of the employer to appoint a committee
~
for re-determination of the pay structure of the employees of the Regional
Rural Banks is nothing but an attempt to get ~ver the effect of the grant of ~
F parity under the Obul Reddi Tribunal and that should not be permitted by any
Court of law. Refuting the submissions of Mr. P.P. Rao, appearing for the
management of the Regional Rural Banks and the learned Solicitor General for
the Union of India with regard to the performance of the Regional Rural
Banks, Mr. Sanghi placed before us the letter of the Minister of State (Finance)
to a Member of Parliament, showing deep appreciation for the role played by
G .;....
the Regional Rural Banks in all its twelve thousand branches in the country
at that point of time and Justice Obul Reddi Tribunal did take note of the said
letter and referred to in paragraph 4.239 of the award itself. According to Mr.
Sanghi, the High Court of Kerala in issuing mandamus and the learned Single
Judge of the Karnataka High Court in striking down the appointment of a
H fresh Committee, have taken the correct decision and as such the Civil Appeals
S.M.G. BANK ,.. CO-ORD. COMM. OF S.M.G. BANK EMPLOYEE [PATTANAIK, .I.] 757

.-1t' filed by the South Malabar Gramin Bank should be dismissed . A
Mr. Jitendra Shanna, the learned senior counsel whose application for
intervention has been allowed, appearing for All India Gramin Bank Employees'
Association, contended thaMhe bipartite settlement between the management
and the employees of the Nationalised Commercial Banks are settlements
relating to entire banking industry, such settlements are entered into under B
¥ Section 18 of the Industrial Disputes Act. Having regard to the manner in
which the dispute between the management and the employees of the Regional
Rural Banks arose and having regard to the manner in which the said dispute
stood referred to the National Industrial Tribunal and a retired Chief Justice
~
of a High Court was appointed as such tribunal and the said tribunal having c
•, resolved the dispute by coming to the conclusion that the empioyees of the
_,.. Regional Rural Banks are entitled to the maintenance of parity with the
employees of the Nationalised Commercial Banks, any change in the pay·
structure of the employees of the Nationalised Commercial Banks must be
given effect to so far as the employees of the Regional Rural Banks are
concerned. The learned counsel placed reliance on a decision of this Court D
in Food Corporation of India Workers' Union v. Food Corporation of India
and Ors., [ 1990] Supp. SCC 296. According to Mr. Shanna the High Court of
Kerala, both the learned Single Judge as well as the Division Bench took the
~
right view and that need not be interfered with.
E
Before formulating the questions to be considered and answered in the
anvil of the submissions ,_made by counsel for the parties, it would be
appropriate for us to notice the salient features of the award of Justice Obul
Reddi, inasmuch as the bone of contention of the parties depend upon the
~ same. The two writ petitions which had been filed in this Court under Article
32, sought for a parity with the employees of the Nationalised Commercial F
Banks in respect of pay, salary, other allowances and other benefits. The
Court instead of examining the same and answering the same, left the matter
to be heard and decided by a tribunal and the Central Government agreed to
appoint a National Industrial Tribunal to decide the question relating to pay,
salary, other allowances and other benefits payable to the employees of the
G
Regional Rural Banks constituted under the Regional Rural Banks Act, 1976.
-+- In the petition filed under Article 32, the validity of Section 17 of the Regional
Rural Banks Act had also been assailed on the ground that the said provision
·is ultra vires of Articles 14 and 16 of the Constitution. The Central Government
had issued a circular dated 26. I I .75, laying down the scales of pay and
allowances applicable to the officers and employees to be appointed by the H
758 SUPREME COURT REPORTS [2001] l S.C.R

A Regional Rural Banks. The Finance Ministry, Economic Affairs, Banking
Division, had issued a communication on 29th of April, 1980 to all the Chairmen
of the Regional Rural Banks in the country, deciding the pay-scales of the
employees of the said Regional Rural Banks in exercise of power under the
second proviso to Sub-section( I) of Section 17 of the Regional Rural Banks
B Act. The Government of India issued another similar communication by letter
dated 5th ofFebruary, 1981. The grievarices of the employees of the Regional
Rural Banks was taken up on the Floor of the Parliament by some Members
of the Parliament and Professor Madhu Dandavate had brought a private Bill
to amend Section 17 of the Act. The Employees' Association and the Finance
Ministry had several discussions on the problem, but yet as the employees
C were not satisfied with the decision of the Union Gov~nment, they approached
the Court under Article 32. The Union Government as well as the Reserve
Bank of India were averse to give parity in the matter of pay scales and
allowances between the employees of the Regional Rural Banks and the
employees of the Nationalised Commercial Banks. The tribunal of Justice Obul
Reddi summarised the pleadings in chapter I, indicated the evidence in chapter
D II and datas, particulars and information furnished in response to his
questionnaire by the Chairman of the RRBs, sponsor banks and State
Governments in Chapter III and formulated the points for determination in '
Chapter IV. The tribunal then went on examining the rival stand point and
answered the questions posed. The tribunal came to hold:
E
"Indisputably, Commercial Banks and Regional Rural Banks carry on
similar banking business and participate in the development of rural
economy as partners in the rural development, acting as
instrumentalities of the State in accordance with the Directive Principles
of the Constitution. Establishment of RRBs is to fill in the vacuum in
F the economic development of the rural sector. It is a national objective
in the direction of ushering in a welfare state. That the RRBs have
brought about a socio-economic reformation in the lives of the small
farmers, traders, agricultural labourers, artisans, SC/STs and weaker
sections is borne out by the evidence on record."
G
On the question as to the scope and ambit of Section 17 of the Regional
Rural Banks Act and whether proviso 2 to Section 17( I) of the Act offends
Articles 14 and 16 in the context of Article 39(d) of the Constitution, the
tribunal held that the employees of the Regional Rural Banks form a separate
class under a separate statute and so are the employees of the Nationalised
H Commercial Banks. Since the Regional Rural Banks have been constituted
S.M.G. BANK '"CO-ORO. COMM. OF S.M.G. BANK EMPLOYEE [PATTANAIK; J.] 759

-y under different statute, the officers and other employees of the Regional Rural A
Banks function in accordance with the requirements of that Statute and they
thus fonn a separate class by themselves. The 2nd proviso to Section 17(1)
is, therefore, not hit by Articles 14 and. 16 of the Constitution. The 2nd
proviso to Section 17( 1) does not take away or limit the jurisdiction in view
of the order of the Supreme Court to decide the question relating to pay,
salary, other allowances and other benefits on the basis of the evidence on B
4'" record, as the proviso is adaptable and supple, so as to extend its application
to the facts and circumstances of the case. The tribunal found that the wage
structure should be such that it should not be unduly below the paying
capacity of the Bank at the top of the class nor unduly above the paying
capacity of the bank at the bottom of the class, which is reasonably well- c
managed, The tribunal further held :
--F "The employees of the RRBs and the employees of rural branches of
commercial banks have a common object, common purpose, common
interest and community of action. Their duties and functions are
similar and they perform the duties in concerted manner for the D
economic bettermel1t of the weaker section of the society, thus
contributing their own share towafds the· achievement of the national
objectives as envisaged in the preamble of the Constitution and the
Directive Principles of the State Policy. The fact that employers are
different, should not obsess one's mind in applying principles of
equity and justice.'; E

The tribunal further held:

"It is crystal clear that the equation of posts under the second proviso
to Section 17( I) of RRB Act, has not been made taking into
consideration or account the functions and duties of a B.D.O. or other F
employees of State Government and duties of the RRB employees.
The most relevant factor to be considered while equating posts is the
similarity of functions and duties in a comparable department or
industry. Without regard to the apparent dissimilarities, the Central
Government erred in the matter of equation of the posts. The pay
G
--+ structure detennined should have nexus or relation to not only the
duties and functions of the Office one holds, but it should also be
justly comparable with the posts in a cognate undertaking or sister
industry. Equations are always made with reference to the qualifications,
level of the post, nature, functions, duties and the position vis-a-vis
similar posts with which they are equated." H
760 SUPREME COURT REPORTS [2001) I S.C.R.

A Repelling the plea of the employer that financial viability should be the
criterion in deciding the wage structure of the RRB employees, the learned
tribunal held:

"The RRBs have brought about socio-economic revolution in the
hitherto-unbanked under-developed priority sector by ameliorating
B the poverty conditions of the under-privileged, SC/STs and other
weaker sections of the society. That is the paramount objective of the
Act. It should not be lost sight of the fact that the total losses
suffered by rural branches of commercial banks is undeniably more
than the total losses suffered by the RRBs. But the losses of the rural
c branches of commercial banks are made up by the other branches in
semi-urban and urban areas and the RRBs unfortunately for them
cannot transfer the losses to their sponsor banks. The object and
purpose is the economic development of the target groups and the
achievements in that field certaiilly outweigh considerations of viability
or losses. When the losses are on the increase even in the rural
D branches of commercial banks, the RRBs alone cannot be sign led out
to bear the cross. I can find no better authority than the Chairman of
the NABADRD who categorically stated that the "ghost of
profitability" should not haunt us in judging the performance of the
RRBs. Establishment ofRRBs is a national commitment in the direction
E of ushering in a welfare State and that is a mandate of the Constitution.
It is in fulfillment of hopes and aspirations aroused in the preamble
and the Directive Principles of the Constitution that the RRB Act has
been enacted and the performance of such institutions in furtherance
of those principles, shall not be judged from the curved angle of
viability or from the point of view of a private money lender or
F businessman or from mere profit and loss statement."

It also came to the conclusion that there is no justification in equating the
post of a Branch Manager and a Field Supervisor as of a comparable level
with the duties of Block Development Officer or Extension Officer. It is not
G necessary to quote the other findings of the tribunal in its award. Be it be
stated that pursuant to the decision of the award and in accordance with the
directions of the tribunal that the award should be given effect to with effect
from 1.9.1987, the RRB employees got the benefit of the pay-scales and other
allowances as was prevalent in the year 1987 for the employees of the
Nationalised Commercial Banks. Bearing in mind the nature of dispute that
H was referred for the adjudication of the tribunal and the findings arrived at,
S.M.G. BANK 1•. CO-ORD. COMM. OF S.M.G. BANK EMPLOYEE [PATTANAIK, J] 761

-
h

we will have to answer the contentions raised in these appeals. But before A
-....,,- embarking upon the said exercise, it would be relevant to notice that the
Union of India itself had filed an Interlocutory Application in this Court for
certain directions and it was averred therein:

"I I. That the Central Government is very much alive to the need of
wage revision in RRBs and is of the opinion that a wage revision in B
RRBs is long overdue. The setting up of Mahalik Committee in
November, 1996 and suo-moto filing of an alternative package to this
Hon 'ble Court in May, 1999 is the testimony to the concern and
responsibility felt by the Central Government. That it was in this
context that discussions were held with the Unions to break the
stalemate. Based on the discussions held with the Unions and keeping
c
in mind the various factors affecting the wage revision as stated
above, the Central Government now proposes the following package
in the larger interest of RRBs, their employees and depositors.

(i) As a gesture of goodwill and keeping in mind the genuineness of D
the demand of the RRB employees, these employees may be granted
new scales w.e.f. 01.4.2000 in the line with scales granted to commercial
bank employees of equivalent level. For determination of equivalent
l{ level, the recommendations of Equation Committee shall be taken as
the basis. This is going to be a step further as up till now RRB
employees have been demanding new scales as per 6th Bipartite and E
Officers' wage revision settlement only. The new basic pay of each
RRB employee as on 01.4.2000 would be determined by notionally
granting the benefit of 6th and 7th bipartite settlement and officers'
wage revision w.e.f. 01.11.1992 and 01.11.1997 respectively. The fonnula
~ for fitment of salary in various scales may also remain the same as was F
adopted for commercial bank employees. Thus, as on 01.4.2000, the
pay scales of the RRB employees would become equal to that of their
counterparts in commercial banks."

In paragraph (14) of the said application, it was averred thus:
G
"(14). That the above proposal of the Central Government is intended
-+ to help in promoting industrial peace and bring litigation in this regard
to an end. These proposals are being advanced without prejudice to
the rights and contentions of the Government in the appeal. The
Central Government proposes to determine under Second Proviso to
Section 17 of the RRBs Act, the remuneration of officers and other H
762 , SUPREME COURT REPORTS [200 I] I S.C.R.

A employees appointed by the Regional Rural Banks in terms of theJe
proposals shall be valid till the Central Government revise the
remuneration of pfficers and other employees ofRRBs afresh in exercise
-
of its powers under the said proviso."

The aforesaid assertion unequivocally states that w.e.f. 1.4.2000, the pay
B . scales of RRB employees would become equal to that of their counterparts
in commercial banks by granting them benefit of the 6th and .7th bipartite
settlements on the basis of which there had been revision of wage structure
of the employees of the commercial banks on I.I 1.92andI.I1.1997.

On the contentions· raised by the learned counsel for the parties, the
C first question that arises for consideration is whether the award given by
Justice Obul Reddi and accepted by the State Government and given effect
to, can b~ construed to mean that the pay scales and other emoluments of
the Regional Rural Bank employees would stand automatically altered, as and
when the pay structure of the employees of the commercial banks get revised,
D on the basis of the so-called bipartite settlement between the employer and
the employees of those commercial banks? The award no where indicated this
co1:1rse of actiOn nor could it have' indicated so, in vjew of the provisions of
the Regional Rural Banks Act, conferring specific power on the Central
Government to decide the pay structure of the employees of the Regional
Rural Banks. The second proviso to Section I 7(1) of the Regional Rural Banks
E Act, 1976 reads thus:

':Provided further that the remuneration of officers and other employees
appointed by a Regional Rural Bank shall be such as may be
determined by the Central Government,· and, in determining such
· remuneration, the Central Government shall have due regard to the
F ·salary structure of the employ~es (}f the State Government and the
local authorities of comparable level and status in the notified area."

The Legislature, therefore, while enacting a Jaw for establishment and
incorporation of Regional Rural Banks, conferred power on the Central
G Government for determining the remuneration of the officers and employees
·appointed by the Regional Rural Banks and that power conferred upon the
Central Government by the legislature cannot be taken away by an award of ...-+-;..
· . a tribunal, constituted by the Central Government for redressing the grievances
of the employees, which were pending before a Court of Jaw. Even the prayer
in the writ petition that had been filed in the Supreme Court was not for a
H declaration and mandamus that the employees of the· R~gional Rural Banks
S.M.G. BANK v. CO-ORD. COMM. OF S-.M.G. BANK EMPLOYEE [PATTANAIK, J.] 763

-
--..,,--
wou Id be entitled to the ·same scale of pay as and when the pay structure of A
their counterparts in the Nationalised Commercial Banks get revised. To
construe the award of Justice Obul Reddi in the manner as was contended
by the counsel, appearing for the employees of the bank would tantamount
to making the second proviso to Section 17(1) of the Act nugatory, redundant
and otiose and by no stretch of imagination the duties and powers conferred B
on the Central Government under the Act could be made nugatory by
interpreting an award of a tribunal. The disputes raised before the Court being
disputes on several questions of facts, the Court and the Union Government
thought it fit to be adjudicated upon by a tribunal and the tribunal on
discussion on materials, gave its award. The relevant findings of the tribunal
which we have quoted earlier in this judgment does not in any manner even C
contemplate that the power and jurisdiction of the Central Government under
the second proviso to Sub-section(!) of Section 17 would become redundant
and the pay structure as decided in 1987, pursuant to the award of the tribunal
in respect of the employees of the Regional Rural Banks would automatically
get revised as and when the pay structure of the employees of the commercial
banks get revisect. On the construction of the award of Justice Obul Reddi D
and the provisions of the second proviso to Section 17( 1) of the Act, we have
no hesitation to hold that the revision of pay structure of the employees of
the Regional Rural Banks could be made, only after the Central Government
·~ exercises its power under the provisions of the Act and determines the same.
If however, the Central Government fails to discharge its obligation as in the E
case in hand, which would result in gross disparity between the pay-scales
of the commercial banks and the Regional Rural Banks, then a mandamus
could be issued to the Central Government for performance of its duties and
the Central Government would be bound to perform its duties, taking into
account all germane factors, including the factor of the subsequent pay
revision of the employees of the Nationalised Commercial Banks. F

The next question that arises for consideration is whether the financial
condition of the Regional Rural Banks could be a vital consideration for the
Central Government in determining the pay structure of the employees of the
Regional Rural Banks? Both Mr. Rao, appearing for the bank as well as Mr. G
Salve, appearing for the Union of India had vehemently urged before us that
the financial condition of the Regional Rural Banks is such that it would not
be possible for the Union of India to give them the pay structure of the
employees of the Nationalised Commercial Banks. In support of this contention,
several decisions of this Court had been placed before us. In Express
Newspapers (Private) Ltd., and Anr. v. The Union of India and Ors., [1959] H
764 SUPREME COURT REPORTS [200 I) I S.C.R.

A S.C.R. Page 12, while deciding the Constitutional validity of the Working
Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955
and the legality of the decision of the Wage Board constituted thereunder
purporting to act under Section 9 of the Act, no doubt construed Section 9( I)
of the said Act and held that it was incumbent on the Wage Board to take
B into consideration the capacity of the newspaper industry to pay the rates
and scales of wages recommended by it. The observation of this Court was
in the context of construing Section 9(1) of the Act and the language used
therein, which indicated the prevalent rate of wages for comparable
employment. Under the Regional Rural Banks Act, while conferring power
u~on the Central Government to determine the pay structure of the employees
C of the Regional Rural Banks, there has been no whisper that the financial
condition of the bank or capacity of the employer to pay, would be a germane
consideration. The aforesaid decision, therefore is of no assistance to the
appellant. In the case of Standard Vacuum Refining Co. of India v. Its
Workmen and Anr., [1961] 3 S.C.R. Page 536, the question for consideration
was whether the employees were entitled to Bonus? In that case the Industrial
D Tribunal, in a dispute held that the wages paid were fair but there was still
a gap between the actual wage and the living wage and as such awarded
bonus equivalent to five months' basic wage. When that award was assailed
before the Supreme Court and a plea was raised that no bonus could be
payable when the employees are being paid the living wage standard, the
E Court had observed while proceeding to examine the merits of the contention
that the employees are being paid a living wage:

"Considerations of the financial position of the employer and the
state of national economy have their say, and the requirements of a
workman living in a civilised and progressive society also come to be
F recognised."

But the aforesaid observations bereft of the context in which the observations
have been made, will be of no universal application and at any time would
have no application to the case in hand, where the aforesaid contention raised
G on behalf of the employer was considered and negatived by the tribunal,
appointed to decide the dispute between the parties and that award of the
tribunal instead of being challenged, has already been implemented. In The
Hindustan Times ltd, New Delhi v. Their Workmen. [ 1964] I S.C.R. 2J4, again
an award of an Industrial Tribunal was subject matter of challenge before the
Court. The dispute before the tribunal was in relation to the pay, dearness
H allowance, adjustments, leave rules, gratuity as well as the working hours and
S.M.G. BANK v. CO-ORD. COMM. OF S.M.G. BANK EMPLOYEE [PATTANAIK, J] 765

age of retirement. In considering the legality of the award and after referring A
-..,,.- to the earlier decision of the Court in Standard Vacuum Refining Co., which
we have already noticed, this Court had observed the difference between the
minimum basic wage and the fair wage and above the same, the living wage
and it is in that context, the Court, no doubt had made the observations that
their exist need of considering the problem on an industry-cum-region basis
and on giving careful consideration to the ability of the industry to pay. But
B
the aforesaid observations cannot be pressed into service in the case in hand,
where the award of Justice Obul Reddi Tribunal, unhesitatingly negatived the
aforesaid stand of the employer and came to the positive conclusion after
elaborate discussions of the purpose for which these banks were established
and how a case of very special nature concerning the employees of a banking c
industry, claiming parity with the salary structure of the employees of a sister
banking industry is being considered and ultimately, the tribunal had observed
~ that the Act has been enacted in fulfillment of the hopes and aspirations
llio aroused in the preamble and the Directive Principles of the Constitution and,
therefore, the performance of such institutions in furtherance of those principles
is not required to be judged from the curved angle of viability or from the D
point of view of a private money lender or businessman or from mere profit
and loss statement. At any rate, the aforesaid decision of the tribunal in the
form of an award was implemented by the Central Government and, therefore,
having implemented the same, it would not be permissible for the employer-
bank or the Union of India to take such a plea in the present proceedings. E
In Jacob M Puthuparambil and Ors. v. Kera/a Water Authority and Ors.,
[1991] I S.C.C. 28, the Court was considering the regularisation of employees
serving for a reasonably long period having requisite qualification for the job.
While indicating what the preamble of the Constitution obligates the State to
secure to all citizens and while stating how the Directive Principles of State
Policy engrafted in Part IV of the Constitution, reflect the hopes and aspirations F
of the people, the Court had observed:

"This part, therefore, mandates that the State shall strive to promote
the welfare of the people by minimising the inequalities in income and
eliminating inequalities in status, facilities and opportunities; by
directing its policy towards securing, amongst others, the distribution
G
----+ of the material resources of the community to subserve the common
good; by so operating the economic system as not to result in
concentration of wealth; and by making effective provision for securing
the right to work as also to public assistance in cases of unemployment,
albeit within the limits of its economic capacities." H
766 SUPREME COURT REPORTS [2001] I S.C.R.

A It i's this expression "within the limits of its economic capacities" in the
aforesaid case on which Mr. Rao, the learned senior counsel for the bank -.,,,.
strongly relied upon in support of his contention that the financial capacity
must be held to be a vital factor in determining the wage structure of the
employees of the Regional Rural Banks. We are afraid, this decision is also
B of no assistance to the contentions raised inasmuch as in the dispute between
the employer and the employees which stood resolved by an award of the
tribunal (Justice Obul Reddi), one of the contentions was whether the financial
viability would be the sole criterion in deciding the wage structure of the RRB
employees, which was point No. I0 for consideration before the tribunal and
after an elaborate consideration of the relevant stand point as well as the
C evidence laid by the parties on the point, the tribunal ultimately obserfod:

"4.239. Now we are dealing with a case of special nature concerning
the employees of a banking industry claiming parity with the salary
structure of employees of a sister banking industry, which alone is
comparable in terms of duties, functions and responsibilities. The RRB
D Act places special emphasis on the development of rural economy by
providing credit and other facilities to productive activities in the rural
areas, particularly to small and marginal farmers, agricultural labourers,
artisans and small entrepreneurs, and for matters connected therewith
and incidental thereto. The reasons and objects of the Act provide a
highway for the social welfare and common good of the rural poor
E
living in the priority sector. The preamble of the Constitution envisages
to all citizens social, economic and political justice. Article 38 in Part
IV enjoins on the State to promote the welfare of the people and to
bring about a social order where social, economic and political justice
prevail in all the institutions of national life. In particular, the State is
F asked to strive to minimise the inequalities in income and eliminate
inequalities in status. The RRBs have brought about socio-economic
revolution in the hitherto-Unbanked under-developed priority sector
by ameliorating the poverty conditions of the under-privileged, SC/
STs and other weaker sections of the society. That is the paramount
objective of the Act. It should not be lost sight of the fact that the
G
total losses suffered by rural branches of commercial banks is
undeniably more than the total losses suffered by the RRBs. But the
losses of the rural branches of commercial banks are made up by the
other branches in semi-urban and urban areas and the RRBs
unfortunately for them cannot transfer the losses to their sponsor
H banks. The object and purpose is the economic development of the
S.M.G. BANK r. CO-ORD. COMM. OF S.M.G. BANK EMPLOYEE [PA TTANAIK, l] 767
target groups and the achievements in that field certainly outweigh A
-y- considerations of viability or losses. When the losses are on the
increase even in the rural branches of commercial banks, the RRBs
alone cannot be signled out to bear the cross. l can find no better
authority than the Chairman of the NABADRD who categorically
stated that the "ghost of profitability" should not haunt us in judging
the performance of the RRBs. Establishment of RRBs is a national B
commitment in the direction of ushering in a Welfare State, and that
is a mandate of the Constitution. It is in fulfillment of the hopes and
aspirations aroused in the preamble and the Directive Principles of the
Constitution that the RRB Act has been enacted and the perfonnance
of such institutions in furtherance of those principles, shall not be c
judged from the curved angle of viability or from the point of view of
a private money lender or businessman or from mere profit and loss
·--I statements."

This conclusion of the tribunal has become final, the award in question not
having been assailed and on the other hand having been implemented. In the D
aforesaid premises, it is a futile attempt on the part of the employer as well
as the Union of India to re-agitate the dispute, which has already been
resolved and has been given effect to. In our considered opinion, therefore,
the aforesaid contention on behalf of the appellant cannot be sustained and
it would no longer be open, either for the bank or the Union of India to raise E
a contention that in determining the wage structure of the employees of the
RRBs, the financial condition would be a relevant factor.

The next question that arises for consideration is, what is the meaning
of the expression "parity" used by the tribunal in giving its award and
ll(
indicating "that the officers and other employees of the Regional Rural Banks F
will be entitled to claim parity with the officers and other employees of the
sponsor banks in the matter of pay-scales, allowances and other benefits" in
paragraph 4.425 of the award of the tribunal. It may be noticed at this stage
that on behalf of the employees, a claim had been made before the tribunal
for application of the principle "equal pay for equal work" and that was
G
negatived by the tribunal, but all the same the tribunal directed to maintain
~- a parity. The meaning of the word "parity" in the Concise Oxford Dictionary
is equality; being at par; fact of being even or odd. In Law Lexicon Dictionary,
the word "parity" has been defined to mean being on a par with; analogy;
close similarity (as) by party of reasoning. In Webster .Comprehensive
Dictionary, the expression "parity" has been defined to mean equality, as of H
768 SUPREME COURT REPORTS [200 I] I S.C.R.

A condition or rank; equivalent position; equal value; close resemblance. In the
·'Words and Phrases' Volume 31, the word "parity" means act providing for -y
road construction to bring each country in state to "parity" required all
counties to be brought in same condition regarding aid in road building,
"parity" meaning equality. In view of the definition of the aforesaid expression
"parity" and in the context in which the tribunal came to hold that the
B employees of the Regional Rural Banks would be entitled to claim a parity
w)h the employees of the Nationalised Commercial Banks, the Union
Government, while exercising its power under the proviso to Sub-section(!)
of Section 17 would be guided by the aforesaid conclusion of the tribunal and
will, not be justified in deciding the pay structure for the employees of the
C Regional Rural Banks, which would bring in disparity between the two groups
of ei\lployees, even though there may be a slight variation in the pay structure.
As has been stated earlier, the aforesaid direction to maintain parity was duly
given effect to and the employees of the Regional Rural Banks were given ..,...
the pay structure applicable to their counter parts in the Nationalised
Commercial Banks w.e.f. 1987, though subsequently in 1992 and 1997, there
D had been revision in the pay structure of the employees of the Nationalised
Commercial Banks. Though, we have upheld the contention of the appellant
with regard to the power of the Central Government to decide the pay structure
of the employees of the Regional Rural Banks, yet there cannot be any doubt
that in so deciding, the Central Government would be duty bound to maintain
E the parity with the pay structure of the employees of the Nationalised
Commercial Banks in the same sense and spirit as Justice Obul Reddi decided
and as was given effect to by the Union Government in the year 1987.

In the light of the conclusions arrived at by us, the contention of Mr.
Sanghi that the very idea of the employer to appoint a fresh Committee for
F re-determination of the pay structure of the employees of the Regional Rural
Banks is nothing but an attempt to get over the effect of the grant of parity
under Justice Obul Reddi Tribunal, is of great substance. It has to be borne
in mind that the tribunal has devoted a considerable time and has considered
all aspects of the dispute between the parties and the notification itself of the
G Union Government in appointing the tribunal, indicated that the decision of
the tribunal shall be final and binding. In this view of the matter, the
conclusions arrived at on different questions raised by the tribunal, cannot
be assailed indirectly by taking recourse to a procedure either by the Union
Government or by the Bank. Though, we have no hesitation in coming to a
conclusion that.the Union Government possesses the power to determine the
H pay structure in accordance with the second proviso to Sub-section( I) of
S.M.G. BANK r. CO-ORD. COMM. OF S.M.G. BANK EMPLOYEE [PATTANAIK, J.] 769
Section 17 and,· therefore, that power has to be exercised soon after ·any pay A
revision of the employees of the Nationalised Commercial Banks is effected
and while exercising that power, the Union Government should try to maintain
the parity between the pay structure of the employees of the Regional Rural
Banks and the employees of the Nationalsied Commercial Banks.

In view of the aforesaid conclusions of ours on the different contentions B
raised and in view of the fact that the Union of India in its Interlocutory
-~-
Application had already indicated that the employees of the RRBs will be
granted the new scales w.e.f. 1.4.2000 in the line with scales granted to
commercial bank employees of equivalent level, we direct that the said
determination be a determination under the second proviso to Sub-section(I) C
of Section 17 of the RRB Act and as such the salary of the employees of the
Regional Rural bank w.e.f. 1.4.2000 be determined accordingly.

f We also further direct that for maintaining the parity between the
employees of the commercial banks and the employees of the Regional Rural
Banks, the said Union Government shall decide the question as to what would D
be the salary of the employees of the RRBs subsequent to the 6th Bipartite
Settlement having b~en given effect to, in case of employees of the commercial
banks and with effect from what date and the benefit flowing from such
decision be given to the RRB employees. The decision in question shall be
taken within a period of six months from today.
E
Hereafter, as and when the pay structure of the employees of the
nationalised commercial banks get revised on the basis of any bipartite
settlement, the Union Government should take a decision so far as the
employees of the Regional Rural Banks are concerned, within a reasonable
'r time and bearing in mind the conclusions, we have already arrived at, so that F
the so-called parity could be maintained.

The impugned judgment of the Kera la High Court, must accordingly
stand set aside. These appeals and Transfer Petition stand accord,ingly
disposed of.

K.K.T. Appeals and T.P. disposed of. G