Supreme Court of India
STATE BANK OF INDIA AND ORS.versusK.P. SUBBAIAH AND ORS.
- Citation
- 2003 INSC 315
- Decided
- 16 July 2003
- Disposal
- Case Partly allowed
- Bench
- SHIVARAJ V PATIL
Holding
The protection granted to ex‑servicemen under the government policy relates to the amount of pay (total emoluments) and not to a particular pay scale, rendering the High Court's direction to protect pay within a corresponding scale untenable.
Summary
The State Bank of India (SBI) had absorbed several ex‑servicemen and, following government policy, was required to protect the pay they earned in the armed forces when fixing their salaries. After the Fourth Bipartite Settlement became retrospectively operative, SBI issued circulars that reduced the employees' total emoluments, leading the ex‑servicemen to challenge the reduction before the High Court. The High Court held that the pay scale, not the amount of pay, was the determinative factor and directed that the total pay at entry be protected within the corresponding scale. On appeal, the Supreme Court examined the policy documents and concluded that the protection was intended for the amount of pay (total emoluments), not for a specific pay scale, and that the High Court’s direction was therefore erroneous. Consequently, the Court allowed the main appeals, holding that the bank must ensure that total emoluments are not less than the last drawn pay, but dismissed the connected appeals.
Issues considered
- When does the government policy of protecting ex‑servicemen's pay apply to the amount of pay versus a specific pay scale?
- Can the bank re‑fix pay and dearness allowance under the Fourth Bipartite Settlement without reducing total emoluments below the last drawn pay in defence service?
- Is the High Court's direction to protect total pay within a corresponding pay scale legally valid?
- Are the bank's circulars dated 12‑Oct‑1985 and 24‑Nov‑1986 consistent with the policy of pay protection?
Subjects
service lawpay fixationex‑servicemenpublic sector bankspay scaleFourth Bipartite Settlementdearness allowanceprotection of payFundamental Rule 9(21)salary revision
Judgment
STATE BANK OF INDIA AND ORS. A
v.
K.P. SUBBAIAH AND ORS.
JULY 16, 2003
[SHIVARAJ V. PATIL AND ARIJIT PASA YAT, JJ.] B
Service law:
Fixation of pay scale-Absorption of ex-servicemen of defence services
in public sector banks-Government policy that last pay drawn to be C
protected-Revision in pay of employees under Fourth Bipartite Settlement-
Subsequent issue of circular that only D.A. and interim relief drawn by ex-
serviceman qualifY for protection as components of D.A.-As such last pay
drawn by employees reduced-Writ petition challenging reduction-High
Court holding scale of pay determinative factor and directing that while re- D.
fixing pay and D.A. that the total pay fixed by bank when ex-servicemen
entered its service be protected within corresponding scale of pay-On
appeal, held: Intention was to protect pay and not a particular scale of pay
thus demand of corresponding pay scale not correct-· Thus· the direction of
the High Court not maintainable.
E
Fixation of pay scale-Factors to be considered-Discussed.
Words and Phrases :
'Pay' and 'pay scale '-Meaning of in the context of service
jurisprudence. F
Appellant-State Bank of India absorbed ex-servicemen of Indian Army.
While fixing their pay the basic pay and the dearness allowance last drawn
by them in military service was to be protected. Respondents joined the bank
during the period from 11.8.83 to 7.6.1984. At that time, the pay and allowances
payable to employees of the bank were governed by the Third Bipartite G
Settlement which was operative from 1.9.1978. Subsequently, Fourth Bipartite
Settlement was passed which was retrospectively operative from 1.7.1983.
Under the settlement there was an upward revision in the pay scales and the
basic pay of employees were revised on stage to stage basis. Thereafter, the
545 H
546 SUPREME COURT REPORTS [2003) SUPP. I S.C.R.
A Bank issued a circular regarding fixation of pay relating to ex-servicemen
employed in the bank. By another circular bank notified that only dearness
allowance and interim relief drawn by ex-servicemen qualified for protection
as components of D.A. and not the other allowances. In terms of the circulars
the pay last drawn by the respondent-employees stood reduced. Respondent-
B employees challenged the reduction in pay. High Court held that the scale of
pay was the determinative factor; that the bank was entitled to correct the
mistake committed by them in revising the pay of the employees by fitment in
the new pay scales under IV Bipartite Settlement on stage to stage basis;
that while re-fixing the pay and D.A., the total pay fixed by the Bank when the
employees entered its service has to be protected within the corresponding
C scale of pay. Hence the present appeal.
Appellant-Banks contended that the conclusions of the High Court are
erroneous because it proceeded on the basis as if pay scale was to be protected
not the pay whereas in terms of the policy decision, protection was of the pay
and the employees were not to receive any amount below the last pay drawn by
D them; that the anomaly has arisen because the_ Fourth Bipartite Settlement
was made retrospectively operative; that in order to protect the pay, fixation
of a scale was without an alternative; and that the employees cannot clai~ a
double advantage by seeking a corresponding increase in the pay scale.
Respondent-employee contended that fixation of pay and retrospective
E oper&tion of the Fourth Bipartite Settlement were within the choice of the
employer-Bank and employees had nothing to do with it; that by indicating a
particular scale of pay at the time of absorption, a right is conferred on the
employee to get a corresponding higher scale of pay as and when there is
revision of the scale of pay; that the employees were fitted in a particular
p scale of pay and as a natural corollary and consequence they were entitled to
the corresponding scale of pay in terms of the subsequent Bipartite Settlement;
and that the High Court was not justified in denying certain benefits.
Allowing the main appeals and dismissing the connected appeals, the
Court
G
HELD: I. I. In terms of the Government's policy there was no intention
to protect any particular scale of pay but the protection related to pay. The
apparent intention was to ensure that the ex-serviceman at the time of
employment in the public sector bank does not get an amount as pay lesser
than what he was drawing while in defence service. Therefore, the demand of
H
S.B.I. v. K.P. SUBBAIAH 547
a corresponding pay scale has no rationale. The High Court erred in holding A
that the scale of pay was the determinative factor. The direction that while re-
fixing the pay and D.A. the total pay fixed when the ex-servicemen entered
into the bank's service has to be protected within the corresponding scale of
pay, cannot be maintained and is indefensible.1557-C; 559-D-EI
1.2. The Government of India, Ministry of Finance, Department of B
Economic Affairs (Banking Division) by its letter dated 28.1.1983 had
indicated that for the purpose of fixation of pay of ex-servicemen re-employed
in the public sector banks, protection was to be given to total emoluments i.e.
pay plus D.A. (instead of only pay) last drawn by ex-servicemen before their
retirement from the Armed Forces. The guidelines were partially modified C
and it was stipulated that pay fixation in the case of ex-servicemen who joined
service after revision of pay scale in Septem her, 1978 will be on the basis of
protection of pay instead of pay plus D.A. drawn by them prior to retirement
The stress, was on protection of total emoluments received by the concerned
employee before retirement from the Armed Forces. The intention was to see
that the total emoluments do not fall belo;v what was being received by him as D
pay plus last D.A. in Armed Forces. 1557-C-EI
2. In service jurisprudence the expressions 'pay' and 'pay scale' are
conceptually different connotations. Pay is essentially a consideration for the
services rendered by an employee and is the remuneration which is payable
to him. Remuneration is the recurring payment for services rendered during E
the tenure of employment. Pay and salary are necessarily not interchangeable
concepts. Their meanings vary depending upon the provisions providing the
same. 1555-EI
Concise Oxford Dictionary, 8th Edn. 119901, referred to.
F
3.1. The fixation of pay scales is essentially a function of the executive.
They are closely inter-linked with evaluation of duties and responsibilities
attached to the posts and the pay scales are normally linked with conclusions
arrived at by expert bodies like the Pay Commission. 1556-DI
G
3.2 The degrees of skill, strain of work, experience involved, training
required, responsibility undertaken, mental and physical requirements,
disagreeableness of the tasks, hazard attendant on work and fatigue involved
are some of the relevant factors which go into the process of fixing the pay
scale. 1556-El
H
548 SUPREME COURT REPORTS [2003) SUPP. I S.C.R.
A Delhi Veterinary Association v. Union o/lndia and Ors., 1198413 SCC
I, referred to.
3.3. Ordinarily, a pay structure is evolved keeping in mind several
factors, for example (i) method of recruitment, (ii) level at which recruitment
is made, (iii) the hierarchy of service in a given cadre, (iv) minimum
B educational/technical qualifications required, (v) avenue of promotion, (vi) the
nature of duties and responsibilities, (vii) the horizontal and vertical
relativities with similar jobs, (viii) public dealings, (ix) satisfaction level, (x)
employer's capacity to pay etc. Such a carefully evolved pay structure ought
not to be ordinarily disturbed as it may upset the balance and cause avoidable
C ripples in other cadres as well.1556-H; 557-A, Bl
Secretary, Finance Department and Ors. v. West Bengal Registration
Service Association and Ors., AIR 119921 SC 1203, referred to
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4312-4317 of
D 1998.
From the Judgment and Order dated 11.9.1997 of the Karnataka High
Court in W.P. Nos. 3426-3427/86 and 6432-6435of1987.
WITH
E C.A. Nos . .4621-24, 4625-26 of2003.
K.N. Raval Solicitor General, A.V. Rangam, Buddy A. Ranganadhan, A.
Ranganadhan, S. Ravindra Bhat, Naveen R. Nath, Sanjay Sharawat and Ms.
Hetu Arora for the appearing parties.
F The Judgment of the Court was delivered by
ARIJIT PASAYAT, J. Leave granted in SLP (C) Nos.15808-15811/98 and
2998-2999/99.
These appeals have their base on a judgment of the High Court of
G Karnataka at Bangalore disposing of writ petitions Nos.3426-27/1986 and writ
petition Nos. 6432-35/1987.
The background scenario in which the present dispute appears, lies
within a very narrow factual compass. Six persons who are the respondents
H in the appeal Nos. 4312-4317 /98 (hereinafter referred to as 'the employees')
S.B.l. v. K.P. SUBBAIAH [PASA YAT. J.] 549
were ex-servicemen in the Indian Army. They are appellants in the other A
appeals. After discharge from Army service they were employed by the State
Bank of India (in short 'the Bank'). They were discharged from defence
services during the period from 1.4.1982 to 1.9.1984 and joined the Bank on
different dates during the period from 11.8.1983 to 7.6.1984. In terms of the
Government of India's policy, the basic pay and the dearness allowance last B
drawn by them while in military service was to be protected while fixing their
pay on absorption into public sector banks. During the period when the
employees joined the bank, the pay and allowances payable to employees of
the Bank were governed by the Third Bipartite Settlement which was operative
from 1.9.1978. Having regard to the Government's policy and as per the
decision of the Indian Banks Association (in short 'the Association'), all C
public sector banks followed the norms in the matter of fixation of pay as per
the Third Bipartite Settlement. The Fourth Bipartite Settlement became
retrospectively operative from 1.7 .1983. Under the .said settlement, there is an
upward revision in the pay scales and the basic pay of the employees were
revised on stage to stage basis. The annual increments were also given to
the concerned employees. When the matters stood thus, the Bank issued a D
Circular dated 12. I0.1985 regarding fixation of pay relating to ex-servicemen
employed in the public sector banks. This was the starting point of controversy.
By Staff Circular dated 24.11.1986, the Bank notified that while dearness
allowance and interim relief drawn by ex-servicemen shall qualify for protection
as components of D.A., the other allowances like city compensatory allowance E
and H.R.A. did not qualify for such protection. Eleven types of emoluments
admissible in defence services were to be protected on re-employment in the
Bank. On the basis of the aforesaid Circulars dated 12.10.1985 and 24.11.1986
the pay last drawn by the employees stood reduced. This reductioP was
challenged by the employees before the High Court. Following questions
were formulated by the High Court for consideration. F
"(i) When the IV Bipartite Settlement was signed on 17 .9.1984 bringing
into force new scales of pay, with retrospective effect from 1.7.1983,
what was the proper course to be adopted by the Bank, in the case
of petitioners (who were appointed between 1.7.1983 and 17.9.1984):- G
(a) whether the pay of petitioners had to be revised by fitment
in the new scales of pay, on a stage to stage basis, with reference
to the pay fixed under the Ill Bipartite Settlement, retrospectively
from the date of petitioners entering with service (as contended
by the petitioners); or
H
550 SUPREME COURT REPORTS [2003) SUPP. I S.C.R.
A (b) Whether a fresh fitment in the new pay scales (under IV
Bipartite Settlement) should have been effected to protect the
pay and allowances last drawn when in Defence Service, in place
of the earlier fitment in the old pay scales under the Ill Bipartite
Settlement (as contended by the Bank).
B (ii) If the revision of pay of petitioners, by fitment in the new scales
of pay, on stage to stage basis, was contrary to the scheme under
which petitioners were appointed, whether the Bank could subsequently
rectify the error by re-fixation of pay of petitioners, by fitment in the
new pay scales (under IV Bipartite Settlement) with reference to the
last pay drawn in Defence Service.
c
(iii) Whether by resorting to such refixation the Bank can reduce the
salary of the petitioners to a level which is less than the salary at
which they were appointed when they joined the services of the Bank
even though the refixed salary protects the last pay drawn while in
Defence service."
D
On consideration of rival stands, the High Court observed that Part (a)
of first question was to be answered in the negative while part (b) of the said
question was to be answered in the affirmative. Question No.(ii) was to be
answered in the affirmative; question No.(iii) in the negative and finally it was
E concluded that the Bank's Circulars dated 12.10.1985 and 24.11.1986 were
upheld subject to conclusions at paragraph 23(d) of the judgment. The memos
prepared by the Bank revising the pay at the time of entry of the employees
in the banks were quashed. It was declared that the Bank was entitled to
correct the mistake committed by them in revising the pay of the employees
by fitment in the new pay scales under IV Bipartite Settlement on stage to
F stage basis and were also entitled to re-fix the pay and D.A. on the basis of
their entry into service with reference to the new pay scales under the IV
Bipartite Settlement. But while doing so, the total pay packet of the employees
should not be less than the total pay fixed when the employees entered the
service of the Bank. In other words, the total pay fixed by the Bank when the
G employees entered its service should be protected. Consequently, while re-
fixing the pay and allowances payable to the employees as on the date of
entry into service under Circulars dated 12. l 0.1985 and 24.11.1986, the basic
pay and D.A. of the employees should not be less than Rs.1319.99, Rs.1596.12,
Rs.1380.50, Rs.1319.99, Rs.1582.61 and Rs.1582.61 respectively.
H
S.B.l. v. K.P. SUBBAIAH [PASA YAT . .I.] 551
The relevance of these figures shall be dealt with a little later. A
It was further held that the employees were entitled to further allowances
on the basis of re-fixation subject to the minimum mentioned above.
Mr. K.N. Raval, Learned Solicitor General appearing for the appellants-
Bank submitted that the conclusions of the High Court are erroneous because· B
it proceeded on the basis as if a scale of pay was to be protected not the
pay in tenns of the policy decision. A bare reading of the relevant circular
of the Government of India makes the position crystal clear that the protection
was of the pay. It obviously meant that the employees were not to receive
any amount below the last pay drawn by them. It had nothing to do with any
scale of pay. The anomaly has arisen because the Fourth Bipartite Settlement · C
was made retrospectively operative. In order to protect the pay, fixation of a
scale was without an alternative. The employees cannot claim a double
advantage by seeking a corresponding increase in the pay scale. Had the pay
scale been in contemplation at the time of fixing the salary structure, the basic
pay could not have been fixed at a higher figure and that would have avoided D
the claim of a corresponding scale of pay. It was submitted that if the High
Court's view is accepted, it would mean conferring double benefit on the
employees which was not a contemplated idea in protecting the pay.
Per contra, learned counsel appearing for the employees submitted that
fixation of pay and retrospective operation of the Fourth Bipartite Settlement E
were within the choice of the employer-Bank and employees had nothing to
do with it. By indicating a particular scale of pay at the time of absorption,
a right is conferred on the employee to get a corresponding higher scale of
pay as and when there is revision of the scale of pay. Undisputedly, the
employees were fitted in a particular scale of pay and as a natural corollary F
and consequence they were entitled to the corresponding scale of pay in
tenns of the subsequent Bipartite Settlement. He also submitted that the High
Court was not justified in denying certain benefits for which the employees
hav:: filed appeals.
The rival contentions need careful consideration. Though a plea had G
been taken by the employees that unilateral revision of the scale of pay was
violative of principles of natural justice, the same was abandoned by learned
counsel for the employees during hearing of the case. It was submitted that
all the relevant materials were placed before the High Court and, therefore, the
issues shou Id be decided on merits.
H
552 SUPREME COURT REPORTS [2003] SUPP. I S.C.R.
A It would be relevant to quote the Circular dated 12.10.1985, which, inter
a!ia, reads as follows:
" .... Fitment of salary in cases of the ex-servicemen who joined the
Bank's service after the revision of pay scale in September 1978 is
being done on the basis of the protection of pay drawn by them prior
B to their retirement. Pursuant tl1ereto, ex-servicemen employees who
have joined the Bank on or after I. 7.1983 i.e. the date from which the
wage revision of award staff in terms of the Fourth Bipartite Settlement
came into effect retrospectively, but before 17.9.1984 (the date of
settlement) have been fitted in the old scale of pay, on the basis of
the protection of pay last drawn by them in the Armed Forces prior
c to their retirement.
(2) The question as to how their salary should be re-fixed under
the Fourth Bipartite Settlement has been examined by the Central
Office in consultation with IBA. According to IBA guidelines:
D (a) The pay fixation in the case of ex-servicemen, who joined the
Bank's service on or after July I, 1983 may be made on the basis
of protection of pay drawn in the Armed Forces or at a stage
where the new basic pay plus dearness allowance corresponds
to the basic pay plus dearness allowance drawn by them in the
Armed Forces, whichever is higher.
E
(b) In the cases of those ex-servicemen who joined the Bank
between July I, 1983 and September 17, 1984 and were given the
fitment in the scale of pay under the Third Bipartite Settlement,
they may be given re-fixation in the above manner, but if as a
result of such re-fixation, their salary (pay+ D.A.) is reduced, the
F
recovery of excess payment for the period July I, 1983 to
September I 7, 1984 be waived. Recoveries for subsequent period
will be made where necessary in three to four instalments.
3. It has been decided to accept the IBA guidelines referred to
above."
G
The effect of the Circulars dated 12.10. 1985 and 24.11.1986 can be figuratively
crystallized as follows:
H
S.B.I. v. K.P. SUBBAIAH [PASAYAT.J.] 553
Names Stage Effective Basic Pay Pennissible Total A
date Allowances
Employee A 14.6.1982 535/- 404.00 939.00
in W.P. 3426/1986 B 7.6.1984 5451- 774.99 1319.99
(K.P. Subbaiah) c 7.6.1984 875/- 498.75 1373.75
D 7.6.1984 615/- 350.55 965.55 B
Employee A 1.4.1982 700/- £25.60 1325.60
in W.P. 3427/1986 B 11.8.1983 705/- 891.12 15%.12
(M. Shamanna) c 11.8.1983 1125/- 528.75 1653.75
D 11.8.1983 930/- 437.10 1367.10 c
Employee A 1.6.1984 5501- 687.90 1237.90
in W.P. 6432/1987 B 22.5.1984 580/- 900.50 1380.50
(M. Meenakshi ) c 22.5.1984 930!- 530.00 1460.00
Sundaram D 22.5.1984 820/- 467.40 1287.40
D
Employee A 1.9.1984 520/- 655.40 1175.40
in W.P. 6433/1987 B 22.5.1984 5451- 774.99 1319.99
(K.Sakkarias) c 22.5.1984 875/- 498.75 1373.75
D 22.5.1984 775/- 441.75 1216.75
E
Employee A 29.2.1984 5951- 736.30 1331.30
in W.P. 6434/1987 B 22.5.1984 620/- %2.61 1582.61
(S. Balasubramaniam) c 22.5.1984 990/- 564.30 1554.30
D 22.5.1984 875/- 498.75 1373.75
Employee A 1.9.1984 520/- 595.40 1115.40 F
in W.P. 6435/1987 B 22.5.1984 620/- %2.61 1582.61
(Kewal Kumar Vaid) c 22.5.1984 9901- 564.30 1554.30
D 22.5.1984 730/- 416.10 1146.10
G
Note (i) Stage 'A' refers to the Stage when th.e employees were discharged
from military service.
(ii) Stage 'B' refers to the stage when the employees joined the
service of the Bank and pay was fixed as per the
Third Bipartite Settlement scales of pay.
H
554 SUPREME COURT REPORTS (2003] SUPP. I S.C.R.
A (iii) Stage 'C' refers to the stage when the pay was revised on
stage to stage basis, as per the Fourth Bipartite
Settlement, with retrospective effect from 1.7 .1983
(or in the case of employees from the date of their
entry into service) corresponding to the salary
fixed under the Third Bipartite Settlement.
B (iv) Stage 'D' refers to the stage when pay and allowance was
refixed by the Bank in pursuance of its Circular
dated 12.10.1985.
(v) While calculating permissible allowances, HRA,
and CCA have been omitted. Only DA, ADA, GCB
c and IR taken for Stage 'A' and only DA taken for
stages B, C and D.
There was some amount of controversy as to what was to be protected.
With reference to Government of India's letter dated 28.1.1983 it was submitted
by learned counsel for the employees that dearness allowance was to be
D excluded. We, however, notice that the stand was different before the High
Court which proceeded on the basis that the protection was to be given in
respect of the last pay drawn which was inclusive of D.A. It is also relevant
to take note of the Association's letter dated 28.4.1982 in which a reference
has been made to Government of India, Ministry of Finance's communication
to the following effect:
E
"It has been decided that while fixing the pay of ex-servicemen in
nationalized banks the basic pay plus D.A. last drawn by them in the
military service would be protected and in this process their pension
upto Rs. 125 per month would be ignored. The banks may now be
advised to take necessary action in this regard under intimation to
F us."
One thing is clear from various documents based on record that the intention
asl'Cflt!tted in the policy of Government of India was to protect the last pay
drawn of the concerned ex-servicemen in the armed forces.
G Learned Solicitor General is, therefore, right in his submission that the
protection related to pay and not to a scale of pay. Submission of learned ·
counsel for the employees that after having been fitted to a scale of pay in
force at the time of absorption as a natural corollary and consequentially a
corresponding scale of pay in the subsequent settlement at first flush appears
H attractive. But it does not stand closer scrutiny. The apparent intention was
S.B.I. v. K.P. SUB BA IAH [PASA YAT, J.) SSS
to ensure that the ex-serviceman at the time of employment in the public A
sector bank does not get an amount as pay lesser than what he was drawing
while in defence service. Perforce a scale of pay was to be fixed. It stands
to logic that the employer while fixing pay has to fix it at a level of pay which
would ensure compliance with the requirement that it is not less than the last
pay drawn. The scale of pay on the basis of Third Bipartite Settlement
applicable to clerical cadre was Rs.325-20-405-25-455-30-545-35-580-40-660-45- B
750-50-800-60-1160. After retrospective operation of the Fourth Bipartite
Settlement, the scale became Rs.520-30-580-35-685-45-320-:i.i-930-60-990-65-
1055-70-1195-85-1280-95-1660.
Strictly speaking, there is no fitment to a particular scale as contended C
by the employees. The fitment into a particular scale has to be considered in
the background of the policy decision to ensure the payment of an amount
not less than the last pay drawn. In that sense, it cannot be said that there
was any fitment to a particular scale to attract the corresponding scale of pay
in terms of subsequent settlement.
D
In Service jurisprudence the expressions 'pay' and 'Pay scale' are
conceptually different connotations. Pay is essentially a consideration for the
services rendered by an employee and is the remuneration which is payable
to him. Remuneration is the recurring payment for services rendered during
the tenure of employment. Pay and salary are necessarily not interchangeable
concepts. Their meanings vary depending upon the provisions providing for E
them.
As per Concise Oxford Dictionary 8th Edn. (1990), the word 'pay' in
its ordinary significance in relation to service means "to give what is due for
services done". However, in the Service Jurisprudence, the expression 'pay' F
has technical connotation of its own. Fundamental Rule 9(21) throws some
light on this aspect. The definition itself is as follows:
"9(21 )(a)- Pay means the amount drawn monthly by a Government
servant as-
(i) the pay, other than special pay or pay granted in view of his G
personal qualifications, which has been sanctioned for a post
held by him substantively or in an officiating capacity, or to
which he is entitled by reasons of his position in a cadre, and
(ii) overseas pay, special pay and personal pay, and
H
556 SUPREME COURT REPORTS [2003] SUPP. I S.C.R.
A (iii) any other emoluments which may be specially classed as pay
by the President."
There are different types of pay like substantive pay, special pay,
additional pay, personal pay and presumptive pay.
B Public services comprise of different grades and, therefore, different pay
scales are provided for different grades. The pay of an employee is in that
background fixed with reference to a pay scale. This is necessary to be done
because the pay of an employee does not remain static.
It has to be noted that an employee starts with a particular pay which
C is commonly known as initial pay and the periodical increases obtained by
him are commonly known as increments. When the highest point is reached,
the concerned empioyee becomes entitled to what is known as ceiling pay.
It is, therefore, a graded upward revision.
The fixation of pay scales is essentially a function of the executive.
D They are closely inter-linked with evaluation of duties and responsibilities
attached to the posts and the pay scales are normally linked with conclusions
arrived at by expert bodies like the Pay Commission.
The degrees of skill, strain of work, experience involved, training required,
E responsibility undertaken, mental and physical requirements, disagreeableness
of the tasks, hazard attendant on work and fatigue involved are some of the
relevant factors which go into the process of fixing the pay scale. [See Delhi
Veterinary Association v. Union of India and Ors., [1984] 3 SCC I.
As noted above, a pay scale has different stages starting with initial
p pay and ending with ceiling pay. Each stage in the scale is commonly referred
to as basic pay. The emoluments which an employee gets is not only the basic
pay at a particular stage, but also the additional amounts to which he is
entitled as allowances e.g. D.A. etc. Therefore, when a question of pay
protection comes, the basic feature is that the fitment or fixation of pay in a
particular scale must be such as to ensure that the total emoluments are not
G reduced.
Ordinarily, a pay structure is evolved keeping in mind several factors,
for example (i) method of recruitment, (ii) level at which recruitment is made,
(iii) the hierarchy of service in a given cadre, (iv) minimum educational/
technical qualifications required, (v) avenue of promotion, (vi) the nature of
H
S.B.I. v. K.P. SUBBAIAH [PASAYAT.J.] 557
duties and responsibilities, (vii) the horizontal and vertical relativities with A
similar jobs, (viii) public dealings, (ix) satisfaction level, (x) employer's capacity
to pay etc. Such a carefully evolved pay structure ought not to be ordinarily
disturbed as it may upset the balance and cause avoidable ripples in other
cadres as well. [See Secretary, Finance Department and Ors. v. West Bengal
Registration Service Association and Ors., AIR (1992) SC 1203.
B
The Government of India, Ministry of Finance, Department of Economic
Affairs (Banking Division) by its letter dated 28.1.1983 had indicated what was
to be protected. It is clearly spelt out therefrom that for the purpose of fixation
of pay of ex-servicemen re-employed in the public sector banks, protection
was to be given to total emoluments i.e. pay plus D.A. (instead of only pay) C
last drawn by ex-servicemen before their retirement from the Armed Forces .
•
The initial guidelines were fixed by letter dated 2.2.1980 and the Indian Banks
Association Circular dated 28.4.1982. The guidelines were partially modified
by letter dated 28.1.1983 and it was stipulated that pay fixation in the case
of ex-servicemen who joined service after revision of pay scale in September
1978 will be on the basis of protection of pay instead of pay plus D.A. drawn D
by them prior to retirement. In other words, their pay fixation will be in
accordance with the office memorandum issued by the Ministry of Finance,
Department of Expenditure dated 25.11.1958, 16.1.1964 and 19.7.1978. The
stress, as is evident from various documents noted above, was on protection
of total emoluments received by the concerned employee before retirement E
from the Armed Forces. The obvious intention was to, as indicated supra, see
that the total emoluments do not fall below what was being received by him
as pay plus last D.A. in Anned Forces. The Office memorandum dated 28.1.1983
is of considerable importance and is quoted below:
F. No.2/8n8-SCT(B)
Government of India F
Ministry of Finance
Department of Economic Affairs
(Banking division)
New Delhi, dated the 28th January, 1983
G
To
The Chairman & Mg. Director (20 Nationalised Banks) The
Chairman, State Bank of India, Bombay. The Mg. Directors: 7
subsidiaries of SBI The Chief Officer, DPP. Reserve Bank of India,
Bombay The Chairman & Mg. Director: IDBl/IROl/IFCI. H
558 SUPREME COURT REPORTS [2003) SUPP. I S.C.R.
A Subject:- Ex-servicemen re-employed in Public Sector banks - fixation of pay.
Sir,
I am directed to invite reference to this Department's letter of even
number dated 2.2.1980 and the Indian Banks' Association's circular
B No. PD/76/589/865 dated 28.4.1982 on the above subject. These two
letters to be read together and accordingly for the purpose of fixation
of pay of ex-servicemen re-employed in the public sector banks,
protection was to be given to total emoluments i.e. 'pay+ DA' (instead
of only pay) last drawn by ex-servicemen before their retirement from
the Armed Forces.
c 2. In partial modification of the guidelines, conveyed through the
•
aforesaid letters, it has been decided that :
(i) In respect of ex-servicemen, absorbed in banks' service prior
to September 1978, if no recoveries were made on account
D of pension and pension equivalent of gratuity in excess of
Rs. 125 p.m. such recovery may not be made with retrospective
effect. However, in future the adjustment of pension will be
made in accordance with the Department of Expenditure
O.M.No.18(34)-E.Ill{B)/57 dated 25.11.1958 (copy enclosed)
read with IBA 's circular No.PD/76/589/865 dated 28.4.1982.
E
(ii) The pay fixation in the case of ex-servicemen who joined
Banks' service after the revision of pay scales in September,
78 will however be on the basis of protection of "pay"
(instead of pay + DA) drawn by them prior to retirement. In
other words, their pay fixation will be in accordance with the
F following office memorandum issued by the Ministry of
Finance, Deptt. Of Expenditure:
I. 0.M. No.18(34)-E.lll(B)/57 dated 25.11.1958.
2. O.M. No.7(34)-E.111/62 dated 16.1.1964.
G
3. O.M. No.5(14)-E.lll(B)/77 dated 19.7.1978.
(Copies of these OMs are enclosed)
3. For the purpose of qualifying service, necessary to avail of housing
loan, conveyance loan, etc. service rendered by the ex-servicemen in
H
S.8.1. v. K.P. SUBBAIAH [PASA YAT . .I.] 559
defence forces may be taken into account. A
4. If certain number of years of service are prescribed as a minimum
eligibility criteria for promotion from one cadre to another, rules in this
regard may be suitably modified to give weightage to ex-servicemen
on the basis of their service in the Defence Forces.
B
5. Receipt of this letter may please be acknowledged and action
taken reported to this Department at an early date.
Hindi version of this letter will follow.
Yours faithfully,
Sd/- C
(Ahmad Fareed)
Under Secretary to the Government of India."
There was no intention to protect any particular scale of pay. That
being the position, the demand of a corresponding pay scale has no rational. D
The High Court was, therefore, clearly in error in holding that the scale of pay
was the determinative factor. The direction that while re-fixing the pay and
D.A. the total pay fixed when the petitioner entered into the bank's service
has to be protected within the corresponding scale of pay, cannot be maintained
and is indefensible.
E
Civil Appeal nos. 4312-43 I 7 of 1998 are accordingly allowed.
In the connected appeals filed by the employees, challenge is to the
observations of the High Court as noted above. It could not be shown as to
how they suffer from any infirmity. We do not find anything wrong in the
impugned conclusions of the High Court challenged by the employees to F
warrant interference. The appeals are dismissed. There shall be no order as
to costs in all the appeals.
N.J. Civil Appeals Nos. 4312-4317of1998 allowed and
Civil Appeals Nos. 4621-24, 4625-26 of2003 dismissed.
G
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