Summary
Maharashtra approved in March 2010 the application of Fifth Pay Commission scales to the State Financial Corporation from 1 January 2006, but only for the 115 employees then on its rolls, excluding those who had retired, died or taken voluntary retirement since that date; the Bombay High Court upheld the cut-off. The Supreme Court partly allowed the ex-employees' appeal: a cut-off that excludes a section of a homogeneous class is open to scrutiny under Article 14; fitment was notionally from 1996 and interim reliefs paid to all employees till 2005 were not recovered, so those who superannuated or died between 1 January 2006 and 29 March 2010 belonged to the same class, and motivating existing staff to recover bad loans had no nexus with pay revision. Voluntary retirees and dismissed employees stand on a different footing.
Issues
- Whether confining the benefit of Fifth Pay Commission pay revision, made effective from 01.01.2006, to employees on the Corporation's rolls on 29.03.2010 and excluding those who retired or died between those dates is discriminatory under Article 14.
- Whether employees who left under a voluntary retirement scheme, or whose services were terminated or dismissed, can claim parity with superannuated employees for the revised pay.
Provisions considered
- Article 14, read with Article 43, Constitution of IndiaPeriodic pay revision protects employees from the rising cost of living in furtherance of the living wage objective; a classification by cut-off date must have a rational nexus with that object, and following Triloki Nath Khosa, Maharashtra Forest Guards, U.P. Raghavendra Acharya, All Manipur Pensioners and D.S. Nakara, treating retirees who worked during the same period differently from continuing employees creates a class within a class. (¶¶ 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37)
- Section 39, State Financial Corporations Act, 1951The Corporation must seek the State Government's guidance on policy matters and had referred its pay revision proposal to the State; the State's decision of 29.03.2010 and the Corporation's office order of 09.04.2010 implemented the revision with fitment from 01.01.1996 and arrears from 01.01.2006, without recovering interim reliefs paid between 1996 and 2005. (¶¶ 15, 21, 22, 23, 24, 30, 31)
Held
- Whether and to what extent pay is revised falls within executive policy, but the impact of the cut-off and whether it discriminates is for the court; here the fitment formula fixed revised pay notionally from 01.01.1996, interim reliefs paid to all employees from 18.09.1996 to 31.12.2005 were not recovered, and employees who retired before 29.03.2010 discharged the same duties as those who continued, so denying them any revision for the period they worked after 01.01.2006 is clearly discriminatory, and the rationale of enthusing existing staff to recover non-performing assets has no nexus with the object of pay revision. The decision not to grant arrears before 01.01.2006 is not faulted. (¶¶ 2, 26, 30, 31, 36, 37)
- Employees who opted for voluntary retirement received an ex gratia amount in addition to terminal benefits as a package bringing complete cessation of the employment relationship, and following A.K. Bindal cannot reopen pay revision claims; likewise those dismissed or terminated are not entitled to the revision. (¶¶ 38, 39)
Result
Appeal partly allowed without costs; Bombay High Court judgment dated 19.06.2018 in WP No. 1420 of 2013 set aside; employees who retired from the Corporation between 01.01.2006 and 29.03.2010 on superannuation, and the legal heirs of those who died in that period, held entitled to arrears of Fifth Pay Commission pay revision with interest at 8 per cent per annum from 01.04.2010 till the date of judgment, to be calculated and paid within eight weeks; voluntary retirees and dismissed or terminated employees not entitled.