Summary
Ex-servicemen re-employed by a public sector bank had their basic pay reduced on re-fixation pursuant to an Indian Banks' Association clarification of 17.05.2018 and the bank's HRMD circular, which capped pay at the 20th stage of the clerical scale. The Court held that the Department of Financial Services guidelines dated 17.02.2014 govern pay fixation and prevail over the IBA clarification and HRMD circular, that the re-fixation ignoring those guidelines was unjustified, and that reducing pay without a hearing violated natural justice. Re-fixation quashed and the bank directed to re-fix pay under the 2014 guidelines.
Issues
- Whether the IBA Clarification dated 17.05.2018 and the bank's HRMD Circular can override the guidelines dated 17.02.2014 for the purpose of pay fixation of ex-servicemen on re-employment.
- Whether the re-fixation of pay by the bank pursuant to the IBA Clarification was in consonance with the 2014 guidelines and whether the High Court was justified in confirming it.
- In what manner the pay of ex-servicemen is to be fixed on re-employment and what reliefs the appellants are entitled to.
- Whether re-fixation reducing pay without affording an opportunity of hearing violates the principles of natural justice.
Provisions considered
- Clause 2.1(i), (ii) and (iii), Guidelines for fixation of pay of ex-servicemen/ex-ECOs/SSCOs re-employed in Public Sector Banks on or after 01.01.2006 (Department of Financial Services, 17.02.2014)Three essentials were culled out: (i) protection of pay plus DA drawn at the time of release from the Armed Forces, with entitlement to full pension and the MSP component in pension; (ii) 'pay' for fixation on re-employment means basic pay plus special allowance or special pay attached to the re-employed post; and (iii) the pay protected plus pension must not exceed the minimum of the General Manager's scale of pay. Pay must be fixed by applying these three principles. (¶¶ 15, 16, 17, 18, 19)
Held
- The IBA Clarification and the HRMD Circular do not override the 2014 guidelines issued by the Department of Financial Services; the finding to this effect by the Single Judge, affirmed by the Division Bench and conceded by the bank, requires no re-look. For pay fixation of ex-servicemen the 2014 guidelines prevail over the IBA Clarification and HRMD Circular, which are not in consonance with them. (¶¶ 14, 21, 25)
- Under Clause 2.1 of the 2014 guidelines an ex-serviceman re-employed in a public sector bank is entitled to protection of pay plus DA drawn at release from the Armed Forces together with full pension and the MSP benefit; pay for this purpose means basic pay plus special allowance or special pay attached to the re-employed post; and the protected pay plus pension must not exceed the minimum of the General Manager's pay scale. The appellants' pay must be fixed on these three principles. (¶ 19)
- The bank's re-fixation reduced the appellants' pay on the pretext that pay could be protected only up to the 20th stage of the cadre, by applying the IBA Clarification and HRMD Circular which were not applicable and by ignoring the 2014 guidelines; such re-fixation is unjustified and deserves to be quashed. (¶¶ 20, 21, 25)
- Reduction of pay through re-fixation entails civil consequences. Following Bhagwan Shukla, an order reducing pay cannot be passed without notice and hearing; observance of natural justice in cases of re-fixation leading to financial loss is sine qua non, and the bank violated it by reducing the appellants' pay without hearing them. (¶¶ 23, 24, 25)
- K.P. Subbaiah, which explains the distinction between pay and pay scale and between pay fixation and fixation of pay scale, does not assist the appellants where the re-fixation was in blatant violation of the applicable 2014 guidelines. (¶ 22)
Result
Appeal allowed to the extent indicated. Re-fixation orders quashed and reliefs (a) to (c) of the writ petition granted; bank directed to apply the 2014 guidelines and re-fix the appellants' pay afresh on the three principles laid down; recovery and refund, if any, including any made during the pendency of the writ proceedings or this appeal, quashed; if fresh fixation reduces pay below the initial fixation the bank must observe natural justice; parties to bear their own costs; pending applications disposed of.