TMI Blog2021 (7) TMI 1338X X X X Extracts X X X X X X X X Extracts X X X X ..... penditures. Therefore, the grant of benefits of higher pay scale to the Central/State Government employees stand on different footing than grant of pay scale by an instrumentality of the State. The judgment in Purshottam Lal [ 1973 (2) TMI 135 - SUPREME COURT ] is a case where reference was made to the Pay Commission to consider the pay revision of all Central Government employees paid out of the Consolidated Fund of India. The recommendation of the Pay Commission was accepted but the benefit of revised pay scale was not given to the employees of the Forest Research Institute and College, Dehradun. An argument was raised that the report of the Pay Commission did not deal with the case of the Petitioners. The said argument was negated for the reason that once the Government has accepted the recommendation of the Pay Commission, which included all Central Government employees, the benefit of revised pay scale cannot be denied to the Petitioners. In K.T. Veerappa and Ors. v. State of Karnataka and Ors. [ 2006 (4) TMI 576 - SUPREME COURT ], the Court upheld the principle that fixation of pay and parity in duties is the function of the executive and financial capacity of the Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veeta Wadia, AOR, Mr. Karan Bharihoke, AOR, Ms. Siddhant Sharma, Adv. JUDGMENT Hemant Gupta, J. CIVIL APPEAL No. 7427 OF 2011. CIVIL APPEAL No. 7429 OF 2011. CIVIL APPEAL No. 7430 OF 2011. CIVIL APPEAL No. 7431 OF 2011. CIVIL APPEAL No. 7433 OF 2011 AND CIVIL APPEAL No. 7435 OF 2011 1. The present appeals are directed against an order passed by the Division Bench of the High Court of Punjab Haryana at Chandigarh on 19.3.2009 whereby the writ petitions filed by the Respondents Hereinafter referred to as the 'employees' herein were allowed holding that the Punjab State Co-operative Milk Producers Federation Ltd. For short, the 'Federation' is a State within the meaning of Article 12 of the Constitution of India and that the employees are therefore entitled to pay scale equivalent to their counterparts in the State of Punjab from 1.1.1986, though the revised pay scale was allowed by the Federation w.e.f. 1.1.1994. 2. The milk producers in the State launched the setting up of Cooperative Societies at village level which are known as Primary Milk Producers Cooperative Societies. Such Primary Milk Producers Cooperative Societies are in turn mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions of the employees of the Federation are governed by the Punjab State Co-operative Milk Producers Federation Services (Common Cadre) Rules, 1980 Hereinafter referred to as the 'Common Cadre Rules'. The Common Cadre Rules were resolved to be amended on 10.8.1990 by the Board of Directors of the Federation. The same were approved by the Registrar (Co-operative Societies) on 30.10.1990. It is thereafter that the Federation issued a notice Under Section 9-A of the Industrial Disputes Act, 1947 on 12.11.1990 (Annexure P-12) to all the employees on the ground of financial stringency showing its intention to effect the changes specified in the annexure annexed with the said notice. 7. The employees of the Federation raised protest; therefore, a committee was constituted on 6.12.1994 to examine the following issues: (i) Whether the upward revision should be adopted for the employees of Milkfed and Milk Unions? (ii) Whether the revision is to be given with effect from 1.1.1986 or any subsequent date by giving the benefit of notional fixation? (iii) Whether the upward should confine only to the categories covered in the report of Government Anomaly Committee or cate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... give scope to the employee for placement in better pay scale and getting benefit which might accrue as a result next revision of pay scale likely to be made w.e.f. 1.1.1994 on Punjab Government pattern. 9. The report of the Committee was considered and the grant of revised pay scale w.e.f. 1.1.1994 was approved by the Board of Directors of the Federation. The minutes of the meeting of the Board of Directors of Federation held on 30.8.1996 read as under: After discussion, it is unanimously resolved that in view of the recommendations of the Departmental Committee, constituted by the Milkfed on 6.12.1994, contained in the report enclosed at Annexure-3, approval is granted to the implementation of the revised pay scales and Master Pay Scale to the concerned employees of the Milkfed and the Milk Unions in accordance with the report of the Anomaly Committee constituted under the Third Pay Commission by the Punjab Government, with effect from 1.1.1994. Its approval may also be obtained from the Registrar, Cooperative Societies, Punjab. 10. The decision of the Board was approved by the Registrar (Cooperative Societies) on 29.4.1997. Thus, subsequently, revised scales with effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y much. Therefore, no further additives should be encouraged and Governments revision is not justifiable pretext to consider similar increase in the Public Sector Undertakings should see their financial condition, rising cost in relation to productivity and the fact that Governments is not going to support the Public Sector Undertakings financially. 13. The High Court allowed the writ petitions filed by the employees holding that the financial stringency was no longer an excuse to not revise the pay scales and thus held that the date of implementation to grant revised pay scales as 1.1.1994 was absolutely unfair. The Federation is in appeal herein against such order. This Court had stayed the recovery pending further orders on 6.11.2009. 14. Mr. Patwalia, learned Counsel for the Federation, submitted that the High Court erred in law in holding that the date of implementation to grant revised pay scales as 1.1.1994 was absolutely unfair and that financial stringency was not an excuse for refusing to revise the pay scales from 1.1.1986. It was contended that the judgments M.M.R. Khan and Ors. v. Union of India and Ors., 1990 (Supp.) SCC 191; Haryana State Minor Irrigation Tubew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntroverted the arguments raised by Mr. Goel and pointed out that the writ Petitioners are the employees of the Federation who have no work of the post to which they were appointed. Instead of abolishing the post to which the writ Petitioners were appointed, the Committee had nevertheless dealt with the grant of revised pay scales to them in the following manner: Sr. No Name of the Categories Unrevise d Pay scale before 1.1.86 Already RPS w.r.f. 1.1.86 Pay scale now revised by Govt. Remarks Recommendations of the Committee for improvement from 1.1.94 xxx 15 Head Draftsman 700-1200 1640-2925 2200-3500 There is only one Head Draftsman, for whom the deptt. has no work has been put on alternate job in a Milk Union. There is also no likelihood of new civil works to be undertaken. So the pay scale of 1800-3200 is recommended for this post. No financial burden. 16 Draftsman 570-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1958 SC 30, wherein the question examined was as to whether in view of financial conditions, the wages of workmen can be reduced. This Court held that it would not be right to hold that there is a rigid and inexorable convention that the wage structure once fixed by Industrial Tribunals can never be changed to the prejudice of workmen. This Court thus held as under: 11.... In dealing with a claim for such revision, the Tribunal may have to consider, as in the present case whether the employer's financial difficulties could not be adequately met by retrenchment in personnel already effected by the employer and sanctioned by the Tribunal. The Tribunal may also enquire whether the financial difficulties facing the employer are likely to be of a short duration or are going to face the employer for a fairly long time. It is not necessary, and would indeed be very difficult, to state exhaustively all considerations which may be relevant in a given case. It would, however, be enough to observe that, after considering all the relevant facts, if the Tribunal is satisfied that a case for reduction in the wage structure has been established then it would be open to the Tribunal to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian adult of moderate activity. (iii) Clothing requirements should be estimated at a per capita consumption of 18 yards per annum which would give for the average workers' family of four, a total of 72 yards. (iv) In respect of housing, the rent corresponding to the minimum area provided for under Government's Industrial Housing Scheme should be taken into consideration in fixing the minimum wage. (v) Fuel, lighting and other 'miscellaneous' items of expenditure should constitute 20% of the total minimum wage. 22. This Court in Hindustan Times Ltd., New Delhi v. Workmen (1963) 1 LLJ 120 held that numerous complex factors, some of which are economic and some spring from social philosophy give rise to conflicting considerations that have to be borne in mind and that such factors are not static in nature. The financial position of the employer, state of national economy, and the requirements of a workman living in a civilized and progressive society also are to be recognized. This Court held as under: 5. The fixation of wage structure is among the most difficult tasks that industrial adjudication has to tackle. On the one hand not only the demands of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC 290, this Court held that a worker's wage has the force of collective bargaining under the labour laws. Each category of the wage structure has to be tested at the anvil of social justice which is the live-fibre of our society today. The Court held as under: 12. The concept of 'minimum wage' is no longer the same as it was in 1936. Even 1957 is way behind. A worker's wage is no longer a contract between an employer and an employee. It has the force of collective bargaining under the labour laws. Each category of the wage structure has to be tested at the anvil of social justice which is the live-fibre of our society today. Keeping in view the socio-economic aspect of the wage structure, we are of the view that it is necessary to add the following additional component as a guide for fixing the minimum wage in the industry: (vi) children's education, medical requirement minimum recreation including festivals/ceremonies and provision for old age marriages etc. should further constitute 25 per cent of the total minimum wage. 13. The wage structure which approximately answers the above six components is nothing more than a minimum wage at subsistence leve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meet the financial liability which would have been incurred by revision of pay scales. By the office memorandum dated 19-7-1995 the Government merely reiterated its earlier stand and issued a caution that till a decision was taken to revive the undertakings, no revision in pay scale should be allowed. We, therefore, do not find any infirmity, legal or constitutional in the two office memorandums which have been challenged in the writ petitions. 18....But to hold that mere non-revision of pay scale would also amount to a violation of the fundamental right guaranteed Under Article 21 would be stretching it too far and cannot be countenanced. Even under the industrial law, the view is that the workmen should get a minimum wage or a fair wage but not that their wages must be revised and enhanced periodically. It is true that on account of inflation there has been a general price rise but by that fact alone it is not possible to draw an inference that the salary currently being paid to them is wholly inadequate to lead a life with human dignity. What should be the salary structure to lead a life with human dignity is a difficult exercise and cannot be measured in absolute terms... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the employer as well as the Union of India to reagitate 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 a contention that in determining the wage structure of the employees of the RRBs, the financial condition would be a relevant factor. 27. In a judgment reported as Officers Supervisors of I.D.P.L. v. Chairman M.D., I.D.P.L. and Ors. (2003) 6 SCC 490, this Court held that the employees cannot legitimately claim that their pay-scales should necessarily be revised and enhanced when the organization in which they are working are making continuous losses and are deeply in the red. It was held as under: 11. In our view, the economic capability of the employer also plays a crucial part in it, as also its capacity to expand business or earn more profits. The contention of Mr. Sanghi, if accepted, that granting higher remuneration and emoluments and revision of pay to workers in other governmental undertakings and, therefore, the Petitioners are also entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by holding that they cannot be denied benefit of 'Wage Revision' by notional fixation and re-computation of their retiral dues (severance package). This Court referred to A.K. Bindal and Officers Supervisors of I.D.P.L. to accept the argument of the Appellant that if the wage revision office order is interpreted to include all the employees who were superannuated/voluntarily retired between 1.4.1997 to 1.4.2003, it would frustrate the measures taken, including the Voluntary Retirement Scheme, to improve the condition of Public Sector Undertaking. The Court thus upheld the cutoff date in view of the financial constraints faced by the Appellant. 30. In the third category of cases, in respect of Central or State Government, the factor of financial constraints has been found to be relevant when the liberalized benefits were granted from a particular date. In Amar Nath Goyal, the question examined was whether limiting of benefits only to the employees who retired or died on or after 1.4.1995 after calculating the financial implications was irrational or arbitrary, the Court held as under: 26. It is difficult to accede to the argument on behalf of the employees that a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is not abolished is held by a person who is not permanent would not affect the legality of the decision to abolish the former post as long as the decision to abolish the post is taken in good faith. We would, therefore, hold that the High Court was in error in quashing the order of the Government whereby the post of Panchayati Raj Election Officer had been abolished. 32. The Central or State Government is empowered to levy taxes to meet out the expenses of the state. It is always a conscious decision of the government as to how much taxes have to be levied so as to not cause excessive burden on the citizens. But the Boards and Corporations have to depend on either their own resources or seek grant from the Central/State Government, as the case may be, for their expenditures. Therefore, the grant of benefits of higher pay scale to the Central/State Government employees stand on different footing than grant of pay scale by an instrumentality of the State. 33. The judgment in Purshottam Lal is a case where reference was made to the Pay Commission to consider the pay revision of all Central Government employees paid out of the Consolidated Fund of India. The recommendation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Khan is in respect of workers in the canteen in different railway establishments. It was held that the Government has complete control over the canteens and the workers employed therein are holders of civil posts within the meaning of Article 311 of the Constitution. The issue was not of financial stringency on the part of the Union to make the payment of wages to railway employees. 36. In a judgment reported as The Employees of Tannery and Footwear Corporation of India Ltd. and Anr. v. Union of India and Ors. 1991 Supp. (2) SCC 565, the employees were claiming parity in pay and allowances with that of the Central Government employees. This Court held that pay scales of the employees in the unionised cadre falling in four categories in the Respondent corporation should be revised in a way that the same are at par with the pay scales of such employees employed with the Cotton Corporation of India. 37. In G.S. Uppal, the Sub-Divisional Officer (SDO), Sub-Divisional Engineer (SDE) and Assistant Engineer (AE) on deputation from the Irrigation Department were granted revised pay scale but the SDO, SDE and AE appointed in the Appellant corporation were denied the same benefit. An a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Patwalia has not raised any argument about the Federation being not a State. Therefore, the said judgment is not relevant to be examined in the present appeals. 40. In K.T. Veerappa and Ors. v. State of Karnataka and Ors. (2006) 9 SCC 406, the Court upheld the principle that fixation of pay and parity in duties is the function of the executive and financial capacity of the Government is also a relevant factor to be considered, though on facts, it was held that the employees of the University were entitled to revision of pay at par with the employees of the State. It was held as under: 13. He next contended that fixation of pay and parity in duties is the function of the executive and financial capacity of the Government and the priority given to different types of posts under the prevailing policies of the Government are also relevant factors. In support of this contention, he has placed reliance on State of Haryana v. Haryana Civil Secretariat Personal Staff Assn. [(2002) 6 SCC 72 : 2002 SCC (L S) 822] and Union of India v. S.B. Vohra [(2004) 2 SCC 150 : 2004 SCC (L S) 363]. There is no dispute nor can there be any to the principle as settled in State of Haryana v. Haryana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable to the exercise of power of judicial review by the High Court in the administrative decisions of the State within the meaning of Article 12 of the Constitution. The Court held as under: 77. The duty of the court is to confine itself to the question of legality. Its concern should be: 1. Whether a decision-making authority exceeded its powers? 2. Committed an error of law, 3. committed a breach of the Rules of natural justice, 4. reached a decision which no reasonable tribunal would have reached or, 5. abused its powers. Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under: (i) Illegality: This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it. (ii) Irrationality, namely, Wednesbury unreasonableness. (iii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstrated that such policy is contrary to any statutory provision or the Constitution. It is not for the Court to consider relative merits of different economic policies and consider whether a wiser or better one could be evolved. The Court held as under: 92. In a democracy, it is the prerogative of each elected Government to follow its own policy. Often a change in Government may result in the shift in focus or change in economic policies. Any such change may result in adversely affecting some vested interests. Unless any illegality is committed in the execution of the policy or the same is contrary to law or mala fide, a decision bringing about change cannot per se be interfered with by the court. 93. Wisdom and advisability of economic policies are ordinarily not amenable to judicial review unless it can be demonstrated that the policy is contrary to any statutory provision or the Constitution. In other words, it is not for the courts to consider relative merits of different economic policies and consider whether a wiser or better one can be evolved. For testing the correctness of a policy, the appropriate forum is Parliament and not the courts. Here the policy was tested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r intended to favour someone; OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say: the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached ; (ii) Whether public interest is affected. If the answers are in the negative, there should be no interference Under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action. 46. In a recent judgment reported as West Bengal Central School Service Commission and Ors. v. Abdul Halim and Ors. (2019) 18 SCC 39, this Court was examining the candidature of a candidate for appointment in pursuance of advertisement advertised by West Bengal Central School Service Commission. One of the essential qualifications was Bengali as a subject either at the Secondary level or at the Higher Secondary level or at the graduation or postgraduation level. The candidature of selected candidate was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on founded on reasons which are clearly wrong in law, which can be corrected by the writ court by issuance of writ of certiorari. 31. The sweep of power Under Article 226 may be wide enough to quash unreasonable orders. If a decision is so arbitrary and capricious that no reasonable person could have ever arrived at it, the same is liable to be struck down by a writ court. If the decision cannot rationally be supported by the materials on record, the same may be regarded as perverse. 32. However, the power of the Court to examine the reasonableness of an order of the authorities does not enable the Court to look into the sufficiency of the grounds in support of a decision to examine the merits of the decision, sitting as if in appeal over the decision. The test is not what the Court considers reasonable or unreasonable but a decision which the Court thinks that no reasonable person could have taken, which has led to manifest injustice. The writ court does not interfere, because a decision is not perfect. 33. In entertaining and allowing the writ petition, the High Court has lost sight of the limits of its extraordinary power of judicial review and has in fact sat in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision or relevant considerations have been ignored, the decision stands vitiated as the decision maker has misdirected himself in law. It is useful to refer to R. v. Vestry of St. Pancras [R. v. Vestry of St. Pancras, (1890) LR 24 QBD 371 (CA)] in which it was held: (QBD pp. 375-76) ... If people who have to exercise a public duty by exercising their discretion take into account matters which the courts consider not to be proper for the guidance of their discretion, then in the eye of the law they have not exercised their discretion. 49. Thus, we find that the decision that the Federation was in financial difficulties is based upon relevant material before the Federation. The process to arrive at such decision can be said to be flawed only on the permissible grounds of illegality, irrationality and procedural impropriety. We find that neither the decision-making process, nor the decision itself suffers from any such vice. 50. Learned Counsel for the writ Petitioners have referred to the information received under the Right to Information Act to show that the Federation was in profit in the year 1996-1997. We do not find that such information is relevant to determine the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The present appeal is also directed against an order passed by the Division Bench of the High Court of Punjab Haryana at Chandigarh on 19.3.2009 wherein it was held that the employees are entitled to pay scale equivalent to their counterparts in the State of Punjab from 1.1.1986, though the revised pay scale was allowed by the Federation w.e.f. 1.1.1994. The argument raised is that the contention of the employees claiming equal pay for equal work has not been examined by the High Court. 54. The employees have not filed any appeal against the impugned judgment of the High Court. We find that the employees cannot raise any grievance in an appeal preferred by the Federation to claim equal pay for equal work. The employees are not aggrieved against the judgment of the High Court. Therefore, the employees cannot raise an argument which was not raised before the High Court. 55. But still, we have examined the argument raised. It was argued that the claim of the employees is not of revised pay scale from 1.1.1986 but that the categorization of Milk Procurement Assistants as Grade-I II is unconstitutional and they would be entitled to the same pay as is being paid to Milk Proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng higher duties and responsibilities than Grade II. 59. We do not find any merit in the argument claiming equal pay for the alleged equal work. Consequently, the appeal is allowed. The orders passed by the High Court are hereby set aside. CIVIL APPEAL No. 7434 OF 2011 60. The present appeal is also directed against an order passed by the Division Bench of the High Court of Punjab Haryana at Chandigarh on 19.3.2009 wherein it was held that the employees are entitled to pay scale equivalent to their counterparts in the State of Punjab from 1.1.1986, though revised pay scale was allowed by the Federation w.e.f. 1.1.1994. It was contended that the argument of the employees claiming equal pay for equal work was not examined by the High Court. 61. The Respondent Nos. 1 to 4 are Milk Procurement Assistants Grade-I in the pay scale of ₹ 700-1200 whereas Respondent No. 5 is Animal Husbandry Assistant in the same pay scale of ₹ 700-1200 w.e.f. 1.8.1980. Such employees are claiming parity in the matter of pay with the Area Officers including Deputy Manager (Procurement) and Dairy Extension Officer in the pay scale of ₹ 850-1700. The employees have pleaded ..... X X X X Extracts X X X X X X X X Extracts X X X X
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