whether the the Punjab
State Co-operative Milk Producers Federation Ltd. 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.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7427 OF 2011
PUNJAB STATE CO-OPERATIVE MILK
PRODUCERS FEDERATION LTD. & ANR. .....APPELLANT(S)
VERSUS
BALBIR KUMAR WALIA & ORS. .....RESPONDENT(S)
W I T H
CIVIL APPEAL NO. 7429 OF 2011
CIVIL APPEAL NO. 7430 OF 2011
CIVIL APPEAL NO. 7431 OF 2011
CIVIL APPEAL NO. 7432 OF 2011
CIVIL APPEAL NO. 7433 OF 2011
CIVIL APPEAL NO. 7434 OF 2011
A N D
CIVIL APPEAL NO. 7435 OF 2011
J U D G M E N T
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
1
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 respondents1
herein were allowed holding that the Punjab
State Co-operative Milk Producers Federation Ltd.2
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 members of
The District Cooperative Milk Producers Union. These District
Level Unions are ultimately the members of the Federation.
The employees have claimed pay scale as revised by the
Punjab Government Anomaly Committee w.e.f. 1.1.1986.
3. Before the High Court, an objection was raised by the
Federation that since it is not a State within the meaning of
Article 12 of the Constitution, therefore, the writ petitions were
1 Hereinafter referred to as the ‘employees’
2 For short, the ‘Federation’
2
not maintainable. However, before this Court, Mr. Patwalia,
learned senior counsel appearing for the Federation has
submitted that the question whether the Federation is a State
or not is not being raised in the present appeals. The main
grievance of the Federation is regarding grant of revised pay
scale w.e.f. 1.1.1986 though the Federation was suffering with
acute financial stringency in those days and had therefore
granted revised pay scales from 1.1.1994.
4. It is pointed out that The Registrar (Cooperative Societies)
accorded approval for implementation of the report of the
Third Pay Commission on 2.6.1989. The Federation granted
revised pay scale and allowances w.e.f. 1.1.1986 as per the
report of the Pay Commission. Thereafter, on 15.2.1990, the
State Government revised pay scale of Veterinary Officers of
the Animal Husbandry Department, Punjab Government from
Rs.850-1700 to Rs.2200-4000 and that after eight years of
service, the pay scale of Veterinary Officers would be Rs.3000-
4500 and after eighteen years of service, it would be Rs.3700-
5300 with effect from 1.1.1986 on the basis of report of an
Anomaly Committee constituted to consider the grievances of
the employees of the State. It is the said pay scale which was
claimed by the filing of writ petitions before the High Court.
3
5. It was argued that the Federation was facing acute financial
crisis inasmuch as the State had granted a loan of Rs.8 (sic
12) crores on 9.5.1990 which the Federation could not repay
and, therefore, the said amount was converted into the share
capital of the State Government with the Federation. In
addition thereto, keeping in view the financial stringency, the
National Dairy Development Board gave a loan of Rs. 4 crores
on 2.5.1990 to the Federation. After the loan was granted by
the National Dairy Development Board, there was a change in
the management which led to restructuring of the Federation.
6. The service conditions of the employees of the Federation are
governed by the Punjab State Co-operative Milk Producers
Federation Services (Common Cadre) Rules, 19803
. 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.
3 Hereinafter referred to as the ‘Common Cadre Rules’
4
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 categories enjoying identical
scales (unimproved) need to be covered (a)
repercussion if revision is confined to the categories
covered in the Government report (b) impact, if any, of
pending writ petitions, resolutions of BOD of M.U.,
Ludhiana and BOD of Milkfed?
(iv) Whether there is any necessity of changing the
qualification/improving designations of certain
categories being placed in higher scales?
(v) Any other point/issue identical to or connected with
the above?”
8. The Committee, inter alia, made the following
recommendations:
“4. The Committee finds that in case the revision of
pay scales is taken up w.e.f. 1.1.1986, the amount of
arrears upto 31.12.1993 works out to Rs.1.5 crore
approx., i.e. about 60 lacs in case of those categories
for which the scales have been improved and about
Rs.90 lac in case of identical categories. Taking into
consideration the financial health of the Milkfed and
more particularly majority of Milk Unions, Committee
strongly feels that payment of arrears will further
5
shatter the financial health of the Milkfed and Milk
Unions and it will not be possible to pay such a huge
amount in the shape of arrears. Committee feels that
the employees concerned also understand this position
and will most probably be agreeable to the grant of
improved pay scales w.e.f. any subsequent date. The
2
nd alternative of granting benefit from 1.1.1994 with
notional fixation of BP w.e.f. 1.1.1986 has also been
examined. In this case, more than 750 employees will
be financially benefited and the financial burden will be
Rs.2.0 lac pm. This is also considered to be a huge
liability, especially when the recommendations of the
IVth Pay Commission are expected and the liability on
its implementation is also likely to be heavy. Further,
the Committee has been told that the liability of the
arrears n account of Prop. set up from 1.1.1986 to
31.8.1992 are still outstanding. The Committee after
considering the above as well as various other aspects,
recommends that the improved pay scales may be
implemented w.e.f. 1.1.1994 without giving the benefit
of even notional pay fixation w.e.f. 1.1.1986. Adoption
of the Punjab Government pattern of Pay Scales has
been felt necessary with a view to make parity in the
scales for future revisions etc. This would save the
organisation from a huge liability of the payment of
arrears and will also 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
6
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 from 1.1.1994 were granted to the
employees.
11. Mr. Patwalia referred to the communication of the Punjab Government dated 1.3.1990 that grant of allowances or concessions should not automatically be made applicable to the employees of Public Sector Undertakings/Cooperative Institutions,
without examining the liabilities involved, the available resources of the Undertakings and the extent of concessions already being availed by their employees. The State Government communicated as under:
“It has accordingly been decided that instructions, regarding grant of any allowance/perks/concessions etc.
by whatever name called, issued by State Government from time to time for its employees should not
automatically be made applicable to the employees of
Public Sector Undertakings/Cooperative Institutions.
Before making such instructions applicable to your
employees/officers, these should thoroughly be exam7
ined by B.O.D. with reference to the liabilities involved, capacity of the Undertakings to bear the additional financial burden, availability of the resources
and the extent/nature of the similar allowances/concessions already being availed of and the views of Department of Finance (B.P.E.) should also invariably be
obtained through the Administrative Department.”
12. The State Government reiterated on 9.7.1993 that whenever
instructions for revision of allowances/pay scale are issued by
the Punjab Government for its employees, they are adopted
by Public Sector Undertakings and are applied to its employees without examining the liability involved and the capacity
to pay, which results in loss and Public Sector Undertakings
add the same to their costs. It was suggested that these practices may be discontinued as the State Government would not
be supporting the PSUs financially in such cases. It was communicated as under:
“It has been noticed that whenever any instructions
regarding revision of allowances/pay are issued by
the Punjab Government for its employees these are
adopted by Public Sector Undertakings and applicable
to its employees without examining the liability involved and the Public Sector Undertakings capacity to
pay with the result that the loss incurring Public Sector Undertakings keep adding to their costs. This
practice may be discontinued. The establishment
cost of per unit of product or service in Public Sector
Undertakings has increased very 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
8
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 judgments4
referred to by the High Court
have no applicability to the facts of the present case. Mr. Patwalia also relied upon judgments of this Court reported as
A.K. Bindal & Anr. v. Union of India & Ors.
5
and State of
Punjab & Ors. v. Amar Nath Goyal & Ors.
6
wherein the
4 M.M.R. Khan & Ors. v. Union of India & Ors., 1990 (Supp.) SCC 191; Haryana State
Minor Irrigation Tubewells Corporation & Ors. v. G.S. Uppal & Ors., (2008) 7 SCC 375;
High Court Employees Welfare Assn., Calcutta & Ors. v. State of W.B. & Ors., (2004) 1
SCC 334; Supreme Court Employees Welfare Association v. Union of India & Anr., (1989)
4 SCC 187 and Purshottam Lal & Ors. v. Union of India & Anr., (1973) 1 SCC 651
5 (2003) 5 SCC 163
6 (2005) 6 SCC 754
9
Court had upheld financial stringency as a ground to deny
higher pay scales etc.
15. Mr. Govind Goel, appearing for the respondents in Civil Appeal
No. 7433 of 2011 argued that the writ petition before the High
Court was filed on behalf of one Head Draftsman, two
Draftsman, two Junior Draftsman and two Surveyors. It was
contended that such seven employees of the Federation have
not been provided the benefit of recommendations of the
Committee as was granted to the other employees of the
Federation w.e.f. 1.1.1994. Thus, it was argued that the
decision to not grant the revised pay scale on the basis of the
report of the Committee of the Federation w.e.f. 1.1.1994 was
wholly arbitrary and discriminatory. It was contended that out
of the 1573 employees of the Federation, these seven
employees alone have been discriminated. It was also argued
that the High Court has restricted the arrears consequent to
its directions to grant arrears of the revised pay scale for a
period of 3 years and 2 months from the date preceding the
date of filing of respective writ petitions. While contesting the
ground of financial stringency preferred by the Federation, it
was stated that though there were losses for some years, the
information disclosed under the Right to Information Act on
22.7.2011 shows that the Federation has been in profit since
10
1996-1997. Hence, such ground of financial stringency is not
tenable.
16. Mr. Goel relied upon a Constitution Bench judgment of this
Court reported as Purshottam Lal, referred to by the High
Court as well, to contend that revision of pay scale
recommended by the Pay Commission after acceptance by the
Government could not be denied to a category of employees
as it would be an act of discrimination.
17. Mr. Patwalia controverted 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
Categorie
s
Unrevise
d Pay
scale
before
1.1.86
Alread
y RPS
w.r.f.
1.1.86
Pay
scale
now
revise
d by
Govt.
Remarks Recommendation
s 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.
11
So the pay scale
of 1800-3200 is
recommended for
this post. No
financial burden.
16 Draftsman 570-1080 1500-
2640
1800-
3200
Jr.
Draftsman
shall be
eligible for
promotion
as
draftsman
in the scale
of Rs.1800-
3200 after
a minimum
period of 12
years.
There are 3
draftsmen. The
civil works have
almost been
completed and
there is no
likelihood of new
civil works to be
undertaken. Two
of them have
been put on
alternate jobs, as
they are surplus.
So the committee
feels that the
existing pay scale
of Rs.1500-2640
is sufficient for
them. So no
improvement is
recommended.
17. Tracers 400-600 950-
1800
1200-
2100
To be
designated
as Jr.
draftsman
and
qualificatio
n to be
raised to
matric with
two years
ITI
certificate
of
draftsman.
There are 4
tracers. None of
them is deployed
on his job, but
have been put on
alternate jobs,
which are clerical,
to provide this
work. There is no
likelihood of civil
work for them in
future. So no
improvement is
recommended.
18 Surveyor 400-600 950-
1800
1200-
2100
There are two
Surveyors, who
have been put on
alternate jobs. So
no improvement
is recommended
for this category
too.
18. It was thus argued that the Committee had taken a conscious
decision not to grant pay scale as revised by the Government.
12
Instead of granting enhanced pay scale at par with what was
approved by the State Government, a higher pay than the
recommendations of the Pay Commission was granted. The
Federation thus exercised this option instead of abolishing the
post. Therefore, the decision of the Committee does not
warrant any interference in exercise of the power of judicial
review.
19. We have heard learned counsel for the parties and find that
the judgment and order of the High Court cannot be
sustained. In our country, there are broadly three sets of
employers such as employers in the organized sector like the
Industrial workers; secondly, Public Sector Undertakings
including Boards and Corporations and all other
establishments, which meet the test of a State within the
meaning of Article 12 of the Constitution; and thirdly, Central
or State Government employees.
20. One of the early judgments of this Court is Crown
Aluminium Works v. Workmen
7
, 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.
7 AIR 1958 SC 30
13
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 accede to the request of the employer to
make appropriate reduction in the wage structure,
subject to such conditions as to time or otherwise that
the tribunal may deem fit or expedient to impose. …”
21. In respect of Industrial workers, this Court, while dealing with
wage structure in a judgment reported as Standard Vacuum
Refining Co. of India v. Workmen & Anr.
8
, held that it is
usual to divide wages into three broad categories: the basic
minimum wage which is the bare subsistence wage, above it
is the fair wage, and beyond the fair wage is the living wage.
The said three categories of wages are described as the
poverty level, the subsistence level and the comfort or the
decency level. This Court accepted the Report by the
Commission of Enquiry on “Emoluments and Conditions of
Service of Central Government Employees, 1957-1959”
8 AIR 1961 SC 895
14
wherein the five norms which should guide all wage fixing
authorities including Minimum Wage Committees, Wage
Boards, adjudicators, etc. were stated by the Court inter alia
as under:
“9. It is well known that the problem of wage structure
with which industrial adjudication is concerned in a
modern democratic State involves on the ultimate
analysis to some extent ethical and social
considerations. ……. As the social conscience of the
general community becomes more alive and active, as
the welfare policy of the State takes a more dynamic
form, as the national economy progresses from stage
to stage, and as under the growing strength of the
trade union movement collective bargaining enters the
field, wage structure ceases to be a purely arithmetical
problem. 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
recognised.
19. ... With regard to the minimum wage fixation it was
agreed that the minimum wage was need-based to
ensure the minimum human needs of the industrial
worker irrespective of any other considerations.
(i) In calculating the minimum wage, the standard
working class family should be taken to consist of 3
consumption units for one earner; the earnings of
women, children and adolescents should be
disregarded.
(ii) Minimum food requirement should be calculated on
the basis of a net intake of calories, as recommended
by Dr Aykroyd for an average 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
15
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
9 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 social justice
but also the claims of national economy require that
attempts should be made to secure to workmen a fair
share of the national income which they help to
produce, on the other hand, care has to be taken that
the attempt at a fair distribution does not tend to dry
up the source of the national income itself On the one
hand, better living conditions for workmen that can
only be possible by giving them a "living wage" will
tend to increase the nation's wealth and income on the
other hand, unreasonable inroads on the profits of the
9 (1963) 1 LLJ 120
16
capitalists might have a tendency to drive capital away
from fruitful employment and even to affect
prejudicially capital formation itself. The rise in prices
that often results from the rise of the workmen's wages
may in its turn affect other members of the community
and may even affect prejudicially the living conditions
of the workmen themselves. The effect of such a rise in
price on the Country's international trade cannot also
be always ignored. Thus 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. Nor does the process of
valuation of the numerous factors remain static. ……
6. In trying to keep true to the two points of social
philosophy and economic necessities which vie for
consideration, industrial adjudication has set for itself
certain standards in the matter of wage fixation. At the
bottom of the ladder, there is the minimum basic wage
which the employer of any industrial labour must pay in
order to be allowed to continue an industry. Above this
is the fair wage, which may roughly be said to
approximate to the need based minimum, in the sense
of a wage which is "adequate to cover the normal
needs of the average employee regarded as a human
being in a civilised society." Above the fair wage is the
"living wage" a wage "which will maintain the workman
in the highest state of industrial efficiency, which will
enable him to provide his family with all the material
things which are needed for their health and physical
well-being, enough to enable him to qualify to
discharge his duties as a citizen." (Cited with approval
by Mr. Justice Gajendragadkar in Standard Vacuum
Company's Case (1) from "The living Wage" by Philip
Snowden).”
23. In Workmen v. Reptakos Brett. & Co. Ltd.
10
, this Court
held that a worker's wage has the force of collective
bargaining under the labour laws. Each category of the wage
10 (1992) 1 SCC 290
17
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 level. The employees
are entitled to the minimum wage at all times and
under all circumstances. An employer who cannot pay
the minimum wage has no right to engage labour and
no justification to run the industry”.
24. Now, in respect of the establishments which meet the
parameters of being a State within the meaning of Article 12,
this Court considered the question of financial stringency in
A.K. Bindal. This Court in the said case was examining the
claim of revision of pay of the employees of a public sector
enterprise. The employers placed reliance upon the Office
Memoranda of the Government of India that the Government
18
would not provide any budgetary support for wage increase
and the undertakings themselves would have to generate the
resources to meet the additional expenditure which would be
incurred on account of increase in the wages. It was thus held
by this Court that the non-revision of pay scale would not
amount to violation of fundamental rights guaranteed under
Article 21 as it would be stretching too far and cannot be
countenanced. It was held that even under industrial law,
workmen should get a minimum wage or a fair wage but not
that the wages must be revised and enhanced periodically.
The Court held as under:
“17. …Being employees of the companies, it is the
responsibility of the companies to pay them salary and
if the company is sustaining losses continuously over a
period and does not have the financial capacity to
revise or enhance the pay scale, the petitioners cannot
claim any legal right to ask for a direction to the
Central Government to meet the additional expenditure
which may be incurred on account of revision of pay
scales. It appears that prior to issuance of the office
memorandum dated 12-4-1993 the Government had
been providing the necessary funds for the
management of public sector enterprises which had
been incurring losses. After the change in economic
policy introduced in the early nineties, the Government
took a decision that the public sector undertakings will
have to generate their own resources to meet the
additional expenditure incurred on account of increase
in wages and that the Government will not provide any
funds for the same. Such of the public sector
enterprises (government companies) which had
become sick and had been referred to BIFR, were
obviously running on huge losses and did not have
their own resources to meet the financial liability which
19
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….”
25. This Court also considered two earlier judgments11 that the
financial capacity of the employer cannot be held to be a
germane consideration for determination of the wage
structure of the employees, therefore, it must be confined to
the facts of the aforesaid case. It was held that economic
viability or the financial capacity of the employer is an
important factor which cannot be ignored while fixing the
wage structure, otherwise the unit itself may not be able to
11 South Malabar Gramin Bank v. Coordination Committee of South Malabar Gramin Bank
Employees’ Union., (2001) 4 SCC 101 and Associate Bank Officers’ Association v. State
Bank of India & Ors., (1998) 1 SCC 428
20
function and may have to close down which will inevitably
have disastrous consequences for the employees themselves.
26. In South Malabar Gramin Bank, one of the contentions
raised was whether financial viability could be the sole
criterion in deciding the wage structure of the Regional Rural
Bank (RRB) employees. The Tribunal constituted to consider
the wage structure inter alia held that The Regional Rural
Banks 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. The objects and reasons of the Act
provide a highway for the social welfare and common good of
the rural poor living in the priority sector. The RRBs have
brought about socio-economic revolution in the hitherto
unbanked underdeveloped priority sector by ameliorating the
poverty conditions of the underprivileged, SCs/STs and other
weaker sections of the society. That was the paramount
objective of the Act. The Court held that the RRBs are in
fulfilment of the hopes and aspirations aroused in the
Preamble and the directive principles of the Constitution, and
the performance of such institutions in furtherance of those
principles shall not be judged from the curved angle of
21
viability or from the point of view of a private money lender or
businessman or from mere profit and loss statements. This
Court held as under:
“12. …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 aforesaid premises, it is a futile attempt on the part
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. & Ors.
12
, 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 entitled for the
grant of pay revision may, in our opinion, only lead to
undesirable results. Enough material was placed on
12 (2003) 6 SCC 490
22
record before us by the respondents which clearly show
that the first respondent had been suffering heave
losses for the last many years. In such a situation the
petitioners, in our opinion, cannot legitimately claim
that their pay-scales should necessarily be revised and
enhanced even though the organisation in which they
are working are making continuous losses and are
deeply in the red. As could be seen from the counter
affidavit, the first respondent company which is
engaged in the manufacture of medicines became sick
industrial company for various reasons and was
declared as such by the BIFR and the revival package
which was formulated and later approved by the BIFR
for implementation could not also be given effect to
and that the modifications recommended by the
Government of India to the BIFR in the existing revival
package was ordered to be examined by an operating
agency and, in fact, IDBI was appointed as an operating
agency under Section 17(3) of SICA. It is also not in
dispute that the production activities had to be stopped
in the major two units of the company at Rishikesh and
Hyderabad w.e.f. October, 1996 and the losses and
liabilities are increasing every month and that the
payment of three instalments of interim relief could not
also be made due to the threat of industrial unrest and
the wage revision in respect of other employees is also
due w.e.f. 1992 which has also not been sanctioned by
the Government of India.”
28. This Court in a judgment reported as S.C. Chandra & Ors. v.
State of Jharkhand & Ors.
13
was examining the question of
equal pay for equal work where the claim of the appellants
was to release and pay Dearness Allowance. Hon’ble Mr.
Justice Markandey Katju in a separate but concurring judgment
held that the "Fixation of pay scale is a delicate mechanism
which requires various considerations including financial
13 (2007) 8 SCC 279
23
capacity, responsibility, educational qualification, mode of
appointment, etc. …."
29. In Mineral Exploration Corporation Ltd. v. Arvind Kumar
Dixit & Anr.
14
, this Court was dealing with an appeal against
an order of the High Court, which did not interfere with the
award of Industrial Tribunal who had extended the actual
financial benefits to the respondents 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
14 (2015) 2 SCC 535
24
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 decision of the Central
Government/State Governments to limit the benefits
only to employees, who retire or die on or after 1-4-
1995, after calculating the financial implications
thereon, was either irrational or arbitrary. Financial and
economic implications are very relevant and germane
for any policy decision touching the administration of
the Government, at the Centre or at the State level.”
31. In State of Haryana v. Shri Des Raj Sangar & Anr.
15
, the
post of the Panchayati Raj Election Officer was abolished in
view of the extreme financial stringency. This Court held as
under:
“8. …… It was also stated in another affidavit filed on
behalf of the appellant State that the post of
Panchayati Raj Election Officer and the seven posts of
field Deputy Directors were abolished as an economy
measure to meet financial stringency. We see no
cogent ground to question the averments made in the
above affidavits. The averments show that the decision
to abolish the post of Panchayati Raj Election Officer
was taken because of administrative reasons. The
question as to whether greater economy could have
been brought about by adopting some other course is
not for the court to go into for the court cannot sit as a
court of appeal in such matters. It may be that some of
the functions which were being previously performed
by the respondent are now being performed by Deputy
Directors whose posts have not been abolished, this
fact would not show that the decision to abolish the
post held by the respondent was not taken in good
15 (1976) 2 SCC 844
25
faith. After the posts of Deputy Directors had been
created and had been in existence along with the post
of Panchayati Raj Election Officer for a number of
months, the Government, it would appear, decided to
abolish some of the posts to meet the financial
stringency. In taking the decision as to which post to
abolish and which not to abolish, the Government, it
seems, took into account the relative usefulness of
each post and decided to abolish the seven posts of
field Deputy Directors and the one post of Panchayati
Raj Election Officer. This was a matter well within the
administrative discretion of the Government and as the
decision in this respect appears to have been taken in
good faith, the same cannot be quashed by the court.
The fact that the post to be abolished is held by a
person who is confirmed in that post and the post
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
26
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 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. This Court has held
as under:
“15. Mr Dhebar contends that it was for the
Government to accept the recommendations of the Pay
Commission and while doing so to determine which
categories of employees should be taken to have been
included in the terms of reference. We are unable to
appreciate this point. Either the Government has made
reference in respect of all government employees or it
has not. But if it has made a reference in respect of all
government employees and it accepts the
recommendations it is bound to implement the
recommendations in respect of all government
employees. If it does not implement the report
regarding some employees only it commits a breach of
Articles 14 and 16 of the Constitution. This is what the
Government has done as far as these petitioners are
27
concerned.”
34. We find that the judgment in Purshottam Lal is altogether on
different facts. The said judgment is in the context where the
report was in respect of all Central Government employees but
the benefit of the report was not granted to the petitioners for
the reason that there was no specific reference in the Pay
Commission report. In the case of the writ petitioners herein
represented by Mr. Govind Goel, the Committee has
considered that there was no work for the writ petitioners. Still
further, instead of abolishing the post, the Federation granted
revised pay scale which was better than the pay scale
recommended by the Pay Commission but less than the pay
scale granted by the State Government in pursuance of the
recommendations of the Anomaly Committee. Thus, it cannot
be said to be a discriminatory or arbitrary decision more so in
exercise of power of judicial review. There exist good reasons
not to grant higher pay scale for the reason that there is no
work of the post to which they were appointed but were given
alternate assignments.
35. The judgment in M.M.R. 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
28
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. & Anr. v. Union of
India & Ors.
16
, 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 argument was
raised that the appellant was running in losses and thus
cannot meet the financial burden on account of revision of pay
scales. The Court while rejecting such argument held as
under:
16 1991 Supp. (2) SCC 565
29
“33. The plea of the appellants that the Corporation is
running under losses and it cannot meet the financial
burden on account of revision of scales of pay has been
rejected by the High Court and, in our view, rightly so.
Whatever may be the factual position, there appears to
be no basis for the action of the appellants in denying
the claim of revision of pay scales to the respondents.
If the Government feels that the Corporation is running
into losses, measures of economy, avoidance of
frequent writing off of dues, reduction of posts or
repatriating deputationists may provide the possible
solution to the problem. Be that as it may, such a
contention may not be available to the appellants in
the light of the principle enunciated by this Court
in M.M.R. Khan v. Union of India [1990 Supp SCC 191 :
1990 SCC (L&S) 632 : (1991) 16 ATC 541] and Indian
Overseas Bank v. Staff Canteen Workers' Union [(2000)
4 SCC 245 : 2000 SCC (L&S) 471] . However, so long as
the posts do exist and are manned, there appears to be
no justification for granting the respondents a scale of
pay lower than that sanctioned for those employees
who are brought on deputation. In fact, the sequence of
events discussed above clearly shows that the
employees of the Corporation have been treated on a
par with those in Government at the time of revision of
scales of pay on every occasion.”
38. The judgment in Union of India & Anr. v. S.B. Vohra &
Ors.
17
is distinguished from the present matter as the issue
was regarding pay scale of the employees of the High Court on
recommendation of the Chief Justice. It was observed that
financial implications vis-à-vis effect of grant of a particular
scale of pay may not always be a sufficient reason and
differences should be mutually discussed and tried to be
solved. It is, however, again not a case of financial stringency
17 (2004) 2 SCC 150
30
alone but also the power of the Chief Justice to grant revised
pay scales to the employees of the High Court.
39. General Manager, Kisan Sahkari Chini Mills Ltd.,
Sultanpur, U.P. v. Satrughan Nishad & Ors.
18
is a judgment
which deals with the scope of Article 12 in respect of
Cooperative Sugar Mills. Mr. 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 & Ors. v. State of Karnataka & Ors.
19
,
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 :
18 (2003) 8 SCC 639
19 (2006) 9 SCC 406
31
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 Civil Secretariat Personal Staff
Assn. [(2002) 6 SCC 72 : 2002 SCC (L&S) 822] that
fixation of pay and determination of parity in duties is
the function of the executive and the scope of judicial
review of administrative decision in this regard is very
limited. However, it is also equally well settled that the
courts should interfere with administrative decisions
pertaining to pay fixation and pay parity when they find
such a decision to be unreasonable, unjust and
prejudicial to a section of employees and taken in
ignorance of material and relevant factors.”
(Emphasis supplied)
41. In the present case, it is contended that the Federation is a
statutory Co-operative Society which is having its Common
Cadre Rules. Any amendment in the Common Cadre Rules is
to be approved by the Registrar (Co-operative Societies). The
State Government communicated on 1.3.1990 and 9.7.1993
that the pay scale as applicable to the Punjab Government
employees is not to be adopted by the Public Sector
Undertakings without taking into consideration the financial
health of the other statutory Boards and Corporations. The
Federation has thus taken a conscious and concerted decision
to not follow the report of the Anomaly Committee of the State
Government to grant revised pay scale from 1.1.1986 in view
of precarious financial condition. Moreover, financial
assistance had to be availed by the Federation from the State
32
Government as well as from the National Dairy Development
Board.
42. A Committee was constituted to examine the grievance of the
employees for grant of revised pay scale. The Committee also
recommended that pay scale be given w.e.f. 1.1.1994 on
account of financial stringency being faced by the Federation.
The Board of Directors approved the recommendation of the
Committee, which was accepted by the Registrar (Cooperative Societies). Therefore, the decision of not to grant
revised pay scale from 1.1.1986 was taken keeping in view the
financial condition of the Federation. The question now is
whether such a decision could have been interfered with in a
writ petition in exercise of power of judicial review.
43. The power of judicial review over the administrative decisions
of the State was examined by a judgment of this Court in Tata
Cellular v. Union of India
20
. Though, that is a case of grant
of contract, but the principles of law are very well 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:
20 (1994) 6 SCC 651
33
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) Procedural impropriety.
The above are only the broad grounds but it does not
rule out addition of further grounds in course of time.
As a matter of fact, in R. v. Secretary of State for the
Home Department, ex Brind [(1991) 1 AC 696] , Lord
Diplock refers specifically to one development, namely,
the possible recognition of the principle of
proportionality. In all these cases the test to be adopted
is that the court should, “consider whether something
has gone wrong of a nature and degree which requires
its intervention”.
xx xx xx
94. The principles deducible from the above are:
34
(1) The modern trend points to judicial restraint in
administrative action.
(2) The court does not sit as a court of appeal but
merely reviews the manner in which the decision was
made.
(3) The court does not have the expertise to correct the
administrative decision. If a review of the
administrative decision is permitted it will be
substituting its own decision, without the necessary
expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be
open to judicial scrutiny because the invitation to
tender is in the realm of contract. Normally speaking,
the decision to accept the tender or award the contract
is reached by process of negotiations through several
tiers. More often than not, such decisions are made
qualitatively by experts.
(5) The Government must have freedom of contract. In
other words, a fair play in the joints is a necessary
concomitant for an administrative body functioning in
an administrative sphere or quasi-administrative
sphere. However, the decision must not only be tested
by the application of Wednesbury principle of
reasonableness (including its other facts pointed out
above) but must be free from arbitrariness not affected
by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy
administrative burden on the administration and lead
to increased and unbudgeted expenditure.
Based on these principles we will examine the facts of
this case since they commend to us as the correct
principles.”
44. In Balco Employees’ Union (Regd.) v. Union of India &
35
Ors.
21
, the Court was examining the policy of disinvestment of
public sector undertakings. It was held that wisdom and
advisability of economic policies of Government are not
amenable to judicial review unless it can be demonstrated
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 and the motion defeated in the Lok Sabha on 1-
3-2001.
xx xx xx
98. In the case of a policy decision on economic
matters, the courts should be very circumspect in
conducting any enquiry or investigation and must be
21 (2002) 2 SCC 333
36
most reluctant to impugn the judgment of the experts
who may have arrived at a conclusion unless the court
is satisfied that there is illegality in the decision itself.”
45. This Court in a judgment reported as Jagdish Mandal v.
State of Orissa & Ors.
22
examined the scope of judicial
review in the matter of award of a contract. The Court held as
under:
“22. Judicial review of administrative action is intended
to prevent arbitrariness, irrationality,
unreasonableness, bias and mala fides. Its purpose is
to check whether choice or decision is made “lawfully”
and not to check whether choice or decision is “sound”.
When the power of judicial review is invoked in matters
relating to tenders or award of contracts, certain
special features should be borne in mind. A contract is
a commercial transaction. Evaluating tenders and
awarding contracts are essentially commercial
functions. Principles of equity and natural justice stay
at a distance. If the decision relating to award of
contract is bona fide and is in public interest, courts will
not, in exercise of power of judicial review, interfere
even if a procedural aberration or error in assessment
or prejudice to a tenderer, is made out. The power of
judicial review will not be permitted to be invoked to
protect private interest at the cost of public interest, or
to decide contractual disputes. The tenderer or
contractor with a grievance can always seek damages
in a civil court. Attempts by unsuccessful tenderers
with imaginary grievances, wounded pride and
business rivalry, to make mountains out of molehills of
some technical/procedural violation or some prejudice
to self, and persuade courts to interfere by exercising
power of judicial review, should be resisted. Such
interferences, either interim or final, may hold up
public works for years, or delay relief and succour to
thousands and millions and may increase the project
cost manifold. Therefore, a court before interfering in
22 (2007) 14 SCC 517
37
tender or contractual matters in exercise of power of
judicial review, should pose to itself the following
questions:
(i) Whether the process adopted or decision made by
the authority is mala fide or 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 & Ors. v. Abdul Halim &
Ors.
23
, 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 not interfered with by the Division
23 (2019) 18 SCC 39
38
Bench of the High Court although such candidate was not
possessing Bengali as a language. The Court held as under:
“27. It is well settled that the High Court in exercise of
jurisdiction under Article 226 of the Constitution of
India does not sit in appeal over an administrative
decision. The Court might only examine the decisionmaking process to ascertain whether there was such
infirmity in the decision-making process, which vitiates
the decision and calls for intervention under Article 226
of the Constitution of India.
28. In any case, the High Court exercises its
extraordinary jurisdiction under Article 226 of the
Constitution of India to enforce a fundamental right or
some other legal right or the performance of some
legal duty. To pass orders in a writ petition, the High
Court would necessarily have to address to itself the
question of whether there has been breach of any
fundamental or legal right of the petitioner, or whether
there has been lapse in performance by the
respondents of a legal duty.
29. The High Court in exercise of its power to issue
writs, directions or orders to any person or authority to
correct quasi-judicial or even administrative decisions
for enforcement of a fundamental or legal right is
obliged to prevent abuse of power and neglect of duty
by public authorities.
30. In exercise of its power of judicial review, the Court
is to see whether the decision impugned is vitiated by
an apparent error of law. The test to determine whether
a decision is vitiated by error apparent on the face of
the record is whether the error is self-evident on the
face of the record or whether the error requires
examination or argument to establish it. If an error has
to be established by a process of reasoning, on points
where there may reasonably be two opinions, it cannot
be said to be an error on the face of the record, as held
by this Court in Satyanarayan Laxminarayan
Hegde v. Millikarjun Bhavanappa
Tirumale [Satyanarayan Laxminarayan
39
Hegde v. Millikarjun Bhavanappa Tirumale, AIR 1960 SC
137]. If the provision of a statutory rule is reasonably
capable of two or more constructions and one
construction has been adopted, the decision would not
be open to interference by the writ court. It is only an
obvious misinterpretation of a relevant statutory
provision, or ignorance or disregard thereof, or a
decision 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 over the decision of Respondent 2.”
47. Later, a three-Judge Bench in a judgment reported as
Municipal Council, Neemuch v. Mahadeo Real Estate &
Ors.
24
followed the aforesaid judgment and held as under:
24 (2019) 10 SCC 738
40
“16. It could thus be seen that an interference by the
High Court would be warranted only when the decision
impugned is vitiated by an apparent error of law i.e.
when the error is apparent on the face of the record
and is self-evident. The High Court would be
empowered to exercise the powers when it finds that
the decision impugned is so arbitrary and capricious
that no reasonable person would have ever arrived at.
It has been reiterated that 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. Not only this but such a
decision must have led to manifest injustice.”
48. In another recent judgment reported as Harshit Agarwal &
Ors. v. Union of India & Ors.
25
, this Court held that judicial
review of administrative action is permissible on grounds of
illegality, irrationality and procedural impropriety. An
administrative decision is considered as flawed if it is illegal,
and a decision is illegal if it pursues an objective other than
that for which the power to make the decision was conferred.
The discretion exercised by the decision maker is subject to
judicial scrutiny if a purpose other than the specified purpose
is pursued. The Court observed that:
“10. Judicial review of administrative action is
permissible on grounds of illegality, irrationality and
procedural impropriety. An administrative decision is
flawed if it is illegal. A decision is illegal if it pursues an
objective other than that for which the power to make
the decision was conferred [De Smith's Judicial Review,
(6th Edn., p. 225)] . There is no unfettered discretion in
public law [Food Corpn. of India v. Kamdhenu Cattle
Feed Industries, (1993) 1 SCC 71] . Discretion conferred
25 (2021) 2 SCC 710
41
on an authority has to be necessarily exercised only for
the purpose provided in a statute. The discretion
exercised by the decision maker is subject to judicial
scrutiny if a purpose other than a specified purpose is
pursued. If the authority pursues unauthorised
purposes, its decision is rendered illegal. If irrelevant
considerations are taken into account for reaching the
decision 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 financial condition for the period from 1.1.1986 to
42
1.1.1994. The Federation has categorically stated that
because of the remedial steps taken by the Federation, there
was turn around only after 1994. Still further, we find that the
profits in the balance sheet are not meant to be appropriated
towards wages of the employees alone. Though the profits
had to be shared by the members of the Co-operative Society,
but the employees of the Federation are not its members. The
income generated by the Federation is not to be expanded
only on payment of salary but is also required for upgradation
of technology, renovation and expansion of plants etc.
Therefore, entire profit is not to be appropriated towards the
wages of the employees alone. The Federation was
established as a step towards white revolution. The objective
of the Federation was not to give employment but to increase
milk production in the State. The employees are facilitators of
the employer to achieve such objective and thus demanding
enhanced wages without considering the objective and
financial condition of the employer would not be ideal. The
employer and the employees have to work together to
achieve the objective of the organisation i.e. white revolution
rather frittering away the gains made by the joint efforts of
the management and employees by giving increased wages to
the employees irrespective of its capacity to bear such
43
expenses.
51. The submission that there will not be financial burden on the
federation in view of the fact that the High Court has ordered
payment of arrears for a period of 3 years and 2 months
before the date of filing of writ petitions is again not tenable.
The High Court has granted revised pay scales with effect
from 01.01.1986 instead of revised pay scales granted to the
employees of the federation with effect from 01.01.1994.
Therefore, restricting it for a period of 3 years and 2 months
will not be helpful in respect of the financial condition of the
Federation as during the relevant time the federation was
suffering from huge losses.
52. In view of the above, we find that the order of the High Court
is unjustified and in excess of the power of judicial review
conferred on the High Court. Consequently, the appeals are
allowed. The orders passed by the High Court are hereby set
aside and the writ petitions are dismissed.
CIVIL APPEAL NO. 7432 OF 2011
53. 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
44
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
Procurement Assistants Grade-I on the principle of equal pay
for equal work.
56. The said contention of the employees is controverted by the
Federation, inter alia, on the ground that the Milk Procurement
Assistants are not the employees of the Apex Society i.e.
Punjab State Co-operative Milk Producers Federation but they
45
are employees of the District Co-operative Milk Producers
Union which is a separate entity. The staffing pattern for
District Co-operative Milk Producers Union, as approved by the
Registrar (Co-operative Societies), shows that different
educational qualifications and experience is prescribed for
appointment to Milk Procurement Assistants Grade-I & II. It
has also been pointed out that there is qualitative difference in
the responsibilities of the two sets of employees. Milk
Procurement Assistants Grade-II are allotted 10 to 12 villages
at the village-level Milk Producers Co-operative Society for
supervising their work with regard to milk collection, testing,
record keeping, payment to producers of milk, transportation
of milk and to attend the other problems of the societies
whereas the duty of the Milk Procurement Assistants Grade-I is
to supervise the work of Milk Procurement Assistant Grade-II.
One Milk Procurement Assistant Grade I officer supervises the
work of six to seven Milk Procurement Assistants Grade II.
57. As per the staffing pattern, the educational qualifications for
Milk Procurement Assistants Grade-I are Bachelor’s Degree
with minimum three years’ experience of Organisation of Milk
Producers Co-operative Societies affiliated with Milk Producers
Co-operative Unit whereas for Milk Procurement Assistant
Grade II, the qualification is Graduation preferable in
46
Agriculture with one year experience of working as Secretary
in a Co-operative Milk Supply Society. The pay scale
prescribed for the Milk Procurement Assistants Grade-I is
Rs.700-1200 whereas the pay scale prescribed for the Milk
Procurement Assistants Grade-II is Rs.480-880. It is sought to
be contended that, in fact, Milk Procurement Assistants GradeI is a promotional avenue for Milk Procurement Assistants
Grade-II.
58. As stated, the educational qualifications and the
responsibilities of the two posts are quite different. Therefore,
the principle of equal pay for equal work would not be
applicable to them inasmuch as Grade I is a higher post
having 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
47
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 Rs.700-1200 whereas respondent
No. 5 is Animal Husbandry Assistant in the same pay scale of
Rs.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 Rs.850-1700. The employees have pleaded
that w.e.f. 2.2.1987, the designation of Milk Procurement
Assistants Grade-I has been changed to Milk Procurement
Supervisor and now the workload has increased inasmuch as
fifty societies are to be supervised as against eight societies
which were supervised, without any increase in the pay scale.
It was argued that the duties and functions of the employees
and the other Area Officers including Deputy Manager
(Procurement) and Dairy Extension Officer are the same as
such posts are interchangeable.
62. In the written statement filed before the High Court, the stand
of the Federation was that the employees have since long
been permanently transferred to the Milk Union, Ludhiana. It
48
was pointed out that the employees and the Deputy Manager
(Procurement)/Dairy Extension Officer do not constitute one
class as the posts are not similar on the points of qualifications
and duties to be performed by the incumbents. The
classification on the basis of qualifications, educational or by
experience, for the fixation of pay is permissible under the
Constitution. The qualifications of Milk Procurement Assistant
Grade-I or Animal Husbandry Assistant is
Graduation/Matriculation with live-stock Diploma course
whereas the essential qualifications for the post of Dairy
Extension Officer and for the post of Deputy Manager
(Procurement) is B.Sc. Dairy Husbandry/Dairy Technology with
two to three years’ experience.
63. We have heard learned counsel for the parties. Firstly, the
order passed by the High Court has not been challenged in
appeal by the employees. Secondly, the classification of
different pay scales is permissible based upon educational
qualifications, experience and nature of duties. In view of the
said facts, we do not find that the employees are entitled to
the pay scale as claimed in the writ petition.
64. We do not find any merit in the argument claiming equal pay
for the alleged equal work. Consequently, the appeal is
49
allowed. The orders passed by the High Court are hereby set
aside.
.............................................J.
(SANJAY KISHAN KAUL)
.............................................J.
(HEMANT GUPTA)
NEW DELHI;
JULY 9, 2021.
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