What is involved in this case, is the fixation of date for the implementation of the Fifth Pay Commission recommendations, when applied to the respondent Corporation. That decision denied the benefit of revision of pay scales, as recommended by the Fifth Pay Commission, to the employees of the Maharashtra State Financial Corporation (hereafter “MSFC”) who had retired or died during the period of 01.01.2006 to 29.03.2010. The MSFC had also urged before the High Court, that the benefit was granted to those employees on the rolls of the corporation, as of 29.03.2010, in order to motivate and incentivise them for better performance.
Considering the target of loan recovery fixed for the years 2009-10, it was felt necessary to motivate the existing staff to give benefit of pay revision to employees to work hard for achieving the recovery target. After considering the above fact, the Finance Department of the answering Respondent took decision to approve the revision of pay scale and communicated decision to respondent No.2 vide Government GR No.
Also Read: https://newslaw.in/supreme-court/legal-analysis-of-claim-for-loss-of-profit-in-delayed-contract/
SFC-2009 (422/Industries-7) dated 29/03/2010, as per the recommendations made by the Finance Department. It is submitted that the decision taken by the answering Respondent is based on objective and rational considerations.” In the decisions relied upon by Shri Puranik, the learned Counsel for the respondent – Corporation in the matter of revision of pay scale, the Apex Court has clearly laid down that financial implication is the relevant criteria for fixing the cut-off date. Jay Salva, learned counsel for the appellants argued that the last pay revision was made applicable to MSFC’s employees from 01.01.1986, which expired on 31.12.1989, and MSFC considered pay revision to be made effective from 01.01.1990. Thus, the fixation of date, in this case, is arbitrary as it deprives the benefit of pay revision – which is otherwise made applicable to all employees who worked during a particular period – to those who ceased to be in employment, despite working in the said period.
It was further argued that no recoveries were made (under the impugned GR dated 29.03.2010) of the amount paid towards interim relief and ad hoc amount paid to existing employees from September, 1993 to July, 2001 which shows that the Fifth Pay Commission’s recommendations were implemented from 01.01.1996. Salva placed reliance on the following condition (Clause 5) of the VRS scheme : “The officers/employees whose request for voluntary retirement is accepted by the Corporation will be entitled for payment of arrears on account of revision of pay-scales and allowances as also for the difference of voluntary retirement benefits accruing to them on account of revision of pay-scales, if and as may be made effective retrospectively to the employees of the Corporation by the Board and approved by Govt.
It was submitted that under Section 39 of the State Financial Corporations Act, 1951 it has to seek guidance and directives of the State Government in policy matters.
It only approved a proposal to extend the benefit of Fifth Pay Commission recommendations to the Corporation’s employees in terms of its letter dated 23.09.2010. Granting any benefit to employees normally involves fixing of cut-off date. The payment of such amounts along with other terminal dues led to cessation of employment; consequently, the claim of such employees who have already secured benefits by way of ex-gratia payouts towards pay revision was not justified.
A close analysis of the facts would show that the question of pay revision of employees of MSFC has been engaging attention for a considerable period of time. However, the MSFC, did not, finalise whether to adopt those scales for its employees and sent the proposal to the State Government (as provided under S. The decision to make the pay revision effective in respect of the employees who were existing employees and limit the arrears payable from 01.01.2006, is based upon the State of Maharashtra letter dated 29.03.2010. Government Decision: The Government has given its consent vide this Order for implementation of revised Pay Scales as per 5 Commission subject to the following terms to the employees/officers of Maharashtra State Financial Corporation as shown in Column No.5 of the enclosed Annexure ‘A’. By Office Order dated 09.04.2010, the MSFC decided to implement the decision of the Government of Maharashtra and grant the benefits of the Fifth Pay Commission to employees of the Corporation who were on its rolls on that date. of Maharashtra
in order to motivate the present staff to recover maximum amount in NPA Accounts, vide its GR No.SFC-2009/(422)/Industries-7 dated 29.03.2010 has decided to implement Fifth Pay Commission to the employees of the Corporation who are on the roll of the Corporation as on date of the issue of the Government GR subject to terms and conditions as mentioned in the said GR. (xi) Salary as per revised Pay Scale will be paid from 01.04.2010 and arrears for the period from 01.01.2006 to 31.03.2010 will be paid in two instalments on or before 31 May, 2010.” The fixation of pay as per revised pay-scales condition, in the said order, reads as follows: “6. Besides aforesaid interim relief, the Corporation also gave lumpsum adhoc amount towards Revision of Pay Scale from September, 1996 to July, 2001 as under: Category Amount (Rs.)
Class “A” employees 34,375/- Class “B” employees 28,480/- Class “C” employees 22,585/-
The note also set out the number of employees concerned, as follows: “There were 950 employees on the roll of the Corporation as on 01.01.1996. The total net liability works out to Rs.39.08 crore after deducting amount of interim relief and ad-hoc payment, the details of which are as under: (Rs. At the same time, a larger public interest is involved, impelling revision of pay of public officials and employees. Sound public policy considerations appear to have weighed with the Union and state governments, and other public employers, which have carried out pay revision exercises, periodically (usually once a decade, for the past 50 years or so).
The court also noted neutralization of wages, through dearness allowance is on a “sliding scale” with those at the lowest wage bracket, getting full neutralization and those in the highest rungs being given the least of such allowance: “Workers are therefore concerned with the purchasing power of the pay- packet they receive for their toil. In the cost-of-living sliding scale systems the basic wages are automatically adjusted to price changes shown by the cost-of-living index. observed that the whole purpose of granting dearness allowance to workmen being to neutralise the portion of the increase in the cost of living, it should ordinarily be on a sliding scale and provide for an increase when the cost-of-living increases and a decrease when it falls. Barot, Member, Industrial Court, Gujarat [(1979) 4 SCC 622] and it was emphasised that normally full neutralisation is not given except to the lowest class of employees and that too on a sliding scale.” Therefore, the state and public employers have an obligation to address – as a measure of public interest, the ill-effects of rise in the cost of living, on account of price rise, which results in fall in real wages. At the same time, fitment and fixation of salary was with effect from 1 January 1996, in terms of Para 6 of the MSFC’s circular dated 09.04.2010, which stipulated that revised salary “ will be fixed with effect from 01.01.1996 as per the formula of the Fifth Pay Commission as mentioned below”.
Another significant fact is that interim relief had been directed and was made payable, to all employees, between 01.01.1996 and 29.03.2010. Seventy-five per cent of the posts were to be filled through the regular promotion channel based on seniority and twenty-five per cent “ by selection of suitable persons from amongst the persons holding the post of Forest Guard, on the basis of common merit list prepared by the Additional Principal Chief Conservator of Forests (Administration Subordinate Cadre), Maharashtra State, Nagpur, on the basis of result of the “Limited Departmental Competitive Examination…”. The situation would have been different if, in the first place, there had been a classification wherein 75% of the posts have to be filled based on seniority and 25% reserved for graduates and again subject to inter se merit in the competitive examination. The Forest Guards, irrespective of educational qualifications, having formed one class for the purpose of participation in LDCE, a further classification between graduates and non-graduates for participating in LDCE is unreasonable. This court held that the discrimination, brought about on the basis of date of retirement, was invidious: “The State while implementing the new scheme for payment of pensionary benefits to its employees, may deny the same to a class of retired employees who were governed by a different set of rules.
Case Title: MAHARASHTRA STATE FINANCIAL CORPORATION EXEMPLOYEES ASSOCIATION Vs. THE STATE OF MAHARASHTRA (2023 INSC 96)
Case Number: C.A. No.-000778-000778 / 2023
