Maharashtra State Financial Corporation Ex-Employees Association & Ors Vs State of Maharashtra & Ors (Supreme Court of India)
Supreme Court held that employees who secured VRS benefits and left the service of MSFC voluntarily during this period, stand on a different footing. They cannot claim parity with those who worked continuously, discharged their functions, and thereafter superannuated.
Facts-
The appellant association (consisting of employees who had superannuated, opted for VRS, resigned, or legal heirs of expired employees of the respondent corporation) challenge a judgment1 of the Bombay High Court (Nagpur bench). In that proceeding, the appellants had complained of discrimination against the decision dated 29.03.2010, of the Industry, Energy and Labour Department, Government of Maharashtra (hereafter “the State”). 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. That decision of the State made the revision of pay scale as a result of the Report of the Fifth Pay Commission applicable to 115 employees of MSFC who were working as on 29.03.2010. The revision, however, was given effect from 01.01.2006.
The appellants had urged before the High Court, that denying them the benefit of pay scales was discriminatory and arbitrary, because they were in continuous service, and had even received the benefit of interim revision, pending finalization of pay scales pursuant to the Pay Commission Report. It was urged that those in employment on and after 29.03.2010, and those who continued in service after 01.01.2006 but retired before 29.03.2010, belonged to the same category. The only difference between those who were in service after the latter date, was that they had longer period of service. However, the crucial date for grant of pay revision, was the date from which it was given effect to, i.e., 01.01.2006. As all the appellants were in service as on that date, the denial of pay revision, which was concededly for the period they had worked, amounted to not only hostile discrimination, but also withholding of pay revision benefits, legitimately and rightfully theirs.
Conclusion-
Held that employees who secured VRS benefits and left the service of MSFC voluntarily during this period, stand on a different footing. They cannot claim parity with those who worked continuously, discharged their functions, and thereafter superannuated. VRS employees chose to opt and leave the service of the corporation; they found the VRS offer beneficial to them.
It is held that VRS employees cannot claim parity with others who retired upon achieving the age of superannuation. Likewise, those who ceased to be in employment, for the reason of termination, or their dismissal, etc., would not be entitled to the benefit of pay revision.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Special leave to appeal granted. With the consent of learned counsel for the parties, the appeal was heard finally.
2. 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 framing a policy concerning fixation of pay for the salaries of its employees, the extent of its revision, and even the date of its implementation, are matters of undoubted exclusive executive decision making powers. However, the manner of its implementation, the timing of applicability of a scheme, and its impact, especially where it results in exclusion of a certain section of public employees from the benefit, are subject matters of scrutiny by the court, especially, when the complaint is of discrimination and violation of Article 14 of the Constitution. This is one such case.
3. The appellant association (consisting of employees who had superannuated, opted for VRS, resigned, or legal heirs of expired employees of the respondent corporation) challenge a judgment1 of the Bombay High Court (Nagpur bench). In that proceeding, the appellants had complained of discrimination against the decision dated 29.03.2010, of the Industry, Energy and Labour Department, Government of Maharashtra (hereafter “the State”). 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. That decision of the State made the revision of pay scale as a result of the Report of the Fifth Pay Commission applicable to 115 employees of MSFC who were working as on 29.03.2010. The revision, however, was given effect from 01.01.2006.
4. The appellants had urged before the High Court, that denying them the benefit of pay scales was discriminatory and arbitrary, because they were in continuous service, and had even received the benefit of interim revision, pending finalization of pay scales pursuant to the Pay Commission Report. It was urged that those in employment on and after 29.03.2010, and those who continued in service after 01.01.2006 but retired before 29.03.2010, belonged to the same category. The only difference between those who were in service after the latter date, was that they had longer period of service. However, the crucial date for grant of pay revision, was the date from which it was given effect to, i.e., 01.01.2006. As all the appellants were in service as on that date, the denial of pay revision, which was concededly for the period they had worked, amounted to not only hostile discrimination, but also withholding of pay revision benefits, legitimately and rightfully theirs.
5. By the impugned order, the High Court accepted the submissions of MSFC and the State, that financial considerations were of importance in regard to grant or denial of monetary benefits. 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.
6. After quoting the counter affidavit filed by the State Government, which approved such revision, the High Court accepted MSFC’s argument:
““…It was also considered that there were only 115 employees working in the Respondent No.2 Corporation and the said strength of said employees will further reduce in near future. An expenditure of Rs.16.00 lakhs per month was being incurred on the salary payable to the employees. It was also noted that the Respondent No.2 stopped sanctioning and disbursing loan from the year 2005 and presently only the work of recovery of loans already given is being done. It was also considered that the strength of the employees existing is necessary for carrying out the work of loan recovery. 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. Considering the financial implications, keeping in view the number of employees it was decided to implement 5th pay to the employees of Respondent No.2. Accordingly, considering its income and considering all relevant factors; it was decided that the pay revision based on 5th Pay Commission recommendations should be given only to the existing employees and that the revised pay scales should be made applicable from 01.01.2006. 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.SFC-2009 (422/Industries-7) dated 29/03/2010, as per the recommendations made by the Finance Department. Accordingly, Government Resolution dated 20.03.2010 was issued.
16. It is specifically denied that the Government Resolution dated 29.03.2010 is discriminatory in nature and violets the fundamental rights of the member of the Petitioner Union. It is submitted that the answering Respondent has already taken policy decision on 16.02.2010 not to extend any budgetary support to any public sector Corporation in the State for the purposes of granting pay revision to its employees. Considering the fact the Respondent No.2 is not a profit making Corporation, the question of pay revision was considered keeping in view the financial implications and the capacity of Respondent No.2 which played development role to bear the additional financial burden on account of such pay revision. At the same time it was noted that it was also necessary to give existing employees pay revision to motivate them to work hard for recovering the loans already disbursed. The pay revision was made effective from 01.01.2006 again keeping in view the financial implications. It is submitted that the decision taken by the answering Respondent is based on objective and rational considerations.”
7. 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. The other decisions relied upon by Shri Dhole, the learned Counsel for the petitioners are on the question of payment of pension and other benefits.
8. Keeping in view the justification furnished by the respondent nos.1 and 2, we do not find that fixation of cut off date of 29/3/2010 in the present case is arbitrary or irrational. We, therefore, do not find any substance in the petition.”
The appellants’ contentions
7. 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. Its proposal for pay revision was submitted to the State Government by the Board of Directors of MSFC. The revision of pay and emoluments was approved by MSFC’s Board of Directors, and it was forwarded to the State of Maharashtra for final approval in the year 1996. Pending approval of the said revision, further five revisions were kept due. Instead of considering those revisions, the MSFC’s Board of Directors arbitrarily implemented the pay commission’s recommendations w.e.f. 01.01.1996. The benefits of revised pay were passed on to the existing 115 employees working at the relevant time only, and deprived 900 ex-employees of similar benefits, though the revision was applicable to them for the period of their service time span, respectively.
8. It was submitted that the cut-off date, for granting benefits of the pay revision, is arbitrary, because several employees had retired, after long years of loyal service. They would be deprived of the benefit of any pay revision, merely because the MSFC chose to implement the decision on a particular date, after their retirement.
9. It was also urged that the State and the MSFC cannot discriminate between persons who worked during the same period, and discharged their duties in accordance to its mandate, merely because some of them had retired. 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 submitted that those who worked for the period 2000-2005 are in the same class of employees, who worked after the so called cut-off date, i.e., 01.01.2006.
10. It was submitted that all those in employment, including those who were finally deprived of the pay revision on account of retirement, were granted three interim reliefs by the MSFC from September, 1993 onwards (on 03.03.1994, 29.04.1996, and 07.09.1996) towards the recommendations of the Fifth Pay Commission, in line with directions of the Maharashtra government.
11. 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.
12. Salva further submitted that the total liability of the MSFC is not more than ₹ 32 crores, in respect of past employees, including those who had retired, sought VRS, or had died before the pay revision was made effective. The figure of existing employees, as on the date of the issuance of the order was 114; 130 had retired and 631 had sought voluntary retirement. However, all of them had benefited and secured interim relief to the extent of 30%, through the orders of the MSFC itself. In these circumstances, singling out existing employees from a homogenous larger group, amounted to hostile discrimination against those left out.
