Karnataka High Court
Sri Jayaram V L vs Union Of India on 4 July, 2023
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NC: 2023:KHC:23097
WP No. 2175 of 2022
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 4TH DAY OF JULY, 2023
BEFORE
THE HON'BLE MR. JUSTICE E.S.INDIRESH
WRIT PETITION NO.2175 OF 2022 (S-RES)
BETWEEN:
1. SRI JAYARAM V.L.
S/O LATE V. LAKSHMAIAH
AGED ABOUT 66 YEARS,
RETIRED ASST. GENERAL MANAGER
NO.156, II BLOCK
13TH MAIN, HMT LAYOUT
VIDYARANYAPURA
BENGALURU - 560 097.
2. SRI H. RAVINDRA
S/O LATE N. HANUMANTHA RAO
AGED ABOUT 67 YEARS,
RETIRED DY. MANAGER (HR AND TRG)
NO.13, I CROSS, YELLAPPA GARDEN
BSK III STAGE, BANAGIRINAGARA
BENGALURU-560085.
Digitally signed by
SHARMA ANAND
CHAYA
3. SRI M.R. VISWANATH
Location: High Court S/O LATE M.V. RAMASWAMY
of Karnataka
AGED ABOUT 68 YEARS,
RETIRED DEPUTY GENERAL MANAGER
NO.567/37 13TH, 'A' CROSS
BHUVANESHWARANAGAR
HEBBAL-KEMPAPURA
BENGALURU-560 024.
4. SRI PILLAPPA N.
S/O LATE S.M. NANJAPPA
AGED ABOUT 68 YEARS,
RETIRED WORKERS SUPERVISOR-1
NO.307, 6TH CROSS
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WP No. 2175 of 2022
3RD BLOCK, HMT LAYOUT
VIDYARANYAPURA
BENGALURU-560 097.
5. SRI THYAGARAJU M.
S/O LATE MUNITHIMMAIAH
AGED ABOUT 70 YEARS,
RETIRED DY.GENERAL MANAGER (SR)
NO.21, 6TH CROSS
VASANTHANAGAR
BENGALURU-560052.
6. SRI PRAKASH M.
S/O LATE GAANGADHARAN M R
AGED ABOUT 66 YEARS,
RETIRED DY. MANAGER
NO.45, 2ND MAIN
NATARAJA LAYOUT
(OPP RBI LAYOUT)
J P NAGAR, 7TH PHASE
BENGALURU-560 078.
7. SRI MADHAVA R.
S/O LATE RAMACHANDRA RAO S.
AGED ABOUT 66 YEARS,
RETIRED MANAGER (ASSY.PROG)
NO.114, 5TH CROSS
MODEL HOUSE STREET
BASAVANAGUDI
BENGALURU - 560 004.
8. SRI B. SUDHAKAR
S/O GUNDU RAO
AGED ABOUT 65 YEARS,
RETIRED ASST. GEN MANAGER
"SUMERU"
NO.45/1, RATHNA VILAS ROAD
BASAVANAGUDI
BENGALURU - 560 004.
9. SHRI MUNIYAPPA
S/O LATE MUNISWAMAPPA K.
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WP No. 2175 of 2022
AGED ABOUT 69 YEARS,
RETIRED AGM (PLANT MAINTENANCE )
NO.615, 3RD CROSS 7TH MAIN
HMT LAYOUT, R. T. NAGAR
BENGALURU-560032.
...PETITIONERS
(BY SRI. DHANANJAY JOSHI, SENIOR COUNSEL FOR
SMT. KAVITHA D., ADVOCATE)
AND:
1. UNION OF INDIA
MINISTRY OF HEAVY INDUSTRIES
AND PUBLIC ENTERPRISES
DEPARTMENT OF HEAVY INDUSTRY
REPRESENTED BY ITS SERETARY
UDYOG BHAVAN
NEW DELHI-110 001.
2. HMT LIMITED
HMT BHAVAN
NO.59 BELLARY ROAD
BENGALURU - 560 032
REPRESENTED BY ITS
CHAIRMAN AND MANAGING DIRECTOR.
3. HMT MACHINE TOOLS LIMITED
BANGALORE COMPLEX
HMT POST JALAHALLI
BENGALURU-560013.
...RESPONDENTS
(BY SRI.P.CHIDANANDA, ADVOCATE FOR R1 TO R3)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
QUASH THE IMPUGNED LETTER DATED 31.03.2014 ISSUED BY
THE RESPONDENT 1 (ANNX-A) AND THE IMPUGNED OFFICE
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WP No. 2175 of 2022
ORDER NO.15/2014 DATED 10.06.2014 ISSUED BY THE
RESPONDENT 2 (ANNX-B) AND ETC.
THIS PETITION, COMING ON FOR FURTHER HEARING,
THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
Heard learned counsel for the parties.
1. In this writ petition, petitioner has challenged the order dated 31.03.2014 issued by respondent No.1 (Annexure-A) and Office Order No.15/2014 dated 10.06.2014 issued by respondent NO.2 (Annexure-B).
2. In this writ petition, petitioners claim to be retired employees of second and third respondents and the respondent
- Company is a Central Government Unit. It is further stated in the writ petition that, the Central Government has made 1992 pay revision in respect of all public sector undertakings between March and April 1994 and as such, the respondent No.2 has taken steps to implement the *1997 pay scale with retrospective effect from *01.01.1997 It is the grievance of the petitioners that, though the petitioners herein were employed with respondent No.3, however no decision was taken to implement 1992 pay scale revision till 2014 and as per letter *corrected vide Court Order dated 05.12.2023. -5-
NC: 2023:KHC:23097 WP No. 2175 of 2022 dated 31.03.2014 (Annexure-A), the respondent took decision to revise the pay scale prospectively with effect from 28.02.2014 instead of *01.01.1997. Feeling aggrieved by the same, petitioners have presented this writ petition.
3. I have heard Sri. Dhananjay Joshi, learned Senior Counsel appearing for the petitioners and Sri. P. Chidanand, learned counsel appearing for respondents 1 to 3.
4. Sri. Dhananjay Joshi, learned Senior Counsel appearing for the petitioners invited the attention of the Court to Clause
(b) of the impugned letter dated 31.03.2014 and argued that, the classification made between the employees of the respondent who are on rolls / superannuation, cannot be made and benefits are ordered prospectively applying the pay revision in terms of letter dated 31.03.2014 is incorrect. He further argued that, the ground on which the respondent - Company is restricting the revision of payscale prospectively is on account of financial position of the respondent - Company and the said aspect cannot be a ground to deny the legitimate benefits to the petitioners herein. He further contended that, in identical case, the Punjab and Haryana High Court in CWP No.18512 of 2011 disposed of on 03.10.2011 (Annexure-F) had *corrected vide Court Order dated 05.12.2023. -6-
NC: 2023:KHC:23097 WP No. 2175 of 2022 an occasion to direct the respondent - Company therein which is one of the subsidiary companies of respondent No.2 and directed the said respondent - Company to revise the pay scale of the Officers of particular cadre employees inter alia direction was issued to pay the arrears and therefore, he contended that, denial of the similar payscale benefit to the petitioners till 2014 amounts to violation of Article 14 and 16 of the Constitution of India. Learned Senior Counsel places reliance on the judgment of the Hon'ble Supreme Court in the case of MAHARASHTRA STATE FINANCIAL CORPORATON EX EMPLOYEES ASSOCIATION AND OTHERS Vs. STATE OF MAHARASHTRA AND OTHERS disposed of on 02.02.2023 to buttress the argument that, financial inability is not a ground to deny the legitimate payscale to the employees and accordingly, sought for interference of this Court.
5. Per contra, Sri. P. Chidananda learned counsel appearing for respondent sought to justify the impugned order passed by the respondent - company and submitted that the HMT has distinct Units and they are not under the same management. He further contended that, on the basis of the recommendation made by the Board for Restructuring of Public Sector -7- NC: 2023:KHC:23097 WP No. 2175 of 2022 Enterprises, the Government has taken a decision to include the Hindustan Machine Tools Limited to implement the 1992 pay scale with one time relaxation in terms of DPE Guidelines. He further contended that the employees of HMT Machine tools were not entitled for pay guidelines and the question relating to pay fixation of employees is prerogative of employer and as such, learned counsel appearing for the respondents submitted that the respondents have implemented the revision of pay scale prospectively with effective from 28.02.2014 (Annexure- A), inter alia to meet the financial exigencies, raising retirement age from 58 to 60 years in respect of 10% of employees retiring in a financial year and accordingly, it is the categorical argument of Sri. Chidanand that, the matter has been taken in consonance with the Cabinet Committee on Economic Affairs and therefore, he contended that, no interference is called for in this writ petition.
6. In the light of the submission made by the learned counsel appearing for the parties, it is not in dispute that the petitioners herein were the employees of the respondent - Company. Perusal of the writ papers would indicate that the respondent - Company has taken a decision in terms of the -8- NC: 2023:KHC:23097 WP No. 2175 of 2022 direction issued by the Government to issue revision of pay scale prospectively from 28.02.2014. Perusal of the letter would indicate that, the respondent - Company is suffering financially, however, the said aspect cannot be a ground to deny the benefits to the employees. It is also well settled principle in law that financial constraints cannot be a ground to deny legitimate dues to the employees. In so far as the applicability of revisional pay scale from 28.02.2014, it is to be noted that the respondent - Authorities by letter 07.02.2017 (Annexure-R3) has stated that the HMT Industry was restructured during 2000 with the formation of subsidiary Companies based on business portfolios in keeping with the contemporary business funds. In that view of the matter, I am of the view that, the bifurcation of respondent - Company was in the year 2000 and if the subsidiary Company is extending benefits to its employees since 01.01.1997 same benefit cannot be denied to the employees of other unit and the said exercise to retired employees from implementing the benefit from 2014 has no relevance in so far as the classification made under Article 14 of the Constitution of India.
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7. It is also made clear that the petitioners herein were on rolls till bifurcation effected in 2000 in the second respondent - company and thereafter the company was restructured and in this regard the negative networth of respondent No.3 is not a ground to deny the legitimate claim of the petitioners as in identical case, the respondent - Company has implemented the same in other Units. and such a classification between the subsidiary companies would not withstand the touch stone of Article 14 of the Constitution of India. Sri. Chidanand further argued that, the judgment of Punjab and Haryana in CWP No.18512/2010 was under consideration before the Appellate Jurisdiction in LPA No.299/2012. However, the said aspect cannot be a ground to dismiss the petition as the classification which has been made by the respondent No.2 to implement the 1997 pay scale with effect from 2014 is incorrect. At this juncture, it is relevant to cite the judgment of the Hon'ble Supreme Court in the case of MAHARASHTRA STATE FINANCIAL CORPORATON EX EMPLOYEES ASSOCIATION (SUPRA), paragraph Nos. 2, 3 and 36 to 39 & 42 read as under:
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NC: 2023:KHC:23097 WP No. 2175 of 2022 " 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 (hereinafter "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
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NC: 2023:KHC:23097 WP No. 2175 of 2022 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 ******* ****** ******
36. In U.P. Raghavendra Acharya. v. State of Karnataka a notification dated 22.07.1999, issued by the State of Karnataka, denied revised scales of pay to those teachers who had retired during the period from 01.01.1996 to 31.03.1998. The High Court held that the impugned notifications were arbitrary as these resulted in discrimination between the teachers working in the government colleges and the teachers working in the Non-Government Colleges, which would mean treating the equals unequally. It was further opined that, in any event, the teachers of the Government Aided Colleges as also the teachers of the Regional Engineering Colleges formed a class by themselves and no discrimination could have been made between the employees who retired prior to 31.03.1998 and those retiring subsequent thereto. 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 grant 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. The extension of the benefits can also be denied to a class of employees if the same is permissible in law. The
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NC: 2023:KHC:23097 WP No. 2175 of 2022 case of the appellants, however, stands absolutely on a different footing. They had been enjoying the benefit of the revised scales of pay.
Recommendations have been made by the Central Government as also the University Grant Commission to the State of Karnataka to extend the benefits of the Pay Revision Committee in their favour. The pay in their case had been revised in 1986 whereas the pay of the employees of the State of Karnataka was revised in 1993. The benefits of the recommendations of the Pay Revision Committee w.e.f. 1.1.1996, thus could not have been denied to the appellants.
The stand of the State of Karnataka that the pensionary benefits had been conferred on the appellants w.e.f. 1.4.1998 on the premise that the benefit of the revision of scales of pay to its own employees had been conferred from 1.1.1998, in our opinion, is wholly misconceived. Firstly, because the employees of the State of Karnataka and the appellants, in the matter of grant of benefit of revised scales of pay, do not stand on the same footing as revised scales of pay had been made applicable to their cases from a different date. Secondly, the appellants had been given the benefit of the revised scales of pay w.e.f. 1.1.1996. It is now well settled that a notification can be issued by the State accepting the recommendations of the Pay Revision Committee with retrospective effect as it was
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beneficent to the employees. Once such a
retrospective effect is given to the
recommendations of the Pay Revision Committee, the concerned employees despite their reaching the age of superannuation in between the said dates and/or the date of issuance of the notification would be deemed to be getting the said scales of pay as on 1.1.1996. By reason of such notification as the appellants had been derived of a vested right, they could not have been deprived therefrom and that too by reason of executive instructions.
The contention of the State that the matter relating to the grant of pensionary benefits vis-à-vis the revision in the scales of pay stands on different footing, thus, must be rejected."
37. In All Manipur Pensioners Association by its Secretary v. State of Manipur & Ors.15 the classification by which the formula of pension, whereby those retiring prior to 01.01.1996 were given a lower rate of revised pension, as compared to those retiring later (who were given a higher rate of revision), was held to be discriminatory:
"The facts leading to the present appeal in a nutshell are as under :that the State of Manipur adopted the Central Civil Services (Pension) Rules, 1972, as amended from time to time. As per Rule 49 of the Central Civil Services Rules, 1972, a case of a government employee retired in accordance with the provisions of the Rules after completing
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NC: 2023:KHC:23097 WP No. 2175 of 2022 qualifying service of not less than 30 years, the amount of pension shall be calculated at 50% of the average emoluments subject to a maximum of Rs 4500 per month. It appears that considering the increase in the cost of living, the Government of Manipur decided to increase the quantum of pension as well as the pay of the employees. That the Government of Manipur issued an office memorandum dated 21-4-1999 revising the quantum of pension. However, provided that those Manipur Government employees who retired on or after 1-1-1996 shall be entitled to the revised pension at a higher percentage and those who retired before 1-1-1996 shall be entitled at a lower percentage.
Even otherwise on merits also, we are of the firm opinion that there is no valid justification to create two classes viz. one who retired pre-1996 and another who retired post-1996, for the purpose of grant of revised pension. In our view, such a classification has no nexus with the object and purpose of grant of benefit of revised pension. All the pensioners form one class who are entitled to pension as per the pension rules. Article 14 of the Constitution of India ensures to all equality before law and equal protection of laws. At this juncture it is also necessary to examine the concept of valid classification. A valid classification is truly a valid discrimination. It is true that Article 16 of the Constitution of India permits a valid classification.
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NC: 2023:KHC:23097 WP No. 2175 of 2022 However, a valid classification must be based on a just objective. The result to be achieved by the just objective presupposes the choice of some for differential consideration/treatment over others. A classification to be valid must necessarily satisfy two tests. Firstly, the distinguishing rationale has to be based on a just objective and secondly, the choice of differentiating one set of persons from another, must have a reasonable nexus to the objective sought to be achieved. The test for a valid classification may be summarised as a distinction based on a classification founded on an intelligible differentia, which has a rational relationship with the object sought to be achieved. Therefore, whenever a cut-off date (as in the present controversy) is fixed to categorise one set of pensioners for favourable consideration over others, the twin test for valid classification or valid discrimination therefore must necessarily be satisfied.
In the present case, the classification in question has no reasonable nexus to the objective sought to be achieved while revising the pension. As observed hereinabove, the object and purpose for revising the pension is due to the increase in the cost of living. All the pensioners form a single class and therefore such a classification for the purpose of grant of revised pension is unreasonable, arbitrary, discriminatory and violative of Article 14 of the Constitution of India. The State cannot arbitrarily
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NC: 2023:KHC:23097 WP No. 2175 of 2022 pick and choose from amongst similarly situated persons, a cut-off date for extension of benefits especially pensionary benefits. There has to be a classification founded on some rational principle when similarly situated class is differentiated for grant of any benefit.
As observed hereinabove, and even it is not in dispute that as such a decision has been taken by the State Government to revise the pension keeping in mind the increase in the cost of living. Increase in the cost of living would affect all the pensioners irrespective of whether they have retired pre-1996 or post-1996. As observed hereinabove, all the pensioners belong to one class. Therefore, by such a classification/cut-off date the equals are treated as unequals and therefore such a classification which has no nexus with the object and purpose of revision of pension is unreasonable, discriminatory and arbitrary and therefore the said classification was rightly set aside by the learned Single Judge of the High Court. At this stage, it is required to be observed that whenever a new benefit is granted and/or new scheme is introduced, it might be possible for the State to provide a cut- off date taking into consideration its financial resources. But the same shall not be applicable with respect to one and single class of persons, the benefit to be given to the one class of persons, who are already otherwise getting the benefits and the question is with respect to revision.
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NC: 2023:KHC:23097 WP No. 2175 of 2022 In view of the above and for the reasons stated above, we are of the opinion that the controversy/issue in the present appeal is squarely covered by the decision of this Court in D.S. Nakara [D.S. Nakara v. Union of India, (1983) 1 SCC 305. The decision of this Court in D.S. Nakara shall be applicable with full force to the facts of the case on hand. The Division Bench of the High Court has clearly erred in not following the decision of this Court in D.S. Nakara and has clearly erred in reversing the judgment and order of the learned Single Judge. The impugned judgment and order passed by the Division Bench is not sustainable and the same deserves to be quashed and set aside and is accordingly quashed and set aside. The judgment and order passed by the learned Single Judge is hereby restored and it is held that all the pensioners, irrespective of their date of retirement viz.
pre-1996 retirees shall be entitled to revision in pension on a par with those pensioners who retired post-1996. The arrears be paid to the respective pensioners within a period of three months from today."
38. In the present case, too, there is no denial that the employees who retired prior to 29.03.2010 discharged the same duties as in the case of those who did thereafter. The quality and content of responsibilities assigned to them were the same. The respondents' decision not to grant arrears prior to 01.01.2006 cannot be found fault with; however, not to grant any revision to those who were not in service when the order implementing the pay revision was issued and confining it to those, in employment is clearly discriminatory. The rationale that
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NC: 2023:KHC:23097 WP No. 2175 of 2022 granting such pay revision only to existing employees would be to enthuse them to recover NPA amounts payable to MSFC has no rational nexus with the object sought to be achieved by the pay revision, which is to benefit employees and protect them from the rise in the cost of living.
39. In the present case, therefore, applying the ratio in the above decisions, it is clear that there is no distinction between those who retired (or died in service) before 29.03.2010 and those who continued in service - and were given the pay revision. Those who worked during the period 01.01.2006 to 29.03.2010 and those who continued thereafter, fell in the same class, and a further distinction could not be made. The fact that the MSFC did not recover any interim relief, or ad-hoc amount disbursed between 18.09.1996 to 31.12.2005 (towards recommendations of the 5th Pay Commission), also reaffirms that these exemployees belonged to the same class as those that received the benefit of the pay revisions. The exclusion of the retired employees, who retired between 01.01.2006 and 29.03.2010 on achieving their date of superannuation, is violative of Article 14 of the Constitution of India.
******* ****** ******
42. In view of the above findings, the impugned judgment and order is hereby set aside. The appeal is accordingly allowed, to the extent that those who retired from the services of MSFC between 01.01.2006 to 29.03.2010, and the legal heirs/representatives of those who died during
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NC: 2023:KHC:23097 WP No. 2175 of 2022 that period, shall be entitled to arrears based on pay revision, accepted by the Corporation. The Corporation is directed to pay interest @ 8% p.a. on these arrears from 01.04.2010 till the date of this judgment. These amounts shall be calculated and disbursed to those individuals within eight weeks from today. The appeal is partly allowed, in the above terms. There shall be no order on costs."
8. In the result I pass the following:
ORDER
(i) writ petition is allowed.
(ii) Order dated 31.03.2014 issued by respondent No.1 (Annexure-A) is set aside, consequently office order No.15/2014 dated 10.06.2014 issued by respondent No.2 (Annexure-B) is liable to be set aside and accordingly, it is set aside. Respondent Nos.2 and 3 are hereby directed to extend the benefit of *2007 pay scale revision with effect from *01.01.2007 and all other consequential benefits, to the petitioners herein also.
(iii) It is made clear that respondent is directed to pay the pay scale in terms of 1997 pay scale revision with effect from *corrected vide Court Order dated 05.12.2023.
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NC: 2023:KHC:23097 WP No. 2175 of 2022 1.1.1997 *and 2007 pay scale revision with effect from 01.01.2007 and such other benefits with arrears, if any, within outer limit of six months from the date of receipt of certified copy of this order.
SD/-
JUDGE sac* *inserted vide Court Order dated 05.12.2023.