Eastern Coalfields Ltd. vs Prativa Biswas

Reportable

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S).8606 OF 2009

EASTERN COALFIELDS LTD. & ORS. APPELLANT(S)

VERSUS

PRATIVA BISWAS & ORS. RESPONDENT(S)

O R D E R

1. The question involved in the instant appeal is

the fixation of the salary of the respondents, upon their

absorption in the Eastern Coalfields Limited (hereinafter

referred to as “ECL”). It is one of the subsidiary

companies of the Coal India Limited (for short “CIL”).

2. The respondents were earlier employed in the

Central Hospital, Kalla, which was under Coal Mines Signature Not Verified

Welfare Organisation, set up and maintained by Ministry Digitally signed by DEEPAK MANSUKHANI Date: 2017.10.25 16:41:39 IST Reason: SIGNER CARD OF MR. DEEPAK MANSUKHANI IS BEING USED BY MR. OM PARKASH SHARMA

of Steel, Mines & Coal, Coal Department of the Government

of India. Under the orders of the Government of India, 2

the hospital in question was transferred to the

subsidiary company of Coal India Ltd. w.e.f. 1.8.1985,

and the communication in this regard had been issued on

24.12.1986.

3. Services of the respondents had been transferred

to the Eastern Coalfields Ltd., and they had opted for

their absorption with the ECL. There was a meeting on

25.7.1986, between the Joint Secretary to the Government

of India and an official of Southern Coalfields Ltd. It

was decided that fitment would be offered to the

transferred employees in NCWA scales, which does not

entail any drop in their total emoluments, and that

uniform procedure in this behalf should be followed.

Option form was prepared, and options had been invited in

the Form (Annexure P3) dated 24.12.1986. As the pay

scale already prevailed, the very pay scale for

technical, clerical hospital staff already existed and

the employees’ salaries were to be fixed in respective

grades in the corresponding scales of pay. It was also

mentioned in the Office Order dated 9.1.1987, that

protection to be provided to the salary also.

4. Circular had been issued by CIL that on 3

absorption of employees of Coal Mines Labour Welfare

Organisation in Eastern Coalfields Ltd. (ECL) that is to

take place from 1.1.1987 basic pay and dearness allowance

of the opted employees until 31st December 1986 was to be

taken into consideration for their fixation in an

appropriate Scale and calculation of benefits. The

Additional Chief Medical Officer, Central Hospital, has

taken the decision, that pay was to be fixed in the grade

and pay scales of NCWA-IV (Four) and would be given with

effect from 1.1.1987. The fitment has to be made in such

a way that there was no loss of the employees so far as

pay protection was concerned.

The respondents filed a writ petition on

6.1.1983, WP No.2663/1993 in which they had prayed for

quashing of the decision dated 21.1.1992; it was, inter

alia, also prayed not to reduce the salary which was paid

to them, other emoluments were also claimed. The writ

petition had been decided on 29.8.2002, in which the

following order had been passed:

"Mr. Majumdar learned counsel appearing for the respondent

authority, however, submits that the petitioners have given solitary instance and there had been no 4

categorical assertion on the part of the petitioners that there has been any reduction in pay in respect of other petitioners. Mr. Majumdar learned counsel, however, has not been able to show that other petitioners’ pay got increased with effect from 1.1.1987 or at least their pays were protected. In my view when the petitioners were enjoying the Central Government scale of pay and when they were converted and fitted in the Coal India pay scale, their pay, in any event, could not be reduced, in as much as, pay protection was assured to them. After fitment now if it is found that ultimately lesser amount is to be received on or after 1 st January 1987 that shortfall must be made, need by way of a personal adjustment.

The writ petition succeeds in part.

The Eastern Coal Fields Ltd. is directed to verify each and every individual case of the petitioners and if it is found that after fitment in any of the cases lesser amount in effect was being received by the concerned employees on or after 01.01.1987, personal adjustment with retrospective effect from 01.01.1987 must be given in accordance with the Coal India guideline contained in the office order dated 9th January 1987.

Such benefit must be extended to the writ petitioners within a period of six weeks from the date of communication of this order.

The Writ petition is disposed of."

5

5. Thereafter, fitment was done, and for that, an

order has been placed on record, reflected in P-8, dated

20/21 May 2003, in which fixation has been shown in the

following manner:

“We have considered your case and considering the relevant items, we have come to a conclusion that no more further benefit is payable to you as we have; given you much more salary in comparison to what you were getting salary during the period of C.M.L.W.O. The details are as follows: -

Basic as on DA DA Total Pay Basic F.D.A S.D.A 10% Att. Total 31.12.86 4% 8% fixed as on @1.795 Bonus pay 1.1.87 Rs.1950.00 Rs.78.00 Rs.2028.00 Rs.1834 Rs. 186.00 Rs.32.92 Rs. 183.40 Rs.2236.63

Rs. 156.00 Rs. 2106.00

Yours faithfully, Sd/-

Chief Medical Officer I/C CH, Kalla Copy to: Dy. C.P. M L&IR, ECL HQ

/ TRUE COPY /”

6. It is apparent from the aforesaid fixation that

the basic salary had been reduced to Rs.1834.00 as on

1.1.1987, whereas, the basic salary was Rs.1950/- as on

31.12.86; it was by way of adding the dearness allowance

and bonus, that the total emoluments added up to be

Rs.2236.63, whereas, the earlier drawn salary inclusive 6

of dearness allowance was Rs.2028/-; but the fact

remains, that basic salary had been fixed on a lower

side. It was clearly in contravention of the order

passed by the Single Bench, in the previous Writ

Application, on 29.8.2002.

Thereafter, the respondents had preferred fresh

writ petition, and the Single Bench dismissed the same.

However, the Division Bench has allowed the appeal

preferred by the employees, and hence passed the

following order:-

“The respondent authorities failed to appreciate that the optees including the appellants/writ petitioners herein did not exercise option of absorption in the Coal companies notwithstanding the fact that their existing service benefits including the pensionary benefits might be affected ultimately. The respondent authorities herein all through represented before the optees that they will not suffer any prejudice with regard to their service benefits. Therefore, by reducing the basic pay of the optees, namely the appellants herein, the respondent authorities have acted in breach of the specific assurance given to the optees before exercising option.

For the aforementioned reasons, we cannot approve the decisions of the learned Single Judge by affirming the judgment and order under appeal and the same are, therefore, set aside.

7 The respondent authorities herein are directed to refix the scale of pay of the writ petitioners/appellants without reducing the basic pay with retrospective effect from the date of their joining the Coal companies after exercising option and also pay the admissible financial benefits including the arrears. The aforesaid exercise should be done by the concerned respondents at an early date but positively within a period of four weeks from the date of communication of this order.

With the aforesaid directions, this appeal stands allowed.”

7. Shri Kalyan Bandopadhyay, learned senior counsel

appearing for the appellants, urged that what they

assured was protection for the total emoluments; the

fixation of the pay has been done in the manner that the

total emoluments which had been drawn as on 1.1.1987,

were more than the one drawn by the employees as on

31.12.1986. Learned senior counsel has taken us to the

options form, to contend that protection was for the

overall emoluments, and not to the pay. Pay scales could

vary, once the pay scales that prevailed in ECL had been

opted for as per the option exercised. Thus, the basic

salary could have been reduced; however, that was taken

care of by clubbing other emoluments. Thus, the decision 8

rendered by the Court in the first round of litigation

had been duly complied with. The Single Bench had

rightly dismissed the writ application. Writ-appeal has

been allowed on the wrong perception of fitment required

to be made. Learned senior counsel has also relied upon

the decisions of this Court in High Court Employees

Welfare Organisation vs. State of West Bengal 2007 (3)

SCC 637, and State Bank of India vs. K.B. Upadhyay and

Ors. 2003(11)SCC 646.

8. Shri Ashok Bhan learned senior counsel appearing

on behalf of the respondents has contended that the basic

principle of fitment of absorption had been violated.

The salary that was drawn was to be protected; it has not

been protected. As a matter of fact, while fixing the

salary the Single Bench judgment and order in the first

round of litigation, decided on 29.8.2002, had been

violated, by issuing the communication dated

20/21.5.2003. The Division Bench has rightly undone the

injustice that was done. Learned senior counsel has also

relied upon the decision of this Court in K. Gopinathan

vs. Union of India 1992(4) SCC 701, and has also relied

upon the option form in which option was invited for 9

grant of the fitment. The option clearly indicated that

the salary was to be protected and overall emoluments

also could not have been less than as drawn on

31.12.1986.

9. Record of note of discussion leading to taking

over of the hospitals given by Coal Mines Labour Welfare

Organisation due to the repeal effect of The Coal Mines

Labour Welfare Fund (Repeal) Act, 1986, it was decided

that terms and conditions of transfer of the staff of

CMWO would be as under:

“(B) Terms and conditions of transfer of staff of CMWO:

CIL should ensure that the fitment to be offered to the transferred employees in NCWA scales does not entail any drop in their total emoluments. All subsidiaries and SCCL should follow uniform procedure in this behalf. Standard detailed options paper should be prepared jointly by CIL and SCCL clearly specifying the terms especially for those who may choose to retain Government pay scales. The draft should then be sent to Government for clearance."

10. It was clearly indicated that CIL would ensure,

that the fitment that was offered would not entail any 10

drop in employee’s total emoluments. Emoluments are

different than the basic salary. Fitment in the pay

scale was not to entail any drop in total emoluments on

absorption. Protection of basic pay is different

connotation than the other emoluments that are paid.

Even the emoluments were to be protected as decided in

the aforesaid meeting.

11. Coming to the option form in which options were

invited on 24.12.1986 which gave two options; the first

option was an option to be absorbed in the company’s pay

scales and terms and conditions, and another option was

to be absorbed in the company but retention of the

government pay scales and revision in the ongoing pay

scales and service conditions including pensionary

benefits. The option No.1 and No.2 are extracted

hereunder:

Option No.1

(a) Employees may opt for pay structure and terms & conditions of service as applicable to the employees governed by National Coal Wage Agreement as a package in lieu of their existing remuneration, pay scales and terms & conditions of service including retirement benefit 11

as would be applicable on revision of pay scales with effect from 1st January, 1987, or from the subsequent date from which the revision takes place.

(b) Such employees who opt for Company's pay scales, terms &

conditions etc. will continue to draw the same pay and allowances as admissible to them under 3 rd Pay Commission till 31 st December, 1985, and thereafter under 4 pay Commission th

till 31st December, 1986, or subsequent date from which revision of pay scales for the Coal Mining Industry takes place. However, their pay will be refixed in the revised scales of pay from 1st January 1987 or from the subsequent date from which general revision takes place for the coal mining workers.

(c) On option, the employees, shall stand absorbed in the Company's service with effect from 1.8.1985 and will become numbers of Coal Mines Provident Fund from the date of absorption.

(d) Such of the optees will continue to draw their emoluments under 3rd Pay Commission and 4th pay Commission till their pay is refixed in the manner provided in Annexure 'A' under revised scales of pay. The refixation as mentioned in para 'b' will be subject to adjustment.

(e) The total emoluments drawn by such optees as on 31st December 1986 will, however, be protected and they will be placed in the Company's appropriate revised scales of pay/ grade.

12 (f) The General terms and conditions of such of the optees, in brief, is placed at Annexure 'A'.

Option No. 2 (a) Employees on absorption who do not opt for Company's pay scales and terms and conditions of service will retain their existing pay scales and service conditions including pensionary benefits as admissible in Government Service as on 31st July’ 85 immediately prior to absorption.

(b) Such of the optees will also be governed by their existing rules in the matter of overtime, leave, leave travel concession.

(c) In the matter of discipline, medical facilities and working hours and holidays, they will be governed by the Rules of the Company at their place of posting.

(d) Such of the optees will, however not be entitled to any career growth opportunities at par with those optees opting for Company's pay scales.

(e) Such of the optees opting for Govt. pensionary benefits will have to become members of the Public Provident Fund with effect from 1.8.85.

(f) Superannuation of such optees will remain 58 years of age.

12. It is apparent from the option No.1 that the

employees who opt for the company’s pay scales, terms and

conditions, will continue to draw the same pay and 13

allowance as admissible to them under the 3rd Pay

Commission till 31.12.1985 and thereafter the 4th Pay

Commission till 31st December, 1986 or subsequent date

from which the revision of pay scales for the Coal Mining

Industry takes place. Mention of a subsequent date for

revision of pay scales for the Coal Mining Industry

clearly indicates that even when the option was exercised

to be absorbed in the company's pay scales, the pay which

was drawn earlier was required to be protected till

revision. However, the basic pay was to be protected in

the revised pay scales from 1.1.1987 or from the

subsequent date from which general revision takes place

for the coal-mining workers. We are concerned in the

instant case with the fitment on absorption. As per

option No.1 clause (b), the basic salary that was being

drawn clearly had to be protected, when the option for

absorption in company’s pay scales had been applied for.

When we consider the emolument part also, a separate

protection was given in the Option No.1 itself, in

clause(e), i.e. that the total emoluments which were

being drawn by such incumbents, as on 31.12.1986 would,

in any case, be protected, and that they would be placed

in the company's appropriate pay scales/grades. So, there 14

was a dual protection, one for the basic salary, and

another for the emoluments. The ECL has wrongly confused

both the issues by overall taking the fixation by the

inclusion of the emoluments. Salary was required to be

protected, as well as the total emoluments that were

being drawn; both could not have been reduced than what

was being drawn as on 31.12.1986. Though we are not

concerned with Option No.2, such protection was available

on continuance in the government pay scale.

13. The Office Order dated 9.1.1987 has also been

referred to on behalf the employer with respect to the

terms and conditions of service in the subsidiaries of

CIL in regard to the replacement of existing terms &

conditions of services of Coal Mines Welfare

Organisation. There was a clarification made with respect

to Option No.2 with that we are not concerned. Thus,

wrong reliance placed on Option No.2 resulted in the

observation made by the single Bench that protection was

only provided for the total emoluments of the employees

and that shall be protected at the time of the

re-fixation of the pay in the revised corresponding pay

under NCWA-IV with effect from 1.1.1987. As already 15

mentioned that Option No.1 had been exercised in the

instant case. Even in Option No.2 basic pay as well as

the emoluments continued to be as drawn.

14. As a matter of fact, in the instant case, we need

not have dilated on various issues as the matter stood

concluded by the judgment and order passed by the single

Bench in the previous round of litigation. The Single

Bench vide order dated 26.08 2002 clearly ordered that the

pay could not have been reduced as pay protection was

assured to them and shortfall be made good if needed by

way of personal adjustment.

15. When the pay scales were converted to and paid in

the Coal India Limited, respondents’ pay drawn could not

have been reduced, inasmuch as pay protection had been

assured to them and in view of aforesaid order that

attained finality and pay fixation was to be made in the

manner that total emoluments drawn were not less. After

fitment, if it was found that lesser amount was to be

received as salary on or after 1.1.1987, it was required

that the shortfall was made good by way of personal

adjustment(s). Accordingly, protection was to be made on

the fitment by grant of personal pay meaning thereby the

pay could not have been reduced on the fitment in the ECL 16

pay scales. The order 26.8 2002 was to be complied with

in pith and substance; rather it was violated by the

aforesaid method of fixation. As apparent from the

aforesaid figure of fitment, pertaining to Prathiva

Biswas, Senior Staff Nurse, Central Hospital, Kalla. The

fitment that was made on 20/21 May 2003 was clearly in

violation of the order as well as the provisions of

option form and even subject to conditions on which the

absorption had been made. Thus, in our opinion, the

Division Bench has rightly set aside the order passed by

the Single Bench by the order impugned; it was not the

total emoluments that matters. Salary protection was to

be ensured, it could not have been reduced apart from

emoluments. There was dual protection; that was

unfortunately ignored and overlooked by the ECL in spite

of the clear and categorical order passed by the Single

Bench in the writ application of 1993, which order had

attained finality, and had not been questioned by any of

the parties.

16. Learned senior counsel for the respondent has

relied upon the decision of this Court in K. Gopinathan

vs. Union of India (supra), in which this Court has 17

considered the concept of deduction in basic pay. One of

the Assistant Sub Inspectors of the Police of the State

had been absorbed in CBI and on absorption; the basic pay

was reduced, though his overall pay had become higher as

a deputationist. As the basic pay had been reduced, the

Tribunal observed that the dearness allowance under the

Central scale was higher, out of which a portion had been

merged with the pay and, therefore, by thus adding the

merged portion to the basic pay, the total emoluments

became higher than the basic pay under the State

Government. This Court rejected the reasoning adopted by

the Tribunal and held that such reasoning was not

acceptable. The basic pay could not have been reduced by

absorption. This Court has observed:

“8. We are afraid we cannot subscribe to this reasoning. While upholding the view of Central Administrative Tribunal, Principal Bench, New Delhi in Original Application No.1680 of 1989 in SLP(C)No.2196 of 1992, we have pointed out how the basic pay cannot be reduced. The same principle will be applicable to this case as well. Accordingly, the appeal is allowed. However, there shall be no order as to costs.”

17. Shri Kalyan Bandopadhyay, learned senior counsel

for the appellant, has relied upon the decision of this 18

Court in State Bank of India & Ors. vs. K.P. Subbaiah &

Ors. (supra); the relevant portion is extracted

hereunder:

"22. As noted above, a pay scale has different stages starting with initial pay and ending with ceiling pay. Each stage in the scale is commonly referred to as basic pay. The emoluments which an employee gets is not only the basic pay at a particular stage but also the additional amounts to which he is entitled as allowances e.g. DA etc. Therefore, when a question of pay protection comes, the basic feature is that the fitment or fixation of pay in a particular scale must be such as to ensure that the total emoluments are not reduced.

...........

25. There was no intention to protect any particular scale of pay. That being the position, the demand of a corresponding pay scale has no rationale. The High Court was, therefore, clearly in error in holding that the scale of pay was the determinative factor. The direction that while refixing the pay and DA the total pay fixed when the petitioner entered into the Bank's service has to be protected within the corresponding scale of pay cannot be maintained and is indefensible.

It is apparent from the aforesaid decision that

this Court has considered the facts of the particular

case before it, and culled out that there was no 19

intention to protect a particular scale of pay. The

scale of pay was not a determinative factor. This Court,

in the aforesaid context, observed, that while re-fixing

the pay and dearness allowance, the direction that the

total pay fixed, at the time when the petitioner entered

into the service be protected with the corresponding

scale of pay, could not be maintained. There is no

dispute with the proposition, however, in the instant

case, the pay scales, as they prevailed in the ECL, had

been opted; but the dispute arose about the fixation of

the pay in that scale. Pay was fixed lower than what had

been drawn earlier, i.e. the one which had prevailed in

the erstwhile employment. In the instant case, option

clearly intended that the pay was to be protected; and

the emoluments as well. Thus, the intention in the

instant case was otherwise and fitment has not been done

correctly, as such, basic pay have to be revised.

18. Reliance has also been placed by the appellants

on a decision of High Court Employees Welfare Association

vs. State of West Bengal 2007 (3) SCC 637 in which this

Court has observed:

20

"26. A revision of pay scales has to be followed by fitment in the revised pay scales, in the case of all employees who are receiving payments under the old pay scales. Such fitment in the revised pay scales will have to ensure pay protection so that the total emoluments are not reduced on fitment in the revised pay scales. The problem of fitment is noticed in Samaraditya Pal's 'Service Law' (Second Edition, Page 277) thus :

"A pay scale has different stages. It starts with what is normally known as initial pay and ends with a ceiling. Each stage in the scale is represented by what is commonly referred to as basic pay. The emoluments which an employee takes home is not only the basic pay at a particular stage but also other admissible allowances viz. dearness allowance, house rent allowance etc. When the existing pay scale (Rs.1,000-100-1,500-200-5,000) is revised (Rs.2,000-200-3,000-400-10,000) the question of fitment arises in this form. At which stage of the new pay scale is an employee who is at the stage of Rs.1,300 in the existing scale and is drawing a total emolument of Rs.3,000 (including all allowances) on the day immediately preceding the date on which the revised pay scale becomes effective to be fitted?"

Therefore, a formula or principle of fitment is provided either in the pay revision Rules or by a separate order. Such a formula or principle for fitment is not required in the case of new recruits as they start at the 21

lowest stage of the applicable pay scale or at such stage as stated in the terms of appointment. Rule 7 of the State Pay Rules relating to fixation of initial pay in the revised scale of pay thus applies only to existing employees who have been extended the benefit of a revised pay scale. The words 'fixation of initial pay' in Rule 7 of State Pay Rules, refers to the first pay fixed in the revised scale, on fitment. Therefore the contention of the petitioner that Rule 7 of State Pay Rules is intended to apply only to new recruits and the sole purpose of paras 9 and 10 of Minutes is to apply the principle of Rule 7 of State Pay Rules to existing employees is untenable."

The decision does not espouse the cause of the

appellants, as this Court has considered in the aforesaid

dictum the fitment when the revised pay scale is made

applicable and when a new entrant comes, new entrant

starts at the lowest stage of the applicable pay scale

and gets the benefit of the pay scale. This Court has

observed that the employees who are receiving under the

old pay scale, fitment in the revised pay scale has to be

made in the manner so that total emolument was not

reduced in the revised pay scale. In our opinion that

would not mean the pay can be reduced. This court

considered by said decision only the question to provide 22

the protection to emoluments.

19. Thus, the reduction of basic pay drawn in the pay

scale was wholly arbitrary and violates the order of the

Single Bench dated 26.08.2002, thus we find no merits in

the appeal and we dismiss the same. Let the benefits be

extended forthwith to all the employees who were

absorbed, whether continuing today or have been retired

and to the legal representatives of deceased employees,

within a period of two months and compliance be reported

to this Court. No costs.

.......................J. [ARUN MISHRA]

.......................J. [MOHAN M. SHANTANAGOUDAR]

NEW DELHI OCTOBER 11, 2017 23

ITEM NO.114 COURT NO.9 SECTION XVI

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Civil Appeal No(s). 8606/2009

EASTERN COALFIELDS LTD. & ORS. Appellant(s)

VERSUS

PRATIVA BISWAS & ORS. Respondent(s)

Date : 11-10-2017 This appeal was called on for hearing today.

CORAM :

HON'BLE MR. JUSTICE ARUN MISHRA HON'BLE MR. JUSTICE MOHAN M. SHANTANAGOUDAR

For Appellant(s) Mr. Kalyan Bandopadhyay,Sr.Adv.

Mr. Anip Sachthey, AOR Ms. Anjali Chauhan,Adv.

Ms. Ria Sachthey,Adv.

For Respondent(s) Mr. Ashok Bhan,Sr.Adv.

Mr. Subhasish Bhowmick, AOR Ms. Goldy Goyal,Adv.

UPON hearing the counsel the Court made the following O R D E R

In terms of the signed reportable order, the appeal is dismissed.

Pending application(s), if any, stand disposed of.

(OM PARKASH SHARMA) (TAPAN KUMAR CHAKRABORTY) AR CUM PS BRANCH OFFICER

(Signed reportable order is placed on the file)