Grant Of Benefits Of Higher Pay Scale To Central/State Govt Employees Stand On Different Footing Than That By An Instrumentality Of The State: Supreme Court

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 State, the Supreme Court observed.

The bench comprising Justices Sanjay Kishan Kaul and Hemant Gupta allowed the appeal filed by Punjab State Co-operative Milk Producers Federation Ltd.against the judgment of the High Court of Punjab & Haryana which held that the Federation 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.

The writ petitioners had relied on various judgments to establish their entitlement. Distinguishing them, the bench observed:

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 State.

The court also noted that the decision of not to grant revised pay scale from 1.1.1986 was taken keeping in view the financial condition of the Federation. Referring to principles enunciated in Tata Cellular v. Union of India on the exercise of power of judicial review by the High Court in the administrative decisions of the State, the court said:

"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. 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.", the Court said while allowing the appeal.

Case: Punjab State Co-operative Milk Producers Federation Ltd. vs. Balbir Kumar Walia [CA 7427 OF 2011]

Coram: Justices Sanjay Kishan Kaul and Hemant Gupta

Counsel: Sr. Adv Patwalia, AdvGovind Goel

Citation: LL 2021 SC 291

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