State Bank of India vs Parkash Chand Mehra

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 29 August 1961

Coram: P.B. Gajendragadkar, K.N. Wanchoo, K.C. Das Gupta

In this appeal, the Supreme Court considered a single issue that arose for the State Bank of India: the effect of Paragraph 292 of the Bank Award, as amended, on the respondent, Parkash Chand Mehra. The respondent had entered the service of the Imperial Bank of India on 20 February 1943. By 31 January 1950 his salary was eight rupees and sixty paise per month. On 1 April 1954 he was posted at the Abohar Branch of the Imperial Bank and, on 15 May 1954, he was transferred to the Amritsar Branch. Under the classification of the Bank Award Abohar was designated a class IV area, whereas Amritsar was a class II area. Because Abohar was a class IV area, the Bank fixed his salary at one hundred twelve rupees per month on the date of his posting there. When he moved to Amritsar, a class II area, the Bank considered his length of service, granted him three increments, and fixed his salary at one hundred thirty‑three rupees per month. The respondent contended that, based on the award, he was entitled to three increments over the amount of one hundred twenty‑six rupees that he was said to be earning at Abohar, which would bring his pay to one hundred forty‑eight rupees per month. After the Bank rejected this claim, he filed an application under Section 33(b)(2) of the Industrial Disputes Act seeking a determination of the monetary award due. The Labour Court in Delhi accepted the respondent’s contention and held that his salary should have been fixed at one hundred forty‑eight rupees per month.

The Court then set out the steps necessary to assess whether the Tribunal’s decision was correct. First, it was essential to determine the amount of the respondent’s pay at Abohar, assuming Abohar’s classification as a class IV area, at the time of his transfer to Amritsar, and thereafter to compute his salary at Amritsar under the modified award. The starting point for this calculation was the basic pay that the respondent earned on 31 January 1950. The Court identified the relevant clauses of the Bank Award that governed the adjustment of pay. Clause (1) stipulated that a workman’s basic pay as of 31 January 1950 could not be reduced under any circumstances. Clause (2), subject to the first rule, required that the adjusted basic pay in the new scale must not exceed the amount that a point‑to‑point adjustment would provide or the maximum permissible in the new scale. Clause (3) directed that, in making the adjustment, all efficiency bars—whether contained in the pre‑existing scales or in the new scales prescribed by the award—must be ignored. Clause (4), again subject to the preceding rules, laid down the method for fixing a workman’s basic pay in the new scale: first, the workman must be placed in the new scale at the stage that corresponded to, or was immediately above, his basic pay as of 31 January 1950 in the existing scale. This placement formed the basis for subsequent calculations of increments and final salary under the award.

In applying the award, the first step was to place the worker in the new pay scale at the stage that was equal to, or immediately above, his basic pay as of 31 January 1950 in the then‑existing scale. Once this placement was made, the award required that annual increments in the new scale be added from that point forward. The increments were to be granted at the rate of one increment for every three completed years of service in the same cadre as on 31 January 1950, but only for the first twelve years of service. After those twelve years, the rate changed to one increment for every four years of service for the next eight years, and beyond that period the rate became one increment for every five years of service. After completing these adjustments, the award further mandated that three additional annual increments be added for the years of service covering 1951, 1952 and 1953. The worker was also entitled to receive his normal increment for the year 1954 on 1 April 1954, and thereafter each subsequent year’s increment would take effect from 1 April of that year. Consequently, the Court first fixed the basic pay according to the provision that required fitting the employee into the new scale, and then applied the stipulated increments, all while observing the earlier rules that limited the outcome. The Court rejected the argument advanced on behalf of the respondent that the phrase “subject to” did not bind the later provisions to the limits set out in the earlier rule. Interpreting the language of the rules in its ordinary sense, the Court held that the basic pay could never exceed either the amount determined by a point‑to‑point adjustment or the maximum permissible in the new scale. Under the fitting rule, the worker’s basic pay was fixed at ₹ 90. The increment rule would have added two increments, which without the limitation would have raised the basic pay to ₹ 100, resulting in a total salary of ₹ 126 as of 1 April 1954. However, the limitation clause, which made the fitting rule subject to the earlier limits, prevented any increase beyond the point‑to‑point figure of ₹ 90. Therefore, despite the provision for increments, the basic pay remained at ₹ 90 and did not rise to ₹ 100. As a result, the worker’s total pay at the time of his transfer was ₹ 112, and when he moved to a Class II area he would receive three further increments, thereby granting him the benefit of the higher area allowance.

In this case, the Court examined the calculation of the respondent’s salary after his transfer. The Court observed that, according to the scale that corresponded to the length of service, the respondent’s pay would be Rs. 133 per month. The Court further noted that Abohar had been classified as a class III area with retrospective effect from 1 April 1954. The Court calculated that, on that basis, the respondent’s salary on 31 January 1950 would have been fixed at Rs. 100. When the area was re‑classified, the salary at Abohar would increase to Rs. 126 on 1 April 1954. Upon his subsequent transfer from the class III area of Abohar to the class II area of Amritsar, the respondent would be entitled to one additional increment, which would bring his salary to Rs. 133. The Court found that there had been some confusion in the statements made by the Bank’s witness, Vishnoi, but that such confusion did not change the correct application of the Bank award. Accordingly, the Court held that the respondent was entitled to a monthly salary of Rs. 133 on his transfer to Amritsar, and not the Rs. 148 that the Labour Court had awarded. The Court concluded that the Labour Court’s decision was clearly erroneous. Consequently, the Court allowed the appeal, set aside the award made by the Labour Court, and ordered that the respondent would receive costs of the appeal in accordance with the order issued on 30 January 1961.