State Bank Of India vs M. Selvaraj Daniel

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 707 of 1962

Decision Date: 19 December, 1963

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

In this case the matter titled State Bank of India versus M Selvaraj Daniel was decided on 19 December 1963 by the Supreme Court of India. The judgment was authored by Justice K C Das Gupta, and the bench was composed of Justice K C Das Gupta, Chief Justice P B Gajendragadkar and Justice K N Wanchoo. The petitioner was the State Bank of India and the respondent was M Selvaraj Daniel. The decision is reported in 1966 AIR 1654 and 1964 SCR (3) 280. The application before the Court was a petition for review of the Court’s earlier judgment dated 22 April 1963 in Civil Appeal No 707 of 1962. The review sought to challenge the earlier order under the provisions of the Industrial Disputes Act, 1947 (14 of 1947), specifically section 33(c)(2), and involved the interpretation of paragraph 292 of the Sastry Award issued by the Tribunal in the dispute between certain banks and their workmen. The workman, who had been appointed as a clerk in the State Bank on 14 December 1953, alleged that the Bank had failed to give him the increment prescribed by the Sastry Award in the month of December each year, whereas the Bank contended that the award entitled the workman to receive his annual increment on 1 April each year. The earlier appeal had held that the workman was entitled to the benefit of the new pay scales from the date of his appointment, namely 14 December 1953, and therefore the appeal was allowed, giving rise to the present review application.

The Court observed that the review petition could not succeed because there was no error committed by this Court in disposing of the original appeal. It noted that paragraph 292 of the Sastry Award contained special directions for adjusting the pay scale of workmen who joined the Bank after January 1950, but that the Award made no specific provision regarding the date from which future increments would become operative for such employees. Consequently, the Court held that, in the absence of any direction to the contrary, the natural consequence was that future increments would be effective on the anniversary of the employee’s appointment. Accordingly, the Court concluded that the appellant‑workman would receive his increments under the new scale each year on 14 December, the date of his original appointment. The review petition was therefore dismissed. The judgment lists the counsel appearing before the Court: C K Daphtary, Attorney‑General for India, H N Sanyal, Solicitor‑General of India, H L Anand, Das Gupta and V Sagar for the petitioner, and M K Ramamurthy, R K Garg, S C Agarwal and D P Singh for the respondent. The judgment dated 19 December 1963 was delivered by Justice Das Gupta.

The Court observed that the appellant, who had been appointed as a clerk in the Bank on 14 December 1953, filed an application under section 33(b)(2) of the Industrial Disputes Act before the Labour Court in Delhi. The appellant asserted that the Bank, in applying the award of the Sastry Tribunal as modified by the Labour Appellate Tribunal, had proceeded on the premise that he was entitled to receive his annual increment each year on 1 April. The appellant contended that, pursuant to the award, his annual increment should fall each December, and he therefore prayed that the Bank compute and pay the benefit from which he was being deprived. At the hearing of the appeal, counsel for the appellant argued that a proper construction of paragraph 292 of the Sastry Award, which concerned the adjustment of clerks already in service into the pay scale fixed by the award, required that his increments be granted each year on 14 December. The Bank maintained that increments had correctly been granted from 1 April. The Court did not examine paragraph 292, because it held that when the appellant was first appointed by the Bank on 14 December 1953, his appointment was already on the pay scale fixed by the Sastry Award; consequently, there was no question of adjustment. On that basis, the Court concluded that the appellant was entitled to the pay he claimed in his application and therefore set aside the order of the Labour Court, Delhi, which had rejected the appellant’s application and had calculated his entitlement under the award at Rs 146 plus dearness allowance. In the petition for review, the Attorney‑General appearing for the Bank submitted that it was erroneous to assume that the appellant’s first appointment was on the Sastry Award scale. He pointed to paragraph 401 of the Labour Appellate Tribunal’s judgment, which gave a definite direction that the Tribunal’s decision regarding pay scales, allowances and provident‑fund contributions would commence on 1 April 1954, thereby superseding the Sastry Tribunal’s direction that the award would come into force on 1 April 1953. The Court noted that the appellate Tribunal’s decision was rendered long after the appellant’s appointment, and therefore it was possible that the clerk had been appointed on the Sastry Award scale that had already become effective on 1 April 1953. Counsel further submitted that the operation of the award with respect to the pay scale had been stayed shortly after the award was pronounced and for a considerable period thereafter.

In paragraph 42 of the Labour Appellate Tribunal’s decision it was observed that the banks classified as A and B had not lodged any appeals against the wage structure prescribed by the award. The reason for this omission was not difficult to discern. The award in question had been preceded by the award of the Sen Tribunal, which had been published on 12 August 1950 and subsequently declared void by the Supreme Court on 9 April 1951. The Sen Tribunal had set the following pay scales for clerks in A and B Class banks: for Class A banks in Class I areas the rates were Rs. 96‑6‑132‑7‑174‑9‑190‑205‑9‑250‑10‑290; in Class II areas they were Rs. 82‑5‑112‑6‑148‑7‑162‑172‑8‑212‑9‑248; and in Class III areas they were Rs. 70‑4‑94‑5‑124‑6‑136‑145‑7‑180‑8‑212. For Class B banks the rates were as follows: in Class I areas Rs. 92‑6‑128‑7‑170‑8‑186‑200‑9‑245‑10‑285; in Class II areas Rs. 78‑5‑108‑6‑144‑7‑158‑167‑8‑207‑9‑243; and in Class III areas Rs. 66‑4‑90‑5‑120‑6‑132‑140‑7‑175‑8‑207. The award of the Sastry Tribunal that followed was less favourable to the clerks. It prescribed the following scales: for Class A banks in Area I the rates were Rs. 85‑5‑100‑6‑112‑7‑140‑8‑164‑9‑245‑10‑265‑15‑280; in Area II they were Rs. 73‑4‑85‑5‑100‑6‑112‑7‑140‑8‑164‑9‑245; and in Area III they were Rs. 66‑3‑69‑4‑85‑5‑100‑6‑112‑7‑140‑8‑164‑9‑227. For Class B banks in Area I the rates were Rs. 73‑4‑85‑100‑6‑112‑7‑140‑8‑164‑9‑245; in Area II they were Rs. 66‑3‑69‑4‑85‑100‑6‑112‑7‑140‑8‑164‑9‑227; and in Area III they were Rs. 57‑3‑69‑4‑85‑5‑100‑6‑112‑7‑140‑8‑164‑9‑200. In this context the A and B Class banks accepted the Sastry Tribunal’s award with respect to the wage structure and therefore did not appeal, although the workmen, dissatisfied with the scales, lodged appeals against it. It was therefore not unreasonable to conclude that, having accepted the Sastry award for the wage structure, a bank classified as A would make appointments after 1 April 1953 on those scales. The appointment letter of the appellant, Daniel, is not on the record, but the Court remains inclined to believe that the Bank appointed him on 14 December 1953 on the pay scale fixed by the Sastry Tribunal. The Bank has not been able to demonstrate any error in the earlier disposal of the appeal on the basis that Daniel’s appointment was on the Sastry scale, and that finding is sufficient to dispose of the present review application. Nevertheless, the Court noted that the present application raised the separate question of what the position would be if the appellant had not been appointed on the Sastry scale and his salary needed to be adjusted under paragraph 292. Consequently the Court proposes to address that point as well. The issue of adjustment to the new pay scales formed a distinct item, identified as Item No. 12, in the Government Order referring to the Sastry Tribunal. This matter was dealt with in Chapter XIII of the award, which comprised four sections. Section I set out the various contentions raised by the employer and by the workmen’s counsel, noting that the employees generally sought a point‑to‑point adjustment, that is, the placement of each employee in the new scale at the level he would have attained by virtue of his length of service had he originally entered service under the new scale.

In the Tribunal’s analysis, it observed that at the moment a workman would have risen to a particular position in the new pay scale by reason of his length of service, the Tribunal, relying on the reasons set out in paragraphs 113 to 117 of the Sen Award, concurred with the conclusion of the Sen Tribunal that a compromise between the two methods advocated by the parties ought to be adopted. After a general discussion of the arguments contained in paragraphs 285 to 291, the Tribunal proceeded to issue concrete directions in paragraph 292. Those directions dealt with the matter in six sub‑paragraphs: one sub‑paragraph addressed workmen who entered the service of the Bank before 31 January 1950; a second sub‑paragraph dealt with workmen who joined the service of the Bank after 31 January 1950; and sub‑paragraphs 8 to 14, a total of seven sub‑paragraphs, laid down general rules that applied to all workmen irrespective of whether they were appointed before or after 31 January 1950. The Appellate Tribunal upheld this scheme of adjustment but introduced certain modifications. It replaced the date “31 January 1953” in the Award with “31 January 1954” and substituted the words “1 April 1953” with “1 April 1954”. Moreover, clause (d) of sub‑paragraph 4 was deleted and, in its place, sub‑paragraph 4(A) was inserted, which provided as follows: “After adjustments are made in accordance with the directions given, three further annual increments in the new scale will be added thereto for service for the three years 1951 to 1953. In addition, the workmen will be entitled to draw his normal increment for 1954 on the 1st of April 1954. Thereafter, each succeeding year’s annual increment shall take effect as and from the 1st April of that year.” Consequently, for workmen appointed before 31 January 1950 there was a clear direction that each succeeding year’s annual increment would take effect from 1 April of that year. Sub‑paragraph 7, which dealt with workmen who joined the service after 31 January 1950, read: “The workmen shall be fitted into the new scale of pay on a point‑to‑point basis as though it had been in force since he joined the service of the Bank, provided that his adjusted basic pay is not less than what it would be under a point‑to‑point adjustment on the corresponding ‘pre‑Sen’ scale.” It is important to note that this provision, concerning workmen who joined after 31 January 1950, does not contain any direction regarding the date from which annual increments should become effective. Neither does any of the remaining seven sub‑paragraphs, which lay down the general rules, provide any direction that would support the claim that future increments for workmen who joined after 31 January 1950 would commence on 1 April of the relevant year. The provision in paragraph 12, which states that the adjusted pay shall take effect from 1 April 1954, relates solely to the commencement of the adjusted pay and bears no relationship to the commencement of future increments. The reason that such a direction was given for workmen who entered the service before 31 January 1950, and not for those who joined after that date, is therefore evident from the wording of the award.

In the judgment, it was observed that a clear distinction existed between workmen who entered the service of the Bank before 31 January 1950 and those who joined after that date. For the former group, the regulation provided detailed provisions for fitting them into the new pay scales, and these provisions expressly dealt with the manner of granting future increments. Consequently, the legislature deemed it necessary to specify the exact time from which such increments would commence.

The Tribunal, having brought the new scales into operation with effect from 1953, logically concluded that each succeeding year’s annual increment should become operative on 1 April of that year. Although the Appellate Tribunal adjusted the pay up to 1 April 1954 instead of the earlier date of 1 April 1953, this alteration did not disturb the underlying principle that each subsequent year’s increment would take effect on 1 April of that year.

These considerations, however, were inapplicable to the workmen who were directed to be fitted into the new scale of pay on a point‑to‑point basis as though the scale had been in force since their date of appointment. Because the new scale was deemed to be operative at the moment each such workman joined the Bank, the increments prescribed in that scale necessarily took effect from the anniversary of the individual’s appointment date.

The Court found it unnecessary to examine why workmen who joined after 31 January 1950 were not granted increments in the same manner as those who entered service before that date. The Tribunal’s observations suggested that past matters should be left untouched, that there should be no retrospective adjustment of pay or allowances already paid, and that no further claims should be entertained beyond what had already been awarded.

Nevertheless, the judgment noted that special directions were issued concerning the adjustment of the post‑1950 workmen into the new pay scale, and that no provision was made regarding the date from which future increments should be applied. In the absence of any such directive, the inevitable consequence was that future increments would be calculated based on the appointment date in each year of service.

Having reached this conclusion, the Court determined that, even if the rules of adjustment into the new scale were applied on the assumption that such adjustment was necessary, the appellant‑workman was entitled to the relief he had sought. Accordingly, the application was dismissed with costs, and the review application was also dismissed.