1997 (10) TMI 420 - SC - Indian Laws

Court Rules 'Equal Pay' Principle Inapplicable Between SBI and Subsidiaries; Distinct Autonomy Affirmed for Subsidiary Banks.

The court dismissed the writ petitions, holding that the principle of 'equal pay for equal work' does not apply between the State Bank of India (SBI) and ... - Issues Involved:1. Application of the principle of 'equal pay for equal work' between employees of the State Bank of India (SBI) and its subsidiary banks.2. Claim for higher terminal benefits, better medical benefits, and extra increments by employees of subsidiary banks.3. Legal interpretation of the relationship between SBI and its subsidiary banks under the State Bank of India (Subsidiary Banks) Act, 1959.Detailed Analysis:1. Application of the Principle of 'Equal Pay for Equal Work':The court examined the principle of 'equal pay for equal work' as laid down in Article 39(d) of the Constitution and discussed its non-justiciable nature under Article 37. The principle has been applied in cases of irrational discrimination within the same organization, but not when there is a rational basis for the difference. The court noted that historically, this principle has been a slogan of the women's movement and has been used to address sex-based discrimination. The court emphasized that applying this doctrine across different organizations with different wage structures must be done with caution to avoid undesirable results. The doctrine is designed to correct irrational and inexplicable pay differentiation, not mere differences.2. Claim for Higher Terminal Benefits, Better Medical Benefits, and Extra Increments:The unions of employees from various subsidiary banks claimed higher terminal benefits, better medical benefits, and extra increments based on the benefits available to SBI employees. The court noted that the subsidiary banks have their own capital structure, operations, and staff with distinct terms and conditions of service. The court rejected the claim that employees of subsidiary banks should be considered as employees of SBI, citing Section 50(2) of the State Bank of India (Subsidiary Banks) Act, 1959, which clearly states that employees of subsidiary banks are not deemed to be employees of SBI for any purpose unless otherwise provided in their service contracts. The court also noted that each subsidiary bank operates autonomously and has its own Board of Directors.3. Legal Interpretation of the Relationship Between SBI and its Subsidiary Banks:The court examined the legal relationship between SBI and its subsidiary banks under the State Bank of India (Subsidiary Banks) Act, 1959. The Act provides that subsidiary banks are separate entities with their own Board of Directors, capital structure, and operations. The court highlighted that the State Bank of India exercises certain control over the subsidiary banks but does not amalgamate them into itself. The court concluded that the employees of the subsidiary banks cannot be treated as employees of SBI and are not entitled to the same benefits as SBI employees.The court also addressed specific grievances regarding terminal benefits, medical benefits, and increments:- Terminal Benefits: The court found no discrimination as the terminal benefits in subsidiary banks are comparable to those in nationalized banks, with options for pension or contributory provident fund and gratuity.- Medical Benefits: The court noted that substantial medical benefits are provided to employees of subsidiary banks, although they are not identical to those given by SBI.- Increments: The court accepted SBI's rationale for offering additional increments to attract suitable candidates, given the scale and responsibilities of its operations, which are not comparable to those of subsidiary banks.In conclusion, the court dismissed the writ petitions, stating that the principle of 'equal pay for equal work' could not be applied in this context due to the distinct and autonomous nature of the subsidiary banks and their negotiated settlements with employee unions. No order as to costs was made.