Separate legal identity of subsidiary banks defeats parity claims for service benefits absent real comparability and discrimination.

The Supreme Court reiterated that subsidiary banks of the State Bank of India remained separate corporate entities with their own capital structure, boards, staff and service conditions. Section 50(2) of the State Bank of India (Subsidiary Banks) Act, 1959 preserved that separate status by providing that subsidiary-bank employees were not deemed to be State Bank of India employees unless their contract so stated. Supervisory control by the parent bank, including nomination of directors and directions, did not destroy that autonomy. The doctrine of equal pay for equal work applied only where real comparability and identifiable discrimination were shown, which was not established here for terminal benefits, medical benefits or increments.

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Issues: Whether the employees of the subsidiary banks of the State Bank of India could claim parity with the employees of the State Bank of India in respect of terminal benefits, medical benefits and pay increments on the footing that both sets of employees were similarly placed and that the subsidiary banks were in substance part of the State Bank of India.

Analysis: The scheme of the State Bank of India (Subsidiary Banks) Act, 1959 treated each subsidiary bank as a separate corporate entity with its own capital structure, board, staff and service conditions. Section 50(2) expressly declared that the officers and employees of a subsidiary bank were not to be deemed officers or employees of the State Bank of India unless the contract of service so provided. The control exercisable by the State Bank of India, including nomination of directors and power to issue directions, did not alter the separate identity and autonomy of the subsidiary banks. The doctrine of equal pay for equal work was held to apply only where there was real comparability and identifiable discrimination, not where benefits were structured differently for distinct organisations with different scales of operation, responsibilities and negotiated service conditions. On the facts, the terminal benefits, medical benefits and increments in the subsidiary banks were not shown to be irrational or discriminatory when compared with the applicable service structures.

Conclusion: The employees of the subsidiary banks were not entitled to be treated as employees of the State Bank of India, and they were also not entitled to claim the same terminal benefits, medical benefits or increments as those of the State Bank of India.

Final Conclusion: The writ petitions failed because the subsidiary banks were held to be distinct establishments and the claimed parity in service benefits was not established on the doctrine of equal pay for equal work.

Ratio Decidendi: Parity in service benefits cannot be claimed between employees of distinct legal entities unless real comparability and irrational discrimination are shown; supervisory or shareholding control by one body does not by itself make the employees of a subsidiary its employees for service-benefit parity.

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