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2021 (7) TMI 1338

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.... that the Punjab State Co-operative Milk Producers Federation Ltd. For short, 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. 2. The milk producers in the State launched the setting up of Cooperative Societies at village level which are known as Primary Milk Producers Cooperative Societies. Such Primary Milk Producers Cooperative Societies are in turn members of The District Cooperative Milk Producers Union. These District Level Unions are ultimately the members of the Federation. The employees have claimed pay scale as revised by the Punjab Government Anomaly Committee w.e.f. 1.1.1986. 3. Before the High Court, an objection was raised by the Federation that since it is not a State within the meaning of Article 12 of the Constitution, therefore, the writ petitions were not maintainable. However, before this Court, Mr. Patwalia, learned Senior Counsel appearing for the Federation has submitted that the question whether the Federa....

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....n to effect the changes specified in the annexure annexed with the said notice. 7. The employees of the Federation raised protest; therefore, a committee was constituted on 6.12.1994 to examine the following issues: (i) Whether the upward revision should be adopted for the employees of Milkfed and Milk Unions? (ii) Whether the revision is to be given with effect from 1.1.1986 or any subsequent date by giving the benefit of notional fixation? (iii) Whether the upward should confine only to the categories covered in the report of Government Anomaly Committee or categories enjoying identical scales (unimproved) need to be covered (a) repercussion if revision is confined to the categories covered in the Government report (b) impact, if any, of pending writ petitions, resolutions of BOD of M.U., Ludhiana and BOD of Milkfed? (iv) Whether there is any necessity of changing the qualification/improving designations of certain categories being placed in higher scales? (v) Any other point/issue identical to or connected with the above? 8. The Committee, inter alia, made the following recommendations: 4. The Committee finds that in case the revision of pay scales is taken up w.e.....

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....closed at Annexure-3, approval is granted to the implementation of the revised pay scales and Master Pay Scale to the concerned employees of the Milkfed and the Milk Unions in accordance with the report of the Anomaly Committee constituted under the Third Pay Commission by the Punjab Government, with effect from 1.1.1994. Its approval may also be obtained from the Registrar, Cooperative Societies, Punjab. 10. The decision of the Board was approved by the Registrar (Cooperative Societies) on 29.4.1997. Thus, subsequently, revised scales with effect from 1.1.1994 were granted to the employees. 11. Mr. Patwalia referred to the communication of the Punjab Government dated 1.3.1990 that grant of allowances or concessions should not automatically be made applicable to the employees of Public Sector Undertakings/Cooperative Institutions, without examining the liabilities involved, the available resources of the Undertakings and the extent of concessions already being availed by their employees. The State Government communicated as under: It has accordingly been decided that instructions, regarding grant of any allowance/perks/concessions etc. by whatever name called, issued by State G....

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....erein against such order. This Court had stayed the recovery pending further orders on 6.11.2009. 14. Mr. Patwalia, learned Counsel for the Federation, submitted that the High Court erred in law in holding that the date of implementation to grant revised pay scales as 1.1.1994 was absolutely unfair and that financial stringency was not an excuse for refusing to revise the pay scales from 1.1.1986. It was contended that the judgments M.M.R. Khan and Ors. v. Union of India and Ors., 1990 (Supp.) SCC 191; Haryana State Minor Irrigation Tubewells Corporation and Ors. v. G.S. Uppal and Ors., (2008) 7 SCC 375; High Court Employees Welfare Assn., Calcutta and Ors. v. State of W.B. and Ors., (2004) 1 SCC 334; Supreme Court Employees Welfare Association v. Union of India & Ann, (1989) 4 SCC 187 and Purshottam Lal and Ors. v. Union of India & Ann, (1973) 1 SCC 651 referred to by the High Court have no applicability to the facts of the present case. Mr. Patwalia also relied upon judgments of this Court reported as A.K. Bindal and Anr. v. Union of India and Ors. (2003) 5 SCC 163 and State of Punjab and Ors. v. Amar Nath Goyal and Ors. (2005) 6 SCC 754 wherein the Court had upheld financial st....

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...., for whom the deptt. has no work has been put on alternate job in a Milk Union. There is also no likelihood of new civil works to be undertaken. So the pay scale of 1800-3200 is recommended for this post. No financial burden. 16 Draftsman 570-1080  1500-2640  1800-3200  Jr. Draftsman shall be eligible for promotion as draftsman in the scale of Rs. 1800-3200 after a minimum period of 12 years. There are 3 draftsmen. The civil works have almost been completed and there is no likelihood of new civil works to be undertaken. Two of them have been put on alternate jobs, as they are surplus. So the committee feels that the existing pay scale of Rs. 1500-2640 is sufficient for them. So no improvement is recommended 17. Tracers 400-600 950-1800  1200-2100 To be designated as Jr. draftsman and qualificatio n to be raised to matric with two years ITI certificate of draftsman There are 4 tracers. None of them is deployed on his job, but have been put on alternate jobs, which are clerical, to provide this work. There is no likelihood of civil work for them in future. So no improvement is recommended. 18 Surveyor 400-600 950-1800 1200-2100   There a....

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....the employer to make appropriate reduction in the wage structure, subject to such conditions as to time or otherwise that the tribunal may deem fit or expedient to impose.... 21. In respect of Industrial workers, this Court, while dealing with wage structure in a judgment reported as Standard Vacuum Refining Co. of India v. Workmen and Anr. AIR 1961 SC 895, held that it is usual to divide wages into three broad categories: the basic minimum wage which is the bare subsistence wage, above it is the fair wage, and beyond the fair wage is the living wage. The said three categories of wages are described as the poverty level, the subsistence level and the comfort or the decency level. This Court accepted the Report by the Commission of Enquiry on "Emoluments and Conditions of Service of Central Government Employees, 1957-1959" wherein the five norms which should guide all wage fixing authorities including Minimum Wage Committees, Wage Boards, adjudicators, etc. were stated by the Court inter alia as under: 9. It is well known that the problem of wage structure with which industrial adjudication is concerned in a modern democratic State involves on the ultimate analysis to some extent....

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.... national economy require that attempts should be made to secure to workmen a fair share of the national income which they help to produce, on the other hand, care has to be taken that the attempt at a fair distribution does not tend to dry up the source of the national income itself On the one hand, better living conditions for workmen that can only be possible by giving them a "living wage" will tend to increase the nation's wealth and income on the other hand, unreasonable inroads on the profits of the capitalists might have a tendency to drive capital away from fruitful employment and even to affect prejudicially capital formation itself. The rise in prices that often results from the rise of the workmen's wages may in its turn affect other members of the community and may even affect prejudicially the living conditions of the workmen themselves. The effect of such a rise in price on the Country's international trade cannot also be always ignored. Thus numerous complex factors, some of which are economic and some spring from social philosophy give rise to conflicting considerations that have to be borne in mind. Nor does the process of valuation of the numerous fact....

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....m wage at all times and under all circumstances. An employer who cannot pay the minimum wage has no right to engage labour and no justification to run the industry. 24. Now, in respect of the establishments which meet the parameters of being a State within the meaning of Article 12, this Court considered the question of financial stringency in A.K. Bindal. This Court in the said case was examining the claim of revision of pay of the employees of a public sector enterprise. The employers placed reliance upon the Office Memoranda of the Government of India that the Government would not provide any budgetary support for wage increase and the undertakings themselves would have to generate the resources to meet the additional expenditure which would be incurred on account of increase in the wages. It was thus held by this Court that the non-revision of pay scale would not amount to violation of fundamental rights guaranteed Under Article 21 as it would be stretching too far and cannot be countenanced. It was held that even under industrial law, workmen should get a minimum wage or a fair wage but not that the wages must be revised and enhanced periodically. The Court held as under: 1....

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....udgments South Malabar Gramin Bank v. Coordination Committee of South Malabar Gramin Bank Employees' Union., (2001) 4 SCC 101 and Associate Bank Officers' Association v. State Bank of India and Ors., (1998) 1 SCC 428 that the financial capacity of the employer cannot be held to be a germane consideration for determination of the wage structure of the employees, therefore, it must be confined to the facts of the aforesaid case. It was held that economic viability or the financial capacity of the employer is an important factor which cannot be ignored while fixing the wage structure, otherwise the unit itself may not be able to function and may have to close down which will inevitably have disastrous consequences for the employees themselves. 26. In South Malabar Gramin Bank, one of the contentions raised was whether financial viability could be the sole criterion in deciding the wage structure of the Regional Rural Bank (RRB) employees. The Tribunal constituted to consider the wage structure inter alia held that The Regional Rural Banks Act places special emphasis on the development of rural economy by providing credit and other facilities to productive activities in the ru....

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....nly lead to undesirable results. Enough material was placed on record before us by the Respondents which clearly show that the first Respondent had been suffering heavy losses for the last many years. In such a situation the Petitioners, in our opinion, cannot legitimately claim that their pay-scales should necessarily be revised and enhanced even though the organisation in which they are working are making continuous losses and are deeply in the red. As could be seen from the counter affidavit, the first Respondent company which is engaged in the manufacture of medicines became sick industrial company for various reasons and was declared as such by the BIFR and the revival package which was formulated and later approved by the BIFR for implementation could not also be given effect to and that the modifications recommended by the Government of India to the BIFR in the existing revival package was ordered to be examined by an operating agency and, in fact, IDBI was appointed as an operating agency Under Section 17(3) of SICA. It is also not in dispute that the production activities had to be stopped in the major two units of the company at Rishikesh and Hyderabad w.e.f. October, 199....

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....e benefits only to employees, who retire or die on or after 1-4-1995, after calculating the financial implications thereon, was either irrational or arbitrary. Financial and economic implications are very relevant and germane for any policy decision touching the administration of the Government, at the Centre or at the State level. 31. In State of Haryana v. Shri Des Raj Sangar and Anr. (1976) 2 SCC 844, the post of the Panchayati Raj Election Officer was abolished in view of the extreme financial stringency. This Court held as under: 8....... It was also stated in another affidavit filed on behalf of the Appellant State that the post of Panchayati Raj Election Officer and the seven posts of field Deputy Directors were abolished as an economy measure to meet financial stringency. We see no cogent ground to question the averments made in the above affidavits. The averments show that the decision to abolish the post of Panchayati Raj Election Officer was taken because of administrative reasons. The question as to whether greater economy could have been brought about by adopting some other course is not for the court to go into for the court cannot sit as a court of appeal in such ....

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....le was not given to the employees of the Forest Research Institute and College, Dehradun. An argument was raised that the report of the Pay Commission did not deal with the case of the Petitioners. The said argument was negated for the reason that once the Government has accepted the recommendation of the Pay Commission, which included all Central Government employees, the benefit of revised pay scale cannot be denied to the Petitioners. This Court has held as under: 15. Mr. Dhebar contends that it was for the Government to accept the recommendations of the Pay Commission and while doing so to determine which categories of employees should be taken to have been included in the terms of reference. We are unable to appreciate this point. Either the Government has made reference in respect of all government employees or it has not. But if it has made a reference in respect of all government employees and it accepts the recommendations it is bound to implement the recommendations in respect of all government employees. If it does not implement the report regarding some employees only it commits a breach of Articles 14 and 16 of the Constitution. This is what the Government has done a....

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....et the financial burden on account of revision of pay scales. The Court while rejecting such argument held as under: 33. The plea of the Appellants that the Corporation is running under losses and it cannot meet the financial burden on account of revision of scales of pay has been rejected by the High Court and, in our view, rightly so. Whatever may be the factual position, there appears to be no basis for the action of the Appellants in denying the claim of revision of pay scales to the Respondents. If the Government feels that the Corporation is running into losses, measures of economy, avoidance of frequent writing off of dues, reduction of posts or repatriating deputationists may provide the possible solution to the problem. Be that as it may, such a contention may not be available to the Appellants in the light of the principle enunciated by this Court in M.M.R. Khan v. Union of India [1990 Supp SCC 191 : 1990 SCC (L&S) 632 : (1991) 16 ATC 541] and Indian Overseas Bank v. Staff Canteen Workers' Union [(2000) 4 SCC 245 : 2000 SCC (L&S) 471]. However, so long as the posts do exist and are manned, there appears to be no justification for granting the Respondents a scale of ....

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....xation of pay and determination of parity in duties is the function of the executive and the scope of judicial review of administrative decision in this regard is very limited. However, it is also equally well settled that the courts should interfere with administrative decisions pertaining to pay fixation and pay parity when they find such a decision to be unreasonable, unjust and prejudicial to a Section of employees and taken in ignorance of material and relevant factors. (Emphasis supplied) 41. In the present case, it is contended that the Federation is a statutory Co-operative Society which is having its Common Cadre Rules. Any amendment in the Common Cadre Rules is to be approved by the Registrar (Co-operative Societies). The State Government communicated on 1.3.1990 and 9.7.1993 that the pay scale as applicable to the Punjab Government employees is not to be adopted by the Public Sector Undertakings without taking into consideration the financial health of the other statutory Boards and Corporations. The Federation has thus taken a conscious and concerted decision to not follow the report of the Anomaly Committee of the State Government to grant revised pay scale from 1.1.....

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....rther grounds in course of time. As a matter of fact, in R. v. Secretary of State for the Home Department, ex Brind [(1991) 1 AC 696], Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, "consider whether something has gone wrong of a nature and degree which requires its intervention". xx xx xx 94. The principles deducible from the above are: (1) The modern trend points to judicial restraint in administrative action. (2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. ....

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....tters, the courts should be very circumspect in conducting any enquiry or investigation and must be most reluctant to impugn the judgment of the experts who may have arrived at a conclusion unless the court is satisfied that there is illegality in the decision itself. 45. This Court in a judgment reported as Jagdish Mandal v. State of Orissa and Ors. (2007) 14 SCC 517 examined the scope of judicial review in the matter of award of a contract. The Court held as under: 22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judic....

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....ourt held as under: 27. It is well settled that the High Court in exercise of jurisdiction Under Article 226 of the Constitution of India does not sit in appeal over an administrative decision. The Court might only examine the decision-making process to ascertain whether there was such infirmity in the decision-making process, which vitiates the decision and calls for intervention Under Article 226 of the Constitution of India. 28. In any case, the High Court exercises its extraordinary jurisdiction Under Article 226 of the Constitution of India to enforce a fundamental right or some other legal right or the performance of some legal duty. To pass orders in a writ petition, the High Court would necessarily have to address to itself the question of whether there has been breach of any fundamental or legal right of the Petitioner, or whether there has been lapse in performance by the Respondents of a legal duty. 29. The High Court in exercise of its power to issue writs, directions or orders to any person or authority to correct quasi-judicial or even administrative decisions for enforcement of a fundamental or legal right is obliged to prevent abuse of power and neglect of dut....

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....state and Ors. (2019) 10 SCC 738 followed the aforesaid judgment and held as under: 16. It could thus be seen that an interference by the High Court would be warranted only when the decision impugned is vitiated by an apparent error of law i.e. when the error is apparent on the face of the record and is self-evident. The High Court would be empowered to exercise the powers when it finds that the decision impugned is so arbitrary and capricious that no reasonable person would have ever arrived at. It has been reiterated that the test is not what the Court considers reasonable or unreasonable but a decision which the Court thinks that no reasonable person could have taken. Not only this but such a decision must have led to manifest injustice. 48. In another recent judgment reported as Harshit Agarwal and Ors. v. Union of India and Ors. (2021) 2 SCC 710, this Court held that judicial review of administrative action is permissible on grounds of illegality, irrationality and procedural impropriety. An administrative decision is considered as flawed if it is illegal, and a decision is illegal if it pursues an objective other than that for which the power to make the decision was confe....

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.... Federation, there was turn around only after 1994. Still further, we find that the profits in the balance sheet are not meant to be appropriated towards wages of the employees alone. Though the profits had to be shared by the members of the Co-operative Society, but the employees of the Federation are not its members. The income generated by the Federation is not to be expanded only on payment of salary but is also required for upgradation of technology, renovation and expansion of plants etc. Therefore, entire profit is not to be appropriated towards the wages of the employees alone. The Federation was established as a step towards white revolution. The objective of the Federation was not to give employment but to increase milk production in the State. The employees are facilitators of the employer to achieve such objective and thus demanding enhanced wages without considering the objective and financial condition of the employer would not be ideal. The employer and the employees have to work together to achieve the objective of the organisation i.e. white revolution rather frittering away the gains made by the joint efforts of the management and employees by giving increased wag....

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....the ground that the Milk Procurement Assistants are not the employees of the Apex Society i.e. Punjab State Co-operative Milk Producers Federation but they are employees of the District Co-operative Milk Producers Union which is a separate entity. The staffing pattern for District Co-operative Milk Producers Union, as approved by the Registrar (Co-operative Societies), shows that different educational qualifications and experience is prescribed for appointment to Milk Procurement Assistants Grade-I & II. It has also been pointed out that there is qualitative difference in the responsibilities of the two sets of employees. Milk Procurement Assistants Grade-II are allotted 10 to 12 villages at the village-level Milk Producers Co-operative Society for supervising their work with regard to milk collection, testing, record keeping, payment to producers of milk, transportation of milk and to attend the other problems of the societies whereas the duty of the Milk Procurement Assistants Grade-I is to supervise the work of Milk Procurement Assistant Grade-II. One Milk Procurement Assistant Grade I officer supervises the work of six to seven Milk Procurement Assistants Grade II. 57. As per ....