Major Kurian Thomas vs Bank Of Maharashtra And Ors.
2001 Latest Caselaw 475 Bom

JUDGMENT

D.B. Bhosale, J.

1. By means of this writ petition, the petitioner seeks to challenge the impugned order/communication dated November 30, 1987/ December 9, 1987, whereby the respondent No. 1 - Bank has drastically reduced the basic pay and allowances of the petitioner and further directed to initiate the action to recover with retrospective effect the difference between the pay received by the petitioner and refixed pay by the impugned order, which is equivalent to almost half of the total salary earned by him ever since he joined the Bank in 1985. He has further prayed for a direction to be given to the respondent No. 1 to pay to the petitioner a sum of Rs. 49,606/- unlawfully withheld from his salary since December 1987. The petitioner has also sought an injunction restraining the respondents from refixing his salary on the basis of the Circular issued by the respondent No. 2, on June 15, 1987. The respondent No. 2 is the Union of India through the Ministry of Finance. While admitting the writ petition, the ad-interim relief in terms of prayer Clause (d) was granted, as a result of which the respondent No. 1 was restrained from effecting any recoveries from the petitioner's salary on the basis of the refixation effected by the impugned order/communication dated November 30, 1987/December 9, 1987. Now before we look at the relevant record, guide lines/circulars of 1983 and 1987 and consider the challenge made, it would be, perhaps, better just to state briefly what the credentials of the petitioner are, what are the facts and grounds for this petition.

2. The petitioner is a former officer of the Indian Army. He joined Army as a Non-Comissioned Officer in 1953. In 1964, he received commission as Second Lieutenant. The petitioner retired from the Armed Forces after rendering 22 years of commuted commissioned service on May 23, 1979. He was granted basic pension of Rs.750/- per month and the dearness allowance at the prevailing rates. The petitioner claims to have commuted part of his pension for resettling himself. The commuted pension amounted to Rs. 428/- per month plus dearness allowance. The last drawn basic pay in the Armed Forces was Rs. 1500/- plus Rs. 370/- dearness allowance in 1979. After retirement, the petitioner took up various senior jobs with different private employers abroad and in India intermittently. The Banking Services Recruitment Board published an advertisement on March 13, 1984 for common open recruitment to the posts of Security Officers in three different nationalized Banks including the first respondent. The pay scale prescribed in the advertisement was Rs. 700/- to Rs. 1800/-being the Junior Management Grade Scale-1. In so far as the eligibility for the posts was concerned, the advertisement prescribed that the candidate must be a graduate, and an officer with five years service not below the rank of Subedar in the Army, or equivalent ranks in the Navy, Air Force or the Police Force. In response to the advertisement, the petitioner applied for the said post. He was duly selected by the Banking Services Recruitment Board and accordingly received formal offer of employment on January 18, 1985 from the first respondent. In the letter of appointment, he was informed that he would draw starting pay of Rs. 700/-per month in Rs. 700-1800 pay scale. His starting gross salary came to Rs. 1761/-. By the time he joined the Bank on February 27, 1985, he was entitled to receive from the Army Rs. 750/- as pension and the dearness relief allowances payable on his pension at Rs. 500/-per month, total being Rs. 1250/-. Thus, in the respondent Bank, the petitioner earned a gross salary of Rs. 1761/- in addition to what he would earn as pension i.e. Rs. 1250/- making about Rs. 3011/- in all. The petitioner joined the service of the first respondent as Security Officer on February 27, 1985. From March till October, 1985 he was paid full salary as above as per the letter of appointment.

3. The second respondent, vide its Guidelines circulated on January 28, 1983, had directed that for the ex-servicemen who joined nationalized Banks after September 1978, protection of pay should be granted on the basis of only basic pay earned by them prior to retirement instead of protecting total emoluments, i.e. pay plus dearness allowance. The aforesaid guidelines issued in 1983 were in force at the time when the petitioner joined the first respondent. In pursuance to the said guidelines, the respondent No. 1 - Bank issued a Circular dated July 16, 1985 in respect of fixation of pay of the ex-servicemen reemployed in the Banks. In the said Circular, three classes of the ex-servicemen joining Banks from time to time were mentioned. However, we are concerned with the class of ex-servicemen employed by the Bank and who joined the Bank on or after January 25, 1983. The basis of fixing the pay of the ex-servicemen employed by the Bank on or after January 25, 1983 in Clauses 4(c) and 5 of the said Circular dated July 16, 1985 was provided as under:

"(c) If the ex-serviceman has joined the bank on or after January 25, 1983, his basic pay last drawn by him in the armed forces is to be protected by the amount of basic pay in the bank. His good conduct pay is to be added to his last drawn basic pay for calculating his last drawn basic pay.

The amount of pension upto Rs. 250/-p.m. is to be ignored (in case of officers).

And in case of ex-servicemen below the rank of commissioned officers his entire amount of pension is to be ignored."

5) The ex-servicemen who joined the Bank service on or after July 1, 1983, their pay fixation may be made on the basis of protection of pay drawn in the armed forces or at a stage where the new basic pay plus DA corresponds to the basic pay plus DA drawn by them in the armed forces, whichever is higher. But if such ex-servicemen are paid any excess, the recovery of that excess payment be made from September 17, 1984."

Clause 21 of the Circular further provides as follows:

"21. The ex-servicemen have to exercise option and apply in the prescribed format with its accompaniment for refixation of the pay within six months from the date of this Circular. Otherwise their claims will not be considered. The ex-servicemen have to furnish the information in the enclosed format and submit their last pay drawn certificates issued by the Defence Accounts Department of Ministry of Defence. Incomplete applications will not be considered, if not complied with within specified time.

These ex-servicemen who have already applied in response to the Circular dated September 25, 1984 and have receipts of their applications acknowledged need not apply again."

4. In view of this Circular, the petitioner exercised an option and applied in the prescribed format for fixation of the pay within the stipulated time. In October 1985, the basic pay was refixed by the first respondent in pursuance of the said Circular from Rs. 700/- to Rs 1500/- from the date of joining. As agreed while exercising the option, the petitioner informed the respondent No. 2 not to pay the pension, dearness allowance as he was reemployed. The first respondent was allowed to deduct Rs. 500/-per month from the total emoluments towards pension deduction. According to the petitioner, after fixation of his pay in the year 1985, he started getting Rs. 1500/- as basic pay plus Rs. 1440/- as dearness allowance, minus Rs. 500 as pension, minus Rs. 500/- as pension dearness relief, totalling to Rs. 1940/- plus 250/-pension (Total receipts thus coming to Rs. 2150/-) as against Rs. 3011/- which he was getting after joining the respondent No. 1-Bank. This was less than the starting pay, yet it was accepted by the petitioner for the reason that his basic pay would be protected. In June 1986, an increment of Rs. 100/- was given on completion of one year by the first respondent. At that stage that the 1st respondent Bank's salary revision took place and in place of Rs. 1500/-, the petitioner started getting the revised pay, equivalent to Rs. 2275/- and plus Rs. 1007- of increment totalling to Rs. 2,375/-. In June 1987, the petitioner was given another increment of Rs. 100/- on completion of second year. On June 23, 1987 the petitioner was confirmed at the revised basic salary level of Rs. 2475/- plus dearness allowance minus Rs. 500/- pension.

5. The petitioner received the impugned order/communication dated November 30, -1987/December 9, 1987 of the respondent' No. 1 all of a sudden, whereby the first respondent refixed the salary of the petitioner reducing it by almost 50% which was less than the last drawn pay he was getting in the Army. The impugned refixation of the petitioner's salary was done in pursuance of the second respondent's letter/circular dated June 15, 1987. After refixation, the salary of the petitioner was fixed at Rs. 1362.43. The breakup of this amount was Rs. 740/- as basic plus Rs. 1122.43 as dearness allowance minus Rs. 500/- pension. A copy of the impugned letter was also addressed to the Assistant General Manager, South Zone, Bangalore, with direction to calculate the" recovery to be made from the petitioner. It has further mentioned that the petitioner may be given option to pay arrears in five or six monthly instalments to be deducted from his salary. A copy of the arrear/ recovery sheet was directed to be sent to the Chief Manager (Staff Administration). It was further mentioned that the salary of the petitioner from the month of December 1987 and, onwards be paid as per the revised basic pay. The petitioner protested against the aforesaid directions by sending representation which was not responded to and hence the petitioner filed the present writ petition.

6. Heard Mr. Singh, learned counsel for the petitioner. The nub of the case set up by the petitioner is that the respondents have no power or authority to withdraw or reduce the pay and benefits offered at the time of entry in service, i.e. February 27, 1985 or as subsequently fixed on the basis of the Government Guidelines dated January 28, 1983, when the pay fixation was done on October 19, 1985. Mr. Singh submitted that the petitioner gave up private sector job and accepted employment based on public advertisement which offered him Rs. 1761/- per month, with no stipulation regarding any loss of pension, thus, resulting in total receipts of Rs. 3011/-, i.e. Rs. 1761/-salary plus Rs. 1250/- pension). On refixation in October 1985, his total receipts came down to Rs. 2150/- but that was by agreement. He submitted that the action of the respondent No. 1 making retrospective change in the salary of the petitioner thereafter is arbitrary and violative of Articles 14 and 16 of the Constitution of India. It was pointed out on 'behalf of the petitioner that the total amount which he received from all sources after refixation was Rs. 2150/-, as against his contractual total of Rs. 3011/-, and he accepted this in good faith with a view to protect his basic pay and also on the basis that he would be bound by the Government Guidelines and Instructions which were in force on the date of his joining service. Mr. Singh further submitted that the aforesaid amount cannot be validly reduced without authority of law. He also contended that the pension as well as pay being the property, there cannot be any deprival of property except by the sanction of a valid law. He also challenged the right of the Government in issuing Circular and giving directions to the nationalized Banks in respect of pay of employees, regardless of whether such employees are reemployed ex-servicemen or not. In short, according to Mr. Singh, learned counsel for the petitioner, the refixation effected in 1987 was inherently arbitrary, discriminatory and bears no nexus to the attainment of the lawful objective, and hence violates Articles 14 and 16 of the Constitution of India.

7. Per contra, Mr. Chavan, learned counsel appearing for respondent No. 1, at the outset, contended that the respondent No. 1 has issued the impugned communication on the basis of the Guidelines issued by the respondent No.2 and they are bound by such Guidelines. Mr. Chavan further contended that the fitment of the petitioner's salary is strictly in accordance with the Guidelines issued by the second respondent from time to time correcting the mistake as approved and no injustice whatsoever has been caused to the petitioner and there is no denial of any fundamental rights guaranteed under Articles 14 and 16 of the Constitution of India. In order to justify the action of the respondent No. 1- Bank, he demonstrated that the petitioner was given the fitment as per definition of "Pay" contained in Circular dated January 28, 1983 issued by the second respondent. Thereafter by a Circular dated June 10, 1986 issued by the second respondent, the Banks were advised that with effect from July 1, 1983 the pay fixation on reemployment of ex-servicemen in Banks would be through protection of last drawn basic pay plus dearness allowance in Armed Forces and that the relevant stage of basic pay in the scale will be determined by the Bank after deducting dearness allowance admissible from the figure as protected. He further contended that by a Circular dated June 15, 1987, the Banks were instructed to reopen cases of re-employment on or after April 1, 1984 and to fix the pay in accordance with the Guidelines incorporated in the Circular dated June 15, 1987 as the earlier fitment was made as a result of mistake. Mr. Chavan also contended that without there being a challenge to the Circular of 1987, the petitioner cannot challenge the impugned communication which was issued in pursuance of the said Circular.

8. We heard the learned counsel for the parties at length and perused the record. At the outset, we find, force in the argument advanced, by Mr. Singh, learned counsel for the petitioner, that the respondent No. 1 has no power or authority to withdraw or reduce the pay and benefits offered at the time of entry in service relying on the Government, Circular/Guide lines issued in 1987 which, according to him, was a result of misreading of the circular by the bank authorities.

9. Before we proceed further, we would like to record that in the advertisement published in the Times of India on March 13, 1984 by the Banking Services Recruitment Board for the posts of Security Officers, there was no indication to the effect that the ex-servicemen will suffer any reduction in the advertised pay scale or any loss in the pension and pension dearness allowance which they might receive. Even in the letter of appointment dated January 18, 1985 issued by the first respondent, they did not inform the petitioner that he would suffer any disability in his pay scale or reduction in his pension and pension dearness allowance as a result of accepting the job on re-employment. In view of this, we proceed to consider whether it is just on the part of the respondent No. 1 to reduce the benefit once given, to the prejudice of the employee.

10. In our opinion, the method of pay fixation of ex-servicemen was evolved to protect the last drawn pay of ex-servicemen by fixing their basic pay on re-employment at the relevant pay scale at the level of total emolument, i. e. basic pay and dearness allowance earned by them prior to their retirement. In accordance with the Guidelines issued by the second respondent in 1983 as well as the administrative Instructions issued by the respondent No. 1 on July 16, 1985, the first respondent fixed the pay of the petitioner with effect from February 27, 1985. The petitioner was informed that his basic pay had been fixed in terms of the Government of India Guidelines at Rs. 1500/- and that all other terms and conditions mentioned in his appointment letter would remain unchanged. The petitioner was also informed vide letter dated October 19, 1985 that the entire amount of his pension less Rs. 250/- would be deducted from his total emoluments. The petitioner was further directed to intimate his pension paying authority to withhold his relief on pension (dearness allowance) for his entire tenure with the Bank. Thus, while on one hand his basic pay was enhanced from Rs. 700 to Rs. 1500/-, on the other hand he appears to have suffered minimum reduction of Rs. 500/-pension and Re. 500/- relief on pension clearness allowance. In view thereof, we are in agreement with the submission made by the learned counsel for the petitioner that the petitioner accepted his loss to some extent in good faith on the basis that he would be bound by the Government Guidelines and Instructions which were in force on the date of his joining service, viz, the Guidelines dated January 28, 1983 and further his basic pay would be protected.

11. Now, coming to the Guidelines issued by the Government in the year 1987 in pursuance of which the impugned communication was sent to the petitioner. At the outset, we find that the Circular has been misread by the respondent no 1. By the impugned communication dated November 20, 1987/ December 9, 1987, the petitioner was informed that the principle which would be followed, was that basic pay on reemployment of the ex-servicemen would be fixed on the minimum pay scale of his post; that further, if the total emoluments based on the minimum of the scale of pay fall short of the emoluments drawn by the officer prior to retirement, his basic pay on re-employment would be fixed in such a manner that his total emoluments prior to retirement would be protected. In our opinion, the principle sought to be applied by the impugned communication of the Bank was less beneficial and totally contrary to the binding instructions contained in the Circular dated January 20, 1983 issued by the second respondent. We find that by the aforesaid change, the petitioner's basic pay was reduced from Rs. 1500/- to Rs. 740/- per month, i.e. by more than 50%. His gross salary in pursuance of the impugned communication was fixed at Rs. 1862.43 with further deduction by Rs. 500/- on account of reduction in pension due to him, thereby bringing his starting salary down to Rs. 1362.43 from the date he joined the Bank. It is apparent that the gross salary as retrospectively worked out by the first respondent was even lower than his last drawn salary in the Army as far back as 1979 which was Rs. 1870/-.

12. In our view, the relaxation done in pursuance of the Guidelines issued by the Second respondent in 1987, failed to protect the petitioner's last drawn pay in the Army. The reduction in the salary is, therefore unlawful, unjust and cannot be sustained.

13. Coming to the Circular dated June 15, 1987, on plain reading of the Circular issued by the second respondent, we find that the reading of the said Circular by the respondent No. 1 Bank was erroneous. For the better understanding it would be beneficial to reproduce the Circular dated June 15, 1987 issued by the Government of India, Ministry of Finance, reads thus:

"At present the pay fixation of ex-servicemen officers on their re-employment in the public sector banks etc. is done in terms of the Government of India, Ministry of Finance, Department of Expenditure O.M. No. 8(34) - E III/57 dated November 25, 1958 which envisages the initial pay fixation on reemployment at the minimum stage of the scale of pay prescribed for the post in which individual is re-employed subject to certain conditions. With the revision of the pay scales in the banking industry which are new with reference to which is different from the one applicable to the Government servants, the pay fixation on re- employment in terms of the Department of Expenditure O.M. dated November 25, 1958 is no longer relevant. It has, therefore, been decided, in consultation with the Department of Personnel, that with effect from February 1, 1984 the pay fixation of ex-service officers, other than FCOs/SSCOs, on their re-employment in the public sector banks and financial institutions etc., will be in accordance with the following principles subject to the basic tenets contained in Department of Expenditure O.M. dated November 25, 1958.

   

(i) The basic pay on reemployment in the
public sector banks etc. would be fixed at
I     the minimum of the pay scale of the posts to
which the ex-service officer is re-employed. 

 

 (ii) If the emoluments (excluding HRA, CCA, if any) of the office with reference to the minimum of the scale of pay in the bank fall short of the emolument (viz. basic pay + DA etc. less HRA & CCA) drawn by him at the time of his recruitment his pay on re-employment will be fixed in such a manner that such emoluments are protected. If, however, it does not work out to an exact stage in the pay scale the pay will be fixed -at stage immediately below the stage at which the pre-retirement emoluments are protected. 
 

 (iii) After the pay has been so fixed in terms of (i) and (ii) above, the total emoluments will be reduced by .the total of pension and pension equivalent of gratuity after ignoring the first Rs. 500/-. 
 

 (iv) In so doing if the basic pay falls below -the minimum of the pay scale, the officer will be allowed to earn increments as if his pay had been fixed at the minimum of the pay scale of the re- employed post till such time as he reaches the minimum of the pay scale, thereafter he would start earning increments in the normal course. 
 

 (v) Past cases of a re-employment, on or after first February, 1984, in which the pay fixation has been done otherwise than in accordance with the above principle, may be reopened and the pay fixation may be done in accordance with these instructions."   
 

14. Mr. Chavan, learned counsel for the respondent No. 1, contended that this Circular was given retrospective effect and in view thereof the Bank had no other alternative but to follow the Guidelines contained therein and issued the impugned communication. The close reading of para 2 of the said Circular, in our view, is absolutely clear and unambiguous which does not take away the benefits already conferred on the ex-service officers, such as the petitioner. In our opinion, this Circular of 1987 protects the benefits already conferred on the ex-service officers. In fact, the plain reading of the Circular indicates that it was issued to give more benefits and certainly not to reduce the benefit which were already conferred earlier. Mr. Chavan, learned counsel for the respondent No. 1, could not lay his hand on any part of the Circular to support his contention that the first respondent was justified in issuing the impugned communication thereby the petitioner's salary was reduced and the recovery was directed. He could not point out as to which part of the Circular obliges the first respondent to take the action which they have initiated by issuing the impugned communication. In our opinion, second para of the said Circular, says that the past cases of re-employment on or after February 1, 1984 in which the pay fixation has been otherwise than in accordance with the above principle, may be reopened and the pay fixation may be done in accordance with these instructions. This direction was for re-opening of the cases where the emoluments offered by the first respondent, fall short. This cannot be read to prejudice the rights conferred on the ex-service officers who were enjoying the benefits under Circular of 1983. Mr. Chavan, learned counsel for respondent No. 1 also invited our attention to the Circular issued by the second respondent on June 18, 1986 which, in his submission, is the basic Circular. Mr. Singh, learned counsel for the petitioner, contended that the Circular dated June 18, 1986 does not apply to the ex-service officers since it was covering ex-servicemen and that was the reason why there was no reference made to it in the Circular issued in 1987 which was covering the ex-service officer. We do not intend to enter into controversy whether it applies to the present petitioner or not. However, the reasons recorded in respect of the Circular issued in 1987, for the self same reasons, in our view, the 1986 Circular does not affect the rights of the ex-service officers, conferred on them by the earlier Circular of 1983.

15. Since we have taken a view that reading of the Circular issued by the respondent No. 2 in 1987, by the respondent No. 1 is erroneous, we would not like to enter into the controversy raised by the petitioner, that whether the Government has powers to issue instructions to the nationalized Banks with respect to pay of employees, whether the petition could be deprived of the pay and pension which have become vested by accrued rights by mere administrative instructions, and whether the rights accrued to the petitioner while accepting the job and particularly at the time of fixation of pay in 1985, can be taken away. However, in our opinion, the impugned communication issued by the respondent No. 1 in pursuance of the Circular issued by the respondent No. 2 in 1987, the change made by the respondent No. 2 in 1987, the change made by the respondent No. 1 in the pay scale having retrospective operation which has the effect of taking away the benefits already available to the employee under the fixation of pay in the year 1985 done in pursuance of the Guidelines of the respondent No. 2 of 1983, is arbitrary, discriminatory and violative of rights guaranteed under Articles 14 and 16 of the Constitution. In our view, the respondent No. 2 has misread the Circular issued by the Government in 1987 and thus for no valid reasoning reduced the pay of the petitioner.

16. The respondent No. 1 in the impugned communication also directed to recover the difference of refixed salary in 1987 and the salary fixed in 1985 in giving option to the petitioner to pay arrears in five or six monthly instalments to be deducted from his salary to recover total sum of Rs. 60,000/ from his salary. In our view, the Administrative- Instructions issued by the respondent No. 1 are arbitrary, unjust and they are the result of misreading of the Guidelines issued by the Government in 1987. However, the aforesaid direction of recovery was stayed by this Court while admitting the writ petition.

17. In the result, the impugned order/communication dated November 30, 1987 /December 9, 1987 issued by the respondent No. 1 to the petitioner, is quashed and set aside. The petitioner has sought the release of Rs. 49,606/- in prayer Clause (a) which, according to him, was unlawfully withheld from his salary since December 1987. However, the petitioner's counsel, on instructions, submitted that the aforesaid amount was an approximate amount and the actual amount was Rs. 38,810.91. That amount was deposited by the respondent No. 1 Bank, which the petitioner was allowed to withdraw by furnishing the Bank Guarantee. That Bank Guarantee is hereby discharged. Nothing further is required to be paid to the petitioner on that count. This takes care of prayers (a) and (b). The petitioner will, however, be eligible to pay fixation and all consequential benefits on the footing of his pay fixation in October, 1985 which was correctly done and which is his prayer (c). The respondent No. 1 will make calculation and release the amount with interest at the rate of 12 per cent per annum to the petitioner within a period of four months from today.

18. The petition is accordingly allowed with cost.

19. Authenticated copy of this order may be made available to the parties.