MAHARASHTRA STATE FINANCIAL CORPORATION EXEMPLOYEES ASSOCIATION & ORS. versus STATE OF MAHARASHTRA & ORS.

Citation: [2023] 1 S.C.R. 1169 · Decided: 02-02-2023 · Supreme Court of India · Bench: ANIRUDDHA BOSE · Disposal: Case Partly allowed

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Judgment (excerpt)

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MAHARASHTRA STATE FINANCIAL CORPORATION EX-
EMPLOYEES ASSOCIATION & ORS.
v.
STATE OF MAHARASHTRA & ORS.
(Civil Appeal No. 778 of 2023)
FEBRUARY 02, 2023
[ANIRUDDHA BOSE AND S. RAVINDRA BHAT, JJ.]
Service Law– Pay revision – Application of Fifth Pay
Commission to the employees of Maharashtra State Financial
Corporation with effect from retrospective cut-off date, but limited
to only existing employees in service as on the date of
implementation – Former employees (including retirees, legal
representatives of those who had expired, and those who had availed
of voluntary retirement scheme) who were in service as on the
retrospective cut-off date, but not on the date of implementation,
filed writ petition complaining of discrimination – Held: Decision
to grant pay revision from cut-off date cannot be faulted with, but
to not grant any revision to those who were not in service when the
order implementing the pay revision was issued and confining it to
those in employment, is clearly discriminatory – Limiting pay revision
only to existing employees has no rational nexus with the object of
pay revisions which is to mitigate rise in cost of living – Further
classification in the same class is violative of Article 14 – Those
who retired upon attaining superannuation or those who died while
in service are entitled to relief – VRS employees and those dismissed/
terminated from service not on same footing – Constitution of India
– Art. 14.
Constitution of India –Separation of powers – Policy
regarding fixation of pay, extent of revision, date of implementation
– Exclusively within executive decision making powers – However,
jurisdiction of courts arises in questions of larger public interest –
On manner of implementation, timing of applicability of scheme,
impact, and especially where it results in exclusion or discrimination
of certain sections of public employees from the benefit –Art. 14.
1169
   [2023] 1 S.C.R. 1169
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SUPREME COURT REPORTS
[2023] 1 S.C.R.
Constitution of India – Rationale of pay revisions – Larger
public interest involved - State and public employers obligated to
periodically address ill-effects of rise in cost of living – Other
objectives include enthusing commitment and loyalty towards public
employment, to deter public servants from lure of gratification –
Art. 43.
Partly allowing the appeal, the Court
HELD: 1.1 Framing a policy concerning fixation of pay for
the salaries of its employees, the extent of its revision, and even
the date of its implementation, are undoubtedly exclusively within
executive decision making powers. However, the manner of its
implementation, the timing of applicability of a scheme, and its
impact, especially where it results in exclusion of a certain section
of public employees from the benefit, are subject matters of
scrutiny by the court. Especially, when the complaint is of
discrimination and violation of Article 14 of the Constitution, as
is the present case. [Para 1][1175-B-C]
1.2 Maharashtra State Financial Corporation-MSFC did not
finalise whether to adopt Fifth Pay Commission (which had been
given effect from 01.01.1996 by the State Government) for its
employees and sent the proposal to the State Government as per
Section 39 of the State Financial Corporations Act, 1951. Benefit
of interim relief of pay revision was granted to all existing
employees who were on pay rolls of MSFC between 01.01.1996
and 29.03.2010. Only on 29.03.2010, based on communication
received from the State Government, MSFC implemented the
pay revision recommendations effective only in respect of existing
employees and limited the arrears payable from 01.01.2006. The
reason for the cut-off date (approved by the State Government)
was “in order to motivate the present staff to recover maximum
amount in NPA Accounts”. Second justification for denying benefit
of pay revision was that fixation of cut-off date falls within state
policy domain, which involves among others - the state’s financial
concerns, which the courts should not interfere in. [Para 21-23,
26][1181-F-G; 1182-A-C; 1186-D]
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1.3 A larger public interest is involved, impelling revision
of pay of public officials and employees. The rationale for periodic
pay revisions is to ensure that the salaries and emoluments that
public employees enjoy, should keep pace with the increased cost
of living and the general inflationary trends, and ensure it does
not adversely impact employees. Pay r

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