STATE BANK OF INDIA AND ORS. versus K.P. SUBBAIAH AND ORS.

Citation: [2003] SUPP. 1 S.C.R. 545 · Decided: 16-07-2003 · Supreme Court of India · Bench: SHIVARAJ V. PATIL · Disposal: Case Partly allowed

Judgment (excerpt)

STATE BANK OF INDIA AND ORS. 
A 
v. 
K.P. SUBBAIAH AND ORS. 
JULY 16, 2003 
[SHIVARAJ V. PATIL AND ARIJIT PASA YAT, JJ.] 
B 
Service law: 
Fixation of pay scale-Absorption of ex-servicemen of defence services 
in public sector banks-Government policy that last pay drawn to be C 
protected-Revision in pay of employees under Fourth Bipartite Settlement-
Subsequent issue of circular that only D.A. and interim relief drawn by ex-
serviceman qualifY for protection as components of D.A.-As such last pay 
drawn by employees reduced-Writ petition challenging reduction-High 
Court holding scale of pay determinative factor and directing that while re- D. 
fixing pay and D.A. that the total pay fixed by bank when ex-servicemen 
entered its service be protected within corresponding scale of pay-On 
appeal, held: Intention was to protect pay and not a particular scale of pay 
thus demand of corresponding pay scale not correct-· Thus· the direction of 
the High Court not maintainable. 
Fixation of pay scale-Factors to be considered-Discussed. 
Words and Phrases : 
'Pay' and 'pay scale '-Meaning of in the context of service 
jurisprudence. 
Appellant-State Bank of India absorbed ex-servicemen of Indian Army. 
While fixing their pay the basic pay and the dearness allowance last drawn 
E 
F 
by them in military service was to be protected. Respondents joined the bank 
during the period from 11.8.83 to 7.6.1984. At that time, the pay and allowances 
payable to employees of the bank were governed by the Third Bipartite G 
Settlement which was operative from 1.9.1978. Subsequently, Fourth Bipartite 
Settlement was passed which was retrospectively operative from 1.7.1983. 
Under the settlement there was an upward revision in the pay scales and the 
basic pay of employees were revised on stage to stage basis. Thereafter, the 
545 
H 
546 
SUPREME COURT REPORTS [2003) SUPP. I S.C.R. 
A Bank issued a circular regarding fixation of pay relating to ex-servicemen 
employed in the bank. By another circular bank notified that only dearness 
allowance and interim relief drawn by ex-servicemen qualified for protection 
as components of D.A. and not the other allowances. In terms of the circulars 
the pay last drawn by the respondent-employees stood reduced. Respondent-
B employees challenged the reduction in pay. High Court held that the scale of 
pay was the determinative factor; that the bank was entitled to correct the 
mistake committed by them in revising the pay of the employees by fitment in 
the new pay scales under IV Bipartite Settlement on stage to stage basis; 
that while re-fixing the pay and D.A., the total pay fixed by the Bank when the 
employees entered its service has to be protected within the corresponding 
C scale of pay. Hence the present appeal. 
Appellant-Banks contended that the conclusions of the High Court are 
erroneous because it proceeded on the basis as if pay scale was to be protected 
not the pay whereas in terms of the policy decision, protection was of the pay 
and the employees were not to receive any amount below the last pay drawn by 
D them; that the anomaly has arisen because the_ Fourth Bipartite Settlement 
was made retrospectively operative; that in order to protect the pay, fixation 
of a scale was without an alternative; and that the employees cannot clai~ a 
double advantage by seeking a corresponding increase in the pay scale. 
Respondent-employee contended that fixation of pay and retrospective 
E oper&tion of the Fourth Bipartite Settlement were within the choice of the 
employer-Bank and employees had nothing to do with it; that by indicating a 
particular scale of pay at the time of absorption, a right is conferred on the 
employee to get a corresponding higher scale of pay as and when there is 
revision of the scale of pay; that the employees were fitted in a particular 
p scale of pay and as a natural corollary and consequence they were entitled to 
the corresponding scale of pay in terms of the subsequent Bipartite Settlement; 
and that the High Court was not justified in denying certain benefits. 
G 
H 
Allowing the main appeals and dismissing the connected appeals, the 
Court 
HELD: I. I. In terms of the Government's policy there was no intention 
to protect any particular scale of pay but the protection related to pay. The 
apparent intention was to ensure that the ex-serviceman at the time of 
employment in the public sector bank does not get an amount as pay lesser 
than what he was drawin

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