Date of the Judgment: 05 September 2018
Citation: (2018) INSC 786
Judges: Kurian Joseph, J., Sanjay Kishan Kaul, J.
Can employees absorbed from Rural Electrification Cooperative Societies be denied pay scale benefits enjoyed by other employees of the absorbing company? The Supreme Court addressed this question in a case concerning employees of M.P. Poorva Kshetra Vidyut Vitran Company Limited. The court clarified that if the company had extended pay revision benefits to some employees from societies where pre-revised pay scales were not applicable, then similar benefits should also be extended to others from similar societies to avoid discrimination. This judgment was delivered by a two-judge bench comprising Justice Kurian Joseph and Justice Sanjay Kishan Kaul.
Case Background
The case involves a dispute over the implementation of pay commission recommendations for employees who were absorbed from Rural Electrification Cooperative Societies into M.P. Poorva Kshetra Vidyut Vitran Company Limited. The core issue was whether these absorbed employees were entitled to the benefits of the Fifth Pay Commission, and subsequently, the Sixth and Seventh Pay Commissions. The employees argued that they should receive the same pay scale benefits as other employees of the company. The company, however, contended that the employees from certain societies were not entitled to these benefits based on a notification issued in 2006.
Timeline
| Date | Event |
|---|---|
| 27.04.2006 | Notification issued by M.P. Poorva Kshetra Vidyut Vitran Co. Ltd. stating that the pay revision of 2001 would not be applicable to employees of Rural Electrification Cooperative Societies absorbed into the company, if pre-revised pay scales were not applicable to them. |
| 05.09.2018 | Supreme Court clarifies that if the benefit of pay revision regulations of 2001 was extended to employees despite the exclusion in the notification dated 27.04.2006, the same benefit must be extended to the respondent/employees. |
Legal Framework
The primary legal issue revolves around the interpretation and application of the notification dated 27.04.2006 issued by M.P. Poorva Kshetra Vidyut Vitran Co. Ltd. This notification stated that the pay revision of 2001 would not apply to employees of Rural Electrification Cooperative Societies who were absorbed into the company if they did not have pre-revised pay scales.
Arguments
The appellants argued that the employees from Rewa Society were not entitled to the Fifth Pay Commission benefits because the recommendations had not been implemented in their society. They further contended that the notification dated 27.04.2006 explicitly excluded employees from societies where pre-revised pay scales were not applicable from the 2001 pay revision benefits.
The respondents, on the other hand, argued that despite the exclusion in the notification, the benefit of the 2001 pay revision had been extended to employees of other societies where pre-revised pay scales were not applicable. Therefore, the employees of Rewa Society should not be discriminated against.
| Submissions | Appellants’ Arguments | Respondents’ Arguments |
|---|---|---|
| Applicability of Fifth Pay Commission |
|
|
| Notification dated 27.04.2006 |
|
|
| Sixth and Seventh Pay Commissions | Not specifically addressed in the submissions, but the court clarified the applicability. | Not specifically addressed in the submissions, but the court clarified the applicability. |
Issues Framed by the Supreme Court
The main issue before the Supreme Court was:
- Whether the appellants were bound to implement the recommendations of the Fifth Pay Commission in respect of the respondent/employees.
Treatment of the Issue by the Court
| Issue | Court’s Decision |
|---|---|
| Whether the appellants were bound to implement the recommendations of the Fifth Pay Commission in respect of the respondent/employees. | The Supreme Court clarified that if the appellant had extended the benefit of the pay revision regulations of 2001, despite the exclusion in the Notification dated 27.04.2006, to those employees where the pre-revised pay scales had not been applied, the respondent/employees belonging to the Rewa Society will not be discriminated against. |
Authorities
The court did not specifically cite any previous cases or books in its judgment. The primary focus was on interpreting the notification dated 27.04.2006 and ensuring equal treatment of employees.
| Authority | Type | How it was used |
|---|---|---|
| Notification dated 27.04.2006 | Notification | The court interpreted the notification to clarify the applicability of pay revision benefits. |
Judgment
| Submission | Court’s Treatment |
|---|---|
| Appellants’ submission that Fifth Pay Commission benefits were not applicable to Rewa Society employees. | The court clarified that if the benefit of the 2001 pay revision was extended to employees from societies where pre-revised pay scales were not applicable, then the same benefit must be extended to the respondent/employees of Rewa Society. |
The Supreme Court clarified that if M.P. Poorva Kshetra Vidyut Vitran Co. Ltd. had extended the benefit of the pay revision regulations of 2001 to employees from societies where pre-revised pay scales were not applicable, then the respondent/employees from Rewa Society should also receive the same benefits to avoid discrimination.
The court further clarified that the benefits of the Sixth and Seventh Pay Commissions should be extended to the employees of the REC Societies from the date these benefits were given to the employees of M.P. Poorva Kshetra Vidyut Vitran Co. Ltd. Any arrears in this regard should be paid within three months from the date of the judgment.
The court stated, “We make it clear that in case Appellant No.1 has extended the benefit of the pay revision Regulations of 2001, despite the exclusion in the Notification dated 27.04.2006, to those employees where the pre-revised pay scales had not been applied, the respondent/employees belonging to the Rewa Society will not be discriminated.”
The court also stated, “As far as implementation of recommendations of Sixth and Seventh Pay Commissions are concerned, there cannot be any dispute. The benefits will be extended to the employees of the REC Societies with effect from the date the benefits of the Sixth and Seventh Pay Commissions have been given to the employees of Appellant No.1.”
The court also stated, “If there is any arrears to be paid in this regard, the same shall be paid within three months from today.”
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the principle of equal treatment and non-discrimination. The court emphasized that if the company had extended pay revision benefits to some employees from societies where pre-revised pay scales were not applicable, then similar benefits should also be extended to others from similar societies. The court focused on ensuring that all employees absorbed from Rural Electrification Cooperative Societies were treated fairly and consistently with respect to pay scale benefits.
| Sentiment | Percentage |
|---|---|
| Equal Treatment | 40% |
| Non-Discrimination | 30% |
| Implementation of Pay Commissions | 30% |
| Category | Percentage |
|---|---|
| Fact | 20% |
| Law | 80% |
Key Takeaways
- Employees absorbed from Rural Electrification Cooperative Societies are entitled to equal pay scale benefits as other employees of the absorbing company.
- If the company has extended pay revision benefits to some employees from societies where pre-revised pay scales were not applicable, then similar benefits should also be extended to others from similar societies.
- The benefits of the Sixth and Seventh Pay Commissions should be extended to the employees of the REC Societies from the date these benefits were given to the employees of M.P. Poorva Kshetra Vidyut Vitran Co. Ltd.
- Any arrears in this regard should be paid within three months from the date of the judgment.
Directions
The Supreme Court directed that any arrears related to the implementation of the Sixth and Seventh Pay Commissions should be paid within three months from the date of the judgment.
Development of Law
This judgment clarifies that in cases of absorption of employees from cooperative societies, the principle of equal treatment and non-discrimination should be followed. If a company has extended certain pay benefits to some employees from similar backgrounds, then those benefits should be extended to all such employees. The ratio decidendi is that similarly situated employees should be treated equally in terms of pay scale benefits.
Conclusion
The Supreme Court’s judgment in M.P. Poorva Kshetra Vidyut Vitran Co. Ltd. vs. Uma Shankar Dwivedi clarifies that employees absorbed from Rural Electrification Cooperative Societies should not be discriminated against in terms of pay scale benefits. The court emphasized the principle of equal treatment, directing that if the company had extended pay revision benefits to some employees from societies where pre-revised pay scales were not applicable, then similar benefits should also be extended to others from similar societies. The judgment also clarified the applicability of the Sixth and Seventh Pay Commissions, ensuring that all employees receive their due benefits.