Supreme Court Denies Pay Parity for Internal Auditors: Punjab State Power Corporation Ltd. vs. Rajesh Kumar Jindal (2019)

Date of the Judgment: January 08, 2019

Citation: (2019) INSC 19

Judges: R. Banumathi, J. and Indira Banerjee, J.

Can employees in the same group, but with different roles, demand equal pay? The Supreme Court of India addressed this question in a case involving the Punjab State Power Corporation Limited (PSPCL) and its Internal Auditors. The core issue was whether Internal Auditors were entitled to the same pay scale as Head Clerks simply because they belonged to the same group within the organization. This judgment, delivered by a two-judge bench comprising Justice R. Banumathi and Justice Indira Banerjee, clarifies the principles governing pay parity claims in service law.

Case Background

The dispute arose from a claim by Internal Auditors of the Punjab State Electricity Board (PSEB), later renamed Punjab State Power Corporation Limited (PSPCL), for pay parity with Head Clerks. Both positions were categorized under Group XII of the PSEB. Initially, both positions had similar pay scales. However, a revision in 1990 granted Head Clerks a higher pay scale than Internal Auditors. Aggrieved by this disparity, the Internal Auditors filed a writ petition before the High Court of Punjab and Haryana, arguing that their roles were similar and that they were being discriminated against.

The Internal Auditors contended that they were always on par with Head Clerks, being a promotional post from Circle Assistants/ARAs. They argued that the 1990 revision disturbed the parity maintained for over two decades. The PSPCL, on the other hand, argued that the nature of duties and responsibilities, as well as the recruitment process for both positions, were different, justifying the pay disparity. The High Court, relying on a previous judgment concerning Sub Fire Officers, granted the Internal Auditors parity, leading to the appeal by PSPCL before the Supreme Court.

Timeline

Course of Proceedings

The Internal Auditors filed Civil Writ Petition No. 10117 of 1992 before the High Court of Punjab and Haryana, challenging the pay disparity created by the order dated 03.10.1990. The High Court, relying on its judgment in a similar case involving Sub Fire Officers (CWP No. 9294 of 1993), allowed the writ petition, granting parity to the Internal Auditors. The High Court dismissed the appeal (LPA No. 264 of 2012) filed by the PSPCL, stating that the issue was pending before the Supreme Court in SLP(C) No. 10896 of 2011. The PSPCL then filed the present appeal before the Supreme Court.

Legal Framework

The judgment references the following legal provisions:

• Section 79(c) of the Electricity (Supply) Act, 1948: This section grants the Punjab State Electricity Board (PSEB) the power to frame regulations regarding the conditions of service of its employees. The judgment notes that the PSEB framed the “Punjab Public Works Departments (Electricity Branch) State Service Class-III (Subordinate Posts) Rules, 1958” under this provision.
• Punjab State Electricity Board (Revised Pay) Regulations, 1988, Regulation 3(g): This regulation empowers the Board to revise pay scales for any post specified in the schedule. The Court noted that the appellant-Board was competent to revise the pay scales under this regulation.
• Article 14 of the Constitution of India: This article guarantees equality before the law and prohibits discrimination. The respondents argued that the pay disparity violated this article.
• Article 16 of the Constitution of India: This article guarantees equality of opportunity in matters of public employment. The respondents argued that the pay disparity violated this article.

The Court also discussed the principle of “equal pay for equal work” as enshrined under Article 39(d) of the Constitution, read with Article 14. However, the Court clarified that this principle applies only when there is complete identity between the two groups in all respects.

Arguments

Appellant (Punjab State Power Corporation Limited) Arguments:

• The appellant-Board is competent to revise pay scales under Regulation 3(g) of the Punjab State Electricity Board (Revised Pay) Regulations, 1988.
• Internal Auditors who consciously applied for the post at a specific pay scale cannot claim parity with Head Clerks.
• Promotional avenues for Internal Auditors are far superior to those of Head Clerks, making the Internal Auditor position a ‘preferred option.’
• Internal Auditors cannot claim parity solely based on being in Group XII, as many different posts with varying duties and responsibilities are included in this group.
• Granting parity based solely on group categorization would have huge financial implications for the PSEB.

Respondents (Internal Auditors) Arguments:

• Internal Auditors, being in Group XII and historically on par with Head Clerks, should receive the same pay scale.
• The 1990 revision disturbed the parity maintained for over two decades, which is arbitrary and violates Article 14 and Article 16 of the Constitution of India.
• The retrospective operation of the 1990 order caused prejudice to Internal Auditors promoted between 1986 and 1990.
• There was no justification to disturb the parity in the pay scales of two posts which were being maintained for quite some time.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for determination:

1. Whether the Internal Auditors are entitled to claim parity of pay scale with Head Clerks and Head Clerk–cum–Divisional Accountants irrespective of the nature of recruitment, qualifications, and nature of duties and responsibilities?
2. Can the Internal Auditors claim equity of pay scale merely because they are in the same group (Class-XII) irrespective of the nature of work and the internal qualification for recruitment? In view of the promotional avenues available to the Internal Auditors and the high pay scales which are available in the promotional position, opting for Internal Auditors, is it not a “preferred option”?
3. When there are about fourteen posts categorized in Group XII, can Internal Auditors claim parity of pay scale with the Head Clerks merely because they were categorized in Group XII?

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

The Court relied on a series of precedents to reinforce the principle that pay parity claims must be based on a holistic assessment of the nature of duties, responsibilities, qualifications, and mode of recruitment, not merely on group categorization. The Court emphasized that it should not interfere with the decisions of expert bodies like the Pay Anomaly Committee unless there is evidence of extraneous considerations. The Court also highlighted that the burden of proof in establishing parity lies with the person claiming it.

• The Court followed Kshetriya Kisan Gramin Bank v. D.B. Sharma and Others [2001] 1 SCC 353, stating that courts should not interfere with findings of expert bodies unless there is extraneous consideration.
• The Court followed State of U.P. and Others v. J.P. Chaurasia and Others [1989] 1 SCC 121, stating that matters of pay should be left to the Executive Government and expert bodies.
• The Court followed S.C. Chandra and Others v. State of Jharkhand and Others [2007] 8 SCC 279, stating that granting pay scales is an executive function and the principle of equal pay for equal work should not be applied unless there is complete identity between the two groups.
• The Court followed Steel Authority of India Limited and Others v. Dibyendu Bhattacharya [2011] 11 SCC 122, stating that parity of pay can be claimed only when eligibility, mode of selection, nature of work and responsibilities are identical.
• The Court followed Union of India and Another v. P.K. Roy and Others AIR 1968 SC 850, stating that factors for considering equivalence of posts include nature of duties, responsibilities, minimum qualifications, and salary.
• The Court followed Union of India and Another v. Manik Lal Banerjee (2006) 9 SCC 643, stating that financial implication is a relevant factor for accepting the revision of pay.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• Different Nature of Duties and Responsibilities: The Court emphasized that the duties and responsibilities of Head Clerks and Internal Auditors are entirely different. Head Clerks manage the establishment in the Divisional Office, disburse salaries, and handle administrative functions. Internal Auditors, on the other hand, audit the billing of the Revenue Department.
• Mode of Recruitment and Qualifications: The Court noted that the mode of recruitment and the minimum educational qualifications and experience required for Head Clerks and Internal Auditors are different. Head Clerks are promoted from Circle Assistants/ARAs, while Internal Auditors are recruited directly (55%) and promoted (45%).
• Report of the Pay Anomaly Committee: The Court gave significant weight to the reports of the Pay Anomaly Committees, which had thoroughly examined the pay scales and concluded that the nature of duties and responsibilities of the two posts were different. The Court noted that it should not interfere with the decisions of expert bodies unless there is evidence of extraneous considerations.
• Conscious Exercise of Option: The Court observed that Circle Assistants/ARAs had a conscious choice to opt for either the Head Clerk or Internal Auditor positions. Those who chose the Internal Auditor position did so knowing the pay scales and promotional avenues.
• Promotional Avenues: The Court highlighted that the promotional avenues for Internal Auditors are far superior to those of Head Clerks, with higher pay scales at each promotional level. This made the Internal Auditor position a “preferred option.”
• Financial Implications: The Court also considered the financial implications of granting parity, noting that it would have a significant impact on the Board’s finances.

Logical Reasoning

Conclusion

The Supreme Court’s judgment in Punjab State Power Corporation Ltd. vs. Rajesh Kumar Jindal (2019) is a significant ruling on pay parity in service law. The Court clarified that employees cannot claim equal pay solely based on being in the same group or historical parity. The Court emphasized that the nature of duties, responsibilities, mode of recruitment, qualifications, and promotional avenues must be considered when determining pay scales. The Court upheld the principle that courts should not interfere in matters of pay scales unless there is a clear violation of law or evidence of extraneous considerations. The Court underscored that the burden of establishing right and parity in employment lies with the person claiming such right. This judgment provides a clear framework for addressing pay parity claims and reinforces the importance of expert bodies in making decisions related to pay scales.