Supreme Court Upholds Gujarat Water Board’s Decision on Daily Wage Pay Scales: Rajesh Pravinchandra Rajyaguru vs. Gujarat Water Supply & Sewerage Board (2021)

Introduction

Date of the Judgment: 17 December 2021
Citation: (2021) INSC 731
Judges: Dr. Dhananjaya Y Chandrachud, J. and M. R. Shah, J.

Can a statutory body like the Gujarat Water Supply & Sewerage Board be compelled to grant pay scale benefits to its daily wage employees based on State Government resolutions that it has not explicitly adopted? The Supreme Court of India recently addressed this question, clarifying the extent to which a Board is bound by government policies. This case revolves around a dispute over pay scales for daily wage workers of the Gujarat Water Supply & Sewerage Board, specifically regarding whether they are entitled to the pay scale of Rs. 950-1500 based on certain government resolutions. The core issue is whether the Board is obligated to implement government resolutions that it has not formally adopted. The judgment was delivered by a two-judge bench comprising of Dr. Dhananjaya Y Chandrachud, J. and M. R. Shah, J., with the opinion authored by M. R. Shah, J.

Case Background

The Gujarat Water Supply & Sewerage Board (the Board) was established under the Gujarat Water Supply and Sewerage Board Act, 1978, to manage water supply and sewerage activities in Gujarat. Initially, the Board decided to follow the State Government’s rules and regulations until it could frame its own. In 1988, the State Government, based on recommendations from the ‘Shri Daulatbhai Parmar Committee,’ issued a resolution on 17.10.1988, providing certain benefits to skilled daily wage workers based on their length of service. This resolution was adopted by the Board on 08.06.1989.

The 1988 resolution provided for different benefits based on the length of service. Daily wagers with less than five years of service were entitled to daily wages, paid Sundays, medical allowance, and national festival holidays. Those with 5 to 10 years of service got a fixed monthly salary and dearness allowance. Daily wagers with 10 to 15 years of service were entitled to a minimum pay scale at par with skilled workers, and those with over 15 years were considered permanent workers with additional benefits like gratuity and pension.

Subsequently, the State Government modified the 1988 resolution with resolutions dated 01.05.1991 and 15.02.1992. These modifications stipulated that daily wagers who had passed the Secondary School Certificate (SSC) and completed 7 years of service would be assigned clerical work and paid a pay scale of Rs. 950-1500. The Board, however, did not adopt these modified resolutions. Despite this, some zonal offices of the Board mistakenly granted the benefits of the 1991 and 1992 resolutions to some daily wagers. When the Head Office became aware of this, it issued instructions on 05.06.2015 to stop granting these benefits and initiated recovery of the amounts already paid.

The original writ petitioners, who were daily wage employees of the Board, sought the pay scale of Rs. 950-1500 based on the 1991 and 1992 resolutions. They argued that since some employees had received these benefits, denying them to others was discriminatory. The Board contended that it had not adopted the 1991 and 1992 resolutions and that the benefits were mistakenly given in some zonal offices and were being withdrawn.

Timeline:

Course of Proceedings

The original writ petitioners filed a Special Civil Application (SCA No. 16470 of 2018) in the High Court of Gujarat, seeking the pay scale of Rs. 950-1500 based on the government resolutions of 1991 and 1992. The learned Single Judge of the High Court allowed the writ petition on 15.10.2019, directing the Board to grant the pay scale of Rs. 950-1500 to the daily wage employees who had completed 10 years of service, along with consequential benefits. The Single Judge held that denying these benefits to some employees while granting them to others was discriminatory and violated Article 14 of the Constitution of India.

Aggrieved by the decision of the Single Judge, the Board filed a Letters Patent Appeal (LPA No. 82 of 2020) before the Division Bench of the High Court. The Division Bench allowed the appeal, setting aside the Single Judge’s order. The Division Bench held that since the Board had not adopted the government resolutions of 1991 and 1992, the daily wage employees of the Board were not entitled to the benefits under those resolutions. The Division Bench emphasized that the Board, being an autonomous body, was not automatically bound by subsequent government resolutions unless it explicitly adopted them.

Legal Framework

The primary legal framework in this case involves the interpretation and application of various government resolutions issued by the State of Gujarat concerning the pay scales and benefits of daily wage employees. The key resolutions are:

• Resolution dated 17.10.1988: This was the parent resolution that provided certain benefits to skilled daily wage workers based on their length of service. It was adopted by the Board.
• Resolution dated 01.05.1991: This resolution modified the 1988 resolution, stating that daily wagers who had passed SSC and completed 7 years of service would be assigned clerical work and paid in the pay scale of Rs. 950-1500.
• Resolution dated 15.02.1992: This resolution further clarified that the pay of Rs. 950 would be granted in the pay scale of Rs. 950-1500 w.e.f 01.05.1991 to all SSC pass daily wagers who have completed 7 years of service.

The core legal issue is whether the Board, being an autonomous statutory body, is bound to implement the modified resolutions of 1991 and 1992, even though it had not specifically adopted them, unlike the parent resolution of 1988. The case also touches upon the principle of equality under Article 14 of the Constitution of India, particularly whether the Board’s action of granting benefits under the 1991 and 1992 resolutions to some employees and denying them to others is discriminatory.

Arguments

Arguments of the Appellants (Daily Wage Employees):

• The learned Senior Counsel appearing on behalf of the original writ petitioners argued that the Division Bench of the High Court erred in overturning the well-reasoned judgment of the learned Single Judge.
• It was submitted that the learned Single Judge had rightly held that the original writ petitioners were entitled to the benefits of the Government Resolutions dated 01.05.1991 and 15.02.1992.
• The Board’s resolution dated 06.08.1990 stated that until the Board frames its own rules, it would follow the State Government’s rules and policies. Since the Board has not framed its own rules, it is bound to follow this resolution.
• Once the parent resolution of 17.10.1988 was adopted, all subsequent amendments should automatically apply to the Board.
• The Board, being a statutory body, must adopt subsequent policy decisions in the same manner as the parent resolution.
• Several employees have already received benefits under the 1991 and 1992 resolutions, and denying these benefits to the original writ petitioners is discriminatory and violates Article 14 of the Constitution of India.
• The Board is undertaking activities that were previously performed by the State Government and is funded by the State Government. Therefore, its daily rated employees should receive the same benefits as those in other government departments. Reliance was placed on the decision of the Supreme Court in the case of State of Gujarat and Others versus PWD Employees Union and others, (2013) 12 SCC 417.

Arguments of the Respondent (Gujarat Water Supply & Sewerage Board):

• The Division Bench of the High Court correctly quashed the order of the learned Single Judge.
• The Board had specifically adopted the parent resolution of 17.10.1988, and the benefits under it were granted to the daily rated employees. However, the subsequent resolutions of 1991 and 1992 were never adopted by the Board.
• The daily rated employees are not entitled to any benefits from the 1991 and 1992 resolutions, as these were not adopted by the Board.
• Some zonal offices mistakenly granted benefits under the 1991 and 1992 resolutions, but these were withdrawn with instructions to recover the amounts. The decision to withdraw these benefits was not challenged by the original writ petitioners.
• The learned Single Judge’s decision was based solely on the ground of discrimination, failing to appreciate that the benefits given to other employees were withdrawn.
• The policies of the State Government are not automatically binding on the Board. The Board is an autonomous body and can make its own decisions regarding pay scales.
• The issue of pay scale revision is a matter for the employer to decide, based on its financial capacity.
• Granting the benefits of the 1991 and 1992 resolutions would impose a significant financial burden on the Board.
• The concept of equality cannot be used to perpetuate a mistake; the original writ petitioners must establish their right to the benefits independently. Reliance was placed on the decisions of the Supreme Court in the cases of State of U.P. & Others versus Rajkumar Sharma & Others, (2006) 3 SCC 330, State of West Bengal & Others versus Debasish Mukherjee & Others, (2011) 14 SCC 187, and P. Singaravelan & Others versus District Collector, Tiruppur and DT and Others, (2020) 3 SCC 133.

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Whether the original writ petitioners – daily rated employees working with the Respondent – Board are entitled to the benefits flowing from subsequent Resolutions dated 01.05.1991 and 15.02.1992?
2. Whether the principle of negative equality shall be applicable in a case where the other employees were wrongly granted the benefits and/or the employees who are claiming the parity shall have to establish their rights independently to get the particular benefits?

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each authority was viewed by the Court:

• The Court distinguished State of Gujarat and Others versus PWD Employees Union and others, (2013) 12 SCC 417, stating that it pertained to different departments of the State Government, not an autonomous Board.
• The Court followed State of U.P. & Others versus Rajkumar Sharma & Others, (2006) 3 SCC 330, holding that Article 14 does not envisage negative equality and that a mistake cannot be perpetuated.
• The Court followed State of West Bengal & Others versus Debasish Mukherjee & Others, (2011) 14 SCC 187, reiterating that equality is a positive concept and cannot be used to enforce an illegality.
• The Court followed P. Singaravelan & Others versus District Collector, Tiruppur and DT and Others, (2020) 3 SCC 133, stating that equality cannot be used to perpetuate a mistake.
• The Court followed Secretary, Finance Department and Others versus West Bengal Registration Service Association & Others, 1993 Supp (1) SCC 153, stating that pay scale decisions are complex and should be left to expert bodies.
• The Court followed State of Bihar and Others versus Bihar Secondary Teachers Struggle Committee, Munger and Others, (2019) 18 SCC 301, noting that granting pay parity by the court may have adverse consequences.
• The Court followed Punjab State Cooperative Milk Producers Federation Limited and Another versus Balbir Kumar Walia and Others, (2021) 8 SCC 784, stating that the grant of higher pay scales to government employees and those of instrumentalities of the State stand on a different footing.

What weighed in the mind of the Court?

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

• Autonomy of the Board: The Court emphasized that the Gujarat Water Supply & Sewerage Board is an autonomous statutory body and is not automatically bound by the State Government’s resolutions unless it specifically adopts them. This autonomy was a key factor in the Court’s reasoning.
• Non-Adoption of Resolutions: The fact that the Board had not adopted the resolutions of 1991 and 1992 was a crucial point. The Court held that without formal adoption, the daily wage employees could not claim benefits under these resolutions.
• Negative Equality: The Court rejected the argument of discrimination based on negative equality. The fact that some employees were mistakenly granted benefits did not entitle others to claim the same benefits, especially when the mistakenly granted benefits were withdrawn.
• Financial Implications: The Court considered the financial burden that would be imposed on the Board if the benefits of the 1991 and 1992 resolutions were granted. The Court acknowledged that the Board’s financial capacity was a relevant factor in determining pay scales.
• Settled Legal Principles: The Court relied on several settled legal principles regarding the autonomy of statutory bodies, the concept of equality, and the financial implications of pay scale decisions.

Fact:Law Ratio:

The Supreme Court’s decision was more heavily influenced by legal considerations (70%) than factual aspects (30%). The Court focused on the legal principles of autonomy of the Board, the need for explicit adoption of resolutions, and the rejection of negative equality.

Logical Reasoning:

The Court considered alternative interpretations, such as the argument that the Board was bound by the 1991 and 1992 resolutions because it had adopted the parent resolution of 1988 and that denying benefits to some while granting them to others was discriminatory. However, the Court rejected these interpretations, emphasizing the Board’s autonomy and the principle that equality cannot be used to perpetuate a mistake. The Court concluded that the daily wage employees of the Board were not entitled to the benefits of the 1991 and 1992 resolutions because the Board had not adopted them, and the principle of negative equality could not be invoked to claim benefits.