Supreme Court Upholds Pay Scale for Officiating Employees: State of Punjab vs. Dharam Pal (2017)

Date of the Judgment: September 5, 2017

Citation: 2017 INSC 782

Judges: Dipak Misra, CJI, A.M. Khanwilkar, J., Dr. D.Y. Chandrachud, J.

Can an employer deny an employee the pay scale of a higher post when they are officiating in that post, simply by including a condition in the appointment order? The Supreme Court of India addressed this question in a case concerning an employee who was denied the pay scale of higher posts despite performing the duties of those posts. The Court examined the legality of such conditions and their compatibility with established principles of service law. The judgment was delivered by a three-judge bench comprising Chief Justice Dipak Misra, Justice A.M. Khanwilkar, and Justice Dr. D.Y. Chandrachud, with the majority opinion authored by Chief Justice Dipak Misra.

Case Background

The respondent, Dharam Pal, was initially appointed as a clerk on May 22, 1970. He was later promoted to the post of Senior Assistant on September 22, 1980. Subsequently, he was given the officiating charge of Superintendent Grade II on December 9, 2004, and then directed to function as Superintendent Grade I on May 26, 2007. Dharam Pal retired from service on March 31, 2008.

Despite performing the duties of Superintendent Grade II and Superintendent Grade I on an officiating basis, he was not granted the corresponding pay scales for these positions. He filed a Writ Petition before the High Court seeking the pay, arrears, and other consequential benefits with 18% interest.

Timeline

Course of Proceedings

The High Court of Punjab and Haryana, relying on the decision in Pritam Singh Dhaliwal v. State of Punjab, ruled in favor of Dharam Pal. The High Court held that the case was covered by the Pritam Singh Dhaliwal judgment and disposed of the writ petition accordingly. This decision was then challenged by the State of Punjab in the Supreme Court.

Legal Framework

The case primarily revolves around the interpretation of the Punjab Civil Services Rules, specifically Rule 4.13, which deals with the pay of officiating government employees. Rule 4.13(1) states:

“Subject to the provisions of rules 4.22 to 4.24, a Government employee who is appointed to officiate in a post shall not draw pay higher than his substantive pay in respect of a permanent post, other than a tenure post, unless the post in which he is appointed to officiate is one enumerated in the schedule to this rule or unless the officiating appointment involves the assumption of duties and responsibilities of greater importance than those attaching to the post, other than a tenure post on which he holds a lien…”

The court also considered Rule 4.22, which allows a government employee to hold multiple posts, and Rule 4.24, which states that an employee holding current duty charge of another post is not entitled to additional remuneration. Rule 4.16 allows a competent authority to fix the pay of an officiating employee at an amount less than that admissible under the rules.

Arguments

Arguments by the Appellants (State of Punjab):

• The State argued that the High Court erred in granting the benefit to the respondent by ignoring the restrictions in the orders dated December 9, 2004, and May 26, 2007. These orders stipulated that the respondent would work in his own pay scale and that his officiating promotion was subject to the recommendations of the Departmental Promotion Committee (DPC) and subsequent approval.
• The State contended that the decision in Pritam Singh Dhaliwal was not applicable, citing the Supreme Court’s judgments in State of Haryana and another v. Tilak Raj and others, S.C. Chandra and others v. State of Jharkhand and other, and A. Francis v. Management of Metropolitan Transport Corporation Limited, Tamil Nadu.
• The State also argued that the Punjab Civil Services Rules explicitly deny the benefit claimed by the respondent.

Arguments by the Respondent (Dharam Pal):

• The respondent argued that the State’s interpretation of the Rules as imposing negative conditions was fundamentally erroneous.
• He contended that the judgments relied upon by the State were not applicable to his case.
• The respondent asserted that he was relieved from his substantive post and performed the duties of the higher posts, and therefore, denying him the benefits would be a travesty of justice.
• He further argued that the language used in the employer’s order was against the spirit of the Rules.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame specific issues in a separate section. However, the core issue was whether the respondent was entitled to the pay scale of the higher posts (Superintendent Grade II and Grade I) while officiating in those posts, despite the conditions stipulated in the appointment orders and the relevant service rules.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Court considered the following authorities:

Cases:

• Pritam Singh Dhaliwal v. State of Punjab and another, relied upon by the High Court, which held that an officer officiating in a higher post is entitled to the pay scale of that post.
• Smt. P. Grover v. State of Haryana and another, where the Supreme Court held that an officer promoted to a higher post on an acting basis is entitled to the pay of that post.
• Selvaraj v. Lt. Governor of Island, Port Blair and others, which supported the view that an officiating employee is entitled to the pay of the higher post.
• State of Haryana and another v. Tilak Raj and others, which dealt with the issue of equal pay for equal work for daily wagers, and was distinguished by the Court.
• S.C. Chandra and others v. State of Jharkhand and other, which concerned the release of pay for teachers in a school run by Hindustan Copper Limited, and was found to be inapplicable.
• A. Francis v. Management of Metropolitan Transport Corporation Limited, Tamil Nadu, where the Court upheld the conditions stipulated in the order of appointment, but was distinguished in the present case.
• Secretary-cum-Chief Engineer, Chandigarh v. Hari Om Sharma and others, where the Court held that an employee officiating in a higher post is entitled to the salary of that post, and any undertaking to the contrary is against public policy.

Legal Provisions:

• Rule 4.13 of the Punjab Civil Services Rules, which deals with the pay of officiating government employees.
• Rule 4.22 of the Punjab Civil Services Rules, which allows a government employee to hold multiple posts.
• Rule 4.24 of the Punjab Civil Services Rules, which states that an employee holding current duty charge of another post is not entitled to additional remuneration.
• Rule 4.16 of the Punjab Civil Services Rules, which allows a competent authority to fix the pay of an officiating employee at an amount less than that admissible under the rules.
• Section 23 of the Contract Act, 1872, which deals with contracts that are against public policy.

Judgment

How each authority was viewed by the Court?

The Supreme Court relied on Smt. P. Grover v. State of Haryana and another [AIR 1983 SC 1060]* which held that an officer promoted to a higher post on an acting basis is entitled to the pay of that post. The court also relied on Secretary-cum-Chief Engineer, Chandigarh v. Hari Om Sharma and others [(1998) 5 SCC 871]* which held that an employee officiating in a higher post is entitled to the salary of that post, and any undertaking to the contrary is against public policy. The court distinguished State of Haryana and another v. Tilak Raj and others [(2003) 6 SCC 123]*, S.C. Chandra and others v. State of Jharkhand and other [(2007) 8 SCC 279]* and A. Francis v. Management of Metropolitan Transport Corporation Limited, Tamil Nadu [(2014) 13 SCC 283]* stating that the facts in those cases were different and not applicable to the present case.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that an employee performing the duties of a higher post should be entitled to the pay scale of that post. The Court emphasized the following points:

• Performance of Duties: The respondent had performed the duties and responsibilities of the higher posts (Superintendent Grade II and Grade I) on an officiating basis.
• Public Policy: The Court reiterated the principle from Hari Om Sharma that an undertaking not to claim higher salary while officiating in a higher post is against public policy and unenforceable.
• Rules Interpretation: The Court interpreted the Punjab Civil Services Rules to mean that they do not prohibit the grant of pay scale for higher posts when an employee is officiating and performing the duties of those posts.
• Consistency with Precedents: The Court found that its decision was consistent with the principles laid down in Smt. P. Grover and Hari Om Sharma.

Logical Reasoning:

The Court rejected alternative interpretations that would have denied the respondent the pay scale of the higher posts. The Court reasoned that the conditions in the appointment orders could not override the principles of public policy and the interpretation of the service rules. The Court also found that the precedents cited by the State were either distinguishable or not applicable to the facts of the case.

The Court’s decision was clear: “the view expressed by the High Court is absolute impeccable.” The Court held that the respondent was entitled to the pay scale of the higher posts he was officiating in, despite the conditions in the appointment orders. The Court also stated, “by an incorporation in the order or merely by giving an undertaking in all circumstances would not debar an employee to claim the benefits of the officiating position.” The Court further observed, “the controversy is covered by the ratio laid down in Hari Om Sharma (supra).”

Key Takeaways

• An employee performing the duties of a higher post on an officiating basis is generally entitled to the pay scale of that post.
• Conditions in appointment orders that deny the pay scale of a higher post to an officiating employee may be considered against public policy and unenforceable.
• Service rules should be interpreted to ensure that employees are fairly compensated for the duties they perform.
• Undertakings taken from employees not to claim higher pay while officiating in higher posts are not enforceable.
• This judgment reinforces the principle that employees should be compensated for the responsibilities they carry out.

Directions

The Supreme Court dismissed the appeal without any order as to costs, thereby upholding the High Court’s decision in favor of the respondent. The State of Punjab was directed to grant the respondent the pay scale of the higher posts he was officiating in, along with arrears and other consequential benefits.

Development of Law

The ratio decidendi of this case is that an employee who is performing the duties of a higher post on an officiating basis is entitled to the pay scale of that post, and any condition in the appointment order or undertaking to the contrary is against public policy and unenforceable. This case reinforces the principles laid down in Smt. P. Grover and Hari Om Sharma, and clarifies that the conditions in the appointment order cannot override the principles of public policy and the interpretation of the service rules.

Conclusion

In conclusion, the Supreme Court’s judgment in State of Punjab v. Dharam Pal upholds the principle that employees performing the duties of a higher post are entitled to the corresponding pay scale. The Court’s decision emphasizes that conditions in appointment orders that deny such pay are against public policy and unenforceable. This judgment ensures fair compensation for employees who take on higher responsibilities, reinforcing the importance of equitable treatment in service law.