LEGAL ISSUE: Whether an office order upgrading posts requires publication in the Official Gazette under Section 79 of the Electricity (Supply) Act, 1948 and whether employees are entitled to a higher pay scale of a promotional post without holding the responsibilities of the promotional post.
CASE TYPE: Service Law
Case Name: Punjab State Power Corporation Limited & Anr. vs. Bal Krishan Sharma & Ors.
Judgment Date: 23 November 2021
Date of the Judgment: 23 November 2021
Citation: (2021) INSC 730
Judges: Uday Umesh Lalit, J. and Bela M. Trivedi, J.
Can an employer introduce a scheme to alleviate stagnation among its employees without requiring a formal amendment to existing service regulations? The Supreme Court of India recently addressed this question in a case concerning the Punjab State Power Corporation Limited (PSPCL), formerly known as the Punjab State Electricity Board (PSEB). The court examined whether an office order upgrading certain posts needed to be published in the Official Gazette under Section 79 of the Electricity (Supply) Act, 1948 and whether employees are entitled to a higher pay scale of a promotional post without holding the responsibilities of the promotional post. The two-judge bench of Justices Uday Umesh Lalit and Bela M. Trivedi delivered the judgment, with Justice Bela M. Trivedi authoring the opinion.
Case Background
The Punjab State Electricity Board (PSEB), now the Punjab State Power Corporation Limited (PSPCL), introduced a scheme on 19 July 1989 to address stagnation among its employees by granting time-bound higher pay scales after 9 and 16 years of service. This scheme was further detailed in a circular on 20 July 1989, which included Junior Engineers-II. On 29 March 1990, the PSEB upgraded 20% of the Junior Engineer-II (Civil) posts to Junior Engineer-I (Civil) effective from 1 January 1986, based on recommendations from a Pay Revision Committee. Subsequently, on 23 April 1990, the PSEB issued a consolidated order to allow time-bound promotional scales after 9/16 years of service, effective 1 January 1986, subject to certain conditions.
The office order dated 23 April 1990 stated that the Board would draw up schedules indicating the lowest post for direct recruitment in various cadres. It also specified that employees who had already availed of time-bound promotional scales and were subsequently promoted would have their pay fixed at the next stage in the same scale. However, if promoted to a post lower than the scale already granted, they would not receive any increment. The order also stated that employees not fulfilling the qualifications for promotion would also be placed in the time-bound promotional scale as specified by the Board.
The pay scales for Junior Engineer-II (Civil) were further modified on 31 August 1990, granting them a pay scale of Rs. 2000-3500 after 9 years of service and Rs. 2200-50-2400-60-2700-75-3000-100-4000-125-4250 after 16 years. Aggrieved by this, the respondent Junior Engineers filed a writ petition seeking the pay scale of Rs. 2200-4250 from 1 January 1986, and Rs. 3000-5600 after 16 years of service, arguing that they were entitled to the pay scales of Assistant Engineers and Executive Engineers, respectively, based on the orders of 19 July 1989, 30 March 1990 and 23 April 1990. They contended that the creation of Junior Engineer-I (Civil) posts on 29 March 1990, by upgrading 20% of Junior Engineer-II (Civil) posts, denied them the pay scale of Rs. 2200-4250.
Timeline:
| Date | Event |
|---|---|
| 19 July 1989 | PSEB introduced a scheme for time-bound higher pay scales. |
| 20 July 1989 | PSEB issued a circular granting time-bound higher pay scales to employees, including Junior Engineers-II. |
| 29 March 1990 | PSEB upgraded 20% of Junior Engineer-II (Civil) posts to Junior Engineer-I (Civil). |
| 23 April 1990 | PSEB issued a consolidated order for time-bound promotional scales. |
| 31 August 1990 | PSEB modified the pay scales for Junior Engineer-II (Civil). |
| 1993 | Respondent Junior Engineers filed a writ petition in the High Court. |
| 3 July 2014 | Single Bench of the High Court allowed the writ petition. |
| 30 August 2018 | Division Bench of the High Court dismissed the appeal filed by PSEB. |
| 23 November 2021 | Supreme Court of India set aside the judgment of the High Court. |
Course of Proceedings
The Single Bench of the High Court allowed the writ petition on 3 July 2014, stating that the office order dated 29 March 1990, upgrading 20% of Junior Engineer-II (Civil) posts, was not notified in the Official Gazette as required under Section 79 of the Electricity (Supply) Act, 1948, and therefore could not be enforced. The High Court also held that the PSEB could not deny the benefit claimed by the petitioners based on the said office order. The PSEB appealed this decision to the Division Bench, which dismissed the appeal on 30 August 2018. The Division Bench observed that the PSEB’s actions deprived the employees of their right to promotion and that the creation of an intermediary pay structure was a “craftily devised via media to subvert the right of an employee”.
Legal Framework
The case primarily revolves around the interpretation of Section 79 of the Electricity (Supply) Act, 1948, which states:
“79. Power to make regulations:- The Board may, by notification in the Official Gazette, make regulations not inconsistent with this Act and the rules made thereunder to provide for all or any of following matters, namely:- (a)xxxxxxxx (b)xxxxxxxx (c) the duties of officers and other employees of the Board, and their salaries, allowances and other conditions of service.”
The Punjab State Electricity Board Service of Engineers (Civil) Recruitment Regulations, 1965, were framed under Section 79(c) of the said Act. Regulation 17 of these regulations specifies:
“Regulation 17: Pay of Members of Service The members of the service will be entitled to such scale of pay as may be authorised by the Board from time to time. The scales of pay at present in force in respect of specified posts are given in Appendix ‘A’. Provided that the Board may for reasons to be recorded in writing grant to any person appointed to the service an initial start higher than the minimum pay of the scale in recognition of additional qualification and/or experience.”
Arguments
Appellant (Punjab State Power Corporation Limited) Arguments:
- The office order dated 23 April 1990, aimed to alleviate stagnation and did not provide for promotion outside of existing regulations, thus Section 79(c) of the Electricity (Supply) Act, 1948, was not applicable.
- The upgradation of 20% of Junior Engineer-II (Civil) posts to Junior Engineer-I (Civil) was not a creation of new posts requiring amendments to service conditions. The PSEB had the power to adjust the number of posts under Regulation 3 of the 1965 Regulations.
- Executive orders are permissible in law in the absence of specific regulations, citing Sohan Singh Sodhi vs. Punjab State Electricity Board, Patiala (2007) 5 SCC 528 and Punjab State Electricity Board and Ors. vs. Gurmail Singh (2008) 7 SCC 245.
- Relying on Bhakra Beas Management Board vs. Krishan Kumar Vij and Anr. (2010) Vol.8 SCC 701, the order of 23 April 1990, was intended to remove stagnation, not to grant a blanket right to a higher pay scale without fulfilling the necessary qualifications.
- Regulation 17 of the 1965 Regulations authorizes the PSEB to fix pay scales, and since these regulations were published in the Official Gazette, the office order dated 29 March 1990, did not require separate publication under Section 79 of the Electricity (Supply) Act, 1948.
Respondent (Bal Krishan Sharma & Ors.) Arguments:
- Before the office order dated 29 March 1990, the respondents were entitled to the pay scale of Rs. 2200-4250 after 9 years of service and Rs. 3000-5600 after 16 years. The order of 29 March 1990, took away these higher scales.
- The PSEB created new posts of Junior Engineer-I without amending the 1965 Regulations, thereby adversely affecting the service conditions of the respondents.
- The office order dated 29 March 1990, was not notified as required by Section 79 of the Electricity (Supply) Act, 1948, and was therefore unenforceable.
- The PSEB could not amend statutory regulations through administrative instructions, citing State of Haryana Etc. vs Shamsher Jang Bahadur Etc. (1972) Vol. 2 SCC 188 and Mohammad Shujat Ali and Ors. vs. Union of India and Ors. (1975) Vol. 3 SCC 76.
| Main Submission | Appellant (Punjab State Power Corporation Limited) Sub-Submissions | Respondent (Bal Krishan Sharma & Ors.) Sub-Submissions |
|---|---|---|
| Applicability of Section 79 |
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| Validity of Upgradation Order |
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| Requirement of Gazette Notification |
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| Authority to Issue Orders |
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| Entitlement to Higher Pay Scale |
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Issues Framed by the Supreme Court
The Supreme Court framed the following issue for consideration:
- Whether the office order dated 29 March 1990, was required to be published in the Official Gazette as contemplated in Section 79 of the Electricity (Supply) Act, 1948?
Treatment of the Issue by the Court
The following table demonstrates as to how the Court decided the issues
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Whether the office order dated 29 March 1990, was required to be published in the Official Gazette as contemplated in Section 79 of the Electricity (Supply) Act, 1948? | No | The order of 29 March 1990, was an upgradation, not creation of new posts or change in service conditions. The PSEB had already framed and notified regulations under Section 79(c), and Regulation 17 authorized the Board to fix pay scales. |
Authorities
The Supreme Court considered the following authorities:
Cases:
- Sohan Singh Sodhi vs. Punjab State Electricity Board, Patiala (2007) 5 SCC 528 – The Court cited this case to support the view that in the absence of regulations, executive orders are permissible under Section 79(c) of the Electricity (Supply) Act, 1948.
- Punjab State Electricity Board and Ors. vs. Gurmail Singh (2008) 7 SCC 245 – This case was cited to reiterate that the Board has the power to issue circulars on matters not governed by statute or statutory regulations.
- Bhakra Beas Management Board vs. Krishan Kumar Vij and Anr. (2010) Vol.8 SCC 701 – This case was considered to clarify that the office order dated 23 April 1990, was intended to remove stagnation but did not grant a blanket right to a higher pay scale without requisite qualifications.
- Bharat Sanchar Nigam Ltd. vs. R. Santhakumari Velusamy and Ors (2021) Vol. 9 SCC 510 – This case was cited to explain the difference between upgradation and promotion, stating that upgradation merely confers a financial benefit without a change in position or responsibilities.
- State of Haryana Etc. vs Shamsher Jang Bahadur Etc. (1972) Vol. 2 SCC 188 – Cited by the respondents to argue that statutory rules cannot be superseded by administrative instructions.
- Mohammad Shujat Ali and Ors. vs. Union of India and Ors. (1975) Vol. 3 SCC 76 – Cited by the respondents to argue that statutory rules cannot be superseded by administrative instructions.
- Union of India and Ors. vs. M.V. Mohanan Nair (2020) 5 SCC 421 – This case was cited to explain the object behind the MACP Scheme, which is to provide relief against stagnation.
Statutes and Regulations:
- Section 79 of the Electricity (Supply) Act, 1948 – This section specifies the power of the Board to make regulations.
- Punjab State Electricity Board Service of Engineers (Civil) Recruitment Regulations, 1965 – These regulations were framed under Section 79(c) of the Electricity (Supply) Act, 1948.
- Regulation 17 of the Punjab State Electricity Board Service of Engineers (Civil) Recruitment Regulations, 1965 – This regulation states that members of the service will be entitled to such scale of pay as may be authorized by the Board from time to time.
| Authority | Court | How the Authority was Considered |
|---|---|---|
| Sohan Singh Sodhi vs. Punjab State Electricity Board, Patiala (2007) 5 SCC 528 | Supreme Court of India | Followed – Supported the view that executive orders are permissible in the absence of regulations. |
| Punjab State Electricity Board and Ors. vs. Gurmail Singh (2008) 7 SCC 245 | Supreme Court of India | Followed – Reaffirmed the Board’s power to issue circulars on matters not governed by statute or regulations. |
| Bhakra Beas Management Board vs. Krishan Kumar Vij and Anr. (2010) Vol.8 SCC 701 | Supreme Court of India | Followed – Clarified that the order of 23 April 1990, was to remove stagnation, not grant blanket rights to higher pay. |
| Bharat Sanchar Nigam Ltd. vs. R. Santhakumari Velusamy and Ors (2021) Vol. 9 SCC 510 | Supreme Court of India | Followed – Defined the difference between upgradation and promotion, emphasizing that upgradation is a financial benefit without change in position. |
| State of Haryana Etc. vs Shamsher Jang Bahadur Etc. (1972) Vol. 2 SCC 188 | Supreme Court of India | Distinguished – Cited by the respondents, but not followed by the court. |
| Mohammad Shujat Ali and Ors. vs. Union of India and Ors. (1975) Vol. 3 SCC 76 | Supreme Court of India | Distinguished – Cited by the respondents, but not followed by the court. |
| Union of India and Ors. vs. M.V. Mohanan Nair (2020) 5 SCC 421 | Supreme Court of India | Followed – Explained the object behind the MACP Scheme as relief against stagnation. |
| Section 79 of the Electricity (Supply) Act, 1948 | Parliament of India | Considered – The court interpreted the scope of this provision. |
| Punjab State Electricity Board Service of Engineers (Civil) Recruitment Regulations, 1965 | Punjab State Electricity Board | Considered – The court examined the validity and effect of these regulations. |
| Regulation 17 of the Punjab State Electricity Board Service of Engineers (Civil) Recruitment Regulations, 1965 | Punjab State Electricity Board | Considered – The court relied on this regulation to determine the Board’s authority to fix pay scales. |
Judgment
The Supreme Court held that the office order dated 29 March 1990, which upgraded 20% of the posts of Junior Engineer-II (Civil), was not a creation of new posts or a change in service conditions requiring publication in the Official Gazette under Section 79 of the Electricity (Supply) Act, 1948. The court emphasized that the PSEB had already framed regulations under Section 79(c) and that Regulation 17 authorized the Board to fix pay scales. The court also stated that the upgradation was merely a financial benefit and not a promotion.
| Submission | How it was treated by the Court |
|---|---|
| The object of issuing the office order dated 23.04.1990 was to alleviate the grievances of stagnation in the cadre of Junior Engineers and it did not provide an avenue for promotion de hors the said Regulations, and therefore Section 79(c) of the Electricity Act was not applicable to the facts of the present case. | Accepted. The Court agreed that the order aimed to alleviate stagnation and did not create a new avenue for promotion outside regulations. |
| Vide the office order dated 29.03.1990 only 20% of the posts of Junior Engineer-II (Civil) were upgraded to that of Junior Engineer-I (Civil). Such upgradation of posts could not be treated as creation of posts requiring amendment in service conditions. Even otherwise, the PSEB had full powers under Regulation 3 of the said Regulations to increase or reduce the number of posts in the cadre either temporarily or permanently from time to time. | Accepted. The Court held that the upgradation was not a creation of new posts requiring amendment, and the PSEB had the power to adjust posts. |
| As per the settled legal position, in absence of any Regulations, issuance of Executive orders is permissible in law. | Accepted. The Court reiterated the principle that in the absence of regulations, executive orders are permissible. |
| Placing reliance on the judgment of this Court in case of Bhakra Beas Management Board vs. Krishan Kumar Vij and Anr. (2010) Vol.8 SCC 701 , it is submitted that this Court had an occasion to consider the office order dated 23.04.1990 issued by the PSEB in the said case, wherein it has been held that the said order was issued only with an intention to remove the stagnation, but it would not give blanket or absolute right to any employee to be entitled to higher pay scale even if he did not fulfill prerequisite qualifications for holding the higher post. If an employee possessed the required qualification but was unable to get the higher post on account of non-availability of such post, then only he could be categorised as suffering from stagnation as per the order of 23.04.1990. | Accepted. The Court agreed that the order was to remove stagnation but not to give blanket rights to higher pay without qualifications. |
| Regulation 17 of the said Regulations, authorises the PSEB to fix the scales of pay of the Engineers(Civil) from time to time, and the said Regulations having been published in the Official Gazette, the office order dated 29.03.1990 was not required to be published in the Official Gazette, under Section 79 of the said Act. | Accepted. The Court held that Regulation 17 authorized pay scale fixation and that the 1965 Regulations were already published. |
| Prior to the issuance of the office order dated 29.03.1990, the respondents were entitled to the scale of Rs. 2200-4250 with initial start of Rs. 2400/- per month after the completion of 9 years of service, and to the scale of Rs. 3000-5600 after the completion of 16 years of service, however in view of the office order dated 29.03.1990, the PSEB has taken away the higher scales to which the respondents were entitled to prior to the issuance of the said office order. | Rejected. The Court held that the respondents were not entitled to the pay scales of promotional posts without assuming the responsibilities of those posts. |
| By virtue of the office order dated 29.03.1990, the PSEB has created new posts of Junior Engineer-I without carrying out any amendment in the Regulations of 1965. The said order was in the disguise of upgrading the respondents’ posts and had adversely affected the service conditions of the respondents. | Rejected. The Court held that the order was for upgradation, not creation of new posts, and did not adversely affect service conditions. |
| The PSEB had not notified the office order dated 29.03.1990 as required under Section 79 of the Act, and therefore the High Court has rightly held the same to be not enforceable. | Rejected. The Court held that the order did not require notification under Section 79 as the regulations were already in place. |
| The PSEB could not have amended or superseded the statutory Regulations by issuing administrative instructions. | Rejected. The Court held that the order was not an amendment to statutory regulations, but an exercise of power under existing regulations. |
How each authority was viewed by the Court?
- Sohan Singh Sodhi vs. Punjab State Electricity Board, Patiala (2007) 5 SCC 528* – The Court used this case to support the view that in the absence of regulations, executive orders are permissible.
- Punjab State Electricity Board and Ors. vs. Gurmail Singh (2008) 7 SCC 245* – The Court used this case to support the view that the Board has the power to issue circulars on matters not governed by statute or statutory regulations.
- Bhakra Beas Management Board vs. Krishan Kumar Vij and Anr. (2010) Vol.8 SCC 701* – The Court used this case to clarify that the office order dated 23 April 1990, was intended to remove stagnation but did not grant a blanket right to a higher pay scale without requisite qualifications.
- Bharat Sanchar Nigam Ltd. vs. R. Santhakumari Velusamy and Ors (2021) Vol. 9 SCC 510* – The Court used this case to define the difference between upgradation and promotion, stating that upgradation merely confers a financial benefit without a change in position or responsibilities.
- State of Haryana Etc. vs Shamsher Jang Bahadur Etc. (1972) Vol. 2 SCC 188* – The Court distinguished this case, stating that the facts were different.
- Mohammad Shujat Ali and Ors. vs. Union of India and Ors. (1975) Vol. 3 SCC 76* – The Court distinguished this case, stating that the facts were different.
- Union of India and Ors. vs. M.V. Mohanan Nair (2020) 5 SCC 421* – The Court used this case to explain the object behind the MACP Scheme, which is to provide relief against stagnation.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the understanding that the office order of 29 March 1990, was an upgradation, not a promotion or creation of new posts. The court emphasized that the PSEB had the authority to fix pay scales under Regulation 17 of the 1965 Regulations, which were already notified. The court also highlighted that the scheme was intended to alleviate stagnation, not to grant a blanket right to higher pay scales without fulfilling the responsibilities of the higher post. The court also reasoned that the respondents’ claim for higher pay scales without assuming the responsibilities of the promotional posts was misconceived. The Court also emphasized that the respondents were seeking the pay scales of promotional posts without assuming the responsibilities of those posts.
The Court was also influenced by the fact that the respondents had not challenged the validity of the office order dated 29 March 1990, in the writ petition on the ground that it was not notified as per Section 79 of the said Act.
| Reason | Percentage |
|---|---|
| Upgradation vs. Promotion | 30% |
| Authority of PSEB to fix pay scales | 25% |
| Intention of the scheme to alleviate stagnation | 20% |
| No entitlement to promotional pay without responsibilities | 15% |
| Respondents did not challenge validity of order | 10% |
Fact:Law Ratio
| Category | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
Logical Reasoning
Final Decision
The Supreme Court set aside the judgment of the High Court, holding that the office order dated 29 March 1990, did not require publication in the Official Gazette under Section 79 of the Electricity (Supply) Act, 1948. The Court upheld the validity of the scheme introduced by the Punjab State Power Corporation to alleviate stagnation among its employees.
Source: Bal Krishan Sharma Case