Supreme Court Upholds State’s Pay Scale Discretion in University Appointments: State of Uttarakhand vs. Sudhir Budakoti (2022)

Date of the Judgment: April 07, 2022
Citation: (2022) INSC 398
Judges: Sanjay Kishan Kaul, J., M.M. Sundresh, J.
Can a state government be compelled to adopt pay scales recommended by the Central Government for its university staff? The Supreme Court of India recently addressed this question in a case concerning the pay scale of a Registrar in a state university. The court clarified that while Central Government recommendations are binding on Central Universities, they are merely directory for State Universities, thus upholding the state’s autonomy in determining pay scales for its employees. This judgment, authored by Justice M.M. Sundresh, clarifies the extent of the state’s autonomy in matters of pay scale for its employees, particularly in the context of higher education.

Case Background

The State of Uttar Pradesh enacted the “State Universities Act, 1973,” which was later adopted by the State of Uttarakhand in 2001. This Act governs the appointment and service conditions of university staff, including the Registrar. In 2006, Uttarakhand framed the “Uttarakhand State University (Centralized Services) Rules, 2006” which prescribed qualifications and pay scales for various university posts, including the Registrar. The pay scale for the Registrar was set at 3200-100-3500-125-4875, effective from 01.01.1986.

In 2008, the State of Uttarakhand requested the State Public Service Commission to appoint Registrars, specifying the qualifications and pay scale as per the 2006 Rules. Later that year, the Central Government issued circulars recommending revised pay scales for lecturers and administrative staff in Central Universities. While the state adopted the revised pay scales for lecturers, it did not extend the same to administrative staff, including Registrars. The qualification prescribed for the post of Registrar by the UGC was higher and different to that of the Uttarakhand State Universities as mandated under the 2006 Rules.

The first respondent, Sudhir Budakoti, was appointed as a Registrar in 2009 with the pay scale as per the 2006 Rules. He then filed a writ petition before the High Court of Uttarakhand, seeking pay parity with Registrars in Central Universities. The High Court initially directed the state to consider the matter, and later directed the Pay Anomaly Committee to look into the matter. The committee rejected the claim, citing differences in qualifications prescribed by the UGC and the State Government. However, the High Court allowed the writ petition, which prompted the State to appeal to the Supreme Court.

Timeline

Course of Proceedings

The High Court of Uttarakhand initially directed the Principal Secretary, Higher Education of the State of Uttarakhand to take a decision on the letter sent by Kumaon University regarding the pay scale of the petitioner. Subsequently, the High Court directed the Pay Anomaly Committee to review the matter. The Pay Anomaly Committee rejected the claim of the Respondent No. 1, noting the difference in qualifications prescribed by the UGC and the State Government for the post of Registrar. Despite this, the High Court allowed the writ petition, misconstruing the decision made in favour of the teaching faculty to that of the Registrar and other administrative staff. This decision of the High Court was challenged by the State of Uttarakhand before the Supreme Court.

Legal Framework

The case primarily revolves around the interpretation of Section 16 and Section 17 of the Uttar Pradesh State Universities Act, 1973, as adopted by the State of Uttarakhand. Section 16 deals with the post of Registrar, stating that the Registrar shall be a whole-time officer of the University and shall not be offered nor be entitled to accept any remuneration for any other work in the University. Section 17(1) of the Act empowers the State to make rules regarding the appointment of the Registrar. In exercise of this power, the State of Uttarakhand brought into the statute book, “The Uttarakhand State University (Centralized Services) Rules, 2006”.

Section 17(1) of the Uttar Pradesh State Universities Act, 1973 states:
“Subject to the provisions of this Act, the State Government may make rules regulating the procedure for recruitment and the conditions of service of persons appointed to the posts in the University.”

The Uttarakhand State University (Centralized Services) Rules, 2006, were framed under this provision, prescribing essential qualifications, procedure for recruitment, and pay scales for the post of Registrars in the State Universities. The rules also specify the qualification for a Lecturer, which is different from that of a Registrar. The pay scale at the relevant point of time was 3200-100-3500-125-4875, with effect from 01.01.1986.

The judgment also considers the circulars issued by the Government of India, Ministry of Human Resource Development, dated 31.12.2008, which recommended revised pay scales for lecturers and administrative staff in Central Universities. The court notes that these recommendations are binding on Central Universities but are directory for State Universities.

Arguments

Submissions of the Appellant:

• The High Court misunderstood the facts. There were two separate circulars, one for lecturers and one for registrars. The decision to revise pay scales was for lecturers only, and not for registrars.
• The respondent has no vested right to claim pay parity with registrars in Central Universities.
• There is no mandatory compliance for State Universities to implement Central Government’s revised pay scales.
• The matter is a policy decision, and judicial review is not available.
• The temporary arrangement of the respondent undertaking the work of a lecturer does not create a right to pay parity.
• The classification between lecturers and registrars is just and fair, and the respondent was aware of the pay scale fixed according to the rules.
• The High Court’s order has significant financial implications and should be set aside.

Submissions of the Respondents:

• The respondent functioned as a lecturer for a limited period, and the pay scale fixed was very low.
• Since the pay scale for lecturers was revised, the appellant should have done the same for registrars.
• The benefit conferred should not be disturbed.

Innovativeness of the argument: The appellant’s argument was innovative in highlighting the distinction between the applicability of Central Government recommendations to Central and State Universities, emphasizing the policy nature of pay scale decisions, and demonstrating that the temporary arrangement of the respondent undertaking the work of a lecturer does not create a right to pay parity.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the primary issue before the court was:

1. Whether the High Court of Uttarakhand was correct in directing the State Government to grant pay parity to the Registrar with that of the Registrars in Central Universities, based on the Central Government’s recommendations.

The sub-issue that the Court dealt with was whether the temporary arrangement of the respondent undertaking the work of a lecturer would create a right to pay parity.

Treatment of the Issue by the Court

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

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 Transport & Dock Workers Union v. Mumbai Port Trust, (2011) 2 SCC 575 to emphasize that differential treatment is permissible if there is a reasonable basis, and that judicial self-restraint is necessary in reviewing administrative decisions.
• The Court cited B. Shamasundar v. University of Mysore, 1996 SCC OnLine Kar 430 to support the principle that equality means equality among equals and that reasonable classification is permissible under Article 14.
• The Court referred to Shyam Babu Verma v. Union of India, (1994) 2 SCC 521 to highlight that ‘equal pay for equal work’ should not be applied mechanically and that pay scales may vary based on qualifications and experience.
• The Court used Union of India v. International Trading Co., (2003) 5 SCC 437 to underscore that a change in policy must be fair and not arbitrary, and that judicial review is limited to ensuring that the State acts validly for a discernible reason.
• The Court cited Hotel & Bar (FL.3) Association of Tamil Nadu (HOBAT) v The Secretary to Government, Commercial Taxes Department, 2015 SCC OnLine Mad 7092 to support the position that judicial review of policy decisions in the field of revenue should be done with good faith and intention, avoiding absolute and inflexible concepts.
• The Court relied on Narmada Bachao Andolan v. Union of India, (2000) 10 SCC 664 to emphasize that courts should not transgress into the field of policy decisions.
• The Court cited State of M.P. v. Narmada Bachao Andolan, (2011) 7 SCC 639 to highlight that a policy decision should not be struck down merely because the court feels that another decision would have been fairer.
• The Court referred to Indian Drugs & Pharmaceuticals Ltd. v. Workmen, (2007) 1 SCC 408 to emphasize that courts should not impose financial burdens on the State by insisting on regularization or permanence in employment when those employed temporarily are not needed permanently.
• Finally, the Court used Kalyani Mathivanan v. K.V. Jeyaraj, (2015) 6 SCC 363 to clarify that UGC Regulations are mandatory for Central Universities and directory for State Universities.

What weighed in the mind of the Court?

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

• The Court emphasized that the Central Government’s recommendations on pay scales are directory for State Universities, not mandatory. This was crucial in determining that the State of Uttarakhand was not bound to adopt the pay scales recommended for Central Universities.
• The Court recognized that the State had its own rules and regulations for determining the pay scales of its employees, as per the Uttarakhand State University (Centralized Services) Rules, 2006. It held that these rules were valid and applicable to the case.
• The Court highlighted the distinction between the roles and responsibilities of lecturers and registrars. It noted that these are distinct categories of employees and that the State was justified in treating them differently with respect to pay scales.
• The Court held that the temporary arrangement of the respondent working as a lecturer did not change his status as a Registrar, and therefore, he was not entitled to the pay scale of a lecturer.
• The Court underscored that pay scale decisions are a matter of policy and that judicial review is limited in such matters. It emphasized that the State has the autonomy to make decisions on pay scales, considering its financial implications.

The ratio of Fact to Law is 30:70, indicating that the legal considerations weighed more heavily in the Court’s decision than the factual aspects of the case.

Logical Reasoning

The Court considered alternative interpretations but rejected them. The Court rejected the High Court’s view that the State was obligated to follow the Central Government’s recommendations for the pay scale of Registrars. The Court also rejected the argument that the respondent’s temporary work as a lecturer entitled him to the pay scale of a lecturer. The final decision was reached by considering the legal framework, the State’s autonomy, and the distinct roles of lecturers and registrars.

The court held that “The High Court of Uttarakhand in our opinion has completely misconstrued the facts. The Appellant nowhere has made a decision to accept and adopt the circular of the Central Government pertaining to the Registrars working in the Universities coming under its purview.” The court further stated that “In the absence of any legal right with the corresponding duty, such a relief can never be asked for, particularly when there are clear and specific rules provided for the pay scale of Registrars by the Appellant itself.” The court also noted that “Merely because Respondent No. 1 was made to fill the gap by temporarily taking up the job of a Lecturer, he would never become one and so also a Lecturer, who might undertake the job of a Registrar.”

The judgment was unanimous, with both Justices Sanjay Kishan Kaul and M.M. Sundresh concurring.

Key Takeaways

• State Universities are not bound by the pay scales recommended by the Central Government for Central Universities.
• State Governments have the autonomy to determine the pay scales of their employees, including university staff, based on their own rules and regulations.
• Temporary assignments or additional responsibilities do not automatically entitle an employee to pay parity with employees in different roles.
• Courts should exercise judicial restraint in matters of policy decisions, such as pay scale determination, unless there is a clear violation of law or arbitrariness.
• The classification between different categories of employees, such as lecturers and registrars, is permissible if there is a reasonable basis, and the classification has a rational relation to the object.

Directions

The Supreme Court set aside the judgment of the High Court of Uttarakhand and dismissed the writ petition filed by the respondent.

Development of Law

The ratio decidendi of this case is that State Universities are not bound by the pay scales recommended by the Central Government for Central Universities, and that State Governments have the autonomy to determine the pay scales of their employees based on their own rules and regulations. This judgment clarifies the extent of the state’s autonomy in matters of pay scale for its employees, particularly in the context of higher education. It reinforces the principle that policy decisions, such as pay scale determination, are best left to the executive, and that judicial review should be limited in such matters.

Conclusion

In conclusion, the Supreme Court’s decision in State of Uttarakhand vs. Sudhir Budakoti & Ors. reaffirms the autonomy of State Governments in determining the pay scales of their employees. The judgment clarifies that recommendations from the Central Government are not binding on State Universities. The Court’s decision underscores the importance of adhering to established rules and regulations and the need for judicial restraint in matters of policy. The Supreme Court allowed the appeal and set aside the judgment of the High Court.