# PUNJAB STATE CO-OPERATIVE MILK PRODUCERS FEDERATION LTD. & ANR v. BALBIR KUMAR WALIA & ORS

- **Citation:** [2021] 6 S.C.R. 395
- **Court:** Supreme Court of India
- **Decided:** 2021-07-09
- **Case number:** Civil Appeal No. 7427 of 2011
- **Bench:** Sanjay Kishan Kaul, Hemant Gupta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/punjab-state-co-operative-milk-producers-federation-ltd-anr-v-balbir-kumar-34954
- **Pages:** 40

## Headnote

Punjab State Co-operative Milk Producers Federation
Services (Common Cadre) Rules, 1980: Revised pay scale -
Entitlement to, from 1.1.1986 - Writ petitions by the respondentsemployees seeking entitlement to pay scale equivalent to their
counterparts in the State of Punjab from 1.1.1986, though the revised
pay scale was allowed by the Punjab State Co-operative Milk
Producers Federation Ltd w.e.f. 1.1.1994 - Federation's case that
they were suffering with acute financial stringency - High Court
allowed the writ petitions holding that the financial stringency was
no longer an excuse to not revise the pay scales and thus held that
the date of implementation to grant revised pay scales as 1.1.1994
was absolutely unfair - On appeal, held: Objective of the Federation
was not to give employment but to increase milk production in the
State - Employees are facilitators of the employer to achieve such
objective and thus demanding enhanced wages without considering
the objective and financial condition of the employer would not be
ideal - Employer and the employees have to work together to
achieve the objective of the organization-white revolution - Decision
of not to grant revised pay scale from 1.1.1986 was taken keeping
in view the financial condition of the Federation - Process to arrive
at such decision can be said to be flawed only on the permissible
grounds of illegality, irrationality and procedural impropriety -
Neither the decision-making process, nor the decision itself suffers
from any such vice - Income generated by the Federation is not to
be expanded only on payment of salary but is also required for
upgradation of technology, renovation and expansion of plants etc
- Order of the High Courtis unjustified and in excess of the power
of judicial review conferred on the High Court - Orders passed by
the High Court is set aside.
[2021] 6 S.C.R. 395
395
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396
SUPREME COURT REPORTS
[2021] 6 S.C.R.
Pay scale - Entitlement to - Employees seeking pay scale
equivalent to their counterparts in the State of Punjab from 1.1.1986,
though revised pay scale was allowed by the Federation w.e.f.
1.1.1994 - High Court holding that employees were entitled to pay
scale - Held: Not justified - Principle of equal pay for equal work
not applicable to them in as much as Grade I is a higher post having
higher duties and responsibilities than Grade II - Milk Procurement
Assistants Grade-I is a promotion alavenue for Milk Procurement
Assistants Grade-II - Educational qualifications and the
responsibilities of the two posts are quite different.
Allowing the appeals, the Court
HELD: 1.1 In the instant case, it was contended that the
Federation-Punjab State Co-operative Milk Producers Federation
Ltd is a statutory Co-operative Society which is having its Common
Cadre Rules. Any amendment in the Common Cadre Rules is to
be approved by the Registrar (Co-operative Societies). The State
Government communicated on 1.3.1990 and 9.7.1993 that the
pay scale as applicable to the Punjab Government employees is
not to be adopted by the Public Sector Undertakings without
taking into consideration the financial health of the other statutory
Boards and Corporations. The Federation thus took a conscious
and concerted decision to not follow the report of the Anomaly
Committee of the State Government to grant revised pay scale
from 1.1.1986 in view of precarious financial condition. Moreover,
financial assistance had to be availed by the Federation from the
State Government as well as from the National Dairy Development
Board. A Committee was constituted to examine the grievance
of the employees for grant of revised pay scale. The Committee
also recommended that pay scale be given w.e.f. 1.1.1994 on
account of financial stringency being faced by the Federation. The
Board of Directors approved the recommendation of the
Committee, which was accepted by the Registrar (Co- operative
Societies). Therefore, the decision of not to grant revised pay
scale from 1

## Text

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PUNJAB STATE CO-OPERATIVE MILK PRODUCERS
FEDERATION LTD. & ANR.
v.
BALBIR KUMAR WALIA & ORS.
(Civil Appeal No. 7427 of 2011)
JULY 09, 2021
[SANJAY KISHAN KAUL AND HEMANT GUPTA, JJ.]
Punjab State Co-operative Milk Producers Federation
Services (Common Cadre) Rules, 1980: Revised pay scale -
Entitlement to, from 1.1.1986 - Writ petitions by the respondentsemployees seeking entitlement to pay scale equivalent to their
counterparts in the State of Punjab from 1.1.1986, though the revised
pay scale was allowed by the Punjab State Co-operative Milk
Producers Federation Ltd w.e.f. 1.1.1994 - Federation's case that
they were suffering with acute financial stringency - High Court
allowed the writ petitions holding that the financial stringency was
no longer an excuse to not revise the pay scales and thus held that
the date of implementation to grant revised pay scales as 1.1.1994
was absolutely unfair - On appeal, held: Objective of the Federation
was not to give employment but to increase milk production in the
State - Employees are facilitators of the employer to achieve such
objective and thus demanding enhanced wages without considering
the objective and financial condition of the employer would not be
ideal - Employer and the employees have to work together to
achieve the objective of the organization-white revolution - Decision
of not to grant revised pay scale from 1.1.1986 was taken keeping
in view the financial condition of the Federation - Process to arrive
at such decision can be said to be flawed only on the permissible
grounds of illegality, irrationality and procedural impropriety -
Neither the decision-making process, nor the decision itself suffers
from any such vice - Income generated by the Federation is not to
be expanded only on payment of salary but is also required for
upgradation of technology, renovation and expansion of plants etc
- Order of the High Courtis unjustified and in excess of the power
of judicial review conferred on the High Court - Orders passed by
the High Court is set aside.
[2021] 6 S.C.R. 395
395
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SUPREME COURT REPORTS
[2021] 6 S.C.R.
Pay scale - Entitlement to - Employees seeking pay scale
equivalent to their counterparts in the State of Punjab from 1.1.1986,
though revised pay scale was allowed by the Federation w.e.f.
1.1.1994 - High Court holding that employees were entitled to pay
scale - Held: Not justified - Principle of equal pay for equal work
not applicable to them in as much as Grade I is a higher post having
higher duties and responsibilities than Grade II - Milk Procurement
Assistants Grade-I is a promotion alavenue for Milk Procurement
Assistants Grade-II - Educational qualifications and the
responsibilities of the two posts are quite different.
Allowing the appeals, the Court
HELD: 1.1 In the instant case, it was contended that the
Federation-Punjab State Co-operative Milk Producers Federation
Ltd is a statutory Co-operative Society which is having its Common
Cadre Rules. Any amendment in the Common Cadre Rules is to
be approved by the Registrar (Co-operative Societies). The State
Government communicated on 1.3.1990 and 9.7.1993 that the
pay scale as applicable to the Punjab Government employees is
not to be adopted by the Public Sector Undertakings without
taking into consideration the financial health of the other statutory
Boards and Corporations. The Federation thus took a conscious
and concerted decision to not follow the report of the Anomaly
Committee of the State Government to grant revised pay scale
from 1.1.1986 in view of precarious financial condition. Moreover,
financial assistance had to be availed by the Federation from the
State Government as well as from the National Dairy Development
Board. A Committee was constituted to examine the grievance
of the employees for grant of revised pay scale. The Committee
also recommended that pay scale be given w.e.f. 1.1.1994 on
account of financial stringency being faced by the Federation. The
Board of Directors approved the recommendation of the
Committee, which was accepted by the Registrar (Co- operative
Societies). Therefore, the decision of not to grant revised pay
scale from 1.1.1986 was taken keeping in view the financial
condition of the Federation. [Para 41, 42][423-C-G]
1.2 Judicial review of administrative action is permissible
on grounds of illegality, irrationality and procedural impropriety.
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An administrative decision is considered as flawed if it is illegal,
and a decision is illegal if it pursues an objective other than that
for which the power to make the decision was conferred. The
discretion exercised by the decision maker is subject to judicial
scrutiny if a purpose other than the specified purpose is pursued.
[Para 48][430-A-B]
1.3 The decision that the Federation was in financial
difficulties is based upon relevant material before the Federation.
The process to arrive at such decision can be said to be flawed
only on the permissible grounds of illegality, irrationality and
procedural impropriety. Neither the decision-making process, nor
the decision itself suffers from any such vice. [Para 49][430-GH]
1.4 The information received under the Right to Information
Act to show that the Federation was in profit in the year 19961997, is not relevant to determine the financial condition
fortheperiod from 1.1.1986 to 1.1.1994. The Federation has
categorically stated that because of the remedial steps taken by
the Federation, there was turn around only after 1994.Still further,
the profits in the balance sheet are not meant to be appropriated
towards wages of the employees alone. Though the profits had to
be shared by the members of the Co-operative Society,but the
employees of the Federation are not its members.
The income generated by the Federation is not to be
expanded only on payment of salary but is also required for
upgradation of technology, renovation and expansion of plants
etc.Therefore, entire profit is not to be appropriated towards the
wages of the employees alone. The Federation was established
as a step towards white revolution. The objective of the
Federation was not to give employment but to increase milk
production in the State.The employees are facilitators of the
employer to achieve such objective and thus demanding enhanced
wages without considering the objective and financial condition
of the employer would not be ideal. The employer and the
employees have to work together to achieve the objective of the
organisation i.e. white revolution rather frittering a way the gains
PUNJAB STATE CO-OPERATIVE MILK PRODUCERS FEDERATION
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made by the joint efforts of the management and employees by
giving increased wages to the employees irrespective of its
capacity to bear such expenses. [Para 50][431-A-E]
1.5 The submission that there will not be financial burden
on the federation in view of the fact that the High Court has
ordered payment of arrears for a period of 3 years and 2 months
before the date of filing of writ petitions is again not tenable. The
High Court has granted revised pay scales with effect from
01.01.1986 instead of revised pay scales granted to the employees
of the federation with effect from 01.01.1994.Therefore,
restricting it for a period of 3 years and 2 months will not be
helpful in respect of the financial condition of the Federation as
during the relevant time the federation was suffering from huge
losses. In view thereof, the order of the High Court is unjustified
and in excess of the power of judicial review conferred on the
High Court.The orders passed by the High Court are hereby
set aside and the writ petitions are dismissed. [Para 51, 52]
[431-E-H]
2.1 As regards, CA No. 7432 of 2011, is directed against an
order passed by the High Court wherein it was held that the
employees are entitled to pay scale equivalent to their
counterparts in the State of Punjab from 1.1.1986, though revised
pay scale was allowed by the Federation w.e.f. 1.1.1994. It was
contended that the argument of the employees claiming equal
pay for equal work was not examined by the High Court. The
employees have not filed any appeal against the impugned
judgment of the High Court. The employees cannot raise any
grievance in an appeal preferred by the Federation to claim equal
pay for equal work.The employees are not aggrieved against the
judgment of the High Court. Therefore, the employees cannot
raise an argument which was not raised before the High Court.
However, their arguments are examined. It was argued that the
claim of the employees is not of revised pay scale from 1.1.1986
but that the categorization of Milk Procurement Assistants as
Grade-I & II is unconstitutional and they would be entitled to
the same pay as is being paid to Milk Procurement Assistants
Grade-I on the principle of equal pay for equal work. [Paras 53,
54, 55][432-A-E]
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2.2 As per the staffing pattern, the educational qualifications
for Milk Procurement Assistants Grade-I are Bachelor's Degree
with minimum three years' experience of Organisation of Milk
Producers Co-operative Societies affiliated with Milk Producers
Co-operative Unit whereas for Milk Procurement Assistant
Grade II, the qualification is Graduation preferable in Agriculture
with one year experience of workingas Secretary in a Cooperative Milk Supply Society. The pay scale prescribed for the
Milk Procurement Assistants Grade-I is Rs.700-1200 whereas
the pay scale prescribed for the Milk Procurement Assistants
Grade-II is Rs.480-880. It is sought to be contended that, infact,
Milk Procurement Assistants Grade-I is a promotional avenue
for Milk Procurement Assistants Grade-II. The educational
qualifications and the responsibilities of the two posts are quite
different. Therefore, the principle of equal pay for equal work
would not be applicable to them in as much as Grade I is a higher
post having higher duties and responsibilities than Grade II.
There is no merit in the argument claiming equal pay for the
alleged equal work. The orders passed by the High Court are
hereby set aside. [Para 57-59][433-A-E]
3.1 As regards, CA No. 7434 of 2011, is directed against an
order passed by the Division Bench of the High Court wherein it
was held that the employees are entitled to pay scale equivalent
to their counterparts in the State of Punjab from 1.1.1986, though
revised pay scale was allowed by the Federation w.e.f. 1.1.1994.
It was contended that the argument of the employees claiming
equal pay for equal work was not examined by the High Court.
[Para 60][433-F]
3.2 The respondent Nos. 1 to 4 are Milk Procurement
Assistants Grade-I in the pay scale of Rs.700-1200 whereas
respondent No. 5 is Animal Husbandry Assistant in the same pay
scale of Rs.700-1200 w.e.f. 1.8.1980. Such employees are claiming
parity in the matter of pay with the Area Officers including Deputy
Manager (Procurement) and Dairy Extension Officer in the pay
scale of Rs.850-1700. The employees have pleaded that w.e.f.
2.2.1987, the designation of Milk Procurement Assistants GradeI has been changed to Milk Procurement Supervisor and now
PUNJAB STATE CO-OPERATIVE MILK PRODUCERS FEDERATION
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the workload has increased inasmuch as fifty societies are to be
supervised as against eight societies which were supervised,
without any increase in the pay scale. It was pointed out that the
employees and the Deputy Manager (Procurement)/Dairy
Extension Officer do not constitute one class as the posts are
not similar on the points of qualifications and duties to be
performed by the incumbents. The classification on the basis of
qualifications, educational or by experience, for the fixation of
pay is permissible under the Constitution. The qualifications of
Milk Procurement Assistant Grade-I or Animal Husbandry
Assistant is Graduation/Matriculation with live-stock Diploma
course whereas the essential qualifications for the post of Dairy
Extension Officer and for the post of Deputy Manager
(Procurement) is B.Sc. Dairy Husbandry/Dairy Technology
with two to three years' experience. [Paras 61, 62][433-G-H;
434-A-D]
3.3 The order passed by the High Court has not been
challenged in appeal by the employees. Secondly, the classification
of different pay scales is permissible based upon educational
qualifications, experience and nature of duties. In view of the
said facts, the employees are not entitled to the pay scale as
claimed in the writ petition. The orders passed by the High Court
are set aside. [Para 63-64][434-E-F]
Tata Cellular v. Union of India (1994) 6 SCC 651 :
[1994] 2 Suppl. SCR 122 - relied on.
Purshottam Lal & Ors. v. Union of India & Anr., (1973)
1 SCC 651; Union of India & Anr. v. S.B. Vohra & Ors.
(2004) 2 SCC 150 : [2004] 1 SCR 36 - distinguished.
M.M.R. Khan & Ors. v. Union of India & Ors., 1990
(Supp.) SCC 191 : [1990] SCR 687; Haryana State
Minor Irrigation Tubewells Corporation & Ors. v. G.S.
Uppal & Ors., (2008) 7 SCC 375 : [2008] 6 SCR 662;
High Court Employees Welfare Assn., Calcutta & Ors.
v. State of W.B. & Ors., (2004) 1 SCC 334 : [2003] 5
Suppl. SCR 712; Supreme Court Employees Welfare
Association v. Union of India & Anr., (1989) 4 SCC
187 : [1989] 3 SCR 488; A.K. Bindal & Anr. v. Union
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of India & Ors. (2003) 5 SCC 163 : [2003] 3 SCR
928; State of Punjab & Ors. v. Amar Nath Goyal &
Ors. (2005) 6 SCC 754 : [2005] 2 Suppl. SCR 549;
Crown Aluminium Works v. Workmen AIR 1958 SC 30
: [1958] SCR 651; Standard Vacuum Refining Co. of
India v. Workmen & Anr. AIR 1961 SC 895 : [1961]
SCR 536; Hindustan Times Ltd., New Delhi v. Workmen
(1963) 1 LLJ 120; Workmen v. Reptakos Brett. & Co.
Ltd. (1992) 1 SCC 290 : [1991] 2 Suppl. SCR 129 ;
South Malabar Gramin Bank v. Coordination Committee
of South Malabar Gramin Bank Employees'
Union.(2001) 4 SCC 101 : [2001] 1 SCR 742; Associate
Bank Officers' Association v. State Bank of India & Ors.
(1998) 1 SCC 428 : [1997] 4 Suppl. SCR 475; Officers
& Supervisors of I.D.P.L. v. Chairman & M.D., I.D.P.L.
& Ors.(2003) 6 SCC 490 : [2003] 1 Suppl. SCR 720;
S.C. Chandra & Ors. v. State of Jharkhand & Ors.
(2007) 8 SCC 279 : [2007] 9 SCR 130; Mineral
Exploration Corporation Ltd. v. Arvind Kumar Dixit &
Anr. (2015) 2 SCC 535 : [2014] 11 SCR 255; State of
Haryana v. Shri Des Raj Sangar & Anr. (1976) 2 SCC
844 : [1976] 2 SCR 1034; The Employees of Tannery
and Footwear Corporation of India Ltd. & Anr. v. Union
of India & Ors. 1991 Supp. (2) SCC 565; Union of
India & Anr. v. S.B. Vohra & Ors. (2004) 2 SCC 150 :
[2004] 1 SCR 36; General Manager, Kisan Sahkari
Chini Mills Ltd., Sultanpur, U.P. v. Satrughan Nishad
& Ors.(2003) 8 SCC 639:[2003] 4 Suppl.SCR 349;
K.T. Veerappa & Ors. v. State of Karnataka & Ors.
(2006) 9 SCC 406; Balco Employees' Union (Regd.)
v.Union of India & Ors. (2002) 2 SCC 333 : [2001] 5
Suppl. SCR 511; Jagdish Mandal v.State of Orissa &
Ors. (2007) 14 SCC 517 : [2006] 10 Suppl. SCR 606;
West Bengal Central School Service Commission & Ors.
v. Abdul Halim & Ors. (2019) 18 SCC 39 : [2019] SCR
1089; Municipal Council, Neemuch v. Mahadeo Real
Estate & Ors.(2019) 10 SCC 738 : [2019] 12 SCR 532;
Harshit Agarwal & Ors. v. Union of India & Ors.
(2021) 2 SCC 710 - referred to.
PUNJAB STATE CO-OPERATIVE MILK PRODUCERS FEDERATION
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Case Law Reference
[1990] 1 SCR 687
referred to
Para 14
[2008] 6 SCR 662
referred to
Para 14
[2003] 5 Suppl. SCR 712
referred to
Para 14
[1989] 3 SCR 488
referred to
Para 14
(1973) 1 SCC 651
distinguished
Para 34
[2003] 3 SCR 928
referred to
Para 14
[2005] 2 Suppl. SCR 549
referred to
Para 14
[1958] SCR 651
referred to
Para 34
[1961] 3 SCR 536
referred to
Para 21
(1963) 1 LLJ 120
referred to
Para 22
[1991] 2 Suppl. SCR 129
referred to
Para 23
[2001] 1 SCR 742
referred to
Para 25
[1997] 4 Suppl.SCR 475
referred to
Para 25
[2003] 1 Suppl. SCR 720
referred to
Para 27
[2007] 9 SCR 130
referred to
Para 28
[2014] 11 SCR 255
referred to
Para 29
[1976] 2 SCR 1034
referred to
Para 31
1991 Supp. (2) SCC 565
referred to
Para 36
[2004] 1 SCR 36
distinguished
Para 38
[2003] 4 Suppl.SCR 349
referred to
Para 39
(2006) 9 SCC 406
referred to
Para 40
[1994] 2 Suppl. SCR 122
relied on.
Para 43
[2001] 5 Suppl. SCR 511
referred to
Para 44
[2006] 10 Suppl. SCR 606
referred to
Para 45
[2019] 9 SCR 1089
referred to
Para 46
[2019] 12 SCR 532
referred to
Para 47
(2021) 2 SCC 710
referred to
Para 48
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7427
of 2011.
From the Judgment and Order dated 19.03.2009 of the High Court
of Punjab and Haryana at Chandigarh in C.W.P. No. 4418 of 1992.
With
Civil appeal nos. 7429,7430,7431,7432,7433,7434 and 7435 of 2011
P. S. Patwalia, Sr. Adv., Ashok K. Mahajan, Advs. for the
Appellants.
Govind Goel, Ankit Goel. Ravi Kapur, Raghav Kapur, Himinder
Lal, R. C. Kohli, Ms. Kaveeta Wadia, Karan Bharihoke, Siddhant
Sharma, Advs. for the Respondents.
The Judgment of the Court was delivered by
HEMANT GUPTA, J.
CIVIL APPEAL NO. 7427 OF 2011, CIVIL APPEAL NO.
7429 OF 2011, CIVIL APPEAL NO. 7430 OF 2011, CIVIL
APPEAL NO. 7431 OF 2011, CIVIL APPEAL NO. 7433 OF 2011
AND CIVIL APPEAL NO. 7435 OF 2011
1. The present appeals are directed against an order passed by
the Division Bench of the High Court of Punjab & Haryana at Chandigarh
on 19.3.2009 whereby the writ petitions filed by the respondents1 herein
were allowed holding that the Punjab State Co-operative Milk Producers
Federation Ltd.2 is a State within the meaning of Article 12 of the
Constitution of India and that the employees are therefore entitled to
pay scale equivalent to their counterparts in the State of Punjab from
1.1.1986, though the revised pay scale was allowed by the Federation
w.e.f. 1.1.1994.
2. The milk producers in the State launched the setting up of
Cooperative Societies at village level which are known as Primary Milk
Producers Cooperative Societies. Such Primary Milk Producers
Cooperative Societies are in turn members of The District Cooperative
Milk Producers Union. These District Level Unions are ultimately the
members of the Federation. The employees have claimed pay scale as
revised by the Punjab Government Anomaly Committee w.e.f. 1.1.1986.
3. Before the High Court, an objection was raised by the Federation
that since it is not a State within the meaning of Article 12 of the
1 Hereinafter referred to as the 'employees'
2 For short, the 'Federation'
PUNJAB STATE CO-OPERATIVE MILK PRODUCERS FEDERATION
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Constitution, therefore, the writ petitions were not maintainable. However,
before this Court, Mr. Patwalia, learned senior counsel appearing for
the Federation has submitted that the question whether the Federation is
a State or not is not being raised in the present appeals. The main
grievance of the Federation is regarding grant of revised pay scale w.e.f.
1.1.1986 though the Federation was suffering with acute financial
stringency in those days and had therefore granted revised pay scales
from 1.1.1994.
4. It is pointed out that The Registrar (Cooperative Societies)
accorded approval for implementation of the report of the Third Pay
Commission on 2.6.1989. The Federation granted revised pay scale and
allowances w.e.f. 1.1.1986 as per the report of the Pay Commission.
Thereafter, on 15.2.1990, the State Government revised pay scale of
Veterinary Officers of the Animal Husbandry Department, Punjab
Government from Rs.850-1700 to Rs.2200-4000 and that after eight
years of service, the pay scale of Veterinary Officers would be Rs.30004500 and after eighteen years of service, it would be Rs.3700-5300 with
effect from 1.1.1986 on the basis of report of an Anomaly Committee
constituted to consider the grievances of the employees of the State. It
is the said pay scale which was claimed by the filing of writ petitions
before the High Court.
5. It was argued that the Federation was facing acute financial
crisis inasmuch as the State had granted a loan of Rs.8 (sic 12) crores
on 9.5.1990 which the Federation could not repay and, therefore, the
said amount was converted into the share capital of the State Government
with the Federation. In addition thereto, keeping in view the financial
stringency, the National Dairy Development Board gave a loan of Rs. 4
crores on 2.5.1990 to the Federation. After the loan was granted by the
National Dairy Development Board, there was a change in the
management which led to restructuring of the Federation.
6. The service conditions of the employees of the Federation are
governed by the Punjab State Co-operative Milk Producers Federation
Services (Common Cadre) Rules, 19803. The Common Cadre Rules
were resolved to be amended on 10.8.1990 by the Board of Directors of
the Federation. The same were approved by the Registrar (Co-operative
Societies) on 30.10.1990. It is thereafter that the Federation issued a
notice under Section 9-A of the Industrial Disputes Act, 1947 on
12.11.1990 (Annexure P-12) to all the employees on the ground of
3 Hereinafter referred to as the 'Common Cadre Rules'
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financial stringency showing its intention to effect the changes specified
in the annexure annexed with the said notice.
7. The employees of the Federation raised protest; therefore, a
committee was constituted on 6.12.1994 to examine the following issues:
"(i) Whether the upward revision should be adopted for the
employees of Milkfed and Milk Unions?
(ii) Whether the revision is to be given with effect from 1.1.1986
or any subsequent date by giving the benefit of notional fixation?
(iii) Whether the upward should confine only to the categories
covered in the report of Government Anomaly Committee or
categories enjoying identical scales (unimproved) need to be
covered (a) repercussion if revision is confined to the categories
covered in the Government report (b) impact, if any, of pending
writ petitions, resolutions of BOD of M.U., Ludhiana and BOD
of Milkfed?
(iv) Whether there is any necessity of changing the qualification/
improving designations of certain categories being placed in higher
scales?
(v) Any other point/issue identical to or connected with the above?"
8. The Committee, inter alia, made the following
recommendations:
"4. The Committee finds that in case the revision of pay scales is
taken up w.e.f. 1.1.1986, the amount of arrears upto 31.12.1993
works out to Rs.1.5 crore approx., i.e. about 60 lacs in case of
those categories for which the scales have been improved and
about Rs.90 lac in case of identical categories. Taking into
consideration the financial health of the Milkfed and more
particularly majority of Milk Unions, Committee strongly feels that
payment of arrears will further shatter the financial health of the
Milkfed and Milk Unions and it will not be possible to pay such a
huge amount in the shape of arrears. Committee feels that the
employees concerned also understand this position and will most
probably be agreeable to the grant of improved pay scales w.e.f.
any subsequent date. The 2nd alternative of granting benefit from
1.1.1994 with notional fixation of BP w.e.f. 1.1.1986 has also been
examined. In this case, more than 750 employees will be financially
benefited and the financial burden will be Rs.2.0 lac pm. This is
also considered to be a huge liability, especially when the
PUNJAB STATE CO-OPERATIVE MILK PRODUCERS FEDERATION
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recommendations of the IVth Pay Commission are expected and
the liability on its implementation is also likely to be heavy. Further,
the Committee has been told that the liability of the arrears n
account of Prop. set up from 1.1.1986 to 31.8.1992 are still
outstanding. The Committee after considering the above as well
as various other aspects, recommends that the improved pay scales
may be implemented w.e.f. 1.1.1994 without giving the benefit of
even notional pay fixation w.e.f. 1.1.1986. Adoption of the Punjab
Government pattern of Pay Scales has been felt necessary with a
view to make parity in the scales for future revisions etc. This
would save the organisation from a huge liability of the payment
of arrears and will also give scope to the employee for placement
in better pay scale and getting benefit which might accrue as a
result next revision of pay scale likely to be made w.e.f. 1.1.1994
on Punjab Government pattern."
9. The report of the Committee was considered and the grant of
revised pay scale w.e.f. 1.1.1994 was approved by the Board of Directors
of the Federation. The minutes of the meeting of the Board of Directors
of Federation held on 30.8.1996 read as under:
"After discussion, it is unanimously resolved that in view of the
recommendations of the Departmental Committee, constituted by
the Milkfed on 6.12.1994, contained in the report enclosed at
Annexure-3, approval is granted to the implementation of the
revised pay scales and Master Pay Scale to the concerned
employees of the Milkfed and the Milk Unions in accordance
with the report of the Anomaly Committee constituted under the
Third Pay Commission by the Punjab Government, with effect
from 1.1.1994. Its approval may also be obtained from the
Registrar, Cooperative Societies, Punjab."
10. The decision of the Board was approved by the Registrar
(Co-operative Societies) on 29.4.1997. Thus, subsequently, revised scales
with effect from 1.1.1994 were granted to the employees.
11. Mr. Patwalia referred to the communication of the Punjab
Government dated 1.3.1990 that grant of allowances or concessions
should not automatically be made applicable to the employees of Public
Sector Undertakings/Cooperative Institutions, without examining the
liabilities involved, the available resources of the Undertakings and the
extent of concessions already being availed by their employees. The
State Government communicated as under:
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"It has accordingly been decided that instructions, regarding grant
of any allowance/perks/concessions etc. by whatever name called,
issued by State Government from time to time for its employees
should not automatically be made applicable to the employees of
Public Sector Undertakings/Cooperative Institutions. Before
making such instructions applicable to your employees/officers,
these should thoroughly be examined by B.O.D. with reference
to the liabilities involved, capacity of the Undertakings to bear the
additional financial burden, availability of the resources and the
extent/nature of the similar allowances/concessions already being
availed of and the views of Department of Finance (B.P.E.) should
also invariably be obtained through the Administrative
Department."
12. The State Government reiterated on 9.7.1993 that whenever
instructions for revision of allowances/pay scale are issued by the Punjab
Government for its employees, they are adopted by Public Sector
Undertakings and are applied to its employees without examining the
liability involved and the capacity to pay, which results in loss and Public
Sector Undertakings add the same to their costs. It was suggested that
these practices may be discontinued as the State Government would not
be supporting the PSUs financially in such cases. It was communicated
as under:
"It has been noticed that whenever any instructions regarding
revision of allowances/pay are issued by the Punjab Government
for its employees these are adopted by Public Sector Undertakings
and applicable to its employees without examining the liability
involved and the Public Sector Undertakings capacity to pay with
the result that the loss incurring Public Sector Undertakings keep
adding to their costs. This practice may be discontinued. The
establishment cost of per unit of product or service in Public Sector
Undertakings has increased very much. Therefore, no further
additives should be encouraged and Governments revision is not
justifiable pretext to consider similar increase in the Public Sector
Undertakings should see their financial condition, rising cost in
relation to productivity and the fact that Governments is not going
to support the Public Sector Undertakings financially."
13. The High Court allowed the writ petitions filed by the employees
holding that the financial stringency was no longer an excuse to not
revise the pay scales and thus held that the date of implementation to
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grant revised pay scales as 1.1.1994 was absolutely unfair. The Federation
is in appeal herein against such order. This Court had stayed the recovery
pending further orders on 6.11.2009.
14. Mr. Patwalia, learned counsel for the Federation, submitted
that the High Court erred in law in holding that the date of implementation
to grant revised pay scales as 1.1.1994 was absolutely unfair and that
financial stringency was not an excuse for refusing to revise the pay
scales from 1.1.1986. It was contended that the judgments4 referred to
by the High Court have no applicability to the facts of the present case.
Mr. Patwalia also relied upon judgments of this Court reported as A.K.
Bindal & Anr. v. Union of India & Ors.5 and State of Punjab & Ors.
v. Amar Nath Goyal & Ors.6 wherein the Court had upheld financial
stringency as a ground to deny higher pay scales etc.
15. Mr. Govind Goel, appearing for the respondents in Civil Appeal
No. 7433 of 2011 argued that the writ petition before the High Court
was filed on behalf of one Head Draftsman, two Draftsman, two Junior
Draftsman and two Surveyors. It was contended that such seven
employees of the Federation have not been provided the benefit of
recommendations of the Committee as was granted to the other
employees of the Federation w.e.f. 1.1.1994. Thus, it was argued that
the decision to not grant the revised pay scale on the basis of the report
of the Committee of the Federation w.e.f. 1.1.1994 was wholly arbitrary
and discriminatory. It was contended that out of the 1573 employees of
the Federation, these seven employees alone have been discriminated.
It was also argued that the High Court has restricted the arrears
consequent to its directions to grant arrears of the revised pay scale for
a period of 3 years and 2 months from the date preceding the date of
filing of respective writ petitions. While contesting the ground of financial
stringency preferred by the Federation, it was stated that though there
were losses for some years, the information disclosed under the Right to
Information Act on 22.7.2011 shows that the Federation has been in
profit since 1996-1997. Hence, such ground of financial stringency is
not tenable.
4 M.M.R. Khan & Ors. v. Union of India & Ors., 1990 (Supp.) SCC 191; Haryana State
Minor Irrigation Tubewells Corporation & Ors. v. G.S. Uppal & Ors., (2008) 7 SCC
375; High Court Employees Welfare Assn., Calcutta & Ors. v. State of W.B. & Ors.,
(2004) 1 SCC 334; Supreme Court Employees Welfare Association v. Union of India &
Anr., (1989) 4 SCC 187 and Purshottam Lal & Ors. v. Union of India & Anr., (1973) 1
SCC 651
5 (2003) 5 SCC 163
6 (2005) 6 SCC 754
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16. Mr. Goel relied upon a Constitution Bench judgment of this
Court reported as Purshottam Lal,referred to by the High Court as
well, to contend that revision of pay scale recommended by the Pay
Commission after acceptance by the Government could not be denied to
a category of employees as it would be an act of discrimination.
17. Mr. Patwalia controverted the arguments raised by Mr. Goel
and pointed out that the writ petitioners are the employees of the
Federation who have no work of the post to which they were appointed.
Instead of abolishing the post to which the writ petitioners were appointed,
the Committee had nevertheless dealt with the grant of revised pay scales
to them in the following manner:
Sr.
No.
Name of
the
Categories
Unrevised
Pay scale
before
1.1.86
Already
RPS
w.r.f.
1.1.86
Pay
scale
now
revised
by
Govt.
Remarks
Recommendations of the
Committee
for
improvement from 1.1.94
xxx
15
Head
Draftsman
700-1200
16402925
22003500
There is only one Head
Draftsman, for whom the
deptt. has no work has
been put on alternate job
in a Milk Union. There is
also no likelihood of new
civil
works
to
be
undertaken. So the pay
scale of
1800-3200
is
recommended
for
this
post. No financial burden.
16
Draftsman
570-1080
15002640
18003200
Jr.
Draftsman
shall be eligible
for promotion as
draftsman in the
scale of Rs.18003200
after
a
minimum
period
of 12 years.
There are 3 draftsmen.
The
civil
works
have
almost
been
completed
and there is no likelihood
of new civil works to be
undertaken. Two of them
have been put on alternate
jobs, as they are surplus.
So the committee feels
that the existing pay scale
of
Rs.1500-2640
is
sufficient for them. So no
improvement
is
recommended.
17.
Tracers
400-600
9501800
12002100
To be designated
as Jr. draftsman
and qualification
to be raised to
matric with two
years
ITI
certificate
of
draftsman.
There are 4 tracers. None
of them is deployed on his
job, but have been put on
alternate jobs, which are
clerical, to provide this
work.

There
is
no
likelihood of civil work
for them in future. So no
improvement
is
recommended.
18
Surveyor
400-600
9501800
12002100

There are two Surveyors,
who have been put on
alternate jobs. So no
improvement
is
recommended
for
this
category too.
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18. It was thus argued that the Committee had taken a conscious
decision not to grant pay scale as revised by the Government. Instead of
granting enhanced pay scale at par with what was approved by the
State Government, a higher pay than the recommendations of the Pay
Commission was granted. The Federation thus exercised this option instead
of abolishing the post. Therefore, the decision of the Committee does
not warrant any interference in exercise of the power of judicial review.
19. We have heard learned counsel for the parties and find that
the judgment and order of the High Court cannot be sustained. In our
country, there are broadly three sets of employers such as employers in
the organized sector like the Industrial workers; secondly, Public Sector
Undertakings including Boards and Corporations and all other
establishments, which meet the test of a State within the meaning of
Article 12 of the Constitution; and thirdly, Central or State Government
employees.
20. One of the early judgments of this Court is Crown Aluminium
Works v. Workmen7,wherein the question examined was as to whether
in view of financial conditions, the wages of workmen can be
reduced.This Court held that it would not be right to hold that there is a
rigid and inexorable convention that the wage structure once fixed by
Industrial Tribunals can never be changed to the prejudice of workmen.
This Court thus held as under:
"11. ... In dealing with a claim for such revision, the Tribunal may
have to consider, as in the present case whether the employer's
financial difficulties could not be adequately met by retrenchment
in personnel already effected by the employer and sanctioned by
the Tribunal. The Tribunal may also enquire whether the financial
difficulties facing the employer are likely to be of a short duration
or are going to face the employer for a fairly long time. It is not
necessary, and would indeed be very difficult, to state exhaustively
all considerations which may be relevant in a given case. It would,
however, be enough to observe that, after considering all the
relevant facts, if the Tribunal is satisfied that a case for reduction
in the wage structure has been established then it would be open
to the Tribunal to accede to the request of the employer to make
appropriate reduction in the wage structure, subject to such
conditions as to time or otherwise that the tribunal may deem fit
or expedient to impose. ..."
7 AIR 1958 SC 30
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21. In respect of Industrial workers, this Court, while dealing with
wage structure ina judgment reported as Standard Vacuum Refining
Co. of India v. Workmen & Anr.8,held that it is usual to divide wages
into three broad categories: the basic minimum wage which is the bare
subsistence wage, above it is the fair wage, and beyond the fair wage is
the living wage. The said three categories of wages are described as the
poverty level, the subsistence level and the comfort or the decency level.
This Court accepted the Report by the Commission of Enquiry on
"Emoluments and Conditions of Service of Central Government
Employees, 1957-1959" wherein the five norms which should guide all
wage fixing authorities including Minimum Wage Committees, Wage
Boards, adjudicators, etc. were stated by the Court inter alia as under:
"9. It is well known that the problem of wage structure with which
industrial adjudication is concerned in a modern democratic State
involves on the ultimate analysis to some extent ethical and social
considerations. ....... As the social conscience of the general
community becomes more alive and active, as the welfare policy
of the State takes a more dynamic form, as the national economy
progresses from stage to stage, and as under the growing strength
of the trade union movement collective bargaining enters the field,
wage structure ceases to be a purely arithmetical problem.
Considerations of the financial position of the employer and the
state of national economy have their say, and the requirements of
a workman living in a civilised and progressive society also come
to be recognised.
19. ... With regard to the minimum wage fixation it was agreed
that the minimum wage was need-based to ensure the minimum
human needs of the industrial worker irrespective of any other
considerations.
(i) In calculating the minimum wage, the standard working class
family should be taken to consist of 3 consumption units for one
earner; the earnings of women, children and adolescents should
be disregarded.
(ii) Minimum food requirement should be calculated on the basis
of a net intake of calories, as recommended by Dr Aykroyd for an
average Indian adult of moderate activity.
8 AIR 1961 SC 895
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(iii) Clothing requirements should be estimated at a per capita
consumption of 18 yards per annum which would give for the
average workers' family of four, a total of 72 yards.
(iv) In respect of housing, the rent corresponding to the minimum
area provided for under Government's Industrial Housing Scheme
should be taken into consideration in fixing the minimum wage.
(v) Fuel, lighting and other 'miscellaneous' items of expenditure
should constitute 20% of the total minimum wage."
22. This Court in Hindustan Times Ltd., New Delhi v. Workmen9
held that numerous complex factors, some of which are economic and
some spring from social philosophy give rise to conflicting considerations
that have to be borne in mind and that such factors are not static in
nature. The financial position of the employer, state of national economy,
and the requirements of a workman living in a civilized and progressive
society also are to be recognized. This Court held as under:
"5. The fixation of wage structure is among the most difficult
tasks that industrial adjudication has to tackle.