Dr. Y.B. Yalwar Vs. State of Karnataka and ors. - Court Judgment

Excerpt:
(a) state financial corporation act, 1951 (central act no. 63 of 1951) - section 23 & 48 -- petitioner appointed as executive director with special pay but ksfc denying for lack of approval by state -- held, petitioner's contract of employment with corporation did not require state's approval with regard to pay scale. ; (b) constitution of india - article 12 -- ksfc 'an authority' under article 12 being autonomous body, has discretion for entering into contracts and state's approval held, not required. - labour & services wage revision: [s.n. sathyanarayana,j] benefit of wage increase given to petitioners pursuant to recommendation of third tripartite committee - respondent company voluntarily extended the benefit of wage increase to its employees including the petitioners -.....orderk.s. bakthavatsalam, j.1. by consent of parties this writ petition is taken up for final disposal.2. the petitioner has been working in the office of the 3rd respondent as general manager (operations). one of the terms and conditions of his appointment is a special pay of rs. 1500/- per month. the complaint of the petitioner is that he has not been paid the special pay of rs. 1500/- though he has made requests as per annexures d & e. another grievance of the petitioner is that he is entitled for rs. 3,000/- per month for leased accommodation irrespective of whether he is staying in his own house or rented accommodation. the petitioner alleges that non-payment of rs. 1500/ - p.m. from the date of his appointment is highly illegal, arbitrary and without jurisdiction. it is also.....

Judgment:
ORDER

K.S. Bakthavatsalam, J.

1. By consent of parties this Writ Petition is taken up for final disposal.

2. The petitioner has been working in the office of the 3rd respondent as General Manager (Operations). One of the terms and conditions of his appointment is a special pay of Rs. 1500/- per month. The complaint of the petitioner is that he has not been paid the special pay of Rs. 1500/- though he has made requests as per Annexures D & E. Another grievance of the petitioner is that he is entitled for Rs. 3,000/- per month for leased accommodation irrespective of whether he is staying in his own house or rented accommodation. The petitioner alleges that non-payment of Rs. 1500/ - p.m. from the date of his appointment is highly illegal, arbitrary and without jurisdiction. It is also contended that the Board is the competent authority which makes the appointment as statutory body under the Karnataka State Financial Act. As such the petitioner has come up to this Court with the following two prayers:

'a) a writ of mandamus directing the respondents for payment of Rs. 1,500/- p.m. special pay from 13.1.1993 onwards;

b) A writ in the nature of declaration to declare the demand of deposit of Rs. 30,000/- for the house obtained on rent is illegal and arbitrary and ineffective. And payment of Rs. 3,000/- p.m. for leased accommodation from August 1995 onwards.'

3. A statement of objections has been filed by respondents 3 and 4 in which it is stated that under Section 48 read with Section 23 of the K.S.F.C. Act the State has not approved special pay of Rs. 1500/- p.m. while approving the scale of pay and allowances for the post of Executive Director. It is also stated in the statement of objections that the creation of a new post and the terms and conditions applicable to the said post cannot become effective without making necessary amendment to the Staff Regulations which requires previous sanction of the State Government as per Section 48 of the Act.

4. The State has filed a statement of objections in which it is stated that there was no post as Executive Director, and the post created requires an amendment to the K.S.F.C. Staff Regulations. It is stated that the respondent-1 examined the proposal of the Corporation in detail and the Board approved the creation of post of Executive Director in the pay scale of Rs. 5,900-6650/-. The highest scale of pay applicable to the State Government Employees is Rs. 5600-6300/- and whereas the Corporation which is an organ of the State which is being run by the Government has granted a higher pay scale. Therefore the first respondent is justified in not granting or approving the special pay of Rs. 1500/- p.m. It is also stated that if the demand of the petitioner is granted then there are as many as 422 officers in the cadre of Manager, Deputy General Manager, General Manager and another Executive Director who may also demand for grant of special pay which may result in heavy burden on the Corporation. A reference is made to Section 48 of the K.S.F.C. Act and it is stated that there is no justification for the demand made by the petitioner.

5. I have heard the learned Counsel for the Petitioner who argues that the Corporation is an autonomous body and the fixation of pay is a contract between the Employer-Corporation and employee of the petitioner and the State Government cannot have any say with regard to payment of Special Pay. Learned Counsel draws assistance from a Division Bench Judgment of the Rajasthan High Court reported in R.F.C. OFFICERS ASSOCIATION v. R.F.C. AND ANR., RLR 1989 (1) P.821 and ASSOCIATION OF SELECTED CANDIDATES v. THE STATE OF BIHAR AND ORS., 1991(1) Bank CLR P 96, of Patna High Court in support of his submitting that the scheme of the provisions of the Act makes it clear that the right to make appointments, determine the vacancies against which appointments are to be made and framing regulations for such appointment have been given to the Financial Corporation. The only Power in this behalf given to the State Government to specify the class or categories of posts in respect of which appointments may be made by the Board without following the regulations and without adhering to the conditions of appointment and service and the remuneration payable to the employees or the officers appointed in such specified class or categories of posts. The sum and substance of the argument of the learned Counsel for the petitioner is that the State has no say in the matter with regard to grant of special pay of Rs. 1500/- p.m. to the petitioner. With regard to rental allowances claimed in the Writ Petition, learned Counsel for the Corporation has stated that it will be considered. As such the only question is with regard to special pay of Rs. 1500/- p.m.

6. Learned Counsel appearing for the State also vehemently contends that the State Government has not approved the Regulations and has not given any approval for special pay, it isnot open to the petitioner to claim special pay of Rs. 1500/- p.m. as of right.

7. I have considered the arguments of the learned Counsel for the petitioner and the learned Counsel for the Corporation and also the High Court Government Pleader. Section 23 of the State Financial Corporations Act, 1951 reads thus:

'23. The Financial Corporation may appoint such officers, advisers, and employees as it considers necessary for the efficient performance of its functions, and determine, by regulations, their conditions of appointment and service and the remuneration payable to them.

Provided that the State Government may in consultation with and after obtaining the advice of the Development Bank, specify the class or categories of posts in respect of which appointments may be made by the Board on such remuneration and other conditions of service as the Board may determine, and no regulation made under this Act shall apply to such posts in respect of matters so determined by the Board.'

Section 48 of the Act speaks about the Power of B6ard to make regulations. So far as this case is concerned it is necessary to extract 48(1) & 48(2)(j) which reads thus:

'48(1). The Board may, after consultation with the Development Bank and with the previous sanction of the State Government, make regulations not inconsistent with this Act and the rules made thereunder to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of this Act.'

'48(2)- In particular, and without prejudice to the generality of the foregoing power such regulations may provide for -- (j) the duties and conduct of officers, other employees, advisers and agents of the Financial Corporation.'

A reading of these provisions in my view, do not anywhere curb the authority of the Corporation to fix pay and enter into contract with the employee with regard to payment of salary. I do not think the State Government's approval is necessary with regard to payment of salary to the employee of the Corporation. A Division Bench Judgment of the Patna High Court in ASSOCIATION OF SELECTED CANDIDATES v. THE STATE OF BIHAR AND ORS., it has been held:

(Head Notes 1 & 2)-

'The scheme of the provisions aforementioned, thus, make it clear that the right to make appointments, determine the vacancies against which appointments are to be made and framing the regulations for such appointment have been given to the Financial Corporation. The only power in this behalf give to the State Government to specify the class or categories of posts in respect of which appointments may be made by the Board without following the regulations and without adhering to the conditions of appointment and service and the remuneration payable to the employees or the officers appointed in such specified class or categories of posts.

The power to issue instructions on the question of policy cannot be brought into the realm of appointments, determination of classes or categories of posts and regulations framed for making appointments. No policy decision of the State Government shall prevail upon the statutory power of the Corporation under Section 23 of the Act. That shall have to be ignored or struck down if it shall have any effect upon the Corporation's right acknowledged under Section 23 of the Act.'

A Division Bench of the RAJASTHAN High Court in R.F.C. OFFICERS ASSOCIATION v. RFC AND ANR., held as follows:

'Section 39 of the R.F.C. Act, 1951 (Sic State Financial Corporations Act, 1951} further provides that the Board shall be guided by such instructions on questions of policy as may be given to it by the State Government. The word or phrase (policy) does not include the fixation of emoluments. The State Government has a limited power only in the matters pertaining the running of the business. To decide the fixation of the grades, creation of the posts and the matter relating to emoluments, pension, gratuity etc. cannot be said to be policy matters. If a wider interpretation given to the word 'policy' as used in Section 39 the Corporation will become the part of the State Government and cannot work as autonomous body. We can understand that the matters relating to the advancement of loan and their recoveries and other allied matters the State Government will have a right to give the directions under Section 39. The conditions of the service of the employees cannot be considered as a matter of policy. Therefore, we are of the view, that the directions given by the State Government, regarding exgratia payment are not within the jurisdiction of Government. The Orders annexure-7 dated 22.7.1987 and Annexure-11, are set aside. We hereby further direct that the payment should be made to the employees which they are getting since 1973, and onwards. The Corporation shall comply the order of this Court within 3 months. The State Government shall pay Rs. 1,000/- as a cost of litigation to the petitioners.'

8. With respect I agree with the view taken by the learned Judges of the Patna and Rajasthan High Courts with regard to the power of the State Government vis-a-vis, the State Financial Corporation. In my view Sections 23 and 48 as extracted above, do not empower the State Government to interfere with the payment of special pay to the petitioner. The Corporation is an autonomous body though it is under the control of the State Government for certain purposes. When the Corporation is a statutory body and instrumentality of the State under Article 12 of the Constitution of India I do not think that the State Government can interfere with the discretion of the Corporation with regard to payment of salary to any of its employees. In my view the statute nowhere requires the payment to the officer has to be approved by the State Government. In such circumstances, the arguments of the Learned Counsel for the Petitioner is well founded. A writ is issued to the respondents to pay Rs. 1500/- as special pay as asked for by the petitioner. With regard to the prayer regarding house rent allowances, no order is necessary as the Counsel for the Corporation has stated that it will be considered. Petition ordered accordingly.