Supreme Court of India.

Court should refrain from interfering with policy decisions which have cascading effects, says SC

Earlier this week, a judgement pronounced by a two-judge bench of the Supreme Court shed light on the special status vested on the government employees under the Constitution, and whether employees of autonomous bodies can claim similar benefits as them. Although the Bombay High Court had considered the employees of the autonomous bodies on par with the government employees, an expert on labour law finds merit in the Supreme Court’s interpretation, writes NINAD PARIKH.

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WHILE deciding the case of The State of Maharashtra and Anr. vs. Bhagwan & Ors., on an appeal filed by Maharashtra government against an order passed by the Bombay High Court, on January 10, the Supreme Court held that employees of autonomous bodies cannot claim, as a matter of right, service benefits on par with the government employees.

The bench comprising Justices M.R. Shah and B.V. Nagarathna held while allowing the appeal on the basis that as per the Service Rules applicable to the employees of Water And Land Management Institute (WALMI), there is no provision for pensionary benefits for them.

The issue of contention in this case was if the employees of WALMI, which is an independent autonomous entity registered under the Societies Registration Act, are entitled to the same pensionary benefits as employees of the Maharashtra Government.

The High Court’s rationale for its decision was that the amount of funds available with WALMI and deposited with the Employees’ Provident Fund towards employees’ contribution itself is sufficient to meet the financial liability of the pensionary benefits to employees, and that there is no reasonable basis for the state government to refuse the same to the retired employees of WALMI.

The High Court further observed that as WALMI essentially performs educational and research activities, and receives 100 per cent grant from the state government, the service conditions of employees are regulated by Maharashtra Civil Services Rules, and that the employees have been, from time to time, extended the benefits of wage and pay scale revision on par with state government employees. The employees are being paid out of the Consolidated Fund of the state government and hence, there is no justification to treat WALMI employees differently state government employees. The High Court, therefore, held that the denial of pensionary benefits to the employees of WALMI would be discriminatory and violative of the principle of equality guaranteed under Article 14 of the Constitution.

Supreme Court’s rationale

However, the Supreme Court ruled that the Pension Rules applicable to the state government employees cannot be made applicable to the employees of WALMI, and thus they are not entitled to the pensionary benefits.

A claim for equality can be made when there is discrimination by the State between two similarly situated persons. Thus, it cannot be invoked in cases where the discrimination sought to be shown, is between acts of two different authorities functioning as State under Article 12 of the Constitution, the Supreme Court held.

The Supreme Court’s judgment, authored by Justice Shah, noted that employees of autonomous bodies cannot claim parity with the government employees merely because such organisations have adopted rules similar to a government service. It was stated in the judgement that a claim for equality can be made when there is discrimination by the State between two similarly situated persons. Thus, it cannot be invoked in cases where the discrimination sought to be shown, is between acts of two different authorities functioning as State under Article 12 of the Constitution, the Supreme Court held.

Referring to its judgment in T.M. Sampath & Ors. vs. Secretary, Ministry of Water Resources & Ors., (2015), the bench observed:

As per the law laid down by this court in a catena of decisions, the employees of the autonomous bodies cannot claim, as a matter of right, the same service benefits on par with the Government employees, Merely because such autonomous bodies might have adopted the Government service rules and/or in the Governing Council there may be a representative of the Government and/or merely because such institution is funded by the State/Central Government, employees of such autonomous bodies cannot, as a matter of right, claim parity with the state/central Government employees. This is more particularly, when the employees of such autonomous bodies are governed by their own Service Rules and service conditions. The state Government and the autonomous Board/Body cannot be put on par.

WALMI being an autonomous body, registered under the Societies Registration Act, its employees are governed by their own Service Rules and conditions, which specifically do not provide for any pensionary benefits, the Supreme Court concluded.

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Supreme Court’s judgment legally sound: senior lawyer Dr Lalit Bhasin

Speaking to The Leaflet, Dr Lalit Bhasin, a distinguished lawyer with almost 60 years of experience, specialising in labour laws, elucidated that the Constitution gives a special status to government employees, and there are specific Articles giving protection to the government employees (Articles 309311). Accordingly, such employees have a constitutional status. The employees of autonomous bodies set up independently and under various statutes are in a different category.

Further, he added that these employees also have a higher status than employees in the private sector for the reason that the service conditions of the former are governed by various Rules and Regulations which have a statutory flavour.

Agreeing with the Supreme Court’s judgement, he said that it recognises this essential distinction between government employees and employees of public sector undertakings or statutory bodies. It has been rightly held that the employees of public sector undertakings or autonomous bodies cannot claim the same service benefits which are enjoyed by government employees. This is because private sector employees do not have the same protection of service, particularly those who work in managerial, senior administrative or supervisory positions. Other employees who come under the “workmen” category do have protection with regard to service conditions and termination of employment under the labour laws applicable to these employees. The non-Workmen category of senior managerial employees, however, are simply governed by their contract of employment, and they cannot claim any benefits beyond those specified under their respective contracts of employment, Dr. Bhasin explained.

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Judiciary must stay clear of policy decisions: SC

The Supreme Court bench further held that the order passed by the Bombay High Court directing the state government to extend the pensionary benefits to the employees of WALMI is unsustainable, both in law and on facts.

Dr Lalit Bhasin explained that the Constitution gives a special status to government employeesEmployees of public sector undertakings or autonomous bodies cannot claim the same service benefits which are enjoyed by government employees. This is because private sector employees do not have the same protection of service, particularly those who work in managerial, senior administrative or supervisory positions. They are simply governed by their contract of employment, and they cannot claim any benefits beyond those specified under their respective contracts of employment.

Referring to its recent judgment in Punjab State Cooperative Milk Producers Federation Limited & Anr. vs. Balbir Kumar Walia & Ors., (2021) the Supreme court held: ”As per the settled proposition of law, the court should refrain from interfering with the policy decision, which might have a cascading effect and having financial implications. Whether to grant certain benefits to the employees or not should be left to the expert body and the undertakings and the court cannot interfere lightly. Granting of certain benefits may result in a cascading effect having adverse financial consequences.”

It concluded by advising the judiciary to not interfere in such policy decisions, as it is ultimately up to executive authorities and the society in question to come up with their policies regarding such matters.

(Ninad Parikh is a final year journalism student at Tata Institute of Social Sciences, and an intern with The Leaflet.)

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