EASTERN COALFIELDS LTD. & ORS. v. PRATIVA BISWAS & ORS.

The following Order of the Court was passed :

ORDER I. The question involved in the instant appeal is the fixation of the G salary of the respondents, upon their absorption in the Eastern Coalfields Limited (hereinafter referred to as "ECL"). It is one of the subsidiary companies of the Coal India Limited (for short "CIL").

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2Copy pinpoint2. The re~pondents were earlier employed in the Central Hospital, Kalla, which was under Coal Mines Welfare Organisation, set up and maintained by Ministry of Steel, Mines & Coal, Coal Department of the Government of India. Under the orders of the Government of India, the hospital in queStion was transferred to the subsidiary company of Coal India Ltd. w.e.f. 1.8.1985, and the communication in this regard had B been issued on 24.12.1986.

3Copy pinpoint3. Services of the respondents had been transferred to the Eastern Coalfields Ltd., and they had opted for their absorption with the ECL. There was a meeting on 25.7.1986, between the Joint Secretary to the c Government ofllndia and an official of Southern Coalfields Ltd. It was decided that fitrnent would be offered to the transferred employees in NCWA scales, which does not entail any drop in their total emoluments, and that uniforin procedure in this behalf should be followed. Option form was prepated, and options had been invited in the Form (Annexure P3) dated 24.12.1986. As the pay scale already prevailed, the very pay D scale for technical, clerical hospital staff already existed and the employees' salaries were to be fixed in respective grades in the corresponding scales of pay. It was also mentioned in the Office Order dated 9.1.1987, that protection to be provided to the salary also.

4Copy pinpoint4. Circular had been issued by CIL that on absorption of employees of Coal Mines Labour Welfare Organisation in Eastern Coalfields Ltd. (ECL) that is to take place from 1.1.1987 basic pay and dearness allowance of the opted employees until 31" December 1986 was to be taken into consideration for their fixation in an appropriate Scale and calculation of benefits. The Additional Chief Medical Officer, Central F Hospital, has t;tken the decision, that pay was to be fixed in the grade and pay scales of NCWA-IV (Four) and would be given with effect from L 1.1987. The fitment has to be made in such a way that there was no loss of the employees so far as pay protection was concerned.

The respondents filed a writ petition on 6.1.1983, WP No.2663/ G 1993 in which they had prayed for quashing of the decision dated 21.1.1992; it was, inter alia, also prayed not to reduce the salary which was paid to theln, other emoluments were also claimed. The writ petition had been decided on 29.8.2002, in which the following order had been passed: H

EASTERN.COALFIELDS LTD. & ORS. v. PRATIVA BISWAS 89 & ORS.

"Mr. Majumdar learned counsel appearing for the respondent authority, however, submits that the petitioners have given solitary instance and there had been no categorical assertion on the part of the petitioners that there has been any reduction in pay in respect of other petitioners. Mr. Majumdar learned counsel, however, has not been able to show that other petitioners' pay got increased with effect from 1.1.1987 or at least their pays were protected. In my view when the petitioners were enjoying the Central Government scale of pay and when they were converted and fitted in the Coal India pay scale, their pay, in any event, could not be reduced, in as much as, pay protection was assured to them. After fitment now if it is found that ultimately lesser amount is to be received on or after 1" January 1987 that shortfall must be made, need by way of a personal adjustment.

· The writ petition succeeds in part.

The Eastern Coal Fields Ltd. is directed to verify each and every individual case of the petitioners and if it is found that after fitment in any of the cases lesser amount in effect was being received by the concerned employees on or after 01.01.1987, personal adjustment with retrospective effect from 01.01.1987 must be given in accordance with the Coal India guideline contained in the office order dated 9'' January 1987.

Such benefit must be extended to the writ petitioners within a period of six weeks from the date of communication of this order.

The Writ petition is disposed of." F

5Copy pinpoint5. Thereafter, fitment was done, and for that, an order has been placed on record, reflected in P-8, dated 20/21 May 2003, in which fixation has been shown in the following manner:

"We have considered your case and considering the relevant items, G we have come to a conclusion that no more further benefit is payable to you as we have; given you much more salary in comparison to what you were getting salary during the period of C.M.L.W.O. The details are as follows: -

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A --- lii!lsi~~ "

DA Total Pay Basic F.D.A S.DA 10% I Total ' ~% 011 8o/o fixcrl as en @l.795 Att. pay I rA i 3 l.l2.86 1.1.87 Bonus Rs. 1Rs. Rs. Rs. Rs. Rs. Rs. Rs. I 1950.00 [78.00 2028.00 1834 186.00 3292 183.40 ~ 2236.63 ! I !'

D B ' i 1

R• Rs. 115600 2106.00 -- J_____LJ i . Yours faithfully, c Sdi- Chief Medical Officer VC CH, Kalla Copy to: Dy. C.P. M L&IR, ECL HQ

I TRUE COPY !" D

6Copy pinpoint6. It is apparent from the aforesaid fixation that the basic salary had been reduc~d to Rs.1834.00 as on 1.1.1987, whereas, the basic salary was Rs. l QSOI- as on 31.12.86; it was by way of adding the dearness allowance and bcimus, that the total emoluments added up to be Rs.2236.63, E whereas, the earlier drawn salary inclusive of dearness allowance was Rs.2028/-; but the fact remains, that basic salary had been fixed on a lower side. It was clearly in contravention of the order passed by the Single Bench, in the previous Writ Application, on 29.8.2002. Thercaftor, the respondents had preferred fresh writ petition, and the Single Bench dismissed the same. However, the Division Bench has allowed the appeal preferred by the employees, and hence passed the following order:- "The respondent authorities failed to appreciate that the optees including the appellants/writ petitioners herein did not exercise option of absorption in the Coal companies notwithstanding the fact that their existing service benefits including the pensionary benefits might be affected ultimately. The respondent authorities herein all through represented before the optees that they will not suffer any prejudice with regard to their service benefits. H Therefor¢, by reducing the basic pay of the optees, namely the

EASTERN COALFIELDS LTD. & ORS. v. PRATIVA BISWAS 91 &ORS.

appellants herein, the respondent authorities have acted in breach A of the specific assurance given to the optees before exercising option. For the aforementioned reasons, we cannot approve the decisions of the learned Single Judge by affirming the judgment and order under appeal and the same are, therefore, set aside. B The respondent authorities herein are directed to refix the scale of pay of the writ petitioners/appellants without reducing the basic pay with retrospective effect from the date of their joining the Coal companies after exercising option and also pay the admissible financial benefits including the arrears. The aforesaid exercise c should be done by the concerned respondents at an early date but positively within a period of four weeks from the date of communication of this order. With the aforesaid directions, this appeal stands allowed."

7Copy pinpoint7. Shri Kalyan Bandopadhyay, learned senior counsel appearing for the appellants, urged that what they assured was protection for the total emoluments; the fixation of the pay has been done in the manner that the total emoluments which had been drawn as on 1.1.1987, were more than the one drawn by the employees as on 31.12.1986. Learned senior counsel has taken us to the options form, to contend that protection was for the overall emoluments, and not to the pay. Pay scales could vary, once the pay scales that prevailed in ECL had been opted for as per the option exercised. Thus, the basic salary could have been reduced; however, that was taken care of by clubbing other emoluments. Thus, the decision rendered by the Court in the first round of litigation had been duly complied with. The Single Bench had rightly dismissed the writ application. Writ-appeal has been allowed on the wrong perception offitment required to be made. Learned senior counsel has also relied upon the decisions of this Court in High Court Employees Welfare Organisation vs. State of West Bengal 2007 (3) SCC 637, and State Bank of India vs. K.B. Upadhyay and Ors. 2003(11 )SCC 646. G

8Copy pinpoint8. Shri Ashok Bhan learned senior counsel appearing on behalf of the respondents has contended that the basic principle of fitment of absorption had been violated. The salary that was drawn was to be protected; it has not been protected. As a matter of fact, while fixing the salary the Single Bench judgment and order in the first round of ii

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A litigation, decided on 29.8.2002, had been violated, by issuing the communication dated 20/21.5.2003. The Division Bench has rightly undone the injnstice that was done. Learned senior counsel has also relied upon the decision of this Court in K. Gopinathan vs. Union of India 1992(4) SCC 70 l, and has also relied upon the option form in which option was invited for grant of the fitmcnt. The option clearly B indicated that the salary was to be protected and overall emoluments also could not h~ve been less than as drawn on 31.12.1986.

9Copy pinpoint9. Record of note of discussion leading to taking over of the hospitals given by Coal Mines Labour Welfare Organisation due to the repeal effect of The Coal Mines Labour Welfare Fund (Repeal) Act, c 1986, it was declded that terms and conditions of transfer of the staff of CMWO would be as under:

"(B) Terms and conditions of transfer of staff ofCMWO:

CIL shoultl ensure that the fitment to be offered to the transferred employees in NCWA scales does not entail any drop in their total emoluments. All subsidiaries and SCCL should follow uniform procedure in this behalf. Standard detailed options paper should be prepared jointly by CIL and SCCL clearly specifying the terms especially for those who may choose to retain Government pay scales. The draft should then be sent to Government for clearance."

l 0. It was clearly indicated that CIL would ensure, that the fitment that was offered would not entail any drop in employee's total emoluments. E1Poluments are different than the basic salary. Fitment F in the pay scale was not to entail any drop in total emoluments on absorption. Protection of basic pay is different connotation than the other emoluments that arc paid. Even the emoluments were to be protected as decided in the aforesaid meeting.

11Copy pinpoint11. Coming to the option form in which options were invited on G 24.12.1986 which gave two options; the first option was an option to be absorbed in the company's pay scales and terms and conditions, and another option was to be absorbed in the company but retention of the government pay scales and revision in the ongoing pay scales and service conditions including pcnsionary benefits. The option No.1 and No.2 are extracted hereunder: H

EASTERN COALFIELDS LTD. & ORS. v. PRATIVA BISWAS 93 &ORS.

OptionNo.l A

(a) Employees may opt for pay structure and terms & conditions of service as applicable to the employees governed by National Coal Wage Agreement as a package in lieu of their existing remuneration, pay scales and terms & conditions of service including retirement benefit as would be applicable on re~ision of B pay scales with effect from l'' January, 1987, or from the subsequent date from which the revision takes place.

(b) Such employees who opt for Company's pay scales, terms & conditions etc. will continue to draw the same pay and allowances as admissible to them under 3"' Pay Commission till 31" December, C 1985, and thereafter under 4'' pay Commission till 31" December, 1986, or subsequent date from which revision of pay scales for the Coal Mining Industry takes place. However, their pay will be refixed in the revised scales of pay from l ''January 1987 or from the subsequent date from which general revision takes place for the coal mining workers.

(c) On option, the employees, shall stand absorbed in the Company's service with effect from 1.8.1985 and will become numbers of Coal Mines Provident Fund from the date ofabsorption.

(d) Such of the optees will continue to draw their emoluments under 3'd Pay Commission and 4th pay Commission till their pay is refixed in the manner provided in Annexure 'N under revised scales of pay. The refixation as mentioned in para 'b' will be subject to adjustment. F ( e) The total emoluments drawn by such optees as on 31" December 1986 will, however, be protected and they will be placed in the Company's appropriate revised scales of pay/ grade.

(t) The General terms and conditions of such of the optees, in brief, is pfaced at Annexure 'A'. G Option No. 2

(a) Employees on absorption who do not opt for Company's pay scales and terms and conditions of service will retain their existing pay scales and service conditions including pensionary benefits H

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A as admi$sible in Government Service as on 31" July' 85 immedia1ely prior to absorption. (b) Such of the optees will also be governed by their existing rules in the matter of overtime, leave, leave travel concession. (c) In the matter of discipline, medical facilities and working hours B and holidays, they will be governed by the Rules of the Company at their place of posting. (d) Such of the optees will, however not be entitled to any career growth opportunities at par with those optees opting for Company's pay scales. c (e) Such pf the optees opting for Govt. pensionary benefits will have to b¢come members of the Public Provident Fund with effect from 1.8.85. (f) Superannuation of such optees will remain 58 years of age.

12Copy pinpoint12. It is apparent from the option No. I that the employees who opt for the company's pay scales, terms and conditions, will continue to draw the same pay and allowance as admissible to them under the 3'' Pay Commission till 31.12.1985 and thereafter the 4ili Pay Commission tiil 3 l" December. l 986 or subsequent date from which the revision of pay scales for the Coal Mining Industry takes place. Mention of a subsequent date for revision of pay scales for the Coal Mining Industry clearly indicates that even when the option was exercised to be absorbed in the company's pay scales, the pay which was drawn earlier was required to be protected till revision. However, the basic pay was to be protected in the revised pay scales from I. l. l 987 or from the subsequent date from which general revision takes place for the coal-mining workers. We are concerned in the instant case with the fitment on absorption. As per option No. I clause (b ), the basic salary that was being drawn clearly had to be prote~ted, when the option for absorption in company's pay scales had been applied for. When we consider the emolument part also, a separate protection was given in the Option No. I itself, in clause(e), i.e. that the total emoluments which were being drawn by such incumbents, as on 31.12. l 986 would, in any case, be protected, and that they would l!>e placed in the company's appropriate pay scales/grades. So, there was a <!lual protection, one for the basic salary, and another for the emoluments. The ECL has wrongly confused both the issues by H

EASTERN COALFIELDS LTD. & ORS. v. PRATIVA BISWAS 95 & ORS.

overall taking the fixation by the inclusion of the emoluments. Salary A was required to be protected, as well as the total emoluments that were being drawn; both could not have been reduced than what was being drawn as on 31.12.1986. Though we are not concerned with Option No.2, such protection was available on continuance in the government pay scale. B

13Copy pinpoint13. The Office Order dated 9 .1.1987 has also been referred to on behalf the employer with respect to the terms and conditions of service in the subsidiaries of CIL in regard to the replacement of existing terms & conditions of services of Coal Mines Welfare Organisation. There was a clarification made with respect to Option No.2 with that we are not concerned. Thus, wrong reliance placed on Option No.2 resulted in c the observation made by the single Bench that protection was only provided for the total emoluments of the employees and that shall be protected at the time of the re-fixation of the pay in the revised corresponding pay under NCWA-IV with effect from 1. l.1987. As already mentioned that Option No.I had been exercised in the instant case. Even D in Option No.2 basic pay as well as the emoluments continued to be as drawn.

14Copy pinpoint14. As a matter of fact, in the instant case, we need not have dilated on various issues as the matter stood concluded by the judgment and order passed by the single Bench in the previous round oflitigation. E The Single Bench vide order dated 26.08 2002 clearly ordered that the pay could not have been reduced as pay protection was assured to them and shortfall be made good if needed by way of personal adjustment.

15Copy pinpoint15. When the pay scales were converted to and paid in the Coal India Limited, respondents' pay drawn could not have been reduced, inasmuch as pay protection had been assured to them and in view of aforesaid order that attained finality and pay fixation was to be made in the manner that total emoluments drawn were not less. After fitment, if it was found that lesser amount was to be received as salary on or after

1. l.1987, it was required that the shortfall was made good by way of personal adjustment(s). Accordingly, protection was to be made on the fitment by grant of personal pay meaning thereby the pay could not have been reduced on the fitment in the ECL pay scales. The order 26.8 2002 was to be complied with in pith and substance; rather it was violated by the aforesaid method of fixation. As apparent from the aforesaid H

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A figure of fitment, pertaining to Prathiva Biswas, Senior Staff Nurse, Central Hospitill, Kalla. The fitment that was made on 2012 l May 2003 was clearly in v'olation of the order as well as the provisions of option form and even subject to conditions on which the absorption had been made. Thus, in our opinion, the Division Bench has rightly set aside the order passed by the Single Bench by the order impugned; it was not the B total emoluments that matters. Salary protection was to be ensured, it could not have been reduced apart from emoluments. There was dual protection; that was unfortunately ignored and overlooked by the ECL in spite of the cleatr and categorical order passed by the Single Bench in the writ application of 1993, which order had attained finality, and had c not been questioned by any of the parties.

16Copy pinpoint16. Learn~d senior counsel for the respondent has relied upon the decision of this Court in K. Gopinathan vs. Union of India (supra), in which this Court has considered the concept of deduction in basic pay. One of the Assistant Sub Inspectors of the Police of the State had been absorbed in CBI and on absorption; the basic pay was reduced, though his overall pay had become higher as a deputationist. As the basic pay had been reduced, the Tribunal observed that the dearness allowance under the Central scale was higher, out of which a portion had been merged with the pay and, therefore, by thus adding the merged portion to the basic pay, the total emoluments became higher than the basic pay under the State Government. This Court rejected the reasoning adopted by the Tribunal and held that such reasoning was not acceptable. The basic pay could not have been reduced by absorption. This Court has observed: "8. We are afraid we cannot subscribe to this reasoning. While F upholding the view of Central Administrative Tribunal, Principal Bench, New Delhi in Original Application No.1680 of l 989 in SLP(C)N o.2 l 96 of 1992, we have pointed out how the basic pay cannot be reduced. The same principle will be applicable to this case as well. Accordingly, the appeal is allowed. However, there G shall be no order as to costs."

17Copy pinpoint17. Shri Kalyan Bandopadhyay, learned senior counsel for the appellant, has relied upon the decision of this Court in State Bank of India & Ors. vs. K.P. Subbaiah & Ors. (supra); the relevant portion is extracted hereunder: H

EASTERN COALFIELDS LTD. & ORS. v. PRATIVA BISWAS 97 & ORS.

"22. As noted above, a pay scale has different stages starting with initial pay and ending with ceiling pay. Each stage in the scale is commonly referred to as basic pay. The emoluments which an employee gets is not only the basic pay at a particular stage but also the additional amounts to which he is entitled as allowances e.g. DA etc. Therefore, when a question of pay protection comes, the basic feature is that the fitment or fixation of pay in a particular scale must be such as to ensure that the total emoluments are not reduced.

25. There was no intention to protect any particular scale of pay. C That being the position, the demand of a corresponding pay scale has no rationale. The High Court was, therefore, clearly in error in holding th~t the scale of pay was the determinative factor. The direction that while refixing the pay and DA the total pay fixed when the petitioner entered into the Bank's service has to be protected within the corresponding scale of pay cannot be maintained and is indefensible. It is apparent from the aforesaid decision that this Court has considered the facts of the particular case before it, and culled out that there was no intention to protect a particular scale of pay. The scale of pay was not a detenninative factor. This Court, in the aforesaid context, observed, that while re-fixing the pay and dearness allowance, the direction that the total pay fixed, at the time when the petitioner entered into the service be protected with the corresponding scale of pay, could not be maintained. There is no dispute with the proposition, however, in the instant case, the pay scales, as they prevailed in the ECL, had been opted; but the dispute arose about the fixation of the pay in that scale. Pay was fixed lower than what had been drawn earlier, i.e. the one which had prevailed in the erstwhile employment. In the instant case, option clearly intended that the pay was to be protected; and the emoluments as well. Thus, the intention in the instant case was otherwise and fitment has not been done correctly, as such, basic pay have to be revised.

18Copy pinpoint18. Reliance has also been placed by the appellants on a decision of High Court Employees Welfare Association vs. State of West Bengal 2007 (3) SCC 637 in which this Court has observed: H

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A "26. A revision of pay scales has to be followed by fitment in the revised pay scales, in the case of all employees who arc receiving payments under the old pay scales. Such fitment in the revised pay scales will have to ensure pay protection so that the total emoluments are not reduced on fitment in the revised pay scales. The problem of fitmcnt is noticed in B Samar~ditya Pal's 'Service Law' (Second Edition, Page 277) thus: "A pay scale has different stages. It starts with what is normally known as initial pay and ends with a ceiling. Each stage in the scale is represented by what is commonly referred to as basic c pay. The emoluments which an employee takes home is not only the basic pay at a particular stage but also other admissible allowances viz. dearness allowance, house rent allowance etc. When the existing pay scale (Rs. l ,000-100-1,500-200-5,000) is revised (Rs.2,000-200-3,000-400-10,000) the question of D fitment arises in this form. At which stage of the new pay scale is an employee who is at the stage of Rs.1,300 in the existing scale apd is drawing a total emolument ofRs.3,000 (including all allowances) on the day immediately preceding the date on which the revised pay scale becomes effective to be fitted?"

E Therefore, a formula or principle offitment is provided either in the pay revision Rules or by a separate order. Such a formula or principle for fitment is not reqnired in the case of new recruits as they start at the lowest stage of the applicable pay scale or at such stage as stated in the terms of appointment. Ruic 7 of the State Pay Rules relating to fixation of initial pay in the revised scale of pay thus applies only to existing employees who have been extended the benefit of a revised pay scale. The words 'fixation1ofinitial pay' in Ruic 7 of State Pay Rules, refers to the first pay fixed in the revised scale, on fitment. Therefore the contention of the petitioner that Rule 7 of State Pay Rules is intended to apply only to new recruits and the sole purpose of paras 9 and l 0 of Minutes is to apply the principle of Rule 7 of State Pay Rules to existing employees is untenable." The decision does not espouse the cause of the appellants, as this Court has considered in the aforesaid dictum the fitment when the revised pay scale is made applicable and when a new entrant comes, new entrant H

EASTERN COALFIELDS LTD. & ORS. v. PRATNA BISWAS 99 & ORS.

starts at the lowest stage of the applicable pay scale and gets the benefit of the pay scale. This Court has observed that the employees who are receiving under the old pay scale, fitment in the revised pay scale has to be made in the manner so that total emolument was not reduced in the revised pay scale. In our opinion that would not mean the pay can be reduced. This court considered by said decision only the question to provide the protection to emoluments.

19Copy pinpoint19. Thus, the reduction of basic pay drawn in the pay scale was wholly arbitrary and violates the order of the Single Bench dated 26.08.2002, thus we find no merits in the appeal and we dismiss the same. Let the benefits be extended forthwith to all the employees who were absorbed, whether continuing today or have been retired and to c the legal representatives of deceased employees, within a period of two months and compliance be reported to this Court. No costs.

Ankit Gyan Appeal dismissed.