Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICITION

CIVIL APPEAL NO. 4194 OF 2003

Chairman, Magadh Gramin Bank & Anr. …Appellants

Versus

Madhya Bihar Gramin Bank & Ors. …Respondents

(With C.A. No.4483 of 2003)

J U D G M E N T

T.S. THAKUR, J.

1. These  appeals  by  special  leave  arise  out  of  an  order  

passed by the High Court of Judicature at Patna whereby LPA  

No.84 of 2003 filed by the appellant-bank has been dismissed  

in limine and the order passed by a Single Bench of that Court  

allowing  Writ  Petitions  No.7367  of  2001  and  5924  of  2002  

affirmed.  The  controversy  in  the  appeals  lies  in  a  narrow  

compass but before we come to the precise issue that falls for

our consideration, we may briefly set out the facts giving rise  

to  the  proceedings  before  the  High  Court  and  the  present  

appeals before us.

2. In  South  Malabar  Gramin  Bank  Vs. Coordination  

Committee  of  South  Malabar  Gramin  Bank  Employees  

Union (2001 (1) SCC 101) this Court, inter alia, held that the  

Central Government was vested with the power to determine  

the pay structure of the employees working in the Regional  

Rural Banks in accordance with second proviso to sub-section  

(1) of Section 17 of RRB Act, and that it should try to maintain  

parity between the pay structure of the employees of the RRBs  

and those working in the nationalized commercial banks. As a  

sequel to the said direction the Government of India, Ministry  

of Finance, Department of Economic Affairs (Banking Division)  

issued  notification  dated  11th April,  2001,  inter  alia,  

determining  the  pay  scales  of  the  employees  of  RRBs  and  

granting to them the benefit of 6th and 7th Bipartite Settlements  

and Officers Wage Revision w.e.f. 1st November, 1992 and 1st  

November,  1997  respectively.  The  notification  attempted  to  

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bring at par the pay scales of the RRB employees and those of  

their counterparts in other nationalized banks.  It was then  

followed  by  a  letter  dated  25th April,  2001,  defining  the  

expressions “Basic Pay and Dearness Allowance” used in the  

notification. The clarification was to the effect that “Basic Pay  

and  the  Dearness  Allowance”  would  mean  “Basic  Pay,  

Dearness Pay, Dearness Allowances, ad hoc or additional D.A.;  

interim relief or any other allowance which form part of pay or  

D.A.”  

3. Pursuant  to  the  above,  the  appellant-bank  issued  a  

circular  dated  16th May,  2001,  giving  to  its  employees  the  

benefit of what is known as “computer increment” as per 6th  

and 7th Bipartite Settlements and Officers Wage Revision. The  

circular  envisaged  that  each  staff  member  shall  file  an  

undertaking  that  he/she  shall  refund  in  lump  the  excess  

amount drawn by them in case a contrary decision is received  

from the  Government of  India/NABARD sponsor bank. This  

circular  was some time later  recalled by an order dated 5th  

June,  2001  and  the  benefit  of  computer  increment  and  

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automatic switch over from scale II to scale III granted to the  

employees of the appellant-bank withdrawn. The order further  

directed that the amount already paid shall be recovered from  

the employees concerned.  

4. Aggrieved by the  order aforementioned,  the employees-

association filed Writ Petition No.7367 of 2001 challenging the  

validity of the withdrawal order on several grounds. While the  

said writ petition was still pending, this Court passed an order  

dated  7th March,  2002  in  All  India  Regional  Rural  Bank  

Officers Federation and Ors.  Vs. Govt.  of India and Ors.  

2002  (3)  SCC  554  whereby  paragraphs  2  and  3  of  the  

notification  dated  11th April,  2001  were  quashed  and  the  

Government directed to issue a fresh notification for proper  

implementation  of  the  judgment  of  this  Court.  The  

Government  of  India  accordingly  appears  to  have  examined  

the  matter  and issued  a  fresh  notification  dated  17th April,  

2002, para 5 whereof provides as under:

“All  other  allowances  should  be  immediately  revised,  if  not  already  revised  pursuant  to  

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order  dated  11.4.2001 by  respective  sponsor  banks after negotiations with RRB employees.”

    5. In  the  writ  petition  filed  by  the  association  before  the  

High  Court,  the  Bank filed  an  affidavit  in  reply,  inter  alia,  

stating  that  the  matter  relating  to  the  grant  of  “computer  

increment”, “computer allowance” and “automatic switchover  

from scale  II  to  scale  III”  was pending  consideration  of  the  

Government of India which is the authority competent under  

Section 17 of the RRB Act. A learned Single Judge of the High  

Court  of  Judicature  at  Patna,  however,  allowed  the  Writ  

Petition Nos.7367 and 5924 of 2002 by a common order dated  

17th December, 2002 and directed the appellant-bank to act  

upon  the  decision  dated  17th April,  2002,  taken  by  the  

Government  of  India,  Ministry  of  Finance,  Department  of  

Economic Affairs (Banking Division) in its letter and spirit and  

to pay to the  employees the benefits  admissible  to them in  

accordance  with  law.  The  said  direction  proceeded  on  the  

premise that the decision of  the Government of  India dated  

17th April,  2002,  particularly,  clause  (5)  of  the  notification  

issued by the Government envisaged grant of all  allowances  

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admissible to the employees of the nationalised banks to those  

serving in the RRBs. A Letters Patent Appeal preferred against  

the  said  order,  having  been  dismissed  summarily,  the  

appellant-bank has filed appeal to this Court by special leave  

as already noticed above.

6. Appearing  for  the  appellant-bank,  Mr.  Dhruv  Mehta,  

learned counsel, submitted that so far as grant of automatic  

switch over from scale II to scale III was concerned, the issue  

stood finally  resolved by the Government and NABARD who  

have now taken a decision to extend the facility of automatic  

switch over to the employees working in the RRB w.e.f. 16th  

December,  2002.  In support  of  his  submissions,  Mr.  Mehta  

drew our attention to a letter dated 11th April, 2002 addressed  

by  NABARD to  the  Government  of  India  suggesting  certain  

modalities  and conditions for  the  grant  of  automatic  switch  

over  facility  to  the  officers  of  RRBs  and  order  dated  6th  

January,  2003  issued  by  the  said  bank  pursuant  to  the  

decision taken by the Government of India on the subject.  A  

careful  reading  of  the  said  order  would  show  that  the  

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Government of India and NABARD have agreed to the grant of  

automatic switch over from scale II to scale III to the officers of  

RRBs  w.e.f.  16th December,  2002  subject  to  the  conditions  

stipulated in the said order.  Mr.  Mehta argued,  and in our  

opinion rightly so, that the facility of automatic switch over  

from scale  II  to  scale  III  shall  stand granted to  the  officers  

w.e.f. 16th December, 2002 subject to the conditions stipulated  

in the said order and that the directions issued by the High  

Court can subject to that modification be affirmed.   

7. Mr. Rakesh Dwivedi,  learned senior counsel,  appearing  

for  the  respondents-writ  petitioners  were  agreeable  to  the  

disposal  of  these  appeals  subject  to  the  condition  that  the  

payment already made to the employees shall not be recovered  

from them for the period earlier to 16th December, 2002.  We  

order accordingly.

8. The only other question that had fallen for consideration  

before the High Court and that need be noticed by us relates  

to the grant of computer increment to the employees of the  

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RRBs. Mr. Tripathi, Additional Solicitor General, appearing for  

the Government of India, has placed before us a compilation of  

documents comprising a letter dated 6th January, 2003 from  

the Government of India to NABARD approving the consensus  

of  the  bank as set  out  in NABARD’s  letter  dated 23rd July,  

2002.  A perusal of the said letter would show that the grant of  

computer  increment  to  the  employees/officers  of  RBBs  was  

not favoured by the banks and the NABARD which consensus  

was agreed to by the Government of India thereby effectively  

declining  the  grant  of  computer  increment  to  the  

employees/officers  of  the  RRB.  It  was  contended  by  Mr.  

Tripathi  and  Mr.  Mehta  that  the  Government  of  India  had  

taken a conscious decision on the subject leaving no manner  

of doubt relating to the admissibility of computer increment to  

the employees/officers of RRBs.  

9. The material placed on record was not disputed by Mr.  

Dwivedi.  Mr. Dwivedi fairly conceded that the Government’s  

decision, as is evident from the documents placed on record,  

does indeed deny the said benefit to the employees of RRBs. It  

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was, however, argued by the learned counsel that the decision  

of the Government of India was arbitrary and ought to be set  

aside  by  permitting  the  respondents  to  amend  the  writ  

petitions suitably or by remanding the matter back to the High  

Court. We are not impressed by that submission. We say so  

because the legality of the decision taken by the Government  

was not in question before the High Court in the writ petitions  

filed by the respondents. We, therefore, see no reason why we  

should allow the employees to challenge the said decision in  

the present proceedings when the High Court did not have an  

occasion to examine the matter in the writ petitions heard and  

disposed of by it. Since the Government’s decision denies the  

benefit  of  computer  increments  the  direction  issued  by  the  

learned  Single  Judge  and upheld  by  the  Division  Bench in  

appeal to the extent requiring the respondent-bank to grant  

the said benefit  cannot be sustained.  We,  however,  make it  

clear  that  this  order  shall  not  prevent  the  respondent-

association  or  any  member  thereof  from  challenging  in  

appropriate proceedings the validity of the decision taken by  

the Government of India on all such grounds as may be open  

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to them but subject to all just exceptions including delay and  

laches. These appeals are accordingly allowed in part and the  

orders passed by the High Court to the extent indicated above  

set aside. The parties are left to bear their own costs.          

……………………………J. (MARKANDEY KATJU)

……………………………J. (T.S. THAKUR)

New Delhi February 17, 2010

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