Read Judgment: ODISHA STATE FINANCIAL CORPORATION v. ODISHA STATE FINANCIAL CORPORATION EMPLOYEES UNION & ORS 

Tulip Kanth

New Delhi, April 6, 2022: The Supreme Court has held that the recommendations made by the Board of Directors to implement the Orissa Revised Scales of Pay Rules, 2008 to the employees of the Odisha State Financial Corporation were not available for its implementation as such recommendations were neither approved by the Administrative Department nor the Finance Department of the Government of Orissa.

The Division Bench of Justice Ajay Rastogi and Justice Sanjiv Khanna was hearing an appeal preferred by the Odisha State Financial Corporation assailing the judgment of the Division Bench of the High Court directing the Corporation to pay the arrear benefits under the revised scale of pay from April 1, 2012 in terms of the decision of the Board of Directors of the Corporation.

Herein, the revised scales of pay were introduced for the State Government employees in Odisha. There was a demand for revision of pay as per recommendations of 6th Central Pay Commission by the State Public Sector Undertakings(PSUs). Accordingly, the Government of Orissa, consequent upon revision of scale of pay of whole time State Government employees as per recommendations of 6th Central Pay Commission by introduction of Orissa Revised Scales of Pay Rules, 2008 considered the revision of scale of pay of State PSUs w.e.f. January 1, 2006 subject to fulfillment of the eligibility criteria as per ORSP Rules.

The procedure to be adopted in such cases was that the payment of revised pay scale had to be meted out by PSUs from its internal resources and the PSU was not to depend upon the Government for any financial assistance. The eligible PSUs had to first seek approval of the Board of Directors regarding fitment of scale of pay of their employees on the basis of ORSP Rules, 2008 and, thereafter, the suitability of the said PSU would have to be examined by the concerned Administrative Department which, in the instant case, was Micro Small and Medium Enterprises(MSME). This Department would examine the suitability on the basis of the conditions fulfilled after getting prior approval of the Finance Department for sanction of the same with modification.

However, in this case, the recommendations made by the Committee of the Corporation were approved by the Board of Directors but the administrative department did not approve the same.On such disapproval, a writ petition came to be preferred by the employees Union before the Single Judge under Article 226 of the Constitution of India.

The  Single Judge ordered the Corporation to pay the arrear benefits under revised scale of pay. Later, when the Corporation filed an Appeal, the same was dismissed by the Division Bench of the High Court.

The Division Bench said, “..the revised scale of pay under ORSP Rules, 2008 could not have been implemented without being approved by the Administrative Department and the Department of Finance, Government of Orissa. Thus, the directions of the learned Single Judge under Order dated 10th April, 2018 in itself were not sustainable.”

According to the Apex Court, the recommendations were neither approved by the Administrative Department nor the Finance Department, Government of Orissa. In the given circumstances, the recommendations made by the Corporation/Board of Directors to implement the ORSP Rules, 2008 to the employees of the Corporation were not available for its implementation and this was completely overlooked by the Division Bench of the High Court while dismissing the appeal filed by the present appellant.

The Bench also clarified that one of the condition of eligibility as being resolved by the Government of Orissa in its Resolution for taking decision to implement ORSP Rules, 2008 was to keep in view the previous balance sheets of the undertakings which must show cumulative profit at least for the last consecutive two years and the material placed on record justify that the balance sheet of the Corporation reflects accumulated financial losses in the preceding years.

The Bench said, “..in our considered view, the recommendations made by the Corporation in introducing the ORSP Rules, 2008 for the employees of the Corporation in the absence of being approved by the Administrative Department, i.e., MSME, in the instant case, and by the Finance Department were not available for implementation and the finding which has been recorded by the learned Single Judge and affirmed in appeal, in our considered view, is not sustainable and deserves to be set aside.”

Quashing the order of the Division Bench, the Top Court allowed the Appeal.

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