THE STATE BANK OF INDIA & ORS. versus RAVINDRA NATH & ORS. on 12 February 2019

[2019] 2 S.C.R. 121

THE STATE BANK OF INDIA & ORS.

v.

RAVINDRA NATH & ORS.

(Civil Appeal No. 12367 of 2017)

FEBRUARY 12, 2019

[UDAY UMESH LALIT AND HEMANT GUPTA, JJ.]

State Bank of India Act, 1955: s.18 – Re-fixation of salary– Respondent joined the appellant bank in 1981 and on 24.6.2001,he was posted at Johannesburg as Manager on a salary of USD1965 per month but subject to change from time to time – In theletter of posting, there was a clause that salary as well as otherterms and conditions spelt out in the letter were subject to reviewand revision by the bank from time to time – On 16.1.2001, thesalary in respect of the respondent was re-fixed as USD 1300 andsame was subsequently revised to USD 1380 – The stand of thebank was that when the respondent was posted at Johannesburg,the salary was fixed on Consumer Price Index of 1992 on the basisof directives of the Working Group of the Standing Committee w.e.f1.1.1995 in the absence of the availability of Cost of Living Indexbut since the relevant data became available in March 2000, theWorking Group in its meeting held on 15.1.2001, refixed the salarybased on formula approved by the Standing Committee and thatthese recommendations of the Working Group were binding on allpublic sector banks in respect of the officers posted abroad – HighCourt held in favour of respondent on the ground that the respondentdid not have privity of contract with the Standing Committee on thebasis of which the salary was reduced and that the letter did notremotely suggest that the salary of USD 1965 was tentative – Onappeal, Held: The respondent as an Officer of the Bank is boundby the salary structure approved by the Bank for its Officers – Thedecision of the Standing Committee is a part of the decision-makingin respect of salary payable to the employees of the Banks – Theemployee of a Bank has no right that he should be associated withthe decision-making process in respect of the fixation of salary –However, if the question of reasonableness of salary arises, then inexercise of power of judicial review, the Court may examine thedecision-making process – In exercise of power of judicial review,there was no infirmity in the decision of Standing Committee taken

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Aon 15.01.2001 in pursuance to the direction of the Government ofIndia issued under s.18 of the Act – Since, the salary was fixed forall Officers of the Public Sector Banks in a non-discriminatorymanner keeping in view the Cost of Living Index, the High Courterred in law in setting aside the reduction in salary – There wasreasonable basis of reduction of salary – Moreover, there was noBpromise ever made to the respondent that his salary of US $ 1965shall remain unchanged during the period of his posting – In fact,it was categorically mentioned that the salary as well as perquisiteswere subject to change from time to time – Therefore, mere fact thatthe salary was changed subsequently, it will not confer any legallyCenforceable right in favour of the respondent to challenge the sameon the ground that the same is arbitrary or unjust.

Allowing the appeal, the Court

Conclusion

Allowing the appeal, the Court

HELD : 1. The relevant conditions in the letter of postingshowed that salary of US $ 1965 was not promised to be paid forDthe entire period of posting in Johannesburg. It was subject tochange either way that is increase or decrease. The Bank hadexplained that such salary of US $ 1965 was fixed in absence ofCost of Living Index on the basis of recommendations of theCommittee. Later, the Standing Committee was constituted inEexercise of the powers under Section 18 of the State Bank ofIndia Act, 1955 mandating that any change in future in the salariesand perquisites and other service conditions has to be affectedwith the prior approval of the Standing Committee. In view ofsuch directions, the appellant Bank framed service conditionsand allied matters. It was thereafter on 15.1.2001, theFWorking Group of the Standing Committee decided the salarypayable to the Officers of the Bank. Such salarystructure was meant for all Officers of Public Sector Banks postedabroad. Such recommendations were applicable innon-discriminatory manner to all Officers of the Public SectorBanks. [Paras 15, 16][128-F-G, 129-B-C]G

2. Though, certain representations were said to have beenmade by the Chief Executive Officer on behalf of the five Officersposted at Johannesburg but there was no communication thatthe Officers were finding it difficult to work on the basis of suchreduced salary. The respondent never offered to seekH

repatriation to India and in fact sought voluntary retirement ondepositing of Rs. 10,00,000/- for further stay in Johannesburg. Itshowed that there was no financial loss suffered by him on accountof reduction in salary, but actually, he found it lucrative to resignfrom the service of the Bank and to stay in Johannesburg afterpayment of substantial amount. [Para 17][129-C-E]

3. The salary was fixed in terms of directions of theGovernment of India, in respect of all Public Sector Banks keepingin view the Cost of Living Index in different countries and makingadjustments in the salaries according to the Cost of Living ofeach country. The Cost of Living in each country is separate anddistinct and such factors were taken into consideration while fixingthe salary on the basis of Bulletin of Statistics published by U.N.in March, 2000. The earlier fixation of salary for Johannesburgwas fixed by Working Group w.e.f. 01.01.1995 on the basis ofConsumer Price Index of 1992 as per International Financial,Statistics. The revised salary structure was not meant for anyparticular official but was applicable to all Officers of Public SectorBanks posted abroad. [Para 18][129-F-G]

4. The respondent as an Officer of the Bank is bound bythe salary structure approved by the Bank for its Officers. Thedecision of the Standing Committee is a part of the decision-making in respect of salary payable to the employees of theBanks. The employee of a Bank has no right that he should beassociated with the decision-making process in respect of thefixation of salary. However, if the question of reasonableness ofsalary arises, then in exercise of power of judicial review, theCourt may examine the decision-making process. In exercise ofpower of judicial review, there was no infirmity in the decision ofStanding Committee taken on 15.01.2001 in pursuance to thedirection of the Government of India issued under Section 18 ofthe Act. [Para 20][130-C-D]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 12367of 2017.

From the Judgment and Order dated 09.07.2014 of the HighCourt of Judicature at Bombay in Writ Petition No. 2457 of 2006.

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ANeeraj Kishan Kaul, Sr. Adv., Sanjay Kapur, Ms. Megha Karnwal,Bharat Gangadharan, Ramchandra Madan, Advs. for the Appellants.Subrat Birla, Subhash Chandra Birla, Advs. for the Respondents.The Judgment of the Court was delivered by HEMANT GUPTA, J.B

1. The challenge in the present appeal is to an Order passed bythe Division Bench of the High Court of Judicature at Bombay on09.07.2014, whereby the communication dated 16.01.2001 re-fixing thesalary of the respondent from 01.01.2001 was set aside.

C2. The respondent-writ petitioner before the High Court joinedthe appellant Bank in the year 1981. After almost nineteen years videletter dated 24.06.2000, he was posted at Johannesburg Branch (SouthAfrica) as Manager (Credit) as a Scale V Officer on a fixed salary ofUS $ 1965 (net) per month but subject to change from time to time.Apart from such salary, the respondent was granted various allowancesDincluding reimbursement of education expenses of the children, usage ofBank’s car, leave and reimbursement of medical expenses apart fromthe host of other allowances. The relevant clause in respect of salaryreads as under:

“1.1. A fixed salary US $ 1965 (net) per month subject to changeEfrom time to time will be paid to you abroad from the date ofyour reporting at the foreign office. Wherever taxes arepayable by you on account of salary and perquisites such taxeswill be reimbursed by the bank.”

3. There was also a condition that salary and terms and conditions Fas spelt out in the letter are subject to review and revision by the Bankfrom time to time. Clause 7.3 in this respect reads as under:

“7.3 Your salary as well as other terms and conditions spelt outin this letter are subject to review and revision by the bank,from time to time.”

4. It was on 16.01.2001, the salary in respect of the respondentwas re-fixed as US $ 1300 w.e.f. 01.01.2001. The same was subsequentlyrevised to US $ 1380 on 14.12.2001. It is the stand of the Bank thatwhen the respondent was sent to Johannesburg, salary was fixed onConsumer Price Index of 1992 on the basis of directives of the Working G

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STATE BANK OF INDIA v. RAVINDRA NATH[HEMANT GUPTA, J.]

Group of the Standing Committee w.e.f. 01.01.1995 in the absence ofavailability of Cost of Living Index. But since, the relevant data becameavailable in March 2000, the Working Group in its meeting held on15.01.2001, has re-fixed the salary on the basis of formula approved bythe Standing Committee.

5. The revised minimum net monthly salary in respect of ScaleI Officer was US $ 950 reduced from US $ 1615 per month, whereas, inrespect of Scale V Officer such as the respondent, the salary was fixedat US $ 1300 reduced from US $ 1965. The maximum salary in respectof TEG Sp. SC. II, was US $ 1900 reduced from US $ 2565. The saidcommunication reads as under:

REVISION OF SALARY WEF 01.01.2001

1. In the absence of availability of Cost of Living Indexdata at the material time salary for Johannesburg was fixed bythe Working Group w.e.f. 01.01.1995 on the basis of ConsumerPrice Index of 1992 (as per IMF Publication of September,1995) as available.

2. With the relevant data now available the Working Group inits meeting held on January 15, 2001 has re-fixed the salary onthe basis of the formula approved by the Standing Committee.The detailed salary levels for various grades with effect from01.01.2001 will be as under:

6. The stand of the Bank is that the recommendations of theWorking Group are binding on the Bank which are applicable to all PublicSector Banks, in respect of the Officers posted abroad. The reliance A

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Awas placed upon Section 18 of the State Bank of India Act, 1955[1] asalso the proceedings of the Standing Committee from time to time, thereference to which will be made subsequently.

7. The High Court in the impugned judgment held that therespondent-writ petitioner has no privity to contract with the StandingCommittee on the basis of which the salary was reduced. It has alsoBheld that the salary of the respondent has been reduced within threemonths which is unfair and arbitrary and that the letter dated 24.06.2000does not even remotely suggest that salary of US $ 1965 was tentative,nor the available information taken into consideration for fixing the salarywas shared with the respondent.C

8. The High Court did not accept the argument raised by therespondent of the equal pay for equal work for the reason that the Costof Living in the different countries is different, therefore the salary mustnecessarily be fixed keeping in mind various factors which vary fromcountry to country.D9. In the present appeal, the appellant refers to the constitution

9. In the present appeal, the appellant refers to the constitutionof a Committee by the Government of India in August 1981 for evolvinguniform guidelines on salaries and other terms applicable to Officers ofIndian Banks posted abroad. The Report of the Committee producedbefore this Court is on record. Some of the relevant extracts from theEReport read as under:

“12. The salary levels recommended by the committee forcountries for which a detailed study has been made are given inAnnexure-III. To facilitate comparison with the existing salarystructure, not only the gross salary recommended has been givenbut the net take home salary after taxes etc., has also been indicatedFseparately, as some of the banks have a practice of fixing thesalary levels on the basis of net take home pay. The salary modelrecommended broadly follows the level obtaining in the State Bank,determined as on 1979 and updated by building the cost of livingindicates for 1980 and 1981. This updating has been done on theGbasis of UK Cost and Living Index figure after making anallowance of 5 % for the accommodation factor as the officersstand insulated from increases in cent of accommodation.

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14. Before applying the revised model set of provisions conditionsoutlined in Annexure I and II, Individual banks should be asked toH1The Act work out the impact of the implementation of the standardizationscheme on each of its officers working overseas so as to ensurethat the adoption of the standardisation structures does not resultin either too large a benefit or sever curtailment of the existingemoluments. While the Committee has taken a broad view in thematter on the basis of the information supplied by the variousbanks, having regard to the limited number of officers workingabroad, an individualistic exercise as suggested could be done tominimize the problems that may arise on this score. It is, therefore,suggested that the revised set of a service conditions becommunicated to all the banks who have overseas offices, with arequest to them to advise the standing committee, the presentsalary and allowances pattern of each of the officers, the revisedsalary and allowances payable and the net difference. Based onthis detailed information, the standing committee may modify thesalary levels appropriately.”

10. It is, thereafter on 27.07.1982, the Government againcommunicated to Public Sector Banks that any change in future, in thesalaries, perquisites and other service conditions of Officers posted abroadmay be made in consultation with and with prior approval of the StandingCommittee constituted by the Government. The Standing Committeeconsists of Chairperson of four Public Sector Banks and Joint Secretaryin the Banking Division of the Government of India. It was in July, 1984,the appellant Bank framed service conditions and allied matters onpersonnel posted overseas.

11. The fixation of salary of the Officers posted in Johannesburg(South Africa), Botswana and Seychelles was considered by WorkingGroup of the Standing Committee in its meeting held on 15.01.2001. Inrespect of fixation of salary for the Officers at Johannesburg, the Costof Living Index was revised on the basis of Bulletin of Statistics publishedby U.N. in March, 2000 as 62, as compared to 100 of New York.Therefore, if the salary for Scale III Officers in New York is US $ 1773,then the salary for Scale III Officers in South Africa would be 62% thatis US $ 1099.26, say US $ 1100. On the basis of such criteria, the netmonthly salary of different grades of Officers was fixed as wascommunicated to the respondent on 16.01.2001.

12. The counter-affidavit filed by the respondent relies upon therepresentations submitted by Chief Executive Officer of the Appellant-Bank posted at Johannesburg Bank on 22.01.2001 that reduction would AB

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Acause extreme hardship to the Officers. Such grievance was repeatedsubsequently. It is also pointed out that the representations were notaccepted on 12.04.2004, whereas, the term of posting of the respondentcame to end in November, 2004. It is also stated in the affidavit of therespondent himself that he has taken voluntary retirement on 18.03.2005,after paying a sum of Rs. 10,00,000/- including payment of bond money.BIt is admitted on record that the respondent after taking voluntaryretirement on 18.03.2005 stayed in Johannesburg only, where he wasposted as an Officer of the Bank.

13. Learned counsel for the appellant argued that the High Courthas committed material illegality in holding that the salary communicatedCto the Officers on 24.06.2000, was not tentative. It is contended thatsuch finding is contrary to the letter dated 24.06.2000, wherein, whilecommunicating the salary of US $ 1965, it was categorically mentionedthat it is subject to change from time to time. Apart from the said fact,there was Clause 7.3 which is also to the effect that salary as well asDother terms and conditions spelt out in the letter are subject to reviewand revision by the Bank from time to time.

14. Mr. Kaul learned counsel for the appellant-Bank has pointedout that there was no alteration in the perquisites granted to the respondentwhich was to the tune of Rs. 1,60,000/- per month. It was only theEsalary component which was reduced on availability of the Cost of LivingIndex in March, 2000.

15. A perusal of relevant conditions as reproduced above showsthat salary of US $ 1965 was not promised to be paid for the entireperiod of posting in Johannesburg. It was subject to change either waythat is increase or decrease. The Bank has explained that such salary ofFUS $ 1965 was fixed in absence of Cost of Living Index on the basis ofrecommendations of the Committee. Later, the Standing Committee wasconstituted in exercise of the powers under Section 18 of the Actmandating that any change in future in the salaries and perquisites andother service conditions has to be affected with the prior approval of theGStanding Committee. Section 18 of the Act reads as under:

“18. Central Board to be guided by directions of CentralGovernment.—(1)In the discharge of its functions theState Bank shall be guided by such directions in matters ofpolicy involving public interest as the Central Government may,in consultation with the governor of the Reserve Bank and theHchairman of the State Bank, give to it.

(2) All directions shall be given by the Central governmentand, if any question arises whether a direction relates to amatter of policy involving public interest, the decision of theCentral Government thereon shall be final.”

16. It is in view of such directions that the appellant Bank framedservice conditions and allied matters. It is thereafter on 15.1.2001, theWorking Group of the Standing Committee decided the salary payableto the Officers of the Bank. Such salary structure is meant for all Officersof Public Sector Banks posted abroad. Such recommendations areapplicable in non-discriminatory manner to all Officers of the PublicSector Banks.

17. Though, certain representations are said to have been madeby the Chief Executive Officer on behalf of the five Officers posted atJohannesburg but there is no communication that the Officers are findingit difficult to work on the basis of such reduced salary. The salary wasreduced from the month of January, 2001, though, the respondent-writpetitioner has joined only on 21.09.2000. The respondent never offeredto seek repatriation to India and in fact sought voluntary retirement ondepositing of Rs. 10,00,000/- for further stay in Johannesburg. It showsthat there was no financial loss suffered by him on account of reductionin salary, but actually, he found it lucrative to resign from the service ofthe Bank and to stay in Johannesburg after payment of substantial amountof Rs. 10,00,000/-.

18. The salary has been fixed in terms of directions of theGovernment of India, in respect of all Public Sector Banks keeping inview the Cost of Living Index in different countries and makingadjustments in the salaries according to the Cost of Living of eachcountry. The Cost of Living in each country is separate and distinct andsuch factors have been taken into consideration while fixing the salaryon the basis of Bulletin of Statistics published by U.N. in March, 2000.The earlier fixation of salary for Johannesburg was fixed by WorkingGroup w.e.f. 01.01.1995 on the basis of Consumer Price Index of 1992as per International Financial, Statistics (IMF Publication - September,1995). The revised salary structure is not meant for any particular officialbut is applicable to all Officers of Public Sector Banks posted abroad.

19. The argument of the learned counsel for the respondent isthat when the respondent was deputed in June, 2001 the Cost of LivingIndex as in March, 2000 was available, therefore, there was no reason A

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Ato fix the salary on the basis of Consumer Price Index of the year 1995.It has come on record that the Bulletin of Statistics published by theU.N. in March, 2000 was considered by the Standing Committee in itsmeeting held on 15.01.2001. The respondent was informed of his reducedsalary the very next day. Therefore, the Cost of Living Index on thebasis of March, 2000 Report was considered in January, 2001. SuchBdecision cannot be said to be arbitrary only because it was taken afterabout nine months of the publication of the data.

20. The reasoning given by the High Court that there is no privityof contract of the respondent-writ petitioner with the Standing Committeeis not tenable. The respondent-writ petitioner as an Officer of the BankCis bound by the salary structure approved by the Bank for its Officers.The decision of the Standing Committee is a part of the decision-makingin respect of salary payable to the employees of the Banks. The employeeof a Bank has no right that he should be associated with the decision-making process in respect of the fixation of salary. However, if theDquestion of reasonableness of salary arises, then in exercise of power ofjudicial review, the Court may examine the decision-making process. Inexercise of power of judicial review, we do not find any infirmity in thedecision of Standing Committee taken on 15.01.2001 in pursuance to thedirection of the Government of India issued under Section 18 of the Act.

21. Since, the salary has been fixed for all Officers of the PublicESector Banks in a non-discriminatory manner keeping in view the Costof Living Index, we find that the High Court erred in law in setting asidethe reduction in salary. There is reasonable basis of reduction of salary.Still further there was no promise ever made to the respondent-writpetitioner that his salary of US $ 1965 shall remain unchanged during theFperiod of his posting. In fact, as reproduced above, it was categoricallymentioned that the salary as well as perquisites are subject to changefrom time to time. Therefore, mere fact that the salary was changedsubsequently, it will not confer any legally enforceable right in favour ofthe respondent to challenge the same on the ground that the same isarbitrary or unjust.G

22. The present appeal is allowed. The order passed by theBombay High Court is set aside and the Writ Petition is dismissed withno order as to costs.

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Devika Gujral

Appeal allowed.