IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE TWENTY FOURTH DAY OF APRIL TWO THOUSAND AND NINE PRESENT THE HON'BLE MR JUSTICE B.SESHASAYANA REDDY WRIT PETITION NO : 17292 of 2007 Between: 1 T.Ravi Mohan Rao S/o.T.Suryanarayana The Andhra Pradesh State Cooperative Bank Ltd., Head Office, Hyderabad. 2 M.Vidyasagar Reddy S/o.late M.Mohan Reddy The Andhra Pradesh State Cooperative Bank Ltd., Jubilee Hills Branch, Hyderabad. 3 R.Gunasundari Bai W/o.late T.Karan Singh The Andhra Pradesh State Cooperative Bank Ltd., Barkatpura Branch, Hyderabad. 4 B.Doraswamy S/o.B.Hussainappa The Andhra Pradesh State Cooperative Bank Ltd., Baghlingampally Branch, Hyderabad. 5 Vasa Sai Baba S/o.V.C.V.Ramana The Andhra Pradesh State Cooperative Bank Ltd., Champapet Branch, Hyderabad. 6 S.Leela Kumari W/o.M.V.Narasimha Rao The Andhra Pradesh State Cooperative Bank Ltd., Head Office, Hyderabad. 7 K.Annarao S/o.S.P.K.Ramakrishna Rao The Andhra Pradesh State Cooperative Bank Ltd., Head Office, Hyderabad. 8 C.S.Sainath Rao S/o.C.S.Ananda Rao The Andhra Pradesh State Cooperative Bank Ltd., Ameerpet Branch, Hyderabad. ..... PETITIONERS AND 1 Andhra Pradesh State Cooperative Bank Ltd., Rep. by its Managing Director, Troop Bazar, Hyderabad - 500 012. 2 The Deputy General Manager, Andhra Pradesh State Cooperative Bank Ltd., Troop Bazar, Hyderabad - 500 012. .....RESPONDENTS Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court may be pleased to to issue an appropriate writ or order or direction more particularly one in the nature of Writ of Mandamus declaring the proceedings of the 2nd respondent in Memo No. Admn.A/F.358, dt. 19.7.2007 is arbitrary, illegal and violative of ARticle 14, 16 and 21 of the Constitution of India and principles of natural justice, and consequently direct the respondents to fix the pay scales of the petitioners in the Special Promotion Post (Manager) i.e., 7100-340/21 - 14240-380/2- 15000+2 stagnation increments of Rs.380/- each triennially. SPAN 24 stages on par with their juniors and pass any such other order or orders. Counsel for the Petitioner:MR.K.GOVIND Counsel for the Respondent No.: MR.A.H.RAMA KRISHNA RAO The Court made the following : O R D E R: The petitioners were appointed as Subordinate staff in erstwhile Andhra Pradesh Cooperative Central Agricultural Development Bank. They were promoted as Staff Assistants in the year 1986. They were given Special Grade Promotion scale and thereafter Special Promotion Post Scale. The Government of Andhra Pradesh approved the scheme of re-organisation of Cooperative Delivery system (single window service scheme) in G.O.Ms.No.15 Food and Agriculture (Cooperative III) Department, dated 9.1.1987. Consequently, Andhra Pradesh Cooperative Central Agricultural and Development Bank (for short APCCADB) was merged with A.P. State Cooperative Bank (for short APCOB) w.e.f. 30.4.1984. The Government constituted a committee to finalize the service regulations, cadre equation and other service conditions of employees of APCCADB and APCOB. The committee submitted a report, which formed the basis for fixing interse seniority of Staff Assistant, Steno Typist/Typists as on 20.6.1999. While so, in the revised pay scales 2005, special grade promotion and special promotion post scales have been abolished w.e.f. 1.11.1997. For regular and special grade promotion staff assistants and special promotion post staff assistants, two different types of pay scales have been given effect from 1.11.1987. In the revised pay scale, the special grade pay scale has been taken into account in the case of employees of APCCADB and whereas in the case of staff assistants who are appointed by direct recruitment and transfer from Primary Agricultural Development Bank revised pay scales have been fixed on the basis of special promotion post scale. Thus, there is a discrimination between the employees of APCOB and APCCADB. 2. It is the contention of the petitioners that they have been given step- motherly treatment. In the affidavit filed in support of the writ petition certain names of the employees of APCCADB have been stated as to how they have been discriminated in awarding revised pay scale. For better appreciation I may refer paras 5 and 6 of the writ affidavit and they read as under: “ 5. I submit that in the revised pay scale 2005, the Special Promotion post scales have been abolished w.e.f., 1.11.1997. For regular and Special Grade Promotion Staff Assistants and Special Promotion Post Staff Assistant, two different types of new pay scales have been given effect to with effect from 1.11.1997. While pay fixation in the revised pay scale the special grade promotion pay scale has been taken into account in the case of employees of A.P. Cooperative Central Agricultural Development Bank, whereas in the case of Staff Assistants who are appointed by direct recruitment and transferred from Primary Agricultural Development Bank revised pay scales have been fixed on the basis of special Promotion Post. Thus, the respondents have been given step motherly treatment to us in not fixing the pay scales on the basis of special promotion post. For instance T.Ravi Mohan Rao who was promoted as Staff Assistant in A.P.C.C.A.D.B Service is at Sl.No.200 in the interse seniority list, his basic pay as on 30.10.1997 was Rs.5270/- and his pay was fixed Rs.7920/-, whereas C.Suresh who was appointed as Staff Assistant on 14.2.1986 is shown at Sl.No.208 in the seniority list his basic pay was Rs.4670/- and in the revised pay scale his pay was fixed at Rs.7540/-. Similarly, R.Raghuiramulu was appointed as Staff Assistant on 5.11.1986 is at Sl.No.240 in the seniority list, his basic pay as on 31.10.1997 was Rs.4495/- and in the revised pay scale his pay was fixed at Rs.7160/-. However, they were given special promotion post in the year 2001 and their pay was fixed at Rs.10160/-, whereas Ravi Mohan Rao was not given special promotion post presently the basic pay of T.Ravi Mohan Rao, Suresh, Raghuramulu as on 1.9.2005 is Rs.9740/-, Rs.11,520/-, Rs.11,520/- respectively. Thus, juniors are drawing more salary than seniors. In not fixing the same scale to us is not only arbitrary, but also discriminatory and violative of Articles 14, 16 and 21 of the Constitution of India. 6. I submit that before revision of pay all of us are in the pay scale of 3970- 175-4670-200-5470-230-6620-250-7630-275-8720 i.e. Special Promotion Post (Manager). After the implementation of revised pay scales their scale was fixed in Special Promotion Post (Manager) 7100-340-21-14240-380/2-15000 + 2 stagnation increments of Rs.380 each triannually. Whereas our scale was fixed as Staff Assistant Regular and SGP(LT) scale 3020-135/3-3425-225/3-4100- 320/4-5380-340/3-6400-380/4-680/1-8600-380/1-8980+5 stagnation increments of Rs.380/- at a frequency of 3 years. In the year 2001 we were all appointed in special promotional post. The authorities ought to have fixed our pay in the revised pay scale special Promotion Post (Manager) but not staff Assistant regular and Special Grade Promotion (L.T) scale. It is also not out of place to mention that the employees who were completed 15 years of service prior to 1997 were given Special Promotion Post (Manager) Scale. But in our case the authorities lower down the scale from special promotion post to special grade promotion. We were regularly appointed in special promotion post in the year 2001 and under the guise of implementation of revised pay scale fixing the pay in the special grade promotion not only a reversion, but also affects monitory benefit. Thus, the authorities have committed grave irregularity and even go by to all canons of law. In other words, the employees who were appointed to Special Promotion post from Subordinate staff prior to 1997 are enjoying the benefit of special promotion post and who are appointed by way of direct recruitment and also enjoying the benefit special promotion post even though they were appointed later and juniors to us. Looking from any angle the action of the respondents cannot stand for judicial scrutiny. As our pay scale was lower down without notice by wrong fixation we made representation to the respondents on 10.7.2006, 22.2.2007 and 16.5.2007 the respondents have rejected out request on the ground that any anomalies from the present scale II IBM pattern will not be entertained on 19.7.2007.” 3. The petitioners submitted representation to 1st respondent for removal of anomalies in their pay scale. Their representations came to be rejected on the ground that the settlement arrived at between the bank and the employees does not entitle any of the employees to question wage revision under the memorandum of settlement vide Memo dated 19.7.2007. The said rejection proceeding is under challenge in this writ petition. 4. The respondents have filed counter affidavit resisting the claim of the petitioners. It is stated in the counter affidavit that APSCB Employees Association (LT wing) representing the LT wing employees (erstwhile APCCADB) have signed the memorandum of settlement under section 18(1) of the I.D. Act, 1947, on 23.3.2005 and the said memorandum of settlement provides for four types of pay fixation in the revised pay scales w.e.f. 1.11.1997. First category of pay fixation is for direct recruitee staff Assistants who are in the regular scle as on 1.11.1997. Second category of pay fixation is for direct recruitee Staff Assistants who are in the SGP scale as on 1.11.1997. Third category of pay fixation is for Staff Assistants (both direct recruitee and promotee Staff Assistants) who are in the SPP scale as on 1.11.1997 and the fourth category of pay fixation is for promotee Staff Assistants who completed 15 years of service after 1.11.1997 and drawing SPP scale. The APCOB staff Service Regulations and Settlement with the APCOB staff Union representing ST wing had provided for automatic promotion to the Staff Assistant, according to which, any staff Assistant who is not promoted through the selection process shall be eligible if he has received no promotion during his career to an automatic promotion as an officer on completion of 15 years of service. In other words, a promotee Staff Assistant who had already received promotions in his career is not eligible for this benefit. The Bank in lieu of Automatic Promotion extended Officer scale (Manager scale) to the direct recruitee Staff Assistants on completion of 15 years of service but not to the promotee Staff Assistants. The said provision was extended to the L.T wing (EPCCADB employees) in terms of the memorandum of settlement dated 23.3.2005 entered into by the APSCB Employees Association which represented L.T. Wing employees. The said memorandum of settlement is binding on the employees. The extension of Manager scale fitment formula adopted to ST wing staff Assistants on completion of 15 years of service under automatic promotion scheme to the L.T. staff Assistants coming under Category I and II above after 1.11.1997 will be notionally given as and when they complete 15 years of service in Staff Assistants cadre, but financial benefit will be allowed w.e.f. 1.11.2002 only. All the Employees Associations in the Bank vide their letter dated 15.6.2007 have informed that they are fully satisfied on the implementation of the Memorandum of Settlement entered into with the Management under the I.D. Act, 1947. In view of the memorandum of settlement, the petitioners are estopped from claiming any further benefits. 5. Heard Sri K.Govind, learned counsel appearing for the petitioners and Sri D.Krishna Murthy, learned Standing Counsel appearing for the respondents. 6. Learned counsel appearing for the petitioners submits that the action of the respondents in not allowing special promotion posts scale to the petitioners in the revised pay scales is arbitrary and illegal and violative of Articles 14, 16 and 21 of the Constitution of India. In elaborating his arguments, he contends that the persons working as Staff Assistants in the respondents Corporation have came from three different feeder categories – Firstly, by way of direct recruitment; Secondly, by way of transfer from Agricultural Development Banks, and thirdly, by way of promotion from eligible clerks, Bradma Operators/ Telephone Operators and in the pre-revised pay scale, special grade promotion and special promotion post scales have been given uniformly to the staff assistants irrespective of feeder category from which they came. But in fixing the revised pay scales, a discriminatory treatment has been given to the petitioners, who have been came to the post of staff assistants by way of promotion from the lower cadre and therefore, they questioned the discriminatory treatment as unjustified. He would also contend that the management of the respondents Corporation have not considered the representation submitted by the petitioners objectively and rejected the same under proceedings dated 19.07.2007 mechanically without application of mind and thus the proceedings impugned in the writ petition are liable to be set aside with a specific direction to the respondents to fix the pay scales of the petitioners in the Special Promotion Post (Manager) i.e. 7100-340/21-14240-380/2-15000+2 stagnation increments of Rs.380/- each triennially on par with their juniors. A further contention has been advanced by the learned counsel appearing for the petitioners that in the revised pay scales juniors to the petitioners are getting more than the petitioners. He took me to the seniority list dated 20.06.1999 to convince that one C.Suresh, who is figuring at S.No.208, is getting more pay than the petitioners, one of them is figuring at 200 in the said list. He would also contend that any service conditions of the petitioners, who have come from APCCADB, cannot be to their disadvantage as per the Andhra Pradesh Single Window Co- operative Credit Structure at State Level Act, 1994 (Act 14 of 1994). Much emphasis has been laid on Section 2 of Act 14 of 1994. Proviso to Section 2 reads as hereunder: “Provided that the staff so transferred shall continue to be governed by the respective service regulations applicable to them immediately before such transfer until new service regulations are framed by the Successor Bank with the approval of the Commissioner of Co-operation and Registrar of Co-operative Societies. Provided further that the service rendered by the staff so transferred in the said Bank upto its abolition shall be deemed to be the service under the Successor Bank and they shall be entitled to counter that service for all purpose including increments, leave, provident fund and gratuity. Provided also that their existing terms and conditions of service shall not be varied to their disadvantage.” In support of his submissions, reliance has been placed on the decisions of the Supreme Court in Union of India v. Dineshan K.K.[1]; Workmen of M/s.Delhi Cloth and General Mills Ltd. v. The Management of M/s.Delhi Cloth and General Mills Ltd[2]; Haryana State Minor Irrigation Tubewells Corporation v. G.S.Uppal[3], Er.Gurcharan Singh Grewal vs. Punjab State Electricity Board[4], and the decision of the High Court of Kerala in Keltron Controls v. Workmen of Keltron Controls & Ors.[5]. 7. I n Keltron Controls’s case (4 supra), a question came up for consideration with regard to enforceability of the settlement, which has been arrived at between the employer and workmen. Since the settlement has not been sent to the government, it has been held that the said settlement was not enforceable under law. For better understanding, I deem it appropriate to refer paras.5 and 6 of the cited judgment, which read as hereunder: 5. Even after entering such a finding that the settlement was not enforceable under law, the Tribunal directed the management to comply with the terms of the settlement which was not enforceable by law. The above approach made by the Tribunal was totally inappropriate and without any jurisdiction. Hence the direction issued to the management for regularisation of the employees in pursuance to an unenforceable settlement is liable to be set aside. 6. The learned counsel for the unions submitted that the settlement was arrived at between the management and the unions, though the statutory formalities had not been complied with, yet it was enforceable under law being a continuation of the earlier settlement. The above terms regarding the regularisation of the employees was a new settlement and it was not part of an earlier settlement and as such the above argument cannot be accepted. Being an independent settlement not complying with the statutory formalities, it cannot be enforced under the provisions of the Industrial Disputes Act. Hence the employees are not entitled to the protection of the above settlement and OP 30857/1999 was liable to be dismissed.” The respondents Corporation stated in the counter-affidavit that the Person-in-Charge of the Bank approved proposal and resolved to authorize the Managing Director to enter into settlements with Unions/Associations and implement the revised pay scales and allowances after approval of the Commissioner of Cooperative and Registrar of Cooperative Societies. It is further stated in the counter- affidavit that the Commissioner of Cooperative and Registrar of Cooperative Societies vide proceedings No.4307/05 CR I[c], dated 07.02.2005 had accorded permission for the proposal to the bank in accordance with statutory requirement of Section 116-C(1) of the APCS Act, 1964. Therefore, the contention of the learned counsel appearing for the petitioners that the memorandums of settlement have not been sent to the Government as provided under Section 2(p) of the Industrial Disputes Act, 1947 has no substance. In which case, the decision of the Kerala High Court, which has been relied on by the learned counsel appearing for the petitioner, has no application to the facts of the case on hand. 8. In Union of India v. Dineshan KK’s case (1 supra), the dispute was with regard to fixation of initial pay. Whereas, coming to the facts of the case on hand, the dispute is not with regard to fixation of initial pay and instead it is with regard to grant of special promotion post scale. In Haryana State Minor Irrigation Tubewells Corporation’s case (3 supra), the dispute was with regard to disparity of revision of pay scales between the employees of the Corporation and the employees, who are brought on deputation. Para.24 of the cited judgment needs to be noted and it is thus: “24. The plea of the appellants that the corporation is running under losses and it cannot meet the financial burden on account of revision of scales of pay has been rejected by the High Court and, in our view, rightly so. Whatever may be the factual position, there appears to be no basis for the action of the appellants in denying the claim of revision of pay scales to the respondents. If the government feels that the Corporation is running into losses, measures of economy, avoidance of frequent writing off of dues, reduction of posts or repatriating deputationists may provide the possible solution to the problem. Be that as it may, such a contention may not be available to the appellants in the light of the principle enunciated by this Court in M. M. R. Khan v. Union of India [JT 1990 (3) SC 1 ; 1990 Supp. SCC 191] and Indian Overseas Bank v. I. O. B. Staff Canteen Workers' Union [JT 2000 (4) SC 503 ; 2000 (4) SCC 245]. However, so long as the posts do exist and are manned, there appears to be no justification for granting the respondents a scale of pay lower than that sanctioned for those employees who are brought on deputation. In fact, the sequence of events, discussed above, clearly shows that the employees of the Corporation have been treated at par with those in Government at the time of revision of scales of pay on every occasion. It is an admitted position that the scales of pay were initially revised w. e. f. April 1, 1979 and thereafter on January 1, 1986. On both these occasions, the pay scales of the employees of the Corporation were treated and equated at par with those in Government. It is thus an established fact that both were similarly situated. Thereafter, nothing appears to have happened which may justify the differential treatment. Thus, the Corporation cannot put forth financial loss as a ground only with regard to a limited category of employees. It cannot be said that the Corporation is financially sound insofar granting of revised pay scales to other employees, but finds financial constraints only when it comes to dealing with the respondents, who are similarly placed in the same category. Having regard to the well reasoned judgment of the division Bench upholding the judgment and order of the learned Single Judge, we are of the view that the impugned judgment warrants no interference inasmuch as no illegality, infirmity or error of jurisdiction could be shown before us.” Therefore, both the cited cases have no application to the facts of the case on hand. 9. In Workmen of M/s.Delhi Cloth and General Mills Ltd.’s case (2 supra), the Supreme Court in para.13 observed as hereunder: “13. The respondent's learned Advocate in reply obliquely suggested in this connection that the Management and the Union were free to arrive at a settlement of their dispute and if they agreed to do so then the agreement could not but be held to be binding. We do not think the Management and the Union can, when a dispute is referred to the Conciliation Officer, claim absolute freedom of contract to arrive at a settlement in all respects binding on all workmen, to which no objection whatsoever can ever be raised by the workmen feeling aggrieved. The question of a valid and binding settlement in such circumstances is, in our opinion, governed by the statute and the rules made thereunder. Reliance was next placed on Section 18 (1) to support the binding character of the settlement. This Ss. for its proper construction must be read with the other Ss. and the relevant rules, in the light of the definition of 'settlement' as contained in Section 2 (p) of the Industrial Disputes Act. 'settlement' as defined therein means settlement arrived at in the course of conciliation proceeding and includes a written agreement between the employer and workmen arrived at otherwise than in the course of conciliation proceeding where such agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to the appropriate government and the Conciliation Officer. In the light of these provisions we do not think that Section 18 (1) vests in the Management and the Union unfettered freedom to settle the dispute as they please and clothe it with a binding effect on all workmen or even on all member workmen of the Union. The settlement has to be in compliance with the statutory provisions.” In the above referred case the workmen specifically pleaded that he did not authorize the two persons who entered into settlement on his behalf. Coming to the facts of the case on hand, it is not the case of the petitioners that the union has no authorization to enter into settlement with the management with regard to the pay scale of their cadre. Therefore, the cited case has no application to the facts of the case on hand. 10. Learned Standing Counsel appearing for the respondents contends that settlement as provided under Section 18(1) of the I.D. Act has been arrived at after due deliberation, and therefore, it is binding on the petitioners as well as the respondents. 11. The issue involved in this writ petition is whether the petitioners are entitled to question the terms of memorandum of settlement dated 23.03.2005 by filing writ petition invoking the jurisdiction under Article 226 of the Constitution of India. 12. Section 18 of the I.D. Act enacts an exception to the ordinary law of contract, namely that an agreement can be binding on and can be enforced only against those persons who are parties to it. In doing so it gives effect to the principle of collective bargaining, which is made applicable to the industrial disputes. Settlement between employer and workmen would be binding on all workers whether they were members of the Union or not. Agreement signed by the President and Secretary of the Union is valid and binding on parties by virtue of Sections 18(1) and 19(2) of the I.D. Act. 13. Indisputably, memorandum of settlement is signed by the representatives of the Union to which the petitioners belong. It is not the case of the petitioners that the persons who signed in the memorandum