LPA No. 1311 of 2011 [1] IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH LPA No. 1311 of 2011 (O&M) Date of Decision: 02.08.2011 Haryana Financial Coroporation, Chandigarh through its Deputy General Manager ..Appellant Versus Deva Singh, Law Officer and others ..Respondents CORAM: HON'BLE MR. JUSTICE M.M.KUMAR, HON'BLE MR. JUSTICE GURDEV SINGH, Present : Mr. Kamal Sehgal, Advocate, for the appellant. 1. Whether to be referred to the Reporters or not ? 2. Whether the judgment should be reported in the Digest? **** M.M.KUMAR, .J. 1. The instant appeal under Clause X of the Letters Patent filed by the Haryana Financial Corporation through its officer is directed against the judgment dated 26.11.2010 rendered by the learned Single Judge holding that once the pay scales concerning the post of the Legal Assistant working in the Corporation are equated to that of Assistant District Attorney, the Law Officer to that of Deputy District Attorney and the Deputy Senior Manager (Law) is equated with that of District Attorney in the year 1979, then there was no escape from the conclusion that for the revision of pay scale granted LPA No. 1311 of 2011 [2] to the equated post by the Government in 1988 would also enure to the benefit of the Legal Assistant Law Officer and the Deputy Senior Manager (Law) who have been working in the Corporation. It is appropriate to notice that the learned Single Judge has interpreted the provisions of Section 39 of the State Financial Corporations Act, 1951 (for brevity '1951 Act') to conclude that the Corporation is not bound by the direction issued by the respondent-State of Haryana. The pay scales of the writ petitioners-respondents were equated by the Board of Directors of the Corporation in its meeting held on 30.03.1979 (Annexure P-1) and then no approval of the Government was considered necessary. Accordingly, the pay scales of all the Law Officers [Legal Assistant, Law Officer and Deputy Senior Manager (Law)] working in the Corporation were equated with those of the Law Officers working with the Government. The orders were implemented as is evident from the perusal of the minutes of meeting dated 15.10.1979 (Annexure P-2) and the Office Order No. 148 dated 28.02.1980 (Annexure P-3). Even in respect of revision of pay scales w.e.f. 01.01.1986, the same was given on the same pattern and the approval by the State Government was then duly accorded. However, there was further revision in the pay scales of the Law Officers in 1988 working with the State Government which resulted in the demands of revision of their pay scales by the Law Officers working in the Corporation so that the pay scales are brought at par. In that regard, a representation was made by one Shri Baljit Issar, Legal Assistant, working in the Corporation which has been rejected vide order dated 28.09.1989. The learned Single Judge has rejected the LPA No. 1311 of 2011 [3] contention raised by the appellant as well as the respondent-State of Haryana holding that under Section 39 of the 1951 Act the State Government could issue instructions to the Corporation only with respect to the financial business being transacted by the Corporation. It has also been held that in the matter relating to revision of pay scales of the employees of the Corporation, the State Government has no right to interfere as the Corporation is an independent body. The view of the learned Single Judge emerges from the perusal of paras No. 16, 17, 18 and 19 of the impugned judgment which reads as under:- “16. The 1st respondent has issued an instruction to all the heads of departments of Haryana with respect to the revision of pay scales of employees of Marketing Boards/Marketing Committees and other Public Sector Undertakings specifically instructing them to send all proposals for revision of pay scales to the Financial Department for clearance. 17. Under Section 39 of the State Financial Corporations Act, 1951, the State Government can issue an instruction to the Financial Corporation only with respect to the financial business being transacted by the Financial Corporation. That is the reason why it has been specifically enumerated under Section 39 of the Act that any instruction that is flowed from the State Government on financial matters shall be preceded by an advice given by the Development Bank. The “Development Bank” as defined under Section 2(aa) means the Industrial Development Bank of India. The Industrial Development Bank of India would have nothing to do with the revision of pay scales of the employees of the Financial Corporation. It is concerned with the strategies to be adopted by the Financial Corporation with regard to its financial business LPA No. 1311 of 2011 [4] transactions. Therefore, a matter relating to revision of pay of the employees of the Financial Corporation cannot be construed as a policy decision which requires the guidance of the State Government after obtaining an advice from the Industrial Development Bank of India. 18. The Haryana Financial Corporation is an independent body which manages its affairs in terms of Section 9 of the Act. The pay structure of the employees and their service conditions are regulated by the State Financial Corporation invoking its power under Section 23 of the said Act. The State Government has noting to do with the regulation of the pay of the employees of the Financial Corporation or the revision of pay of its employees. 19. It appears that the State Government has unnecessarily poked its nose into the affairs of the Haryana Financial Corporation with respect to the revision of pay of its employees. The 1st respondent has no authority under the State Financial Corporations Act, 1951 to instruct the Haryana Financial Corporation with respect to the revision of pay of its employees.” 2. We have heard learned counsel for the appellant at a considerable length 3. Learned counsel for the appellant has argued that the Corporation is bound by the direction issued by the State Government. However, we asked the learned counsel that even if it is assumed for the sake of argument, is there any possibility of declining the relief of equivalent pay scale to the Law Officers working in the Corporation. Mr. Sehgal, learned counsel for the Corporation has submitted that the pay scales concerning the Law Officers working in the Corporation could be varied if there was a reorganization of the LPA No. 1311 of 2011 [5] department resulting in enactment of the new Rules and defining of their duties afresh. 4. Having heard the learned counsel for the appellant we are of the view that if the directions issued by the State Government are considered to be binding even then the decision of the State Government could not be set aside on the ground that it is arbitrary and violative of Articles 14 and 16(1) of the Constitution. The Corporation has equated the post of the Legal Assistant with that of the Assistant District Attorney working in the Government Departments. Likewise, the post of Law Officer has been equated with the post of Deputy District Attorney and the Deputy Senior Manager (Law) has been equated with that of District Attorney. The aforesaid order became effective after the 97th Board Meeting Agenda Item No. 97.10. The thinking of the Corporation is understood from the minutes which is reflected in the following two paras:- “2. The organizational chart of the Haryana Government's Law Department has also been studied & seen. It has been observed that the legal Assistants in the Government were placed in the scale of ` 350-25-500-EB-30-350 with a special pay of ` 75/-. The Government has since charged the designation of the Legal Assistants to that of the Assistant Districts Attorney. Since the Government is giving a higher grade as such the Corporation cannot expect to get qualified and experienced candidates for the post of Legal Assistants in a lower scale. Also the grade of the Deputy District Attorney he is promoted from the post of Assistant District Attorney after 5 years experience is ` 350- 25-500-EB-30-590-30-830-EB-35-900 with a minimum start of ` 450/- plus a special pay of ` 100/-. The District Attorney has been placed by the LPA No. 1311 of 2011 [6] Government in the scale of ` 700-50-1000-EB-50- 1250 (a scale given by the Corporation to Deputy Senior Manager) with a special pay of ` 150/- P.M. 3. To bring the Corporation's staff in the legal cell at par with the Government and in order to a ttract suitable candidate for the post of Legal Assistants in the Corporation it is proposed that the post of Legal Assistants equated to that of Assistant District Attorney Law Officers be equated with that of Deputy District Attorney and the Deputy Senior Manager (Law) be equated with that of District Attorney.” 5. The aforesaid decision has been implemented vide Office Order No. 148 dated 28.02.1980 (Annexure P-3). It is also not disputed that the Government has accorded approval to the revision of the pay scales granted w.e.f. 01.01.1986 as would be evident from the decision taken by the Board of Directors of the Corporation in its 162nd meeting held on 19.8.1987. The State Government has approved the revised pay scales which were granted to all the 'Law Officers' working in the Corporation. The dispute arose only in respect of a small revision given to the officers in 1988 working in the Government and the refusal of the same to the Law Officers working in the Corporation. The question which arise for consideration is whether the State Government could reject the proposal sent by the Corporation by a cryptic and conjectural order. The proposal was sent by the Corporation vide letter dated 04.10.1988 (Annexure P-9) and the same has been rejected vide letter dated 2.8.1989 (Annexure P-10) with the following observation:- “ Para No.1:- Reference your letter No. HFC/ESTT/88/24068 dated 4.10.1988. Para No.2 :- Your proposal regarding revision of LPA No. 1311 of 2011 [7] pay scales of Law Officers and Legal Assistants to ` 2000-3500 and ` 1640-2900 respectively has been considered and rejected.” 6. Even the individual representation made by one Shri Baljit Issar, Legal Assistant, working in the Corporation has met the same fate. Assuming that the State Government has the power to issue directions in pursuance of Section 39 of the 1951 Act, the question would be whether such a power can be exercised arbitrarily and by passing a cryptic order. 7. We are of the considered view that the State Government cannot refuse to grant revision of pay scales once the equation of the posts and pay scales accorded by the Corporation in respect of its officers has been accepted by the State Government itself. It was in the 97th Board Meeting that such a proposal was accepted and thereafter it was implemented which would be evident from the Office Order No. 148 dated 28.02.1980 (Annexure P-3). Even the State Government has accorded approval to the revised pay scales w.e.f. 01.01.1986 as is clear from the decision taken by the Board of Directors in 162nd meeting held on 19.8.1987 (Annexure P-6). Therefore, for all intends and purposes the post of Legal Assistant stand equated to that of Assistant District Attorney; the post of Law Officer stand equated with that of Deputy District Attorney and the post of Deputy Senior Manager (Law) stand equated with the post of District Attorney. In other words, whenever there is a revision of pay scales in the cadre of Assistant District Attorney, Deputy District Attorney and the District Attorney working with the State Government, it would result into automatic revision in the pay scales LPA No. 1311 of 2011 [8] of the Legal Assistants, Law Officers and the Deputy Senior Managers (Law) working in the Corporation. Therefore, the State Government could not have declined the approval and the proposal was liable to be accepted. The rejection of proposal would result into violation of Articles 14 and 16(1) of the Constitution because otherwise equal would be treated unequally which is impermissible in law. For the aforesaid proposition we place reliance on a judgment of this Court rendered in Dr. Sukhdev Singh and others V. The State of Punjab and another, 1991(2) SLR (Pb&HR) 336. In that case the State Government has equated the post of Veterinary Assistant Surgeon for the purpose of pay scales with that of PCMS Class-II Doctors. When the Medical Officers and the Dental Surgeons who were working as PCMS Class-II were given the revision of pay scales, similar revision was not extended to the Veterinary Assistant Surgeons. As a consequence they approached this Court and succeeded in securing the relief as is evident from the reading of para No.3 of the judgment which is as under:- “When replies to the writ petitions are required to be submitted by responsible Officers of the State, it is expected that they would disclose the facts clearly, correctly and honestly and not to conceal the same. In the correspondence which was in the file maintained by the office of Animal Husbandry, there was a reference to such an order passed by the Government equating the pay scales of the two services. However, when replies were filed by the Secretary/Joint Secretary to Government, Punjab, Animal Husbandry Department, copy of the aforesaid order was not produced. If at that stage, an enquiry had been made from the Finance Department, who had issued order allowing pay LPA No. 1311 of 2011 [9] scale of 400-1100 to the Veterinary Assistant Surgeons, copy of the order of the Finance Minister on the basis of which the pay scale was issued, could have been obtained and filed in Court. The Government having failed to do so, when persisted by a direction to the Finance Department, to produce the file, a privilege was sought to be claimed. Legally speaking, no privilege to the order passed by the Minister could be claimed. Privilege could only be claimed regarding office notings to protect the Officers of the State from giving independent opinion on the matters involving the State. The intention of the Secretaries of the Department of Finance and Animal Husbandry to keep the order of the Finance Minister aforesaid in concealment from the Court is not at all commendable. The way in which the writ petition and the Review Application has been prosecuted on behalf of the State of Punjab, it has put the petitioners not only to great inconvenience but to great expenses. In the order dated June 2, 1989, it was specifically observed that if the Government decides to equate the pay scales of Veterinary Assistant Surgeons to that of the Medical Officers, the Government would allow same pay scale for both the posts. Inspite of the aforesaid observation, the State did not allow the same pay scale to the petitioners inspite of the order of the Finance Minister as reproduced above existed on the file of the Finance Department.” 8. When the principles of law with regard to equation of post for the purposes of pay scales are applied to the facts of the present case then there is no doubt left that the State Government has not acted in accordance with the equality clause enshrined in Articles 14 and 16(1) of the Constitution. Equation of various Law Officers working in the Corporation with that of the Government Officers would necessarily result into equal treatment in matter concerning pay LPA No. 1311 of 2011 [10] scales unless, ofcourse there are structural changes in setting up of the Corporation which may have the effect of changing duties in comparison to what they use to do earlier. If all other things remain the same then the equation cannot be disturbed at the whims and fancies by the State Government by refusing to grant approval. Therefore, we agree with the conclusion drawn by the learned Single Judge in so far as the writ petition filed by the writ petitioners- respondents has been allowed. We make it clear that we have not expressed any final opinion with regard to the power of the Government to issue directions under Section 39 of the 1951 Act with regard to the fixation of the pay scales of the employees of the Corporation as it is not considered necessary for deciding the controversy in the present case. Accordingly, we find that the appeal is wholly devoid of merit. It does not merit admission and the same is dismissed. Consequently, we direct the respondents to accord approval to the proposal sent by the appellant within a period of two months from the date of receipt of a copy of this order. Within one month thereafter, the appellant shall release the pay scale as per revision in 1988 given to the Law Officers working with the State Government. (M.M.KUMAR) JUDGE (GURDEV SINGH) 02.08.2011 JUDGE 'ravinder'