IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. C.W.P.(T) No. 14084 of 2008. Reserved on : 23.03.2010. Decided on 20.04.2010. _____________________________________________________ Suresh Rana and others. …Petitioners. -Versus- State of Himachal Pradesh and others. …Respondents. Coram: The Hon’ble Mr. Justice Rajiv Sharma, Judge. Whether approved for reporting?1Yes. __________________________________________________________ For the petitioners. : Mr. P.P. Chauhan, Advocate. For the respondents : Mr. R.K. Sharma, Senior Additional Advocate General with Mr. Rajinder Dogra, Additional Advocate General. ---------------------------------------------------------------------------------------- Rajiv Sharma, Judge: Material facts necessary for the adjudication of this petition are that the petitioners were called for interviews for the post of Male / Female Health Workers in the pay scale of Rs.510- 940/- ( lateron revised to Rs.1365-2410/-). However, while issuing the appointment letters, they were appointed as Male/Female Health Workers at various places in the pay scale of Rs.950- 1800/- (pre-revised pay scale of Rs.400-600/-). Three batches were appointed prior to the petitioners in the years, 1983, 1985 and 1988. These batches were given appointments in the pay scale of Rs.510-940/- (lateron revised to Rs.1365-2410/- and 1 Whether the reporters of the local papers may be allowed to see the judgment?.Yes. - 2 - revised to Rs.4400-7000/- w.e.f. 1.1.1996). Petitioners are placed in the same cadre. The Himachal Pradesh Multipurpose Health Workers Sangh has filed an Original Application No. 1567 of 1993 before the learned Himachal Pradesh Administrative Tribunal. The same was directed to be treated as representation to the Secretary (Health) to the Government of Himachal Pradesh by the learned Tribunal on 01.09.1993. The same was rejected by the Commissioner-Cum-Secretary (Health) on 29.09.1995. Thereafter, a meeting was held between the Multipurpose Health Workers Mahasangh and the respondent-State on 13.07.1999. The President of the Mahasangh in the meeting had stated that they had already made a commitment to forgo their arrears of pay in case the higher pay scale is released to the members of the Sangh. Mr. P.P. Chauhan, learned counsel for the petitioners has strenuously argued that the petitioners are in the same cadre. According to him, they could not be discriminated against for the release of higher pay scale of Rs.1365-2410/- revised w.e.f. 01.01.1986 and scale of Rs.4400-7000/- w.e.f. 1.1.1996 on the basis of cut off date, i.e., 23.07.1990. He further contended that his clients are entitled to get the higher pay scales from the due date and the decision taken in the meeting held on 13.07.1999 is not binding. He has also assailed the cut off date, i.e., 23.07.1990. Mr. R.K. Sharma, learned Senior Additional Advocate General has vehemently argued that initially the State Government has deviated from the Punjab pattern, which led to payments of higher pay scale and the same was rectified, which led to reduction of pay scale. However, to remove the anomaly, the persons, who were already granted higher pay scale of - 3 - Rs.1365-2410/-, were protected and the incumbents who were appointed after 23.07.1990, were granted the pay scale of Rs.510- 940/- with initial start of Rs.1000/-. He then argued that the agreement between the representatives of the petitioners’ association and the State Government is binding on all the parties. I have heard the learned counsel for the parties and gone through the pleadings carefully. Petitioners are holding the posts of Male/Femal Health Workers. The persons, appointed before 23.07.1990 and thereafter, are in the same cadre. Their conditions of service are governed by the same set of Recruitment and Promotion Rules. However, the persons who were appointed before 23.07.1990, have been granted the pay scale of Rs.510-940/-, revised to Rs.1365-2410/- w.e.f. 01.01.1986 and scale of Rs.4400-7000/- w.e.f. 01.01.1996. Petitioners, though similarly situate, have been granted the pay scale of Rs.950-1800/- with initial start of Rs.1000/- and scale of Rs.3300-6200/- w.e.f. 01.01.1996. Petitioners and the incumbents who were appointed before 23.07.1990 form a homogeneous class. Petitioners and the incumbents appointed before or after 23.07.1990 are discharging exactly the same duties. It is only on the basis of notifications dated 23.07.1990, 03.04.1991 and 02.08.1991 that a separate Class has been carved out by the respondents to deny the petitioners higher pay scale, which was being paid to the incumbents appointed before 23.07.1990. The representatives of petitioners had filed an Original Application, as noticed above, before the learned Tribunal, which was directed to be treated as - 4 - representation to the Secretary (Health). The same was rejected on 29.09.1995. A meeting was held between the representatives of the petitioners’ association and the State Government on 13.07.1999. However, fact of the matter is that the State Government has taken a conscious decision to grant the petitioners and similarly situate persons pay scale of Rs.4400-7000/- w.e.f. 03.03.2000. The only ground taken by the respondents to deny the higher pay scale of Rs.4400-7000/- w.e.f. 1.1.1996 and pay scale of Rs.1365-2410/- w.e.f. 1991 is that the State Government has to incur heavy expenditure. This cannot be a ground to deny the higher salary to the petitioners, who are entitled to it on the principle of “equal pay for equal work” as well. There cannot be two pay scales in the same cadre. The action of respondents to provide two pay scales in the same cadre for the persons who are discharging the same duties, is violative of Articles 14 and 16 of the Constitution of India. Their Lordships of the Hon’ble Supreme Court in Haryana State Minor Irrigation Tubewells Corporation and others versus G.S. Uppal and others, (2008) 7 Supreme Court Cases, 375 have held that “equal pay for equal work” cannot be denied only on the ground of incurring losses. Their Lordships have held as under: “33. 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 - 5 - the appellants in the light of the principle enunciated by this Court in M.M.R. Khan V. Union of India and Indian Overseas Bank V. Staff Canteen Workers’ Union. 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 on a par with those in Government at the time of revision of scales of pay on every occasion.” Mr. R.K. Sharma, learned Senior Additional Advocate General has also tried to support the decision of the State Government to deny the higher pay scale to the petitioners, on the ground that earlier there was deviation from the Punjab pattern and the same was subsequently rectified, which has resulted in anomalous situation and, it is in these circumstances, that the pay scale of Rs.1365-2410/- was made personal to the incumbents, who were appointed before 23.07.1990. Their Lordships of the Hon’ble Supreme Court in State of H.P. versus P.D. Attri and others, (1999) 3 Supreme Court Cases, 217 have held that each State has its own individualistic way of governance under the Constitution and one State is not bound to follow the rules and regulations applicable to the employees of the other State or if it had adopted the same rules and regulations, it is not bound to follow every change brought in the rules and regulations in the other State. Their Lordships have held as under: “5. The case of the respondents is not based on any constitutional or any other legal - 6 - provisions when they claim parity with the posts similarly designated in the Pubjab and Haryana High Court and their pay scales from the same date. They do not allege any violation of any constitutional provision or any other provision of law. They say it is so because of “accepted policy and common practice” which, according to them, are undisputed. We do not think we can import such vague principles while interpreting the provisions of law. India is a union of States. Each State has its own individualistic way of governance under the Constitution. One State is not bound to follow the rules and regulations applicable to the employees of the other State or if it had adopted the same rules and regulations, it is not bound to follow every change brought in the rules and regulations in the other State. The question then arises before us is whether the State of Himachal Pradesh has to follow every change brought in the States of Punjab and Haryana in regard to the rules and regulations applicable to the employees in the States of Pubjab and Haryana. The answer has to be in the negative. No argument is needed for that as anyone having basic knowledge of the Constitution would not argue otherwise. True, the State as per “policy and practice” has been adopting the same pay scales for the employees of the High Court as sanctioned from time to time for the employees of the Pubjab and Haryana High Court and it may even now follow to grant pay scales but is certainly not bound to follow. No law commands it to do so.” Mr. R.K. Sharma has also contended that it is the prerogative of the State Government to fix the cut off date. In other words, he has justified the cut off date, i.e. 23.07.1990. It is true that it is the prerogative of the State Government or the employer - 7 - to fix the date from which the financial benefits have to accrue, however, it is equally true that while fixing the date, relevant considerations have to be taken into consideration and the decision must be rational. The only reason assigned for fixing the cut off date, i.e. 23.07.1990 by the respondents, is the huge financial burden to be incurred by the State in case higher pay scale is granted to the petitioners. Their Lordships of the Hon’ble Supreme Court in Union of India and another versus S. Thakur, (2008) 13 Supreme Court Cases 463 have held that the Courts can interfere with executive decision on these aspects if the decision is unreasonable, unjust and prejudicial to a section of the employees. Their Lordships have held as under: “8. The plea that as restructuring of cadre and redistribution of posts was involved insofar as the Assistant Directors were concerned and therefore the policy decision taken by the State Government to give benefit of upgraded scale to an Assistant Director (Executive) with effect from 1.10.1997 should not have been interfered with by the Tribunal and by the High Court is devoid of merits. There is no dispute nor there can be any, to the principle that fixation of pay and date from which the benefit of revised pay scale would be admissible is the function of the executive and the scope of judicial review of such an administrative decision is very limited. However, it is equally well settled that the courts would interfere with the administrative decisions pertaining to pay fixation and pay parity as well as the date from which the revised pay scales would be made applicable if it is found that such a decision is unreasonable, unjust and prejudicial to a section of the employees.” The cut off date, i. e., 23.07.1990 prescribed by the respondents, is declared ultra vires the Constitution being - 8 - violative of Articles 14 and 16 of the Constitution of India in view of the observations made hereinabove. Mr. R.K. Sharma has lastly contended that the petitioners are estopped from seeking higher pay scales from the anterior date on the basis of undertaking given by the President of the Union and its members. Petitioners, as noticed above, had a right to get the pay scales w.e.f. 01.01.1986 and 01.01.1996. Since the petitioners had been working in the same cadre, therefore, they could not be discriminated against by the respondents. Moreover, it is settled law that there cannot be waiver of fundamental/constitutional rights. Their Lordships of the Hon’ble Supreme Court in Nar Singh Pal versus Union of India and others, (2000) 3 Supreme Court Cases 588 have held as under: “13. The Tribunal as also the High Court, both appear to have been moved by the fact that the appellant had encashed the cheque through which retrenchement compensation was paid to him. They intended to say that once retrenchement compensation was accepted by the appellant, the chapter stands closed and it is no longer open to the appellant to challenge his retrenchement. Thus, we are constrained to observe, was wholly erroneous and was not the correct approach. The appellant was a casual labour who had attained the 'temporary' status after having put in ten years' of service. Like any other employee, he had to sustain himself, or may be, his family members on the wages he got. On the termination of his services, there was no hope left for payment of salary in future. - 9 - The retrenchement compensation paid to him, which was only a meagre amount of Rs.6,350/-. was utilised by him to sustain himself. This does not mean that he had surrendered all his constitutional rights in favour of the respondents. Fundamental Rights under the Constitution cannot be bartered away. They cannot be compromised nor can there be any esstoppel against the exercise of Fundamntal Rights available under the Constitution. As pointed out earlier, the termination of the appellant from service was punitive in nature and was in violation of the principles of natural justice and his constitutional rights. Such an order cannot be sustained. Their Lordships of the Hon’ble Supreme in Central Inland Water Transport Corporation Limited and another versus Brojo Nath Ganguly and another, (1986) 3 Supreme Court Cases 156 have held that unconscionable agreement is against the public policy. There cannot be any agreement, which violates Articles 14 and 16 of the Constitution of India. Petitioners are entitled to get the higher pay scale and the same cannot be permitted to be denied only on the ground of unconstitutional undertaking given by their President and members of the Union as per the meeting held on 13.7.1999. Their Lordships have held as under: “76. Under which head would an unconscionable bargain fall? If it falls under the head of undue influence, it would be voidable but if it falls under the head of being opposed to public policy, it would be void. No case of the type before us appears to have fallen for - 10 - decision under the law of contracts before any court in India nor has any case on all fours of a Court in any other country been pointed out to us. The word "unconscionable" is defined in the Shorter Oxford English Dictionary, Third Edition, Volume II, page 2288, when used with reference to actions. etc. as "showing no regard for conscience; irreconcilable with what is right or reasonable". An unconscionable bargain would, therefore, be one which is irreconcilable with what is right or reasonable. 78. Legislation has also interfered in many cases to prevent one party to a contract from taking undue or unfair advantage of the other. Instances of this type of legislation are usury laws, debt relief laws and laws regulating the hours of work and conditions of service of workmen and their unfair discharge from service, and control orders directing a party to sell a particular essential commodity to another. 83. Yet another theory which has made its emergence in recent years in the sphere of the law of contracts is the test of reasonableness or fairness of a clause in a contract where there is inequality of bargaining power. Lord Denning M.R., appears to have been the propounder, and perhaps the originator - at least in England, of this theory. In Gillespie Brothers & Co. Ltd. v. Roy Bowles Transport Ltd., (1973) 1 QB 400. Where the question was whether an indemnity clause in a contract, on its true construction, relieved the indemnifier from liability arising to the indemnified from his own negligence, Lord Denning said (at pages 415-6) : "The time may come when this process of construing the contract can be pursued no further. The words are too clear to permit of it. Are the courts then powerless? Are they to permit the party to enforce his unreasonable clause, even when it is so unreasonable, or applied so unreasonably, as to unconscionable? When it gets to this point, I would say, as I said many years ago : "there is the vigilance of the common law which, while allowing freedom of contract, watches to see that it is not abused' : John Lee & Son (Grantham) Ltd. v. Railway Executive - 11 - (1949) 2 All ER 581, 584. It will not allow a party to exempt himself from his liability at common law when it would be quite unconscionable for him to do so." (Emphasis supplied) In the above case the Court of Appeal negatived the defence of the indemnifier that the indemnity clause did not cover the negligence of the indemnified. It was in Lloyds Bank Ltd. v. Bundy, (1974) 3 All ER 757 that Lord Denning first clearly enunciated his theory of "inequality of bargaining power". He began his discussion on this part of the Me by stating (at page 763) : "There are cases in our books in which the courts will set aside a contract, or a transfer of property, when the parties have not met on equal terms, when the one is so strong in bargaining power and the other so weak that, as a matter of common fairness, it is not right that the strong should be allowed to push the weak to the wall. Hitherto those exceptional cases have been treated each as a separate category in itself. But I think the time has come when we should seek to find a principle to unite them. I put on one side contracts or transactions which are voidable for fraud or misrepresentation or mistake. All those are governed by settled principles. I go only to those where there has been inequality of bargaining power, such as to merit the intervention of the Court." (Emphasis supplied) He then referred to various categories of cases and ultimately deduced therefrom a general principle in these words (at page 765) : "Gathering all together, I would suggest that through all these instances there runs a single thread. They rest on 'inequality of bargaining power'. By virtue of it, the English law gives relief to one who, without independent advice, enters into a contract on terms which are very unfair or transfers property for a consideration which is grossly inadequate, when his bargaining power is grievously impaired by reason of his own needs or desires, or by his own ignorance or infirmity, coupled with undue - 12 - influences or pressures brought to bear on him by or for the benefit of. the other. When I use the word 'undue' I do not mean to suggest that the principle depends on proof of any wrongdoing. The one who stipulates for an unfair advantage may be moved solely by his own self-interest, unconscious of the distress he is bringing to the other. I have also avoided any reference to the will of the one being 'dominated' or .overcome' by the other. One who is in extreme need may knowingly consent to a most improvident bargain, solely to relieve the straits in which he finds himself. Again, I do not mean to suggest that every transaction is saved by independent advice: But the absence of it may be fatal. With these explanations, I hope this principle will be found to reconcile the cases." (Emphasis supplied) 84. Though the House of Lords does not yet appear to have unanimously accepted this theory, the observations of Lord Diplock in A. Schroeder Music Publishing Co. Ltd. v. Macaulay (Formerly Instone) (1974) 1 WLR 1308 are a clear pointer towards this direction. In that case a song writer had entered into an agreement with a music publisher in the standard form whereby the publishers engaged the song writer's exclusive services during the term of the agreement, which was five years. Under the said agreement, the song writer assigned to the publisher the full copyright for the whole world in his musical compositions during the said term. By another term of the said agreement, if the total royalties during the term of the agreement exceeded £5,000 the agreement was to stand automatically extended by a further period of five years. Under the said agreement, the publisher could determine the agreement at any time by one month's written notice but no corresponding right was given to the song writer. Further, while the publisher had the right to assign the agreement, the song writer agreed not to assign ,his rights without the publisher's prior written consent. The song writer brought an action claiming, inter alia, a declaration that the agreement was contrary to public policy and Void. Plowman, J., who heard the action granted the declaration which was sought and the Court of Appeal affirmed his - 13 - judgment. An appeal filed by the publishers against the judgment of the Court of Appeal was dismissed by the House of Lords. The Law Lords held that the said agreement was void as it was in restraint of trade and thus contrary to public policy. In his speech Lord Diplock, however, outlined the theory of reasonableness or fairness of a bargain. The following observations of his on this part of the case require to be reproduced in extenso (at pages 1315-16) : "My Lords, the contract under consideration in this appeal is one whereby the respondent accepted restrictions upon the way in which he would exploit his earning power as a song writer for the next ten years. Because this can be classified as a contract in restraint of trade the restrictions that the respondent accepted fell within one of those limited categories of contractual promises in respect of which the courts still retain the power to relieve the promisor of his legal duty to fulfil them. In order to determine whether this case is one in which that power ought to be exercised, what your Lordships have in fact been doing has been to assess the relative bargaining power of the publisher and the song writer at the time the contract was made and to decide whether the publisher had used his superior bargaining power to exact from the song writer promises that were unfairly onerous to him. Your Lordships have not been concerned to inquire whether the public have in fact been deprived of the fruit of the song writer's talents by reason of the restrictions, nor to assess the likelihood that they would be so deprived in the future if the contract were permitted to run its full course. It is, in my view, salutary to acknowledge that in refusing to enforce provisions of a contract whereby one party agrees for the benefit of the other party to exploit or to refrain from exploiting his own earning power, the public policy which the Court is implementing is not some 19th century economic theory about the benefit to the general public of freedom of trade, but the protection of those whose bargaining power is weak against being forced by those whose bargaining power is stronger to enter into bargains that are unconscionable. Under the influence of Bentham and of laissez