Case: STATE BANK OF INDIA Vs. RAVINDRA NATH

A fixed salary US $ 1965 (net) per month subject to change from time to time will be paid to you abroad from the date of your reporting at the foreign office. Wherever taxes are payable by you on account of salary and perquisites such taxes will be reimbursed by the bank.There was also a condition that salary and terms and conditions as spelt out in the letter are subject to review and revision by the Bank from time to time. Clause 7.3 in this respect reads asYour salary as well as other terms and conditions spelt out in this letter are subject to review and revision by the bank, from time to time.It was on 16.01.2001, the salary in respect of the respondent was re-fixed as US $ 1300 w.e.f. 01.01.2001. The same was subsequently revised to US $ 1380 on 14.12.2001. It is the stand of the Bank that when the respondent was sent to Johannesburg, salary was fixed on Consumer Price Index of 1992 on the basis of directives of the Working Group of the Standing Committee w.e.f. 01.01.1995 in the absence of availability of Cost of Living Index. But since, the relevant data became available in March 2000, the Working Group in its meeting held on 15.01.2001, has re-fixed the salary on the basis of formula approved by the Standing Committee.The revised minimum net monthly salary in respect of Scale I Officer was US $ 950 reduced from US $ 1615 per month, whereas, in respect of Scale V Officer such as the respondent, the salary was fixed at US $ 1300 reduced from US $ 1965. The maximum salary in respect of TEG Sp. SC. II, was US $ 1900 reduced from US $ 2565. The said communication reads asOF SALARY WEF 01.01.In the absence of availability of Cost of Living Index data at the material time salary for Johannesburg was fixed by the Working Group w.e.f. 01.01.1995 on the basis of Consumer Price Index of 1992 (as per IMF Publication of September, 1995) as available.With the relevant data now available the Working Group in its meeting held on January 15, 2001 has re- fixed the salary on the basis of the formula approved by the Standing Committee. The detailed salary levels for various grades with effect from 01.01.2001 will be asThe stand of the Bank is that the recommendations of the Working Group are binding on the Bank which are applicable to all Public Sector Banks, in respect of the Officers posted abroad. The reliance was placed upon Section 18 of the State Bank of India Act, 1955as also the proceedings of the Standing Committee from time to time, the reference to which will be made subsequently.The High Court in the impugned judgment held that the respondent-writ petitioner has no privity to contract with the Standing Committee on the basis of which the salary was reduced. It has also held that the salary of the respondent has been reduced within three months which is unfair and arbitrary and that the letter dated 24.06.2000 does not even remotely suggest that salary of US $ 1965 was tentative, nor the available information taken into consideration for fixing the salary was shared with the respondent.The High Court did not accept the argument raised by the respondent of the equal pay for equal work for the reason that the Cost of Living in the different countries is different, therefore the salary must necessarily be fixed keeping in mind various factors which vary from country to country.

Reasoning:
15. A perusal of relevant conditions as reproduced above shows that salary of US $ 1965 was not promised to be paid for the entire period of posting in Johannesburg. It was subject to change either way that is increase or decrease. The Bank has explained that such salary of US $ 1965 was fixed in absence of Cost of Living Index on the basis of recommendations of the Committee. Later, the Standing Committee was constituted in exercise of the powers under Section 18 of the Act mandating that any change in future in the salaries and perquisites and other service conditions has to be affected with the prior approval of the Standing Committee.It is in view of such directions that the appellant Bank framed service conditions and allied matters. It is thereafter on 15.1.2001, the Working Group of the Standing Committee decided the salary payable to the Officers of the Bank. Such salary structure is meant for all Officers of Public Sector Banks posted abroad. Such recommendations are applicable in non-discriminatory manner to all Officers of the Public Sector Banks.Though, certain representations are said to have been made by the Chief Executive Officer on behalf of the five Officers posted at Johannesburg but there is no communication that the Officers are finding it difficult to work on the basis of such reduced salary. The salary was reduced from the month of January, 2001, though, the respondent-writ petitioner has joined only on 21.09.2000. The respondent never offered to seek repatriation to India and in fact sought voluntary retirement on depositing of Rs. 10,00,000/- for further stay in Johannesburg. It shows that there was no financial loss suffered by him on account of reduction in salary, but actually, he found it lucrative to resign from the service of the Bank and to stay in Johannesburg after payment of substantial amount of Rs. 10,00,000/-.The salary has been fixed in terms of directions of the Government of India, in respect of all Public Sector Banks keeping in view the Cost of Living Index in different countries and making adjustments in the salaries according to the Cost of Living of each country. The Cost of Living in each country is separate and distinct and such factors have been taken into consideration while fixing the salary on the basis of Bulletin of Statistics published by U.N. in March, 2000. The earlier fixation of salary for Johannesburg was fixed by Working Group w.e.f 01.01.1995 on the basis of Consumer Price Index of 1992 as per International Financial, Statistics (IMF Publication - September, 1995). The revised salary structure is not meant for any particular official but is applicable to all Officers of Public Sector Banks posted abroad.The argument of the learned counsel for the respondent is that when the respondent was deputed in June, 2001 the Cost of Living Index as in March, 2000 was available, therefore, there was no reason to 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 the U.N. in March, 2000 was considered by the Standing Committee in its meeting held on 15.01.2001. The respondent was informed of his reduced salary the very next day. Therefore, the Cost of Living Index on the basis of March, 2000 Report was considered in January, 2001. Such decision cannot be said to be arbitrary only because it was taken after about nine months of the publication of the data.The reasoning given by the High Court that there is no privity of contract of the respondent-writ petitioner with the Standing Committee is not tenable. The respondent-writ petitioner as an Officer of the Bank is bound by the salary structure approved by the Bank for its Officers. The decision of the Standing Committee is a part of the decision-making in respect of salary payable to the employees of the Banks. The employee of a Bank has no right that he should be associated with the decision-making process in respect of the fixation of salary. However, if the question of reasonableness of salary arises, then in exercise of power of judicial review, the Court may examine the decision-making process. In exercise of power of judicial review, we do not find any infirmity in the decision of Standing Committee taken on 15.01.2001 in pursuance to the direction of the Government of India issued under Section 18 of the Act.Since, the salary has been fixed for all Officers of the Public Sector Banks in a non-discriminatory manner keeping in view the Cost of Living Index, we find that the High Court erred in law in setting aside the reduction in salary. There is reasonable basis of reduction of salary. Still further there was no promise ever made to the respondent-writ petitioner that his salary of US $ 1965 shall remain unchanged during the period of his posting.