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Punjab State Co-Operative Milk Producer Federation Limited vs. Balbir Kumar Walia - (Supreme Court) (09 Jul 2021)

Grant of benefits of higher pay scale to Central/State Government employees stand on different footing than grant of pay scale by an instrumentality of State



The present appeals are directed against an order passed by the Division Bench of the High Court whereby the writ petitions filed by the Respondents were allowed holding that, the Punjab State Co-operative Milk Producers Federation Ltd. is a State within the meaning of Article 12 of the Constitution of India, 1950 and that the employees are therefore entitled to pay scale equivalent to their counterparts in the State of Punjab from 1st January, 1986, though the revised pay scale was allowed by the Federation w.e.f. 1st January, 1994.

The main grievance of the Federation is regarding grant of revised pay scale w.e.f. 1st January, 1986 though the Federation was suffering with acute financial stringency in those days and had therefore, granted revised pay scales from 1st January, 1994.

The sweep of power under Article 226 of Constitution may be wide enough to quash unreasonable orders. If a decision is so arbitrary and capricious that no reasonable person could have ever arrived at it, the same is liable to be struck down by a writ court. If the decision cannot rationally be supported by the materials on record, the same may be regarded as perverse.

However, the power of the Court to examine the reasonableness of an order of the authorities does not enable the Court to look into the sufficiency of the grounds in support of a decision to examine the merits of the decision, sitting as if in appeal over the decision. The test is not what the Court considers reasonable or unreasonable but a decision which the Court thinks that no reasonable person could have taken, which has led to manifest injustice. The writ court does not interfere, because a decision is not perfect.

The Central or State Government is empowered to levy taxes to meet out the expenses of the state. It is always a conscious decision of the government as to how much taxes have to be levied so as to not cause excessive burden on the citizens. But the Boards and Corporations have to depend on either their own resources or seek grant from the Central/ State Government, as the case may be, for their expenditures. Therefore, the grant of benefits of higher pay scale to the Central/State Government employees stand on different footing than grant of pay scale by an instrumentality of the State.

The decision that the Federation was in financial difficulties is based upon relevant material before the Federation. The process to arrive at such decision can be said to be flawed only on the permissible grounds of illegality, irrationality and procedural impropriety. Neither the decision-making process, nor the decision itself suffers from any such vice. The order of the High Court is unjustified and in excess of the power of judicial review conferred on the High Court. The orders passed by the High Court are hereby set aside. Appeals allowed.


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