2016 (12) TMI 1882 - SC - Indian Laws

Classification as permanent employees - fixation of pay of Petitioners at the minimum of the regular pay-scale attached to the respective posts - whether the Petitioners are also entitled to the increment? - Madhya Pradesh Industrial Employment (Standing Orders) Act, 1961 - HELD THAT - Merely by putting in six months' satisfactory service, an employee can be treated as 'permanent employee'. Rights which would flow to different categories of employees including 'permanent employee' are not stipulated in these Rules or even in the parent Act. It can be gathered from Rule 11 of the said Rules, which relates to termination of employment, that in case of a 'permanent employee' one month's notice or wages for one month in lieu of notice is required when the employment of a 'permanent employee' is to be terminated. On the other hand, no such notice or wages in lieu thereof is needed to be given to any other category of employees. Additional obligation casts on the employer is to record reasons for termination of service in writing and communicate the same to the employee. The issue came up again in the case of M.P. State Agro Industries Development Corporation Ltd. and Anr. v. S.C. Pandey 2006 (2) TMI 721 - SUPREME COURT wherein this Court held that only because a temporary employee has completed 240 days of work, he would not be entitled to be regularized in service. The Court also reiterated that the Standing Orders categorize the nature of employment and do not classify individual employees in different post according to the hierarchy created in the Department and thus proviso to Rule 2 does not apply to promotions or regularization in higher grade. Though a 'permanent employee' has right to receive pay in the graded pay-scale, at the same time, he would be getting only minimum of the said pay-scale with no increments. It is only the regularisation in service which would entail grant of increments etc. in the pay-scale. Contempt petition dismissed.

Summary

Issues Involved:
1. Classification of employees as 'permanent' under the Madhya Pradesh Industrial Employment (Standing Orders) Rules, 1963.
2. Entitlement to pay-scale and increments for employees classified as 'permanent'.
3. Compliance with court orders regarding pay fixation and increments.
4. Distinction between 'permanent' and 'regular' employees.
5. Applicability of the principle of 'equal pay for equal work'.

Issue-wise Detailed Analysis:

1. Classification of Employees as 'Permanent':
The Petitioners were engaged by the State of Madhya Pradesh as daily wagers and claimed entitlement to be classified as 'permanent employees' under the Madhya Pradesh Industrial Employment (Standing Orders) Rules, 1963. The labour court directed their classification as 'permanent', which was upheld by the industrial court and the High Court. This classification was based on Standing Order No. 2, which defines a 'permanent' employee as one who has completed six months of satisfactory service in a clear vacancy.

2. Entitlement to Pay-Scale and Increments:
The Petitioners contended that once classified as 'permanent', they were entitled to the regular pay-scale with increments and other emoluments. The State Government fixed their pay at the minimum of the regular pay-scale without increments, which the Petitioners argued was not in full compliance with the court's orders. The Respondents argued that the Petitioners were not 'regularised' against any posts and were only entitled to the minimum pay-scale as 'permanent' employees.

3. Compliance with Court Orders:
The High Court had directed the State Government to implement the orders classifying the Petitioners as 'permanent' and to grant them the pay-scale of permanent posts. The Supreme Court dismissed the State's Special Leave Petitions and directed compliance within eight months. The State Government fixed the pay at the minimum of the pay-scale without increments, which the Petitioners claimed was not in full compliance with the court's directions.

4. Distinction Between 'Permanent' and 'Regular' Employees:
The court examined whether 'permanent' employees under the Standing Orders could be treated as 'regular' employees. It was held that classification as 'permanent' does not equate to regularisation. The court referred to previous judgments, including Mahendra L. Jain v. Indore Development Authority and M.P. State Agro Industries Development Corporation Ltd. v. S.C. Pandey, which distinguished between 'permanent' and 'regular' employees. 'Permanent' employees are entitled to the minimum pay-scale but not to increments, which are reserved for 'regular' employees appointed through a regular selection process.

5. Applicability of the Principle of 'Equal Pay for Equal Work':
The court referred to the judgment in State of Punjab v. Jagjit Singh, which held that temporary employees are entitled to the minimum of the regular pay-scale under the principle of 'equal pay for equal work' but without increments. The Petitioners, classified as 'permanent' but not 'regular', were similarly entitled to the minimum pay-scale without increments.

Conclusion:
The Supreme Court dismissed the contempt petitions, holding that the State Government had complied with the court's orders by fixing the Petitioners' pay at the minimum of the regular pay-scale. The Petitioners, classified as 'permanent' employees, were not entitled to increments, which are reserved for 'regular' employees. The court emphasized that previous erroneous grants of increments to some employees could not form the basis for similar claims by the Petitioners.