Isabella Mariam

The Madras High Court Division Bench of Justice S.M. Subramaniam and Justice C. Kumarappan held that High Courts exercising writ jurisdiction cannot conduct an enquiry into pay parity. The case arose from a dispute over whether a lineman employed by a state-owned rubber corporation was entitled to a pay scale equivalent to that of similarly positioned government department employees. The court found that government directives requiring prior approval for such pay revisions were binding on the corporation and prevailed over its service rules.

The case arose from a dispute regarding whether a lineman employed in a state-owned public sector undertaking was entitled to pay parity with linemen working in the Government of Tamil Nadu departments. The employee sought quashing of the government’s rejection order and requested fixation of the scale of pay for the post of lineman at Rs.610–1075 from 01.06.1988, along with subsequent fixation and grant of 5% personal pay from 01.08.1992. The writ court granted relief by relying on Rule 34 of the service rules governing the public sector undertaking.

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The State Government and the Managing Director of the corporation filed an intra-court appeal challenging the writ court order. They contended that implementation of equivalent pay scales required prior approval of the State Government. Reference was made to several government letters which stated that government orders applicable to government employees should not be adopted by public sector undertakings without prior approval and that financial implications and sustainability must be examined before such adoption.

The employee argued that Rule 34 of the service rules provided that pay and allowances of the corporation employees would be paid at rates applicable to state government employees from time to time. It was contended that once the service rules recognized such parity and the board had passed a resolution extending the benefit, government approval was unnecessary. The court examined the relevant service rules and government directives governing the corporation.

The Court examined the relationship between the corporation’s service rules and the directives issued by the State Government. It observed that “Service Rules of Arasu Rubber Corporation Limited was approved in G.O.No.46 Environment and Forests (FRVIII) Department dated 11.08.1988… Draft Service Rules were approved by the Government and only after approval by the Government, Rules came into force.” The Bench recorded that the origin of the service rules themselves lay in government approval, and therefore the scope of those rules had to be read along with the authority retained by the government.

Referring to the relevant provision governing governmental control, the Court stated that “Rule 7 is relevant to the present context and provides power of the Government of Tamil Nadu, which states that ‘the directives issued by the Government of Tamil Nadu to the Corporation shall prevail over the Rules’.” It observed that this clause made government directions binding on the corporation and capable of overriding the rules.

The Court further recorded that “the directives issued by the Government in various letters… would indicate that prior approval of the Government is required for extending the benefit of Government employees to employees of Corporation.” In light of this framework, the Bench noted that “when the directives issued by the Government of Tamil Nadu is unambiguous and contemplates prior approval to be secured for implementation of scale of pay, the said directives are binding on the Board and shall prevail over the Rules.”

While examining Rule 34, the Court stated that “Rule-34 no doubt provides a Clause that pay and allowances will be paid to Corporation employees at the rates applicable to State Government employees from time to time.” However, it recorded that “for securing such rates applicable to State Government employees, approval of the Government is mandatory, since Rule 7 provides powers of the Government of Tamil Nadu… that the directives issued by the Government… shall prevail over the Rules.”

The Court also addressed the argument based on the principle of equal pay, recording that “No doubt ‘Equal Pay for Equal Work’ was considered by the Courts, but principle would apply if the employees are working in the same institution and duties and responsibilities are same and there cannot be any comparison in respect of the employees working in public sector undertakings as well as Government departments.” It added that “since Service Rules are different and distinct, question of applying the principles of ‘Equal Pay for Equal Work’ does not arise at all.”

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The Court directed:  “Writ Order dated 01.02.2021 passed in W.P.No.13025 of 2007 is set aside and the writ appeal is allowed. Consequently, the connected miscellaneous petitions are closed.”

Advocates Representing the Parties

For the Petitioners: Mr. P. Muthukumar, Additional Advocate General assisted by Mr. R. Mugunthan

For the Respondents: Mr. M. Ravi

Case Title: State of Tamil Nadu & Another v. V. Shunmugam
Case Number: W.A. No. 1804 of 2023
Bench: Justice S.M. Subramaniam, Justice C. Kumarappan