judgement:
vil Appeal No 3719 3721 of l988.
PG NO 474 From the Judgment and Order dated 9/10.3.1987 of the Bombay High Court in W.P. Nos.
620, 622 and 621 of 1986.
G. Ramaswamy, Additional Solicitor General and A.M. Khanwilkar for the Appellant.
Dr. R.S. Kulkarni, Jitender Sharma, D.M. Nargolkar and A.S. Bhasme for the Respondents.
The Judgment of the Court was delivered by DUTT, J.
Special is granted.
Heard learned Counsel for the parties.
These appeals preferred by the appellant, the Maharashtra State Cooperative Cotton Growers Marketing Federation Ltd., are directed against the judgment of the Bombay High Court whereby the High Court allowed the writ petitions of the respondents and quashed the order of the Industrial Court Maharashtra (Kolhapur Bench), Kolhapur, dismissing the complaints filed by the respondents.
The Government of Maharashtra appointed the Maharashtra State Cooperative Marketing Federation, hereinafter referred to as "the Marketing Federation", the Chief Agent in the Cotton Monopoly Scheme under the provision of section 42 of tile Maharashtra Raw Cotton (Procurement Process of Marketing) Act, 1971.
The activities of the Marketing Federation extended to various agricultural produce including foodgrains.
In February, 1984 the Government carved out the operation of the levy of cotton from the other activities of the Marketing Federation and assigned them to another society, namely.
the Maharashtra State Cooperative Cotton Growers Marketing Federation Ltd., the appellant in all these appeals.
By its order dated August 10, 1984, the Government directed the Marketing Federation to take the following actions: "(i) In respect of the Staff working under the Cotton Monopoly Scheme at present, the Services of the seasonal staff working, if any, should be terminated with immediate effect and in any case not later than 15th August, 1984.
(ii) So far as the regular staff is concerned, it is proposed that the services of the staff working in the Cotton Department of the Federation at Bombay and in the Mofussil areas would be placed at the disposal of the new PG NO 475 Organisation on "as is where is basis" as on 1st July, 1984.
" In a subsequent letter dated September 8, 1984 the Marketing Federation was directed to effect the transfer of the chief agency from the Marketing Federation to the appellant, inter alia by transferring all the assets and liabilities under the scheme account and the cash and Bank balance at Bombay and Mofussil under the scheme account as well as under the non scheme account to the appellant etc.
The respondents claimed that they were permanent employees of the Marketing Federation and in view of the directions contained in the said letter dated August 10, 1984 of the Government, the appellant should have appointed them on a permanent basis and not as seasonal employees.
The case of the respondents was that they had been in the employment of the Marketing Federation since 1972 on monthly salaries with annual increments.
Even though there was an Award in their favour by the Industrial Tribunal declaring them as permanent employees, yet the Marketing Federation and the appellant failed and neglected to give them the permanent status.
Accordingly, they made complaints before the Industrial Court complaining of unfair labour practices on the part of the Marketing Federation as also on the part of the appellant as contained in Items Nos. 6 and 9 of Schedule IV to the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 items 6 and 9 are as follows: "Items 6.
To employ employee as "badlis", casuals or temporaries and to continue them as such for years, with the object of depriving them of the status and privileges of permanent employees.
Item 9.
Failure to implement award, settlement or agreement.
In this connection, we may refer to section 5(d) of the said Act which provides that it shall be the duty of the Industrial Court to decide complaints relating to unfair labour practices except unfair labour practices falling in Item I of Schedule IV.
The Industrial Court took the view that the complaints made by the respondents did not come under Item Nos. 6 and 9, but they came under Item No. I and, as such, it could not decide the complaints in view of section 5(d).
Further, it was held by the Industrial Court that there was no unfair PG NO 476 labour practice on the part of the Marketing Fedration or the appellant and that, in any event, the complaints were barred by limitation as the same were filed beyond 90 days from the date of the knowledge of the respondents that they were appointed by the appellant as seasonal employees.
Upon the said findings, the Industrial Court dismissed the complaints of the respondents.
Being aggrieved by the order of the Industrial Court, the respondents filed writ petitions before the High Court and, as stated already, the High Court allowed the writ petitions and quashed the order of the Industrial Court.
Hence these appeals.
It has been already noticed that under the Award of the Industrial Tribunal, the respondents were declared the permanent employees of the Marketing Federation.
The appellant has prepared a seniority list for the year 1985 86 which shows that most of the respondents have been in the employment of the Marketing Federation since 1972.
The said seniority list is Annexure 'D ' to the writ petitions filed by the respondents in the High Court.
The annual increment list, also D prepared by the appellant, shows that the respondents have been in the service of the appellant on monthly salaries and they were given annual increments on November 1, 1985.
In spite of the above facts, the respondents have been shown in the seniority list and also in the annual increment list as temporary employees.
In our opinion, there cannot he any doubt that there has been unfair labour practice on the part of the Marketing Federation as also on the appellant by continuing them as temporary employees.
We are unable to accept the contention of the appellant that the Award is not binding on the appellant.
In view of the Award, it must be held that the respondents were the permanent employees of the Marketing Federation, and that after the constitution of the appellant and the transfer of the employees of the Marketing Federation to the appellant, the appellant was bound to accept the respondents as permanent employees and not to treat them as seasonal employees or temporary employees.
This act on the part of the appellant amounts to unfair labour practice.
We do not find any justification for the finding of the Industrial Court that the complaints made by the respondents do not come within the purview of Items Nos. 6 and 9 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971.
No reason has been given by the Industrial Court why the complaints come within Item No. 1 of Schedule IV and.
as such, can be decided only by the Labour Court and not by the Industrial Tribunal.
The complaints made by the respondents are clear and specific and there was no scope for PG NO 477 categorising them as complaints under Item No. 1 of Schedule IV.
With regard to the question of limitation, the Industrial Tribunal seems to think that as the appointment letters bear some dates in October, 1984, the period of limitation will be computed from the respective dates of the appointment letters.
It has been assumed by the Industrial Tribunal that the respondents come to know that they were being appointed as seasonal employees on the respective dates of their appointment letters.
There is, however, no material on record to show on what dates the appointment letters were served on the respondents.
In other words, there is nothing to show when the respondents received the appointment letters.
In the circumstances, the Industrial Court was not at all justified in holding that the complaints filed by the respondents were barred by limitation.
Even assuming that the complaints were barred by limitation, as held by the Industrial Court, the Industrial Court should have given an opportunity to the respondents for explaining the delay.
No such opportunity has been given to the respondents.
Accordingly, we are unable to subscribe to the view of the Industrial Court that the complaints filed by the respondents were barred by limitation.
Before parting with these appeals, we may dispose of a short contention of the appellant.
The learned Counsel for the appellant has placed much reliance upon a letter of the Government dated November 9, 1984 giving some directions to the appellant as contained in paragraphs 1 and 2 of the said letter.
Paragraphs 1 and 2 are as follows: 1.
All staff recruited after 1st July 1972 specifically for the cotton scheme with prior approval of Government wherever necessary or where the Government representative was associated with the selection/appointment of the candidates should be immediately placed on deputation without payment of Deputation Allowance to the Cotton Growers ' Marketing Federation Their salaries and allowances will be payable from the scheme as part of the commission payable to the Cotton Growers Federation till 1st January, 1985.
The Cotton Growers Federation Ltd. will finally absorb the above categories of staff after scrutiny as on 1st January,1985.
Those out of the above staff who are not PG NO 478 acceptable to the new Federation for some reason or the other, and so have to be retrenched, will be retrenched by the Maharashtra State Cooperative Marketing Federation Ltd. and the cost thereof would be debited to cotton scheme account" On the basis of the directions in paragraph 2 extracted above, it is submitted on behalf of the appellant that the appellant is at liberty not to absorb or accept the respondents in the appellant 's concern.
This contention, in our opinion, is without any substance whatsoever.
There is a specific direction that the appellant shall finally absorb the staff of the Marketing Fedration after scrutiny as on January 1, 1985.
The appellant cannot refuse to absorb or accept a permanent employee of the Marketing Federation without any reason whatsoever.
So far as the respondents are concerned, we do not find any reason why the appellant should not accept them as its permanent employees.
The High Court has rightly directed the appellant and the Marketing Federation to process the cases of the respondents on the basis that they have put in more than 240 days of service and grant them all the benefits under the circular letter dated January 18, 1985.
For the reasons aforesaid, the judgment of the High Court is affirmed and the appeals are dismissed with one set of costs quantified at Rs.5,000.
H.S.K. Appeals dismissed.

summary:
Industrial Court Duty of Must give an opportunity to applicants to explain the delay if the complaints are barred by limitation.
The respondents were earlier the employees of an organisation called the Maharashtra State Cooperative Marketing Federation Limited (Marketing Federation).
Later a new organisation namely the Maharashtra State Cooperative Cotton Growers Marketing Federation Ltd., the appellant herein, was formed and some of the activities of the Marketing Federation were assigned to it.
By letter dated l0th August, 1984, the Government directed the Marketing Federation that the Services of the seasonal staff should be terminated and those of the regular staff be placed at the disposal of the new organisation.
As the Marketing Federation and the appellant failed and neglected to give them the permanent status, the respondents made a complaint before the Industrial Court complaining of unfair labour practices on the part of the Marketing Federation as also the appellant herein as contained in Items 6 and 9 of the Schedule IV of the Act.
The workers stated that even when there was an award in their favour by the Industrial Tribunal declaring them as permanent employees, yet the Marketing Federation and the appellant did not give them the status of permanent employees.
The Industrial Court took the view (i) that the complaints made by the respondents did not come under items nos.
6 and 9 but they came under item No. I and as such he could not decide the complaints in view of PG NO 472 PG NO 473 section 5(d) of the Act, (ii) that there was no unfair labour practice on the part of the Marketing Federation or the appellant, and (iii) that the complaints were barred by limitation.
The Industrial Court dismissed the complaints of the respondents.
Feeling aggrieved the respondents filed writ petitions before the High Court and the same were allowed.
Hence these appeals by special leave.
The appellant contended that the award of the Industrial Court was not binding on them.
Dismissing the appeals, this Court, HELD: In view of the Award, it must be held that the respondents were the permanent employees of the Marketing Federation, and that after the constitution of the appellant and the transfer ot the employees of the Marketing Federation to the appellant, the appellant was bound to accept the respondents as permanent employees and not to treat them as seasonal employees or temporary employees.
This act on the part of the appellant amounts to unfair labour practice.
[476E F] There is no justification for the finding of the Industrial Court that the complaints made by the respondents do not come within the purview of Items Nos. 6 and 9 of the Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971.
No reason has been given by the Industrial Court why the complaints come within Item No. I of Schedule IV and, as such, can be decided only by the labour Court and not by the Industrial Tribunal.
The complaints made by the respondents are clear and specific and there was no scope for categorising them as complaints under Item No. I of Schedule IV.
[476G H;477] It has been assumed 1 the Industrial Tribunal that the respondents came to now That they were being appointed as seasonal employees on the respective dates of their appointment letters.
There is, however, no material on record to show on what dates the appointment letters were served on the respondents.
In the circumstances, the Industrial Court was not at all Justified in holding than the complaints filed by the respondents were barred by limitation.
Even assuming that the complaints were barred by limitation, as held by the Industrial Court, the Industrial Court should have given an opportunity to the respondents for explaining the delay.
No such opportunity has been given to the respondents.
Accordingly, this Court is unable to subscribe to the view of the Industrial Court that the complaints filed by the respondents were barred by limitation.
[477B D]


judgement:
ition (Civil) No. 13369 of 1984 (Under Article 32 of the Constitution of India).
M. K. Ramamurthi and Uma Datta for the Petitioners.
Shanti Bhushan and R.P. Kapur for the Respondents.
The Judgment of the Court was delivered by VENKATACHALIAH, J.
This Writ Petition under Article 32 of the Constitution of India raises the question of the validity of Regulation 7 read with Schedule I of State Bank of Patiala (Officers ') Service Regulations,1979 ( Regulations ' for short) pertaining to the place ment and fitment of existing officers in the service of the State Bank of Patiala in the new grades and scales of pay.
In the year 1959, all "State Banks" State Bank of Patiala was one of them were made subsidiaries of the State Bank of India under (Subsidiary Banks) Act 1959.
Section 63 of this Act provided: "63.
Power of the State Bank to make regulations: (I) The State Bank may with the approval of the Reserve Bank, make in respect of a subsidiary bank regulations, not inconsistent with this Act and the rules made thereunder, to provide for all matters for which provision is, necessary or expedient for the purpose of giving effect to the provisions of this Act.
(2) In particular and without prejudice to the generality of the foregoing power, such regulations may provide for (a) to (I) .
Omitted as unnecessary PG NO 482 (m) the conditions and limitations, subject to which the subsidiary bank may appoint officers, advisers and other employees and fix their remuneration and other terms and conditions of service; (n) to (y) .
Omitted as not necessary Pursuant to and in exercise of the powers of Section 63 State Bank of Patiala (Officers ') Service Regulations, 1979 were promulgated.
On the pattern of the recommendations made in regard to the Rationalisation and Standardisation of pay scales of nationalised banks made by what is known as the "Pillai Committee", the pay scales in State Bank of Patiala were also revised and restructured introducing new grades and scales.
The Regulations were to take effect from 1st October, 1979.
Regulation 7 read with Schedule I provided the placement and fitment of the existing officers of the bank in the new grades and scales Of pay.
In the present case, we are concerned with the placement and fitment of existing officers "Grade A" to which both the petitioners Sri Tarsem Lal Gautam and Sri C. V. Madan belong.
The "Regulations" were promulgated.
in exercise of the powers conferred by the State Bank of India (Subsidiary Banks) Act.1959, by the Central Board of Directors of the State Bank of India in consultation with the Board of Directors of State Bank of Patiala and with the previous approval of the Reserve Bank of India.
Regulation 4(1) introduced the following new grades and scales of pay for the officers in the Bank: "4(1) There shall be the following tour grades for officers with the scales of pay specified against each of the grades: (A) Top Executive Scale VII Rs.3000 125 3500 Grade Scale VI Rs.2750 125 3250 (B) Senior Management Scale V Rs.2500 100 2700 Grade Scale IV Rs.2000 100 2400 (C) Middle Management Scale III Rs.1800 75 Grade 2250 Scale II Rs. 1200 70 1550 75 2000 PG NO 483 (D) Junior Management Scale I RS.700 40 900 Grade 50 1 100 EB 1200 60 1800 The petitioners were "existing officers" as on the appointed date i.e. on 1.10.1979 in Grade A. Existing Officers in Grade A were placed in the corresponding new grades and scales of pay.
The officers in the earlier existing Grade A in the pay scale of RS.1200 60 50 75 950 were placed in two different cadres and scale of pay, viz., "Senior Management Grade Scale IV" with the pay scale of RS.2000 100 2400, and "Middle Management Grade Scale III" with the pay scale of Rs. 1800 75 2250, on the sole basis whether the officers had been promoted to the existing Grade A on or prior to 31.12.1975 or there after.
The effect of Regulation 7 read with Schedule I was that all existing Grade A officers who had been promoted to that grade prior to 31.12.1975 were placed in the new scale ("Senior Management Grade Scale IV": RS.2000 100 2400) and those existing Grade A Officers who are promoted as such after 31.
12.1975 were placed in the new scale of "Middle Management Grade Scale Ill: RS.1800 75 2250".
Petitioners challenged this classification of existing officers belonging to same grade and scale of pay into two different categories for fitment in the revised pay scales solely on the basis of date of their promotion as arbitrary and violative of Article l4 of the Constitution of India.
Regulation 7 reads: "Subject to the provisions of Regulation 6, existing officers serving in the grades and scales of pay mentioned in column I of the table given in schedule I to these regulations shall be placed as on the appointed date in the grades and scale specified there against in column ' of the said schedule.
Provided that any difficulties or anomalies arising out of the above placement shall be referred to a committee of such persons as the Board or Executive Committee may appoint and the decision of that committee in this regard shall be final." Relevant entries in Schedule I are: PG NO 484 Schedule I [See regulation 7] Placement of existing Officers in the new grades and scales in the State Bank of Patiala Grade and scale Grade and scale immediately before the in which placed appointed date 1.
Omitted as unnecessary 2.
Officers 'A ' Grade Senior Management promoted as such on or Grade Scale IV December, 1975 Scale Rs.2000 100 2400 Rs.1200 60 1500 75 1950 4.
Other Officers 'A ' Middle Management Grade Scale Rs.1200 60 Grade Scale III 1500 75 1950 Rs.1800 75 2250 5.
Omitted as not necessary 6.
do Sri Tarsem Lal Gautam was promoted as Grade A Officer on 1.12.1978.
C.V. Madan was promoted as Grade A Officer on 1.12.1976.
Both of them having been promoted after 31.12.1975 in the matter of their placement they, by circular dated 23.7.1980 of the First respondent, were held to fall outside entry 3 of Schedule I and within entry 4 of that Schedule and, accordingly, placed them in the 'Middle Management Grade Scale III" and not in the higher revised scale,"Senior Management Grade Scale IV".
It is to be mentioned here that second petitioner Sri C.V. Madan was removed from service on 30.12.1977.
But the prayers in the petition, to the extent they bear upon the correctness of his placement in so far as the benefits that he may be entitled to on that basis up to 30.12.1977, shall survive.
The main grievance of the petitioners is that the new Regulations merely brought about a revision of pay scales and that the differentiation amongst the existing "Grade A" Officers who were doing the same nature of work and who PG NO 485 would continue even after the placement in the new cadre to do the same work into two grades with different scales of pay based purely on the fortuitous circumstance of the date of their promotion to the existing "Grade A" is aroitrary.
The effect of this is illustrated by the possibility that two officers doing the same duty both in the existing grades and in the revised grades are placed in two different scales of pay by reason alone that one of them had been promoted to "Grade A" on 31st December, 1975, would go to the Higher Grade and scale of pay in the revised scale and the other would be placed in the lower scale by reason alone of the fact that he was promoted to the existing Grade the next day.
In the memorandum of writ petition, petitioners contend that existing officers belonging to Grade A are split into two groups with reference to their date of promotion to Grade A and this differentium is an irrational one.
It is averred: ". .
Thus, the same class of officers i.e. Officers "A" Grade, were bifurcated into two different categories with reference to wholly irrational, illegal, inequitable, unreasonable and arbitrary criteria like the fortuitous event of promotion to "A" Grade on or before 31st December, 1975 . ." "The number of posts in SMGS IV were far more than the officers were arbitrarily cut off and intially placed in SMGS IV at that time . " In counter affidavit dated 15.3.1985 filed by the General Manager of the first respondent bank it is stated: ".
It is denied that 'A ' grade officers were bifurcated into two different categories with reference to irrational, illegal, inequitable, unreasonable and arbitrary criteria like the fortuitous event of promotion as alleged.
This date was fixed having regard to the number of posts vacant with the respondent No. I in the Senior Management Grade Scale IV and the number of such posts came to 32 and it was further found that 26 officers had been promoted to then officer Grade 'A ' on or before December 31, 1975 .
The seniority of the officers for placement in Senior Management Grade Scale IV was strictly maintained and no officer junior to the petitioner was placed in Senior PG NO 486 Management Grade Scale IV.
Thus, there was a rational differentia in placing certain officers in Senior Management Grade Scale IV and there was rational relationship of such placement to the objects sought to be achieved, procuring the services of senior most experienced officers for the senior management Grade Scale IV posts. " Setting out the antecedents and the background for this restructuring of the cadres and pay scales it is averred: "It is submitted that in the year 1973, a Committee known as Pillai Committee was appointed by the Government of India for bringing uniformity and standardisation in the conditions of service of the officers of various nationalised Banks.
The recommendations of the Pillai Comrnittee were later on sought to be applied to the State Bank of India and its associate banks with suitablc modifications having regard to their special features . " I say that the new structure of grades and scales created by State Bank of Patiala [Officers`] Service Regulations, 1979, does not lay down grades and scales corresponding to the earlier grades and scales, but it is an entirely new structure created on the basls of recommendations of the Pillai Committee suitably adopted for the subsidiary banks of the State Bank of India with some modifications and there have been bifurcations, which have resulted in intermediate grades and scales.
As such, it cannot be said that the new grades and scales correspond to gold grades and scales and they cannot be construed in a manner that a person who was in a particular grade or scale earlier, would automatically get entitled to be placed in some specified corresponding grade and scale without any reference to the date of his promotion in an earlier grade or scale.
It is very likely that whenever reorganization of cadres takes place in service, some grades may have to be split up into more than one grade or class of posts,or more than one grade or class of posts may have to be merged to form a single cadre and as long as the inter se seniority of the officers is not disturbed, it would be quite permissible to do so in law.
In the present case also, the grades and scales were reorganised, but the inter se seniority of the vis a vis the petitioner was not disturbed and no officer PG NO 487 junior to the petitioner got higher grade or scale in the reorganised structure . " We have heard Shri M.K. Ramamurthy, learned Senior Counsel in support of the petitioners and Shri Shantibhushan, learned Senior Counsel for the first respondent bank.
Though in addition to the challenge to the unconstitutionality of the classification of the existing A Grade Officers into two classes for purposes of fitment into the revised scales of pay, petitioner, Sri Tarsem Lal Goutam has alleged mala fies on the part of senior officers.
It would appear, that he had appeared before the Selection Committee for purposes of promotion from 'Middle Management Grade Scale III ' to the 'Senior Management Grade Scale IV ' and was allegedly, over looked for promotion owing to what according to him was a hostile bias against him.
There are lengthy averments in the memorandum of petition in regard to these grievances and equally lengthy reputations thereof in the counter affidavit.
At the hearing, Sri Ramamurthy, did not rest the case on mala fides and bias but confined the arguments to the question of constitutionality of the criteria of classification in Entry 3 of Schedule I. Sri Ramamurthy contended that the exercise contemplated by the Regulations.
in so far us pay scales were concerned, was a mere revision of the scales of pay and that when in the year 1983, the placements and fitments were undertaken with retrospective effect from 1.10.1979,the two sets of existing officers Grade A, who were earlier doing the same kind of work and who even thereafter continued to do same kind of work, were bifurcated into two classes on the mere fortuitous line of demarcation of the respective dates of their promotion to the Existing Grade A post.
Sri Ramamurthy submitted that the line of demarcation was irrational in fact and impermissible in law.
Those who had put in longer number of years of service, learned counsel submitted, would, of course, be entitled to and get higher pay in the same pay scale; but dividing the Officers of the same cadre into two groups for purposes of the benefit of revision of pay merely on the basis of the date of their promotion would be palpably arbitrary and violative of Article 14.
Shri Ramamurthy contended even on the avowed basis of justification of the choice of the cut off date line of 31.12.1975, namely, that it was intended to bring about a uniformity in all the subsidiary banks would, apart altogether from its legality, by itself negate and detract PG NO 488 from the feebly suggested stand of the First Respondent that the cut off date was intended to secure the requisite number of senior and more experienced officers to man certain posts which were to be categorised against "Senior Management Grade Scale IV".
Sri Ramamurthy submitted that the words 'promoted as such on or before 31.12.1975 ' occurring in item 3 of the Schedule I of the Regulations, which has the effect of bringing about this hostile discrimination, would require to be struck down.
With those words so deleted from item 3 of Schedule I, it was urged, the provision would be purged of the vice of unconstitutionality.
In support of his contention that mere seniority of service cannot support a classification for purposes of higher pay scales, Sri Ramamurthy placed particular reliance on the pronouncement of this Court in P. Savita vs Union of India, [1985] 1 Supp.
SCR 101.
In that case, Senior Draughts men who were holding the posts as on 31.12.
1972, were alone held entitled to a higher pay scale and those who had been promoted after 31.12.1972 were denied the benefit of the revision of the pay scale.
The High Court did not see substance in the challenge of the Senior Draughtsmen who were denied the benefit to the Rule; but this Court relying on the principle of "Equal pay for Equal work" as recognised and effectuated in Randhir Singh vs Union of lndia; , held that the classification to be bad.
Shri Ramamurthy invited our particular attention to the following observations of this court made while striking down the basis of the classification. ".
The explanation is that this division is based on seniority.
This cannot be accepted as sufficient to meet the requirements of law.
By seniority, a Senior Draughtsman will get higher pay with the increments that he earns proportionate to the number of years he is in service.
Here that is not the case.
It is the classification of the Senior Draughts men into two groups, that is responsible for the higher pay . .In view of the total absence of any plea on the side of the respondents, that the Senior Draughts men who are placed in the advantageous group.
do not perform work and duties more onerous or different from the work performed by the appellants group, it will have to be held that this grouping violates Article 14 of the Constitution .
"For the purposes of the case on hand, it is sufficient PG NO 489 to note that the classification between two groups of Senior Draughtsmen is without any basis.
They do the same work, they perform the same duties, and as such the ratio of the decision in Randhir Singh 's case applies to this case with greater force . ." Shri Ramamurthy submitted that this is a full answer to the First Respondent 's contention and stated that the proper authority to plead any tenable justification for the purported classification in item 3 of Schedule I of the Regulations was the State Bank of India, which has framed and promulgated the regulations and said that though the State Bank of India was impleaded as a party, it did not enter appearance and seek to justify the principle justifying the classification.
Shri Shanti Bhushan, however, submitted that the petitioners ' approach to the matter on the strength of Savitha 's case some what misconceived as the former case was one of Revision of pay scales simpliciter while the present Regulations do not contemplate a mere revision of pay scales of the existing cadres of officers but an exercise involving Rationalisation, Standardisation and Re structuring of the whole Administrative set up of the management cadres of the Subsidiary Banks of the State Bank of India.
Shri Shantibhushan submitted that where, as here, new categories of posts and new Scales of Pay, not corresponding to the pre existing categories of posts and scales are created, criteria will have to be evolved and applied for the subsumption and fitment of the existing officers into the new categories of posts and scales of pay.
It might happen that all the Officers of any particular pre existing category, it was urged, cannot.
en bloc, be grafted on a particular new category or scale of pay and a fair and reasonable criteria would, therefore, require to be formulated which, while protecting the inter se seniority of the existing officers would also make for their absorbtion and distribution in the new cadres and scales of pay on some reasonable basis.
Shri Shanti bhushan submitted that the Regulations 4, 6 and 7 read with Schedule I envisage such an exercise and that, indeed, similar exercises have been undertaken and implemented both in the State Bank of India and in all the other subsidiary banks.
Shri Shantibhushan submitted that any acceptance of the contentiones urged for by the petitioners would have the effect of introducing new and unforeseen complications and unsettlements in respect of a large number of similar cases.
Referring to Savita 's case, Shri Shantibhushan submitted that that was a case of a mere unreasonable withholding of the benefits of pay revision to some of the members who PG NO 490 were part of a well defined class.
That apart, that was case where Senior Draughtsmen were divided into two pay scales of Rs.330 560 and Rs.425 700 respectively and the important factor was that under the same pay revision the lesser grade of "Draughtsmen" had the benefit of revised pay scale of Rs.330 560.
The unreasonableness and injustice of the case were writ large and set it apart.
On a careful consideration of the matter, we are pursuaded to the view that the 'Regulations ' did not bring about a mere revision of pay and that the analogy of precedents dealing with revision of pay would not be wholly determinative and that 1he contentions urged by Shri Shantibhushan are not without force.
Regulation 6 required the categorisation of posts under the various new categories of posts.
At the hearing, Shri Shantibhushan brought to our notice that about 32 posts had been categorised against the 'Senior Management Grade IV" by the statutorily envisaged committee constituted for the purpose.
It has been urged for the First Respondent Bank that the seniority and greater experience of the existing Officers in Grade A have been taken into account by the Regulations in the placement and fitment of the existing officers in the "Senior Management Grade Scale IV".
This, we think, is not an instance to which the principle of equal pay for equal work could straight away be applied.
Indeed, the qualitative differences of regard to degrees of reliability and responsibility cannot be put aside as irrelevant.
There cannot be any Thumb Rule to decide the invalidity of the provisions which recognise and provide for differentiation on the basis of higher experience, reliability and responsibility.
Indeed, the observations of this Court All Customs & Central Excise Stenographers (recognised) and Others vs Union of India, [1988] 2 JT 519 are apposite| "There may be qualitative difference as regards reliability and responsibility.
Functions may be same but the responsibilities make a difference.
One cannot deny that often the difference is a matter of degree and that there is an element of value judgment by those who are charged with the administration in fixing the scales of pay and other conditions of service.
So long as such value judgment is made bona fide, reasonably on an intelligible criteria which has a rational nexus with the object of PG NO 491 differentiation, such differentiation will not amount to discrimination . " "The same amount of physical work may entail different quality of work, some more sensitive, some requiring more tact, some less it varies from nature and culture of employment.
The problem about equal pay cannot always be translated into a mathematical formula.
If it has a rational nexus with the object to be sought for, as reiterated before a certain amount of value judgment of the administrative authorities who are charged with fixing the pay scale has to be left with them and it cannot be interfered with by the Court unless it is demonstrated that either it is irrational or based on no basis or arrived mala fide either in law or in fact.
" In Randhir Singh 's case itself it was recognised thus: " . .
The higher qualifications for the higher grade, which may be either academic qualifications. or experience based on length of service reasonably sustain the classification of the officers into two grades with different scales of pay.
The principle of equal pay for equal work would be an abstract doctrine not attracting article 14 if sought to be applied to them.
" In a recent pronouncement, this Court dealt with a case, the facts of which, in comparison with those of the present one, would render the latter as a fortiori position.
In State of U.P. vs J.P. Chaurasia and Ors, (Civil Appeal No. 56 of 1987 dated 27.9.1988 this Court noticed the question thus: " The question is whether it is permissible to have two pay scales in the same cadre for persons having same duties and having same responsibility ? Reversing the decision of the High Court which in the facts of the case answered in the negative this Court observed: ' 'The second question formulated needs careful examination.
The question is not particular to the present case.
It is pertinent to all such cases.
It is a matter affecting the civil services in general.
The question is whether there could be two scales of pay in the same cadre PG NO 492 of persons performing the same or similar work or duties.
All Bench Secretaries in the High Court of Allahabad are undisputedly having same duties.
But they have been bifurcated into two grades with different pay scales . " ".
In service matters, merit or experience could be the proper basis for classification to promote efficiency in administration.
He or she learns also by experience as much as by other means.
It cannot be denied that the quality of work performed by persons of longer experience is superior than the work of new comers . " We think that the principle of classification amongst the existing officers Grade A for purposes of fitment in the new dispensation brought about by the statutory regulations cannot be said to be unreasonable and arbitrary requiring to be struck down as violative of Article 14.
Some arguments were advanced on the question if the number of pots categorised against "Senior Management Grade Scale IV" was higher than those filled up by the initial fitment under Regulation 7 read with Schedule I, the excess number of posts would automatically go, by way of placement, to the existing officers in Grade A without the requirement of "promotion".
The categorisation of posts under Regulation 6 is an exercise which is not in any way fettered by Regulation 7.
If more number of posts are categorised under 'Senior Management Grade Scale IV ' than the number of existing officers placed into the higher scale pursuant to Regulation 7 read with Schedule I, the proper construction to be placed on the scheme of the Regulation is that these extra number of posts in the higher scale would have to be filled up by promotion under Regulation 17 and not by a continuing process of placement and fitment.
There is thus, no merit in the writ petition which is accordingly dismissed.
But in the circumstances, we make no order as to costs.
R.S.S. Petition dismissed.

dataset_name: IN-Abs

summary:
The petitioners were working as Grade A officers on the appointed date, i.e., 1.10.1979 when the State Bank of Patiala (Officers ') Service Regulation, 1979 pertaining to the placement and fitment of existing officers in the new grades and scales of pay became effective.
By virtue of Regulation 7 read with Schedule 1, the pre existing Grade A officers were placed in two different grades Senior Management Grade and Middle Management Grade Depending on their date of promotion to Grade A being before or after 31.12.1975.
The petitioners who were placed in the Middle Management Grade have challenged in their writ petition to this Court the validity of Regulation 7 read with Schedule I of the Regulations on the grounds that (i) the Regulations merely brought about a revision of pay scales; (ii) to divide the officers of the same cadre and doing the same nature of work into two groups for the purposes of mere revision of pay scales purely on the basis of the fortuitous circumstance of the date of their promotion to the existing Grade A would be arbitrary and violative of Article 14; and (iii) the number of posts in the revised senior grade were far more than the officers arbitrarily cut off and initially placed in that grade.
P. Savita vs Union of India, [1985] Suppl I S.C.R. 101 and Randhir Singh vs Union of India, ; , relied upon.
PG NO 479 PG NO 480 On behalf of the Bank it was contended that: (i) the Regulations did not contemplate revision simpliciter of pay scales of the existing cadres of officers; (ii) new categories of posts and new scales of pay not corresponding to the pre existing categories of posts and scales had been created and, therefore, new criteria had to be evolved and applied for the placement and fitment of the existing officers into the new categories of posts and scales of pay; (iii) all the officers of any particular pre existing category could not, en bloc, be grafted on a particular new category or scale of pay; and (iv) there was a rational differentia in placing certain officers in the Senior Management Posts as the cut off date was fixed having regard to the number of posts vacant in that grade on the appointed date.
Dismissing the petition, it was, HELD: (l) The Regulations did not bring about a mere revision of pay.
[490B C] (2) This was not a case to which the principle of 'equal pay for equal work ' could straight away be applied.
[490E] (3) The qualitative differences in regard to degrees of reliability and responsibility could not be put aside as irrelevant.
There could not be any Thumb Rule to decide the invalidity of the provisions which recognised and provided for differentiation on the basis of higher experience, reliability and responsibility.
[490E F] Randhir Singh vs Union of India, ; ; All Customs & Central Excise Stenographers (recognised) vs Union of India,[1988] 2 JT 519 and State of U.P. v.J.P.Chaurasia,C.A.No 56 of 1987 dated 27.9.1988, referred to.
P. Savita vs Union of India [1985] 1 SUPP.
SCR 101; distinguished.
(4) The principle of classification amongst the existing Grade A officers for purposes of fitment in the new dispensation brought about by the statutory regulations could not be said to be unreasonable and arbitrary requiring to be struck down as violative of Article 14.
[492C D] (5) If more number of posts were categorised under Senior Management Grade Scale IV` than the number of existing officers placed into the higher scale pursuant to PG NO 481 Regulation 7 read with Schedule 1, those extra number of posts in the higher scale would have to be filled up by promotion under Regulation 17 and not by a continuing process of placement and fitment.
[492F]


judgement:
vil Appeal No. 1006 ot 1980.
From the Judgment and Order dated 13.2.1980 of the Karnataka High Court in C.R.P. No. 1287 of 1977.
R.B. Datar for the Appellant.
S.S. Javali and Ravi P. Wadhwani for the Respondents.
The Judgment of the Court was delivered by NATARAJAN, J.
Does a mortgagee with possession stand on a par with an owner of a building to seek the eviction of a tenant under Section 21(l)(h) of the Karnataka Rent Control Act, 1961 (for short the Act ' hereinafter) for his bona fide requirement of the tenanted premises for residential or business needs is the question for determination in this appeal by special leave by a tenant.
The Trial Court, the Appellate Court and the High Court in revision have answered the question in the affirmative and the aggrieved tenant now represented by his Iegal representatives is before us in appeal.
The tenanted shop to one Nanjappa and the appellant had taken the same on rent for running a cycle shop.
On the foot of an usufructuary mortgage executed in their favour, the respondents, who are partners, sought the eviction of the appellant under Section 2l(1)(h) of the Act.
Their case was that they were also running a cycle shop in a rented premises but since their landlord had obtained an order of eviction against th In they were bona fide in need of another building to run their business.
In such circumstance they had advanced a sum of Rs.25,000 to the appellant 's landlord Nanjappa and obtained a usufructuary mortgage of the tenanted premises and thus having stepped into the shoes of the landlord, they were seeking the eviction of the appellant.
The appellant 's defence was that the usufructuary mortgage was a sham and nominal translation created by the landlord with an oblique motive because he had refused to pay higher rent for the premises and secondly the mortgagees were not bona fide in need of the petition premises for their business, The Trial Court rejected both the defences and ordered eviction and the said order has been affirmed PG NO 508 by the Appellate Court and the High Court.
In this appeal there is no challenge to the findings that the respondents were bona fide in need of another shop to run their business and that they had obtained an usufructuary mortagage of the tenanted premises from the owner Nanjappa.
However, the contention of the appellants is that a usufructuary mortgagee cannot be equated with the mortgagor/landlord for seeking the tenant 's eviction under Section 21(1)(h) on the ground of bona fide requirement of the leased premises for his own use.
The argument of Mr. Datar, learned counsel for the appellant was that the Act is a beneficial piece of legislation intended to protect the tenants from unreasonable evictions and as such the provisions of Section 21 have to be construed in such a manner that the right of the tenants are not taken away beyond the limits of the Section.
It was urged by the learned counsel that if Section 21(1)(h) is to be liberally construed so as to equate a usufructuary mortgagee with the owner of a building and enable him to seek eviction of a tenant under Section 21(1)(h), then it would give a handle for scheming landlords, who cannot themselves obtain an order of eviction against their tenants under Section 21(1)(h), to crate a nominal deed of usufructuary mortgage and have their tenants evicted with the help of the mortgagee and then secure possession of the leased premises for themselves.
In this eontext it was pointed out by Mr. Datar that the usufructuary mortgage in favour of the respondents was only for a period of 30 months and therefore the mortgage should be treated as a colourable transaction.
Before we examine the merit of these contentions, we may refer to the relevant provisions of the Act.
The term `landlord ' is defined in Clause (h) of Section 3 of the Act as under: "Landlord `Landlord means any person who is for the time being, receiving or entitled to receive, rent in respect of any premises whether on his own account, or on account, or on behalf of, or for the benefit of any other person or as a trustee, guardian or receiver for any other person or who would so receive the rent or be entitled to receive the rent if the premises were let to a tenant; and includes any person not being a tenant who from time to time derives title under a landlord; and further includes in respect of his sub tenant who has sub let any premises;" Section 21(1)(h) under which the eviction petition was filed reads as under: PG NO 509 "21( I)(h) that the premises are reasonably and bona fide required by the landlord for occupation by himself or any person for whose benefit the premises are held or where the landlord is a trustee of a public charitable trust, that the premises are required for occupation for the purpose of the trust.
On a reading of Section 3(h) it may be seen that it is an inclusive definition and takes within the fold of 'landlord not only the owner of the premises but any person who for the time being is receiving or is entitled to receive the rent, whether on his own account or on account of, or on behalf of or for the benefit of any other person or as a trustees, guardian or receiver for any other person etc.
A usufructuary mortgagee, as per Section 58(d) of the Transfer of Property Act is entitled to be in possession of the mortgage property or to receive the rents and profits, either in full or in part, accruing from the property and appropriate the rents and profits in lieu of interest or in payment of the mortgage money or partly in lieu of interest or partly in payment of the mortgage money.
By reason of his entitlement to receive the rent of the mortgage property.
a mortgagee with possession will undoubtedly constitute a landlord within the meaning of Section 3(h) of the Act.
The appellant 's counsel did not dispute this position.
He would however say that even so, Section 21( I)(h) should be read down so as to restrict the meaning of the word "landlord" in that clause to the owner of the premises alone and not to a usufructuary mortgagee.
Before considering the matter, we may refer to some of the decisions where the same question has been considered.
A learned single judge of the Madras High Court has held in V. Baluswamy Servai vs N. Raju Servai, that a usufructuary mortgagee of a building in the occupation of a tenant would undoubtedly constitute a landlord within the meaning of Section 2(6) of the Madras Buildings (lease & Rent Control) Act, 1960, as he is entitled to receive the rent o the building on is Own account and therefore he would be entitled to evict a tenant under Section 10(3)(a)(i) of the Act on he ground of bona fide requirement of the premises for his personal occupation.
This ratio was followed in T. Ezhumalai vs Padmavathi Ammal, The same view was taken by a learned single judge of the Karnataka High Court also in a case arising under the Karnataka Rent Control Act in Aswatharamiah vs Special Deputy Commissioner, However, a Division Bench of the Karnataka High Court took a different view in S.Subramanayaswamy vs Deputy Commissioner, PG NO 510 Bangalore, AIR 1981 Karnataka 190 and held that though a mortgagee with possession may satisfy he definition of `landlord ' under Section 3(h) of the Karnataka Act, he would not be entitled to claim priority in the matter of allotment of the mortgage premises to himself under Section 5 as the benefit of the Section could be availed of only by the owner/landlord.
As the decision in section Subramanayaswamy (supra) conflicted with some of the earlier decisions of the High Court, a reference was made to a Full Bench in R. Vijendra vs H.R. & A.C., ILR for settlement of law on the question formulated as under: "Whether an usufructuary mortgagee is a landlord for purposes of Part II of the Karnataka Rent Control Act, 1961.
" The Full Bench answered the reference in the affirmative and held that since delivery of possession is a necessary concomitant of a usufructuary mortagage and since the concomitant entitles the usufructuary mortgagee to claim possession of the property to the exclusion of all other, including the mortgagor, the mortgagee is for all intents and purposes the owner himself, as he steps into the shoes of owner, and by reason of it he acquires the status of a landlord under Section 3(h) as well as the provisions in Part II for claiming possession of the mortgage premises for is personal occupation.
On a consideration of the matter we find ourselves in agreement with the view taken by the Full Bench.
We may now give the reasons for our view.
The definition of `landlord ' in Section 3(h), as we have already seen in an inclusive definition and would take within its fold any person who for the time being is receiving or is entitled to receive the rent in respect of the leased premises.
The person receiving or entitled to receive the rent may do so either on his own account or on account of or on behalf of or or the benefit of any other person or as a trustee, guardian or receiver for any other person.
A mortgagee with possession undoubtedly falls under the first category as he is entitled to receive the rent on his own account and this factor makes the usufructuary mortgagee stand on a higher and different footing than other persons accorded the status of a landlord under Section 3(h) because their entitlement to receive rent is on behalf of or for the benefit of others and not on their own account.
Secondly it is of significance that the legislature being alive to the expansive nature of the definition of the term `landlord ' in Section 3(h) had realised the need to limit PG NO 511 the operation of the definition in so far as eviction petitions under Section 21(1)(h) are concerned.
Section 21(1) sets out various grounds on which the eviction of a tenant can be sought for.
The grounds may pertain to the omissions or commissions of the tenant or to the bona fide requirement of the premises by the landlord in various situations.
The legislature has taken care to see that in so far as clause (h) is concerned viz the premises being reasonably and bona fide required by the landlord for his own occupation or for the benefit of any person for whom the premises are held, the status of a landlord should be denied to a Rent Collector or an Estate Manager.
The exclusion is to be found in the Explanation to Clause 4 of Section 21 in the following terms: "For the purpose of clause (h) of the proviso to sub section 1, expression `landlord ' shall not include a Collector or Estate Manager.
" It therefore follows that if the legislature had wanted that a mortgagee with possession should not be equated with the owner of the premises and should be denied the benefit of seeking a tenant 's eviction under Section 21(1)(h), the Legislature would have undoubtedly categorised a mortgagee with possession also as one of the excluded class of landlord lords for the Purposes of Section 21(1)(h) of the Act.
Obviously therefore the legislature has not wanted a mortgagee with possession to be excluded of his right to seek eviction of a tenant from the mortgaged premises under Section 21(1) of the Act.
Thirdly, a mortgagee with possession is enjoined by Section 76(a) of the Transfer of Property Act manage the property as a man of ordinary prudence would manage it if it were his own.
As such the mortgagee 's acts, it prudently done, could bind the mortgagor even after the redemption of the mortgage.
A mortgagee with possession, steps into the shoes of the mortgagor and becomes entitled to all the rights of the mortgagor and the only right left with the mortgagor is the right of redemption.
A mortgage with possession is entitled to be in possession of the mortgage property as long as it is not redeemed.
If the mortgagee with possession leases back the property to the mortgagor, he acquires the rights of a lessor and is entitled to enforce the terms of the lease against the mortgagor (vide Mathur Lal vs Keshar Bai & Anr., ; On account of all these factors there can be no doubt that a mortgagee with possession stands very differently from other kinds of landlords envisaged under Section 3(h) of the Act.
He is therefore entitled, as much as the owner himself, to seek recovery of possession of the leased premises from a tenant for his own bona fide requirements of use.
For all these reasons we hold PG NO 512 that the view taken by the single judges in the cases referred to above and the Full Bench in R. Vijendra 's case (supra) is the correct view to be taken.
As regards the contention of Mr. Datar that a scheming landlord can adopt the devious method of creating a sham deed of usufructuary mortgage in order to have a tenant evicted, when he himself cannot sustain such an action, the argument fails to note that an order of eviction under Section 21(1)(h) would not be passed by the Court for the mere asking because, the mortgagee with possession has first get to prove that the premises are reasonably and bona fide required by him for occupation by himself.
Without the reasonable and bona fide requirement being proved to the satisfaction of the Court, no order for eviction will be passed.
Nextly, even if the mortgagee with possession satisfies the above test, he has to pass the further test laid down by sub section 4 of Section 21 which provides that a tenant shall not be evicted under Section 21(1)(h) if the Court is satisfied that the tenant would be put to greater hardship by an order of eviction being passed than the hardship that would be caused to the landlord by refusal to pass an order of eviction in his favour.
These things apart, it is inconceivable every landlord who would not be able to evict his tenant by resort to Section 21(1)(h) would be able to readily find a willing accessory who will be prepared to play the role of a usufructuary mortgagee and institute eviction proceedings against the tenant in order to secure the possession of the leased premises and then hand over possession to the owner of the building.
For all these reasons, the appeal deserves to fail and will accordingly stand dismissed.
The appellant is, however, given six months time from today to vacate the leased premises subject to the appellant filing an undertaking in the usual terms within four weeks from today.
There will be no order as to costs.
H.S.K. Appeal dismissed.

summary:
The appellant, now represented by his legal representatives, had taken on rent certain premises and was in occupation thereof.
On the basis of a usufructuary mortgage executed by the landlord in their favour, the respondents who are the partners, sought the eviction of the appellant under section 21(1)(h) of the Karnataka Rent Control Act, 1961 on the ground that they were bona fide in need of the premises to run their business.
The appellant 's defence was that the usufructuary mortgage was a sham and nominal transaction created by the landlord with an oblique motive because he had refused to pay higher rent for the premises and secondly the mortgagees were not bona fide in need of the premises for their business.
The Trial Court rejected both the defences and ordered eviction and the said order was affirmed by the appellate court and the High Court.
Hence this appeal.
Dismissing the appeal, this Court, HELD: The definition of landlord ' in Section 3(h),is an inclusive definition and would take within its fold any per.
who for the time being is receiving or is entitled to receive the rent in respect of the leased premises.
The person receiving or entitled to receive the rent may do so either on his own account or On account of or on behalf of or for the benefit of any other person or as a trustee, guardian or receiver for any other person.
A mortgagee with possession undoubtedly falls under the first category as under Sec.
58(d) of the Transfer of property Act, he is PG NO 505 PG NO 506 entitled to receive the rent on his own account and this factor makes the usufructuary mortgagee stand on a higher and different footing than other persons accorded the status of a landlord under Scction 3(h) because their entitlement to receive rent is on behalf of or for the benefit of others and not on their own account.
[5l0F H] V.
Baluswamy Servai vs N. Raju Servai, ; T. Ezhumalai vs Padmavathi Ammal, [1971] J Aswatharamiah vs Special Deputy Commissioner, ; section Subramanayaswamy vs Deputy Commissioner, Bangalore, AIR 1981 Karnataka 190; R. Vijendra vs H.R. & A.C., ILR , referred to.
If the legislature so wanted, it would have undoubtedly categorised a mortgagee with possession also as one of the excluded class of landlords for the purpose of sec.
21(1)(h) of the Act.
Obviously the legislature has not done so as would appear from the explanation to clause 4 of sec.
[511D E] A mortgagee with possession, steps into the shoes of the mortgagor and becomes entitled to all the rights of the mortgagor and the only right left with the mortgagor is the redemption.
A mortgagee with possession is entitled to be in posession of the mortgage property as long as it is not redeemed.
If the mortgagee with possession leases back the property to the mortgagor, he acquires the rights of a lessor and is entitled to enforce the terms of he lease against the mortgagor.
[511F G] Mathur Lal vs Keshar Bai & Anr., ; , referred to.
There can be no doubt that a mortgagee with possession stands very differently from other kinds of landlords euvisagad under section 3(b) of the Act.
He is therefore entitled, as much as the owner himself, to seek recovery of posession of the leased premises from a tenant for him own bona fide requirement of use.
[511g H] V.Baluswamy Servai vs N. Raju Servai ; R Vijendra vs H. R. & A .
C., ILR , approved.
The appellant 's argument that a scheming landlord can adopt the devious method of creating a sham deed of usufructuary mortgage in order to have u tenant evicted has no force because il fails to note that an order of eviction under sec.
21(1)(h) would not be Passed by the court for the PG NO 507 mere asking because, the mortgagee with possession has first get to prove that the premises are reasonably and bona fide required by him for occupation by himself.
[512B C]


judgement:
ecial Leave Petition (Civil)No.6536 of 1988.
From the Judgment and Order dated 26.4.1988 of the Bombay High Court in Appeal No. 431 of 1988.
G. Ramaswami, Additional Solicitor General and Mukul Mudgal for the Petitioner.
Anil B. Diwan, D.N. Misra, M.P. Bharucha and S.J. Vajifdar for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI,J.
This application for leave to appeal is from the decision of the Division Bench of the High Court of Bombay, dated 26th April, 1988.
By the said decision the Division Bench summarily dismissed the appeal thereby affirming the order of the learned Single Judge of the High Court.
On 12th January, 1980 the petitioner herein signed what has been treated as the first contract with the respondent for the supply of 5000 Mts. of Indian H.P.S. Groundnut Kernels Javas (hereinafter referred to as the said goods) for the year 1979 8O.
The second contract in respect of the same was signed for 4000 Mts.
on 3rd April, 1980.
On 18th August, 1980 since 3100 Mts.
of the remaining first contract and total of 4000 Mts. of the second contract had not been supplied, the contract was extended for the balance quantity for the next crop season 1980 81.
On 20th December.
1980 the petitioner informed the respondent not to nominate any vessels to load goods as they were unable to get necessary clearance from the Government.
PG NO 551 The petitioner on 27th January, 1981 sent a telex informing the respondent that the goods could not be exported on account of executive/legislative ban on such exports.
On 6th March, 1981 the Federation of Oil Seeds and Fats Association (FOSFA) informed the petitioner by its letter of the appointment of an arbitrator because of non shipment due to Government 's refusal.
Thus the respondent invoked the arbitration proceedings with FOSFA.
On 19th March, 1981 the petitioner filed a petition in the Delhi High Court challenging the arbitration proceedings by FOSFA.
The Delhi High Court on 23rd March, 1981 passed a stay order and restrained the arbitration proceedings by FOSFA.
On 11th December, 1981, the Delhi High Court held that no arbitration agreement existed with regard to the second contract dated 3rd April, 1980 and as such none was entitled to seek reference to arbitration.
It was further held that vis a vis the first contract dated 12th January, 1980 there was an arbitration clause existing.
The National Agricultural Cooperative Marketing Federation of India Ltd., filed a special leave petition in this Court on 1st April, 1982 challenging the decision of the Delhi High Court on the ground that there was no valid FOSFA arbitration clause incorporated in the first contract dated 12th January, 1980.
On 2nd December, 1983 this Court passed an interim order granting special permission to the respondent to file a money suit in any court against the petitioner since the claims were getting barred by time.
The said order stated as follows: "The order of this court dated 30.4.1982 is modified to the extent that Alimenta S.A. is at liberty to file suit against N.A.F.E.D. in respect of its claims/disputes under the two contracts dated 121.1980 and 3.4.1980.
It is directed that such suit shall not constitute abandonment of the pending arbitrations instituted/commenced by Alimenta S.A. against N.A.F.E.D. or in any manner prejudice the said arbitrations or any awards made therein or the enforcement thereof and shall not prejudice Alimenta 's contention in any of the cases.
" On 17th December, 1983 the respondent filed a regular money suit No. 488 of 1984 for an amount of US $1,70,39,544 (equivalent to Rs. 17,93,93,440) and interest On the sum of US $ 11,23,500 (equivalent to Rs.11,23,35,000).
Written statement was filed by the respondent raising several objections, inter alia, limitation, maintainability etc.
On or about 24th July, 1984, the respondent filed another identical suit in the Bombay High Court being Suit No. PG NO 552 2657/84 for recovering damages for which the written statement was filed on 20th March, 1984.
The respondent also filed another identical suit No. 1241 of 1981 in the High Court on 21st March, 1985 for which also the written statement was filed.
The Supreme Court on 9th January, 1987 held that there was a valid arbitration clause in the first contract dated 12.1.1980.
In January, 1987 the respondents started arbitration proceedings in respect of FOSFA contract dated 12.1.1980.
In 1987, the petitioner 's Solicitor in London issued summons to restrain the London arbitration.
The arbitrator thereafter affirmed that they would not proceed with the arbitration until the petitioner 's application for stay was finally disposed of.
The petitioner moved an application in suit No. 1241 of 1985 in the Bombay High Court stating that in the interests of justice pending disposal of the above three suits an injunction should be granted restraining the parties from proceeding with the arbitration and the arbitration be stayed under the principles of Section 35 of the Indian .
On 2nd January, 1988 the Bombay High Court granted an interim injunction restraining the parties from proceeding with the arbitration.
The learned Single Judge on 8th March, 1988 dismissed the notice of motion holding, inter alia, that this Court 's order dated 2nd December, 1983 set out hereinbefore was clear and, therefore, stay could not be granted.
There was an appeal to the Division Bench.
On 28th March, 1988 there was an interim order in appeal No. 431 of 1988 permitting the respondent to seek clarification from this Court regarding its order dated 2nd December, 1983.
This Court disposed of the said application by stating that the Bombay High Court might make its own order.
As mentioned hereinbefore the Division Bench of the High Court dismissed on 26th April, 1988 the appeal preferred from the decision of the learned Single Judge of that High Court.
Hence, the petitioner seeks have to appeal to this Court.
The question concerned here is, whether the High Court was right.
The High Court noted that it was an admitted position that under the first contract the defendant therein being the petitioner herein, has supplied 1900 Mts while under the second contract the defendant has not supplied anything.
The High Court noted that the petitioner has pleaded that the Government had not permitted supply of any further materials to the plaintiff being the respondent herein.
The respondent is a Swiss Company.
As per the contract the respondent had initiated arbitration proceedings against the petitioner with the Federation of Oil Seeds and Fat Association (for brief called FOSFA London PG NO 553 in 1981 and had informed the petitioner by their letter dated 10th March, 1981 for the appointment of an arbitrator on their behalf.
The defendant had contended that there could not be any such arbitration and, therefore, it filed a petition in the High Court challenging the arbitration proceedings.
The Delhi High Court on the 11th December, 1981 came to the conclusion that as regards the first contract there was a valid arbitration agreement and as regards the second contract, there was no such arbitration agreement.
In other words, as regards the first contract the respondent herein could have proceeded with the arbitration while with regard to the second contract there was no question of referring the dispute to the arbitrator as such.
Both the parties had filed special leave petitions to this Court, being 1755 of 1982 and 1756 of 1982 from the decision of the High Court of Delhi.
This Court admitted the petition but did not decide the matter immediately.
In the meanwhile, the claim of the plaintiffs was getting barred by law of limitation and, therefore, they moved this Court for an early hearing.
This Court instead of hearing the petition passed an order on 12th December, 1988 giving liberty to the respondent to file suit in respect of its claims.
It was further stated that filing of such a suit would not constitute abandonment of the pending arbitration proceedings instituted or commenced by the respondent against the petitioner.
It is pursuant to this liberty that the respondent had filed suit No. 488 of 1984.
Thereafter, without withdrawing the first suit but perhaps on the basis that there was some technical defect in the suit according to the Bombay High Court, the respondent had filed a second suit No. 2659/84 on 20th March, 1984.
It had filed another suit No. 1241 of 1985 on the very next date.
All these suits were pending in the High Court of Bombay.
The cause of action in respect of these suits is the same.
It has been stated that the present suit had been filed by way of an abundant caution and without prejudice to the rights and contentions including the arbitration proceedings.
As a result of this decision the respondent started their arbitration proceedings from the stage at which it had been stayed earlier but only in respect of the first contract.
The first notice of motion is for stay of these arbitration proceedings on the ground that the present suit as also the other two suits are pending and there cannot be any multiplicity of the proceedings in respect of the same cause of action.
The High Court noted further that in view of the decision of this Court giving it liberty to file the proceedings the respondent was at liberty to proceed with the arbitration proceedings in respect of the first contract and having regard to this position it stated at the time of hearing of this petition PG NO 554 before the High Court and also in its affidavit that it was giving up claim in respect of the first contract.
The learned Solicitor General who had appeared in the Bombay High Court on behalf of the petitioner, which was the defendant, contended that it was not open to the respondent to forego a part of its claim.
The learned Solicitor General had also argued that the cause of action was one and it was not open to the respondent to split up its cause of action.
The High Court, however, did not find any substance in that argument.
The High Court was of the view that there were two claims arising out of the two contracts and the claims could easily be segregated or separated and that was the reason that the High Court held that the respondent could give up part of its claims which related to the first contract.
In our opinion, the High Court was right.
Relying upon the decision of this Court in V/C Tractoroexport, Moscow vs M/s. Tarapore & Co. & Anr., ; , the learned Solicitor General had submitted before the Bombay High Court that though Section 35 of the does not apply, the principles underlying the same would apply and those principles were that arbitrators should not proceed with arbitration side by side and in rivalry or in competition with the Civil Court.
It Was further submitted before the High Court that it can exercise cognate or similar powers possessed by it under Section 151 of the Code of Civil Procedure and should avoid the possibility of conflict of decisions.
Reliance was placed on a decision of the Calcutta High Court in Serajuddin & Co. vs Michael Goldetz & Ors., AIR 1960 Cal.
In the said circumstance it was submitted that the proper course was to restrain the plaintiffs from getting the matter decided in London so long as the suit was pending and had not been disposed of.
In view of the fact that the subject matter of the reference was the same as in the plattings of the suit, the public tribunal should have precedence, it was submitted by the learned Solicitor General.
Reliance was also placed on the decision of India Groundnut Syndicate Ltd., Though there was no averment relating to inconvenience with regard to the contract or proceedings in a foreign Contract learned Solicitor had relied on the decision of this Court in Ramji Dayawala & Sons (P) Ltd. vs Invest Import, ; , and submitted that it was more convenient for adjudication in India then in London.
In addition to this the high costs of the arbitration and the restrictions on the availability of foreign exchange were also highlighted before the High Court of Bombay, and in as much as the defence in action in PG NO 555 India as also the arbitration in London was the same, and the evidence was the same and the entire contract had to be performed by shipping the goods from India.
Therefore, it was submitted that it was not necessary that the parties should be allowed to proceed with the arbitration in London.
It was also submitted that no prejudice would be caused to the respondent if they are required to proceed with the present suit and not with the arbitration proceedings.
On behalf of the petitioner, however, it had been contended that the respondent was interested in delaying the proceedings somehow or the other.
In support of this the petitioner brought to the notice of the High Court that in 1980 when the breach of contract took place, the plaintiff instituted arbitration proceedings and the respondent promptly filed petition in the Delhi High Court and got stay of the arbitration proceedings.
Thereafter, they lost interest in the matter and the matter came to be decided by this Court and this Court by its order dated 9.1.1987 expressed and directed that the first contract was subject to the arbitration agreement and there was no reason why the defendants could not have proceeded with such arbitration.
It further appears that sometime in October, 1987 the petitioner had taken out an originating summons in the High Court of Justice in London but the summons were not served on the respondent.
The arbitrators had given the directions that they would proceed and not wait any further.
And it was upon this that the respondent had brought the present proceedings in the Bombay High Court.
The High Court further felt that in view of the decision of this Court on 2nd December, 1983 there was no abandonment of the pending arbitration proceedings by the respondent.
It is well settled that in particular facts and circumstances it a party files a suit to save limitation the same would not Vitiate the award or make the award bad under Section 35 of the .
Reference in this connection may be made to the observations of the Punjab and Haryana High Court in Sujant Singh vs Seth Mohinder Paul, AIR 1964 Punj 395.
The High Court felt that in the facts and circumstances of this case Section 35 of the does not apply, which postulates that neither any reference nor any award shall be rendered invalid by reason only of the commencement of the legal proceedings upon the subject matter of the reference but when the legal proceedings upon the whole subject matter of the reference have been commenced between all the parties to the reference and notice has been given to the arbitrator or the umpire, all further proceedings in a pending reference shall unless a stay of proceedings is granted under Section 34, be invalid.
The High Court held, and in our opinion rightly, that PG NO 556 Section 35 does not apply.
The order of this Court set out hereinbefore clearly permits the continuation of legal proceedings in suit and cannot operate to nullify the arbitration proceedings in London.
The High Court, therefore, declined to grant stay of the arbitration proceedings.
Was the High Court right, is the question in this application.
Reliance was placed by the learned Additional Solicitor General Mr. G. Ramaswamy before us on a decision of this Court in Oil & Natural Gas Commn.
vs Western Co. of N. America, for the proposition that in a situation of the present type it would be improper to ask the petitioner to go on with the arbitration in London.
The facts there were entirely different from the facts before us.
Section 151 of the Code of Civil Procedure on the bais of which and on the principle of which stay of proceedings in London was sought, are well settled and these principles are whether in a particular case it would be just and equitable to the parties to direct them to proceed with the arbitration, must depend upon the facts and circumstances of a particular case having regard to the legal provisions applicable to a particular situation.
In the decision referred to hereinbefore this Court took into consideration the fact that there was an application under Sections 30 & 33 of the for setting aside the awards rendered by the umpire in that case and that there was a possibility of the award rendered by the Umpire being stayed by the Indian court.
This Court also took into consideration that in that event an extremely anomalous situation would arise inasmuch as the successful party the Western Company might well have recovered the amount awarded as per the award from the assets of the losing party in U.S.A. after procuring the judgment in terms of the award from the U.S.A. court.
Such possibility of damage and danger is absent in the present case.
In the said decision before this Court by the contract therein the Indian courts had exclusive Jurisdiction and it would, however, be improper to proceed on the basis that the Indian courts have exclusive jurisdiction to affirm or set aside the award in terms of the proper law of the contract, or in terms of the actual contrast between the parties.
Foreign awards automatically are not 'lifeless awards '.
They can be enforced in this country in accordance with law.
See in this connection the Foreign Awards (Recognition and Enforcement) Act, 1961.
Furthermore, unlike the case of Oil & Natural Gas Commission this is not a case of restraining the respondent from proceeding in a foreign court.
This is a case of binding the parties to their bargain for going to the arbitration.
The learned Single Judge of the High Court in PG NO 557 the instant case had taken into account all the relevant facts.
It had considered the contract of the parties, the arbitration agreement, the statement made on behalf of the respondent and had thereafter exercised its jurisdiction not to stay the proceedings of arbitration in relation to the first contract.
There is a valid arbitration agreement Between the parties.
In view of the direction of this Court, the continuation of the arbitration proceedings in respect of the filing of the suit would not be bad.
In those circumstances if the court declined to exercise its jurisdiction under Section 151 of the Code of Civil Procedure to grant stay of the proceedings of arbitration in London, the court, in our opinion, has not acted in excess of jurisdiction or has not exercised its jurisdiction improperly.
In such a situation the Appellate Court should not normally interfere.
In the premises, it would have been improper to exercise any jurisdiction to interfere.
See the observations of this Court in Ramji Dayawala & Sons (P) Ltd. (supra).
There will be no stay of the arbitration in relation to the first contract only.
In the Premises, it would not be proper for us to interfere with the judgment of the Division Bench of the High Court.
The application, therefore, fails and is accordingly dismissed.

summary:
The petitioner signed two contracts, one on the 12th January.
1980 and the other on 18th August, 1980 for the supply of Indian H.P.S. Groundnut Kernels Javas to a Swiss Company.
On 20th December, 1980 the petitioner informed the respondent not to nominate any vessels to load goods as it were unable to get necessary clearance from the Government, and by a telex message on 27th January.
1981 informed the respondent that the goods could not be exported on account of executive/legislative ban.
The respondent invoked the arbitration proceedings with the Federation of Oil Seeds and Fats Association who informed the petitioner on 6th March, 1981 by a letter of the appointment of an arbitrator.
The petitioner challenged the arbitration proceedings in the Delhi High Court.
On March 23rd.
1981 a stay order was passed restraining the arbitration proceedings, and on 11th December.
1981 the High Court held that no arbitration agreement existed with regard to the second contract and as such nobody was entitled to seek reference to arbitration.
The petitioner filed a special leave petition to this Court.
This Court passed an interim order granting special permission to the respondent to file a money suit in any court since the claims were getting barred by time.
Pursuant to this order the r respondent filed a regular money suit in a foreign court, and two identical suits in the Bombay High Court for recovering damages, for which the written statements were filed.
PG NO 548 PG NO 549 The petitioner moved an application in one of the suits in the High Court stating that in the interests of justice pending disposal of the three suits an injunction should be granted restraining the parties from proceeding with the arbitration, and that the arbitration be stayed under the principles of section 35 of the .
The High Court granted interim injunction restraining the parties from proceeding with arbitration.
On 8th March, 1985, the High Court dismissed the notice of motion and held that this Court 's order dated 2nd December, 1983 was clear, there was no abandonment of the pending arbitration proceedings by the respondent and therefore stay could not be granted.
This order was confirmed by the Division Bench in appeal.
In the S.L.P. to this Court the question was: whether the High Court was right in declining to grant stay of the arbitration proceedings.
Dismissing the application, HELD: 1.
The High Court rightly held that Section 35 does not apply.
[556A] Sujant Singh vs Seth Mohinder Paul, AIR1964 Punj 395 ref.
to. 2.
In particular facts and circumstances if a party filed a suit to save limitation the same would not vitiate the award or make the award bad under section 35 of the Arbitration Act.[555F] 3.
Foreign awards automatically are not `lifeless award ' They can be enforced in this Court in accordance with law.[556G] Oil & Natural Gas Common.
Western Co. of N. America, AIR 1987 SC 574 ref to. 4.
Whether in a particular case it would be just and equitable to the parties to direct them to proceed with the arbitration, must depend upon the facts and circumstances of a particular case having regard to the legal provisions applicable to a particular Situation.[556A D] In the instant case, there is a valid arbitration agreement between the parties.
In view of the direction of this Court.
the continuation of the arbitration proceedings in respect of the filing of the suit would not be bad.
In these circumstances if the court declined to exercise its jurisdiction under section 151 of the Code of Civil Procedure to grant stay of the proceedings of arbitration in PG NO 550 London, the court has not acted in excess of jurisdiction or has not exercised its jurisdiction improperly.
In such a situation the Appellate Court should not normally interfere.
In the premises, it would have been improper to exercise any jurisdiction to interfere.
[557B C] V/C Tractoroexport, Moscow vs M/s Tarapore & Co. & Anr., ; ; Serajuddin & Co. vs Michael Goldetz & Ors., AIR 1960 Cal.
47; In re All India Groundnut Syndicate Ltd., and Ramji Dayawala & Sons (P) Ltd. vs Invest Import; , referred to.