REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 12367 OF 2017           

THE STATE BANK OF INDIA & ORS.                ......APPELLANTS

          Versus

RAVINDRA NATH & ORS.                           …...RESPONDENTS

J U D G M E N T

Hemant Gupta, J.

The challenge in the present appeal is to an Order passed by the

Division  Bench  of  the  High  Court  of  Judicature  at  Bombay  on

09.07.2014, whereby the communication dated 16.01.2001 re-fixing the

salary of the respondent from 01.01.2001 was set aside.   

2. The respondent-writ  petitioner before the High Court joined the

appellant Bank in the year 1981.  After almost nineteen years vide letter

dated 24.06.2000, he was posted at Johannesburg Branch (South Africa)

as Manager (Credit) as a Scale V Officer on a fixed salary of US $ 1965

(net) per month but subject to change from time to time.  Apart from

such salary, the respondent was granted various allowances including

reimbursement of education expenses of the children, usage of Bank’s

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car, leave and reimbursement of medical expenses apart from the host

of other allowances.  The relevant clause in respect of salary reads as

under:  

“1.1. A  fixed  salary  US  $  1965  (net)  per  month subject to change from time to time will be paid to you abroad from the date of your reporting at the foreign office.  Wherever taxes are payable by you on account of salary and perquisites such taxes will be reimbursed by the bank.”

3. There was also a condition that salary and terms and conditions as

spelt out in the letter are subject to review and revision by the Bank

from time to time.  Clause 7.3 in this respect reads as under:  

“7.3 Your  salary  as  well  as  other  terms  and conditions  spelt  out  in  this  letter  are  subject  to review  and  revision  by  the  bank,  from  time  to time.”

4. It was on 16.01.2001, the salary in respect of the respondent was

re-fixed as US $ 1300 w.e.f.  01.01.2001. The same was subsequently

revised to US $ 1380 on 14.12.2001.  It is the stand of the Bank that

when the respondent  was sent  to Johannesburg,  salary was fixed on

Consumer Price Index of 1992 on the basis of directives of the Working

Group of the Standing Committee w.e.f. 01.01.1995 in the absence of

availability of Cost of Living Index.  But since, the relevant data became

available  in  March  2000,  the  Working  Group  in  its  meeting  held  on

15.01.2001, has re-fixed the salary on the basis of formula approved by

the Standing Committee.  

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5. The  revised  minimum net  monthly  salary  in  respect  of  Scale  I

Officer was US $ 950 reduced from US $ 1615 per month, whereas, in

respect of Scale V Officer such as the respondent, the salary was fixed

at US $ 1300 reduced from US $ 1965.  The maximum salary in respect

of TEG Sp. SC. II,  was US $ 1900 reduced from US $ 2565. The said

communication reads as under:  

REVISION OF SALARY WEF 01.01.2001

1. In  the  absence of  availability  of  Cost  of  Living Index data at the material time salary for Johannesburg was fixed by the Working Group w.e.f.  01.01.1995 on the basis of Consumer Price Index of 1992 (as per IMF Publication of September, 1995) as available.  

2. With the relevant data now available the Working Group in its meeting held on January 15, 2001 has re- fixed the salary on the basis of the formula approved by the Standing Committee. The detailed salary levels for various grades with effect from 01.01.2001 will  be as under:  Scale Net Monthly Salary  

in US $ (at present) Net  Monthly  Salary in  US $  payable  w.e.f.  01.01.2001

I 1615 950 II 1690 1025 III 1765 1100 IV 1865 1200 V 1965 1300 VI 2115 1450 VII 2265 1600 TEG Sp. SC. I 2415 1750 TEG Sp. SC. II 2565 1900

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6. The stand of the Bank is that the recommendations of the Working

Group are binding on the Bank which are applicable to all Public Sector

Banks, in respect of the Officers posted abroad.  The reliance was placed

upon  Section  18  of  the  State  Bank  of  India  Act,  19551 as  also  the

proceedings of the Standing Committee from time to time, the reference

to which will be made subsequently.

7.  The  High  Court  in  the  impugned  judgment  held  that  the

respondent-writ petitioner has no privity to contract with the Standing

Committee on the basis of which the salary was reduced.  It has also

held that the salary of the respondent has been reduced within three

months  which  is  unfair  and  arbitrary  and  that  the  letter  dated

24.06.2000 does not even remotely suggest that salary of US $ 1965

was tentative, nor the available information taken into consideration for

fixing the salary was shared with the respondent.   

8. The  High  Court  did  not  accept  the  argument  raised  by  the

respondent of the equal pay for equal work for the reason that the Cost

of Living in the different countries is different, therefore the salary must

necessarily be fixed keeping in mind various factors which vary from

country to country.  

9. In the present appeal, the appellant refers to the constitution of a

Committee  by  the  Government  of  India  in  August  1981 for  evolving

uniform guidelines on salaries and other terms applicable to Officers of

Indian Banks posted abroad.  The Report of the Committee produced

1 The Act

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before this Court is on record. Some of the relevant extracts from the

Report read as under:  

“12. The  salary  levels  recommended  by  the committee for countries for which a detailed study has been  made  are  given  in  Annexure-III.  To  facilitate comparison with the existing salary structure, not only the gross salary recommended has been given but the net  take home salary after  taxes etc.,  has also been indicated  separately,  as  some  of  the  banks  have  a practice of fixing the salary levels on the basis of net take  home  pay.   The  salary  model  recommended broadly follows the level  obtaining in the State Bank, determined as  on  1979 and updated  by  building  the cost  of  living  indicates  for  1980  and  1981.   This updating has been done on the basis of UK Cost and Living Index figure after making an allowance of 5 % for the  accommodation  factor  as  the  officers  stand insulated from increases in cent of accommodation.  

xxx xxx xxx  

14. Before  applying  the  revised  model  set  of provisions  conditions  outlined  in  Annexure  I  and  II, Individual  banks  should  be  asked  to  work  out  the impact  of  the  implementation  of  the  standardization scheme on each of its officers working overseas so as to ensure  that  the  adoption  of  the  standardisation structures does not result in either too large a benefit or sever curtailment of  the existing emoluments.   While the Committee has taken a broad view in the matter on the  basis  of  the  information  supplied  by  the  various banks, having regard to the limited number of officers working abroad, an individualistic exercise as suggested could be done to minimize the problems that may arise on  this  score.   It  is,  therefore,  suggested  that  the revised set of a service conditions be communicated to all the banks who have overseas offices, with a request to them to advise the standing committee, the present salary and allowances pattern of each of the officers, the revised salary and allowances payable and the net difference.   Based  on  this  detailed  information,  the standing  committee  may  modify  the  salary  levels appropriately.”

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 10. It  is,  thereafter  on  27.07.1982,  the  Government  again

communicated to Public Sector Banks that any change in future, in the

salaries, perquisites and other service conditions of  Officers posted

abroad may be made in consultation with and with prior approval of

the  Standing  Committee  constituted  by  the  Government.   The

Standing  Committee  consists  of  Chairperson  of  four  Public  Sector

Banks and Joint Secretary in the Banking Division of the Government

of  India.  It  was  in  July,  1984,  the  appellant  Bank  framed  service

conditions and allied matters on personnel posted overseas.  

11. The fixation  of  salary  of  the  Officers  posted in  Johannesburg

(South Africa), Botswana and Seychelles was considered by Working

Group of the Standing Committee in its meeting held on 15.01.2001.

In respect of fixation of salary for the Officers at Johannesburg, the

Cost of Living Index was revised on the basis of Bulletin of Statistics

published by U.N. in March, 2000 as 62, as compared to 100 of New

York.  Therefore, if the salary for Scale III Officers in New York is US $

1773, then the salary for Scale III  Officers in South Africa would be

62% that  is  US  $  1099.26,  say  US  $  1100.  On  the  basis  of  such

criteria,  the  net  monthly  salary  of  different  grades  of  Officers  was

fixed as was communicated to the respondent on 16.01.2001.  

12. The  counter-affidavit  filed  by  the  respondent  relies  upon  the

representations submitted by Chief Executive Officer of the Appellant-

Bank  posted  at  Johannesburg  Bank  on  22.01.2001  that  reduction

would cause extreme hardship to the Officers.  Such grievance was

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repeated subsequently. It is also pointed out that the representations

were not accepted on 12.04.2004, whereas, the term of posting of the

respondent came to end in November, 2004. It is also stated in the

affidavit  of  the  respondent  himself  that  he  has  taken  voluntary

retirement  on  18.03.2005,  after  paying  a  sum  of  Rs.  10,00,000/-

including payment of bond money. It is admitted on record that the

respondent after taking voluntary retirement on 18.03.2005 stayed in

Johannesburg only, where he was posted as an Officer of the Bank.  

13. Learned counsel for the appellant argued that the High Court

has  committed  material  illegality  in  holding  that  the  salary

communicated to the Officers on 24.06.2000, was not tentative. It is

contended  that  such  finding  is  contrary  to  the  letter  dated

24.06.2000, wherein, while communicating the salary of US $ 1965, it

was categorically mentioned that it is subject to change from time to

time.  Apart from the said fact, there was Clause 7.3 which is also to

the effect that salary as well as other terms and conditions spelt out in

the letter are subject to review and revision by the Bank from time to

time.   

14. Mr. Kaul learned counsel for the appellant-Bank has pointed out

that there was no alteration in the perquisites granted to the respondent

which was to the tune of Rs. 1,60,000/-  per month.  It  was only the

salary component which was reduced on availability of the Cost of Living

Index in March, 2000.  

15. A  perusal  of  relevant  conditions  as  reproduced  above  shows

that salary of US $ 1965 was not promised to be paid for the entire

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period of posting in Johannesburg. It was subject to change either way

that is increase or decrease.  The Bank has explained that such salary

of US $ 1965 was fixed in absence of Cost of Living Index on the basis

of  recommendations  of  the  Committee.  Later,  the  Standing

Committee was constituted in exercise of the powers under Section 18

of the Act mandating that any change in future in the salaries and

perquisites and other service conditions has to be affected with the

prior approval of the Standing Committee.  Section 18 of the Act reads

as under:  

“18. Central Board to be guided by directions of Central Government.—(1) In  the discharge of  its functions  the  State  Bank  shall  be  guided  by  such directions in matters of policy involving public interest as  the Central  Government may,  in  consultation  with the governor of the Reserve Bank and the chairman of the State Bank, give to it.  (2) All  directions  shall  be  given  by  the  Central government  and,  if  any  question  arises  whether  a direction relates to a matter of policy involving public interest,  the  decision  of  the  Central  Government thereon shall be final.”  

16. It  is  in  view of  such directions that  the appellant  Bank framed

service conditions and allied matters.  It is thereafter on 15.1.2001, the

Working Group of the Standing Committee decided the salary payable to

the Officers of the Bank. Such salary structure is meant for all Officers of

Public  Sector  Banks  posted  abroad.  Such  recommendations  are

applicable  in  non-discriminatory  manner  to  all  Officers  of  the  Public

Sector Banks.  

17. Though, certain representations are said to have been made by

the  Chief  Executive  Officer  on  behalf  of  the  five  Officers  posted  at

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Johannesburg  but  there  is  no  communication  that  the  Officers  are

finding it  difficult  to work on the basis  of  such reduced salary.   The

salary  was  reduced  from  the  month  of  January,  2001,  though,  the

respondent-writ  petitioner  has  joined  only  on  21.09.2000.   The

respondent never offered to seek repatriation to India and in fact sought

voluntary retirement on depositing of Rs. 10,00,000/- for further stay in

Johannesburg. It shows that there was no financial loss suffered by him

on account of reduction in salary, but actually, he found it lucrative to

resign from the service of the Bank and to stay in Johannesburg after

payment of substantial amount of Rs. 10,00,000/-.  

18. The salary has been fixed in terms of directions of the Government

of India, in respect of all Public Sector Banks keeping in view the Cost of

Living  Index  in  different  countries  and  making  adjustments  in  the

salaries according to the Cost of Living of each country.  The Cost of

Living in each country is separate and distinct and such factors have

been taken into consideration while  fixing the salary on the basis  of

Bulletin  of  Statistics  published by U.N.  in  March,  2000.    The earlier

fixation of salary for Johannesburg was fixed by Working Group w.e.f.

01.01.1995  on  the  basis  of  Consumer  Price  Index  of  1992  as  per

International  Financial,  Statistics  (IMF Publication -  September,  1995).

The revised salary structure is not meant for any particular official but is

applicable to all Officers of Public Sector Banks posted abroad.  

19. The argument of the learned counsel for the respondent is that

when the respondent was deputed in June, 2001 the Cost of Living Index

as in March, 2000 was available, therefore, there was no reason to fix

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the salary on the basis of Consumer Price Index of the year 1995.  It has

come on record that the Bulletin of Statistics published by the U.N. in

March, 2000 was considered by the Standing Committee in its meeting

held on 15.01.2001.  The respondent was informed of his reduced salary

the very next day.  Therefore, the Cost of Living Index on the basis of

March, 2000 Report was considered in January,  2001.  Such decision

cannot be said to be arbitrary only because it was taken after about nine

months of the publication of the data.  

20. The reasoning given by the High Court that there is no privity of

contract of the respondent-writ petitioner with the Standing Committee

is not tenable.  The respondent-writ petitioner as an Officer of the Bank

is bound by the salary structure approved by the Bank for its Officers.

The decision of the Standing Committee is a part of the decision-making

in  respect  of  salary  payable  to  the  employees  of  the  Banks.   The

employee of a Bank has no right that he should be associated with the

decision-making process in respect of the fixation of salary.  However, if

the  question  of  reasonableness  of  salary  arises,  then  in  exercise  of

power of judicial review, the Court may examine the decision-making

process.   In exercise of  power of  judicial  review, we do not find any

infirmity in the decision of Standing Committee taken on 15.01.2001 in

pursuance  to  the  direction  of  the  Government  of  India  issued under

Section 18 of the Act.  

21. Since, the salary has been fixed for all Officers of the Public Sector

Banks in a non-discriminatory manner keeping in view the Cost of Living

Index,  we find that  the High Court  erred in  law in  setting aside  the

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reduction in salary.  There is reasonable basis of reduction of salary. Still

further  there  was  no  promise  ever  made  to  the  respondent-writ

petitioner that his salary of US $ 1965 shall remain unchanged during

the  period  of  his  posting.   In  fact,  as  reproduced  above,  it  was

categorically  mentioned  that  the  salary  as  well  as  perquisites  are

subject  to change from time to  time.   Therefore,  mere fact  that  the

salary  was  changed  subsequently,  it  will  not  confer  any  legally

enforceable right in favour of the respondent to challenge the same on

the ground that the same is arbitrary or unjust.   

22. The present appeal is allowed.  The order passed by the Bombay

High Court is set aside and the Writ Petition is dismissed with no order

as to costs.  

………...…………..........................J.       (Uday Umesh Lalit)

………….….................................J.       (Hemant Gupta)

New Delhi, February 12, 2019.

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