REPORTABLE  IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7268 OF 2002

FOOD CORPORATION OF INDIA & ORS. — APPELLANTS

      VERSUS

BHARTIYA KHADYA NIGAM KARMCHARI  SANGH & ANR.

— RESPONDENTS

WITH

CIVIL APPEAL NO. 6878 OF 2003

JUDGMENT

D.K. JAIN, J.:

1. Challenge in these appeals is to the judgment dated 23rd May, 2002,  

rendered  by  a  Division  Bench  of  the  High  Court  of  Jammu  and  

Kashmir  at  Jammu  in  S.W.P  No.  1470  of  1994.  By  the  impugned  

judgment,  while  declaring Circular  No.40 of  1985,  dated 29 th July,  

1985, which accorded monetary incentives to in-service employees  

of the Food Corporation of India (for short “the FCI”) for acquiring  

higher qualifications, as discriminatory, the High Court has directed  

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that  if  any  benefit  under  the said  Circular  has  been given to  any  

employee, it shall be withdrawn.

2. Since both the appeals, one by the FCI and the other by the Bhartiya  

Khadya Nigam Karamchari Sangh (for short “the Karamchari Sangh”),  

arise out of the same judgment, the  same are being disposed of by  

this  common  judgment.   We  may  however,  note  that  the  FCI  is  

aggrieved  by  the  impugned  judgment  as  a  whole,  whereas  the  

Karamchari Sangh impugns the direction relating to the denial of the  

incentives to other employees, possessing same qualifications.

3. The material facts, giving rise to the appeal are as follows:-

The FCI was set up with the objective of safeguarding the interest  

of the farmers, distribution of food grains throughout the country and to  

maintain a satisfactory level of food grain stocks to ensure national food  

security.  The  Food  Corporation  of  India  Act,  1964,  became  effective  

w.e.f. 17th December 1964. Section 45 of the said Act empowers the FCI  

to  make  regulations  for  regulating  the  appointment,  conditions  of  

service and scales of pay of its officers and employees. Resultantly, the  

Food  Corporation  of  India  (Staff)  Regulations,  1971,  were  made  and  

came into effect from the year 1971.

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4. With a view to ensure a desired degree of efficiency and mobility in  

the  administration  and  management  of  its  affairs,  the  FCI,  vide  

Circular No.40 of 1985, dated 29th July, 1985, introduced a scheme  

providing  for  incentives  to  its  employees  on  acquiring  additional  

qualifications during their service in the FCI. The Circular provided  

for  grant  of  two  increments  to  employees  in  their  respective  pay  

scales on acquiring such professional degrees and diplomas as were  

mentioned in the Circular. Subsequently, another Circular No. 72 of  

1986, dated 14th November, 1986, was issued, extending the benefit  

of one special increment to in-service employees who acquire one  

year diploma course in any professional subject as mentioned in the  

Circular.  

5. The afore-mentioned Circulars were complimented by Circular No.  

58  of  1987,  dated  24th August,  1987,  which  clarified  that  the  

increments shall only be in the form of a personal pay to an official till  

his promotion to the next higher grade, which shall be subsequently  

absorbed in the basic pay at the time of pay fixation for the promoted  

post.  

6. The Circular of 1985 was challenged by one Shri. V.K. Tandon, vide  

S.W.P.  No.  1146  of  1986,  on  the  ground  that  it  resulted  in  

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discrimination  between  in-service  employees  acquiring  additional  

qualification and the persons recruited by the FCI already possessing  

the prescribed additional qualification. The High Court of Jammu and  

Kashmir,  vide order,  dated, 13th October,  1992, while allowing the  

intervention  application  of  the  Karamchari  Sangh,  allowed  the  

petition  and  directed  that  the  writ  petitioner  be  granted  two  

additional increments under the said Circular. Letters Patent Appeal  

against  the said judgment came to be dismissed on the ground of  

delay. Nonetheless, the Zonal Office of the FCI, vide letter dated 19th  

May, 1994, notified that the aforesaid judgment was a judgment  in  

personam.  

7. Probably,  the said clarification prompted the Karamchari  Sangh to  

file the writ petition (W.P. No.1470 of 1994) in which the impugned  

judgment  has  been delivered.  As  aforestated,  the  High Court  has  

held that, the said Circular is discriminatory and violative of Article  

14 of the Constitution of India, 1950 (for short “the Constitution”) and  

has directed the FCI not to give effect to the Circular and to withdraw  

any incentives, if already given to the employees in furtherance of  

the  said  Circular.  Hence,  the  appeal  by  the  FCI.  The  nub  of  the  

grievance  of  the  Karamchari  Sangh  in  their  appeal  (C.A.  

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No.6878/2003)  is  that  having  held  the  said  Circular  to  be  

discriminatory, the High Court ought to have directed grant of similar  

incentives to other employees as well.  

8. Mr. Ajit Pudussery, learned counsel appearing on behalf of the FCI,  

vehemently  urged that  the  said  Circular  was constitutionally  valid  

and in consonance with the established principles of law, inasmuch  

as the employees already working in the FCI, with lower professional  

qualifications  as  compared  to  those  who  already  had  higher  

qualification  at  the  time  of  initial  recruitment  are  a  class  by  

themselves  and  therefore,  there  was  no  question  of  any  

discrimination between the two differently placed set of employees.  

It  was  submitted  that  the  objective  sought  to  be  achieved  by  

providing incentive to the already recruited employees with lower  

qualifications was to motivate them to  acquire higher qualifications  

in various fields while in service, which would not only benefit the  

employee concerned but also the FCI in the long run. It  was thus,  

stressed  that  the  classification  adopted  by  the  FCI  had  a  rational  

nexus with the objective sought to be achieved and therefore, was  

not discriminatory, offending Article 14 of the Constitution. In support  

of the proposition that the beneficiaries of the said incentive being a  

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class  by  themselves;  there  being  no  parity  between  grant  of  

incentives  to  in-service  employees,  who  acquire  the  prescribed  

qualifications and denial of the same to the employees recruited with  

higher qualification;  the Circular  does not  result  in  discrimination,  

the learned counsel placed reliance on the decisions of this Court in  

State of M.P. and Anr.  Vs. Shakri Khan1;  United Bank of India Vs.  

Meenakshi Sundaram and Ors.2, and H.P. Gupta and Anr. Vs. Union  

of India and Ors3.  

9. Per Contra, Mr. Ashok Mathur, learned Counsel appearing on behalf  

of  the  respondents,  argued  that  the  said  Circular  was  clearly  

discriminatory,  inasmuch  as  the  incentive  under  the  said  Circular  

was denied to one set of employees and granted to another set of  

employees, governed by the same service conditions and possessing  

such  prescribed  additional  qualifications.  Commending  us  to  the  

decisions of this Court in Food Corporation of India & Ors. Vs. Ashis  

Kumar Ganguly & Ors.4 and B. Manmad Reddy & Ors. Vs. Chandra  

Prakash Reddy & Ors.5, learned counsel urged that, irrespective of  

the educational qualifications, all employees in a particular grade got  

1 (1996) 8 SCC 648 2 (1998) 2 SCC 609 3 (2002) 10 SCC 658 4 (2009) 7 SCC 734 5 (2010) 3 SCC 314

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integrated  into  one  class  and  therefore,  there  could  be  no  

discrimination amongst them in the matter of grant of incentives.   

10. The short question that falls for consideration is, whether grant of  

incentives only to the in-service employees of the FCI, who acquire  

professional qualifications after entering in service and denial of the  

same to those who had acquired the same professional qualifications  

before  entering  the  service  is  invalid  in  law,  being  violative  of  

Articles 14 and 16 of the Constitution?  

11. It is trite law that Article 14 of the Constitution, which enshrines the  

principle of equality, is of wide import. It guarantees equality before  

the law and equal protection of the laws within the territory of India. It  

implies right to equal treatment in similar circumstances, except in  

cases where the two persons form a separate and distinct class and  

such  classification  is  a  reasonable  one  based  on  intelligible  

differentia having nexus with the object sought to be achieved. (See:   

State of West Bengal Vs. Anwar Ali Sarkar6 and John Vallamattom &  

Anr. Vs. Union of India7).  

12. Before  examining  the  issue  at  hand  on  the  touchstone  of  the  

aforesaid  principle  envisaged  in  Article  14  of  the  Constitution,  it  6 (1952) SCR 284  7 (2003) 6 SCC 611

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would be apposite to refer to the relevant portions of the Circular  

dated 29th July, 1985. These read as follows:  

“The Food Corporation of India, since its inception, has been  pursuing  the  policy  of  Management  Development  by  providing  suitable  training  facilities  both  within  the  Corporation as well as by nominating its employees to short- term  professional  courses,  work-shops,  seminars,  conferences  etc.  organized  by  leading  management  institutions in India and abroad.

2.  These  efforts  can  get  an  uplift  and  possibly  be  supplemented  to  a  great  extent  by  the  involvement  of  its  employees  in  acquiring  professional  management  qualifications on their own. In order, therefore, to fill the basic  gaps  to  acquire  knowledge,  the  matter  has  been  under  consideration  for  introducing  suitable  incentive  scheme  for  motivating  the  employees  of  the  Corporation  to  encourage  them to  acquire  professional  qualifications  for  rapid  career  advancement and enabling the Corporation to build a reserve  of qualified professionals from within to back up key positions  and to improve the overall performance and efficiency of the  organization.  This  will  further  create  an  atmosphere  of  “professionalism” in the working of the Corporation. With this  end  in  view  it  has  been  decided  with  the  approval  of  the  Board  of  Directors  to  introduce  the  following  incentive  scheme with effect from 1st April, 1984.

3. The following courses of study have been approved for  grant of the two increments as indicated in subsequent pages.

(A) ………           ………      ………           ………

(B) High professional  qualifications viz.  MBA,  ACA,  AMIE,  LLB,  BL,  ACS  etc.  All  the  above courses (Diplomas/Degrees) should  be at least of two years duration.

4. The following are the details of the scheme for grant of  incentive:-

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ELIGIBILITY:

All regular employees of the Corporation would be eligible  for benefit  under the Scheme subject to the following terms  and conditions:-

(i) The scheme would apply to all  regular employees of the  Corporation  except  deputationists/those  employed  on contract basis/ casual or on tenure basis.

(ii)  Employees  covered  under  (i)  above  should  have  acquired  or  may  acquire  higher  professional  qualifications  from  recognised  institutions/Universities  during  the  course  of  their  service  in  the  FCI  with  prior  permission  from  the  competent  authority  of  the  Corporation.  The  acquisition  of  said  qualification  should  be  useful  to  the Corporation in its operations.

(iii) ………           ………      ………           ……… (iv) ………           ………      ………           ……… (v) ………           ………      ………           ……… (vi) ………           ………      ………           ……… (vii) ………           ………      ………           ……… (viii) ………           ………      ………           ………

(ix) In cases where the employees, who join the higher  post  under  direct  recruitment  and  where  for  such  higher post the prescribed minimum qualification is  the same as acquired by the employee while in the  lower post, the incentive already granted to him/her  in the lower post would not be allowed to continue on  his/her appointment to the higher post.

INCENTIVE ADMISSIBLE:

Employees  fulfilling  the  eligibility  conditions  referred  to  above  would  only  be  entitled  to  the  benefits  under  the  scheme. The incentives offered under this Scheme would be  in the form of two special increments as ‘personal pay’, to be  

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merged in pay at  the time of  promotion to the next  higher  grade.  This incentive would be admissible only on written  orders by the competent authority on merit of each case.  The  incentive  in  the  form  of  two  increments  would  be  granted  starting  from  first  day  of  the  following  month  when  the  employee concerned has been declared to have passed the  listed  Courses  or  the  date  of  enforcement  of  this  scheme  whichever is later.

ENTITLEMENT :

In  order  to  overcome  the  administrative  difficulties  and  financial  implications in implementation of  the Scheme with  retrospective  effect  covering  all  the  cases  of  eligible  employees  who  might  have  acquired  such  higher  management  or professional qualifications prescribed in this  Scheme once or  more  than  once in  the  past  and might  be  holding higher post on promotion or direct recruitment within  the  Corporation,  the  employees  would  be  entitled  to  the  incentive under this  scheme with effect  from 1.4.1984 only.  Eligible  employees  would  be  entitled  to  draw  incentive  increments at the rates applicable to their present pay scales.  Arrears of incentive increments shall be payable.

In the case of  past  cases,  eligible  employees should apply  within six months from the date of the Scheme is circulated.  In  case  of  employees  who  may  acquire  any  of  the  above  qualifications  hereafter,  they  may  apply  as  and  when  they  acquire the higher qualifications in the prescribed Proforma  enclosed.

………           ………      ………           ………”

13. It is manifest from a bare reading of the above-mentioned portions  

of  Circular  that  the  fundamental  objective  of  the  Circular  is  to  

provide an incentive to the in-service employees in order to motivate  

and encourage them to acquire professional qualifications in various  

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courses, spelt out in the Circular, for their career progression and at  

the  same  time  enable  the  FCI  to  build  a  reserve  of  qualified  

professionals from within the organisation to back up key positions.  

Evidently,  the  incentive  will  not  only  improve  their  overall  

performance and efficiency in the organisation, but also, in the final  

analysis  would  strengthen  the  management  with  the  advent  of  an  

atmosphere of professionalism in the FCI.

14. Our attention was also drawn to Circular No. 27 of 2000, dated 11 th  

September,  2000,  empowering  the  competent  authorities  to  grant  

higher  start/advance  increments  to  newly  recruited  employees  at  

par with the pay drawn in their previous employment before joining  

the FCI. It is therefore, plain that the provision to grant extra benefit  

to  a  new  recruit  possessing  higher  qualifications  was  already  in  

existence.  It is also pertinent to note that the said Circular and the  

benefit  which  is  sought  to  be  given  under  any  of  the  Circulars,  

referred to above,  is  not  assailed by the respondents.   Their  only  

grievance is that  there is no justification in depriving the persons,  

who  already  possess  the  higher  qualifications  from  the  benefit  of  

extra incentives, which are being granted to the in-house employees.  

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15. We  are  of  the  opinion  that  bearing  in  mind  the  aforesaid  fact  

situation and the objective sought to be achieved by issuance of the  

said Circular, there is substantial merit in the stand of the FCI. The  

classification adopted by the FCI is between an employee obtaining  

a  higher  qualification  after  joining  service  and  an  employee  who  

already possessed such qualification before joining the service. As  

aforesaid,  the  main  purpose  of  this  classification  is  to  grant  an  

incentive to the employees already in service in the FCI to motivate  

them to acquire higher qualifications for their own benefit as well as  

of  their  employer  viz. the  FCI.   We  are  convinced  that  the  

classification sought to be made by the FCI between the two sets of  

employees bears a just and rational nexus to the object sought to be  

achieved by introducing the said incentive scheme. Judged from this  

point of view, in our opinion,  grant of  the incentive in relation to the  

in-service employees, in no way amounts to discrimination between  

the in-service employees and the employees recruited with higher  

qualification,  offending either Articles 14 or 16 of  the Constitution,  

particularly  when the incentive is in the form of a special increment  

as ‘personal pay’ to be merged in pay at the time of promotion to the  

next  higher  grade  and  thus,  having  no  bearing  on  the  inter-se  

seniority and/or to the future promotion to the next higher grade.

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16. The  decisions  of  this  Court  in  B.  Manmad  Reddy  &  Ors.  Vs.  

Chandra Prakash Reddy & Ors.  (supra) and  Food Corporation of   

India & Ors.  Vs. Ashis  Kumar Ganguly & Ors.  (supra),  on which  

reliance was placed by learned counsel for respondents are clearly  

distinguishable on facts inasmuch as these decisions deal with cases  

relating to employees being classified into separate categories for  

the purpose of promotion on the basis of the source from which they  

were  drawn  and  increments  being  given  only  to  the  Central  

Government  employees  on  being  absorbed  into  the  corporation  

respectively, which is not the case here. However, it is important to  

note that  in both these cases,  it  was observed that  the  doctrine of  

equal pay for equal work is not an abstract doctrine. Article 14 of the  

Constitution permits reasonable classification based on qualities or  

characteristics of persons recruited and grouped together, as against  

those who are left out. Courts should interfere with the administrative  

decisions pertaining to pay fixation and pay parity only when they  

find such a decision to be unreasonable, unjust and prejudicial to a  

section of employees and taken in ignorance of material and relevant  

factors.  

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17. At this juncture, it would be profitable to refer to the decision of  

this Court in H.P. Gupta and Anr. (supra), which is on all fours to the  

fact  situation in the present  appeal.  In  the said case,  grant  of  two  

advance increments to Telecom Officers who acquired Engineering  

degree while in service and not to those who possessed such degree  

at the time of joining the service was held to be constitutionally valid.  

Dealing with a similar controversy, the Court observed as follows:  

“The  object of giving two advance increments to  those  officials  who  did  not  possess  degree  in  Engineering before joining the service, is only to  encourage them to get such a degree so that they  could improve themselves while in service. When  that object is satisfied, the contentions that there  should  be  equality  in  the  matter  of  payment  of  salary or other emoluments or that  there should  be  parity  in  the  matter  of  giving  increments,  cannot  be  accepted.  It  is  true  that  in  such  a  situation, certain anomalies may arise in specific  cases when the official who has acquired degree  in  Engineering subsequent  to  joining of  service  may get higher salary though junior to those who  possessed  the  qualification  of  degree  in  Engineering  even  at  the  time  of  joining  the  service. There cannot be perfect equality in any  matter  on an absolute  scientific  basis  and there  may be certain inequities here and there.  If  the  classification  is  correct  and  serves  a  particular  purpose,  the  same  is  not  to  be  judicially  interfered with.”

We deferentially concur with the observations in the afore-extracted  

passage.

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18. For  the  view  we  have  taken  above,  we  deem  it  unnecessary  

to  deal  with  the  contentions  urged  on  behalf  of  the  

parties in C.A. No. 6878 of 2003, praying for extension of the said  

incentive to the employees recruited with higher qualifications.   

19. In view of the foregoing discussion, the decision of the High  

Court,  holding  the  said  Circular  to  be  discriminatory  and  in  

violation  of  Articles  14 and 16 of  the  Constitution  cannot  be  

sustained.  Consequently,       C.A. No. 7268 of 2002, filed by the  

FCI  is  allowed  and  C.A.  No.6878  of  2003  preferred  by  the  

Karamchari  Sangh  is  dismissed.   However,  in  the  facts  and  

circumstances of the case, we leave the parties to bear their own  

costs throughout.

.……………………………………                         (D.K. JAIN, J.)  

                             .…………………………………….                        (ANIL R. DAVE, J.)

NEW DELHI; JANUARY 13, 2012.

RS

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