Revision of pay| VRS Employees or those who were terminated or dismissed cannot claim parity with those who retired on superannuation: SC

Supreme Court: In a case where the ex-employees of Maharashtra State Financial Corporation (MSFC) had challenged decision denying the benefit of revision of pay scales, as recommended by the Fifth Pay Commission, to the employees who had retired or died during the period of 01.01.2006 to 29.03.2010, the bench of Aniruddha Bose and S. Ravindra Bhat*, JJ has held that while the exclusion of the employees who retired on achieving their date of superannuation, is violative of Article 14 of the Constitution of India, the benefit cannot be extended to the VRS employees or the employees who were terminated or dismissed as they cannot claim parity with others who retired upon achieving the age of superannuation.


The MSFC ex-employees’ association complained of discrimination against the decision dated 29.03.2010, of the Industry, Energy and Labour Department, Government of Maharashtra denying the benefit of revision of pay scales, as recommended by the Fifth Pay Commission, to the employees of the MSFC who had retired or died during the period of 01.01.2006 to 29.03.2010. The decision of the State made the revision of pay scale as a result of the Report of the Fifth Pay Commission applicable to 115 employees of MSFC who were working as on 29.03.2010. The revision, however, was given effect from 01.01.2006.

By Office Order dated 09.04.2010, the MSFC decided to implement the decision of the Government of Maharashtra and grant the benefits of the Fifth Pay Commission to employees of the Corporation who were on its rolls on that date. That order itself clarified that the State Government approved the cut-off date,

  1. in order to motivate the present staff to recover maximum amount in NPA Accounts.

  2. due to financial considerations being of importance in regard to grant or denial of monetary benefits.

  3. Interim relief had also been directed and was made payable, to all employees, between 01.01.1996 and 29.03.2010. The order issued on 09.04.2010 stated that “interim reliefs paid from 18.09.1996 to 31.12.2005 will not be recovered”.

Challenging the said decision before the Bombay High Court, the appellants urged that denying them the benefit of pay scales was discriminatory and arbitrary, because they were in continuous service, and had even received the benefit of interim revision, pending finalization of pay scales pursuant to the Pay Commission Report. It was urged that those in employment on and after 29.03.2010, and those who continued in service after 01.01.2006 but retired before 29.03.2010, belonged to the same category. The only difference between those who were in service after the latter date, was that they had longer period of service. However, the crucial date for grant of pay revision, was the date from which it was given effect to, i.e., 01.01.2006. As all the appellants were in service as on that date, the denial of pay revision, which was concededly for the period they had worked, amounted to not only hostile discrimination, but also withholding of pay revision benefits, legitimately and rightfully theirs.

The High Court, however, decided in favour of the MSFC and the State, and observed that financial considerations were of importance in regard to grant or denial of monetary benefits.

Supreme Court’s analysis

On employees who retired on achieving their date of superannuation or died in service

The Court noticed that the employees who retired prior to 29.03.2010 discharged the same duties as in the case of those who did thereafter. The quality and content of responsibilities assigned to them were the same.

There is no distinction between those who retired (or died in service) before 29.03.2010 and those who continued in service – and were given the pay revision. Those who worked during the period 01.01.2006 to 29.03.2010 and those who continued thereafter, fell in the same class, and a further distinction could not be made. The fact that the MSFC did not recover any interim relief, or ad-hoc amount disbursed between 18.09.1996 to 31.12.2005 (towards recommendations of the 5th Pay Commission), also reaffirms that these ex-employees belonged to the same class as those that received the benefit of the pay revisions.

The Court, hence, observed that while the decision not to grant arrears prior to 01.01.2006 cannot be found fault with; however, not to grant any revision to those who were not in service when the order implementing the pay revision was issued and confining it to those in employment is clearly discriminatory. Granting such pay revision only to existing employees would defeat the object sought to be achieved by the pay revision, which is to benefit employees and protect them from the rise in the cost of living.

Employees who voluntarily left the service or got terminated or dismissed

The Court held that the employees who secured VRS benefits and left the service of MSFC voluntarily during this period, stand on a different footing. They cannot claim parity with those who worked continuously, discharged their functions, and thereafter superannuated. VRS employees chose to opt and leave the service of the corporation; they found the VRS offer beneficial to them. Apart from the normal terminal benefits they were entitled to, the additional amount each of them was given – was an exgratia amount, equal to a month’s salary for each completed year of service. Other retired employees were never given such amounts.


Those who retired from the services of MSFC between 01.01.2006 to 29.03.2010, and the legal heirs/representatives of those who died during that period, shall be entitled to arrears based on pay revision, with 8% p.a interest from 01.04.2010 till the date of judgment. These amounts shall be calculated and disbursed to those individuals within eight weeks from the date of judgment.

[Maharashtra State Financial Corporation Ex-Employees’ Association v. State of Maharashtra, 2023 SCC OnLine SC 100, decided on 02.02.2023]

*Judgment authored by: Justice S. Ravindra Bhat.

Know Thy Judge | Justice S. Ravindra Bhat

Advocates who appeared in this case :

For appellants: Advocates Jay Salva, Nitin S. Tambwekar, Seshatalpa Sai Bandaru (AOR);

For respondents: Senior Advocate Santosh Paul, Advocates Sachin Patil,Sriharsh N. Bundela, Akshay Kumar, Maithreya Shetty, M. J. Paul (AOR), Siddharth Dharmadhikari, Aaditya Aniruddha Pande(AOR), Bharat Bagla, Kirti Dadheech, Geo Joseph, Risvi Muhammed, Durgesh Gupta.

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