State Bank of India Act, 1955: s.18 – Re-fixation of salary – Respondent joined the appellant bank in 1981 and on 24.6.2001, he was posted at Johannesburg as Manager on a salary of USD 1965 per month but subject to change from time to time – In the letter of posting, there was a clause that salary as well as other terms and conditions spelt out in the letter were subject to review and revision by the bank from time to time – On 16.1.2001, the salary in respect of the respondent was re-fixed as USD 1300 and same was subsequently revised to USD 1380 – The stand of the bank was that when the respondent was posted at Johannesburg, the 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 1.1.1995 in the absence of the availability of Cost of Living Index but since the relevant data became available in March 2000, the Working Group in its meeting held on 15.1.2001, refixed the salary based on formula approved by the Standing Committee and that these recommendations of the Working Group were binding on all public sector banks in respect of the officers posted abroad – High Court held in favour of respondent on the ground that the respondent did not have privity of contract with the Standing Committee on the basis of which the salary was reduced and that the letter did not remotely suggest that the salary of USD 1965 was tentative – On appeal, Held: The respondent 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, there was no infirmity in the decision of Standing Committee taken on 15.01.2001 in pursuance to the direction of the Government of India issued under s.18 of the Act – Since, the salary was fixed for all Officers of the Public Sector Banks in a non-discriminatory manner keeping in view the Cost of Living Index, the High Court erred in law in setting aside the reduction in salary – There was reasonable basis of reduction of salary – Moreover, there was no promise ever made to the respondent that his salary of US $ 1965 shall remain unchanged during the period of his posting – In fact, it was categorically mentioned that the salary as well as perquisites were 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. Allowing the appeal, the Court
HELD : 1. The relevant conditions in the letter of posting showed that salary of US $ 1965 was not promised to be paid for the entire period of posting in Johannesburg. It was subject to change either way that is increase or decrease. The Bank had 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 State Bank of India Act, 1955 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. In view of such directions, the appellant Bank framed service conditions and allied matters. It was 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 was meant for all Officers of Public Sector Banks posted abroad. Such recommendations were applicable in non-discriminatory manner to all Officers of the Public Sector Banks. [Paras 15, 16][128-F-G, 129-B-C]
2. Though, certain representations were said to have been made by the Chief Executive Officer on behalf of the five Officers posted at Johannesburg but there was no communication that the Officers were finding it difficult to work on the basis of such reduced salary. 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 showed 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. [Para 17][129-C-E]
3. The salary was 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 were 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. The revised salary structure was not meant for any particular official but was applicable to all Officers of Public Sector Banks posted abroad. [Para 18][129-F-G]
4. The respondent 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 decisionmaking 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, there was no 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. [Para 20][130-C-D]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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