ARIJIT PASAYAT - (1.) , J.
(2.) LEAVE granted in SLP (C) Nos. 15808- 15811/98 and 2998-2999/99. These appeals have their base on a judgment of the High Court of Karnataka at Bangalore disposing of writ petitions Nos.3426-27/1986 and writ petition nos. 6432-35/1987. The background scenario in which the present dispute appears, lies within a very narrow factual compass. Six persons who are the respondents in the appeal nos. 4312-4317/98 (hereinafter referred to as 'the employees') were ex-servicemen in the Indian Army. They are appellants in the other appeals. After discharge from Army service they were employed by the State bank of India (in short 'the bank'). They were discharged from defence services during the period from 1.4.1982 to 1.9.1984 and joined the bank on different dates during the period from 11.8.1983 to 7.6.1984. In terms of the government of India's policy, the basic pay and the dearness allowance last drawn by them while in military service was to be protected while fixing their pay on absorption into public sector banks. During the period when the employees joined the bank, the pay and allowances payable to employees of the bank were governed by the Third Bipartite Settlement which was operative from 1.9.1978. Having regard to the government's policy and as per the decision of the Indian Banks Association (in short 'the Association'), all public sector banks followed the norms in the matter of fixation of pay as per the Third Bipartite Settlement. The Fourth Bipartite Settlement became retrospectively operative from 1.7.1983. Under the said settlement, there is an upward revision in the pay scales and the basic pay of the employees were revised on stage to stage basis. The annual increments were also given to the concerned employees. When the matters stood thus, the bank issued a circular dated 12.10.1985 regarding fixation of pay relating to ex-servicemen employed in the public sector banks. This was the starting point of controversy. By staff circular dated 24.11.1986, the bank notified that while dearness allowance and interim relief drawn by ex-servicemen shall qualify for protection as components of D.A., the other allowances like city compensatory allowance and H.R.A. did not qualify for such protection. Eleven types of emoluments admissible in defence services were to be protected on re-employment in the bank. On the basis of the aforesaid circulars dated 12.10.1985 and 24.11.1986 the pay last drawn by the employees stood reduced. This reduction was challenged by the employees before the High Court. Following questions were formulated by the High Court for consideration. "(i) When the IV Bipartite Settlement was signed on 17.9.1984 bringing into force new scales of pay, with retrospective effect from 1.7.1983, what was the proper course to be adopted by the bank, in the case of petitioners (who were appointed between 1.7.1983 and 17.9.1984):- (a) Whether the pay of petitioners had to be revised by fitment in the new scales of pay, on a stage to stage basis, with reference to the pay fixed under the III Bipartite Settlement, retrospectively from the date of petitioners entering with service (as contended by the petitioners); or (b) Whether a fresh fitment in the new pay scales (under IV Bipartite Settlement) should have been effected to protect the pay and allowances last drawn when in Defence service, in place of the earlier fitment in the old pay scales under the III Bipartite Settlement (as contended by the bank). (ii) If the revision of pay of petitioners, by fitment in the new scales of pay, on stage to stage basis, was contrary to the scheme under which petitioners were appointed, whether the bank could subsequently rectify the error by re-fixation of pay of petitioners, by fitment in the new pay scales (under IV Bipartite Settlement) with reference to the last pay drawn in Defence service. (iii) Whether by resorting to such refixation the bank can reduce the salary of the petitioners to a level which is less than the salary at which they were appointed when they joined the services of the bank even though the refixed salary protects the last pay drawn while in Defence service."
(3.) ON consideration of rival stands, the High Court observed that Part (a) of first question was to be answered in the negative while part (b) of the said question was to be answered in the affirmative. Question No.(ii) was to be answered in the affirmative; question no.(iii) in the negative and finally it was concluded that the bank's circulars dated 12.10.1985 and 24.11.1986 were upheld subject to conclusions at paragraph 23(d) of the judgment. The memos prepared by the bank revising the pay at the time of entry of the employees in the banks were quashed. It was declared that the bank was entitled to correct the mistake committed by them in revising the pay of the employees by fitment in the new pay scales under IV Bipartite Settlement on stage to stage basis and were also entitled to re-fix the pay and D.A. on the basis of their entry into service with reference to the new pay scales under the IV Bipartite Settlement. But while doing so, the total pay packet of the employees should not be less than the total pay fixed when the employees entered the service of the bank. In other words, the total pay fixed by the bank when the employees entered its service should be protected. Consequently, while re-fixing the pay and allowances payable to the employees as on the date of entry into service under circulars dated 12.10.1985 and 24.11.1986, the basic pay and D.A. of the employees should not be less than Rs.1319.99, Rs.1596.12, Rs.1380.50, Rs.1319.99, Rs.1582.61 and Rs.1582.61 respectively. The relevance of these figures shall be dealt with a little later.;