Supreme Court of India

RAJASTHAN AGRICULTURAL UNIVERSITY, BIKANERversusMITHA LAL KOTHARI AND ANR.

Citation: 1999 INSC 352
Decided: 24 August 1999
Disposal: Appeal(s) allowed
Bench: SUJATA V MANOHAR

Holding

The University order of 28 July 1980 is valid as it correctly excludes the merged dearness allowance to prevent a double benefit and to achieve proper equivalence between the revised Government and UGC pay scales.

Summary

The State of Rajasthan transferred research staff of its Directorate of Agriculture to the University of Udaipur (now Rajasthan Agricultural University) by an order dated 27‑12‑1975, protecting their existing pay and scale. Subsequent revisions of pay scales merged dearness allowance into basic pay for Government servants from 1‑9‑1976, while the UGC pay scales only merged dearness allowance up to 31‑12‑1972, creating a disparity. The Government issued a memorandum (21‑2‑1979) and the University issued an order (28‑7‑1980) directing that, for fitment into the UGC scales, the additional dearness allowance paid between 1‑1‑1973 and 1‑9‑1976 be deducted to avoid a double benefit. The respondents challenged this order, arguing that their consolidated basic pay under the revised Government scales should be used for fixation in the UGC scales. The Supreme Court held that the University order was valid because it correctly excluded the merged dearness allowance, thereby achieving equivalence between the two pay structures and preventing double allowance. Consequently, the appeal was allowed, the High Court’s decision set aside, and the original writ petition dismissed.

Issues considered

Whether the University of Rajasthan's order of 28 July 1980, which deducts the additional dearness allowance for the period 1 January 1973 to 1 September 1976, is a valid basis for fixing the pay of transferred Government employees in the new UGC pay scales.
Whether the protection of basic pay under the 27 December 1975 transfer order requires inclusion of the dearness allowance merged into Government basic pay, thereby resulting in a double benefit.
Whether the Government of Rajasthan's 21 February 1979 memorandum and the University order correctly exclude the merged dearness allowance to ensure equivalence between Government and UGC pay scales.

Subjects

service lawpay fixationdearness allowanceequivalence of pay scalestransfer of employeesuniversitygovernment employeesdouble benefitpay revision

Judgment

A RAJASTHAN AGRICULTURAL UNIVERSITY, BIKANER
v.
MITHA LAL KOTHARI AND ANR.
!
AUGUST 24, 1999

B [SUJATA V. MANOHAR AND A.P. MISRA, JJ.]

Service Law:

Pay-fixation-Government directing transfer ofsome of its employees to
C University-Basic pay of such employees protected-Subsequently, both
government and University pay scales revised-Criteria of revision of pay
scales different-University passing order bringing about equivalence between
the two pay scales by calculating basic pay under both the scales on a
common basis-University Order challenged by such government employees-
D Held, the University Order is valid and its only purpose is to exclude a
double benefit of dearness allowance to the government employees. ~

. State of Rajasthan issued ~n order dated 27.12.1975 under which
employees of the research wing of the Directorate of Agriculture were ,
\
transferred to the University of Udaipur, the successor of which is the ·
E Appellant, Pending final absorption in the University, the employees were to
be on deputation to the University but no deputation allowance was to be paid.
The rights of the transferred employees were governed by the said order.
The basic pay drawn under the Government scale was protected under the
University scales by the said order. The respondents were transferred and
they chose to retain their pay and the scale of pay under the Governme~t.
F
The pay scales of Government servants were revised with effect fr~m
1.9.1976 when the Rajasthan Civil Services (Revised New Scale) Rules,
1976 came into effect under which the dearness allowance; etc. as admissible
on 1.9.1976 was merged and treated as part of the basic pay for the purpose
of fixation of pay in the revised new pay scales. The respondents' pay was
G accordingly revised. Similarly, the pay scales in the University were also
revised with effect from 1.9.1976 when the new University Grants Commission
scales of pay came into operation under which the basic pay fixed was
inclusive of dearness allowance, etc. as on 31.12.1972. Respondents were
absorbed in the University with effect from 1.4.1977.
H 676
RAJAS THAN AGRICULTURAL UNI. v. M.L. KOTHARI 677
The Government ofRajasthan issued a memorandum dated. 21.2.1979 A
relating to the fixation of pay of Government servants on appointment as
teachers in the colleges/universities located in Rajasthan in the new UGC
pay scales which prescribed the exclusion from the calculation of basic pay
of such Government servants the amount of dearness allowances drawn by
Government servants between 1.1.1973 and 1.9.1976 for fixing the pay with B
reference to which such Government employees pay shall be fixed in the
revised UGC pay scale. In accordance with the Government Memorandum,
the University passed order dated 28.7.1980 which was brought into effect
from 1.9.1976.

Respondents filed writ petition in the High Court challenging the C
University order dated.28.7.1980 and contended that their new UGC pay
scales should be fixed on the basis of the consolidated basic pay that they
were getting under tJ:te revised new pay scales of the Government. Single
. Judge dismissed the Writ Petition. Against the Order of the Single Judge,
the respondents preferred appeal which was allowed by a Division Bench of
the High Court. Division Bench held that the respondents were entitled to D
the protection of their pay under the new Government scales, the element of
dearness allowance which has merged in the basic pay upto 1.9.1976 should
not be deducted, and the fitment in the new UGC scales should be on the basis
of the pay as drawn under the new Government scales. Aggrieved by judgment
of the Division Bench, the appellants have filed the present appeal.
E
Allowing the appeal, the Court

HELD: 1. At the time when the order dated, 27.12.1975, was issued,
neither the revised Government scales of pay nor the new UGC scales of pay
had come into effect. The basic pay drawn under the Government scale was F
to be protected under the University scales by the Order dated 27.12.1975.
The problem in the present case arises on account of the merger of dearness
allowances in the basic scale of pay of the Government employees with effect
from 1.9.1976. The new UGC pay scales had merged only the dearness
allowances with basic pay upto 1.3.1973. There was thus a period between
1973 and 1976 when under the UGC scales of pay additional dearness G
allowance was payable and it continued to be paid thereafter ; while under
the revised Government scales of pay dear8ess allowances were merged as
of 1.9.1976, and only thereafter additio~al dearness allowance was payable.
[683-D-F; 683-H; 684-A)

1.2. If the contention of the respondents, is accepted, the respondents H
678 SUPREME COURT REPORTS (1999] SUPP. I S.C.R.

A would get the benefit of having their basic pay in the UGC scale fixed not
just on the basis of their original basic pay but also by inclusion of dearness .
allowances in the basic pay during the period 1.1.1973 to l.9.1976. And they
would also get the benefit of dearness allowance for the period 1.1.1973 to
1.9.1976. The government as well as the University have, therefore, rightly
B held that in. order to have an equivalence between the revised scales of pay
of the State Government and the new UGC scales of pay, U is necessary to
exclude notionally the dearness allowances during the period 1.1.1973 and
1.9.1976 which were merged in the basic pay under the revised scales of pay
of the Government but which were not so merged when the revised UGC
scales were prescribed. Therefore, a proper equivalence between the two
C scales of pay can come about only when the basic pay under both the scales
is calculated on a common basis. That is why the orders of the Government
as well as the University exclude from the calculation of the basic pay. The
dearness allowances drawn by Government servants between 1.1.1973 and
1.9.1976 for the purpose of a notional calculation of basic pay to find a
corresponding equivalence in the UGC revised scales of pay. The entire
D purpose of the University order of 28th July, 1980 is to exclude a double
benefit of dearness allowance to the Government employees who are to be
fitted in the new UGC scales of pay. The.respondents have gained as a result
of their fitment in the new UGC scales of pay. Therefore, there is no reason
for setting asid~ the order of the University dated 28.7.1980. (684-A-E)
E
CIVIL APPELLATE JURISDICTIO'N : Civil Appeal No. 3329 of 1998
Etc.

From the Judgment and Order dated 27 .3.97 of the Rajasthan High Court
in C.S.A. No. 376of1991.
F
Sushi! Kumar Jain and A.P. Dhamija for the Appellant.

L.N. Rao, Braj K. Mishra, Ejaz Maqbool, SudhirRanjan and Ms. Sandhya
·Goswami for the Respondents.

G The Judgment of the Court was delivered by:

MRS. SUJATA V. MANO.HAR, J. Prior to 27th ofDecmber, 1975 the
respondents in all these appeals were working in the Directorate of Agiculture,
Government of liajasthan. On 27.12.1975 the State Government issued an
order transferring all research activities of the Directorate of Agriculture in the
H Agricultural Department of the State Government to the University ofUdaipur
RAJASTHAN AGRICULTURAL UNI. v. M.L. KOTHARI [SUJATA V. MANOHAR,J.] 679

with effect form 1st of January, 1976. The appellant-University is the sucessor A
of the Udaipur University as far as the respondents are concerned. For the
sake of convenience, therefore, the tenn "the University" is used hereafter
which will cover the Udiapur University or the appellant-University, as the
case may be, at the relevant time.
'Clause 6 of the order of 27.12.1975 stated that the service of the B
Government servants employed in the research wing of the Directorate of
Agriculture shall be transferred to the University on the terms and conditions
mentioned therein. Under sub-clause(i) of Clause 6 (l ), all permanent
Government servants and temporary Government servants who had been
regularly recruited and appointed to the various categories of posts in the
agricultural research section of the agricultural department stood transferred C
to the University. Pending final absorption in the University, the staff was to
be on deputation to the University but no deputation allowance was to be ,
paid. It was further provided that the personnel engaged in research in the
State Directorate of Agriculture would have the choice of joining the University
or in the alternative would be retrenched. D
Sub-clause (3) of Clause (6) provided for protection of pay and scale
of pay by the University while sub-clause (4) of Clause (6) set out method
of equation of posts under the Government versus posts in the University
for the purpose of initial integration. These two sub-clauses are as follows:-
Clause (6): E
"(3) Protection of pay and Scale of pay by the University;
The substantive or officiating pay and the scale of pay in which such
pay is drawn immediately before the date of transfer of services shall
.be protected provided that the Government servant may opt for an
equated scale of pay in the University specified in sub-para (4) below. F
(4) Equation of posts under Government v/s. Posts in University for
the purpose of initial integration:
(i) With a view to achieve integration of the Government servants
into the cadres of the University the equation of posts under
Government V/s. Posts under the University shall be as follows:- G
Post under University with Post under Government
existing pay scale

l. Professor (Rs. l l 00-50-1300-60- Joint Director (Rs.1300-60-1600)
1600) H
680 SUPREME COURT REPORTS [1999) SUPP. I S.C.R.

A 2 Reader (Rs. 700-60-1250) Post in the scale of Rs. 700-40- l l 00-
50-1200

3. Associate Reader (550-40-750-50- No equivalent post.
llOO)

B 4. Assistant Professor (400-40-800- Post in the scale of Rs. 375-25-450-
50-950) 30-650 (Ordinary time scale)

5. Research Assistant & Lecturers Post in the scale of Rs. 250-20-25-
(Rs.300-25-600) 625 (Ordinary time scale)

C (ii) Initial pay of~e Government servant on integration in the University
scale of pay will be fixed at an equal stage if such a stage exists in
the University scale of pay and in case no such stage exists fixation
will be done at the next higher stage in the University scale of pay.

D
(v) In the event of revision of pay scale of University teachers, the
revised pay scale shall be given. to the transferred employees subject
to the fulfilment of conditions of qualification attached to the revised
pay scales." ··~
E The respondents in these appeals fell in the fifth category of persons holding
posts under the Government in the scale of Rs.250-20-25-625 which has been
equated with the post under the University of Research Assistant and Lecturers
with the existing pay scale of Rs. 300-25-600. Under clause 6(3) the substantive
or officiating pay as also the scale of pay in which this pay in drawn
immediately before the date of transfer are protected. The Government servant
F is, however, given the option to choose an equated scale of pay in the
University as specified in clauses 6(3) and 6(4) which have been set out
above. The respondents in these appeals chose to retain their pay and the
scale of pay under the Government.

The respondents were accordingly sent on deputation to the University
G under the order of 27.12.1975. They were absorbed in the University with
effect from 1.4.1977. However, in the meanwhile from 1.9.1976 the Rajasthan
Civil Services (Revised New pay Scale) Rules, 1976 came into effect. Under
these rules the pay of Government servants in various categories was revised.
Since the respondents were drawing their pay in the pay scales of the·
H Government, their salaries were also revised under the Rajasthan Civil Services
RAJASTHAN AGRICULTURAL UNI. v. M.L. KOTHARI [SUJATA V. MANOHAR,J.] 681

(Revised New Pay Scale) Rules, 1976. Under these Rules the entire amount A
of dearness allowance, dearness pay, ad hoc relief and additional dearness
allowance as admissible on 1.9.1976 was merged and treated as ·part of the
basic pay for the purpose of fixation of pay in the revised new pay scales.
The respondents were accordingly receiving their revised pay. However, on
their absorption in the University with effect form 1.4.1977 they were required B
to be fitted in the University pay scales. The pay scales in the University had
also been revised with effect from 1.9.1976 when the new University Grants
Commission scales of pay come into operation. Under the new UGC scales
of pay, however, the basic pay which was fixed was .inclusive of dearness
allowance etc. as on 31.12.1972. The dearness allowance and various other
such allowance were granted from 1. I .1973 onwards in the UGC scales of pay C
on the basic pay newly fixed as on l. l .1973.

In view of the difference in the manner in which the basic pay was fixed
under the new Government scales of pay and the new UGC scales of pay, the
Government of Rajasthan, Finance Department issued a Memorandum dated
21.2. I 979 relating to the fixation of pay of Government servants on appointment D
as teachers in the colleges/universities located in Rajasthan in the new UGC
pay scales to ensure that double benefit of dearness allowance was not given
when a person in the new Government scales of pay was fitted in the new
UGC scales of pay. The order of 21.2.1979 prescribed that for the purpose of
fixation of pay in such cases, the elements of additional dearness allowance E
equal to nine installments of dearness allowance granted by the State
Government between 1.1.1973 and 1.9.1976 and merged in the revised new pay
scales, should be deducted from the pay which a Government servant was
drawing on the date on which he was appointed as a teacher in the UGC
scales of pay. The pay thus arrived at, after excluding the amount of additional
dearness allowance as above, would be treated as pay with reference to which F
his pay should be fixed in the UGC pay scale. The pay in the UGC pay scale
should be fixed at a stage corresponding to his pay so arrived at, and if there
was no equal stage in the UGC pay scale, his pay should be fixed at a stage
next above his pay. In addition to the pay so fixed in the UGC pay scale, he
was to be entitled to dearness allowances admissible with UGC pay scale in G
the universities in Rajasthan.

Some of the persons transferred from the agriculture department to the
University challenged the Memorandum of the Government of Rajasthan
dated 21.2.1979 by filing a writ petition in the High Court. The High Court,
however, said that since the University had adopted the terms of the H
682 SUPREME COURT REPORTS [1999) SUPP. 1 S.C.R.

A Government Memorandum of 21.2.1979, the writ petition was premature.
By an order dated 28th July, 1980 issued in pursuance of the resolution
of the executive committee dated 28/29th of June, 1980, the ~ice-Chancellor
was pleased to order that the pay of transferred research employees who had
been pennanently absorbed in the University and who were drawing pay in
B the revised new pay scales of the Government of 1976 shall be fixed in the
revised UGC scales of 1976 after deducting the element of additional dearness
allowance equal to nine installments of dearness allowance granted between
1.1.1973 and 1.9.1976 and merged in the revised new pay scales 1976 from
basic pay which an employee was drawing on the date of his absorption in
C the University. The order further stated that the pay thus arrived at after
excluding the amount of additional dearness allowance will be treated as pay
with reference to which the employee's pay shall be fixed in the revised UGC
Scales of 1976. In addition to the pay so fixed in the UGC scales, the employees
shall be entitled to dearness allowance admissible with the nevy UGC pay
scales of pay. This order was brought into effect from 1.9.1976. In order to
D understand how a fixation was done under the University order of 28. 7 .1980,
the comparative position of pay fixation of the respondent in civil appeal
no.3332 of 1998 is set out.

Pay fixed by the Govern- Pay fixation as per the Pay fixation wanted by
ment in the new pay University order dated the respondent in the
E scale ofRs.750-1350 28/30.7.1980 in revised revi~ed UGC pay scale
UGC scale Rs. 700-40- of Rs. 700-1600
1100-50-1600

Pay Rs. 990 Pay Rs. 820.00 Pay Rs. 1020
F DA Rs. 40 (Addi.DA) DA DA - -
ADA Rs. nil (excluded) DA - - ADA Rs. 303
Total Rs. 1030.00 ADA Rs. 301.00 Total Rs. 1323.00
Total Rs.1121.00

The respondent filed a writ petition in the High Court challenging the order
G of the University dated 28.7.1980. The respondent, inter alia, prayed for
quashing the order of 28.7.1980. They further prayed for their fixation in the
new UGC pay scales on the basis of the consolidated basic pay which they
were getting under the revised new pay scales of the Government.

A learned Single Judge of the High Court dismissed the writ petition
H filed by the respondent. In appeal, however, the Division Bench of the" High
RA.IASTHAN AGRICULTURAL UNI. v. M.L. KOTHARI [SUJATA V. MANOHAR, J.] 683

Court has allowed the appeal and has held that the respondents are entitled A
to the protection of their pay as drawn under the new Government scales.
Even though it is a consolidated pay, the element of dearness allowance
which has been merged in the basic pay upto 1.9.1976 should not be deducted
and the titment in the new UGC scales should be on the basis of the pay as
drawn under the new Government scales. The Court has also directed payment B
of interest @ 12% per annum on the additional amounts to which the
respondent may become entitled.

The short question that requires consideration is whether the fitment of
the respondents in the new UGC scales is properly done and whether the
order of the University dated 28.7.1980 which is in accordance with the C
Government Memorandum of 21.2.1979 provides as correct basis for the

-
fitment of employees drawing revised Government scales of pay into the new
UGC scales of pay. The manner in which employees getting Government
scales of pay were to be fitted in the University scales of pay was set out
in the initial order dated 27 .12.1975 under which the employees of the research
wing of the Directorate of Agriculture were transferred to the University and D
were absorbed thereafter in the University. The rights of the transferred
employees are, therefore, governed by the order of 27.12.1975. At the date of
this order neither the revised Government scales of pay nor the new UGC
scales of pay had come into effect. Clause 6(4) of the order of 27.12.1975
clearly provided for the manner in which the scales of pay under the Government E
and under the University were to be equated. The initial pay of the Government.
servant in the University scales of pay was to be fixed at an equal stage if
such a stage was available under the University pay scales or at the next
higher stage if an equal stage was not available. The order further provided
under sub-Clause 6(4)(v) that in the event of a revision of pay scales of the
University teachers the revised pay scales shall be given to the transferred F
employees subject to the fulfilment of any conditions relating to qualifications.
Therefore, basic pay drawn under the Government scale was to be protected
under the ':!niversity scales. The problem in the present case arises on
account of the merger of dearness allowances in the basic scale of pay of the
Government employees with effect from 1.9.1976. Had the revised UGC scales G
of pay also provided for such a merger of dearness allowances in the basic
pay with effect from 1.9.1976, there would have been no problem. The revision
of pay scales under the Government as well as under the new UGC pay scales
would have been on the same basis and the ordinary principles of equation
of pay when a fitment is made in a new pay scale, would have applied.
However, the new UGC pay scales had merged only the dearness allowance H
684 SUPREME COURT REPORTS (1999] SUPP. I S.C.R.

A with basic pay upto 1.3.1973. There was thus a period between 1973 and 1976
when under the UGC scales of pay additional dearness allowance was payable
and it continued to be paid thereafter; While under the revised Government
scales of pay dearness allowances were merged as of 1.9.1976, and only
thereafter additional dearness allowance was payable. If we accept the
contention of the respondents, the respondents would get the benefit of
B having their basic pay in the UGC scale fixed n.ot just on the basis of their·
original basic pay but also by inclusion of dearness allowance in the basic
pay during the period 1.1.1973 to 1.9.1976. And they would also get the
benefit of dearness allowance for the period 1.1.1973 to 1.9.1976. The
Government as well as the University have, therefore, rightly held that in
C order to have an equivalence between the revised scales of pay of the State
Government and the new UGC scales of pay, it is necessary to exclude

-
notionally the dearness allowance during the period 1.1.1973 and 1.9.1976
which were merged in the basic pay under the revised scales of pay of the
Government but which were not so merged when the revised UGC scales were
prescribed. Therefore, a proper equivalence between the two scales of pay
D can come about only when the basic pay under both the scales is calculated
on a common basis. That is why the orders of the Government as well as
the University exclude from calculation of the basic pay, the dearness allowance
drawn by Government servants between 1.1.1973 and 1.9.1976 for the purpose
of a notional calculation of basic pay to find a corresponding equivalence in
E the UGC revised scales of pay. The entire purpose of the University order of
28th of July, 1980 is to exclude a double benefit of dearness allowances to
the Government employees who are to be fitted in the new UGC scales of pay.
As the simple calculation set out earlier shows, the respondents have gained
as a result of their fitment in the new UGC scales of pay We do not, therefore
see any reason for setting aside the order of the University dated 28. 7 .1980.
F
The appeals are, therefore, allowed and the impugned judgment and
order of tiJ._e Division Bench of the High Court is set aside and the original
writ petition is dismissed. There will, however, be no order as to costs. We,
however, make it clear that if under the impugned Division Bench judgment
G any monetary benefit has been actually given to any of the respondent, the
same will not be recovered from him.

A.KT. Appeal allowed.

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