Bombay HC tells Maharashtra State Financial Corporation to implement revised pay scale


The Bombay High Court recently rejected the state government’s decision to not extend the benefit of the Sixth Pay Commission to employees of the Maharashtra State Financial Corporation.

A division bench of Justice V M Kanade and Justice M S Sonak acted on a petition filed by a workers’ union, which argued that though the corporation had passed a resolution approving the revised pay scale, the decision had remained on paper.

The state government told the court that the corporation, which offers financial services and is in the business of offering loans, suffered losses to the tune of Rs 570.92 crore. The state government had extended financial assistance of Rs 136.49 crore to the corporation in various forms. The corporation has also stopped granting loans since 2005-2006, the bench was informed.

The financial corporation, on the other hand, told the court that its board of directors passed a resolution to give revised salaries under the Sixth Pay Commission. However, approval for the revision was pending with the government, it said.

The lawyers appearing for the petitioner, Bhartiya Kamgar Karmachari Mahasangh, contended that the approval of the state government is not necessary since the the corporation is an autonomous body. The petitioner further submitted that under Section 23 of the State Financial Corporations Act, the corporation has the power to lay down the service conditions of its employees, including pay scales and remuneration.

The lawyers also argued that Section 23 of the Act was amended with effect from 2000 and the clause, which stated that the government in consultation of the Reserve Bank, would decide the question of remuneration, was omitted.

The bench in its ruling said, “It is no longer necessary to obtain prior approval of the state government.”

The court pointed out that as the financial corporation is an autonomous body, it has the power to determine the conditions of appointment and services as also the remuneration which is payable to its employees.

… contd.


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