Case Note & Summary
The Supreme Court allowed the appeal filed by the State Bank of India and others against the judgment of the Bombay High Court. The respondent, Ravindra Nath, joined the Bank in 1981 and was posted to Johannesburg, South Africa, as Manager (Credit) in Scale V in June 2000. His salary was fixed at US $1965 per month, subject to change from time to time, and the terms and conditions were subject to review and revision by the Bank. In January 2001, the Bank revised his salary to US $1300 based on the recommendations of the Working Group of the Standing Committee, which had used newly available Cost of Living Index data. The High Court set aside this revision, holding that the salary was not tentative and that the reduction was unfair and arbitrary. The Supreme Court, however, found that the contractual terms clearly allowed for revision, and the Bank had acted in accordance with the binding directions of the Standing Committee under Section 18 of the State Bank of India Act, 1955. The Court noted that the respondent did not challenge the reduction at the time, continued to work, and later took voluntary retirement. The Court held that the High Court erred in interfering with the salary revision, which was based on objective criteria and applied uniformly. The appeal was allowed, and the impugned order of the High Court was set aside.
Headnote
A) Service Law - Salary Revision - Contractual Terms - The Bank's letter offering fixed salary 'subject to change from time to time' and clause 7.3 allowing review and revision by the Bank from time to time permitted reduction of salary based on revised Cost of Living Index data. The High Court erred in holding that the salary was not tentative. (Paras 2-4, 13-15) B) Administrative Law - Standing Committee - Binding Effect - The Standing Committee constituted under Section 18 of the State Bank of India Act, 1955, has the authority to fix salaries for officers posted abroad, and its recommendations are binding on all Public Sector Banks. The Bank acted in compliance with such recommendations. (Paras 9-11, 15-16) C) Service Law - Unilateral Reduction - Reasonableness - The reduction of salary from US $1965 to US $1300 was based on objective data (Cost of Living Index from UN Bulletin) and applied uniformly to all officers. The respondent did not challenge the reduction or seek repatriation, and continued to work until voluntary retirement, indicating acceptance. (Paras 11, 14, 17)
Issue of Consideration
Whether the Bank could unilaterally reduce the salary of an officer posted abroad based on revised Cost of Living Index data, given the contractual clause that salary was subject to change from time to time.
Final Decision
The Supreme Court allowed the appeal, set aside the High Court order, and upheld the salary revision.
Law Points
- Contractual terms subject to change
- Standing Committee's binding recommendations under Section 18 of State Bank of India Act
- 1955
- No vested right to fixed salary
- Reasonableness of unilateral revision
