The Madras High Court has ruled that employees of a state-owned public sector undertaking cannot automatically claim salary parity with government employees unless the State Government grants prior approval. The court set aside an earlier single-judge order that had granted a revised pay scale to a lineman working in Arasu Rubber Corporation Limited.
Background of the Case
The case arose from a dispute over whether a lineman employed by Arasu Rubber Corporation Limited, a Tamil Nadu government-owned company, was entitled to the same pay scale as linemen working in state government departments.
The employee had approached the High Court seeking fixation of the scale of pay at Rs.610-1075 from June 1, 1988, along with subsequent benefits including 5% personal pay from August 1, 1992. The Single Judge allowed the petition by relying on Rule 34 of the Arasu Rubber Corporation Service Rules, which states that corporation employees may receive pay and allowances at rates applicable to state government employees.
The State of Tamil Nadu and the corporation challenged this order through a writ appeal.
Court’s Observations
The Division Bench comprising Justice S.M. Subramaniam and Justice C. Kumarappan examined whether employees of the corporation could claim pay parity with government staff.
The court pointed out that Rule 7 of the service rules gives the Tamil Nadu Government authority to issue binding directives to the corporation, which prevail over the rules themselves.
The judges noted that several government communications require prior state approval before public sector undertakings adopt government pay revisions.
The bench observed,
“When the directives issued by the Government are clear and require prior approval for revising pay scales, such directives are binding on the Corporation.”
The court also rejected the argument based on the principle of “equal pay for equal work.” It held that employees of government departments and public sector undertakings operate under different service rules and therefore cannot be directly compared.
Read also:- Supreme Court Seeks Expert Input to Define ‘Aravalli Hills and Ranges’, Orders Status Quo on
Decision of the Court
Holding that government approval was mandatory and had not been granted in this case, the High Court concluded that the earlier writ order granting the revised pay scale was legally unsustainable.
The court set aside the order dated February 1, 2021 in W.P. No.13025 of 2007 and allowed the writ appeal filed by the State of Tamil Nadu and Arasu Rubber Corporation Limited.
Case Title: State of Tamil Nadu & Anr. vs V. Shunmugam
Case No.: W.A. No. 1804 of 2023
Decision Date: 23 February 2026
