Successor States Bound by Pre‑Reorganisation High Court Judgments and Continuing Cause of Action in Pay‑Parity Claims: Commentary on Sanjay Kumar Upadhyay v. State of Jharkhand, 2025 INSC 1445

1. Introduction

The Supreme Court’s decision in Sanjay Kumar Upadhyay v. State of Jharkhand & Ors., 2025 INSC 1445 addresses two significant and interlinked questions in Indian service and constitutional law:

  • Whether a successor State (here, Jharkhand) and its High Court are bound by service‑related judgments of the parent State’s High Court (Patna High Court) delivered before reorganisation, by virtue of the Bihar Reorganisation Act, 2000, particularly Section 34(4); and
  • Whether a claim for parity of pay arising from a pay‑scale anomaly is barred by delay and laches, or whether it constitutes a continuing cause of action.

The appellant, Sanjay Kumar Upadhyay, was appointed as an Industries Extension Officer (IEO) in 1992 in the then State of Bihar, pursuant to a common competitive examination conducted in 1981 for sixteen graduate‑level, non‑gazetted Class‑III posts across various departments. Following the creation of Jharkhand under the Bihar Reorganisation Act, 2000, his services were allocated to Jharkhand.

The core grievance was that while employees appointed through the same common examination and holding equivalent posts in other departments had been granted a higher revised pay scale (₹1600–2780 under the 5th Pay Commission), IEOs remained in a lower scale, despite:

  • A prior Patna High Court judgment in Nagendra Sahani directing uniform higher pay for all sixteen posts; and
  • Recommendations of a Fitment Appellate Committee headed by a former Supreme Court judge (Justice Aftab Alam) favouring parity.

The Jharkhand High Court’s Single Judge granted relief following Nagendra Sahani and Alakh Kumar Sinha, but a Division Bench later reversed that decision, primarily on grounds of delay, policy considerations, and the supposedly “persuasive” (not binding) nature of Patna High Court decisions.

The Supreme Court has now restored the Single Judge’s order, laying down important principles on:

  • How pre‑reorganisation High Court decisions operate in relation to successor States; and
  • How continuing wrongs in pay‑fixation and anomalies are to be treated vis‑à‑vis limitation and laches.

2. Summary of the Judgment

2.1 Procedural History

  • 1981: Common competitive examination held by Bihar State Subordinate Services Selection Board for sixteen graduate‑level Class‑III posts in various departments, including IEO.
  • 1992: Appellant appointed as IEO in the pay scale of ₹1400–2600.
  • Pay‑scale anomaly:
    • Post 4th Pay Revision (April 1981): ten of sixteen posts placed in a higher revised scale (₹850–1360), six (including IEO) in a lower scale (₹296–460).
    • Post 5th Pay Commission (1989): ten posts placed in ₹1600–2780, six in ₹1500–2750.
  • 1993: In Nagendra Sahani v. State Of Bihar, Patna High Court (Division Bench) held this differential unjustified and directed that all sixteen posts be placed in the higher scale of ₹1600–2780 w.e.f. 01.01.1986, with a clear statement that similarly situated persons need not individually move the court.
  • 2000: Bihar Reorganisation Act comes into force; Jharkhand carved out, appellant’s services allocated to Jharkhand.
  • 2000: Fitment Appellate Committee (Justice Aftab Alam) recommends uniform revised scale of ₹5000–8000 for all sixteen posts.
  • 2001 & 2002: Appellant submits representations seeking parity; rejected on 13.09.2004.
  • 2005: Appellant files W.P.(S) No. 5743 of 2005 before Jharkhand High Court.
  • 2011: Single Judge allows the writ, relying on Nagendra Sahani and Alakh Kumar Sinha, directing revision of appellant’s pay scale to ₹1600–2780 from date of appointment with arrears.
  • 2012: State files LPA No. 269 of 2012; initially dismissed in default in 2015, later restored.
  • 2022: Division Bench allows LPA, sets aside Single Judge’s order on grounds of delay, non‑challenge of the 2004 rejection order, and “cascading effect”.
  • 2025: Supreme Court allows civil appeal, restores Single Judge’s judgment.

2.2 Core Holdings

  1. Binding effect of Patna High Court judgments on Jharkhand:
    By virtue of Section 34(4) of the Bihar Reorganisation Act, 2000, orders of the Patna High Court in relevant matters “shall for all purposes have effect, not only as an order of the High Court at Patna, but also as an order made by the High Court of Jharkhand”. Thus, Nagendra Sahani is not merely persuasive; it is a binding precedent for Jharkhand High Court in cases concerning the same recruitment and service conditions.
  2. Judicial discipline and coordinate bench practice:
    Once Nagendra Sahani is deemed a Jharkhand High Court decision, a Division Bench could either:
    • Follow it; or
    • Disagree and refer the matter to a larger bench.
    It could not brush it aside as only having “persuasive value”.
  3. Continuing cause of action in pay‑parity / pay‑fixation claims:
    Following M.R. Gupta v. Union of India, the Court holds that a claim to correct pay scale and pay‑fixation is a continuing right. Each month of underpayment creates a fresh cause of action. Therefore, the writ petition cannot be rejected on grounds of delay or laches.
  4. Extension of judicial benefit to similarly situated employees:
    Applying the principle reiterated in Suprita Chandel v. Union of India and Amrit Lal Berry, once a court has declared the law in favour of one set of employees (as in Nagendra Sahani), other similarly placed employees ought to receive the same benefit without being forced to litigate individually.
  5. Article 14 and pay parity:
    Since:
    • All sixteen posts emerged from the same recruitment and common examination;
    • Allocations to departments were purely administrative (not merit‑based); and
    • No intelligible differentia was shown between IEOs and other posts;
    denial of higher pay scale to IEOs is arbitrary and violative of Article 14. The Fitment and Fitment Appellate Committees’ recommendations strengthened this conclusion.
  6. Financial implications not a defence to constitutional wrong:
    The Court implicitly rejects the “cascading financial effect” argument, holding that financial burden cannot justify continued violation of Article 14, especially where the State, as a model employer, must act fairly.
  7. Outcome:
    The Supreme Court:
    • Allows the appeal;
    • Sets aside the Division Bench judgment (30.03.2022);
    • Restores the Single Judge judgment (14.12.2011);
    • Directs compliance with the Single Judge’s directions within three months; and
    • Grants litigation costs to the appellant as per rules.

3. Detailed Analysis

3.1 Factual and Structural Background

3.1.1 Common Recruitment and Subsequent Pay Anomaly

The case arises out of a single common competitive examination held in 1981 to fill sixteen categories of graduate‑level non‑gazetted Class‑III posts across various departments in Bihar, including the post of IEO.

Critical common features:

  • Same examination and selection process;
  • Similar educational level and job category (graduate‑level, non‑gazetted, Class‑III);
  • Prior to the 4th Pay Revision, all these posts were in the same pay scale;
  • Postings to different departments were done purely by administrative allotment, not by candidate choice or differentiated merit.

Despite this, over time:

  • Ten posts (other than IEO) were moved to higher revised scales following the 4th and 5th Pay Commission recommendations.
  • Six posts (including IEO) were placed in lower scales, and the Industries Department failed to even place the IEO’s case before the 4th Pay Anomaly Committee in 1987.

This created a classic pay‑scale anomaly between similarly situated employees recruited through a common process to substantially comparable posts.

3.1.2 Patna High Court’s Intervention in Nagendra Sahani

In Nagendra Sahani v. State Of Bihar, the Patna High Court examined:

  • The absence of any reasonable classification for differentiating between the sixteen posts; and
  • The State’s failure to justify differential scales by any intelligible criteria.

The Court held that:

“We do not find any reasonable nexus in fixing two revised scales of pay for the aforesaid 16 types of posts… In view of these facts, we are clearly of the view that the persons who are working on 16 types of posts, enumerated in Annexure 1, are entitled to the scale of Rs. 1600‑2780/‑ with effect from 01.01.1986…”

Crucially, the Patna High Court went further and stated:

“We are told that there are several other persons whose cases are similarly situated but they have not moved this court. We are of the view that if cases of those persons are similarly situated, they are not required to move this court, but they shall be also granted the same scale with similar monetary benefits…”

This language is effectively in the nature of directions in rem – intended to cover all similarly situated employees, not only the petitioners before the Court.

On this foundation, the Supreme Court in Sanjay Kumar Upadhyay treats the appellant as squarely covered by Nagendra Sahani.

3.1.3 Post‑Reorganisation: Allocation to Jharkhand

With the bifurcation of Bihar and creation of Jharkhand via the Bihar Reorganisation Act, 2000, the appellant’s services were transferred to Jharkhand. His claim, therefore, was now against the State of Jharkhand.

The central statutory provision invoked is Section 34 of the Bihar Reorganisation Act, 2000, titled “Transfer of proceedings from High Court at Patna to High Court of Jharkhand”.

3.2 Statutory Framework: Section 34 of the Bihar Reorganisation Act, 2000

3.2.1 Text and Structure

Section 34 broadly provides:

  • Sub‑section (1): From the “appointed day”, the Patna High Court loses jurisdiction over the “transferred territory” (i.e., Jharkhand), subject to specific exceptions.
  • Sub‑section (2): The Chief Justice of Patna High Court may certify and transfer pending proceedings to Jharkhand High Court, considering the place of accrual of the cause of action and other circumstances.
  • Sub‑section (3): Certain proceedings (appeals, SLP‑related applications, review, etc.) concerning orders passed by the Patna High Court prior to the appointed day can continue to lie before Patna High Court, though they may be transferred on the Chief Justice’s order.
  • Sub‑section (4): Provides that any order of Patna High Court passed:
    • In proceedings that later stand transferred to Jharkhand under sub‑section (2); or
    • In proceedings retained by Patna under sub‑section (3);
    “shall for all purposes have effect, not only as an order of the High Court at Patna, but also as an order made by the High Court of Jharkhand.”

3.2.2 Supreme Court’s Reading of Section 34(4)

The Supreme Court treats sub‑section (4) as a critical “deeming provision” – a statutory fiction that attributes a dual character to Patna High Court’s orders:

  • They remain orders of Patna High Court; and
  • They are simultaneously deemed to be orders of Jharkhand High Court.

The Court explains that the legislative intent is to ensure continuity of judicial authority and avoid any vacuum or confusion about the enforceability of pre‑reorganisation judgments in the newly created State.

Applying this:

  • The judgment in Nagendra Sahani, though rendered in 1993 by Patna High Court, must be treated as if it were equally a judgment of the Jharkhand High Court for all purposes.
  • Therefore, Nagendra Sahani is a binding precedent for the Jharkhand High Court, not merely a persuasive authority.

This conclusion is expressly recorded in para 21 of the judgment: Nagendra Sahani “must be treated by virtue of Section 34(4) as binding precedent of the High Court of Jharkhand”.

3.3 Judicial Discipline and Coordinate Bench Practice

Having characterised Nagendra Sahani as a Jharkhand High Court decision (by statutory fiction), the Supreme Court then applies the principle of judicial discipline among benches of co‑equal strength.

Relying on Mary Pushpam v. Telvi Curusumary, (2024) 3 SCC 224, the Court reiterates that:

“…when a decision of a coordinate Bench of the same High Court is brought to the notice of the Bench, it is to be respected and is binding subject to right of the Bench of such co‑equal quorum to take a different view and refer the question to a larger Bench. It is the only course of action open to a Bench of co‑equal strength…”

Consequently:

  • Once Nagendra Sahani was a binding Jharkhand precedent, the Division Bench could:
    • Follow it; or
    • Refer the matter to a larger bench if it disagreed.
  • It could not lawfully treat it as having mere “persuasive value” and decide contrary to it without reference to a larger bench.

The Supreme Court explicitly criticises the Division Bench for exactly this misstep, finding that it had ignored a binding precedent under the guise of treating it as persuasive only.

3.4 Delay, Laches, and Continuing Cause of Action

3.4.1 The Division Bench’s View

The Division Bench had held:

  • The appellant sought relief “after more than 20 years of entering into the service”;
  • He did not explain this delay; hence the writ was hit by laches;
  • The relief granted from 1992 would have a “cascading effect on the entire cadre”.

It also stressed that the 2004 rejection of the appellant’s representation was not specifically challenged in the writ petition.

3.4.2 Supreme Court’s Approach: Following M.R. Gupta

The Supreme Court rejects the laches argument by invoking M.R. Gupta v. Union of India, (1995) 5 SCC 628. In that case, the Court clarified that:

  • Incorrect pay‑fixation is not a “one‑time action” whose legality must be challenged within a fixed limitation period;
  • Rather, the right to be paid correct salary as per rules is a subsisting and recurring right, which continues for the entire tenure;
  • Each monthly underpayment constitutes a fresh cause of action.

M.R. Gupta analogised this right to the right of redemption in mortgage law, which subsists as long as the mortgage continues, unless extinguished.

Applying that reasoning, the Supreme Court in Sanjay Kumar Upadhyay holds:

  • The appellant’s grievance regarding pay‑scale anomaly and parity is a continuing wrong resulting in a continuous cause of action (para 25);
  • Therefore, the plea of limitation or laches cannot defeat his claim;
  • This is reinforced by the fact that the appellant actively pursued his claim through representations in 2001 and 2002, which were rejected in 2004; he then approached the High Court in 2005 – a reasonably prompt step after formal rejection (para 26).

Thus, the Court finds that:

  • The appellant was not “sleeping over his rights”;
  • The delay was not only explainable but inherently mitigated by the doctrine of continuing wrong.

3.5 Equal Treatment of Similarly Situated Employees

3.5.1 Article 14 and the Pay Parity Principle

At the constitutional level, the Court roots its reasoning in Article 14 of the Constitution, emphasizing:

  • All sixteen posts originated from the same recruitment process;
  • There was no difference in qualifications or selection methodology;
  • Allocation to different departments was purely administrative, not merit‑based;
  • Other employees of the same recruitment batch already received the higher scale on the strength of Nagendra Sahani and committee recommendations.

Hence, continuing the lower scale for IEOs lacked any intelligible differentia with a rational nexus to a legitimate objective. Such differential treatment among equals is contrary to Article 14.

3.5.2 Extending Judicial Benefits: Suprita Chandel and Amrit Lal Berry

The Court draws from Suprita Chandel v. Union of India, 2024 SCC OnLine SC 366, which itself relies on the classic judgment in Amrit Lal Berry v. Collector of Central Excise, (1975) 4 SCC 714.

The principle restated in para 27 of the judgment is:

“…where a citizen aggrieved by an action of the government department has approached the court and obtained a declaration of law in his/her favour, others similarly situated ought to be extended the benefit without the need for them to go to court.”

This principle is particularly apposite given that in Nagendra Sahani, the Patna High Court expressly directed that similarly situated employees need not file separate writs.

The Supreme Court therefore:

  • Rejects the notion that only the specific writ petitioners in Nagendra Sahani may claim parity;
  • Holds that the appellant, being identically placed, is entitled to the same benefits as a matter of fairness and judicial economy;
  • Notes that refusing such extension would encourage needless multiplicity of litigation.

3.6 State as Model Employer and Financial Concerns

The Division Bench had expressed concern about the “cascading effect” of granting higher pay to the appellant and possibly to the entire cadre.

The Supreme Court implicitly rejects this as a valid ground to deny relief:

  • The State, as model employer, must uphold constitutional values of equality and non‑arbitrariness;
  • Financial or administrative inconvenience cannot override Article 14 rights or justify continuing discrimination;
  • Especially when committees and earlier judicial decisions have already identified and acknowledged the anomaly.

3.7 Effect of the Decision: Restoring the Single Judge’s Order

Given the above reasoning, the Supreme Court concludes:

  • The Division Bench’s judgment is legally unsustainable in its treatment of:
    • Section 34(4) of the Reorganisation Act;
    • Judicial discipline;
    • Delay and laches in a continuing cause of action;
    • Article 14 parity.
  • The Single Judge had correctly:
    • Applied Nagendra Sahani and Alakh Kumar Sinha;
    • Recognised appellant’s entitlement to the higher scale of ₹1600–2780;
    • Granted arrears and consequential benefits from the date of appointment.

Accordingly, the Court:

  • Allows the appeal;
  • Sets aside the Division Bench judgment (30.03.2022);
  • Restores the Single Judge judgment (14.12.2011);
  • Directs the State to comply within three months;
  • Awards costs to the appellant.

4. Impact on Future Cases and Legal Landscape

4.1 Service Law and Pay Anomaly Litigation

The judgment fortifies several trends in service jurisprudence:

  • Broad acceptance of continuing wrong doctrine: Employees bringing pay‑parity or pay‑fixation claims after long delays may still be heard, particularly where the anomaly continues to date. Courts will look at whether the wrong is ongoing, not merely when it first arose.
  • Pay parity across common recruitment: Where a cadre is formed through a common examination without merit‑cum‑preference allocation, differential pay scales within that group will be closely scrutinised under Article 14.
  • Committees’ recommendations as persuasive evidence: Recommendations of Pay Anomaly Committees or Fitment Committees (e.g., Justice Aftab Alam Committee) will not be lightly ignored when assessing the legitimacy of a claimed anomaly.

4.2 State Reorganisation and Successor Responsibility

The case is particularly significant for successor States formed after reorganisation (not only Jharkhand, but by analogy, Chhattisgarh, Uttarakhand, Telangana, etc.), as it:

  • Clarifies that pre‑reorganisation High Court judgments on service conditions of employees continue to bind both the successor State and its High Court; and
  • Prevents successor States from arguing that such decisions are merely “persuasive” or “historical” and hence not binding.

This ensures:

  • Continuity and certainty in service rights of employees whose cadres straddle temporal or territorial changes; and
  • Prevents arbitrary divergence in pay and conditions merely because an employee was geographically allocated to a new State.

4.3 High Court Practice and Doctrine of Precedent

The decision reinforces:

  • The mandatory nature of coordinate bench discipline: High Court benches cannot depart from existing co‑equal precedents except by referring the matter to a larger bench;
  • The role of statutory deeming provisions (like Section 34(4)) in identifying which judgments count as precedents of a High Court.

Going forward, Jharkhand High Court benches will need to:

  • Treat relevant Patna High Court decisions covered by Section 34(4) as binding Jharkhand precedents; and
  • Follow or refer, but not disregard, such decisions.

5. Complex Concepts Simplified

5.1 Continuing Cause of Action

A continuing cause of action is a legal wrong that is repeated or persists over time. For pay anomalies:

  • Every month an employee is paid less than what is legally due, a fresh wrong occurs;
  • This means the employee can challenge the wrong even after many years, since the violation is ongoing.

The Court applies this to hold that the appellant’s claim was not time‑barred.

5.2 Deeming Provision

A deeming provision in a statute creates a legal fiction. It makes the law treat something as if it were something else for specific purposes.

Section 34(4) says that certain Patna High Court orders:

  • “shall for all purposes have effect, not only as an order of the High Court at Patna, but also as an order made by the High Court of Jharkhand.”

This means, legally, such orders must be treated as if the Jharkhand High Court had itself passed them.

5.3 In Rem vs In Personam

  • A judgment in personam binds only the parties to the case.
  • A judgment in rem operates more broadly, declaring a legal position that applies to a wider class or to the world at large.

The directions in Nagendra Sahani stating that similarly situated persons need not approach the court individually are in the nature of directions in rem, and the Supreme Court recognises this while extending the benefit to the appellant.

5.4 Laches

Laches is an equitable doctrine where a court may refuse relief to a claimant who has unreasonably delayed in asserting rights, to the detriment of the other side.

In this case, laches was rejected because:

  • The wrong was continuing; and
  • The appellant had in fact taken timely steps by way of representations, and filed the writ reasonably soon after those were rejected.

5.5 Judicial Discipline and Coordinate Benches

Within a High Court:

  • Benches of the same strength (e.g., two‑judge benches) are called coordinate benches.
  • If a coordinate bench disagrees with an earlier coordinate bench’s decision on a legal question, it must refer the issue to a larger bench (e.g., three judges); it cannot simply ignore or overrule the earlier decision.

This ensures consistency and predictability in the law.

5.6 “Cascading Effect” and Model Employer

“Cascading effect” refers to a situation where granting relief to one employee could logically require extending the same benefit to many others, implying significant financial consequences for the State.

However:

  • Courts have consistently held that financial burden alone cannot justify continued illegality or discrimination;
  • The State, as a model employer, must uphold fairness and equality even if it involves financial cost.

6. Conclusion: Key Takeaways and Significance

The decision in Sanjay Kumar Upadhyay v. State of Jharkhand is doctrinally important on multiple fronts:

  • Binding nature of pre‑reorganisation judgments: Section 34(4) of the Bihar Reorganisation Act is interpreted to mean that relevant Patna High Court judgments – such as Nagendra Sahani – are to be treated as orders of the Jharkhand High Court. Jharkhand and its High Court are bound by such decisions in relation to employees whose services transitioned under the Act.
  • Pay parity and Article 14: Employees recruited through a common examination to posts with no rationally distinguishable differences in qualifications or duties cannot be subjected to disparate pay scales. Arbitrary pay anomalies offend Article 14.
  • Continuing wrong in pay‑fixation: Underpayment due to erroneous pay‑fixation is a recurring cause of action. Delay in raising the issue does not, by itself, bar relief – especially where the employee continually receives lesser pay.
  • Judicial economy and equalisation of benefits: Once a court has declared the law and granted a service benefit to one set of employees, others identically placed are entitled to the same benefit without being forced to litigate afresh, in line with Amrit Lal Berry and Suprita Chandel.
  • Judicial discipline: High Court Division Benches cannot treat binding co‑equal precedents as “merely persuasive”. They must either follow them or refer the matter to a larger bench if they wish to differ.
  • Financial considerations subordinate to constitutional norms: Arguments of “cascading effect” and fiscal burden cannot justify ongoing discrimination where constitutional rights to equality are at stake. The State must act as a model employer.

In practical terms, the judgment not only secures long‑delayed pay parity for the appellant but also consolidates the rights of a larger class of similarly situated employees in Jharkhand whose entitlements had already been recognised in Nagendra Sahani. It sends a clear message that:

  • Successor States cannot evade pre‑existing judicial mandates;
  • Employees will not be denied relief merely because they assert their rights after some lapse of time, where the wrong continues; and
  • Courts will insist on doctrinal consistency and constitutional fidelity in State employment matters.

As such, Sanjay Kumar Upadhyay stands as a significant precedent on state reorganisation, service jurisprudence, and the rule of law in the public employment context.