Attention is invited to Ministry of Finance, Department of Expenditure O.M. No. F. 5(1)-E (Coord)/67, dated November 3, 1967, in which it was pointed out that the official side representatives in the joint Councils have to take final decision in the meetings on the points brought up before such councils and cannot reserve them for later decision by Government. It was, therefore, suggested that, for a proper discharge of this responsibility, the official side representatives would have to consider the items on the agenda well in advance of the meetings, and obtain clearance from the authorities concerned at the appropriate level, i.e., from the Minister concerned or the Finance Ministry or the Cabinet as required, before attending the council meetings so that they would have the proper authority to make commitments on behalf of Government. In regard to matters affecting the pay scales of staff, it was further pointed out that, in view of the existing ban on upward revision of pay scales, any move for such revision would involve relaxation of the ban requiring prior approval of the Cabinet, and that, therefore, in cases where such pay revision was found to be fully justified on merits, the necessary approval of the Cabinet should be taken in advance for the relaxation of the ban in the specific cases expected to be brought up before the Departmental/National Council meetings.

    2.     In para (ix) of Ministry of Home Affairs O.M. No. 6/2/68-JCA, dated 21^st September, 1969, the Ministries/Departments were intimated that, in view of the existing ban on pay revision, and the fact that an arbitration award is binding unless modified by Parliament, it is desirable that the Ministries/Departments concerned keep the Cabinet informed of the disagreements in the Departmental/National Councils on matters relating to pay/allowances. They were, therefore, requested to make a report to the Cabinet as soon as a reference for arbitration on an item relating to pay and allowances was received.

    3.     In the light of the experience gained in this regard so far, it has been observed that the procedure mentioned in para 2 above does not give an opportunity to the Cabinet to consider whether or not arbitration is necessary or avoidable, since at the stage at which the matter is reported to the Cabinet, a disagreement has already been recorded in the concerned Joint Council, and arbitration has been asked for. There is no provision in the present scheme for Joint Consultative Machinery and Compulsory Arbitration to refuse to refer a dispute to arbitration where it is arbitrable. It is felt that a more appropriate course would be that the Cabinet should have an opportunity to consider the merits of a demand about pay and allowances before a disagreement is recorded thereon, and to give suitable directives to the administrative Ministry/Official Side of the Council in this regard, unless the matter has already been considered by the Cabinet in the light of the Ministry of Finance, Department of Expenditure O.M. of 3^rd November, 1967, referred to in para 1 above. It has, therefore, been decided, in modification of para (ix) of Ministry of Home Affairs office memorandum of 21^st September, 1968, referred to in para 2 above, that where an item relating to pay and allowances comes up before a Departmental/National Council, on which there is no likelihood of agreement between the official and staff sides either during the discussion in the Council or in the Committee, which might be set up by the Council to consider the item, the administrative ministry concerned should submit the matter for consideration of the Cabinet, before a disagreement is finally recorded on the item in the Departmental/National Council. This procedure would, however, be not necessary if the matter has already been considered by the Cabinet according to the instructions contained in the Ministry of Finance office memorandum of 3^rd November, 1967, referred to in para 1 above.

Sd/-
P.V. NAYAK
Dy. Secy. to the Govt. of India.