STATE OF H.P. & ORS. v. RAJESH CHANDER SOOD ETC. ETC.

A which were brought into force by the State Government by amending the Building Rules and not by the Corporation against whom such "vested right" or"settled expectation" is being sought to be enforced. The "vested right" or "settled expectation" has been nullified not only by the Corporation but also by the State by amending the Building Rules. Besides this, such a "settled B expectation" or the so-called "vested right" cannot be countenanced against public interest and convenience which are sought to be served by amendment of the Building Rules and the resolution of the Corporation issued thereupon." Based on the conclusions drawn in the cited judgment, it was c submitted, that a 'legitimate' or a ->settled expectation', suggesting the possibility of drawing pension after retirement, could not be treated as a vested right. It was submitted, that the respondent-employees were not justified in raising a claim based on the assumption, thatthey had a vested right, or 'settled expectation', under 'the 1999 Scheme', particularly in the light of the fact, that 'the 1999 Scheme' had been partly nullified, by the notification dated 2.12.2004.

26Copy pinpoint26. It was also the assertion of learned counsel, that the repeal notification dated 2.12.2004, had the consequence of termination/ cessation of benefits, as would emerge from the analogy of the principles expressed in Section 6 of the General Clauses Act. It was further submitted, that the requirement of dealing with rights and liabilities insofar as the present controversy is concerned, is clearly based on a valid classification. It was urged, that truly and factually, there was no classification whatsoever, inasmuch as, the benefits under 'the 1999 Scheme' were extended to a miniscule section of the employees, and excluded uni formally an overwhelming majority of employees. Learned counsel questioned the veracity of the conclusion drawn by the High Court, by reading down the repeal notification dated 2.12.2004, for the reason, that the same would deprive pensionary rights to those employees, who had opted for 'the 1999 Scheme', and had retired after 2.12.2004, G as also, the employees who were already in service when 'the 1999 Scheme' was notified on 29. I 0.1999, and had become members of that scheme, and were due to retire after 2.12.2004. It was pointed out, that the above determination at the hands of the High Com1, would have the effect of 'the 1999 Scheme' remaining in place, till such time as employees engaged in corporations upto 2.12.2004 eventually retired on H

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[JAGDISH SINGH KHEHAR, J.]

attaining the age of superannuation. In the above view of the matter, it was asserted, that in the manner the legality of the issue has been determined by the High Court, 'the 1999 Scheme' which was repealed on 2.12.2004, would actually and factually continue to be·operational, for a further period of approximately 20 years, by which time alone, employees engaged prior to the notification dated 2.12.2004, would retire from service.

27Copy pinpoint27. It was also the contention of learned counsel, that the confinement of the pensionary benefits under 'the 1999 Scheme', to such of the employees, who had retired from the concerned corporations, between 1.4.1999 and 2.12.2004, could not be invalidated because the right to receive pension stood crystalised and vested in them in terms of c paragraph 4 of 'the 1999 Scheme'. It was submitted, that a statutory classification cannot be set aside, when there is overwhelmingjustification, demonstrating a valid basis, therefor. The repeal of'the 1999 Scheme' was based on financial constraints, which .had not been legitimately repudiated. Insofar as the instant aspect of the matter is concerned, learned counsel, in the first instance, placed reliance on State ofRajasthan v. Amrit Lal Gandhi (supra), and our attention was invited to the following observations recorded therein:- " 16. Applying the ratio of the aforesaid decisions to the present case, we find no justification for the High Court having substituted the date of 1-1-1986 in lieu of 1-1-1990. It is evident that for introducing a pension scheme, which eny_isaged financial implications, approval of the Rajasthan Government was required. In the letter of 16-4-1991, written to the Vice-Chancellors of different universities ofRajasthan, it was stated as follows: F "As per the direction in regard to the aforesaid subject, the State Government has decided to introduce Pension Scheme in the Universities of the State w.e.f. 1-1-1990. In this regard the State Legislature has passed University Pension Rules and General Provident Fund Rules. Therefore, by enclosing a copy of University Pension Regulations and General G Provident Fund Regulations with this letter, it is requested that by obtaining approval of the competent body or Syndicate of the University, these Regulations be implemented in the University together and necessary information regarding implementation be intimated." H

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A 17. The Syndicate and Senate of the University, when they had forwarded their recommendations in 1986, did not contain a specific date with effect from which the pension scheme was to be made applicable. Their recommendations were subject to approval. The approval was granted by the Government, after the State Legislature had passed the University Pension Rules and General B Provident Fund Rules. The Government had stated in its affidavit before the High Court that the justification of the cut-off date of 1-1-1990 was "wholly economic". It cannot be said that the paying capacity is not a relevant or valid consideration while fixing the cut-off date. The University could, in 1991, validly frame Pension c Regulations to be made applicable prospectively. It, however, chose to give them limited retrospectivity so as to cover a larger number of employees by taking into account the financial impact of giving retrospective operation to the Pension Regulations. It was decided that employees retiring on or after I-1~1990 would be able to exercise the option of getting either pension or provident fund. D Financial impact of making the Regulations retrospective can be the sole consideration while fixing a cut-off date. In our opinion, it cannot be said that this cut-off date was fixed arbitrarily or without any reason. The High Court was clearly in error in allowing the writ petitions and substituting the date of 1-1-1986 for 1-1-1990." E For the same proposition, reliance was also placed in Union of India v. R. Sarangapani, (2000) 4 SCC 335, and our attention was drawn to the following observations recorded therein:- " I I. One more aspect which we want to emphasise is that the applicants who were appointed to the technical posts and the other F persons who were appointed to the non-technical posts are not on the same footing. The nature of their jobs was different, the qualifications for appointment were different and the training period was to be longer for the technical staff. It was obviously necessary that those who were to occupy the technical posts should have a G longer period of training than those who were to occupy the non- technical posts. The training period for the former was one year while the training period for the latter was only three months. Naturally, the non-technical personnel could therefore be appointed earlier to the technical personnel even if both groups were selected at the same selection. Therefore, in view of the nature of the H

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[JAGDISH SINGH KHEHAR, J.]

qualifications and nature of the posts and functions and duties, no A equality in the dates of accrual of the increments could ever have been claimed by the technical personnel comparing themselves to the non-technical persons, by invoking Article 14.

12. If, however, the Government thought it fit to bring some sort of equalisation in the matter of commencement of their increments, · B it was obviously by way of a sheer concession and was not as a matter of right nor was it to avoid any violation of any principles of equality under Article 14. In fact, the very official memorandum of the Government dated 22-1 0-1990 stated that under the Fundamental Rule 26 read with Rule 9(6)(a)(i) it was only in c,!!_ses of probationers and apprentices where such appointments c were followed by a confirmation that the said period of probation or apprenticeship would be counted for the purpose of scale of pay attached to'the posts. This principle would "not" as per the Rules be applicable to the training period. However, during the meetings of the National Council (JCM) it was represented that where the training period was long, as in the case of technical personnel, the disparity would become perpetual. Therefore, it is obvious that the concession was not based on Article 14 nor was it on the basis ofany rule but was clearly based only upon the fact that the training period of technical personnel was longer and the disparity would continue per:petually if these groups were selected at the same time. Therefore, Government considered initially to bring their increment on par with effect from 1-1-1990 and later on it felt that the grievance could be rectified with effect from 1- 1-1986 as mentioned above, the date of commencement of the recommendations of the Fourth Pay Commission. It is, therefore, clear that the Government decided to extend the benefit in the abovesaid manner, even though parties had no right to the same either under Article 14 or under the Rules and the date was mainly based on the financial burden. It was open to the Government to decide, having regard to the budgetary provision, as to what extent it could go and whether it could fix a cut-off date which was co- G terminus with the commencement of the recommendation of the Fourth Pay Commission, namely, 1-1-1986. On the peculiar facts of this case the said date was perfectly valid because the only consideration was the financial burden of the State and not any H

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A principle of equality."

28Copy pinpoint28. In order to canvass the. proposition noticed hereinabove, learned counsel also placed reliance on, 'A Treatise on the Constitutional Limitations', authored by Thomas M. Cooley (Indian Reprint of 2005, Hindustan Law Book Company, Calcutta), and invited our attention to B following observations recorded in Chapter XI, bearing the heading - Of The Protection To Property By 'The Law Of The Land':- "The chief restriction is that vested rights must not be disturbed; but in its application as a shield of protection, the term "vested rights" is not used in any narrow or technical sense. as importing c a power of legal control merely, but rather as implying a vested interest which it is equitable the government should recognize, and of which the ind_ividual cannot be deprived without injustice. And before proceeding further, it may be well to consider. in the light of the reported cases, what is a vested right in the constitutional sense, that we may the better judge how far the general laws of the State may be changed. and how far special provisions may be made without coming under condemnation. Every man holds all he possesses, and looks forward to all he hopes for, through the aid and protection of the laws; but as changes of circumstances and of public opinion, as well as other reasons of public policy, are all the time calling for changes in the laws, and these changes must more or less affect the value and stability of private possessions, and strengthen or destroy well-founded hopes; and as the power to make very many of them must be conceded, it is apparent that many rights, privileges~ and exemptions which usually pertain to ownership under a particular state of the law, and many reasonable expectations, cannot be regarded as vested rights in any legal sense. In many cases the courts. in the exercise of their ordinary jurisdiction, cause the property vested in one person to be transferred to another, either through a statutory power. or by the force of their judgments or decrees, or by compulsory conveyances. If in these cases the court has jurisdiction, they proceed in accordance with the law of the land, and the right of one man is divested by way of enforcing a higher and better right in another. Of these cases we do not propose to speak: as constitutional questions cannot well arise in regard to them, unless they be attended by circumstances of irregularity which are

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[JAGDISH SINGH KHEHAK, J.]

supposed to take them out of the operation of the general rule. A All vested rights are held subject to the laws for the enforcement of public duties and private contracts, and for the punishment of wrongs; and if they become divested through the operation of these laws, it is only by way of enforcing the ob Iigations of justice and good order. What we desire to arrive at now, is the meaning 8 of the term "vested rights''. when employed by way of indicating , the interests of which one cannot be deprived by the mere force oflegislative enactment, or by any other than the recognized modes of transferring title against the consent of the owner, to which we have alluded." Based on the submissions recorded hereinabove, it was sought to c be concluded, that the respondent-employees had no vested right to claim pension under 'the 1999 Scheme', and that, it was not open to them to assail the partial repeal of 'the 1999 Scheme', vide notification dated 2.12.2004.

29Copy pinpoint29. In the process ofrepudiating the submissions advanced at the hands of the appellants, Mr. Guru Krishna Kumar, learned senior counsel representing the respondent-employees, drew our attention to certain factual aspects of the matter, which according to him, needed to be kept in mind, while determining the veracity of the challenge raised by the State Government. It was pointed out, that all the respondent-employees, were already in the employment of corporate bodies, in the State of Himachal Pradesh, on the date 'the 1999 Scheme' was introduced- on 1.4.1999. Learned counsel asserted, that it was not disputed at the behest of the State Government, that all the respondent-employees were entitled to benefits under 'the 1999 Scheme', either on account of having exercised their option to be governed by 'the 1999 Scheme', or by virtue of the deeming provision expressed in paragraph 2(2) of 'the 1999 Scheme'. It was asserted, that all the employees who came to be governed by 'the 1999 Scheme', constituted a homogenous class. Inasmuch as, the employees whose right to claim pension under 'the 1999 Scheme' has not been disturbed, despite the repeal notification dated 2.12.2004, and those whose right to draw pension has been taken away, cannot be distinguished in any manner, except on the basis of the cut-off date, expressed in the repeal notification, dated 2.12.2004. It was contended, that merely because some of the employees had retired prior to 2.12.2004, and the respondent-employees had retired after H

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A 2.12.2004, cannot be accepted as a legitimate basis, to treat them differentially. It was asserted, that the mandate of paragraph 1(2) of 'the 1999 Scheme' extended pensionary benefits to employees engaged in corporate bodies, in the State of Himachal Pradesh, in accordance with the provisions laid down urider the Central Civil Services (Pension) Rules, 1972, and the Central Civil Services (Commutation of Pension) B Rules, 1981 " ... as amended and adopted by the Himachal Pradesh Government for the State Government employees, save as otherwise provided in this scheme". In the above view of the matter, it was asserted on behalf of the respondent-employees, that the division of a homogenous class, so as to deprive one set of employees benefits, which still remained c extended to another set of employees, was clearly unsustainable in law. It was pointed out with some emphasis, that the High Court had taken conscious notice of the fact, that 'the 1999 Scheme' was introduced by the State Government, after due deliberation by all concerned stake holders, and upon approval by the Chief Minister and his Cabinet. In the factual background highlighted hereinabove, it was urged, that denial of pensionary benefits to one set of employees, out of a homogenous class, was arbitrary and discriminatory, and as such, violative of the principles enshrined in Articles 14 and 16 of the Constitution of India. Based on the above factual background, it was urged, that the High Court was fully justified in reading down the repeal notification dated 2.12.2004, so as to extend the benefit of 'the 1999 Scheme' to all employees who either opted for, or were otherwise entitled to pensionary rights, under 'the 1999 Scheme'.

30Copy pinpoint30. Learned counsel forthe respondent-employees, contested the submission advanced by learned counsel for the appellants, that subscription to 'the 1999 Scheme' by employees engaged in corporations in the State of Himachal Pradesh, did not create a vested right in them. It was submitted, that a mere subscription to 'the 1999 Scheme', by exercising their option to be governed by the same, created a vested right in the respondent-employees. In this behalf it was pointed out, that retirement on attaining the age of the superannuation, was relevant, only for the purpose of the accrual ofa cause ofaction, for raising a claim for pension (under 'the 1999 Scheme'). Learned counsel, while acknowledging, that a right to claim pension would arise only when the concerned employee attained the age of superannuation, yet submitted, that the moment a contribution earlier payable to the employees as CPF H

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[JAGDISH SINGH KHEHAR, J.]

on their retirement, was diverted to the corpus fund maintained by the · A Finance Department of the State Government, the same created a contingent right in each one of them (under 'the 1999 Scheme') to claim pension. It was therefore submitted, that there was no.justification in the contention advanced on behalf of the appellants, that the action of the respondent-employees in opting for 'the 1999 Scheme', did not alter B their position adversely, with reference to their erstwhile vested right (under the Employees Provident Funds Scheme, I 995). In order to support his submission, that a vested right accrued to the respondent- employees, when they subscribed to 'the I 999 Scheme', learned counsel placed reliance on U.P. Raghavendra Acharya v. Sta~e of Karnataka, (2006) 9 sec 630, and drew our attention to the following observations c recorded therein:- "3. It is not in dispute that the revised scales of pay as recommended by the Pay Revision Committee became applicable to the appellants with effect from 1-1-I 986. It is also not in dispute that the UGC scales of pay were applicable to them. The D Government ofKarnataka, by a letter dated 17- I 2-1993, directed that the matter relating to the fixation of pension on the basis of UGC pay scales would be governed by Rule 296 of the Karnataka Civil Services Rules (hereinafter referred to as "the Rules"),· providing for computation ofemoluments for the purpose of pension and gratuity of a government servant. In the said letter it was stated: "The term 'emoluments' has been defined and redefined from time to time whenever pension has been revised by executive orders. The term emoluments for purpose of pensionary benefits as defined in GO dated I 7-8-1987 includes among other things the last pay drawn. It is, therefore, clarified that the pay drawn by' the teachers of degree colleges in respect of whom UGC scales have been extended by GO No. ED 88 UNI 88 dated 30-3-1990 w.e.f. 1-1-1986 and who have opted to UGC scales of pay, the last pay drawn by them in G UGC scales of pay among other things may be treated as emoluments for purpose of pensionary benefits under GO No. FD 20 SRS 87 (I) dated 17-8-1987." *** *** *** H

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A 9. However, para 27-A was inserted thereto in respect ofrevision of pensionary benefits, which is to the fo IIowing effect: "27-A. Revision ofpensionary benefits.-{i) UGC scales as revised from 1-1-1996 have been linked to the index level of 1510 points inasmuch as the revised pay scale structure B includes the DA admissible as on 1-1-1996 to the extent of 138% of basic pay. As on 1-1-1996 the pensionary benefits under the State Government had not been revised. The revised pay scales of the State Government employees came into force from 1-4-1998 by merging the DA as on 1-1-1996. The pensionary benefits were also simultaneously revised c w.e.f. 1-4-1998. Therefore, the revised pay drawn in the UGC pay scales for the period from 1-1-1996 up to 3 1-3- 1998 shall not be taken as emoluments for the purpose of pensionary benefits. Accordingly,- ( a) In respect of teachers drawing UGC pay scales who have retired during the period from 1-1-1996 to 31-3-1998, they shall be eligible for the benefit of the fixation of pay and arrears under the revised UGC scales of pay only. There shall not be any change in their pensionary benefits with reference to the revised UGC pay and the retirement benefits already sanctioned in the pre-revised UGC pay scales will not undergo any modifications. However, they shall be entitled to the benefit of fixation of revised pension/family pension as contemplated in GO No. FD (Spl.) 2 PET 99 dated 15-2- 1999 only w.e.f. 1-4-1998. Para 6 of GO No. FD (Spl.) 2 PET 99 dated 15-2-1999 stands modified to this extent. F (b) In respect of teachers drawing UGC pay scales and who have issued on or after 1-4-1998, the pay drawn in the revised UGC pay scales shall be counted for the purpose of pensionary benefits and the orders revising the pensionary benefits vide GO No. FD (Spl.) 2 PET 99 dated 15-2-1999 G shall be made applicable." *** *** ***

23. The stand of the State of Kamataka that the pensionary benefits had been conferred on the appellants w.e.f. 1-4-1998 on the premise that the benefit of the revision of scales ofoay to its own employees H

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[JAGDISH SINGH KHEHAR, J.]

had been conferred from 1-1-1998. in our opinion, is wholly misconceived. Firstly, because the employees of the State of Karnataka and the appellants. in the matter of grant of benefit of revised scales of pay, do not stand on the same footing as revised scales of pay had been made applicable to their cases from a different date. Secondly, the appellants had been given the benefit of the revised scales ofoay w.e.f; 1-1-1996. It is now well settled that a notification can be issued by the State accepting the recommendations of the Pay Revision Committee with retrospective effect as it was beneficent to the employees. Once such a retrospective effect is given to the recommendations of the Pay Revision Committee. the employees concerned despite c their reaching the age of superannuation in between the said dates and/or the date of issuance of the notification would be deemed to be getting the said scales of pay as on 1-1-I 996. By reason of such notification. as the appellants had been deprived of a vested right. they could not have been deprived therefrom and that too by reason of executive instructions. *** *** ***

25. Pension, as is well known, is not a bounty. It is treated to be a deferred salary. It is akin to right of property. It is correlated and has a nexus with the salary payable to the employees as on the date of retirement.

28. The impugned orders furthermore are opposed to the basic principles oflaw inasmuch as by reason of executive instructions an employee cannot be deprived of a vested or accrued right. F Such a right to draw pension to the extent of 50% of the emoluments. computed in terms of the rules w.e.f. I-1-1996, vested in the appellants in terms of government notification read with Rule 296 of the Rules." Based on the above judgment, it was pointed out, that the right to G draw revised pension under the Karnataka Civil Service Rules, was held to be vested in the concerned employees, from the date of revision of the pay-scales. It was pointed out, that while calculating pensionary benefits, it was imperative for the employer to take into consideration, the actual pay drawn by the employees, at the time of their retirement. H

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A Accordingly it was held, that the action ofthe State Government in granting revised pay-scales with retrospective effect (with effect from l. l .1996), but extending the benefit of revised pay for calculating pension, only with effect from 31.3 .1998, was not sustainable in law. Inasmuch as, employees who had retired between 1.1.1996 and 3 1.3 .1998 would be prejudicially affected. On the same proposition, learned counsel placed B reliance on D.S. Nakara v. Union oflndia, (1983) 1SCC305, and invited 'our attention to the followi~g observations made therein:- "20. The antequated notion of pension being a bounty, a gratuitous payment depending upon the sweet will or grace of the employer not claimable as a right and, therefore, no right to pension can be c enforced through Court has been swept under the carpet by the decision of the Constitution Bench in Deokinandan Prasad v. State ofBihar, (1971) 2 SCC 330. wherein this Court authoritatively ruled that pension is a right and the payment of it does not depend upon the discretion of the Government but is governed by the rules and a government servant coming within those rules is entitled to claim pension. It was further held that the grant of pension does not depend upon anyone's discretion. It is only for the pur:pose of guantifying the amount having regard to service and other allied matters that it may be necessary for the authority to pass an order to that effect but the right to receive pension flows to the officer not because of any such order but by virtue of the rules. This view was reaffinµed in State of Punjab v. Iqbal Singh, (1976) 2 sec l". Reference was also made to Chairman, Railway Board v. C.R. Rangadhamaiah, ( 1997) 6 sec 623' where from our attention was drawn to the following observations:- "24. In many of these decisions the expressions "vested rights" or "a.ccrued rights" have been used while striking down the impugned provisions which had been given retrospective operation so as to have an adverse effect in the matter of promotion, seniority. G substantive appointment, etc., of the employees. The said expressions have been used in the context of a right flowing under the relevant rule which was sought to be altered with effect from an anterior date and thereby taking away the benefits available under the rule in force at that time. It has been held that such an H amendment having retrospective operation which has the effect

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[JAGDISH SINGH KHEHAR, J.]

of taking away a benefit already available to the employee under A the existing rule is arbitrary. discriminatory and violative of the rights guaranteed under Articles 14 and 16 of the Constitution. We are unable to hold that these decisions are not in consonance with the decisions in Roshan Lal Tandon, AIR 1967 SC 1889, B.S. Yadav, AIR 1969 SC 118, and Raman Lal Keshav Lal Soni, (1983) B 2 sec 33.

25. In these cases we are concerned with the pension payable to the employees after their retirement. The respondents were no longer in service on the date of issuance of the impugned notifications. The amendments in the rules are not restricted in their application in futuro. The amendments apply to employees c who had already retired and were no longer in service on the date the impugned notifications were issued. 26.In Deokinandan Prasad v. State ofBihar, (1971) 2 SCC 330, decided by a_Constitution Bench it has been laid down: (SCC p. 343, para31) D

"31. ... pension is not to be treated as a bounty payable on the sweet will and pleasure of the Government and that the right to superannuation pension including its amount is a valuable right vesting in a government servant." [p. 152] E

(emphasis supplied) In that case the right to receive pension was treated as property under Articles 31 (I) and 19( 1)( t) of the Constitution.

27. In D.S. Nakara v. Union ofindia, (1983) 1 SCC 305, this F Court, after taking note of the decision in Deokinandan Prasad (supra), has said: (SCC p. 323, paras 28 and 29) "28. Pension to civil employees of the Government and the defence personnel as administered in India appears to be a compensation for service rendered in the past. However, as G held in Dodge v. Board of Education, 302 US 74, a pension is closely akin to wages in that it consists of payment provided by an employer, is paid in consideration of past service and serves the purpose of helping the recipient meet the expenses ofliving. H

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A *** 29 .... Thus the pension payable to a government employee is earned by rendering long and efficient service and therefore can be said to be a deferred portion of the compensation or for service rendered." B *** *** ***

30. The respondents in these cases are employees who had retired after 1-1-1973 and before 5-12-1988. As per Rule 2301 of the Indian Railway Establishment Code they are entitled to have their pension computed in accordance with Rule 2544 as it stood at the c time of their retirement. At that time the said rule prescribed that running allowance limited to a maximum of 75% of the other emoluments should be taken into account for the purpose of calculation of average emoluments for computation of pension and other retiral benefits. The said right of the respondent- D employees to have their pension computed on the basis of their average emoluments being thus calculated is being taken away by the amendments introduced in Rule 2544 by the impugned notifications dated 5-12-1988 inasmuch as the maximum limit has been reduced from 75% to 45% for the period from 1-1-1973 to 31-3-1979 and to 55% from 1-4-1979 onwards. As a result the E amount of pension payable to the respondents in accordance with the rules which were in force at the time of their retirement has been reduced.

31Copy pinpoint31. In Salabuddin Mohamed Yun us v. State of A.P., ( 1984) Supp sec 399, the appellant was employed in the service of the former F Indian State of Hyderabad prior to coming into force of the Constitution oflndia. On coming into force of the Constitution the appellant continued in the service of that State till he retired from service on 21-1-1956. The appellant claimed that he was entitled to be paid the salary of a High Court Judge from 1-10-194 7 and G also claimed that he was entitled to receive pension ofRs.1000 a month in the Government oflndia currency, being the maximum pension admissible under the rules. The said claim of the appellant was negatived by the Government. He filed a writ petition in the High Court of Andhra Pradesh. During the pendency of the said writ petition the relevant rule was amended by notification dated H

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[JAGDISH SINGH KHEHAR, J.]

3-2-1971 with retrospective effect from 1-10-1954 and the A expression "Rs.1000 a month" in clause (b) of sub-rule (I) of Rule 299 was substituted by the expression "Rs.857.15 a month". This amendment was made in exercise of the power conferred by the proviso to Article 309 read with Article 313 of the Constitution. The said amendment was struck down by this Court B as invalid and inoperative on the ground that it was violative of Articles 31 (1) and I 9(1 )(t) of the Constitution: Relying upon the decision in Deokinandan Prasad (supra), it was held: (SCC p. 406, para 6) "6 .... The fundamental right to receive pension according to the rules in force on the date of his retirement accrued to c the appellant when he retired from service. By making a retrospective amendment to the said Rule 299(J)(b) more than fifteen years after that right had accrued to him. what was done was to take away.theappellant's right to receive pension according to the rules in force on the date of his D retirement or in any event to curtail and abridge that right. To that extent. the said amendment was void."

32Copy pinpoint32. It is no doubt true that on 5- I 2- I 988 when the impugned notifications were issued, the rights guaranteed under Articles 31 (I) and 19(J)(t) were not available since the said provisions in the E Constitution stood omitted with effect from 20-6- I 979 by virtue of the Constitution (Forty-fourth Amendment) Act, 1978. But Notifications Nos. GSR I 143 (E) and GSR I 144 (E) have been made operative with effect from I- 1-1973 and 1-4-1979 respectively on which dates the rights guaranteed under Articles 3 J(J) and I 9(1 )(0 were available. Both the notifications insofar as they have been given retrospective operation are. therefore. violative of the rights then guaranteed under Articles I 9( I) and 3 I (I) of the Constitution.

33Copy pinpoint33. Apart from being violative of the rights then available under Articles 3 !(!) and I 9(1)(0, the impugned amendments. insofar as they have been given retrospective operation. are also violative of the rights guaranteed under Articles 14 and 16 of the Constitution on the ground that they are unreasonable and arbitrary since the said amendments in Rule 2544 have the effect of reducing the amount of pension that had become payable to employees who H

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A had already retired from service on the date of issuance of the impugned notifications, as per the provisions contained in Rule 2544 that were in force at the time of their retirement." Based on the above cited judgments, it was submitted, that the determination rendered by the High Court in the impugned judgment, B · that the respondent-employees acquired a vested right, the moment they had subscribed to 'the 1999 Scheme', was unexceptionable.

31. Learned counsel for the respondent-employees also contested the submission advanced on behalf of the appellants, that the right to receive pension accrues to an employee, on the date on which he attains c the age of superannuation, and not earlier. On the instant aspect of the matter it was submitted, that even though pension can formally be claimed by an employee only on his retirement, the seeds for a claim to pension are sown, and the foundation for receipt of pension is laid, the very moment from which an employee commences to render qualifying service. It was submitted, that based on having acquired a minimum qualifying service postulated under the rules, an employee's claim eventually crystalises for entitlement to pension, on attaining the age of superannuation. It was contended, that since past service rendered by • an employee, constitutes the basis for grant of pension, every day of service rendered by an employee, has to be taken into consideration, for computing pension. It was accordingly urged, that every day of service rendered by an employee, furthers the right in the employee to earn and receive pension. For the aforesaid reasons, according to learned counsel, pension has always been considered as deferred-wages for services rendered. It was asserted, that with effect from the date of commencement of qualifying service, the concerned employee is treated to have an inherent vested right, for a claim to pension. In order to substantiate the instant contention, learned counsel placed reliance on the D.S. Nakara case (supra), and invited our attention to the following observations recorded therein:- "46. By our approach, are we making the scheme retroactive? G The answer is emphatically in the negative. Take a government servant who retired on April 1, 1979. He would be governed by the liberalised pension scheme. By that time he had put iil gualifring service of35 years. His length of service is a, relevant factor for computation of pension. Has the Government made it retroactive, H 35 years backward compared to the case of a Government servant

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[JAGDISH SINGH KHEHAR, J.]

who retired on 30th March, 1979? Concept of qualifying service A takes note oflength of service. and pension quantum is correlated to qualifying service. Is it retroactive for 35 years for one and not retroactive for a person who retired two days earlier? It must be remembered that pension is relatable to qualifying service. It has correlation to the average emoluments and the length of service. B Any liberalisation would pro tanto be retroactive in the narrow sense of the term. Otherwise it is always prospective. A statute is not properly called a retroactive statute because a part of the requisites for its action is drawn from a time antecedent to its passing; (see Craies on Statute Law, sixth edition, p. 387). Assuming the Government had not prescribed the specified date and thereby c provided that those retiring pre and post the specified date would all be governed by the liberalised pension scheme, undoubtedly, it would be both prospective and retroactive. Only the pension will have to be recomputed in the light of the formula enacted in the liberalised pension scheme and effective from the date the revised scheme comes into force. And beware that it is not a new scheme, it is only a revision of existing scheme. It is not a new retiral benefit. It is an upward revision of an existing benefit. If it was a wholly new concept, a new retiral benefit. one could have appreciated an argument that those who had already retired could not expect it. It could have been urged that it is an incentive to attract the fresh recruits. Pension is a reward for past service. It is undoubtedly a condition of service but not an incentive to attract · new entrants because if it was to be available to new entrants only, it would be prospective at such distance of thirty-five years since its introduction. But it covers all those in service who entered thirty-five years back. Pension is thus not an incentive but a reward for past service. And a revision of an existing benefit stands on a different footingthan a new retiral benefit. And even in case of new retiral benefit of gratuity under the Payment of Gratuity Act, 1972 past service was taken into consideration. Recall at this stage the method adopted when pay-scales are revised. Revised pay- G scales are introduced from a certain date. All existing employees are brought on to the revised scales by adopting a theory of fitments and increments for past service. In other words, benefit of revised scale is not limited to those who enter service subsequent to the date fixed for introducing revised scales but the benefit is extended H

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A to all those in service prior to that date. This is just and fair. Now if pension as we view it. is some kind of retirement wages for past service, can it be denied to those who retired earlier, revised retirement benefits being available to future retirees only. Therefore, there is no substance in the contention that the court by its approach wou Id be making the scheme retroactive, because B it is implicit in theory of wages." Based on the observations extracted above, it was submitted, that it was not open to the State to contend, that a vested right would be created under 'the 1999 Scheme', only on the date of retirement. Since pension has been recognized as deferred-wages for past services, c payable on retirement, according to learned counsel, the moment an employee is enrolled on the pension scheme, his right to claim pension, must be deemed to have materialized.

32. Relying on certain paragraphs of'the 1999 Scheme' (referred to above), it was submitted, that the appellants have erroneously treated the date of retirement, as the date on which the right to pension accrued to the employees. In this behalf it was pointed out, that the cause of action to receive pension would accrue to an employee on the date of his retirement. However, the right to receive pension crysta1ises, at the end of every successive day, and at the end of every successive month, and at the end of every successive year. It was pointed out, that it crystalises and further crystalises, giving rise to an eventual claim for pension. It was accordingly pointed out, that the date of retirement had been legally perceived, as the date on which the cause of action arose to an employee to claim pension. Accordingly it was submitted, that the date ofretirement was relevant only for the limited purpose of determining the cause of action, to receive pension. For this, learned counsel place reliance on Asger Ibrahim Amin v. Life Insurance Corporation oflndia, (2015) 10 SCALE 639, and invited our attention to the following observations:- "3. On 8.8.1995, that is post the promulgation by the Respondent G of the Pension Rules, the Appellant enquired from the Respondent whether he was entitled to pension under the Pension Rules, which has been understood by the Respondent as a representation for pension; the Respondent replied that the request of the Appellant cannot be acceded to. The Appellant took the matter no further H but has averred that in 2000, prompted by news in a Daily and

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[JAGDISH SINGH KHEHAR, J.]

Judgments of a High Court and a Tribunal, he requested the A Respondent to reconsider his case for pension. This request has remained unanswered. It was in 2011 that he sent a legal notice to the Respondent, in response to which the Respondent reiterated its stand that the Appellant, having resigned from service, was not eligible to claim pension under the Pension Rules. Eventually, the 8 Appellant filed a Special Civil Application on 29.3.2012 before the High Court, which was dismissed by the Single Judge vide Judgment dated 5.10.2012. The LPA of the Appellant also got dismissed on the grounds of the delay of almost 14 years, as also on merits vide Judgment dated 1.3.2013, against which the Appellant has approached this Court. c

4. As regards the issue of delay in matters pertaining to claims of pension, it has already been opined by this Court in Union oflndia v. Tarsem Singh, (2008) 8 SCC 648, that in cases of continuing or successive wrongs, delay and !aches or limitation will not thwart the claim so long as the claim, if allowed, does not have any adverse D repercussions on the settled third-party rights. This Court held: "7. To summarise, normally, a belated service related claim will be rejected on the ground of delay and !aches (where remedy is sought by filing a writ petition) or limitation (where remedy is sought by an application to the Administrative E Tribunal). One of the exceptions to the said rule is cases relating to a continuing wrong. Where a service related claim is based on a continuing wrong. relief can be granted even if there is a long delay in seeking remedy. with reference to the date on which the continuing wrong commenced, if such continuing wrong creates a continuing source of injury. But F there is an exception to the exception. If the grievance is in respect of any order or administrative decision which related to or affected several others also, and ifthe reopening of the issue would affect the settled rights of third parties, then the claim will not be entertained. For example, if the issue relates G to payment or refixation of pay or pension, relief may be granted in spite of delay as it does not affect the rights of third parties. But if the claim involved issues relating to seniority or promotion. etc .. affecting others. delay would render the claim stale and doctrine oflaches/limitation will H

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A be applied. Insofar as the consequential relief ofrecovery of arrears for a past period is concerned, the principles relating to recurring/successive wrongs will apply.As a consequence, the High Courts will restrict the consequential relief relating to arrears normally to a period of three years prior to the date of filing of the writ petition." B We respectfully concur with these observations which if extrapolated or applied to the factual matrix of the present case would have the effect of restricting the claim for pension, if otherwise sustainable in law, to three years previous to when it was raised in a judicial forum. Such claims recur month to month c and would not stand extinguished on the application of the laws of prescription. merely because the legal remedy pertaining to the time barred part of it has become unavailable. This is too well entrenched in our jurisprudence, foreclosing ai:iy fresh consideration. D Reliance was also placed on the decision of this Court in State of Madhya Pradesh v. Yogendra Shrivastava, (2010) 12 SCC 538, wherefrom learned counsel emphasized on the following observations:- "17. The appellants contended that the claims were therefore barred by limitation. It was pointed out that the respondents were E paid NPA at a fixed rate as stipulated in the appointment orders and NPA was increased only when it was revised by the government orders from time to time; that the respondents accepted such NPA without protest; and that therefore, they cannot, after periods varying from 5 to I 5 years, challenge the fixation of F NPA or contend that they are entitled to NPA at a higher rate, that is 25% of their pay.

18. We cannot agree. Where the issue relates to payment or fixation of salary or any allowance. the challenge is not barred by limitation or the doctrine oflaches, as the denial of benefit occurs G every month when the salary is paid. thereby giving rise to a fresh cause of action, based on continuing wrong. Though the lesser payment may be a consequence of the error that was committed at the time of appointment, the claim for a higher allowance in accordance with the Rules (prospectively from the date of application) cannot be rejected merely because it arises from a H

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[JAGDISH SINGH KHEHAR, J.]

wrong fixation made several years prior to the claim for correct A payment. But in respect of grant of consequential relief of recovery of arrears for the past period, the principle relating to recurring and successive wrongs would apply. Therefore the consequential relief of payment of arrears will have to be restricted to a period .of three years prior to the date of the original application. B [See: M.R. Gupta v. Union oflndia, 1995 (5) SCC 628, and Union of India v. Tarsem Singh, 2008 (8) SCC 648]". It was, therefore, the contention of learned counsel for the respondents, that the foundation to claim pension, accrued in the employees of all corporate bodies in the State of Himachal Pradesh (including all the respondent-employees herein), the very moment they c came to be enrolled in 'the 1999 Scheme'. It was submitted, that all existing employees who had opted for pension or were deemed to have opted for pension, had vested in themselves the rjght to pension when they would retire from service. All employees who came to be engaged by corporations in the State, from 1.4.1999 up to 1.12.2004, were likewise vested with the right to receive pension, because of the fact, that at the very inception of their employment, they became members of 'the 1999 Scheme', and the period of service rendered by them would likewise constitute qualifying service, for pension. It was therefore submitted, that there was a clear distinction between two contingencies, firstly, the date on which a claim for pension can be stated to have vested in the employee, and the date on which the employee earns a right to receive pension. Insofar as the former is concerned, it was submitted, that the moment qualifying service commences to add up, a vested right to receive pension is created. For the latter, having rendered the postulated qualifying service (on the date of superannuation), gives rise to a cause of action to receive pension. It is this fine distinction which according to learned counsel, needs to be examined and has been overlooked during the course of the submissions advanced on behalf of the appellant-State. -=--~-

33. Insofar as the issue of financial unviability of 'the 1999 Scheme' is concerned, it was submitted on behalf of the respondent- G employees, that the State Government was estopped in law, from raising such a plea. In this behalf it was pointed out, that the Law Department and the Finance Department of the State Government, had advised, against the retrospective withdrawal of'the 1999 Scheme'. If the advice had been accepted, according to learned counsel, persons similarly situated, H

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A as the private respondents, would have remained entitled to receive pension under 'the 1999 Scheme'. Additionally it was contended, that in identical circumstances, the State Government had repealed the provisions of the Central Civil Services (Pension) Rules, I 972, as were applicable to State Government employees, through a similar notification, dated I 5.5.2003. It was highlighted, that the aforesaid repeal notification, was B given a prospective effect, inasmuch as, employees similarly situated as the respondent-employees herein, who had not retired on the date of the repeal notification, were allowed to be governed by the Central Civil Services (Pension) Rules, I972. At the cost of clarification, it was pointed out, that the repeal notification dated 15.5.2003, had the effect of not c depriving pensionary rights to any of the existing employees. Based on the above contentions, it was submitted, that the action of the State Government, in depriving the respondent-employees of their pensionary rights, must be treated as based on an arbitrary exercise of power, and as such, was liable to be considered as violative of Article 14 of the Constitution of India. D

34Copy pinpoint34. It was also the contention oflearned counsel for the respondent- employees, that pension was akin to the right of property, postulated under article 300A ofthe Constitution. For the instant proposition, learned counsel placed reliance on the decision rendered in State of Jharkhand v. Jitendra Kumar Srivastava, (20 I3) 12 SCC 2 I0, and invited our attention E to the following observations recorded therein:- ".8. It is an accepted position that gratuity and pension are not bounties. An employee earns these benefits by dint of his long, continuous, faithful and un-blemished service. Conceptually it is so lucidly described in D.S. Nakara and Ors. v. Union of India, F (1983) 1 SCC 305, by D.A. Desai, J., who spoke for the Bench, in his inimitable style, in the following words: (SCC pp. 319-20, paras I 8-20) "I 8. The approach of the Respondents raises a vital and none too easy of answer, question as to why pension is paid. G And why was it required to be liberalised? Is the employer, which expression will include even the State, bound to pay pension? Is there any obligation on the employer to provide for the erstwhile employee even after the contract of employment has come to an end and the employee has H ceased to render service?

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[JAGDISH SINGH KHEHAR, J.]

19. What is a pension? What are the goals of pension? What A public interest or purpose, if any, it seeks to serve? If it does seek to serve some public purpose, is it thwarted by such artificial division of retirement pre and post a certain date? We need seek answer to these and incidental questions so as to render just justice between parties to this petition. B

20. The antiquated notion of pension being a bounty a gratuitous payment depending upon the sweet will or grace of the employer not claimable as a right and, therefore, no right to pension can be enforced through Court has been swept under the carpet by the decision of the Constitution Bench in Deoki Nandan Prasad v. State of Bihar and Ors., c ( 1971) 2 SCC 330, wherein this Court authoritatively ruled that pension is a right and the payment ofit does not depend upon the discretion of the Government but is governed by the rules and a Government servant comin_g within those rules is entitled to claim pension. It was further held that the grant of pension does not depend upon anyone's discretion. It is only for the purpose of quantifying the amount having regard to service and other allied maters that it may be necessary for the authority to pass an order to that effect but the right to receive pension flows to the officer not because of any such order but by virtue of the rules. This view was reaffirmed in State of Punjab andAnr. v. Iqbal Singh, (1976) 2 SCC l ". It is thus hard earned benefit which accrues to an employee and is in the nature of "property". This right to property cannot be taken away without the due process of law as per the provisions of Article 300A of the Constitution oflndia. F

xxx xxx xxx

13. A reading of Rule 43(b) makes it abundantly clear that even after the conclusion of the departmental inquiry, it is permissible for the Government to withhold pension etc. only when a finding G is recorded either in departmental inquiry or judicial proceedings that the employee had committed grave misconduct in the discharge of his duty while in his office. There is no provision in the rules for withholding of the pension/gratuity when such departmental proceedings or judicial proceedings are still pending. H

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A 14. The right to receive pension was recognized as a right to property by the Constitution Bench jl.,ldgment of this Court in Deokinandan Prasad v. State of Bihar, (1971) 2 SCC 330, as is apparent from the following discussion: (SCC pp. 342-43, paras 27-33) B "27. The last question to be considered, is, whether the right to receive pension by a Government servant is property, so as to attract Articles 19(1 )(f) and 31 (1) of the Constitution. This question falls to be decided in order to consider whether the writ petition is maintainable under Article 32. To this aspect, we have already adverted to earlier and we now c proceed to consider the same.

28. According to the Petitioner the right to receive pension is property and the Respondents by an executive order dated 12-6-1968 have wrongfully withheld his pension. That order affects his fundamental rights under Articles 19(1 )(t) and D 31 (I) of the Constitution. The Respondents, as we have already indicated, do not dispute the right of the Petitioner to get pension, but for the order passed on 5-8-1996. There is only a bald avennent in the counter-affidavit that no question of any fundamental right arises for consideration. Mr. Jha, E learned Counsel for the Respondents, was not prepared to take up the position that the right to receive pension cannot be considered to be property under any circumstances. According to him, in this case, no order has been passed by the State granting pension. We understood the learned Counsel t<;> urge that ifthe State had passed an order granting F pension and later on resiles from that order, the latter order may be considered to affect the Petitioner's right regarding property so as to attract Articles 19(1)(f) and 31(1) of the Constitution.

29. We are not inclined to acceptthe contention of the learned G Counse 1for the Respondents. By a reference to the material provisions in the Pension Rules, we have already indicated that the grant of pension does not depend upon an order being passed by the authorities to that effect. It may be that for the purposes of quantifying the amount having regard to H the period of service and other allied matters, it may be

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[JAGDISH SINGH KHEHAR, J.]

necessary for the authorities to pass an order to that effect, A but the right to receive pension flows to an officer not because of the said order but by virtue of the rules. The rules, we have already pointed out, clearly recognise the right of persons like the petitioners to receive pension under the circumstances mentioned therein. B xxx xxx xxx

33. Having due regard to the above decisions, we are of the opinion that the right of the Petitioner to receive pension is property under Article 31(1) and by a mere executive order c the State had no power to withhold the same. Similarly, the said claim is also property under Article I 9( I l(f) and it is not saved by clause (5) of Article 19. Therefore, it follows that the order dated 12-6-1968, denying the petitioner right to receive pension affects the fundamental right of the petitioner under Articles 19( I )(t) and 31 (I) of the Constitution, and as such the writ petition under Article 32 is maintainable. It may be that under the Pension Act (23 of I 871) there is a bar against a civil court entertaining any suit relating to the matters mentioned therein. That does not stand in the way of writ of mandamus being issued to the State to properly consider the claim of the petitioner for payment of pension according to law." I 6. The fact remains that there is an imprimatur to the legal principle that the right to receive pension is recognized as a right in "property". Article 300-A of the Constitution of India reads as under: "300-A. Persons not to be deprived of property save by authority oflaw.- No person shall be deprived of his property save by authority of law." Once we proceed on that premise, the answer to the question posed by us in the beginning of this judgment becomes too obvious. A person cannot be deprived of th is pension without the authority oflaw, which is the Constitutional mandate enshrined in Article 300- A of the Constitution. It follows that attempt of the Appellant to take away a part of pension or gratuity or even leave encashment H

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A without any statutory provision and under the umbrage of administrative instruction cannot be countenanced." For the same proposition, reliance was placed on the decision of this Court in the U.P. Raghavendra Acharya case (supra). Learned counsel while seeking to adopt the conclusions drawn by B this Court in the above case asserted, that the subscription to the pensionary scheme by itself, would create a vested right in the respondent-employees, to draw pension under 'the 1999 Scheme'.

35Copy pinpoint35. At this juncture, learned counsel for the respondent-employees also placed reliance on the U.P. Raghavendra Acharya case (supra), c and invited the Court's attention to the following:- "19. The fact that the appellants herein were treated to be on a par with the holders of similar posts in government colleges is neither denied nor disputed. The appellants indisputably are governed by the UGC scales of pay. They are entitled to the pensionary benefits also. They had been given the benefits of the revision of scales of pay by the I Q•h Pay Revision Committee w.e.f. 1-1-1986. The pensionary benefits payable to them on attaining the age of superannuation or death were also stated to be on a par with the employees of the State Government. The State of Karnataka, as noticed hereinbefore, for all intent and purport, has treated the teachers of the government aided colleges and the regional engineering colleges on the one hand and the teachers of the colleges run by the State itself on the other hand on a par. Even the financial rules were made applicable to them in terms of the notifications, applying the rule of incorporation by reference. Although Rule 296 of the Rules per se may not be applicable so far as the appellants are concerned, it now stands admitted that the provisions thereof have been applied to the case of the appellants also forthe purpose of computation of pensionary benefits. Therefore there cannot be any doubt whatsoever that the term "Emoluments" as contained in Rule 296 of the Rules G would also apply to the case of the appellants. Rule 296 of the Rules reads as under: "296. In respect of retirement or death while in service of government servants on or after first day of July, 1993, the term 'emoluments' for the purpose of this Chapter means, H

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[JAGDISH SINGH KHEHAR, J.]

the basic pay drawn by the government servant in the scale A of pay applicable to the post on the date of retirement or death and includes the following, but does not include pay and allowance drawn from a source other than the Consolidated Fund of the State,- xxx xxx xxx B Note:- (a) Basic pay means the pay drawn in ·the time-scale of pay applicable to the post immediately before retirement or death." xxx xxx xxx

22. The State while implementing the new scheme for payment c of grant of pensionary benefits to its employees, may deny the same to a class of retired employees who were governed by a different set of rules. The extension of the benefits can also be denied to a class of employees ifthe same is permissible in law. The case of the appellants, however, stands absolutely on a different footing. They had been enjoying the benefit of the revised D scales of pay. Recommendations have been made by the Central Government as also the University Grants Commission to the State of Karnataka to extend the benefits of the Pay Revision Committee in their favour. The pay in their case had been revised in 1986 whereas the pay of the employees of the State of E Karnataka was revised in 1993. The benefits of the recommendations of the Pay Revision Committee w.e.f. 1-1-1996, thus, could not have been denied to the appellants.

23. The stand of the State of Kamataka that the pensionary benefits had been conferred on the appellants w.e.f. 1-4-1998 on the premise that the benefit of the revision of scales of pay to its own employees had been conferred from 1-1-1998, in our opinion, is wholly misconceived. Firstly, because the employees of the State of Karnataka and the appellants, in the matter of grant of benefit of revised scales of pay, do not stand on the same footing as revised scales of pay had been made applicable to their cases from a different date. Secondly, the appellant~ had been given the benefit of the revised scales of pay w.e.f. 1-1-1996. It is now well settled that a notification can be issued by the State accepting the recommendations of the Pay Revision Committee with retrospective effect as it was beneficent to the employees. Once H

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A such a retrospective effect is given to the recommendations of the Pay Revision Committee, the employees concerned despite their reaching the age of superannuation in between the said dates and/or the date of issuance of the notification would be deemed to be getting the said scales of pay as on 1-1-1996. By reason of such notification, as the appellants had been derived of a vested B right, they could not have been deprived therefrom and that too by reason of executive instructions.

24. The contention of the State that the matter relating to the grant of pensionary benefits vis-a-vis the revision in the scales of pay stands on different footing, thus, must be rejected. c

25. Pension, as is well known, is not a bounty. It is treated to be a deferred salary. It is akin to right of property. It is co-related and has a nexus with the salary payable to the employees as on the date of retirement.

D 26. These appeals involve the question of revision of pay and consequent revision in pension and not the grant of pension for the first time. Only the modality of computing the quantum of pension was required to be determined in tenns of the notification issued by the State of Karnataka. For the said purpose, Rule 296 of the Rules was made applicable. Once this rule became E applicable, indisputably the computation of pensionary benefits was required to be carried out in terms thereof. The Pension Rules envisage that pension should be calculated only on the basis of the emoluments last drawn. No order. therefore, could be issued which would be contrary to or inconsistent therewith. Such F emoluments were to be reckoned only in tenns of the statutory rules. If the State had taken a conscious decision to extend the , benefit of the UGC pay scales w.e.f. 1-1-1996, to the appellants, al lowing them to draw their pay and allowances in terms thereof, ~~fail to see any reas911 as to why the pensionary benefits would not be extended to them from the said date. G xxx xxx xxx

28. The impugned order furthermore is opposed to the basic principles of law inasmuch as by reason of executive instructions an employee cannot be deprived of a vested or accrued right. Such a riglat to draw pension to the extent of 50% of the H

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[JAGDJSH SINGH KHEHAR, J.]

emoluments, computed in terms ofthe rules, w.e.f. 1-1-1996, vested in the appellants in terms of government notification read with Rule 296 of the Rules."

36Copy pinpoint36. It was also the contention ofleamed counsel for the respondent- empbyees, that the present controversy needs to be examined from the perspective, that the respondent-employees did not make any endeavour to claim pension as a matter of parity with Government employees, in the State of Himachal Pradesh. It was submitted, that legally such a claim would not be sustainable, because civil servants in the State of Himachal Pradesh, and employees of Government owned corporations in the State, can not be considered as entitled to the same monetary benefits. It was however pointed out, that insofar as the present c controversy is concerned, the State ofHimachal Pradesh at its own, had granted parity to employees of Government owned corporations on the subject of pension, with Government employees in the State. Examined in the above context, according to learned counsel, it is apparent that the right of employees of Government owned corporations, in the State of D Himachal Pradesh, on the issue of pension, stood conceded in their favour, on tl>e basis of 'the 1999 Scheme'. It was in the above view of the matter, that learned counsel for the respondent-employees asserted, that the revocation of a benefit which the State Government conceded to employees of Government owned corporations, was per se arbitrary, and as such, not sustainable in law. E

37Copy pinpoint37. Learned counsel for the respondent-employees raised a plea of discrimination as well. It was submitted, that through the repeal notification dated 2.12.2004, 'the 1999 Scheme' was sought to be withdrawn for one set of employees, and was sought to be retained for another set of employees. In this behalf it was submitted, that the action of the State Government in fixing the date of retirement, as a cut-off date for withdrawing or sustaining pensionary benefits, is clearly unacceptable in law. In this behalf it was pointed out, that this Court on a number of occasions held, that the date of retirement, cannot be a valicf'criterion for classification. It was submitted, that the fortuitous circumstance (date) of retirement, by a day earlier or a day later (than the cut-off date), would result in discriminatory consequences, for persons who constitute a homogenous class. It was contended, that whilst 'the 1999 Scheme' was in operation, all employees of State owned corporations who had opted for the same, constituted a homogenous H

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A class, and there could be no division to segregate such a homogenous class, so as to extend pensionary benefits to one set of employees, and to revoke the same, for another. In order to support the above contention, learned counsel for the respondents placed reliance on the D.S. Nakara case (supra) and drew our attention to the following observations recorded therein:- B "42. If it appears to be undisputable, as it does to us that the pensioners for the purpose of pension benefits form a class, would its upward revision permit a homogeneous class to be divided by arbitrarily fixing an eligibility criteria unrelated to purpose of revision, and would such classification be founded on some rational c principle? The classification has to be based, as is well settled, on some rational principle and the rational principle must have nexus to the objects sought to be achieved. We have set out the objects underlying the payment of pension. If the State considered it necessary to liberalise the pension scheme, we find no rational principle behind it for granting these benefits only to those who retired subsequent to that date simultaneously denying the same to those who retired prior to that date. If the liberalisation was considered necessary for augmenting social security in old age to government servants then those who retired earlier cannot be worst off than those who retire later. Therefore, this division which classified pensioners into two classes is not based on any rational principle and ifthe rational principle is the one of dividing pensioners with a view to giving something more to persons otherwise equally placed, it would be discriminatory. To illustrate, take two persons, one retired just a day prior and another a day just succeeding the specified date. Both were in the same pay bracket, the average emolument was the same and both had put in equal number of years of service. How does a fortuitous circumstance of retiring a day earlier or a day later will permit totally unequal treatment in the matter of pension? One retiring a day earlier wi II have to be subject to ceiling of Rs.8100 p.a. And average emolument to be worked out on 36 months' salary while the other will have a ceiling of Rs.12,000 p.a. and average emolument wi II be computed on the basis of last ten months' average. The artificial division stares into face and is unrelated to any principle and whatever principle, ifthere be any, has absolutely no nexus to the objects sought to be H

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[JAGDISH SINGH KHEHAR, J.]

achieved by liberalising the pension scheme. In fact this arbitrary division has not only no nexus to the liberalised pension scheme but it is counter productive and runs counter to the whole gamut of pension scheme. The equal treatment guaranteed in Article 14 is wholly violated inasmuch as the pension rules being statutory in character, since the specified date, the rules accord differential and discriminatory treatment to equals in the matter of commutation of pension. A 48 hours' difference in matter ofretirement would have a traumatic effect. Division is thus both arbitrary and unprincipled. Therefore the classification does not stand the test of Article 14." On the same proposition, reliance was placed on Union oflndia v. c SPS Vains (Retd.), (2008) 9 SCC 125, and the Court's attention was invited to the following observations:- "28. The question regarding creation of different classes within the same cadre on the basis of the doctrine of intelligible differentia having nexus with the object to be achieved, has fallen for consideration at various intervals for the High Courts as well as this Court, over the years. The said question was taken up by a Constitution Bench in the case of D.S. Nakara v. Union oflndia, (1983) 1 SCC 305, where in no uncertain terms throughout the judgment it has been repeatedly observed that the date of retirement of an employee cannot form a valid criterion for classification, for ifthat is the criterion those who retired by the end of the month will form a class by themselves. In the context of that case, which is similar to that of the instant case, it was held that Article 14 of the Constitution had been wholly violated, inasmuch as, the Pension Rules being statutory in character, the amended Rules, specifying a cut-off date resulted in differential and discriminatory treatment of equals in the matter of commutation of pension. It was further observed that it would have a traumatic effect on those who retired just before that date. The division which classified pensioners into two classes was held to be artificial and arbitrary and not based on any rational principle and whatever principle, if there was any, had not only no nexus to the objects sought to be achieved by amending the Pension Rules, but was counterproductive and ran counter to the very object of the pension schen;ie. It was ultimately held that the classification did not satisfy H

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A the test ofArticle 14 of the Constitution.

29. The Constitution Bench (in D.S. Nakara (supra)), has discussed in detail the objects of granting pension and we need not, therefore, dilate any further on the said subject, but the decision in the aforesaid case has been consistently referred to in various B subsequent judgments of this Court, to which we need not refer. In fact, all the relevant judgments delivered on the subject prior to the decision of the Constitution Bench have been considered and dealt with in detail in the aforesaid case. The directions ultimately given by the Constitution Bench in the said case in order to resolve the dispute which had arisen, is ofrelevance to resolve the dispute c in this case also.

30. However, before we give such directions we must also observe that the submissions advanced on behalf of the Union of India cannot be accepted in view of the decision in D.S. Nakara's case (supra). The object sought to be achieved was not to create a D class within a class, but to ensure that the benefits of pension were made available to all persons of the same class equally. To hold otherwise would cause violence to the provisions of Article 14 of the Constitution. It could not also have been the intention of the authorities to equate the pension payable to officers of two different ranks by resorting to the step up principle envisaged in the fundamental rules in a manner where the other officers belonging to the same cadre would be receiving a higher pension."

38Copy pinpoint38. It was therefore asserted on behalf of the respondent- employees, that the concept of a cut-off date cannot be adopted, in case of a repeal of a pension scheme prospectively. In this behalf it was submitted, that it could not be forgotten, that consequent upon the respondent-employees having been enrolled in 'the 1999 Scheme', they had been deprived of the employer's share of provident fund (and the interest which had accrued, thereon). The same ought to be treated as consideration, which passed from the respondent-employees to the State G Government, consequent upon their enrollment into 'the 1999 Scheme'. On account of having foregone the employer's contribution which was a pre-requisite for enrollment in 'the 1999 Scheme', it was submitted, that the respondent-employees must be deemed to have contributed by way of consideration, to earn the benefit which would accrue to them, H under 'the 1999 Scheme'. Keeping the above legal proposition in mind,

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[JAGDISH SJNGH KHEHAR, J.]

it was pointed out, that the action of the State Government in depriving the respondent-employees of pensionary benefits, while allowing the same to such of the employees, who had retired on or before 2.12.2004, was discriminatory and unsustainable in law. It was also the contention of learned counsel for the respondent-employees, that the only situation where a claim for pension under 'the 1999 Scheme' could have been legaliy denied, is when a succeeding pension scheme introduced by the employer, postulated better retiral benefits.

39Copy pinpoint39. Reliance was also placed on Pepsu Road Transport Corporation, Patiala v. Mangal Singh, (2011) 11 SCC 702, wherein it has been held as under:- c "48. The concept of"pension" has also been considered in Corpus Juris Secundum, Vol. 70, at p. 423 as thus: "A pension is a periodical allowance of money granted by the government in consideration or recognition of meritorious past services, or of loss or injury sustained in the public D service. A pension is mainly designed to assist the pensioner in providing for his daily wants, and it presupposes the continued life of the recipient." Based on the above, it was the contention oflearned counsel, that the State Governments' inference, based on the report of the Committee, E dated 15.11.2003, that 'the 1999 Scheme' was not viable, was clearly unacceptable. In this behalf, learned counsel invited the Court's attention to the following observations, recorded in the said report:- "14. After determining the magnitude of inflows and outflows, the sustainability of the corpus has been analysed assuming average interest income from corpus investment at various levels ofinterest over a period of I 0 years. The highest rate of interest has been assumed to be 6.5% and the lowest 5.5%. In each scenario, the net surplus available for ploughing back into the pension fund starts declining from the 6th year onwards. This is essentially due to the fact that with dwindling fresh recruitments, the pension liabilities will continue to increase over the years, but the inflows would decline due to reduced contributions. Details of the calculations are as under:- 5.5% Annexure-F H

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A 5.75% Annexure-F-1 6.00% Annexure-F-Il 6.25% Annexure-F-111 6.50% Annexure-F-IV" B It was submitted, that there was no legitimate basis for recording such a conclusion.

40Copy pinpoint40. It was also the contention oflearned counsel, that the judgment rendered by the High Court, rightly negated the financial impact of 'the 1999 Scheme', because in terms of the conclusions drawn in the judgment, c the same would not be applicable to future employees. And the deficiency in the financial resources was accordingly fastened on the State Government. On the issue in hand, it was submitted, that a number of employees, who became members of 'the 1999 Scheme', and would retire after 2.12.2004 (i.e. the cut-off date, determined under the repeal notification, dated 2.12.2004) is a definite number. In this behalf it was pointed out, that if the employees, who became members of 'the 1999 Scheme', are to be taken into consideration, there would be 6,730 employees, who would draw pension on their retirement. It was accordingly submitted, that there would be no further increase in the liability under 'the 1999 Scheme'. In order to demonstrate that the available funds accumulated on account of the employee's contribution to the EPF/CPF concerned, were sufficient to meet the liability, to administer the pension scheme, it was submitted, that the same has increased from 56 crores in 2003 to 253 crores in 2015. It was pointed out, that the aforesaid figures emerged, despite the withdrawal of provident fund amounts, by a number of employees. It was, therefore submitted, that payment of pensionary benefits to 6, 730 employees, was well within the financial reach of the State Government, and that, the decision of the State Government to issue the repeal notification, on the ground that 'the 1999 Scheme' was not financially viable, was not acceptable.

41Copy pinpoint41. It was also the contention oflearned counsel for the respondent- G employees, that all the State owned corporations were fully controlled by the Government. All shares in the corporations were held by the State Government. The management of all the corporations, was also under the direct control and supervision of the Government. Accordingly it was submitted, that the ultimate authority in determining the conditions H

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[JAGDISH SINGH KHEHAR, J.]

of service of the concerned corporations, was vested with the A Government. In this behalf, reliance was placed on Articles 51 and 52 of Articles of Association of the Himachal Pradesh State Forest Development Corporation Limited. It was highlighted that similar Articles ofAssociation governed the other corporations, as well. It was therefore submitted, that the State Government, had no business, to withdraw itself, B from its responsibility and commitment.

42Copy pinpoint42. It was, therefore submitted, that the Government has consistently been extending the benefit of similar conditions of service, to employees of Government owned corporations, as are available to Government employees in the State. The Government having taken a conscious decision to extend pensionary benefits to all employees of c Government owned corporations, under 'the 1999 Scheme', is clearly precluded from withdrawing the same, specially on account of the fact, that the corporations under consideration, are instrumentalities of the State in terms of Article 12 of the Constitution oflndia. According to learned counsel, 'the 1999 Scheme' was liable to be treated as a welfare D measure, extended by the State Government to all employees, and therefore, it should not shirk its responsibility, to fulfill any financial deficiency therein, out of the Government treasury. In the above view of the matter it was submitted, that the impugned judgment rendered by the High Court, deserved no interference. · E

43Copy pinpoint43. It was also asserted, that even if it was assumed, that the report of the committee, dated 15.11.2003, with reference to the status of the corpus fund, is correct, still the same is liable to be rejected because the committee had sought views of 17 corporations/boards covered by 'the 1999 Scheme', however, it received views of 7 corporations only, namely, Himachal Pradesh Agro Industries Corporation, Himachal F Pradesh Tourism Development Corporation, Himachal Pradesh State Industrial Development Corporation. Himachal Pradesh Horticultural Produce Marketing and Processing Corporation Ltd., Himachal Pradesh Housing Board, 1-limachal Pradesh State Forest Development Corporation Ltd., and Himachal Pradesh SC & ST Development G Corporation. The above corporations had expressed the opinion, that a unified trust for pension with financial support of the State Government, could salvage the financial position, to enable the corpus fund to cater to payment of pension to employees under 'the 1999 Scheme'. It was therefore the contention of learned counsel for the respondents, that H

p. 926 Copy page pinpoint

A credence should not be given to the proposition propounded at the hands of the State Government, that 'the 1999 Scheme' was not financially viable.

44Copy pinpoint44. In order to controvert the submissions advanced at the hands ofleamed counsel for the respondent-employees, Mr. P.P. Rao, learned B senior counsel emphatically pointed out, that all the judgments relied upon by the respondents were inapplicable to the present controversy. It was submitted, that the judgments relied upon, did not deal with the rights of serving employees. It was pointed out, that a clear enunciation in this behalf was recorded by this Court, that the prayers raised at the hands of the respondent-employees, could only relate to superannuated c personnel. For the above, learned counsel invited our attention to the Chairman, Railway Board case (supra), wherefrom the following observations were relied upon:- "20. It can, therefore, be said that a rule which operates in futuro so as to govern future rights of those already in service cannot be assailed on the ground of retroactivity as being violative of Articles 14 and 16 of the Constitution, but a rule which seeks to reverse from an anterior date a benefit which has been granted or availed of, e.g., promotion or pay scale, can be assailed as being violative of Articles 14 and 16 of the Constitution to the extent it operates retrospectively. xxx xxx xxx

25. In these cases we are concerned with the pension payable to the employees after their retirement. The respondents were no longer in service on the date of issuance of the impugned notifications. The amendments in the rules are not restricted in their application in futuro. The amendments applv to employees who had already retired and were no longer in service on the date the impugned notifications were issued. xxx xxx xxx G

30. The respondents in these cases are employees who had retired after 1-1-1973 and before 5-12-1988. As per Rule 2301 of the Indian Railway Establishment Code they are entitled to have their pension computed in accordance with Rule 2544 as it stood at the time of their retirement. At that time the said rule prescribed that H

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[JAGDISH SINGH KHEHAR, J.]

Running Allowance limited to a maximum of 75% of the other emoluments should be taken into account for the purpose of calculation of average emoluments for computation of pension and other retiral benefits. The said right of the respondent- employees to have their pension computed on the basis of their average emoluments being thus calculated is being taken away by the amendments introduced in Rule 2544 by the impugned notifications dated 5-12-1988 inasmuch as the maximum limit has been reduced from 75% to 45% for the period from 1-1-1973 to 31-3-1979 and to 55% from 1-4-1979 onwards. As a result the amount of pension payable to the respondents in accordance with the rules which were in force at the time of their retirement has c been reduced. xxx xxx xxx

33. Apart from being violative of the rights then available under Articles 31 (I) and 19( I )(f), the impugned amendments, insofar as they have been given retrospective operation, are also violative of the rights guaranteed under Articles 14 and 16 of the Constitution on the ground that they are unreasonable and arbitrary since the said amendments in Rule 2544 have the effect of reducing the amount of pension that had become payable to employees who had already retired from service on the date of issuance of the impugned notifications, as per the provisions contained in Rule 2544 that were in force at the time of their retirement.

34. The learned Additional Solicitor General has, however, submitted that the impugned amendments cannot be regarded as arbitrary for the reason that by the reduction of the maximum limit in respect of Running Allowance from 75% to 45% for the period 1-1-1973 to 31-3-1974 and to 55% from 1-4-1979 onwards, the total amount of pension payable to the employees has not been reduced. The submission of the learned Additional Solicitor General is that since the pay scales had been revised under the 1973 Rules with effect from 1-1-1973, the maximum limit of 45% G or 55% of the Running Allowance will have to be calculated on the basis of the revised pay scales while earlier the maximum limit of 75% of Running Allowance was being calculated on the basis of unrevised pay scales and, therefore, it cannot be said that there has been any reduction in the amount of pension payable to H

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A the respondents as a result of the impugned amendments in Rule 2544 and it cannot be said that their rights have been prejudicially affected in any manner. We are unable to agree. As indicated earlier, Rule 2301 of the Indian Railway Establishment Code prescribes in express terms that a pensionable railway servant's claim to pension is regulated by the rules in force at the time B when he resigns or is discharged from the service of Government. The respondents who retired after 1-1-1973 but before 5-12-1988 were, therefore, entitled to have their pension computed on the basis of Rule 2544 as it stood on the date of their retirement. Under Rule 2544, as it stood prior to amendment by the impugned c notifications, pension was required to be computed by taking into account the revised pay scales as per the 1973 Rules and the average emoluments were required to be calculated on the basis of the maximum limit of Run11ing Allowance at 75% of the other emoluments. including the pay as per the revised pay scales under the 1973 Rules. Merely because the respondents were not paid their pension on that basis in view of the orders of the Railway Board dated 21-1-1974, 22-3-1976 and 23-6-1976, would not mean that the pension payable to them was not required to be computed ir. accordance with Rule 2544 as it stood on the date of their retirement. Once it is held that pension payable to such employees had to be computed in accordance with Rule 2544 as it stood on the date of their retirement, it is obvious that as a result of the amendments which have been introduced in Rule 2544 by the impugned notifications dated 5-12-1988 the pension that would be payable would be less than the amount that would have been p:;yable as per Rule 2544 as it stood on the date of retirement. F The Full Bench of the Tribunal has, in our opinion, rightly taken the view that the amendments that were made in Rule 2544 by the impugned notifications dated 5-12-1988, to the extent the said amendments have been given retrospective effect so as to reduce the maximum limit from 75% to 45% in respect of the period G from 1-1-1973 to 31-3-1979 and reduce it to 55% in respect of the period from 1-4-1979, are unreasonable and arbitrary and are violative of the rights guaranteed under Articles 14 and 16 of the Constitution." For the same proposition, reliance was placed on the U .P. H

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[JAGDISH SINGH KHEHAR, J.]

Raghavendra Acharya case (supra), wherefrom our attention was A drawn to the following observations:- "2. The appellants in these appeals are retired teachers of the University and Private Aided Colleges (to whom UGC scales of pay were applicable). They have retired during the period 1.1.1996 to 31.3.1998. So far as the teachers of the University or Privates B .Aided Colleges are concerned, indisputably, they were being paid the same salary as was being paid to the teachers of the Government colleges. The appellants in Civil Appeal No. 1391/ 2006, have retired from the Karnataka Regional Engineering College, Surathkal, Karnataka, which was established by the Government of India at the request of the Government of c Karnataka. It is a Centrally aided institution as envisaged under Entry 64 of List 1 of the Seventh Schedule to the Constitution of India. So far as the said institution is concerned, its expenditure used to be borne by the Government of India and the State of Karnataka. It, however, has been notified by the Government of D India as a Deemed University with effect from 26.6.2002. xxx xxx xxx

31. The appellants had retired from service. The State therefore could not have amended the statutory rules adversely affecting their pension with retrospective effect." E

45Copy pinpoint45. A different projection was sought to be made by Mr. R. Venkataramani, learned senior counsel, who also represented the appellants. Learned counsel, placed reliance on State ofAssam v. Barak Upatyaka D.U. Karmachari Sanstha, (2009) 5 SCC 694, and drew our attention to the following:- F "2. By that order the Division Bench upheld the order dated 23.12.1999 of the learned Single Judge in Civil Rule No. 2996/ 1995 allowing the respondent's writ petition and directing the state government to sanction financial assistance by way of grant-in- aid to Cachar and Karimganj District Milk Producers' Cooperative G Union Limited ("CAMUL", for short) so as to enable CAMUL to make regular payment of monthly salaries, allowances as also the arrears to its employees. · xxx xx.x xxx H

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A 4. It is contended that the State Government had all-pervasive control over the affairs and management of CAM UL and therefore it should be treated as a department of the Government of Assam, though registered as a co-operative society by lifting the corporate veil. It was further contended that State Government was responsible and Iiable to pay the salaries and emoluments of B the employees ofCAMUL and it was not justified in withholding the grant amount.

5. The respondent Union therefore sought a direction to the State Government to release the arrears of pay and allowances of employees ofCAMUL with effect from December 1994 and for c a direction to continue to pay the salary and allowances to the employees ofCAMUL, every month in future. In addition to the state government (Respondent 1) and its officers (Respondents 2 to 4), the Union of India (Respondent 5) and CAMUL and its Managing Director (Respondents 6 and 7) were impleaded as parties to the writ petition.

6. The State Government opposed the petition. It inter- alia contended that the grant-in-aid was extended for helping CAMUL in its different development activities; that under a Centrally sponsored scheme, between 1981 to I986, the eannarked amount was released on 50:50 basis by the Central and State Government with 70% loan component and 30% as grant component; that though the loan component was not repaid by CAMUL, the State Government continued the grant-in-aid for p11rposes of development activities; that the State Government had also provided Rs.43.60 lakhs for developing the milk- F p1 ocessing infrastructure of CAMUL; that despite such assistance, CAMUL became defunct and stopped all its activities and thereafter the Silchar Town Milk Supply Project was being run by the State's Dairy Development Department itself; that at no time, the State Government made any commitment or agreed to bear G the salaries of employees ofCAMUL or any other similar societies; that CAMUL had to generate its own funds and resources to pay the salaries of its staff; and that as there was no relationship of employer and employee between the State Government and the employees ofCAMUL, it was not responsible to bear or pay any amount towards the salaries of the employees ofCAMUL. H

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[JAGDISH SINGH KHEHAR, J.]

7. The learned Single Judge allowed the writ petition. He held that the State Government through its Veterinary Department undertook the Integrated Cattle Development Projects (ICDP) in various districts of Assam; and as a part of the said project, an ICDP block was created at Ghungoor, Silchar in Cachar district; that 32 cooperative societies of Milk Producers were established and CAMUL was formed as an Apex Body of those co-operative societies; that the Dairy Development Department of the State Government had been providing grant-in-aid earmarked in the State budget every year to CAMUL; that the State Government failed to offer any explanation or reason for stopping the grant-in- aid from 1994: that the Dairy Development Project at Silchar c was purely a State Government scheme and as that Project has not been discontinued and as there was no decision to bar CAM UL from receiving grant-in-aid which was being granted from 1982- . 83 till 1994, the State Government could not deny the grant-in-aid amount. Consequently. the learned Single Judge directed release of the grand-in-aid for paying monthly salaries and allowances D along with arrears to the employees. xxx xxx xxx

10. CAMUL indisputably is a co-operative society registered under the provisions of the Assam Cooperative Societies Act, 1949. E Section 85 of the said Act provides that every registered society shall be deemed to be a body corporate by the name under which it is registered, with perpetual succession and a common seal, and with power to hold property, to enter into contracts, institute and defend suits and other legal proceedings and to do all things necessary for the purposes for which it was con.;tituted. F

11. Therefore, CAMUL. even if it was "State" for purposes of Article 12, was an independent juristic entity and could not have been identified with or treated as the State Government. In the view we have taken, it is not necessary in this case to examine whether CAMUL was "State" for purposes of Article 12. G

xxx xxx xxx

14. The respondent has not been able to show any right in the employees of CAMUL against the State Government. or any obligation on the part of the State Government with reference to

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A the salaries/emoluments of employees of CAM UL either under any statute or contract or otherwise.

15. The learned Counsel for the respondent contended that the same issue arose for consideration in Kapila Hingorani (I) v. State of Bihar, (2003) 6 SCC 1 (for short "Kapila Hingorani (I)") and B the issue has been answered in their favour. Reference is invited to the following question, which was set down as one of the questions arising for consideration in that case: (SCC p.17, para 20) "2. Whether having regard to the admitted position that the c government companies or corporations referred to hereinbefore are "State" within the meaning of Article 12 of the Constitution oflndia, the State ofBihar having deep and pervasive control over the affairs thereof, can be held to be liable to render all assistance to the said companies so as to fulfill its own and/or the corporations' obligations to comply D with the citizens' rights under Articles 21 and 23 of the Constitution oflndia?"

16. Reference is also invited to the following observations of this Court in considering the said questiOn (Kapila Hingorani (I), SCC, pp. 20-21, paras 30-31 & 33-34): E "30. The government companies/public sector undertakings being 'State' would be constitutionally liable to respect life and liberty of all persons in terms of Article 21 of the Constitution oflndia. They, therefore, must do so in cases of their own employees. The Government of the State of Bihar F for all intent and purport is the sole shareholder. Although in law, its liability towards the debtors of the company may be confined to the shares held by it but having regard to the deep and pervasive control it exercises over the government companies; in the matter of enforcement of human rights and/or rights of the citizen to life and liberty, the State has G also an additional duty to see that the rights of employees of such corporations are not infringed.

31. The right to exercise deep and pervasive control would in its turn make the Government ofBihar liable to see that the life and liberty clause in respect of the employees is fully H

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[JAGDISH SINGH KHEHAR, J.]

safeguarded. The Government of the State of Bihar, thus, A had a constitutional obligation to protect the life and liberty of the employees of the government-owned companies/ corporations who are the citizens oflndia. It had an additional liability having regard to its right of extensive supervision over the affairs of the company. B xxx xxx xxx

33. The State having regard to its right of supervision and/ or deep and pervasive control, cannot be permitted to say that it did not know the actual state of affairs of the State Government undertakings and/or it was kept in the dark that c the salaries of their employees had not been paid for years leading to starvation death and/or commission of suicide by a large number of employees. Concept of accountability arises out of the power conferred on an authority.

34. The State may not be liable in relation to the day-to-day functioning of the companies, but its liability would arise on its failure to perform the constitutional duties and functions by the public sector undertakings, as in relation thereto lie the State's constitutional obligations. The State acts in a fiduciary capacity. The failure on the part of the State in a case of this nature must also be viewed from the angle that the statutory authorities have failed and/or neglected to enforce the social-welfare legislations enacted in this behalf e.g. the Payment of Wages Act, the Minimum Wages Act etc. Such welfare activities as adumbrated in part IV of the Constitution oflndia indisputably would cast a duty upon the F State being a welfare State and its statutory authorities to do all things which they are statutorily obligated to perform. Reference is invited to the fact that this Court directed the Bihar government to release Rs. 50 crores and deposit it with the High Court for disbursing salaries of employees of G government corporations/companies. The contention of respondent is that the direction of the High Court, is in consonance with the said view.

17. The learned Counsel for the respondent also relied upon the following observations in Kapila Hingorani (II) v. State ofBihar, H