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

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A (2005) 2 SCC 262 (for short "Kapila Hingorani (II)): (SCC p. 268, paras 26-27) "26. We, therefore, do not appreciate the stand taken by the State of Bihar now that it does not have any constitutional obligation towards a section of citizens viz. the employees of 8 the public sector undertakings who have not been paid salaries for years.

27. We also do not appreciate the submissions made on behalf of the State of Bihar that the directions issued were only one-time direction. In Clause 4 of the directions, it was clearly stated that the State for the present shall deposit a sum of c Rs. 50 crores before the High Court for disbursement of salaries to the employees of the corporations. Furthermore, the matter had been directed to be placed again after six months." This Court also issued further interim directions to the State of D B!har to deposit a further sum of Rs.SO crores and the State of Jharkhand to deposit a sum of Rs.25 crores to meet the arrears of salaries of public sector undertakings.

18. We have carefully examined the said two decisions. The two decisions are interim orders made in a writ petition under E Article 32 of the Constitution. The said orders have not finally decided the issues/questions raised, nor laid down by any principle or' law. The observations extracted above as also other observations and directions are purely tentative as will be evident from the following observations in Kapila Hingorani (I): (SCC pp. 34-35, paras 74 & 76) F "74. We, however hasten to add that we do not intend to lay down a law, as at present advised, that the State id directly or vicariously Iiable to pay salaries/remunerations of the employees of the public sector undertakings or the government companies in all situations. We, as explained hereinbefore, G only say thatthe State cannot escape its liability when a human rights problem of such magnitude involving the starvation deaths and/or suicide by the employees has taken place by reason of non-payment of salary to the employees of public sector undertakings for such a long time .... H xxx xxx xxx

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[JAGDJSH SINGH KHEHAR, J.]

76. This order shall be subject to any order that may be passed A subsequently or finally." xxx xxx xxx

19. The position is further made clear in Kapila Hingorani (II) as under: (SCC p. 270, para 37) · B "37. We make it clear that we have not issued the aforementioned directions to the States ofBihar and Jharkhand on the premise that they are bound to pay the salaries of the employees of the public sector undertakings but on the ground that the employees have a human right as also a fundamental right under Article 21 which the States are bound to protect. c The directions, which have been issued by this Court on 9.5.2003 as also which are being issued herein, are in furtherance of the human and fundamental rights of the employees concerned and not by way of an enforcement of their legal right to an;ears of salaries. The amount of salary payable to the employees or workmen concerned would undoubtedly be adjudicated upon in the proper proceedings. However, these directions are issued which are necessary for their survival."

20. It is thus clear that directions were not based on legal right of the employees. but were made to meet a human right problem involving starvation deaths and suicides. But in the case on hand, relief is claimed and granted by proceeding on the basis that the employees of corporations/bodies answering the definition of "State" have a legal right to get their salaries from the State F Government. In fact Kapila Hingorani (I) and Kapila Hingorani (JI) specifically negative such a right."

46Copy pinpoint46. We shall now endeavour to consider the various legal parameters on the basis whereof, learned counsel for the rival parties have premised their respective submissions. G

47Copy pinpoint47. First and foremost, it is essential for us to determine whether or not a vested right came to be created in the employees of the corporate bodies, when they came to be governed by 'the 1999 Scheme'. The submission at the hands oflearned counsel for the appellant-State was, H

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A that no such vested right was created, by the time the repeal notification was issw~d on 2.12.2004. The contention oflearned counsel representing the State was, that under paragraph 4 of 'the 1999 Scheme', a right to draw pension would emerge, only when a concerned employee attained the age of superannuation, subject to the condition that he had rendered the postulated qualifying service. It was submitted, that prior to the B fulfillment of the aforesaid condition, no employee under 'the 1999 Scheme', could be considered as being possessed of a vested right, to receive_ oension.

48Copy pinpoint48. Having given our thoughtful consideration to the aforesaid submission, we are of the view, that such of the employees who had c exercised their option to be governed by 'the 1999 Scheme', came to be regulated by the said scheme, immediately on their having submitted their option. In addition to the above, all such employees who did not exercise any option (whether to be governed, by the Employees' Provident Funds Scheme, 1995, or by 'the 1999 Scheme'), would automatically be deemed to have opted for 'the 1999 Scheme'. All new entrants would naturally be governed by 'the 1999 Scheme'. All those who had moved from the provident fund scheme to the pension scheme, would be deemed to have consciously, foregone all their rights under the Employees' Provident Funds Scheme, 1995. It is of significance, that all the concerned employees by moving to 'the 1999 Scheme', accepted, that the employer's contribution to their provident fund account (and the accrued interest thereon, upto 31.3.1999), should be transferred to the corpus, out of which their pensionary claims, under 'the 1999 Scheme' would be met. It is therefore not possible for us to accept, that the concerned employees would be governed by 'the 1999 Scheme' only from the date on which they a~ained the age of superannuation, and that too - subject to the condition that they fulfilled the prescribed qualifying service, entitling them to claim pension. Every fresh entrant has the statutory protection under the Provident Fund Act. All fresh entrants after the introduction of 'the 1999 Scheme', were extended the benefits of 'the 1999 Scheme', because of the exemption granted by competent authority under the Provident Fund Act. They too, therefore possessed similar rights as the optees.

49Copy pinpoint49. With effect from 1.4.1999, the employees who had opted for 'the 1999 Scheme' (or, who were deemed to have opted for the same) were no longer governed by the provisions of the Provident Fund Act H

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[JAGDISH SINGH KHEHAR, J.]

(under which they had statutory protection, for the payment of provident fund). Consequent upon an exemption having been granted to the concerned corporate bodies by the competent authority under the Provident Fund Act, the Employees Provident Funds Scheme, 1995, was replaced, by 'the 1999 Scheme'. All direct entrants after 1.4.1999, were also entitled to the rights and privileges of 'the 1999 Scheme'. We are therefore of the considered view, that the submissions advanced on behalf of the State of Himachal Pradesh premised on the assertion, that no vested right accrued to the employees of the concerned corporate bodies, on the date when 'the I 999 Scheme' became operational (with effect from 1.4.1999), or to the direct entrants who entered service thereafter, cannot be accepted. In this behalf it would also be relevant to emphasize, c that as soon as the concerned employees came to be governed by 'the 1999 Scheme', a contingent right came to be vested in them. -The said contingent right created a right in the employees to claim pension, at the time of their retirement. Undoubtedly, the aforesaid contingent right would crystalise only upon the fulfillment of the postulated conditions, D expressed on behalfof the appellants (on having rendered, the postulated qualifying service). However, once such a contingent right was created, every employee in whom the said right was created, could not be prevented or forestalled, from fulfilling the postulated conditions, to claim pension. Any action pre-empting the right to pension, emerging out of the conscious option exercised by the employees, to be governed by 'the E 1999 Scheme' (or to the direct entrants after the introduction of 'the 1999 Scheme'), most definitely did vest a right in the respondent- employees.

50Copy pinpoint50. We are also of the view, that there is merit in the contention advanced on behalf of the respondent-employees, inasmuch as, the seeds F of the right to receive pension, emerge from the very day, an employee enters a pensionable service. From that very date, the employee commences to accumulate qualifying service. His claim for pension would obviously crystalise, when he acquires the minimum prescribed qualifying service, and also, does not suffer a disqualification, disentitling him to a claim for pension. G

51Copy pinpoint51. In the above view of the matter, it is not possible for us to accept, that the rights of the concerned employees under 'the 1999 Scheme', can be stated to get vested, only on the date when a concerned employee would attain the age of superannuation, and satisfy all the pre- H

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A requisites for a claim towards pension. We are also persuaded to accept the contention advanced on behalf of the respondent-employees, that the cause of action to raise a claim for pension, would arise on the date when a concerned employee actually retires from service. Any employee governed by a pension scheme, enrolls to earn qualifying service, immediately on his enrolment into the pensionable service. Every such B employee must be deemed to have commenced to invest in his evt:-ntual claim for pension, from the very day he enters service. More so, in the present controversy, by having expressly chosen to forego his rights, under th;: Employees' Provident Funds Scheme, I995.

52Copy pinpoint52. We shall deal with the issue, whether or not such a contingent c right, as was vested in the respondent-employees on their having opted for 'the 1999 Scheme' (or in the fresh entrants, on their very appointment), was binding and irrevocable, at a later stage of our consideration.

53Copy pinpoint53. The second most important issue which deserves to be addressed by us, in the facts and circumstances of the present case is, whether or not the State Government was justified in postulating a cut- off date, by which some of the employees governed by 'the 1999 Scheme' (those who had retired prior to 2.12.2004) were entitled to draw pension under 'the 1999 Scheme', whereas others, who had not retired by the time the repeal notification was issued on 2.12.2004, were deprived of such benefits. In this behalf, the contention of the learned counsel for the respondent-employees was, that all those who had opted (or deemed to have opted) for 'the 1999 Scheme', and all the new entrants after the introduction of'the 1999 Scheme', constituted a homogenous class, and it was impermissible for the State Government, to have treated them differently. It was submitted, that the aforesaid classificatioP was invidioys, inasmuch as, there was no reasonable basis for such classification, nor was there any discernable object, for bifurcating the homoge'lous class of pensioners. It was submitted, that whilst those who had retired on the date of the repeal notification, would be entitled to pensionary benefits, those who retired on the following day, would be deprived of the same. Learned counsel for the rival parties have, relied on a series of judgments in support of the respective propositions canvassed by them. We have extracted the same, while recording their submissions.

54Copy pinpoint54. Having given our thoughtful consideration to the issue canvassed, and having gone through the judgments cited, we are of the

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[JAGDISH SINGH KHEHAR, J.]

considered view, that this Court has repeatedly upheld a cut-off date, for A extending better and higher pensionary benefits, based on the financial health of the employer. A cut-off date can therefore legitimately be prescribed for extending pensionary benefits, if the funds available cannot assuage the liability, to all the existing pensioners. We are therefore satisfied to conclude, that it is well within the authority of the State B Government, in exercise ofits administrative powers (which it exercised, by issuing the impugned repeal notification dated 2.12.2004) to fix a cut- off date, for continuing the right to receive pension in some, and depriving some others of the same. This right was unquestionably exercised by the State Government, as determined by this Court, in the R.R. Verma case (supra), wherein this Court held, that the Government was vested c with the inherent power to review. And that the Government was free to alter its earlier administrative decisions and policy. Surely, this is what the State Government has done in the present controversy. But this Court in the above mentioned judgment, placed a rider on the exercise of such power by the Government. In that, the exercise of such power, should be in consonance with all legal and statutory obligations.

55Copy pinpoint55. It is equally true, that the power of administrative review can only be exercised, for a good and valid justification. Such justification besides being founded on reasonable consideration, should also not be violative of any legal right - statutory or constitutional, vested in the affected employees. Insofar as the permissibility of the administrative action taken, in issuing the impugned repeal notification dated 2. I 2.2004 is concerned, whether the said power was exercised by the State Government for good and valid reasons, and/or whether the same violated any statutory or constitutional right vested in the respondent-employees, shall be examined by us in the succeeding paragraphs. F

56Copy pinpoint56. In order to demonstrate, that the repeal notification dated

2. 12.2004, was impermissible in law, reliance was placed on the U.P. RaghavendraAcharya case (supra). We are of the view, that the above judgment does not have any bearing on the facts and circumstances of this case. In the above judgment, the primary contention which weighed G with this Court, in rejecting the contention advanced by the State Government was, that through an executive determination (by a letter, dated 17. I 2.1993), the State Government had breached a statutory rule, regulating the fixation of pension (Rule 296, of the Karnataka Civil Services Rules). The above position is not available in the present case, H

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A inasmuch as, no contention has been advanced at the behest of the respondent-employees, that the action taken by the State Government (in issuing the repeal notification, dated 2.12.2004), violated any legal obligation or statutory right. So also, the judgment relied upon on behalf of the respondent-employees in the D.S. Nakara case (supra), wherein the employees' claim for pension, was based on existing rules. And B even so, in the Chairman, Railway Board case (supra), wherein it was held, that vested rights under the rules, could not be taken away. It would also be relevant to mention, that in the last judgment referred to above, it was observed, that the employees who had retired from service, had been deprived of their pensionary rights, as the amended rule was c not prospective, but was retrospective. In the instant case, the repeal notification does not adversely affect those employees who had retired prior to 2.12.2004, before the said notification was issued. The above referred judgment is also, therefore inapplicable to the present controversy. The conclusion recorded hereinabove, also emerges on a perusal of paragraphs 31 and 33 of the above judgment. It is therefore D apparent, that the validity of the impugned notification cannot be assailed on the basis of the judgments cited above. We shall now deal with the legal submissions advanced on behalf of the respondent-employees, in their attempt to invalidate the repeal notification, dated 2.12.2004.

57Copy pinpoint57. The first legal contention advanced on behalf of the respondent- E employees was based on the principle of estoppel/promissory estoppel. It was the assertion of learned counsel, that the respondent-employees had altered their position to their detriment, on their having opted (or deemd to have opted) to be governed by 't.he 1999 Scheme'. In order to highlight the above assertion it was submitted, that the entire employer's F contribution towards provident fund (alongwith, the accumulated interest thereon), was foregone by the respondent-employees. The said amount unquestionably belonged to the respondent-employees, and their right over the same was protected under the Provident Fund Act. It was submitted, that the aforesaid option was exercised by the respondent- employees, only when the offer to extend pensionary benefits, was G voluntarily made to the employees by the State Government. It was contended, that the promise to pay pensionary benefits, which was containtid in the offer of the State Government, could not be unilaterally revoked, under the principle of estoppel/promissory estoppel. It was submitted, that the instant action of the State Government (taken by H

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[JAGDISH SINGH KHEHAR, J.]

way ofissuing the repeal notification, dated 2.12.2004), would seriously A impair the financial benefits which had accrued to the respondent- employees, under 'the 1999 Scheme'. It was pointed out, that all that the respondent-employees had gained, by foregoing the employer's contribution (and the accrued interest, thereon), has been lost, consequent upon the issuance of the impugned notification, dated 2.12.2004. B

58Copy pinpoint58. We are of the considered view, that the principle of estoppel/ promissory estoppel cannot be invoked at the hands of the respondent- empbyees, in the facts and circumstances of this case. It is not as ifthe rights which had accrued to the respondent-employees under the Employees' Provident Funds Scheme, 1995 (under which the respondent- employees were governed, prior to their being governed by 'the 1999 c Scheme') have in any manner been altered to their disadvantage. All that was taken away, and given up by the respondent-employees by way of foregoing the employer's contribution upto 31.3.1999 (including, the accrued interest thereon), by way of transfer to the corpus fund, was re~t_ored to the respondent-employees. All the respondent- D employees, who have been deprived of their pensionary claims by the repeal notification dated 2.12.2004, would be entitled to all the rights which had accrued to them, under the Employees' Provident Funds Scheme, 1995. It is therefore, not possible for us to accept, that the respondentcemployees can be stated to have been made to irretrievably alter their position, to their detriment. Furthennore, all the corporate bodies (with which the respondent-employees, are engaged) are independent juristic entities, as held in State ofAssam v. Barak Upatyaka D.U. Kannachari Sanstha (supra). The mere fact, that the corporate bodies under reference, are fully controlled by the State Government, and the State Government is the ultimate authority to detennine their conditions of service, under their Articles of Association, is inconsequential. Undoubtedly, the respondent-employees are not Government employees. The State Government, as a welfare measure, had ventured to honestly extend some post-retiral benefits to employees of such independent legal entities, on the mistaken belief, arising out of a miscalculation, that the same can be catered to, out of available resources. G This measure was adopted by the State Government, not in its capacity as the employer of the respondent-employees, but as a welfare measure. Whe:i it became apparent, that the welfare measure extended by the State Government, could not be sustained as originally understood, the H

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A same was sought to be withdrawn. We are of the view that the principle invoked on behalf of the respondent-employees, cannot be applied in the facts of the present case, specially, in view of the decision in Mis. Bhagwati Vanaspati Traders v. Senior Superintendent of Post Offices, Meerut, AIR 2015 SC 901, wherein this Court held as under:- 8 "The first contention advanced at the hands of the learned counsel for the appellant was based on the decision rendered by this Court in Tata Iron & Steel Co. Ltd. v. Union of India & Ors., (2001) 2 sec 41, wherefrom learned counsel invited our attention tO the following observations:- c "20. Estoppel by conduct in modern times stands elucidated with the decisions of the English Courts in Pickard v. Sears, 1837 6 Ad. & El. 469, and its gradual elaboration until placement of its true principles by the Privy Council in the case of Sarat Chunder Dey v. Go pal Chunder Laha, ( 1891-92) 19 IA 203, whereas earlier Lord Esher in the case of Seton Laing·· D ' Co. v. Lafone, 1887 19 Q.8.D. 68, evolved three basic elements of the doctrine ofEstoppel to wit: "Firstly, where a man makes a fraudulent misrepresentation and another man acts upon it to its true detriment: Secondly, another may be where a man_ makes a false statement negligently though without fraud and another person acts upon it: And thirdly, there may be circumstances under which, where a misrepresentation is made without fraud and without negligence, there may be an Estoppel." Lord Shand, however, was pleased to add one further element to the effect that there may be statements made, which have induced other party to do that from which otherwise he would have abstained and which cannot properly be characterized as misrepresentation. In this context, reference may be made to the decisions of the High Court of Australia in the case of G Craine v. Colonial Mutual Fire Insurance Co. Ltd., 1920 28 C.L.R. 305. Dixon, J. in his judgment in Grundt v. The Great Boulder Pty. Gold Mines Pty. Ltd., 1938 59 C.L.R. 641, stated that,; "In measuring the detriment, or demonstrating its existence, one does not compare the position of the representee, before H

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[JAGDISH SINGH KHEHAR, J.]

and after acting upon the representation, upon the assumption that the representation is to be regarded as true, the question of estoppel does not arise. It is onlv when the representor wished to disavow the assumption contained in his representation that an estoppel arises, and the question of detriment is considered. accordingly, in the light ofthe position which the representee would be in if the representor were allowed to disavow the truth of the representation." (In this context see Spencer Bower and Turner: Estoppel by Representation, 3rd Ed.). Lord Denning also in the case of Central Newbury Car Auctions Ltd. v. Unity Finance Ltd., 1956 (3)All ER 905, appears to have subscribed to the view of Lord c Dixon, J. pertaining to the test of'detriment' to the effect as to whether it appears unjust or unequitable that the representator should now be allowed to resile from his representation, having regard to what the representee has done or refrained from · doing in reliance on the representation, in short, the party asserting the estoppel must have been induced to act to his detriment. So )orig as the assumption is adhered to, the party who altered the situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs, the basis of an assertion of right against him then, if it is allowed, his own original change of position will operate as a detriment, (vide Grundts: High Court of Australia (supra)).

21. Phipson on Evidence (Fourteenth Edn.) has the following to state as regards estoppels by conduct. F "Estoppels by conduct, or, as they are still sometimes called, estoppels by matter in pais, were anciently acts of notoriety not less solemn and formal than the execution of a deed, such as livery of seisin, entry, acceptance of an estate and the like, and whether a party had or had not concurred in an act of this sort was deemed a matter which there could be G no difficulty in ascertaining, and then the legal consequences followed (Lyon v. Reed, (1844) 13 M & W 285 (at p. 309). The doctrine has, however, in modern times, been extended so as to embrace practically any act or statement by a party which it would be unconscionable to petmit him to deny. The H

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A rule has been authoritatively stated as follows: 'Where one by his words or conduct willfully causes another to believe the existence of a certain state of things and induces him to act on that belief so as to alter this own previous position, the former is concluded from averring against the latter a dif-!'erent state of things as existing at the same time.' (Pickard v. Sears B (supra)). And whatever a man's real intention may be, he is deemed to act willfully 'if he so conducts himself that a reasonable man would take the representation to be true and believe that it was meant that he should act upon it.' (Freeman v. Cooke, 1848 (2) Exch. 654: at p. 663). c Where the conduct is negligent or consists wholly of omission, there must be a duty to the person misled (Mercantile Bank v. Central Bank, 1938 AC 287 at p. 304, and National Westminster Bank v. Barclays Bank International, 1975 Q.B. 654 ). This principle sits oddly with the rest of the law of D estoppel, but it appears to have been reaffirmed, at least by implication, by the House of Lords comparatively recently (Moorgate Mercantile Co. Ltd. v. Twitchings, (1977) AC 890). The explanation is no doubt that this aspect of estoppel is properly to be considered a part of the law relating to negligent representations, rather than estoppel properly so- E called. If two people with the same source of information assert the same truth or agree to assert the same falsehood at the same time, neither can be estopped as against the other from asserting differently at another time (Square v. Square, 1935 P. 120)."

F 22. A bare perusal of the same would go to show that the issue of an estoppel by conduct can only be said to be available in the event of there being a precise and unambiguous representation and on that score a further question arises as to whether there was any unequivocal assurance prompting the G assured to alter his position or status. The contextual facts however, depict otherwise. Annexure 2 to the application form for benefit of price protection contains an undertaking to the following effect:- " We hereby undertake to refund to EEPC Rs ... the amount H . paid to us in full or part thereof against our application for

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[JAGDISH SINGH KHEHAR, J.)

price protection. In terms of our application dated against exports made during ... In case any particular declaration/ certificate furnished by us against our above referred to claims are found to be incorrect or any excess payment is determine to have been made due to oversight/wrong calculation etc. at any time. We also undertake to refund the amount within 10 days of receipt of the notice asking for the refund, failing which the amount erroneously paid or paid in excess shall be recovered from or adjusted against any other claim for export benefits by EEPC or by the licensing authorities of CCI & C." and it is on this score it may be noted that in the event of there c being a specific undertaking to refund for any amount erroneously paid or paid in excess (emphasis supplied), question of there being any estoppel in our view would not arise. In this context correspondence exchanged between the parties are rather significant. In particular letter dated D 30.11.1990 from the Assistant Development Commissioner for Iron & Steel and the reply thereto dated 8.3.1991 which unmistakably record the factum ofnon-payment of JPC price." It is apparent from the factual position narrated above, that the original action of the State Government was bonafide, and for the welfare of the respondent-employees. The State Government cannot be accused of having misrepresented to the respondent-employees in any manner. The provisions of 'the 1999 Scheme', clearly bring out, that the pension scheme would be self-financing, and would be administered from the corpus fund created out of the employer's contribution to their CPF account (alongwith the accrued interest thereon). When the above foundational basis for introducing the pension scheme, was found to be an incorrect determination/calculation, the same was withdrawn. In the above view of the matter, it would not be possible to infer, that the State Government, induced the respondent-employees, to move to 'the 1999 Scheme'. Accordingly, it would not be possible to apply the principle of estoppel/promissory estoppel, to the facts of the present case.

59Copy pinpoint59. We are also of the view, that the principle of estoppel/ promissory estoppel, is not applicable in a situation, where the original position, which the individual enjoyed before altering his position (by opting, or deemingly opting- for being governed by 'the 1999 Scheme') H

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A can be restored. For the instant proposition, reference may be made to the judgment in Pratima Chowdhury v; Kalpana Mukherjee, (2014) 4 sec 196, wherein it was held as under:- " We shall, however, endeavour to deal with the· principle of estoppel, so as to figure whether, the rule contained in Section 115 B of the Indian Evidence Act could have been invoked, in the facts and circumstances of the present case. Section 115 of the Indian Evidence Act is being extracted hereinabove:- " 115. Estoppel.- When one person has, by his declaration, act or omission, intentionally caused or permitted another c person to believe a thing to be true and to act upon such belief, neither he nor his representative shall be allowed, in any suit or proceeding between himself and such person or his representative, to deny the truth of that thing. Illustration D A intentionally and falsely leads B to believe that certain land belongs to A, and thereby induces B to buy and pay for it. The land afterwards becomes the property of A, and A seeks to set aside the sale on the ground that, at the time of the sale, he had no title. He must not be allowed to prove his want of title." It needs to be understood, that the rule of estoppel is a doctrine based on fairness. It postulates, the exclusion of, the truth of the matter. All, for the sake of fairness. A perusal of the above provision reveals four salient pre conditions before invoking the rule of estoppel. Firstly, one party should make a factual representation to the other party. Secondly, the other party should accept and rely upon the aforesaid factual representation. Thirdly, having relied on the aforesaid factual representation, the second party should alter his position. Fourthly, the instant altering of position, should be such, that it would be iniquitous to require him to revert back to the original position. Therefore. the doctrine of estoppel would apply only when, based on a representation bv the first party, the second party alters his position, in such manner. that it would be unfair to restore the initial position.'' H

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[JAGDISH SINGH KHEHAR, J.]

Since there is no dispute, that the original position (the rights enjoyed by the respondent-employees, under the Employees Provident Fund Scheme, 1995) available before 'the 1999 Scheme' was given effect to, has actually been restored, we are of the considered view, that the principle sought to be invoked on behalf of the respondent-employees, cannot augur in a favourable determination for them, because it is not possible to conclude, that it would be unfair to restore them to their original position. In fact, in view of the financial incapacity to continue 'the 1999 Scheme', the only fair action would be to restore the employees, to th.i Employees Provident Funds Scheme, 1995. This has actually been done by the State Government.· It is therefore not possible in law, to apply the principle of estoppel/promissory estoppel, to the facts of the c present controversy.

60Copy pinpoint60. Moving to the next contention. A serious dispute has been raised before us, in respect of the financial viability of'the 1999 Scheme'. Insofar as the appellant-State is concerned, it was asserted on its behalf, that a high level committee, was constituted by the Finance Department D of th"' State Government, on 21.1.2003. The said committee comprised of managing directors, of the concerned public sector undertakings and corporations. The task of the high level committee was, to examine the financial viability of 'the 1999 Scheme'. The said committee submitted a report dated 28.10.2003, returning a finding, that 'the 1999 Scheme' was not financially viable, and would not be self-sustaining. It is therefore, E that a tentative decision was taken by the State Government, to withdraw 'the 1999 Scheme'.

61Copy pinpoint61. To determine the modalities for withdrawing 'the 1999 Scheme', on the basis ofthe above report, the matter was jointly examined by the Finance Department and the Law Department of the State F Government, wherein, in consonance with the advice tendered by the Law Department it was decided, that 'the 1999 Scheme' should not be withdrawn retrospectively. Based on the advice of the Law Department, it was finally decided, that those who had commenced to draw pensionary benefits under 'the 1999 Scheme', would not be deprived of the same. G And that, 'the 1999 Scheme' should be withdrawn prospectively, for those whose right to receive pensionary benefits had not arisell, as they had not yet retired from service. In the above view of the matter, it was contwded on behalf of the State Government, that the action of the State Government, in issuing the repeal notification dated 2. I2.2004, was H

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A certainly not an arbitrary exercise of the power of administrative review. It was submitted, that the same was based on two factors. Firstly, the financial unviability of the scheme. And secondly, those who had already commenced to draw pensionary benefits under 'the 1999 Scheme', were not to be affected. It was therefore pointed out, that the classification made by the State Government was reasonable and justifiable in law, B and it also had a nexus to the object sought to be achieved.

62Copy pinpoint62. It is in the above scenario, that the legality andjusticiability of 'the 1999 Scheme', will have to be examined. The submission advanced at the behest of the respondent-employees was, that it was not permissible for the State Government to advance any such plea, because the State c Governnent must be deemed to have examined the financial viability of the scheme, before 'the 1999 Scheme' was given effect to. And that, it does not lie in the mouth of the State Government, after giving effect to 'the 1999 Scheme', to assert that 'the 1999 Scheme' was not financially viable. It was insisted, that even if data pertaining to the financial viability • D of the scheme, as was sought to be relied upon was correct, financial deficiencies if any, could be catered to by the State Government, from the vast financial resources available to it. And further, that 'the 1999 Scheme' in terms of the determination rendered by the High Court, even if permitted to be repealed, should not impact the rights of the respondent- employees, towards pensionary benefits. E

63Copy pinpoint63. We have given our thoughtful consideration to the above contention. It is not possible for us to accept the instant contention, advanced on behalf of the respondent-employees. The calculations projected at the behest of the State Government, to demonstrate tht: financial unviability of the scheme, have not been disputed. The same have been detailed in paragraph I0 above. The basis thereof, projected by the high level committee, admittedly constitutes the rationale for issuing· the repeal notification dated 4.12.2004. We are of the view, that the consideration at the hands of the State Government was conscious and pointed. And was supported by facts and figures. It is apparent, that out of 17 corporations/boards who were invited to express their views on the issue, only 7 had actually done so. It is not the case of the respondent~employees, that any one of those who had expressed their views, contested the fact, that the pension scheme was not self-financing. Those who expressed their views, affirmed that the pension scheme could be salvaged only with Government support. Those who did not H

STATE OF H.P. v. RAJESH CHANDER SOOD ETC. ETC. 949· [JAGDISH SINGH KHEHAR, J.]

express their views, obviously had no comments to offer. The position A projected by the State Government, therefore, cannot be considered to have been effectively rebutted. Certain facts and figures, have indeed been projected, on behalf of the respondent-employees. These have been recorded by us in paragraphs 39 and 40. Financial calculations can not be made casually, on a generalized basis. In the absence of any 8 authenticity, and that too with reference to all the 20 corporate entities specified in Schedule I of 'the 1999 Scheme', the projections made on behalf of the respondent-employees, cannot be accepted, as constituting a legitimate basis, for a favourable legal determination. Since the respondent-employees have not been able to demonstrate, that the foundational basis for withdrawing 'the 1999 Scheme', was not premised· c on any arbitrary consideration, or alternatively, was not founded on any irrelevant consideration, it is not possible for us to accept the contention, that ~he withdrawal of 'the 1999 Scheme', was not based on due consideration, or that, it was irrational or arbitrary or unreasonable. We are a!so satisfied, that the action of the State Government, in allowing D those who had already started earning pensionary benefits under 'the 1999 Scheme', was based on a legitimate classification, acceptable in law. In the above view of the matter, tile action of the State Government cannot be described as arbitrary, and as such, violative of Article 14 of the Constitution oflndia. We are also satisfied in concluding, that the understanding ofthe State Government (which had resulted in introducing E 'the 1999 Scheme') on being found to be based on an incorrect calculation, with reference to the viability of the corpus fund (to operate 'the 1999 Scheme'), had to be administratively reviewed. And that, the State Government's determination in exercising its power of review, was well founded. F

64Copy pinpoint64. It is also not possible for us to accept, that any Court has the jurisdiction to fasten a monetary liability on the State Government, as is the natural consequence, of the impugned ordef passed by the High Court, unless it emerges from the rights and liabilities canvassed in the lis itself. Budgetary allocations, are a matter of policy decisions. The State Government while promoting 'the 1999 Scheme', felt that the same G would be self-financing. The State Government, never intended to allocate financial resources out of State funds, to run the pension scheme. The State Government, in the instant view of the matter, could not have been burdened with the liability, which it never contemplated, in the first H

p. 950 Copy page pinpoint

A place. Moreover, it is the case of the respondent-employees themselves, that a similar pension scheme, floated for civil servants in the State of Himachal Pradesh, has also been withdrawn. The State Government has demonstrated its incapacity, to provide the required financial resources. We are therefore of the view, that the High Court should not (-as it could not) have transferred the financial liability to run 'the 1999 B Scheme', to the State Government. Similar suggestions made by the concerned corporate bodies, cannot constitute a basis for fastening the residuary liability on the Government.

65Copy pinpoint65. The action of the State Government, in revoking 'the 1999 Scheme' vide notification dated 2.12.2004, was also assailed as being c discrimbatory. And as such, violative of Article 16 of the Constitution of India. In this behalf, the submission advanced on behalf of the respondent-employees was, that the State Government extended similar benefits to Government employees under the Central Civil Services (Pension) Rules, 1972. The said pensionary benefits extended to D Government servants, were also sought to be withdrawn. It was however pointed out, that while withdrawing the pensionary benefits from the Governr.tent employees, the State Government had taken a decision to protect all existing employees, who had entered into Government service, till the revocation of the pension scheme. It was submitted, that the High Court had, by the impugned order, similarly protected only the existing employees, who were in service, as on the date of issuance of the repeal notification, dated 2.12.2004. It was contended, that the State Government's action, in not treating the employees of corporate bodies, goveme1 by 'the 1999 Scheme', similarly as it had treated employees in Government service, was clearly discriminatory. It was submitted, that two sets' of employees similarly situated, were treated differently. It was pointed out, that whilst protection was extended to one set of employees, similar benefits were denied to the other set of employees.

66Copy pinpoint66. We have given our thoughtful consideration of the plea of discrimination, advanced at the behest of the respondent-employees. It G is not possible for us to accept, that the employees of corporate bodies, can demand as of right, to be similarly treated as Government employees. Whilst it can be stated that Government employees of the State of Himachal Pradesh are civil servants, the same is not true for employees of corporate bodies. Corporate bodies are independent entities, and their employees cannot claim parity with employees of the State H

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[JAGDISH SINGH KHEHAR, J.]

Government. The State Government has a master-servant relationship with the civil servants of the State, whilst it has no such direct or indirect nexus with the employees of corporate bodies. The State Government may legitimately choose to extend different rights in terms of pay-scales and retiral benefits to civil servants. It may disagree, to extend the same benefits to employees of corporate bodies. The State Government would be well within its right, to deny similar benefits to employees of corporate bodies, which are financially unviable, or iftheir activities have resulted in financial losses. It is common knowledge, that when pay-scales are periodically reviewed for civi I servants, they do not automatically become applicable to employees of corporate bodies, which are wholly financed by the Government. And similarly, not even to employees of Government c companies. Likewise, there cannot be parity with Government employees, in respect of allowances. So also, of retiral benefits. The claim for parity with Government employees is therefore wholly misconceived. rt is, therefore, not possible for us to accept the contention advanced on behalf of the respondent-employees, that the action of the D State Government was discriminatory.

67Copy pinpoint67. Another reason for us to conclude, that the action of the State Government was not discriminatory is, that despite having revoked 'the 1999 Scheme' through the notification dated 2.12.2004, the State Government had permitted such of the Government owned corporations in the State of Himachal Pradesh, which were not suffering any losses, to promote their own pension schemes, and to extend pensionary benefits to their employees, on an individual basis, in the same/similar fashion as had been attempted by the State Government, through 'the 1999 Scheme'. In the instant view of the matter also, we are of the opinion, that the action of the State Government cannot be assailed, on the ground of discrimination.

68Copy pinpoint68. We shall now consider, whether the State Government which had introduced 'the 1999 Scheme', had the right to repeal the same. In answering the above issue, it needs to be consciously kept in mind, that the employees of corporate bodies, who were extended the benefits of G 'the 1999 Scheme', as already noticed above, were not employees of the State Government. 'The 1999 Scheme' was, therefore, just a welfare scheme introduced by the State Government, with the object of ameliorating the final)cial condition of employees, who had rendered valuable service in State owned corporations. In order to logically H

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A appreciate the query posed, we may illustratively take into consideration a situation, wherein an organization similar to the one in which the respondent-employees were engaged, suffered such financial losses, as would make the sustenance of the organization itself, unviable. Can the employees of such an organization, raise a claim in law, that the corporate body be not wound up, despite its financial unworkability? Just because, B the resultant effect would be, that they would lose their jobs. The answer to the above query, has to be in the negative. The sustenance of the organization itself, is of paramount importance. The claim of employees, who have been engaged by the organization, to run the activities of the organization, is of secondary importance. If an organization does not c remain financially viable, the same cannot be required to remain functional, only for the reason that its employees, are not adversely impacted. When and how a decision to wind up an organization is to be taken, is a policy decision. The decision to wind up a corporation may be based on several factors, including the nature of activities rendered by it. In a given organization, sometimes small losses may be sufficient to order its closure, as its activities may have no vital bearing on the· residents of the State. Where, an organization is raised to support activities on which a large number of people in the State are dependent, the same may have to be sustained, despite the fact that there are substantial losses. The situations are unlimited. Each situation has to be regulated administratively, in terms of the policy of the State Government. Whether a corporate body can no longer be sustained, because its activities are no longer workable, practicable, useable, or effective, either for the State itself, or for the welfare of the residents of the State, is for the State Government to decide. Similarly, when and how much, is to be · paid as wages (or allowances)to employees ofan organization, is also a F policy decision. So also, post-retiral benefits. All these issues fall in the realm of executive determination. No Court has any role therein. For the reasons recorded hereinabove, in our considered view, the conditions of service including wages, allowances and post-retiral_ benefits of employees of corporate bodies, will necessarily have to be determined G administratively, on the basis ofrelevant factors. Financial viability, is an important factor, in such consideration. In the facts and circumstances of the present case, it is not possible for us to accept, the contention advanced on behalf of the respondent-employees, that the State Government should provide financial support for sustaining 'the 1999 Scheme', at least for such of the employees, who were engaged on or H

p. 953 Copy page pinpoint

[JAGDISH SINGH KHEHAR, J.]

before the date of issuance of the repeal notification (-4.12.2004). We A would like to conclude the instant submission by recording, that the respondent-employees have not been able to make out a case, that the notification dated 2.12.2004, repealing 'the 1999 Scheme', was in any manner, capricious, arbitrary, illegal or uninformed, and as such, we would further conclude, that the respondent-employees cannot be considered 8 as being entitled, to any relief, through judicial process.

69Copy pinpoint69. Having recorded our aforesaid conclusion, it is not necessary for us to examine the submissions advanced at the hands of the respondent-employees, that the action of the State Government, in issuing the repeal notification dated 2.12.2004, would violate Article 21 of the Constitution oflndia. All the same, since the contention was raised, we c consider it just and appropriate, to examine and deal with the same. The contention advanced on behalf of the respondent-employees was, that the fundamental rights enshrined in the Constitution, do not extend to merely, providing for survival or animal existence. Article 21, it was pointed out, has been interpreted by this Court, as extending the right to life and liberty- as the right to live, with human dignity. It was submitted, that 'the 1999 Scheme', which allowed better post-retiral benefits to the respondent-employees, was an extension of such a benefit. 'The 1999 Scheme', it was submitted, would have resulted in ameliorating the conditions of the respondent-employees, after their retirement. The submission advanced on behalf ofthe respondent-employees is seemingly attractive, but is not acceptable as a proposition oflaw. A welfare scheme, may or may not aim at providing, the very basic rights to sustain human dignity. In situations where a scheme targets to alleviate basic human rights, the same may possibly constitute an irreversible position, as withdrawal of the same, would violate Article 21 of the Constitution. F Not so, otherwise. Herein, the Employees' Provident Funds Scheme, 1995, sponsored under the Provident Fund Act, is in place. The same was sought to be replaced, by 'the 1999 Scheme'. 'The 1999 Scheme' was an effort at the behest of the State Government, to provide still better retiral benefits. 'The 1999 Scheme' was not a measure, aimed at providing basic human rights. Therefore, 'the 1999 Scheme' can not be G treated as irreversible. The same would not violate Article 21 of the Constitution, on its being withdrawn. It is not in dispute, that after the repeal notification dated 2.12.2004, the erstwhile Employees' Provident Funds Scheme, 1995, has been restored to such of the employees, who H

p. 954 Copy page pinpoint

A were impacted by the said repeal notification. We are of the view, that the repealing of 'the 1999 Scheme', in the facts and circumstances of this case, cannot be deemed to have in any manner, violated the right of the respondent-employees, under Article 21 of the Constitution oflndia.

70Copy pinpoint70. It is also not possible to accept, the contention advanced on B behalf of the respondent-employees, based on Article 300A of the Constitution oflndia. We have deliberated hereinabove, the nature of the right created by 'the 1999 Scheme'. We have examined all the legal submissions advanced on behalf of the respondent-employees. We have arrived at the conclusion, that action of the State Government, was well within its authority. We have also held the same to be based on due c consideration. We have therefore, rejected the assertion made on behalf of the respondent-employees, that the impugned notification dated 2.12.2004, was unconstitutional, irrational, arbitrary or unreasonable. It is accordingly not possible for us to accept, the challenge raised by the respondent-employees, that they had been deprived of their right to pensionary benefits, without the authority in law. We are therefore of the view, that the claim raised on behalf of the respondent-employees, by placing reliance on Article 300A of the Constitution of India, is misconceived.

71Copy pinpoint71. Our determination, with reference to all the issues canvassed above, would also answer the question left open in paragraph 52 above. Namely, whether or not the contingent right, as was vested in the respondent-employees, was binding or irrevocable. We may now sum up the position determined by us, in the foregoing paragraphs. It is no doubt true that we have concluded, that 'the 1999 Scheme', created a contingent right in the respondent-employees. The respondent-employees comprise of all those employees of corporate bodies, who had opted for 'the 1999 Scheme', immediately on its having been introduced; all those, who were deemed to have opted for 'the 1999 Scheme' by not having exercised any option; and all those who were appointed after the introduction of'the 1999 Scheme'. The first issue that arises is, whether any express right or obligation existed, between the respondent-employees and the State Government. One can understand, such a claim arising out of an obligation between an employer and his employees, where there is a quid pro quo-a trade off based on a relationship (as between, an employer and employee). We have however concluded, that there . was no such relationship between the State Government, and the H

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[JAGDISH SINGH KHEHAR, J.]

respondent-employees. All the corporate bodies in which the respondent- A employees were/are engaged, are independent juristic entities. It is therefore apparent, that the claim raised by the respondent-employees, is not based on any right or obligation between the parties. We have also examined the submissions advanced by learned counsel premised on various constitutional provisions (-Articles 14, 16, 21 and 300A ofthe 8 Constitution oflndia), but have found, that no right can be stated to have been violated, thereunder. We have also examined the other legal submissions, advanced on behalf of the respondent-employees, and have found the same, as unjustified. The issue whether administrative review was permissible, after 'the 1999 Scheme' had become operational, has been answered in the affirmative. And finally, we have concluded, that c the exercise of such power, while issuing the repeal notification, was based on due consideration. We therefore hereby uphold, the legality and constitutionality of the notification dated 2.12.2004.

72Copy pinpoint72. For the reasons recorded hereinabove, the present appeals stand allowed. The impugned order dated 19.12.2013 passed by the D High Court is accordingly, set aside.

Note: The emphases supplied in all the quotations in the instant judgment, are ours. E

Nidhi Jain Appeals allowed.