Orissa High Court
Bhuban Mohan Dash vs State Of Odisha & Ors. ..... Opp. Parties on 29 November, 2023
Author: B.R.Sarangi
Bench: B.R.Sarangi
ORISSA HIGH COURT: CUTTACK
AFR W.P(C) NO. 18559 OF 2015
In the matter of an application under Articles 226 and
227 of the Constitution of India.
---------------
Bhuban Mohan Dash ..... Petitioner
-Versus-
State of Odisha & Ors. ..... Opp. Parties
For petitioner : M/s. S.K. Dash, A.K. Otta,
A. Dhalsamanta, B.P. Dhal &
S. Das, Advocates
For opp. parties : Mr. S. Nayak,
Addl. Standing Counsel
(O.Ps. No.1 & 2)
M/s.D.Mohapatra,M.Mohapatra,
G.R. Mohapatra & D. Dash,
Advocates (O.P. No.3 )
P R E S E N T:
THE HONOURABLE ACTING CHIEF JUSTICE DR. B.R.SARANGI
AND
THE HONOURABLE MR JUSTICE MURAHARI SRI RAMAN
Date of Hearing: 20.11.2023 :: Date of Judgment: 29.11.2023
DR. B.R. SARANGI, ACJ. The petitioner, who was the employee
of Cuttack Development Authority, has filed this writ
petition to declare the Odisha Development Authorities
(Retirement Benefit of the Employees) Rules, 2015
// 2 //
under Annexure-6 as ultra vires to the provisions
contained in the Odisha Development Authorities Act,
1982 as well as Articles 14 and 16 of the Constitution of
India; and further to direct the opposite party-
authorities to declare that since the petitioner is an
employee appointed prior to 01.01.2005, he is entitled
to get pension, as has been granted to similarly situated
State Government employees.
2. The factual matrix of the case, in brief, is
that the erstwhile employees under the Greater Cuttack
Improvement Trust were brought forward to Cuttack
Development Authority by virtue of Section 128-2(a) of
the Odisha Development Authorities Act, 1982 (for
short "Act, 1982"). The Greater Cuttack Improvement
Trust, in its resolution no.11/48, dated 08.02.1971 had
adopted Odisha Service Code, which in terms regulated
the retirement & pensionary benefits of its employees.
Cuttack Development Authority subsequently also
adopted other Rules of the Government of Odisha
relating to service conditions of its employees. Even the
employees of Greater Bhubaneswar Regional
// 3 //
Improvement Trust were treated as employees of
Bhubaneswar Development Authority and became
amenable to the Rules framed by the Government for its
employees and adopted by the Authority. The petitioner,
having joined prior to 01.01.2005, has been subjected
to the schemes under the Employees Provident Fund
and Miscellaneous Provisions Act, 1952
notwithstanding the fact that the employees, who joined
prior to 01.01.2005 under the State Government are
getting the benefit under the Odisha Civil Services
(Pension) Rules, 1992.
2.1. Under a mistake of fact or misconception, the
Cuttack Development Authority was covered under the
Employees' Provident Fund and Miscellaneous
Provisions Act, 1952 from the year 1982. But the
Authority, vide letter no.16498 dated 27.07.2001 and
letter no.25137 dated 27.11.2001, approached the
Regional Provident Fund Commissioner for exemption
under Section 17 of the E.P.F. and M.P. Act, 1952 with
an undertaking to constitute separate funds for pension
and provident fund for its employees. The Regional
// 4 //
Provident Fund Commissioner, Odisha, vide letter dated
30.01.2002, intimated opposite party no.3 for
production of certain documents for grant of exemption
under Section 17 of the E.P.F. & M.P. Act, 1952.
Opposite party no.3, by letter no. 15898 dated
19.06.2010, requested the Under Secretary to the
Government in Housing and Urban Development
Department, Odisha for approval of the draft Rules of
the year, 1991 in terms of Section 83 of the Odisha
Development Authorities Act, 1982. The E.P.F. and M.P.
Act, 1952 is not applicable to the employees of the
Cuttack Development Authority in view of the Section
16(c) of E.P.F. and M.P. Act, 1952.
2.2. Consequentially, a meeting was convened on
23.08.2010 under the Chairmanship of the Chief
Secretary to the Government of Odisha, wherein
Principal Secretaries to Government, Housing & Urban
Development Department, Finance Department as well
as Law Department were present. It was decided in the
said meeting to initiate steps for formulation of the
Rules regarding pensionary benefit of the employees of
// 5 //
the Development Authorities constituted under the
Odisha Development Authorities Act, 1982, within a
period of six months, keeping in view the new pension
scheme of the State Government. Accordingly, an
affidavit was filed in W.P.(C) No. 552 of 2010 through
the Project Director-cum-Joint Secretary to Government
in Housing and Urban Development Department.
Further, in its 7th meeting held on 31.10.2013 headed
by the Financial Advisor-cum-Additional Secretary to
the Government, Housing and Urban Development
Department, it was decided that the employees of
Development Authorities shall get their pensionary
benefit at par with the State Government employees,
which is extracted below:
"The Committee recommended that :
(1) The employees of the Development
Authorities shall get their pensionary benefits at
par with the State Govt. employees.
(2) Pension burden shall be borne by the
respective Development Authorities.
(3) Secretary, BDA, Bhubaneswar and Finance
Member, BDA Suggested that at the time of
financial crisis while implementing pension
rules, Government shall come to the rescue of
Development Authorities. This was discussed.
But the proposal of BDA was not accepted.
// 6 //
(4) Pension fund shall be managed by the
respective Development Authorities.
(5) The Authority should resolve to pay the
pension to their staff at par with Govt. from
their own source. There will not be any financial
burden On the State Government.
(6) A common draft regulation for payment of
pensionary benefits formulated by Town
planning Authority Section and the same shall
be communicated to all Development Authorities
for placing the same in their respective
authorities before vetting by Finance
Department and Law XX Department.
xxx xxx xxx"
2.3. The Government of Odisha in Housing and
Urban Development Department, without approving the
draft Rules framed under Section 83 of the Odisha
Development Authorities Act, 1982, issued another
draft Rules in exercise of its purported authority for
laying down general Rules for carrying out the purposes
of the Act under Section 123 of the Odisha Development
Authorities Act, 1982, vide notification dated
14.07.2015, inviting objections or suggestions from any
person or authority within fifteen days from the date of
publication of the same in the Orissa Gazette.
2.4. In response to same, more than 100
employees including Commissioner-cum-Secretary
Government of Odisha, Housing and Urban
// 7 //
Development Department, sought withdrawal of the
said draft Rules on various grounds and demanded
immediate steps for approval of the Development
Authority Employees' Pension Rules, which has
remained pending with the Government since 1991 for
approval in terms of Section 83(2) of the Odisha
Development Authorities Act, 1982. Despite objection
filed by the employees of the Cuttack Development
Authority within the stipulated period, the same was
not considered by the appropriate Government. Rather,
vide notification dated 11.08.2015, in exercise of the
purported authority under Section 123 read with Sub-
section (1) of Section 83 of the Odisha Development
Authorities Act. 1982, the Government of Odisha,
Housing and Urban Development Department made the
draft Rules absolute, by stating therein that it is
promulgated with consent of Development Authorities,
whereas no such consent was at all invited from the
Development Authorities, as would be evident from the
information received under the Right to Information Act,
2005. Hence, this writ petition.
// 8 //
3. Mr. S.K. Dash, learned counsel appearing for
the petitioner vehemently contended that this Court in
successive writ petitions observed regarding the
statutory duty of the Development Authority to provide
pension and provident fund to its employees. The
Government of Odisha has utterly failed to make timely
approval of the Draft Pension Rules, 1991. It is
contended that in Bidyadhar Mishra V. State of
Orissa, 2007 (Supp.I) OLR 543 approving the earlier
Judgment dated 29.10.1990 rendered in 0.J C. No. 384
of 1990 in the case of Krupasindhu Barik v. State of
Orissa and Ors., this Court held that it has
jurisdiction to issue necessary direction for
implementation of the provisions, as the right to
pension and the benefit of provident fund is statutory in
nature. It is further contended that the Odisha
Development Authorities (Retirement Benefit of the
Employees) Rules, 2015 have been made by opposite
party No.1 without any authority, inasmuch as Section
83 of the Orissa Development Authorities Act, 1982
clearly vests such power with the Development
// 9 //
Authority to constitute the Fund. The anomalous
situations thus created by the said Rules include total
discrimination in the matter of those employed prior to
01.01.2005 under the State Government and those
employed under the Development Authority. It is
further contended that the Odisha Development
Authorities (Retirement Benefit of the Employees) Rules,
2015 presupposes that there are two different classes of
employees under the Development Authority, those
joining prior to 01.01.2015 to be brought under the
Rules applicable for factory establishments and the rest
are at par with Government employees. While Odisha
Civil Services (Pension) Rules, 1992 were in vogue, so
far as those employed under the State Government
prior to 01.01.2005 were brought under the Rules in
terms of Sub-rule (4) of Rule 3 inserted therein by way
of amendment, and those who were employed under the
Development Authority prior to 01.01.2005 were sought
to be brought under the provisions of the Schemes
constituted under the E.P.F. & M.P. Act, 1952.
Consequentially, the petitioner would be getting a paltry
// 10 //
amount in terms of the E.P.F. and M.P. Act, 1952 in
lieu of pension.
3.1. It is further contended that prior to these
Rules, the employees under the Development Authority
were getting their pension under the Odisha Civil
Services Pensions Rules, 1992 and it was decided that
employees under the Development Authority are
entitled to get their pension at par with the employees
under the State Government. It is further contended
that Rule-5 of the Odisha Development Authorities
Rules, 1983 provides that posts under the Authority
shall be classified into four categories and shall carry
the same scale of pay as applicable to similar categories
of posts in the State Government from time to time.
Pension is one of the very important terms and
conditions of employment which is earned by an
employee by rendering requisite period of service and its
receipt is one of the incidents of employment. Payment
of pension is part of the consideration for the services
rendered by the employee. Thereby, the benefit by way
of pension and gratuity are in the nature of deferred
// 11 //
wages which are paid at the time of retirement or
thereafter. Thus, opposite party no.1 has acted contrary
to the objectives of the Act, inasmuch as it is not
available to fathom that on the one hand each of the
categories of employees under the Authority will receive
the corresponding time scale of pay as that of their
counterparts in the State Government from time to
time, but will thoroughly be discriminated in the matter
of disbursement of the dues for their past services. It is
further contended that the Development Authority
under the pervasive control of the State are not
profiteering institutions and it will be absurd to suggest
that financial constraints of such bodies will stand as a
determinative factor for providing the salary or pension
to the employees. Disparities in that regard will not be
conducive, when ours is a welfare State and the
employees work according to their duties. State cannot
absolve its responsibilities altogether by shirking its
responsibility that it is the Development Authority, who
has to raise fund for the salary or pension to its
employees and all such steps would certainly be
// 12 //
dubbed as arbitrary, illegal and unconstitutional.
Thereby, the petitioner has filed this writ petition
seeking to declare the Odisha Development Authorities
(Retirement Benefit of the Employees) Rules, 2015 as
ultra vires to the provisions contained in the Odisha
Development Authorities Act, 1982 as well as Articles
14 & 16 of the Constitution of India, more specifically
confines to Clause-4(1) of the notification dated
11.08.2015.
3.2. To substantiate his contentions, learned
counsel for the petitioner has relied upon the decisions
in the cases of D.S. Nakara v. Union of India, AIR
1983 SC 130; State of Sikkim v. Dorjee Tsfter-ing
Bhatia and others, AIR 1991 SC 1933; Union of
India (UOI) and Anr. V. P.N. Natarajan and Ors.,
(2010) 12 SCC 405; Salabuddin Mohamed Yunus v.
State of Andhra Pradesh, AIR 1984 SC 1905; Pepsu
Road Transport Corporation, Patiala v. Mangal
Singh, AIR 2011 SC 1974; State of H.P. and Ors v.
Rajesh Chandra Sood and Ors., AIR 2016 SC 5436;
Air India Employees Self Contributory
// 13 //
Superannuation Pension Scheme v. Kuriakose V.
Cherian and others, AIR 2006 SC 3716; Bidyadhar
Bhuyan v. State of Orissa and others, 1995 (II) OLR
655; Shri Anand Dash and Seven others v. State of
Orissa and others, 2014 (Supp.-I) OLR 754; Cuttack
Development Authority v. Regional Provident Fund
Commissioner, 2009 (Supp.-II) OLR 447;
Krupasindhu Barik v. State of Orissa and others,
vide O.J.C. No.768 of 1990 disposed of on 29.10.1990;
Bidyadhar Mishra v. State of Orissa, 2007 (Suppl-I)
OLR 543; Employees' Provident Fund Organization
v. M/s. Raipur Development Authority (Writ Petition
(L) No. 2326 of 2010 disposed of on 05.12.2014) and
Krishena Kumar v. Union of India, AIR 1990 SC
1782.
4. Mr. S. Nayak, learned Addl. Standing
Counsel appearing for the State-opposite parties
contended that the matter is between the petitioner and
the opposite party-Cuttack Development Authority and,
as such, the relief sought against opposite party no.1 to
the extent that opposite party-State is concerned, it is
// 14 //
contended that the provisions of Section 123 of the
Odisha Development Authorities Act, 1982 empowers
the State Government to make Rules after consultation
with the Development Authority to carry out all or any
of the purposes of the said Act. Some of the employees
of the Development Authority had filed writ petitions
before this Court for interference of State Govt.
regarding formulation of pension rules for the
employees of the Development Authority, as there was
no such Rules. As such, this Court has passed orders
with a direction to the State Govt. to make Rules to the
said effect. In obedience to the orders of this Court,
Finance Department and Law Department were
consulted in the matter and it was decided to make
uniform retirement benefit Rules for the employees of
all the Development Authorities. Accordingly, in
exercise of the powers conferred by Section 123 read
with Sub-section (1) of Section 83 of the Odisha
Development Authorities Act, 1982 (Act 14 of 1982) in
due consultation with the Development Authorities, the
Odisha Development Authorities (Retirement Benefit of
// 15 //
the Employees) Rules, 2015 have been framed. It is
further contended that while formulating the Odisha
Development Authorities (Retirement Benefit of the
Employees) Rules, 2015, the Finance Department, Law
Department and the Development Authorities were
consulted. The objections & suggestions received in
respect of the Draft Rules were duly considered. That
apart, it was also considered that the employees of the
Authorities can be classified into (a) Employees, who
have been retired; (b) Employees employed prior to
01.01.2005 and continuing; and (c) Employees entered
into services in the Development Authorities on or after
01.01.2005. Employees, who have already been retired
from service of the Authorities are in receipt of
Provident Fund (PF) and pension, as per Employees
Pension Scheme, 1995, and they have availed the
benefits under Employees Provident Fund (EPF)
Scheme. Employees, who have been employed prior to
01.01.2005 and continuing shall get the benefits as
provided in EPF scheme including P.F and Pension. The
Government of Odisha have already introduced New
// 16 //
Pension Scheme for the employees w.e.f. 01.01.2005,
which has been extended to the employees of all
autonomous and local bodies. In the light of the above,
the Odisha Development Authorities Conditions of
Service (Retirement Benefit) Rules, 2015 were
formulated under Section 123 of the Odisha
Development Authorities Act, 1982. Thereby, no
illegality or irregularity has been committed in framing
the Rules, 2015 so as to cause interference of this
Court at this stage.
5. Mr. D. Mohapatara, learned counsel
appearing for the opposite party-Cuttack Development
Authority contended that admittedly Cuttack
Development Authority is a creature of the Odisha
Development Authorities Act, 1982. Section 83 of the
Odisha Development Authorities Act, 1982 specified the
provisions to bring the P.F. and Pension Scheme by
Government. The Government in exercise of powers
conferred under the Act framed the Rules, 2015. It is
further contended that since date of coverage of C.D.A.
under the EPF & MP Act the contributions are deducted
// 17 //
and paid to the EPF Authority and, as such, there
would be no impediment/prejudice caused to the
employees in payment of EPF pension consequent upon
implementation of the Rules. The Authority, being a
creature under the statute, is bound by the
provisions/rules framed by the Government and
accordingly implemented the rules. It is further
contended that though CDA prepared a draft Pension
Rules, the same were not approved by the Government
and pending decision of the Government the retired
employees were extended provisional pension. After
implementation of the Rules, 2015, the provisional
benefits were discontinued, as they are covered under
the existing Rules. Such discontinuance of the benefit
was the subject-matter of challenge in W.P.(C)
No.18558 of 2015 and the same was dismissed by a
reasoned and well discussed judgment, with reference
to various citations, which the petitioner being the
appellant challenged in Writ Appeal No. 509 of 2016. It
is further contended that so far as reference made to
the decisions in Krupasindhu Barik and Bidyadhar
// 18 //
Mishra (supra) are concerned, in Bidyadhar Mishra
(supra) the case of Krupasindhu Barik (supra) has
been referred to. But on perusal of the judgment in
Krupasindhu Barik (supra), it would reveal that the
finding is to the extent of entitlement of pension, but
has not decided the manner, mode and scope of benefit
of pension at par with the Government and the same is
not the subject-matter of this writ petition so as to take
into consideration to pass order in the present case.
Therefore, the claim made by the petitioner cannot be
sustained in the eye of law and accordingly, the writ
petition is liable to be dismissed.
6. This Court heard Mr. S.K. Dash, learned
counsel appearing for the petitioner; Mr. S. Nayak,
learned Addl. Standing Counsel appearing for the State-
opposite parties and Mr. D. Mohapatra, learned counsel
appearing for opposite party-Cuttack Development
Authority in hybrid mode. The pleadings have been
exchanged between the parties and with the consent of
learned counsel for the parties, the writ petition is being
disposed of finally at the stage of admission.
// 19 //
7. For a just and proper adjudication of the
case, Sections 83 and 123 of the Odisha Development
Authorities Act, 1982 are quoted hereunder:-
"83. Pension and provident fund. -
(1) The Authority shall constitute for the
benefits of its whole-time paid members and of
its officers and other employees in such manner
and subject to such conditions as may be
prescribed by rules such pensions and
provident funds as it may deem fit.
(2) Where any such pension or provident
fund has been constituted the State
Government may declare that the provisions of
the Provident Fund Act, 1925 (Act 19 of 1925)
shall apply to such fund as if it were a
Government provident fund.
xxx xxx xxx
123. Power of State Government to make
rules. -
(1) The State Government, after consultation
with the Authority, may make rules to carry out
all or any of the purposes of this Act and
prescribe forms for any proceedings for which it
considers that a form should be provided :
Provided that consultation with the
Authority shall not be necessary on the first
occasion of the making of the rules under this
section, but the State Government shall take
into consideration any suggestion which the
Authority may make in relation to the
amendment of such rules after they are made.
(2) In particular and without prejudice to the
generality of the foregoing power, such rules
may provide for all or any of the following
matters, namely :
xxx xxx xxx
(xxxiii) the manner in and conditions subject to
which the Authority shall constitute provident
fund under Sub-section (1) of Section 83;
// 20 //
xxx xxx xxx
(xxxviii) any other matter which has to be, or
may be prescribed by rules."
8. Similarly, the Housing and Urban
Development Department issued the notification dated
11.08.2015, which is extracted hereunder:-
"S.R.O No. 377/2015- Whereas, the draft
of Odisha Development Authorities (Retirement
Benefit of the Employees) Rules, 2015 was
published as required by Section 125 of the
Odisha Development Authorities Act, 1982
(Odisha Act, 14 of 1982) in an Extraordinary
issue No.1079 dated the 14th July, 2015 of the
Odisha Gazette issued under the Notification of
the Government of Odisha in the Housing &
Urban Development Department
No.17740/HUD., dated the 14th July.2015
bearing S.R.O. No. 321/2015 inviting objections
and suggestions from all persons likely to be
affected thereby till the expiry of the period of
15 (fifteen) days from the date of publication of
the said notification in the Odisha Gazette;
And, whereas, the objections and
suggestions received in respect of the said draft
during the period specified above have been
duly considered by the State Government;
Now, therefore, in exercise of the powers
conferred by Section 123 read with sub-section
(1) of Section 83 of the Odisha Development
Authorities Act, 1982 (Odisha Act 14, of 1982)
in due consultation with the Development
Authorities, the State Government do hereby
make the following rules namely:
1. Short Title and Commencement.-
(1) These rules may be called the Odisha
Development Authorities (Retirement Benefit of
the Employees) Rules, 2015.
(2) They shall come into force from the date of
their publication in the Odisha Gazette.
// 21 //
2. Application. They shall apply to the
employees working under any Authority
constituted under the Act.
3. Definition, -- (1) In these rules, unless the
context, otherwise requires,
(a) 'Act' means the Odisha Development
Authorities Act, 1982 (Odisha Act, 14 of 1982):
(b) 'Employees' means the employee
appointed under the provisions of Act and the
Rules made thereunder;
(c) 'Government' means the Government of
Odisha.
(2) All other words and expressions used
but not defined in these Rules shall have the
same meaning as respectively assigned to them
in the Act and Odisha Development Authorities
Rules, 1983.
4. Provident Fund and Pension Schemes. -
(1) Employees who have been employed in an
Authority prior to 1st January, 2005 shall be
covered under the provisions of the Employees
Provident Fund Scheme, 1952 and Employee
Pension Scheme, 1995 made under the
provisions of the Employees Provident Fund
and Miscellaneous Provisions Act, 1952.
(2) Employees who have joined in an
Authority on or after 1st January, 2005 shall be
covered under the New Restructured Defined
Contribution Pension Scheme administered by
Pension Fund Regulatory and Development
Authority.
[No.20268-13591500082014/HUD]
By Orders of the Governor
G. MATHIVATHANAN
Commissioner-cum-Secretary to Government"
9. This Court in successive writ petitions
observed regarding the statutory duty of the
Development Authorities is to provide pension and
provident fund to its employees. The Government of
// 22 //
Odisha has utterly failed to make timely approval of the
Draft Pension Rules, 1991.
10. In Bidyadhar Mishra v. State of Orissa,
2007 (Suppl-I) OLR 543, approving the earlier judgment
dated 29.10.1990 rendered in O.J C. No. 384 of 1990 in
the case of Krupasindhu Barik v. State of Orissa and
Ors, this Court held as follows:-
"8. Learned Counsel for the Petitioner
drew my attention to the Judgment dated 29.
10. 1990 rendered in 0.J C. No. 384 of 1990
Krupasindhu Barik v., State of Orissa and Ors.
in which this Court dealt with a similar
question and held as follow:
"Payment of pension and making
provision for provident fund are statutory
duties of the Development Authority. The
provisions are substantive and absolute. The
framing of rules are merely procedural in
nature so as to provide the manner in which
and conditions under which the payment of
pension is to be made and the provident fund is
to be provided for. The right to pension and to
the benefit of provident fund being statutory,
the Court would undoubtedly have the
jurisdiction to issue necessary direction for
implementation of the provisions."
11. Therefore, the petitioner seeks to hold that the
Odisha Development Authorities (Retirement Benefit of
the Employees) Rules, 2015 under Annexure-6 to the
writ petition is ultra vires to the provisions contained in
// 23 //
the Odisha Development Authorities Act, 1982 as well as
Articles 14 and 16 of the Constitution of India and more
particularly to hold that Rule 4 (1) of the Odisha
Development Authorities (Retirement Benefit of the
Employees) Rules, 2015 is ultra vires to the provisions of
the Employees' Provident Funds & Miscellaneous
Provisions Act, 1952, which is not applicable to the
employees of the Development Authority, as has already
been held by this Court. It has been specifically urged
that the applicability of Provident Fund and Pension
Scheme under Rule 4 (1) of the Rules, 2015 specifically
mentions that the employees who have been employed in
an Authority prior to 1st January, 2005 shall be covered
under the provisions of the Employees Provident Fund
Scheme, 1952 and Employee Pension Scheme, 1995
made under the provisions of the Employees Provident
Fund and Miscellaneous Provisions Act, 1952.
Therefore, Rule 4 (1) of the Rules, 2015, is without any
authority, inasmuch as, Section 83 of the Odisha
Development Authorities Act, 1982, which clearly vests
such power with the Development Authority to
// 24 //
constitute the Fund, the anomalous situations thus
created by the said Rules include total discrimination in
the matter of those employed prior to 01.01.2005 under
the State Government and those employed under the
Development Authority. The Odisha Development
Authorities (Retirement Benefit of the Employees) Rules,
2015 presupposes that there are two different classes of
employees under the Development Authority, those
joining prior to 01.01.2015, to be brought under the
Rules applicable for factory establishments and the rests
are at par with Government employees. While the
Odisha Civil Services Pension Rules, 1992 were in vogue
so far as those employed under the State Government
prior to 01.01.2005 in terms of Sub-rule (4) of Rule 3
inserted therein by way of amendment, those who were
employed under the Development Authorities prior to
01.01.2005 are sought to be brought under the
provisions of the Schemes constituted under the EPF &
MP Act, 1952. Therefore, it is vehemently urged that
Rule 4 (1) is ultra vires to the provisions contained in the
// 25 //
Odisha Development Authorities Act, 1982 as well as
Article 14 and 16 of the Constitution of India.
12. With regard to declaration of Rule 4 (1) of
2015 Rules as ultra vires, it is to be understood, what
constitutes a provision to be declared as ultra vires.
13. In P.R. Aiyar, Advanced Law Lexicon, Vol.4
(2005) 4796 and Encyclopedic Law Lexicon, Vol. 4
(2009) 4838-4839 the expression "ultra vires" has been
defined to mean beyond power or authority or lack of
power. An act may be said to be "ultra vires" when it has
been done by a person or a body of persons which is
beyond his, its or their power, authority or jurisdiction.
14. Wade & Forsyth, Administrative Law
(2009) states "ultra vires" relates to capacity, authority
or power of a person to do an act. It is not necessary
that an act to be "ultra vires" must also be illegal. The
act may or may not be illegal. The essence of the
doctrine of "ultra vires" is that an act has been done in
excess of power possessed by a person.
// 26 //
15. D.D. Basu, Administrative Law (1993) 94
states that whenever any person or body of persons,
exercising statutory authority, acts beyond the powers
conferred upon him or them by statute, such act
becomes ultra vires and, accordingly, void. In other
words, substantive ultra vires means the delegated
legislation goes beyond the scope of the authority
conferred on it by the parent statute. Therefore, it is a
fundamental principle of law that a public authority
cannot act outside the powers, i.e. ultra vires, and it has
been rightly described as "the central principle" and
"foundation of large part of administrative law". Thereby,
an act which is for any reason in excess of power is ultra
vires.
16. Schwartz Administrative Law (1984) states
as follows:
"If an agency acts within the statutory limits
(intra vires), the action is valid; if it acts outside
(ultra vires), it is invalid. No statute is needed to
establish this; it is inherent in the constitutional
position of agencies and courts".
Power delegated by statute is limited by its terms and
subordinate to its objects. The delegate must act in good
// 27 //
faith, reasonably, intra vires the power granted and on
relevant consideration of material facts. All his decisions
must be in harmony with the Constitution and other
laws of the land.
17. In Daymond v. S.W. Water Authority,
(1976) 1 All E.R. 1039 (H.L.), it is held that in order to
determine whether the subordinate legislation exceeds
the power granted by the Legislature, the Court has to
interpret the enabling statue.
The above view has also been taken in Hotel
Industry Board v. Automobile Ltd. (1969) 2 All E.R.
582 H.L. and McEldowney v. Forde, (1969) 2 All E.R.
1039.
18. In Durga Prasad v. Suptd., AIR 1966 S.C.
1209, the apex Court held that where the authority to
make a Rule is conferred for exercising a particular
power, the Court would not construe the Rule in such
manner as to include a separate and independent
power.
// 28 //
19. In U.S. v. Eaton, (1892) 144 U.S. 677, it is
held that subordinate law-making body cannot go
beyond the policy laid down in the statue, so as to alter
or amend the law.
The same view has also been taken in U.S. v.
Grimand, (1911) 220 U.S. 506.
20. In U.S. v. Two Hundred Barrels of
Whiskey, (1877) 95 U.S. 571, it is held that the purpose
of subordinate legislation is to carry into effect the
existing law and not to change it.
The same view has also been taken by the
apex Court in Venkateswara v. Govt. of A.A., AIR 1966
SC 629.
21. There is always a presumption in favour of
constitutionality, and a law will not be declared
unconstitutional unless the case is so clear as to be free
from doubt; "to doubt the constitutionality of a law is to
resolve it in favour of its validity". Where validity of a
statute is questioned and there are two interpretations,
one of which will make the law valid and the other void,
// 29 //
the former must be preferred and the validity of the law
upheld.
22. In Karnataka Bank Ltd. v. State of A.P.,
(2008) 2 SCC 254, the apex Court held in pronouncing
on the constitutional validity of a statute, the Court is
not concerned with the wisdom or un-wisdom, the
justice or injustice of the law. If that which is passed
into law is within the scope of the power conferred on a
Legislature and violates no restrictions on that power,
the law must be upheld whatever a Court may think of
it. The parent act may be unconstitutional on several
grounds, i.e. (i) excessive delegation; or (ii) breach of a
Fundamental Right; or (iii) on any other ground such as,
distribution of powers between the Centre and the State.
23. In Hinsa Virodhak Sangh v. Mirzapur Moti
Kuresh Jamat, (2008) 5 SCC 33, the apex Court held
that there is presumption in favour of constitutionality
of statutes as well as delegated legislation and it is only
when there is clear violation of constitutional provision
(or of a parent statute, in the case of delegated
// 30 //
legislation) beyond reasonable doubt that the Court
should declare it to be unconstitutional.
24. In Indian Express Newspapers v. Union of
India, (1985) 1 SCC641 : AIR 1986 SC 515, the apex
Court held as follows:
"A piece of subordinate legislation does
not carry the same degree of immunity which is
enjoyed by a statute passed by a competent
legislature. Subordinate legislation may be
questioned on any of the grounds on which
plenary legislation is questioned. In addition it
may also be questioned on the ground that it
does not conform to the statute under which it
is made. It may further be questioned on the
ground that it is contrary to some other statute.
That is because subordinate legislation must
yield to plenary legislation. It may also be
questioned on the ground that it is
unreasonable, unreasonable not in the sense of
not being reasonable, but in the sense that it is
manifestly arbitrary".
25. In J.K. Industries Limited v. Union of
India, (2007) 13 SCC 673, relying upon the aforesaid
judgment in the case of Indian Express Newspaper
(supra), the apex Court held that, any inquiry into its
vires must be confined to the grounds on which plenary
legislation may be questioned, to the grounds that it is
contrary to the statute under which it is made, to the
grounds that it is contrary to other statutory provisions
// 31 //
or on the ground that it is so patently arbitrary that it
cannot be said to be inconformity with the statute. It
can also be challenged on the ground that it violates
Article 14 of the Constitution. The apex Court also
further held that a subordinate legislation may be struck
down as arbitrary or contrary to the statute if it fails to
take into account the vital facts which expressly or by
necessary implication are required to be taken into
account by the statute or the Constitution. This can be
done on the ground that the subordinate legislation does
not conform to the statutory or constitutional
requirements or that it offends Article 14 or Article 19 of
the Constitution.
It is also further clarified in the said judgment
that where the validity of subordinate legislation is
challenged, the question to be asked is whether the
power given to the rule making authority is exercised for
the purpose for which it is given. Before reaching the
conclusion that the Rule is intra vires, the court has to
examine the nature, object and the scheme of the
legislation as a whole and in that context, the Court has
// 32 //
to consider, what is the area over which powers are
given by the section under which the Rule Making
Authority is to act. However, the Court has to start with
the presumption that the impugned Rule is intra vires.
This approach means that, the Rule has to be read down
only to save it from being declared ultra vires if the court
finds in a given case that the above presumption stands
rebutted. The basic test is to determine and consider the
source of power, which is relatable to the rule. Similarly,
rule must be in accordance with the parent statute as it
cannot travel beyond.
26. In State of Uttar Pradesh v. Renusagar,
AIR 1988 SC 1737: (1988) 4 SCC 59, the apex Court
held that if the exercise of power is in the nature of
subordinate legislation, the exercise must conform to the
provisions of the statute. All the conditions of the statute
must be fulfilled.
27. The doctrine of "ultra vires" has two aspects,
(1) substantive ultra vires and (2) procedural ultra vires.
In view of law laid down by the apex Court in Indian
Express Newspapers (supra), it becomes clear that a
// 33 //
delegated legislation may be challenged on the ground of
substantive ultra vires in the following circumstances:
"1.Where parent Act is unconstitutional;
2.Where parent Act delegates essential
legislative functions;
3. Where delegated legislation is inconsistent
with parent Act;
4. Where delegated legislation is inconsistent
with general law;
5. Where delegated legislation is
unconstitutional is unconstitutional;
6. Where delegated legislation is arbitrary;
7. Where delegated legislation is unreasonable;
8. Where delegated legislation is mala fide;
9. Where delegate further delegates
(sub delegation);
10. Where delegated legislation excludes
judicial review; and
11. Where delegated legislation operates
retrospectively".
28. In Indian Council of Legal Aid and Advice
v. Bar Council of India, AIR 1995 SC 691: (1995) 1
SCC 732, the apex Court held that to apply the doctrine
of substantive ultra vires, the Court first interprets the
relevant statutory provisions to determine the scope of
delegation of power and then interprets the impugned
delegated legislation and finally adjudge whether the
same is within, or without, the statutory power
conferred.
29. In Lohia Machines Ltd. v. Union of India,
AIR 1985 SC 421: (1985) 2 SCC 197, the apex Court
// 34 //
held that declaring delegated legislation ultra vires also
becomes difficult because of judicial attitude. The
judicial policy generally is to interpret the delegating
provision rather broadly.
30. In Om Prakash v. State of U.P., (2004) 3
SCC 402 : AIR 2004 SC 1896, basing reliance on H.C.
Suman v. Rehabilitation Ministry Employees'
Cooperative Housing Building Society Ltd. (1991) 4
SCC 485 : AIR 1991 SC 2160, the apex Court held that
Courts should be slow to interfere with byelaws made by
public representative bodies unless they were manifestly
partial and unequal in operation or unjust, mala fide or
effect unjustified interference with liberty.
31. In Kunj Behari Lal Butail v. State of
Himachal Pradesh, AIR 2000 SC 1069 : (2000) 3 SCC
40, the apex Court held that often the rule-making
power is conferred without specifying the purposes as
such, but generally "for carrying out the purposes of the
Act." This is a general delegation without laying down
any guidelines. This power cannot be so exercised in
such a way as to bring into existence substantive rights
// 35 //
or obligations or disabilities not contemplated by the
parent Act itself.
32. In Laghu Udhyog Bharati v. Union of India
(1999) 6 SCC 418, it was held by the apex Court that
when the Act confers rule making power for carrying out
purposes of the Act, rules cannot be so framed as not to
carry out the purpose of the Act or be in conflict with the
same. Legal effect of the formula is to confer a plenary
power on the delegate to make rules subject to the
overall requirement that the rules made ought to have a
nexus with the purpose of the Act.
33. In Kerala Samsthana Chethu Thozhilali
Union v. State of Kerala, (2006) 4 SCC 327 : AIR 2006
SC 3480, the apex Court considered the Court's power
and held when such a power is given, the Court seeks to
ascertain the purpose of the enactment and then to
ascertain whether the rules framed further that purpose.
A rule may be held as ultra vires if it has no nexus with
the purpose of the parent Act or if it scuttles the same.
// 36 //
34. The efficacy of judicial control of delegated
legislation is very much dependant on how broad is the
statutory formula conferring power of delegated
legislation on the delegate. Usually, the application of
the ultra vires rule becomes very difficult in practice
because of three main reasons;
(1) Powers are usually delegated in broad
language;
(2) Generally speaking, the courts interpret the
enabling provision rather broadly;
(3) The courts adopt a deferential, rather than a
critical, attitude towards delegated legislation
and, thus, lean towards upholding the same.
35. In Goodricke Group Ltd. V. State of West
Bengal, 1995 Supp (1) SCC 707, the apex Court held
that "entries in the Seventh Schedule to the Constitution
are legislative heads or fields of legislation. The
legislature derives its power from Article 246 of the
Constitution and not from the respective entries. The
language of the respective entries, therefore, should be
given widest meaning. It is well-recognized that where
there are three lists containing a large number of
entries, there is bound to be some overlapping among
// 37 //
them. In such a situation, the rule of "pith and
substance" has to be applied to determine the
competence of the legislature. Each general word should
be held to extend to all ancillary or subsidiary matters
which can fairly and reasonably be comprehended in it".
36. In Jilubhai Nanbhai v. State of Gujarat,
1995 Supp (1) SCC 596: AIR 1995 SC 142, the apex
Court held as follows:
"It must be remembered that we are
interpreting the Constitution and when the
Court is called upon to interpret the
Constitution, it must not be construed in any
narrow or pedantic sense and adopt such
construction which must be beneficial to the
amplitude of legislative powers. The broad and
liberal spirit should inspire those whose duty is
to interpret the Constitution to find whether the
impugned Act is relatable to any entry in the
relevant list".
(emphasis supplied)
37. In State of A.P. v McDowell, AIR 1996 SC
1627 : (1996) 3 SCC 709, the apex Court held that the
law made by the Central or State Legislation can be
struck down only on the following grounds;
"(a) the legislative competence of the Legislature
in question; or
(b) violation of any fundamental right; or
// 38 //
(c) violation of any other constitutional provision.
Similar view has also been taken by the apex
Court in the case of State of Kerala v, Peoples
Union for Civil Liberties, (2009) 8 SCC 46."
38. On examination of the aforesaid provisions
with the provisions of Rule 4(1) of the Rules, 2015 and
the provisions contained under the Odisha Development
Authority Rules, 1983, it is made clear that Rule 5
provides that posts under the Authority shall be
classified into four categories and shall carry the same
scale of pay, as applicable to similar categories of posts
in the State Government from time to time. Therefore,
pension is one of the very important terms and
conditions of employment which is earned by an
employee by rendering requisite period of service and its
receipt is one of the incidents of employment. The
payment of pension is part of the consideration for the
services rendered by the employee. In a sense, the
benefit by way of pension and gratuity are in the nature
of deferred wages which are paid at the time of
retirement or thereafter. The meaning of pension has
been considered by the apex Court time again laying
emphasis that an employee is entitled to get under law.
// 39 //
39. In Salabuddin Mohamed Yunus v. State of
Andhra Pradesh, AIR 1984 SC 1905, the apex Court
held that the payment of pension does not depend upon
the discretion of the State but is governed by the rules
made in that behalf and a Government servant coming
within such rule is entitled to claim pension.
40. The concept of 'pension' is now well known
and has been clarified by the apex Court time and again.
It is not a charity or bounty nor is it gratuitous payment
solely dependent on the whim or sweet will of the
employer. It is earned for rendering long service and is
often described as deferred portion of compensation for
past service. It is in fact in the nature of a social security
plan to provide for the December of life of a
superannuated employee. Such social security plans are
consistent with the socio-economic requirements of the
Constitution when the employer is a State within the
meaning of Article 12 of the Constitution.
41. Rule-33 (3) of the Odisha Service Code
prescribes "Pension", which reads as under:-
// 40 //
"(3) Pension & Gratuities:- In case of employees
who have retired on or after 1.7.86, the
dearness pay shall count as emoluments for
pension and gratuity in terms of Rule 73 of the
Orissa Pension Rules 1977. The doses of
temporary increase totaling to 8% of the pension
subject to minimum of Rs.25/- and maximum of
Rs.80/- will not however be admissible in these
cases. These pensioners shall be entitled to
further dose of temporary increase as may be
declared effective after 1.1.86 from time to time.
If however, the pension admissible without
taking into account the dearness pay but the
adhoc increase in pension is more favourable
that the benefit under this order the individual
can be granted the former. The dearness pay
will also count as pay for the purpose of Family
Pension Scheme, as amended from time to
time."
42. Rule-(2)(p) of Odisha Civil Services (Pension)
Rules, 1992 reads as under:-
"(p) "Pension" includes gratuity except
where the term pension is used in contradiction
to gratuity."
43. Taking into account the broad meaning of
"pension", as mentioned above, pension is nothing but a
periodical payment of money for past service.
44. In D.S. Nakara v. Union of India, (1983) 1
SCC 322, the apex Court held as follows:-
"Pension" is neither a bounty nor a matter of
grace depending upon the sweet will of the
employer, nor an ex gratia payment but it is a
payment for the past service rendered; and it is
social welfare measure rendering socio-
economic justice to those who in the hey-day of
their life ceaselessly toiled for the employer on
// 41 //
as assurance that in their old age they would
not be left in lurch. Pension as a retirement
benefit is in consonance with and furtherance
of the goals of the Constitution. The most
practical raison d'etre for pensions is the
inability to provide for oneself due to old age. It
creates a vested right and is governed by the
statutory rules such as the Central Civil
Services (Pension) Rules which are enacted in
exercise of power conferred by Articles 309 and
148(5) of the Constitution."
45. In Poornamal v. Union of India, AIR 1985
SC 1196 : (1985) 3 SCC 345, the apex Court referring to
the judgment in Deakinandan Prasad v. State of
Bihar, AIR 1971 SC 1409, held that "Pension" is not
merely a statutory right but it is the fulfillment of a
constitutional promise, inasmuch as it partakes the
character of public assistance in case of unemployment,
old-age, disablement or similar other cases of
undeserved want. Relevant rules merely make effective
the constitutional mandate. Pension is a right not a
bounty or gratuitous payment.
46. In Kerala State Road Transport
Corporation v. K.O. Varghese, AIR 2003 SC 3966, it
has been held that the title 'pension' includes pecuniary
allowances paid periodically by the Government to
persons who have rendered services to the public or
// 42 //
suffered loss or injury in the public service, or to their
representative; who are entitled to such allowances and
rate and amount thereof; and proceedings to obtain and
payment of such pensions. Pension means a periodical
payment or lump sum by way of pension, gratuity or
superannuation allowance as respects which the
secretary of State is satisfied that it is to be paid in
accordance with any scheme of arrangement having for
its object or one of its objects to make provision in
respect of persons serving in particular employments for
providing with retirement benefits and, except in the
case of such a lump sum which had been paid to the
employee.
In the aforesaid judgment the word 'pension'
has also been analyzed, which reads as under:-
"On analysis of the word 'pension' three things
emerge; (i) that the pension is neither bounty
nor a matter of grace depending upon the sweet
will of the employer and that it creates a vested
right subject to the statute, if any, holding the
field; (ii) that the pension is not an ex gratia
payment but it is a payment for the past service
rendered; and (iii) it is social welfare measure
rendering socio-economic justice to those who in
the 'hey days' of their life ceaselessly toiled for
employers on an assurance that in their ripe old
age they would not be left in lurch. It must also
be noticed that the quantum of pension is a
// 43 //
certain percentage correlated to the emoluments
earlier drawn. Its payment is dependent upon
additional condition of impeccable behavior
even subsequent to retirement. Pension is not a
bounty of the State. It is earned by the
employee for service rendered to fall back, after
retirement. It is a right attached to the office
and cannot be arbitrarily denied. Conceptually,
pension is a reward for past service. It is
determined on the basis of length of service and
last pay drawn. Length of service is
determinative of eligibility and quantum of
pension."
47. In V. Sukumaran v. State of Kerala, (2020)
8 SCC 106, it has been held that pension is succor for
post retirement period, which is not a bounty payable at
will, but social welfare measure as post-retirement
entitlement to maintain dignity of employee.
48. In Col. B.J. Akkara v. Govt. of India, (2006)
11 SCC 709, the apex Court held that the pay of an
employee does not remain static. This is almost an
universal rule in public services. An employee starts
with a particular pay (commonly known as initial pay);
then journeys through periodical increases (commonly
known as increments) to reach the highest point that he
is entitled to (commonly known as the ceiling). This is
what a pay scale signifies. A 'pay scale' has basically
three elements. The first is the minimum pay or initial
// 44 //
pay in the pay scale. The second is the periodical
increment. The third is the maximum pay in the pay
scale. An employee starts with the initial pay in the pay
scale and gets periodical increases (increments) and
reaches the maximum or ceiling in the pay scale. Each
stage in the pay scale starting from the initial pay and
ending with the ceiling in the pay scale, when applied to
an employee is referred to as 'basic pay' of the employee.
Whenever the Government revises the pay scales, a
fitment exercise takes place as per the principle of
fitment (formula) provided in the rules governing the
revision of pay so that the basic pay in the old scale is
converted in to a "basic pay" in the revised pay scale.
49. In Gurupal Tuli v. State of Punjab, 1984
(Supp) SCC 716 : AIR 1984 SC 1901, the apex Court
held that to be entitled to draw a particular pay scale
the employee must fulfill the eligibility conditions
whether by way of qualification or otherwise.
50. In State of Kerala v. Padmanabhan Nair,
AIR 1985 SC 356, the apex Court observed that pension
and gratuity are no longer any bounty to be distributed
// 45 //
by the Government to its employees on their retirement
but are valuable rights and property in their hands and
any culpable delay in settlement and disbursement
thereof must be visited with the penalty of payment of
interest at the current market rate till actual payment.
51. In Vasant Gangaramsa Chandan v. State
of Maharashtra, (1996) 10 SCC 148, the apex Court
held that pension is not bounty of the State. It is earned
by the employee for service rendered to fall back, after
retirement. It is a right attached to the office and cannot
be arbitrarily denied.
52. In State of Punjab v. Justice S.S. Dewan,
(1997) 4 SCC 569, the apex Court held that
conceptually, pension is a reward for past service. It is
determined on the basis of length of service and last pay
drawn. Length of service is determinative of eligibility
and quantum of pension. The same view has also been
reiterated in Dr. Uma Agarwal v. State of U.P., AIR
1999 SC 1212.
// 46 //
53. In Kerala State Road Transport
Corporation v. K.O. Varghese, (2003) 12 SCC 293,
referring to corpus juris secundum, it is stated that the
title 'pension' includes pecuniary allowances paid
periodically by the Government to persons who have
rendered services to the public or suffered loss or injury
in the public service, or to their representative; who are
entitled to such allowances and rate and amount
thereof; and proceedings to obtain and payment of such
pension.
54. Further, referring to Halsbury's Law of
England 4th Edn. Reissue, Vol.16, in the very same
judgment in Kerala State Road Transport Corporation
(supra), the apex Court held as follows:
"'Pension' means a periodical payment or
lump sum by way of pension, gratuity or
superannuation allowance as respects which
the secretary of state is satisfied that it is to be
paid in accordance with any scheme of
arrangement having for its object or one of its
objects to make provision in respect of persons
serving in particular employments for providing
with retirement benefits and, except in the case
of such a lump sum which had been paid to the
employee."
// 47 //
55. Considering the meaning attached to the word
'pension', as stated above, and on analysis of the same,
three things emerge; (i) that the pension is neither
bounty nor a matter of grace depending upon the sweet
will of the employer and that it creates a vested right
subject to the statute, if any, holding the field; (ii) that
the pension is not an ex gratia payment but it is a
payment for the past service rendered; and (iii) it is
social welfare measure rendering social economic justice
to those who in the "heydays" of their life ceaselessly
toiled for employers on an assurance that in their ripe
old age they would not be left in lurch. It must also be
noticed that the quantum of pension is a certain
percentage correlated to the emoluments earlier drawn.
Its payment is dependent upon additional condition of
impeccable behaviour even subsequent to retirement.
56. In U.P. Raghavendra Acharya v. State of
Karnataka, (2006) 9 SCC 630, the apex Court held that
'pension' is treated to be a deferred salary. It is not a
bounty. It is akin to right of property. It is correlated and
// 48 //
has a nexus with the salary payable to the employees as
on date of retirement.
57. Similar view has also been taken by this
Court in the case of Sujata Mohanty v Berhampur
University & others, 2021 (II) OLR 362, in which one of
us (Dr. B.R. Sarangi, ACJ) was the member.
58. In view of the law laid down by the apex
Court, as discussed above, a right has been accrued in
favour of the employees of the Cuttack Development
Authority to get pension and provident fund in
conformity with the provisions contained under Section
83 of the Odisha Development Authorities Act, 1982 and
for that under Section 123 of the Odisha Development
Authorities Act, 1982 Act, the State Government has
been vested with the power to make Rules.
59. In the Constitution Bench decision in the case
of Chairman, Railway Board and others v. C. R.
Rangadhamaiah and others, A.I.R. 1997 SC 3828, the
apex Court was considering the amendment brought
into Rule-2544 of the Indian Railway Establishment
// 49 //
Court, Vol. II (Fifth Reprint) which was given
retrospective effect. The said Rule was amended by
Notification No. G.S.R. 1143 (E) with effect from 1st
January, 1973 and by Notification No. G.S.R. 1144 (E),
the amendment was made with effect from 1st April,
1979. The apex Court, in paragraph - 20 of the said
judgment held as follows:-
"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 retrospectively 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, 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".
Again in paragraph 24 of the said judgment in
the case of Chairman, Railway Board and others
(supra), it was held thus :-
"24. In many of these decisions the
expressions "vested rights" or "accrued 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, 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
// 50 //
such an amendment having retrospective
operation which has the effect of taking away a
benefit already available to the employee under
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) (supra); B.S.
Yadav (AIR 1981 SC 561) (supra) and Raman
Lal Keshav Lal Soni (AIR 1984 SC 161)
(supra)".
60. Ultimately, it was held by the apex Court that
the impugned amendments in so far as they have been
given retrospective operation are violative of the rights
guaranteed under Articles 14 & 16 of the Constitution
on the ground that they are unreasonable and arbitrary
since the said amendments have the effect of reducing
the amount of pension that has become payable to the
employees, who had already retired from service on the
date of issuance of the notifications as per the provisions
contained in Rule 2544 that were in force at the time of
their retirement.
61. The aforesaid Constitution Bench decision,
therefore, has emphasized with regard to the right of an
employee, which has accrued in his favour on the date
he retired and such right cannot be taken away by
// 51 //
amending the Rules retrospectively prior to his
retirement.
62. In the case of State of Madhya Pradesh and
others v. Yogendra Shrivastava, (2010) 12 SCC 538,
the apex Court was considering the amendment brought
to Madhya Pradesh Employees' State Insurance Service
(Gazetted) Recruitment Rules, 1981 by Notification dated
20.05.2003 giving it a retrospective effect from
14.10.1982. By the said amendment, the earlier
provision in the Rule prescribing payment of None
Practicing Allowance @ 25% of pay was amended to the
effect that "NPA at such rates as may be fixed by the
State Government from time to time by the orders issued
in this behalf" in place of words "NPA @ 25% of the pay"
wherever they occurred in the Rules.
63. On considering the said question, the apex
Court, in paragraph 15 of the said judgment in the case
of State of Madhya Pradesh (supra) held as follows :-
15. It is no doubt true that Rules made
under Article 309 can be made so as to operate
with retrospective effect. But it is well settled
that rights and benefits which have already
been earned or acquired under the existing
Rules cannot be taken away by amending the
// 52 //
Rules with retrospective effect. (See N.C.
Singhal v. Armed Forces Medical Services ; K.C.
Arora v. State of Haryana and T.R. Kapur v.
State of Haryana). Therefore, it has to be held
that while the amendment, even if it is to be
considered as otherwise valid, cannot affect the
rights and benefits which had accrued to the
employees under the unamended rules. The
right to NPA @ 25% of the pay having accrued to
the respondents under the unamended Rules, it
follows that respondent employees will be
entitled to the non-practicing allowance @ 25%
of their pay up to 20-5-2003."
64. In a large number of cases, the apex Court
has categorically laid down that the right of an
employee, which accrued in his favour on the date of
appointment, cannot be taken away by the amending
provisions of the Rules concerning the service with
retrospective effect. An employee, while entering into
service, is subjected to the condition of service as on the
date, when he joins. Any right given to such employee
under the provision of any Act or Rules governing the
employment, if taken away by amending such Rules
with retrospective effect, the same would amount to
violating the Rules under Articles 14 & 16 of the
Constitution.
65. Eligibility for liberalized pension scheme of
'being in service on specified date and retiring
// 53 //
subsequent to that date' in impugned memoranda,
violates Article 14 of the Constitution and is
unconstitutional and is to be struck down.
66. In D.S. Nakara v. Union of India, AIR 1983
SC 130, the apex Court held as follows:-
49. But we make it abundantly clear that
arrears are not required to be made because to
that extent the scheme is prospective. All
pensioners whenever they retired would be
covered by the liberalised pension scheme,
because the scheme is a scheme for payment of
pension to a pensioner governed by 1972 Rules.
The date of retirement is irrelevant. But the
revised scheme would be operative from the
date mentioned in the scheme and would bring
under its umbrella all existing pensioners and
those who retired subsequent to that date. In
case of pensioners who retired prior to the
specified date, their pension would be
computed afresh and would be payable in
future commencing from the specified date. No
arrears would be payable. And that would take
care of the grievance of retrospectivity. In our
opinion, it would make a marginal difference in
the case of past pensioners because the
emoluments are not revised. The last revision of
emoluments was as per the recommendation of
the Third Pay commission (Raghubar Dayal
Commission). If the emoluments remain the
same, the computation of average emoluments
under amended Rule 34 may raise the average
emoluments, the period for averaging being
reduced from last 36 months to last 10 months.
The slab will provide slightly higher pension
and if someone reaches the maximum the old
lower ceiling will not deny him what is
otherwise justly due on computation. The words
"who were in service on 31st March, 1979 and
retiring from service on or after the date"
excluding the date for commencement of
revision are words of limitation introducing the
// 54 //
mischief and are vulnerable as denying
equality and introducing an arbitrary fortuitous
circumstance can be severed without impairing
the formula. Therefore, there is absolutely no
difficulty in removing the arbitrary and
discriminatory portion of the scheme and it can
be easily severed.
65. That is the end of the journey. With the
expanding horizons of socio-economic justice,
the socialist Republic and welfare State which
we endeavour to set up and largely influenced
by the fact that the old men who retired when
emoluments were comparatively low and are
exposed to vagaries of continuously rising
prices, the falling value of the rupee consequent
upon inflationary inputs, we are satisfied that
by introducing an arbitrary eligibility criteria:
'being in service and retiring subsequent to the
specified date' for being eligible for the
liberalised pension scheme and thereby
dividing a homogeneous class, the classification
being not based on any discernible rational
principle and having been found wholly
unrelated to the objects sought to be achieved
by grant of liberalised pension and the
eligibility criteria devised being thoroughly
arbitrary, we are of the view that the eligibility
for liberalised pension scheme of being in
service on the specified date and retiring
subsequent to that date' in impugned
memoranda, Exhibits P-I and P-2, violates Art.
14 and is unconstitutional and is struck down.
Both the memoranda shall be enforced and
implemented as read down as under: In other
words, in Exhibit P-1, the words:
"that in respect of the Government
servants who were in service on the 31st
March, 1979 and retiring from service on or
after that date"
and in Exhibit P-2, the words:
"the new rates of pension are effective
from 1st April 1979 and will be applicable to all
service officers who became/become non-
effective on or after that date."
are unconstitutional and are struck down with
this specification that the date mentioned
therein will be relevant as being one from which
the liberalised pension scheme becomes
operative to all pensioners governed by 1972
// 55 //
Rules irrespective of the date of retirement.
Omitting the unconstitutional part it is declared
that all pensioners governed by the 1972 Rules
and Army Pension Regulations shall be entitled
to pension as computed under the liberalised
pension scheme from the specified date,
irrespective of the date of retirement. Arrears of
pension prior to the specified date as per fresh
computation is not admissible. Let a writ to that
effect be issued. But in the circumstances of the
case, there will be no order as to costs.
67. In the case of State of Sikkim v. Dorjee
Tsfter-ing Bhatia and others, AIR 1991 SC 1933, the
apex Court at paragraph-15 of the judgment held as
follows:-
"The executive power of the State cannot be
exercised in the field which is already occupied
by the laws made by the legislature. It is
settled law that any order, instruction, direction
or notification issued in exercise of the
executive power of the State which is contrary
to any statutory provisions, is without
jurisdiction and is a nullity. But in this case we
are faced with a peculiar situation. The Rules,
though enforced, remained unworkable for
about five years. The Public Service
Commission, which was the authority to
implement the Rules, was not in existence
during the said period. There is nothing on the
record to show as to why the Public Service
Commission was not constituted during all
those five years. In the absence of any material
to the contrary we assume that there Were
justifiable reasons for the delay in constituting
the Commission. The executive power of the
State being divided amongst various function-
arise under Article 166(3) of the Constitution of
India there is possibility of lack of co-ordination
amongst various limbs of the Government
working within their respective spheres of
allocation. The object of regulating the
recruitment and conditions of Service by
statutory provisions is to rule out arbitrariness,
// 56 //
provide consistency and crystilise the rights of
employees concerned. The statutory provision's
which are unworkable and inoperative cannot
achieve these objectives. Such provisions are
non-est till made operation- al. It is the
operative statutory provisions which have the
effect of ousting executive power of the State
from the same field. When in a peculiar
situation, as in the present ease, the statutory
provisions could not be operated there was no
bar for the State Government to act in exercise
of its executive power. The impugned
notification to hold special selection 'was issued
almost four years after the enforcement of the
Rules. It was done to remove stagnation and to
afford an opportunity to the eligible persons to
enter the service. In our view the State
Government was justified in issuing the
impugned notification in exercise of its
executive power and the High Court fell into
error in quashing the same."
68. In Union of India (UOI) and Anr. V. P.N.
Natarajan and Ors., (2010) 12 SCC 405, the apex court
observed as follows:-
11. We have considered the respective
submissions and carefully scrutinized the
records. Although, neither the learned Single
Judge nor the Division Bench considered the
issue of violation of the rules of natural justice,
having given serious thought to the entire
matter, we are convinced that the retiral
benefits payable to the Respondents could not
be revised to their disadvantage without giving
them action oriented notice and opportunity of
hearing. By virtue of the option exercised by
them under Section 12A(4)(b) and
Consequential action taken by the competent
authority to fix their pension etc., the private
Respondents acquired a valuable right to
accordingly receive the financial benefits and
the same could not have been reduced without
Complying with one of the basic rules of natural
justice that no one shall be condemned
// 57 //
unheard. The rule of audi alteram partem has
been treated fundamental to the system
established by rule of law and any action taken
or order passed without complying with that
rule is liable to be declared void--State of Orissa
v. Dr. Binapani Dei (Misa)
MANU/SC/0332/1967: A.I.R. 1967 S.C. and
Ors. 1269 and Sayeedur Rehman v. State of
Bihar and Ors. MANU/SC/0053/1972: (1973)3
S.C.C. 333.
12. It is not in dispute that before directing
revision of the pension etc., payable to the
private Respondents, the Central Government
did not give them action oriented notice and
opportunity of showing cause against the
proposed action. Therefore, it must be held that
the direction given by the Central Government
to revise the retiral benefits including the
pension payable to the Respondents Was
nullity."
69. In Salabuddin Mohamed Yunus v. State of
A.P., AIR 1984 SC 1905, the Appellant was employed in
the service of the former Indian State of Hyderabad
prior to coming into force of the Constitution of India.
On coming into force of the Constitution, the Appellant
continued in the service of that State till he retired from
service on 21.01.1956. The Appellant claimed that he
was entitled to be paid the salary of a High Court Judge
from 01.10.1947 and also claimed that he was entitled
to receive pension of Rs. 1000 a month in the
Government of India currency, being the maximum
// 58 //
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
03.02.1971 with retrospective effect from 01.10.1954
and the expression "Rs. 1000 a month" in Clause (b) of
Sub-rule (1) of Rule 299 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 as invalid
and inoperative on the ground that it was violative of
Articles 31(1) and 19(1) (f) of the Constitution.
Relying upon the decision in Deokinandan
Prasad v. State of Bihar and others, [1971] Supp.
S.C.R. 636, the apex Court observed as follows :-
The fundamental right to receive pension
according to the rules in force on the date of his
retirement accrued to the Appellant when he
retired from service. By making a retrospective
amendment to the said Rule 299 (1) (b) more
than fifteen years after that right had accrued
to him, what was done was to take away the
Appellant's right to receive pension according A
to the rules in force at the date of his retirement
// 59 //
or in any event to curtail and abridge that right.
To that extent, the said amendment was void.
70. In Pepsu Road Transport Corporation,
Patiala v. Mangal Singh, AIR 2011 SC 1974, the apex
Court held as follows:-
"48. The concept of pension has also been considered
in Corpus Juris Secundum, Vol. 70, at pg. 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 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."
71. In State of H.P. and Ors v. Rajesh
Chandra Sood and Ors., AIR 2016 SC 5436, the apex
Court at paragraph-48 of the said judgment held as
follows:-
"48. Having given our thoughtful consideration
to the aforesaid submission, we are of the view,
that such of the employees who had 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
// 60 //
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 attained 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.
49. 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 (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 1999 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
// 61 //
relevant to emphasize, 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, expressed on behalf of
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 1999 Scheme' (or to the direct entrants
after the introduction of 'the 1999 Scheme'),
most definitely did vest a right in the
respondent-employees."
72. In Air India Employees Self Contributory
Superannuation Pension Scheme v. Kuriakose V.
Cherian and others, AIR 2006 SC 3716, the apex
Court held that amendment could not be applied to the
employees who had retired before the date of
amendment and such employees would continue to
receive pensionary benefits as before, namely, the
benefits which existed at the time of amendment. it has
been held as follows:-
"xxx 9. The High Court by the impugned
judgment held that the impugned amendment
to the Trust Deed to the extent it applies in
future is legal and valid but the amendment
cannot apply to the employees who have retired
// 62 //
before the date of amendment and such
employees shall continue to receive pensionary
benefits as before, namely, the benefits which
existed at the time of amendment.
Xxx xxx xxx
58. In our opinion, the view of the High Court
is unassailable. In the result, all appeals are
dismissed."
73. In Bidyadhar Bhuyan v. State of Orissa
and others, 1995 (II) OLR 655, this Court at
paragraph-46 of the judgment observed as follows:-
"46. Paragraph 2.3 of the resolution is
regarding pensionary benefits. It is indicated
that pensionary and other retirement benefits
admissible to State Government servants shall
be admissible to such employees for the period
of their service under Government with effect
from 7-6-1994. The remaining aided service
shall be governed by the Orissa Aided
Educational Institution Employees Retirement
Benefit Rules, 1981. What is a pension? What
are the goals of pension? What 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 or
retirement pre and post a certain date? The
Supreme Court has considered these questions
in the case of D.S. Nakara v. Union of India, AIR
1983 SC 130. The Supreme Court in the said
case has observed that 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 Nanden Prasad v. State of Bihar, AIR
1971 SC 1409, wherein the Supreme 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
// 63 //
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
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 re-affirmed in State of
Punjab v. Iqbal Singh, AIR 1976 SC 667. There
are various kinds of pensions and there are
equally various methods of funding pension
programmes. The present enquiry in the instant
case is as to whether by the decision of
Government to take-over management of the
aided schools, the erstwhile empolyees,
namely, the teaching and non-teaching staff are
affected. The better or beneficial scheme to get
larger pension should not be curtailed by virtue
of the impugned resolution, and in particular by
paragraph 2.3 thereof. The artificial two limbs
made in the said clause are not appreciated by
this Court. In the first limb it is provided that
pensionary and other retirement benefits
admissible to State Government servants shall
be admissible to such employees for the period
of their service under Government with effect
from 7-6-1994. The second limb is that the
remaining aided service shall be governed by
the Orissa Aided Educational Institutions'
Employees Retirement Benefit Rules, 1981. By
implementation of such provisions there will be
various anomalies and the inconsistencies have
been demonstrated by the petitioners in making
a graphic chart how a person having shorter
period of service after the take-over will be
prejudiced and the persons having longer
period of service after the takeover will have a
different answer. By introduction of a new
scheme, the consistent policy and scheme
available to the erstwhile employees to get
larger pensionary benefits should not be in
jeooardy. Considering this aspect fully, we are
of the view that the State Government has not
properly applied its mind while providing for the
pensionary, benefits in paragraph 2.3 of the
impugned resolution. The State Government will
have to consider the detailed advantages and
disadvantages of the erstwhile employees,
// 64 //
namely, the teaching and non-teaching staff of
the aided schools, their scheme for pensionary
benefits, the impact of the Government scheme
for pension as in the case of Government
employees if made applicable to them and their
eligibility criteria, their period of service to get
the larger amount of pension and various other
factors should also be taken notice of and a
proper scheme has to be framed for pension.
Until such scheme is framed, the petitioners,
namely, the teaching and non-teaching staff of
the erstwhile aided schools will get their
pensionary benefits under the prevailing rules
applicable to them. On this limited aspect, the
provisions of paragraph 2.3 cannot be
sustained. This paragraph is found to be
irrelevant, inconsistent and irrational and is
thus struck down."
74. In the case of Shri Anand Dash and Seven
others v. State of Orissa and others, 2014 (Supp.-I)
OLR 754, the apex Court held as follows:-
"16. In the case at hand, as already stated
above, all the petitioners joined in their due
assignment on 02.04.2005 by which date, the
amended Rules were not existing. The said
amended Rules, which were introduced by
Notification dated 31.08.2007 and 17.09.2005
there could not have been given retrospective
effect by stating that they will come into
operation from 01.01.2005, which is prior to the
date, when the petitioners joined in their new
assignments.
17. We are, therefore, of the considered view
that the said amendments brought to the
General Provident Fund (Orissa) Rules, 1938
and the Orissa Civil Service (Pension) Rules,
1992 will not apply to the petitioners, who will
be governed by the said Rules as it existed on
the date of their joining in service.
We also find that the opposite parties -
State has discriminated the petitioners by
// 65 //
allowing the benefits under the old Pension
Rules and General Provident Fund (Orissa)
Rules in the case of 13 regularly recruited OES
officers, though they have been appointed on
14.02.2005 and joined the Government much
after 01.01.2005. The said action on the part of
the State also amounts to discrimination
violating Articles 14 & 16 of the Constitution of
India.
18. We, therefore, quash the impugned
orders by which the representations of the
petitioners were rejected arbitrarily inasmuch
as without assigning any reason in support of
such rejection and direct that the petitioners
will be governed by the provisions of the old
General Provident Fund (Orissa) Rules, 1938
and the Orissa Civil Service (Pension) Rules,
1992 as it stood prior to the amendments
brought into the same and will be entitled to all
the benefits, which were provided thereunder
prior to such amendments. The amendments
brought into the above two Rules, will have
prospective effect from the date, such
amendments were notified."
75. The aforesaid decision of this Court formed
the subject matter of Special Leave Petition (C) Nos.
35462-35464 of 2014 before the Apex Court, which
stood dismissed by order dated 09.03.2018 with an
observation that there exist no cogent reason to
entertain the petitions/appeal and that the judgment
impugned does not warrant any interference.
76. In the case of Cuttack Development
Authority v. Regional Provident Fund
// 66 //
Commissioner, 2009 (Supp.-II) OLR 447, this Court
held as follows.
"10. Addressing to the question as to
whether the C.D.A. is exempted from the
application of the provisions of the Act, 1952, a
bare reading of Section 16 (1) (c), as quoted
above, clearly establishes that the C.D.A.
having been constituted/established under the
O.D.A. Act and its employees having been made
entitled to the benefit of old age pension in
accordance with the resolution of the C.D.A.
referred to above, the said establishment of the
C.D.A. is clearly exempted from the application
of the provisions of the Act, 1952."
77. In the case of Krupasindhu Barik v. State
of Orissa and others, vide O.J.C. No.768 of 1990
disposed of on 29.10.1990, this Court held as follows:-
"5. xxx Payment of pension and making
provision for provident fund are statutory duties
of the Development Authority. The provisions
are substantive and absolute. The framing of
rules are merely procedural in nature so as to
provide the manner in which and conditions
under which the payment of pension is to be
made and the provident fund is to be provided
for. The right to pension and to the benefit of
provident fund being statutory, the Court would
undoubtedly have the jurisdiction to issue
necessary direction for implementation of the
provisions."
78. In Bidyadhar Mishra v. State of Orissa
and others, 2007 (Supp.-1) OLR 543, this Court held
as follows:-
"8. Learned counsel for the petitioner drew
my attention to the judgment dated 29.10.1990
// 67 //
rendered in O.J.C. No.768 of 1990
(Krupasindhu Barik Vs. State of Orissa and
others) in which this Court dealt with a similar
question and held as follow: -
"xxx Payment of pension and making
provision for provident fund are statutory duties
of the Development Authority. The provisions
are substantive and absolute. The framing of
rules are merely procedural in nature so as to
provide the manner in which and conditions
under which the payment of pension is to be
made and the provident fund is to be provided
for. The right to pension and to the benefit of
provident fund being statutory, the Court would
undoubtedly have the jurisdiction to issue
necessary direction for implementation of the
provisions. xxx"
79. In Employees' Provident Fund
Organization v. M/s. Raipur Development Authority
(Writ Petition (L) No. 2326 of 2010 disposed of on
05.12.2014), the High Court of Chhattisgarh observed
as follows:-
"27. Thus, on the basis of aforesaid analysis,
it is held that the employees of the RDA are
entitled for the benefit of Contributory Provident
Fund under the M.P. Contributory Provident
Fund Rules, 1955 by virtue of Rule 27 of the
Madhya Pradesh Development Authority
Services (Officers and Servants) Recruitment
Rules, 1987.
28. Accordingly, the respondent-RDA is fulfilling
both the requirements for exemption under
Section 16 (1)(c) of the EPF Act, 1952 and,
therefore, provision of the EPF Act, 1952 would
not be applicable to the respondent herein.
Thus, it is held that EPF Appellate Tribunal,
New Delhi has not committed any illegality in
holding that respondent-RDA is exempted from
the operation of the EPF Act, 1952 and
// 68 //
absolutely justified in granting the appeal filed
by respondent authority by setting aside the
order passed by the Assistant Regional
Provident Fund Commissioner holding the EPF
Act applicable to the respondent/RDA."
The aforesaid judgment was challenged in Writ
Appeal No. 162 of 2015, which stood dismissed vide
order dated 30.03.2015.
80. In Krishena Kumar v. Union of India, AIR
1990 SC 1782, the apex Court held as follows:-
"30. In Nakara it was never held that both the
pension retirees and the P.F. retirees formed a
homogeneous class and that any further
classification among them would be violative
of Art. 14. On the other hand the Court clearly
ob- served that it was not dealing with the
problem of a "fund". The Railway Contributory
Provident Fund is by definition a fund. Besides,
the Government's obligation towards an
employee under C.P.F. Scheme to give the
matching contribution begins as soon as his
account is opened and ends with his retirement
when his rights qua the Government in respect
of the Provident Fund is finally crystallized and
thereafter no statutory obligation continues.
Whether there still remained a moral obligation
is a different matter. On the other hand under
the Pension Scheme the Government's
obligation does not begin until the employee
retires when only it begins and it continues till
the death of the employee. Thus, on the
retirement of an employee Government's legal
obligation under the Provident Fund account
ends while under the Pension Scheme it begins.
The rules governing the Provident Fund and its
contribution are entirely different from the rules
governing pension. It would not, therefore, be
reasonable to argue that what is applicable to
the pension retirees must also equally be
applicable to P.F. retirees. This being the legal
// 69 //
position the rights of each individual P.F. retiree
finally crystallized on his retirement where after
no continuing obligation remained while on the
other hand, as regards Pension retirees, the
obligation continued till their death. The
continuing obligation of the State in respect of
pension retirees is adversely affected by fall in
rupee value and rising prices which,
considering the corpus already received by the
P.F. retirees they would not be so adversely
affected ipso facto. It cannot, there- fore, be
said that it was the ratio decidendi in Nakara
that the State's obligation towards its P.F.
retirees must be the same as that towards the
pension retirees An imaginary definition of
obligation to include all the Government retirees
in a class was 'not decided and could not form
the basis for any classification for the purpose
of this case. Nakara cannot, therefore, be an
authority for this case. Stare decisis et non
guieta movere. To adhere to precedent and not
to unsettle things which are settled. But it
applies to litigated facts and necessarily
decided questions. Apart from Art. 141 of the
Constitution of India, the policy of courts is to
stand by precedent and not to disturb settled
point. When court has once laid down a
principle of law as applicable to certain state of
facts, it will adhere to that principle, and apply
it to all future cases where facts are
substantially the same. A deliberate and
solemn decision of court made after argument
on question of law fairly arising in the case,
and necessary to its determination, is an
authority, or binding precedent in the same
court, or in other courts of equal or lower rank
in subsequent cases where the very point is
again in controversy unless there are occasions
when departure is rendered necessary to
vindicate plain, obvious principles of law and
remedy continued injustice. It should be
invariably applied and should not ordinarily be
departed from where decision is of long
standing and rights have been acquired under
it, unless considerations of public policy
demand it. But in Nakara it was never required
to be decided that all the retirees formed a
class and no further classification was
permissible.
// 70 //
31. The next argument of the petitioners is
that the option given to the P.F. employees to
switch over to the pension scheme with effect
from a specified cut-off date is bad as violative
of Art. 14 of the Constitution for the same
reasons for which in Nakara the notification
were read down. We have extracted the 12th
option letter. This argument is fallacious in view
of the fact that while in case of pension retirees
who are alive the Government has a continuing
obligation and if one is affected by dearness the
others may also be similarly affected. In case of
P.F. retirees each one's rights having finally
crystallized on the date of retirement and
receipt of P.F. benefits and there being no
continuing obligation thereafter they could not
be treated at par with the living pensioners.
How the corpus after retirement of a P.F. retiree
was affected or benefitted by prices and
interest rise was not kept any track of by the
Railways. It appears in each of the cases of
option the specified date bore a definite nexus
to the objects sought to be achieved by giving of
the option. Option once exercised was told to
have been final. Options were exercisable vice
versa. It is clarified by Mr. Kapil Sibal that the
specified date has been fixed in relation to the
reason for giving the option and only the
employees who retired after the specified date
and before and after the date of notification
were made eligible. This submission appears to
have been substantiated by what has been
stated by the successive Pay Commissions. It
would also appear that corresponding
concomitant benefits were also granted to the
Provident Fund holders. There was, therefore,
no discrimination and the question of striking
down or reading down clause 3.1 of the 12th
Option does not arise.
81. Taking into consideration the above settled
positions of law laid down by the apex Court and
applying the same to the present context, this Court is
of the opinion that the provisions contained under Rule
// 71 //
4 (1) of the Odisha Development Authorities (Retirement
Benefit of the Employees) Rules, 2015, whereby a class
of persons who joined after 01.01.2005 have been
deprived of getting the benefit of pension and provident
fund, is ultra vires to the provisions of the Odisha
Development Authorities Act, 1982 as well as Articles
14 and 16 of the Constitution of India. Thus, the
provisions contained under Rule 4 (1) of Odisha
Development Authorities (Retirement Benefit of the
Employees) Rules, 2015 makes a classification of the
employees appointed prior to 01.01.2005 and after the
cutoff date, i.e., 01.01.2005, even though all the
employees are working in same working condition and
same nature of work under the same organization and,
thereby, violates Articles 14 and 16 of the Constitution
of India. Accordingly, this Court holds that the
provisions contained under Rule 4 (1) of the Odisha
Development Authorities (Retirement Benefit of the
Employees) Rules, 2015 is ultra vires to the Odisha
Development Authorities Act, 1982 as well as Articles
14 and 16 of the Constitution of India. Thereby, the
// 72 //
employees, those who have been appointed after
01.01.2005, are to be treated at par with the employees,
those who joined under the very same organization, i.e.,
Cuttack Development Authority prior to 01.01.2005, in
conformity with Articles 14 and 16 of the Constitution
of India and they are to be extended the benefit of
pension and provident fund at par with them in
accordance with law.
52. The writ petition is thus allowed. However,
there shall be no order as to costs.
(DR. B.R. SARANGI)
ACTING CHIEF JUSTICE
M.S. RAMAN, J. I agree.
(M.S. RAMAN)
JUDGE
Orissa High Court, Cuttack
The 29th November, 2023, Alok/Arun
Designation: ADR-cum-Addl. Principal Secretary
Location: High Court of Orissa, Cuttack
Date: 29-Nov-2023 16:51:07
