Judicial
Review - Legitimate expectation is one of the grounds of judicial review but
unless a legal obligation exists, there cannot be any legitimate expectation.
The legitimate expectation is not a wish or a desire or a hope, therefore, it
cannot be claimed or demanded as a right.
Service Law - Pension - Payment of pension in the
past will not confer an enforceable right in favour of the Institute or its
employees.
The resolution of the Board of the Institute to implement a
retirement benefit scheme from its own resources will not bind the State
Government to pay the amount of pension to the employees of the Institute. The
employees of such Institute cannot be treated at par with the employees of the
State Government nor the State can be burdened with the responsibility to pay
pension to the employees of the Institute. Consequently, we find that the order
of the Division Bench is not legally sustainable. Hence, we allow the appeal
and dismiss the Writ Petition. The pending applications, if any, shall stand
disposed of.
Anugraha Narayan Sinha Institute of Social Studies Act, 1964 -
Sections 6, 8, 9, 10, 12, 16 and 17 - Anugraha Narayan Sinha Institute of
Social Studies, Rules 1966 - Anugraha Narayan Sinha Institute of Social
Studies, Patna Regulation, 1966 - Reg. 9 - Functions of the Board - Payment to
Institute - The Institute Fund - Budget - Accounts and audit - Discussed.
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
(Dr. Dhananjaya Y. Chandrachud) and (Hemant Gupta) JJ.
January 30, 2019
CIVIL APPEAL NO. 884 OF 2019
(Arising out of S.L.P (C) No. 18502 of 2018)
The State of Bihar & Anr. ........Appellants
Versus
Dr. Sachindra Narayan & Ors. ........Respondents
J U D G M E N T
Hemant Gupta, J.
The present appeal is directed against an order passed by the Division
Bench of the High Court of Judicature at Patna on 13.03.2018 whereby the Writ
Petition was allowed directing the appellant to provide financial assistance
for payment of the arrears as well as current pension to the employees of the
Anugraha Narayan Sinha Institute of Social Studies, Patna (Institute).
2. The Institute is incorporated by the Anugraha Narayan Sinha Institute
of Social Studies Act, 1964, (Act). The Institute has a perpetual succession
and a common seal. The Chairman of the Board of Control isa nominee of the
State Government. The State Government is also to nominate two persons of
eminence in consultation with the Chairman; whereas, the others are ex-officio
members such as Vice-Chancellor of Patna University, another Vice-Chancellor to
be nominated by the State Government other than that of Patna University in
rotation in alphabetical order as per names of Universities; two representatives
of the Indian Council of Social Science Research, New Delhi; one representative
of the University Grants Commission; one faculty member not below the rank of a
Professor and a Secretary to the State Government in the Department of
Education and in the Department of Finance.
3. In terms of Section 6 of the Act, the Board is the supreme governing
body of the Institute and is to exercise all the powers of the Institute.
Section 8 mandates the State Government to contribute a sum of rupees two lacs
in each financial year for the maintenance of the Institute and such other sums
as it may deem fit for special items of research or education work,
publication, buildings and proper maintenance and development of the Institute.
Section 9 of the Act provides for establishment of Institute Fund, whereas,
Section 10 deals with the budget of the Institute. Section 16 of the Act
empowers the Board to make rules not inconsistent with the provisions of the
Act, whereas, Section 17 empowers the Board to make regulations consistent with
the Act and the Rules framed thereunder. The relevant provisions of the Act
read as under:
“6. Functions of the Board. – (1) The Board
shall be the supreme governing body of the Institute and shall exercise all the
powers of the Institute.
(2) Subject to the provisions of
this Act the Board shall, in particular-
(a) hold, control and administer
the property and the funds of the Institute;
(b) determine the form, provide
for the custody and regulate the use of the common seal of the Institute;
(c) determine and regulate all
matter concerning the Institute;
(d) administer any funds placed
at the disposal of the Board for specific purposes;
(e) create posts and appoint
officers and other employees of the Institute and define their duties and
provide for the filling of temporary vacancies:
Provided that no post the total
emolument of which exceeds Rs. 1,000 per month shall be created without the previous
sanction of the State Government;
(f) have power to accept
transfers on behalf of the Institute of any movable or immovable property to
and for the purposes of the Institute.
xxx xxx xxx
8. Payment to Institute. -
(1) The State Government shall contribute to the institute a sum of two lakhs of
rupees in each financial year for the maintenance of the institute.
(2) The State Government may
contribute from time to time such additional sums to the Institute as it may
deem fit for special items of research or educational work, publication, buildings
and for the proper maintenance and development of the Institute.
9. The Institute Fund. -
(1) There shall be established a Fund to be called the Anugraha Narayan Sinha
Institute Fund which shall be vested in the Institute to which shall be credited-
(a) the balance, if any, standing
to the credit of the Anugraha Narayan Sinha Institute of Social Studies, Patna,
on the date of commencement of this Act;
(b) all moneys contributed to the
Institute by the State Government;
(c) all moneys received by or on
behalf of the Institute from the Central Government;
(d) all moneys received by or on
behalf of the Institute by way of grants, gifts, donations, benefactions,
bequests or transfers;
(e) all interests and profits
arising from any transaction in connection with any money belonging to the
Institute;
(f) proceeds from the sale of the
journals, pamphlets and books; and
(g) all moneys received by the
Institute in any other manner or from any other source.
(2) All moneys credited to the
Fund shall be deposited or invested in such manner as the Institute may, with
the approval of the State Government, decide.
(3) The Fund shall be applied
towards meeting the expenses of the Institute including expenses incurred in
the exercise of its powers and discharge of its functions under this Act.
10. Budget. -
(1) The Director shall, on or before the tenth day of August each year, cause
to be prepared and laid before the Board, in such form as may be prescribed by
the Board, the budget estimate of the income and expenditure of the Institute
for the next financial year.
(2) The Board shall, as soon as
may be after the tenth day of August but not later than the first day of the
following September, examine and approve the estimate with or without
modification as it may deem fit and shall forthwith submit a copy thereof to
the State Government.
(3) The Board may from time to
time during the financial year reduce the amount of any item of budget grant or
transfer such amount or a portion thereof to any other item of budget grant: Provided
that the Board shall have no power to transfer any non-recurring grant for
recurring expenditure:
[Provided further that the Board
shall have no power to transfer from one item to another item an amount
exceeding 20 per cent of the original grant under any item.]
xxx xxx xxx
12. Accounts and audit. -
(1) Subject to any rules made by the State Government in this behalf, the
accounts of receipts and expenditure of the Institute shall be kept in such
manner and in such form as the Board may from time to time prescribe.
(2) The Board shall, as soon as
may be after closing its annual accounts, prepare an annual statement of
accounts in such form as the State Government may from time to time prescribe
and forward the same to the Accountant-General, Bihar, by such date as the
State Government may, in consultation with the Accountant-General, Bihar,
determine.
(3) The accounts of the
Institute shall be audited by the Accountant-General, Bihar, or some other
officer appointed by him in this behalf and the Board shall take suitable
action on the matters arising out of the audit report.
(3A) The State Government may
call upon the Institute to adopt concurrent audit by the Chief Controller of
Accounts and Audit of the State Government.
(4) The Board shall forward the
annual accounts of the Institute together with the audit report thereon to the
State Government and the State Government shall cause the same to be laid
before the Legislature of the State.”
xxx xxx xxx
4. In terms of Section 16 of the Act, the Anugraha Narayan Sinha Institute
of Social Studies, Rules 1966 (Rules) were framed by the Board. “Pay” is
defined in Rule 2(xii), whereas Rule 9 provides for maintenance of Institute’s
provident fund and Rule 19 provides for amendment of the Rules at any time by
2/3 majority of the members at the meeting of the Board.
5. In terms of Section 17 of the Act, the Anugraha Narayan Sinha Institute
of Social Studies, Patna Regulation, 1966 (Regulations) have been framed, which
inter-alia empowers the Board to sanctionDearness Allowance;
House Rent Allowance and also the service conditions of the employees of the
Institute. Regulation 9 empowers the Board to create such posts as may be
necessary and may fix scale of pay and allowances for posts subject to Section
6 of the Act. In terms of Clause 16 of the Regulations, Staff Service Condition
Rules have been framed, however, such Rules do not provide for payment of
pension.
6. The Board in its meeting held on 15.02.1985 passed the following
resolution:
“The Board accepted the
recommendation of the Committee on Retirement Benefits dated 11.2.85 and
decided that the scheme as prepared may be implemented, provided that the scheme
as reported would be operated from Institute resources and that no separate
grant would be sought for it from the Government…………. “
7. In this factual background, 27 petitioners (respondents 1 to 27
herein), in the present appeal invoked the writ jurisdiction of the High Court
for a direction to the respondents (appellants herein) to pay the arrears as
well as current pension on the month to month basis which has been stopped from
the month of January 2014. The Writ Petition was dismissed on 20.06.2017
holding that the resolution of the Board dated 15.02.1985 was inconsistent with
the Act and Rules, therefore, the writ petitioners were not vested with any
legal right. Correspondingly, there is no legal obligation on the State to pay
and that a writ of mandamus cannot be issued to the authority of the State to
act contrary to law. It was also held that, the payment of pension/family
pension by the State for the last few years is anillegality, the same cannot be
directed to be perpetuated by an order of the Court.
8. However, an intra Court appeal was allowed on 13.03.2018 noticing
that the Government of Bihar has earmarked grants under the pension head during
2004-05 to 2010-11. It was held that though the recommendations of the Committee on retirement benefits may be
implemented, provided that the scheme is operated from the Institute’s
resources, but the fact remains that the liability on account of pension was
duly mentioned in the annual budget of the State Government, therefore, such
release of the funds by the State Government will be in the nature of grant as
envisaged under Section 9(g)
of the Act. The State Government
would be estopped from saying that it never considered payment of pension as a
responsibility after about 30 years. The Government approved the budget and provided
additional funds to meet the liabilities, therefore, it would amount to
consideration and acceptance of responsibility, may be in form of grants only.
9. Learned Counsel for the appellant argued that the resolution of Board
was that the Retirement Benefit Scheme was to be operated from the resources of
the Institute and that “no separate grant would be sought for it from the State
Government”. Therefore, the financial burden of the Retirement Benefit Scheme
cannot be foisted upon the State. The pension was resolved to be borne by the
Institute from its own funds. Still further, such resolution of the Board was
notapproved by the State Government creating extra financial liability on the
State.
10. It is argued that in terms of Section 8 of the Act, the State Government
is to contribute a sum of rupees two lacs in each financial year or such other
sums for research or education work, publication, buildings and for proper
maintenance and development of the Institute. Such provision does not
contemplate payment of recurring expenditure of pension which is not
contemplated by Section 8 of the Act. The money contributed by the State Government
is one source of the Institute funds. The Board has limited power to transfer
funds from one item to another item exceeding 20 per cent of the original grant
under any item. The accounts of the Institute are required to be audited. Thus,
it is contended that though the officers of the State are members of the Board
and that such fact will make the Institute a “State” within the meaning of
Article 12 of the Constitution. But that fact will not make the Institute as
extension of the State Government, as the Institute is a creation of a separate
juristic entity under the State Statute. The rules framed in terms of Section
16 of the Act again do not provide for Provident Fund/Gratuity and for pension.
It is argued that the Board as an independent juristic entity is empowered to
prepare its budget but in terms of the resolution of the Board, financial
burden of the pension scheme cannot be passed on to the State Government.
11. It is further pointed out that the State Government has disbursed
grant from the year 2002-03 uptill 2010-11 which includedthe break up of
pension but it was a mistake, which was rectified from the year 2011-12. It is
contended that the State Government can grant funds under the heads (1)
Grant-in-aid for Salary, (2) Grant-inaid for creation of infrastructure, (3)
Grant-in-aid other than salary and infrastructure. Therefore, some amount
released towards pension in certain years including in terms of an order of
this Court will not create any right in favour of the writ petitioners as the
role of the State Government is to give grants as provided in Section 6 of the Act
but such grant cannot be claimed as matter of right.
12. On the other hand, the learned counsel for the Instituterespondent
No. 28, submitted that the State Government has been releasing Grant-in-aid
including amount towards pension since the Board has passed the resolution in
the year 1985. Reference was made to communications dated 09.09.2010 and
29.03.2005. It is also pointed out that the Chief Minister of the State
Government presided over the meeting of the Board on 28.05.1985, wherein, the
poor financial condition of the Institute was discussed. It was resolved that the
three alternative schemes of retirement benefits, i.e. (i) Contributory
Provident Fund; (ii) Contributory Provident Fund-cum- Gratuity; (iii) General
Provident Fund-cum-Pension-cum-Gratuity including benefit of commutation of
pension will at all times be the same as provided for in the statutes and Rules
of Patna University from time to time.
13. It is contended that contribution towards the amount of pension
has created legitimate expectation of the employees of theInstitute that they
are entitled to pension at par with the employees of Patna University. Thus,
the employees have legitimate expectations of receipt of pension from the State
Government. Therefore, the order passed by the Division Bench of the High Court
does not call for any interference.
14. On the other hand, Mr. V. N. Sinha, learned senior counsel appearing
for the respondent Nos. 1 to 27 submitted that the State Government is bound to
disburse the amount necessary for payment of pension as was being done from the
date when the resolution was passed in the year 1985. Therefore, it is too late
for the State to turn around to take a plea that the responsibility of the
pension amount is not of the State Government.
15. Section 6 of the Act empowers the Board to hold control and administer
the property and the funds of the Institute. The Board is further empowered to
create posts and appoint officers with a condition that a post of which
emoluments exceed rupees one thousand per month shall not be created without
the previous sanction of the State Government. Therefore, the Board has freedom
to create posts and to hold, control and administer its property and the funds,
but the post carrying an emolument of rupees one thousand per month or more
cannot be created without the previous approval of the State Government. Though
the proviso to Section 6(2) of the Act requires approval of the State
Government in respect of creation of post carrying pay of more than Rs.1000/-,
but the intention is that any financial expenditure of recurring nature would
require theapproval of the State Government. Therefore, if the amount of pension
exceeds rupees one thousand per month, the same could not be claimed from the
State Government as a right without approval. The State Government cannot be
called upon to bear the burden of the pension as such scheme was not approved
or even sought for. The provision of payment of pension in the Budget of the
State Government is a voluntary act not enforceable by a writ of mandamus. The
release of grant is in discretion of the grantor and cannot be forced by the
grantee.
16. It is true that in certain financial years as per documents on record,
the amount of pension was specifically mentioned while granting grant to the
Institute, but such amount is in discretion of the State and cannot be enforced
by a writ of mandamus. There is no obligation on the State to disburse the
grant towards the pension amount in terms of the Act or the Rules or even in
terms of the resolution of the Board.
17. Sub-Section (1) of Section 8 of the Act mandates the State Government
to contribute a sum of rupees two lacs in each financial year for the
maintenance of the Institute, whereas, sub-Section (2) empowers the State
Government to contribute from time to time, such additional sums as it may deem
fit for special items of research or education work, publication, buildings and
for proper maintenance and development of the Institute. Such payment for the
special projects, is in discretion of the State Government in view of the
object for which the grant is to be disbursed, but sub-Section (2) does notinclude
disbursement of the amount of pension as the contribution is for limited
purpose which is not recurring in nature.
18. The money contributed to the Institute by the State Government
is one source of the fund of the Institute fund. Section 9(3) of the Act
provides that the funds shall be applied towards meeting the expenses of the
Institute including expenses incurred in exercise of its powers and discharge
of its functions under the Act. Therefore, the retirement pension scheme, at
best can be treated to be a part of obligation of utilization of funds of the
Institute but such obligation to bear the amount of pension fund is not on
State Government as it is not mandated either by Section 8 or Section 9 of the
Act.
19. The argument of learned counsel for the Institute is that the State
Government has provided funds for payment of pension for the last many years,
therefore, the Institute and the employees of the Institute have legitimate
expectations to receive the amount of pension, is again not tenable.
20. In the judgment reported as Union of India & Ors. v. Hindustan Development Corporation
& Ors., (1993) 3 SCC 499 it
was held that a pious hope even leading to moral obligation cannot amount to a legitimate
expectation. The legitimacy of an expectation can be inferred only if it is
founded on the sanction of law or custom or an established procedure followed
in regular and natural sequence. It was held: -
“28.
Time is a three-fold present: the present as we experience it, the past as a
present memory and future as a present expectation. For legal purposes, the
expectation cannot be the same as anticipation. It is different from a wish, a
desire or a hope nor can it amount to a claim or demand on the ground of a
right. However earnest and sincere a wish, a desire or a hope may be and
however confidently one may look to them to be fulfilled, they by themselves
cannot amount to an assertable expectation and a mere disappointment does not
attract legal consequences. A pious hope even leading to a moral obligation
cannot amount to a legitimate expectation. The legitimacy of an expectation can
be inferred only if it is founded on the sanction of law or custom or an established
procedure followed in regular and natural sequence. Again it is distinguishable
from a genuine expectation. Such expectation should be justifiably legitimate
and protectable. Every such legitimate expectation does not by itself fructify into
a right and therefore it does not amount to a right in the conventional sense.
xxx xxx xxx
33. On examination of some of
these important decisions it is generally agreed that legitimate expectation
gives the applicant sufficient locus standi for judicial review and that the
doctrine of legitimate expectation is to be confined mostly to right of a fair
hearing before a decision which results in negativing a promise or withdrawing
an undertaking is taken. The doctrine does not give scope to claim relief
straightaway from the administrative authorities as no crystallised right as
such is involved. The protection of such legitimate expectation does not
require the fulfilment of the expectation where an overriding public interest
requires otherwise. In other words where a person's legitimate expectation is
not fulfilled by taking a particular decision then decision-maker should
justify the denial of such expectation by showing some overriding public
interest. Therefore even if substantive protection of such expectation is
contemplated that does not grant an absolute right to a particular person. It
simply ensures the circumstances in which that expectation may be denied or
restricted. A case of legitimate expectation would arise when a body by representation
or by past practice aroused expectation which it would be within its powers to
fulfil. The protection islimited to that extent and a judicial review can be
within those limits. But as discussed above a person who bases his claim on the
doctrine of legitimate expectation, in the first instance, must satisfy that
there is a foundation and thus has locus standi to make such a claim. In
considering the same several factors which give rise to such legitimate
expectation must be present. The decision taken by the authority must be found
to be arbitrary, unreasonable and not taken in public interest. If it is a
question of policy, even by way of change of old policy, the courts cannot
interfere with a decision…..
xxx xxx xxx
35….It can therefore be seen that
legitimate expectation can at the most be one of the grounds which may give
rise to judicial review but the granting of relief is very much limited. It
would thus appear that there are stronger reasons as to why the legitimate
expectation should not be substantively protected than the reasons as to why it
should be protected. In other words such a legal obligation exists whenever the
case supporting the same in terms of legal principles of different sorts, is
stronger than the case against it. As observed in Attorney General for New South Wales case: “To
strike down the exercise of administrative power solely on the ground of
avoiding the disappointment of the legitimate expectations of an individual
would be to set the courts adrift on a featureless sea of pragmatism. Moreover,
the notion of a legitimate expectation (falling short of a legal right) is too nebulous
to form a basis for invalidating the exercise of a power when its exercise
otherwise accords with law.” If a denial of legitimate expectation in a given
case amounts to denial of right guaranteed or is arbitrary, discriminatory, unfair
or biased, gross abuse of power or violation of principles of natural justice,
the same can be questioned on the well-known grounds attracting Article 14 but
a claim based on mere legitimate expectation without anything more cannot ipso
facto give a right to invoke these principles. It can be one of the grounds to
consider but the court must lift the veil and see whether the decision is
violative of these principles warranting interference…..”
21. In a judgment reported as Ram Pravesh Singh and Others v. State of Bihar and Others, (2006) 8 SCC 381 the Court was examining the decision
of the State Government that the assets and the liabilities of a Society should
be transferred to the State Electricity Board, but not the services of the
employees to the Board. It was the said decision of the State which came up for
consideration before this Court. It was held that the Board never agreed nor
decided to take services of any of the employees of the Society. Therefore, it
cannot be said that there was any regularity or predictability or certainty in
action which can lead to a legitimate expectation. It was held:-
“22. The Board had never
agreed nor decided to take services of any of the employees of the Society. In
fact, it is not even the case of the appellants that the Board had at any point
of time held out any promise or assurance to absorb their services. When the
licence of the Society was revoked, the State Government appointed a committee
to examine the question whether the Board can take over the services of the
employees of the Society. The Committee no doubt recommended that the services
of eligible and qualified employees should be taken over. But thereafter the State
Government considered the recommendation and rejected the same, apparently due
to the precarious condition of the Board which itself was in dire financial straits,
and was contemplating retrenchment of its own employees. At all events, any
decision by the State Government either to recommend or direct the absorption
of the Society's employees was not binding on the Board, as it was a matter
where it could independently take a decision. It is also not in dispute that
for more than two decades or more, before 1995, the Board had not taken over
the employees of any private licensee. There was no occasion for consideration
of such a course. Hence, it cannot be said that there was any regularity or
predictability or certainty in action which can lead to a legitimate
expectation.”
22. In view of the above judgments, legitimate expectation is one of
the grounds of judicial review but unless a legal obligation exists,there
cannot be any legitimate expectation. The legitimate expectation is not a wish
or a desire or a hope, therefore, it cannot be claimed or demanded as a right.
The payment of pension in the past will not confer an enforceable right in
favour of the Institute or its employees.
23. Thus, the resolution of the Board of the Institute to implement a
retirement benefit scheme from its own resources will not bind the State
Government to pay the amount of pension to the employees of the Institute. The
employees of such Institute cannot be treated at par with the employees of the
State Government nor the State can be burdened with the responsibility to pay
pension to the employees of the Institute. Consequently, we find that the order
of the Division Bench is not legally sustainable. Hence, we allow the appeal
and dismiss the Writ Petition.
The pending applications, if any, shall stand disposed of.