The State Of Bihar vs Dr. Sachindra Narayan

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

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

JUDGMENT

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 Signature Not Verified Digitally signed by MANISH SETHI Date: 2019.01.30 Institute of Social Studies Act, 1964, (Act). The Institute has a perpetual 15:29:57 IST Reason:

succession and a common seal. The Chairman of the Board of Control is

1 a 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:

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“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.

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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;

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(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.]

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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.”

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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 sanction

5 Dearness 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 an

6 illegality, 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 not

7 approved 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 included

8 the 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-in-

aid 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 Institute-

respondent 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 the

9 Institute 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 the

10 approval 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 not

11 include 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.1, 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: -

1 (1993) 3 SCC 499

12 “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.

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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 is

13 limited 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…..

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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 Others2, the Court was examining the

2 (2006) 8 SCC 381

14 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,

15 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.

….…………..........................J. (Dr. Dhananjaya Y. Chandrachud)

…………….................................J. (Hemant Gupta) New Delhi, January 30, 2019.

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