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CASE NO.: Appeal (civil)  4150 of 2003

PETITIONER: State of Bihar & Ors.

RESPONDENT: Bihar Pensioners Samaj

DATE OF JUDGMENT: 27/04/2006

BENCH: B. N. Srikrishna & Lokeshwar Singh Panta

JUDGMENT:

J U D G M E N T  

SRIKRISHNA,  J.

                The appellants impugn the judgment of the Division Bench of the  High Court of Judicature at Patna which struck down an Act of the State  Legislature styled as "The Bihar State Government Employees Revision of  Pension, Family Pension and Death-cum-Retirement Gratuity (Validation  and Enforcement) Act, 2001 (hereinafter referred to as the "Validation Act")  on the ground that it was enacted to frustrate, sidetrack and avoid an earlier  decision of the High Court.

       A notification, Resolution No. P.C.I. -Id/S7-1853-F dated 19.4.1990,  was issued by the State Government relating to provisions regulating  Pension and Death cum Retirement gratuity pursuant to the  recommendations of a Special Committee known as "Fitment-cum-Pay  Revision Committee". The notification declared that, after considering the  recommendations of the aforesaid Committee, the State Government, after  due deliberations, had decided to revise the provisions regulating Pension,  Family Pension and Death-cum-Retirement Gratuity of the State  Government employees "to the effect and extent indicated in the subsequent  paragraphs." That certain benefits were made available under the said  notification is common ground. However, the effective date of the  notification was fixed as 1.1.1986, although the notification declared that,  the financial benefits of revision of pension would be admissible only with  effect from 1.3.1989 and no arrears would be paid for the period 1.1.1986 to  28.2.1989. Paragraph 1 of the said notification is relevant and reads as  under: "1.  (i)        Date of effect: The revised provisions as per  these, orders shall apply to Government servants, who  retire/die in harness on of (sic) after the 1st January 1986.  The revision of pension with effect from 1st January 1986  shall be merely notional as the financial benefit of  revision of pension will be admissible only with effect  from 1st March 1989, to it, no arrears accruing from  revision of pension during the period from 1st January,  1986 to the 28th February 1989 shall be paid to the  pensioners.

(ii)            Where pension has been provisionally  sanctioned in cases occurring on or after 1st January  1986, the same shall be revised in terms of these orders.  In cases where pension has been finally sanctioned under  the pre-revised orders, the same shall be revised in terms  of these orders, provided such revision is to the  advantage of the pensiner (sic)."

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       Apart from pension, the notification also revised Death-cum- Retirement Gratuity but again no revision of Death-cum-Retirement Gratuity  was made in respect of Government servants who retired/died in harness on  or after 1.1.1986 and up to 28.2.1989. Certain revision was made in   dearness allowance, but the same was admissible only with effect from  1.7.1989. An option was given to those who had retired or would be retiring  between 1.1.1986 and 30.6.1989 to have their pension and retirement  gratuity calculated under the rules in force immediately before coming into  effect of the concerned notification.

       Another notification, Resolution No. P.C.I. 0-16/87-1854-F dated  19.4.1990, was issued for rationalisation of pensionary principles and  structure  of  pre-1.1.1986 Pensioners/Family Pensioners. This notification  also had identical terms with regard to the date of effect, although the  revised pensionary provisions applicable to pre-1.1.1986 Pensioners/Family  Pensioners were to come into effect with effect from 1.1.1986 notionally, the  financial benefits were directed to accrue only from 1.3.1989.

       The respondent, an Association representing the pensioners in the  State of Bihar, challenged the aforesaid two notifications before the High  Court by a writ petition C.W.J.C. No. 2467/91. The High Court disposed of  this writ petition by a judgment dated 21.8.1996. This writ petition was  allowed, by which the two notifications in question were quashed and the  State Government was directed to reconsider the matter "in accordance with  law and in the light of the observations made above." Interestingly, the High  Court made the following observations in the judgment (vide para 4): "It is no doubt open to the state Government to revise/  retionalise (sic) its pension scheme either on the same  pattern as followed by the Government of India or to  form its own scheme and to also fix a cut off date. In fact,  in the present case, it could as well, have fixed 1.3.1989  or date of issue of the impguned  (sic) resolution i.e.  19.4.90 as the cut off date. The question for consideration  nevertheless whether having decided to revise/rationship  (sic) the pension scheme with effect from 1.1.86 on the  Central pattern, the state Government had any  justification to deny the consequential monetary benefits  thereof and make the same effective only from 1.3.1989."

       The appellants challenged the judgment of the High Court by their  Special Leave Petition (Civil) No. 209/97 before this Court and this Court  was pleased to summarily dismiss the Special Leave Petition on 20.1.1997.

       Another similar writ petition being C.W.J.C. No. 2080/96, which was  pending in the Ranchi Bench of the High Court, was dismissed by a learned  Single Judge on 10.7.1997. The said judgment was impugned in a Letters  Patent Appeal before the Division Bench. During its pendency, the  respondent initiated contempt proceedings. The contempt proceedings were  closed by a direction of the High Court that non-implementation of the order  was due to a bona fide misunderstanding and the State Government was  granted three weeks time for implementation of the judgment. The State  Government moved a Special Leave Petition (Civil) No. 1672/99 before this  Court, which was disposed of on 8.3.1999 with a direction that the contempt  proceedings would be stayed for a period of three months and the Letters  Patent Appeal would be disposed of by the High Court within two months.  

       By a judgment dated 21.6.1999 the Division Bench of the Patna High  Court allowed the Letters Patent Appeal and set aside the judgment of the  learned Single Judge holding: "As the paragraph 1(i) of Resolution No. 1853  dated 19.4.1990 and paragraph No. 2.1 of Resolution No. 1854 dated  19.4.1990 have already been quashed, the question of quashing them again  does not arise. The State Government is directed to pay the pension to the  pensioners in accordance with the resolutions ignoring paragraphs 1(i) and  2.1 thereof."  The judgment of the Division Bench was challenged before

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this Court in Special Leave Petition (Civil) No. 9821/99, which was allowed  to be withdrawn and dismissed accordingly.                  On 15.12.2000 the Governor of Bihar was pleased to issue an  Ordinance styled as "The Bihar State Government Employees Revision of  Pension, Family Pension and Death-cum-Retirement Gratuity (Validation  and Enforcement) Ordinance, 2000". The said ordinance was subsequently  replaced by the Bihar Act 3 of 2001. After referring to the litigative history,  the Validation Act purports to validate the revision of pension and gratuity  in accordance with the two Resolution Nos. P.C.I.-Id/S7-1853-F and P.C.I.  0-16/87-1854-F of 19.4.1990 giving effect to the effective dates in  Paragraphs 1 and 2.1, respectively, of the two resolutions.  The respondent- Bihar Pensioners Samaj impugned the Validation Act before the High Court  by its writ petition C.W.J.C. No. 11696/2001. The said writ petition was  "an exercise on how to destroy the Judgment of Courts established under the  Constitution". Hence, this appeal.                                                                                                                                                                                                                                  

       Learned counsel for the appellants relied on the judgment of a  Constitution Bench of this Court in State of Orissa and Ors.  v.   Bhupendra Kumar Bose and Ors. AIR 1962 SC 945 which observed (vide  paragraph 17): "It is true that the judgment delivered by the High Court  under Art. 226 must be respected but that is not to say  that the Legislature is incompetent to deal with problems  raised by the said judgment if the said problems and their  proposed solutions are otherwise within their legislative  competence. It would, we think, be erroneous to equate  the judgment of the High Court under Art. 226 with Art.  226 itself and confer upon it all the attributes of the said  constitutional provision."

And further, learned counsel for the appellants urged that an Act of the State  legislature can be struck down by the courts in exercise of their powers of  judicial review only on the following grounds:

(a)     That the State legislature was incompetent to enact the legislation; (b)     That it was violative of any provisions contained in Part III of the  Constitution; (c)     That it was violative of any other provisions of the Constitution; or (d)     That it was an infringement of the basic features of the  Constitution.         Barring these available grounds, there is no other ground on which an  Act of a State legislature can be struck down and declared to be ineffective,  submits the learned counsel.          Learned counsel relied on Bakhtawar Trust and Ors  v.  M.D.  Narayan and Ors. (2003) 5 SCC 298 wherein it is observed (vide paragraph  14) as under: "The validity of any statute may be assailed on the  ground that it is ultra vires the legislative competence of  the legislature which enacted it or it is violative of Part  III or any other provision of the Constitution. It is well  settled that Parliament and State Legislatures have  plenary powers of legislation within the fields assigned to  them and subject to some constitutional limitations, can  legislate prospectively as well as retrospectively. This  power to make retrospective legislation enables the  legislature to validate prior executive and legislative Acts  retrospectively after curing the defects that led to their  invalidation and thus makes ineffective judgments of  competent courts declaring the invalidity. It is also well  settled that a validating Act may even make ineffective  judgments and orders of competent courts provided it, by  retrospective legislation, removes the cause of invalidity

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or the basis that had led to those decisions."

       We queried of Mr. Ranjit Kumar, learned senior counsel appearing for  the respondent, as to what was the ground on which the notifications were  struck down and the Validation Act was challenged. Learned counsel  contended that the notifications were bad for inconsistency with Article 14  of the Constitution. He submitted that the notifications introduced invidious  distinction between persons who had retired between 1.1.1986 and  28.2.1989 and those who retired on and from 1.3.1989. While in the case of  the former class of employees, the arrears arising out of the implementation  of the notification from 1.1.1986 was denied, although the notification itself  was made effective from 1.1.1986.  This, in the submission of the learned  counsel, amounts to an infringement of Article 14 and, therefore, the High  Court had rightly quashed the offending notifications.  

       In our view, the contention is unsound. In any event, we need not  pursue this contention any further, as the Division Bench of the High Court  had itself taken the view that it was perfectly open to the State Government  to fix 1.3.1989 as the effective date of the notifications and, in any event, the  two earlier judgments of the Division Benches had merely directed the State  Government to consider the issue in the light of the judgments. What is more  relevant to us today is that, after considering the effect of the two judgments,  the State Legislature passed the "Validation Act" in which the validating  Sections 4 and 5 read as under: "4.     Validation of Revision of Pension/Gratuity. \026  Notwithstanding any judgment, decree or order of any  Court, Tribunal or Authority the Government Resolutions  No. 1853 (F) and 1854 (F) both dated 19th April, 1990  would be deemed to have been enforced from 1st March,  1989 and the benefits of pension/family pension and  gratuity given to the Government employees under the  said two Resolutions would be deemed to have been due  to the employees w.e.f. 1st March, 1989 only and the said  date would be deemed always to have been the cut-off  date for the said two Resolutions.

5.      Overriding effect of the Act.- Notwithstanding  anything to the contrary contained in any judgment  decree or order passed by any Court, Tribunal or  Authority and in any other law for the time, being in  force the provisions of this Act shall prevail and have  effect."  

       It is the validity of this Act which was impugned before the High  Court, resulting in the impugned judgment. Once again, relying on the  judgment in Bakhtawar Trust (supra), the learned counsel for the  appellants contended that, a validating Act may even make ineffective the  judgments and orders of competent courts provided it, by retrospective  legislation, removes the cause of the invalidity or the basis that had led to  those decisions. It is always open to the Legislature to alter the law  retrospectively as long as the very premise on which the earlier judgment  declared a certain action as invalid is removed. The situation would be one  of a fundamental change in the circumstances and such a validating Act was  not open to challenge on the ground that it amounted to usurpation of  judicial powers.

       We think that the contention is well founded. The only ground on  which Article 14 has been put forward by the learned counsel for the  respondent is that the fixation of the cut-off date for payment of the revised  benefits under the two concerned notifications was arbitrary and it resulted  in denying arrears of payments to certain sections of the employees. This  argument is no longer res integra. It has been held in a catena of judgments  that fixing of a cut-off date for granting of benefits is well within the powers  of the Government as long as the reasons therefor are not arbitrary and are

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based on some rational consideration.  

       A supplementary affidavit filed on behalf of the State Government by   Mukesh Nandan Prasad dated 9.9.2002 brings out in paragraph 8 that the  total amount of financial burden, which would arise as a result of making  effective the payments from 1.1.1986 would be about 2,038.34 crores. In  other words, the State Government declined to pay the arrears from 1.1.1986  on the ground of financial consideration, which, undoubtedly, is a very  material consideration for any administration. In State of Punjab and Ors.   v.  Amar Nath Goyal and Ors. (2005) 6 SCC 754 this Court had occasion  to consider the very same issue. After referring to a number of other  authorities, it was held that financial constraints could be a valid ground for  introducing a cut-off date while introducing a pension scheme on revised  basis. Thus, refusal to make payments of arrears from 1.1.1986 to 28.2.1989  on the ground of financial burden cannot be held to be an arbitrary ground or  irrational consideration. Hence, the argument based on Article 14 of the  Constitution must fail.

       We see no other contention justifying the striking down of the  Validation Act passed by the competent Legislature. At any rate, none has  been pointed out to us. Thus, the only argument in favour of the striking  down having been found unacceptable, we are of the view that the impugned  judgment of the High Court is erroneous and needs to be interfered with.

       In the result, we allow the appeal and set aside the impugned  judgment of the High Court and declare the constitutionality of the  Validation Act. No order as to costs.