IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. CWP (T) No. 9602/2008 alongwith CWPs (T) No.9873, 9874, 9875, 9876, 9877, 9879, 9880, 9881, 9884, 9885, 9886, 9887, 9892, 9894, 9901, 9903, 9904, 9905, 9906, 9907, 9908, 9909, 9910, 9913, 9914, 9915, 9916, 9917, 9918, 9919, 9920, 9921, 9922, 9926, 9927, 9928, 9929, 9931, 9932, 9933, 9934, 9935, 9936 and 9942 of 2008. And CWPs (T) No. 9878, 9930, 9938, 10183, 10184 & 10571 of 2008 Reserved on: 20.12.2010/21.12.2010/ 22.12.2010 Decided on: 11.3. 2011 _____________________________________________ 1. CWP (T) No. 9602/2008 A.N. Gupta and others. …Petitioners. Versus State of Himachal Pradesh and others. …Respondents. 2. CWP (T) No. 9873/2008 Sarbjeet Singh. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents. 3. CWP (T) No. 9874/2008 Gopal Singh. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 4. CWP (T) No. 9875/2008 Pradeep K. Sharma. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 5. CWP (T) No. 9876/2008 Ravinder Acharya. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 6. CWP (T) No. 9877/2008 Jagat Singh. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 7. CWP (T) No. 9879/2008 V.K. Sharma. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents. 8. CWP (T) No. 9880/2008 Ankur Dhawan. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 9. CWP (T) No. 9881/2008 V.K. Narula. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 10. CWP (T) No. 9884/2008 2 Parkash Chand. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 11. CWP (T) No. 9885/2008 Seth Pal. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 12. CWP (T) No. 9886/2008 Sunder Singh. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 13. CWP (T) No. 9887/2008 Dhani Ram. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 14. CWP (T) No. 9892/2008 D.S. Mankotia. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 15. CWP (T) No. 9894/2008 V.K. Powadia. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents. 16. CWP (T) No. 9901/2008 Surinder Kumar. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 17. CWP (T) No. 9903/2008 Narinder Kumar. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 18. CWP (T) No. 9904/2008 Yash Pal Maria. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 19. CWP (T) No. 9905/2008 Punnu Ram. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 20. CWP (T) No. 9906/2008 Ajmer Singh. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 21. CWP (T) No. 9907/2008 Pradeep Kumar. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 22. CWP (T) No. 9908/2008 Dagu Ram. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 23. CWP (T) No. 9909/2008 Deep Chand. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 24. CWP (T) No. 9910/2008 Prithi Raj. …Petitioner. 3 Versus State of Himachal Pradesh and others. …Respondents 25. CWP (T) No. 9913/2008 Hem Raj. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 26. CWP (T) No. 9914/2008 Krishan Kumar. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 27. CWP (T) No. 9915/2008 Ramesh Chander. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 28. CWP (T) No. 9916/2008 S.K. Panday. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 29. CWP (T) No. 9917/2008 O.P. Mukhija. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 30. CWP (T) No. 9918/2008 V.K. Girhotra. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 31. CWP (T) No. 9919/2008 Umesh Kapoor. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 32. CWP (T) No. 9920/2008 Krishan Chand. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 33. CWP (T) No. 9921/2008 Jai Lal. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 34. CWP (T) No. 9922/2008 P.K. Namhota. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 35. CWP (T) No. 9926/2008 Ram Swaroop. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 36. CWP (T) No. 9927/2008 Ram Singh. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 37. CWP (T) No. 9928/2008 Krishan Chand. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 38. CWP (T) No. 9929/2008 Mohan Lal. …Petitioner. 4 Versus State of Himachal Pradesh and others. …Respondents 39. CWP (T) No. 9931/2008 Dina Nath. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 40. CWP (T) No. 9932/2008 Rattan Singh. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 41. CWP (T) No. 9933/2008 Purkhu Ram. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 42. CWP (T) No. 9934/2008 S.K. Sharma. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 43. CWP (T) No. 9935/2008 Amar Singh. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 44. CWP (T) No. 9936/2008 Anil Kumar. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 45. CWP (T) No. 9942/2008 V.N. Dogra. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 46. CWP (T) No. 9878/2008 T.R. Sharma. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 47. CWP (T) No. 9930/2008 D.S. Chauhan. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 48. CWP (T) No. 9938/2008 Navin Brave. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 49. CWP (T) No. 10183/2008 Partap Singh. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 50. CWP (T) No. 10184/2008 Nagender Kumar. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents 51. CWP (T) No. 10571/2008 Naresh Kumar. …Petitioner. Versus State of Himachal Pradesh and others. …Respondents _______________________________________________________ 5 Coram: Hon’ble Mr. Justice Rajiv Sharma, Judge. Whether approved for reporting?1 Yes (in all the petitions) For the petitioners : Mr. Vikas Bhardwaj, Advocate. For the Respondents: Mr. P.M. Negi, Dy. Advocate General and Mr. J.S. Guleria, Asstt. A.G. for respondents No. 1 to 3. Mr. M.R. Verma, Advocate for respondents No.4 and 5. ____________________________________________________ Justice Rajiv Sharma, Judge. Since common questions of law and facts are involved in all these petitions, the same were taken up together for hearing and are being disposed of by a common judgment. 2. Material facts necessary for the adjudication of these petitions are that all the petitioners were appointed on temporary basis in the Animal Husbandry Department. Respondent-State took a conscious decision vide notification dated 14.9.1983 to transfer dairy development activities of Animal Husbandry Department in six districts ( Shimla, Mandi, Solan, Bilaspur, Sirmaur and Hamirpur) of Himachal Pradesh to the Himachal Pradesh State Cooperative Milk Producers Federation Limited. The State was pleased to enforce the following administrative arrangement in the public interest: 1 Whether reporters of the local papers may be allowed to see the judgment? Yes 6 1. The Himachal Pradesh State Cooperative Milk procedures’’ Federation Ltd. hereinafter referred to as Milkfed will take over the staff and management of the existing Dairy Development Schemes in the 6 districts (Shimla, Mandi, Sirmour, Solan, Bilaspur and Hamirpur) of Himachal Pradesh. 2. a. All property and assets vested in the Animal Husbandry Department in respect of the above Dairy Development Schemes as detailed at Annexure ‘B’ shall vest in the Milkfed provided that the State Government may by notification in the official gazette exclude from the operation of the provision of this clause such property or assets as may be specified in the notification. b. The said property and the assets including land, buildings, services like water and electrical installation, vehicles, fixtures, fittings, stores and spare parts, plants and Machinery, securities and advances, and all the office equipment etc. to be evaluated by the evaluation committee constituted separately for the purpose shall be transferred to the Federation on nominal annual lease of Rs. 100/- with effect from the actual date of switch over. 3. The services of all Government employees of the Animal Husbandry Department mentioned at Annexure ‘A’ shall be temporally placed at the disposal of the said Milkfed on deputation for a period of 6 months on terms and conditions governing at present till the Milkfed frames its own rules and regulations in respect of services of its employees which shall not be less advantageous than the terms and conditions application to them at present including provision for absorption in the services of 7 the Milkfed of Government employees of Animal Husbandry Department. Provided that no deputation allowance will be given to the Government employees for the deputation period. 4. All licences/permits/registrations granted/made on behalf of the said schemes of the Animal Husbandry Department shall be deemed to have been granted/made on behalf of the H.P. State Cooperative Milk Producers Federation Ltd., and shall have effect accordingly. 5. This order will come into force on 2nd October, 1983” 3. The Director, Animal Husbandry, i.e. respondent No.2 issued notice of option to be exercised by the employees, who were serving in the Himachal Pradesh Animal Husbandry Department and were ready and willing to be absorbed in the Himachal Pradesh State Cooperative Milk Producers Federation Limited on 26.12.1983. Thereafter, petitioners were appointed vide letter 16.4.1984. Petitioners and similarly situate persons made representations for granting them pension. Case of petitioner No.1 was rejected by the respondent-State on 27.3.2001. The contents of letter dated 27.3.2001 reads thus: “I am directed to refer to your representation dated 3.7.2001, on the subject cited above and to say that your earlier representation dated 7.10.2000 was examined at Government level and it has been gathered that you were not confirmed employee at the time of your transfer to H.P. Milk Federation. Therefore, you are not 8 entitled to pro-rata pension. You had rightly been allowed the benefit of terminal gratuity.” 4. The Himachal Pradesh State Cooperative Milk Producers Federation Limited also initiated the process for framing the Rules to govern the conditions of service of its employees. These Rules are called “H.P. State Cooperative Milk Producer’s Federation Limited Employees Service Rules, 1983”. These Rules were approved by the Registrar, Cooperative Societies only on 12.3.1985. 5. Mr. Vikas Bhardwaj has strenuously argued that the conditions of service of the petitioners and similarly situate persons were to be regulated on the basis of promise held out to them as per condition No.3 of notification dated 14.9.1983 and notice of option dated 26.12.1983. He also contended that as far as the employees of the erstwhile Himachal Government Transport were concerned, they were granted pension and gratuity on the basis of Annexure A-2 dated 22.8.1975. In other words, his submission is that in the present case also the petitioners are entitled to get pension to be paid by the State Government since there is no pension scheme in the respondent-federation on the basis of letter dated 22.8.1975. He also placed strong reliance on the judgment rendered by a Division Bench of this Court in CWP No. 1781/2002, tilted as Principal Secretary (AH) to 9 the Government of H.P. and another versus Mohan Lal decided on 4.7.2008 and CWP No. 1635/2002, titled as State of H.P. and another versus Ramesh Chand and another, decided on 24.2.2009. He lastly contended that the case of the petitioners for pension has only been rejected on the ground that his clients were not confirmed at the time when they were absorbed in the Himachal Pradesh State Cooperative Milk Producers Federation Limited. During the course of arguments, Mr. Vikash Bhardwaj has given up his relief as far as vires of the rules is concerned and has only argued on the question of pensionary/retiral benefits of the petitioners on the basis of services rendered by the petitioner with the State Government in the Animal Husbandry Department followed by the services rendered in respondent-federation. 6. Mr. P.M. Negi has vehemently argued that once the petitioners have exercised their option as per letter dated 26.12.1983, they are estopped from claiming retiral benefits at par with the Government employees. He also argued on the basis of contents of the reply that petitioners have been given their terminal benefits at the time of their absorption and no right of pension was available to them unless or until they were confirmed employees of the Animal Husbandry Department. He also argued that the copy of the Rules of 10 the Himachal Pradesh State Cooperative Milk Producers Federation Limited was supplied to the employees at the time of their absorption. 7. Mr. M.R. Verma, appearing on behalf of respondents No. 4 and 5, has argued on the basis of the reply filed that petitioners were well aware of the service rules of the respondent-federation and according to him, the Rules were framed in the year 1983 and the petitioners had opted for the service conditions of Himachal Pradesh State Cooperative Milk Producers Federation Limited with their eyes wide open. 8. I have heard the learned counsel for the parties and have perused the pleadings carefully. 9. It is undisputed that the petitioners were temporary employees of the Himachal Pradesh Animal Husbandry Department. The State Government has taken a conscious decision and has evolved administrative arrangement, as per notification dated 14.9.1983 to transfer diary development activities in the 6 districts to Himachal Pradesh State Cooperative Milk Producers Federation Limited. It is abundantly clear from the plain language employed in condition No.3 of notification dated 14.9.1983 that the services of the Government employees of the Animal Husbandry Department were to be temporarily placed at the 11 disposal of the Milk Federation on deputation for a period of 6 months on terms and conditions, governing at that time, till the Milk Federation framed its own rules and regulations in respect of the services of its employees, which were not to be less advantageous than the terms and conditions applicable to them at that time, including provision for absorption in the services of Milk Federation of Government employees of Animal Husbandry Department. Similarly, in the notice of option dated 26.12.1983, it was prescribed that the transfer of services to the Milk Federation will not amount to interruption of service and will not entail any loss of seniority previously held by the employees and the terms and conditions of service applicable to the employees after such transfer would be those applicable in the federation. It was mentioned, as per Annexure RA-1 that the appointment shall be subject to the service rules of the Milk Federation, as amended from time to time and the other conditions of the employees were to be governed by the Rules/Regulations as framed by the Milk Federation and made applicable from time to time and the existing salary was protected. 10. Now, as far as the question of exercising option is concerned, the respondents cannot be permitted to take advantage of their superior bargaining power. Petitioners and similarly situate persons had no option but to accept the 12 terms and conditions as offered though contrary to express provisions of notification dated 14.9.1983 to earn their livelihood. In case they had not opted to unquestionable terms, they would have been out of employment. Such like unquestionable contracts have been declared to be violative of Articles 14 and 16 of the Constitution of India. 11. Their Lordships of the Hon’ble Supreme Court of India in Central Inland Water Transport Corporation Limited and another versus Brojo Nath Ganguly and another, (1986) 3 SCC 156 have held as under: "81. It would appear from certain recent English cases that the Courts in that country have also begun to recognize the possibility of an unconscionable bargain which could be brought about by economic duress even between parties who may not in economic terms be situate differently (See, for instance, Occidental Worldwide Investment Corpn. V. Skibs A/S Avanti (1976), 1 Lloyd's Rep. 293, North Ocean Shipping Co. Lid. v. Hyundai Construction Co. Ltd. (1979) QB 705, Pao On v. Lau Yin Long (1980) AC 614 and Universe Tankships of Monrovia v. International Transport Workers Federation (1981) ICR 129, reversed in (1982) 2 WLR 803, and the commentary on these cases in Chitty on Contracts, Twenty-fifth Edition, Volume 1, paragraph 486). 82. Another jurisprudential concept of comparatively modern origin which has affected the law of contracts is the theory of distributive justice". According to this doctrine, distributive fairness and justice" in the possession of wealth and property can be achieved not only by taxation but also by regulatory control of private and contractual transactions. even 13 though this might involve some sacrifice of individual liberty. In Lingappa Pochanna Appelwar v. State of Maharashtra, (1985) 1 SCC 479 : (AIR 1985 SC 389), this Court, while upholding the constitutionality of the Maharashtra Restoration of Lands to Scheduled Tribes Act 1974, said (at page 493) (of SCC) : (at p. 398 of AIR): "The present legislation is a typical illustration of the concept of distributive justice, as modern jurisprudents know it. Legislators, Judges and administrators are now familiar with the concept of distributive justice. Our Constitution permits and even directs the State to administer what may be termed distributive justice'. The concept of distributive justice in the sphere of law-making connotes, inter alia, the removal of economic inequalities and rectifying the injustice resulting from dealings or transactions between unequals in society. Law should be used as an instrument of distributive justice to achieve a fair division of wealth among the members of society based upon the principle: 'From each according to his capacity, to each according to his needs'. Distributive justice comprehends more than achieving lessening of inequalities by differential taxation, giving debt relief or distribution of property owned by one to many who have none by imposing ceiling on holdings, both agricultural and urban, or by direct regulation of contractual transactions by forbidding certain transactions and, perhaps, by requiring others. It also means that those who have been deprived of their properties by unconscionable bargains should be restored their property. All such laws may take the form of forced redistribution of wealth as a means of achieving a fair division of material resources 14 among the members of society or there may be legislative control of unfair agreements." (Emphasis supplied) When our Constitution states that it is being enacted in order to give to all the citizens of India "JUSTICE social, economic and political", when clause (1) of Art. 38 of the Constitution directs the State to strive to promote the welfare of the people by securing and protecting as effectively as it may be social order in which social, economic and political justice shall inform all the institutions of the national life, when clause (2) of Art. 38 directs the State, in particular, to minimize the inequalities in income, not only amongst individuals but also amongst groups of people residing in different areas or engaged in different vocations, and when Art. 39 directs the State that it shall, in particular, direct its policy towards securing that the citizens, men and women equally, have the right to an adequate means of livelihood and that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment and that there should be equal pay for equal work for both men and women, it is the doctrine of distributive justice which is speaking through these words of the Constitution. 83. Yet another theory which has made its emergence in recent years in the sphere of the law of contracts is the test of reasonableness or fairness of a clause in a contract where there is inequality of bargaining power. Lord Denning M.R., appears to have been the propounder, and perhaps the originator - at least in England, of this theory. In Gillespie Brothers & Co. Ltd. v. Roy Bowles Transport Ltd., (1973) 1 QB 400. Where the question was whether an indemnity clause in a contract, on its true construction, relieved the indemnifier from liability arising to the indemnified from his own negligence, Lord Denning said (at pages 415-6) : 15 "The time may come when this process of construing the contract can be pursued no further. The words are too clear to permit of it. Are the courts then powerless? Are they to permit the party to enforce his unreasonable clause, even when it is so unreasonable, or applied so unreasonably, as to unconscionable? When it gets to this point, I would say, as I said many years ago : "there is the vigilance of the common law which, while allowing freedom of contract, watches to see that it is not abused' : John Lee & Son (Grantham) Ltd. v. Railway Executive (1949) 2 All ER 581, 584. It will not allow a party to exempt himself from his liability at common law when it would be quite unconscionable for him to do so." (Emphasis supplied) In the above case the Court of Appeal negatived the defence of the indemnifier that the indemnity clause did not cover the negligence of the indemnified. It was in Lloyds Bank Ltd. v. Bundy, (1974) 3 All ER 757 that Lord Denning first clearly enunciated his theory of "inequality of bargaining power". He began his discussion on this part of the Me by stating (at page 763): "There are cases in our books in which the courts will set aside a contract, or a transfer of property, when the parties have not met on equal terms, when the one is so strong in bargaining power and the other so weak that, as a matter of common fairness, it is not right that the strong should be allowed to push the weak to the wall. Hitherto those exceptional cases have been treated each as a separate category in itself. But I think the time has come when we should seek to find a principle to unite them. I put on one side contracts or transactions which are voidable for fraud or misrepresentation or mistake. All those are 16 governed by settled principles. I go only to those where there has been inequality of bargaining power, such as to merit the intervention of the Court." (Emphasis supplied) He then referred to various categories of cases and ultimately deduced therefrom a general principle in these words (at page 765) : "Gathering all together, I would suggest that through all these instances there runs a single thread. They rest on 'inequality of bargaining power'. By virtue of it, the English law gives relief to one who, without independent advice, enters into a contract on terms which are very unfair or transfers property for a consideration which is grossly inadequate, when his bargaining power is grievously impaired by reason of his own needs or desires, or by his own ignorance or infirmity, coupled with undue influences or pressures brought to bear on him by or for the benefit of. the other. When I use the word 'undue' I do not mean to suggest that the principle depends on proof of any wrongdoing. The one who stipulates for an unfair advantage may be moved solely by his own self-interest, unconscious of the distress he is bringing to the other. I have also avoided any reference to the will of the one being 'dominated' or .overcome' by the other. One who is in extreme need may knowingly consent to a most improvident bargain, solely to relieve the straits in which he finds himself. Again, I do not mean to suggest that every transaction is saved by independent advice: But the absence of it may be fatal. With 17 these explanations, I hope this principle will be found to reconcile the cases." (Emphasis supplied) 89. Should then our courts not advance with the times? Should they still continue to cling to outmoded concepts and outworn ideologies? Should we not adjust our thinking caps to match the fashion of the day? Should all jurisprudential development pass us by, leaving us floundering in the sloughs of nineteenth- century theories? Should the strong be permitted to push the weak to the wall? Should they be allowed to ride roughshod over the weak? Should the courts sit back and watch supinely while the strong trample under foot the rights of the weak? We have a Constitution for our country. Our judges are bound by their oath to "uphold the Constitution and the laws". The