IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR FRIDAY, THE 25TH FEBRUARY 2011 / 6TH PHALGUNA 1932 WP(C).No. 5401 of 2006(R) ----------------------------------- PETITIONER(S): ----------------------- S.RAGHAVAN, AGED 55 YEARS, S/O.SANKARAN, RESIDING AT PAMPURATHU VEEDU, PERUMBUZHA.P.O, KOLLAM - SENIOR OFFICER, AUDIT REPORT INTERFACE, O/O.CHIEF INTERNAL AUDITOR, K.S.E.B., THIRUVANANTHAPURAM. BY ADVS. SRI.K.S.MADHUSOODANAN SRI.T.V.JAYAKUMAR NAMBOODIRI SMT.K.M.RAMYA RESPONDENT(S): ------------------------ 1. THE KERALA STATE ELECTRICITY BOARD, REPRESENTED BY ITS SECRETARY, VYDYUTHI BHAVAN, PATTOM, THIRUVANANTHAPURAM. 2. THE CHIEF ENGINEER (HRM), KERALA STATE ELECTRICITY BOARD, VYDYUTHI BHAVAN, PATTOM, THIRUVANANTHAPURAM. 3. KERALA SMALL INDUSTRIES DEVELOPMENT CORPORATION LTD., REPRESENTED BY ITS MANAGING DIRECTOR, SANTHI NAGAR, THIRUVANANTHAPURAM. ADV. SRI.K.S.ANIL, SC, KSEB SRI. ASOK M.CHERIYAN, SC, KSEB FOR R1,2 R3 BY ADV.SRI.R.T.PRADEEP, SC FOR SIDCO THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 17/01/2011, THE COURT ON 25/02/2011 DELIVERED THE FOLLOWING: W.P.(C) NO.5401/2006 APPENDIX PETITIONER'S EXHIBITS P1:- COPY OF THE NOTIFICATION DTD. 15.1.1991. P2:- COPY OF THE ADVICE MEMO ISSUED BY THE KERALA STATE PUBLIC SERVICE COMMISSION DTD. 5.4.94. P3:- COPY OF THE RELIVING ORDER DTD. 10.5.1994. P4:- COPY OF THE APPOINTMENT ORDER ISSUED BY THE IST RESPONDENT DT. 5.5.1994. P5:- COPY OF THE ORDER DTD. 12.3.1992 ISSUED BY THE IST RESPONDENT. P6:- COPY OF THE GOVERNMENT ORDER DTD. 12.11.2002. P7:- COPY OF THE GOVERNMENT ORDER DTD. 31.3.87. P8:- COPY OF THE REPRESENTATION SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT THROUGH PROPER CHANNEL DTD. 2.9.2004. P9:- COPY OF THE LETTER DTD. 1.4.2005 ISSUED BY THE FINANCIAL ADVISOR OF THE IST RESPONDENT TO THE IST RESPONDENT. P10:- COPY OF THE ORDER DTD. 1.9.2005 ISSUED BY THE IST RESPONDENT. P11:- COPY OF THE ORDER DTD. 14.12.2005. P12:- COPY OF THE 1.06.2009 IN WPC. 31084/2006 OF THIS HONOURABLE COURT. RESPONDENT'S EXHIBITS R1(a):- COPY OF THE LETTER DTD. 10.10.2005 ISSUED TO THE CHIEF ENGINEER (HRM) TRUE COPY P.S. TO JUDGE tss T.R. Ramachandran Nair, J. - - - - - - - - - - - - - - - - - - - - - - - - W.P.(C) No.5401 of 2006-R - - - - -- - - - - - - - - - - - - - - - - - - - - Dated this the 25th day of February, 2011. JUDGMENT The petitioner seeks for a direction to reckon the period of previous service rendered by him with the third respondent, viz. Kerala Small Industries Development Corporation (SIDCO) (for short 'the Corporation) for computing the pension consequent on his retirement from the first respondent Kerala State Electricity Board (for short 'the Board). 2. Necessary facts for the disposal of the writ petition are the following: The petitioner entered service of the third respondent Corporation on 1.3.1977 as Lower Division Accountant. Subsequently, he became a Senior Accountant. Pursuant to an advertisement to fill up the post of Finance Officer in the Electricity Board published as per Ext.P1, he applied for the post and as per Ext.P2, he was advised for appointment by the Public Service Commission. He was relieved on 16.5.1994 as evident from Ext.P3 and was appointed in the service of the first respondent on 18.5.1994. When he joined the service of the first respondent Board, he was having a total service of 17 years, 2 months and 16 days with the third respondent. wpc 5401/2006 2 3. The whole dispute is whether with regard to reckoning of previous service as qualifying service for pension, the relevant clauses as provided in Ext.P5 which was in vogue at the time of entry in service of the petitioner in the Board or Ext.P10 which was in force at the time of his retirement, are applicable. The petitioner retired from service on 31.3.2006 and Ext.P10 is dated 1.9.2005. As per Ext.P5, the Board accorded sanction for the reckoning of the service rendered by a Board employee in State Government Departments/Quasi-Government Organisations prior to his/her appointment/absorption in Board as qualifying service to sanction pensionary benefits. In Ext.P10 new conditions were prescribed. Mainly it was specified that the counting of past service rendered by the Board employees in the Kerala State Public Sector Undertaking/Autonomous bodies for the purpose of pension in the Board, will be subject to realisation of the pro-rata pension liability from the Kerala State Public Sector Undertaking/Autonomous bodies. 4. The petitioner contends that Ext.P5 confers a vested right as it was in force at the time of entry in service of the petitioner. He joined the service of the Board expecting that pension will be paid reckoning past service also. As far as the third respondent is concerned, no pension scheme was in existence. Alternatively, the petitioner also seeks for a direction to wpc 5401/2006 3 the third respondent to remit the pro-rata pension contribution. Exts.P6 and P7 are the Government Orders whereby the Government has framed scheme for counting the period of service in Central Government, etc. for the purpose of grant of pension to State Government employees. The petitioner relies upon Ext.P9 advice made by the Financial Adviser of the Board which is in his favour. But finally, the Board rejected his request as per Ext.P11 stating that the prior service cannot be reckoned as the former employer had refused to remit the pro-rata pension contribution. 5. Counter affidavit and a statement have been filed by respondents 1 and 3. 6. First I will consider the stand taken by the third respondent in the matter. The third respondent, in para 4 of the statement, avers that they have remitted the Employer's contribution to the Provident Fund account of the petitioner for the entire period of his service in the Corporation. The gratuity payable to him for his service in the Corporation and Earned Leave Surrender salary were fully paid to him after his relief from the Corporation. Therefore, the Corporation is not liable to pay any pension contribution. It is also stated that there is no provision in the Corporation to pay pro-rata pension contribution to any department or institution for service of a regular employee who is relieved or retires from the service of wpc 5401/2006 4 the Corporation since the service of the Corporation is not pensionable. This is the impediment for them to remit the pro-rata contribution. It is further clear that there is no agreement between the Corporation and the Electricity Board in the matter. 7. The stand taken by the Electricity Board is that even though the Board contacted the third respondent Corporation, but the Corporation clarified as per Ext.R1(a) letter that “ they have no provision to remit pro- rata pension contribution to the Board's account and therefore the Board had no other option but to decline the request of the petitioner. It is submitted that Ext.P10 will govern the field. 8. The petitioner has filed a reply affidavit and in the additional affidavit filed by the Board, they have produced Exts.R1(a) and R1(b). Ext.R1(a) is an order passed by the Finance (Pension - B) Department of the Govt. of Kerala. It is stated that the same principle was adopted while issuing Ext.P10. Ext.R1(b) is a judgment of this Court in W.P.(C) No.20707/2006 wherein the petitioner claimed the benefit of reckoning of the period of service rendered in the Electricity Board for the purpose of pension from the State Government. Therein, this Court held that the service rendered by the petitioner in the Board cannot be tagged on to the pensionary service rendered by him under the Govt. of Kerala. wpc 5401/2006 5 9. Heard learned counsel for the petitioner Shri K.S. Madhusoodanan, Shri Ashok M. Cherian, learned Standing Counsel for the Board and Shri R.T. Pradeep, learned Standing Counsel for the SIDCO. 10. Shri Madhusoodanan, learned counsel for the petitioner relied upon the following decisions of the Apex Court and this Court to contend for the position that the petitioner had a vested right to reckon the prior service for the purpose of pension and the same cannot be altered to his disadvantage. They are: Ex-Major N.C.Singhal v. Director General, Armed Forces Medial Services, New Delhi (AIR 1972 SC 628), T.R. Kapur and others v. State of Haryana and others (AIR 1987 SC 415), Kerala Electrical A.E. Co. Ltd. v. Raveendran Pillai (1999 (2) KLT 845), Raghavendra Acharya & others v. State of Karnataka & others (AIR 2006 SC 2145) and Bindu Thomas v. State of Kerala (2008 (1) KLT 89). 11. Ext.P5 is the proceedings of the Electricity Board whereby the Board considered the question of counting past service with the State Government or State Autonomous bodies prior to their appointment in the Board service for the purpose of granting pension. A reading of the said order shows that the State Government informed the Board that they will not bear the pension liability in the case of Government Employees wpc 5401/2006 6 absorbed in autonomous bodies. The order was issued in the context of representations received from certain employees and in paragraph 2, after finding that the financial commitment by way of pension contribution is not very huge, the Board accorded sanction for reckoning of the service rendered by a Board employee in State Government Departments/Quasi- Government Organisations prior to their appointment/absorption in the Board. Thus, learned counsel for the petitioner submitted that this is a vested right available to the petitioner and therefore the same cannot be varied to his disadvantage. 12. Learned Standing Counsel for the Board submitted that Ext.P10 proceedings were issued prior to the retirement of the petitioner. The Board is competent to modify the relevant rules with regard to the grant of pension and since the petitioner was in service as on the date of Ext.P10, the same will apply to him. It is therefore pointed out that it is not a case of taking away his vested right. 13. Now I will come to the principles stated by this Court and the Apex Court in the decisions cited by the learned counsel for the petitioner. 14. In Ex-Major N.C. Singhal's case (AIR 1972 SC 628), on the facts of the said case, it was held in para 7 as follows: “7. We think that the appellant's conditions of service were wpc 5401/2006 7 governed by para 13 of Army Instruction No.I/S of 1954 and his previous full pay commissioned service should be taken in the matter of 'ante-date' for the purpose of his pay. The condition of service in this regard was not liable to be altered or modified to the prejudice of the appellant by a subsequent administrative (Army?) instruction which was given retrospective effect from 28th October, 1962.” The facts of the case are not similar to the facts of this case. 15. The next decision is T.R. Kapur's case (AIR 1987 SC 415). Therein, a notification was issued making degree in Engineering as essential qualification for promotion as Executive Engineer in Irrigation Branch. In an earlier decision in A.S. Parmar v. State of Haryana (AIR 1984 SC 643), the Apex Court took the view that a degree in Engineering is essential for such promotion. Hence, the notification was challenged as violative of Articles 14 and 16 of the Constitution of India. The Apex Court considered the contention that any rule which affects promotion of a person relates to his conditions of service, although mere chances of promotion cannot be approved and held that such contention must prevail. (para 5). After referring to various other aspects, it was held thus in para 16: “16. It is well settled that the power to frame rules to regulate the conditions of service under the proviso to Art. 309 of the Constitution carries with it the power to amend or alter the rules with a retrospective effect : B. S. Vadhera v. Union of India, (1968) wpc 5401/2006 8 3 SCR 575 : (AIR 1969 SC 118), Raj Kumar v. Union of India, (1975) 3 SCR 963: (AIR 1975 SC 1116), K. Nagaraj v. State of A.P., (1985) 1 SCC 523: (AIR 1985 SC 551) and State of J and K v. Triloki Nath Khosla, (1974) 1 SCR 771 : (AIR 1974 SC 1). It is equally well settled that any rule which affects the right of a person to be considered for promotion is a condition of service although mere chances of promotion may not be. It may further be stated that an authority competent to lay down qualifications for promotion, is also competent to change the qualifications. The rules defining qualifications and suitability for promotion are conditions of service and they can be changed retrospectively. This rule is however subject to a well recognised principle that the benefits acquired under the existing rules cannot be taken away by an amendment with retrospective effect, that is to say, there is no power to make such a rule under the proviso to Art. 309 which affects or impairs vested rights. Therefore, unless it is specifically provided in the rules, the employees who are already promoted before the amendment of the rules cannot be reverted and their pro motions cannot be recalled. In other words, such rules laying down qualifications for promotion made with retrospective effect must necessarily satisfy the test of Arts. 14 and 16(l) of the Constitution.” It was also held that in the absence of previous approval from Central Government, the notification cannot be said to be valid. 16. In U. Raghavendra Acharya's case (AIR 2006 SC 2145), the wpc 5401/2006 9 question was considered in the light of the pay revision effected and consequential revision of pensionary benefits. Therein, the appellants were retired teachers who retired during the period 1.1.1996 to 31.3.1998. They were given the benefit of revised scales with effect from 1.1.1996. Going by the relevant Rule 296, the pension had to be calculated based on the last pay drawn. But in the pay revision order, a condition was made that “the revised pay drawn in the UGC pay scales for the period from 1.1.1996 upto 31.3.1998 shall not be taken as emoluments for the purpose of pensionary benefits” and the validity of the same was challenged. It was held thus in para 26: “These appeals involve the question of revision of pay and consequent revision in pension and not the grant of pension for the first time. Only the modality of computing the quantum of pension was required to be determined in terms of the notification issued by the State of Karnataka. For the said purpose, Rule 296 of the Rules was made applicable. Once this rule became applicable, indisputably the computation of pensionary benefits as required to be carried out in terms thereof. The Pension Rules envisage that pension should be calculated only on the basis of the emoluments last drawn. No order, therefore, could be issued which would be contrary to or inconsistent therewith. Such emoluments were to be reckoned only in terms of the statutory rules. If the State had taken a conscious decision to extend the benefit of the UGC pay scales wpc 5401/2006 10 w.e.f. 1.1.1996, to the appellants allowing them to draw their pay and allowances in terms thereof, we fail to see any reason as to why the pensionary benefits would not be extended to them from the said date.” Finally, in para 31 their Lordships held thus: “31. The appellants had retired from service. The State, therefore, could not have amended the statutory rules adversely affecting their pension with retrospective effect.” Therefore, the amendment which was made with retrospective effect adversely affecting the pension, was held invalid. 17. In Kerala Electrical A.E. Co. Ltd.'s case (1999 (2) KLT 845), a Division Bench of this Court considered a similar question wherein also the standing orders were amended with retrospective effect which affected the claim of the persons who have already retired, for gratuity. The Bench took the view that there is a vested right which cannot be destroyed by retrospective amendment. Therein, the persons retired from service in the years 1996 and 1997, but the Amendment Act, viz. Payment of Gratuity (Amendment) Act, 1998 came into force with effect from 24.5.1995. It is in these circumstances, the said view was taken. 18. Another decision which is brought to my notice is that of a Division Bench of this Court in Bindu Thomas' case (2008 (1) KLT 89). wpc 5401/2006 11 Therein, the question arose with regard to the interpretation of the proviso to Rule 2 of Chapter XXXI of the Kerala Education Rules, 1959. It was held on facts that no vested right is taken away. 19. Here, the question to be examined is whether as on the date of coming into force of the amendment, since the petitioner has not retired from service, can it be said that it affects his vested right. The power of the appointing authority to change, vary, or amend the rules or regulations with regard to the conditions of service cannot be disputed. The test laid down in the various decisions noted above, will show that such an amendment shall not affect vested right by giving retrospectivity. 20. The question as now posed herein, has been elaborately considered by a Constitution Bench of the Apex Court in Chairman, Railway Board and others v. C.R. Rangadhamaiah and others {(1997) 6 SCC 623}. Therein also, it was held that retrospective amendment of statutory rules, adversely affecting pension of employees who already stood retired on the date of the notification, was invalid. But their Lordships also held that the rights of persons already in service, will not be affected on the basis of a rule which only governs future right. In fact, an earlier decision of the Apex Court in State of J & K v. Triloki Nath Khosa {(1974) 1 wpc 5401/2006 12 SCC 19) was approved by the Constitution Bench. Paragraphs 19 and 20 of the said judgment reiterates the principles thus: “19. In Triloki Nath Khosa ({(1974) 1 SCC 19) rules had been framed altering the criterion of eligibility for promotion from the post of Assistant Engineer to the post of Executive Engineer and the same were challenged on the ground of retrospectivity by the Assistant Engineers who were in service on the date of making of these rules. Rejecting the said contention, this Court said: (SCC pp.28-29, para 16) “16.....It is wrong to characterise the operation of a service rule as retrospective for the reason that it applies to existing employees. A rule which classifies such employees for promotion purposes, undoubtedly operates in futuro, in the sense that it governs the future right of promotion of those who are already in service. The impugned rules do not recall a promotion already made or reduce a pay scale already granted. They provide for a classification by prescribing a qualitative standard, the measure of that standard being educational attainment. Whether a classification founded on such a consideration suffers from a discriminatory vice is another matter which we will presently consider but surely, the rule cannot first be assumed to be retrospective and then be struck down for the reason that it violates the guarantee of equal opportunity by extending its arms over the past. If rules governing conditions of service cannot ever operate to the prejudice of those who are already in service, the age of superannuation should have remained immutable and schemes of compulsory retirement in public interest ought to have foundered on the rock of retroactivity. But such is not the implication of service rules nor is it their true description to say that because they affect existing employees they are retrospective.” wpc 5401/2006 13 20. It can, therefore, be said that a rule which operates in futuro so as to govern future rights of those already in service cannot be assailed on the ground of retroactivity as being violative of Articles 14 and 16 of the Constitution, but a rule which seeks to reverse from an anterior date, a benefit which has been granted or availed of, e.g. promotion or pay scale, can be assailed as being violative of Articles 14 and 16 of the Constitution to the extent it operates retrospectively.” Therefore, going by the judgment in Triloki Nath Khosa's case ({(1974) 1 SCC 19) it can be seen that the rules governing conditions of service can be amended. Otherwise, all the service rules will be characterised as immutable. The Constitution Bench, in para 20 of Rangadhamaiah's case (supra), was therefore of the view that the rule which operates in futuro so as to govern future rights of those already in service cannot be assailed on the ground of retroactivity as being violative of Articles 14 and 16 of the Constitution. It was held that if a benefit is granted or availed of, it cannot be varied from an anterior date. By amendment of a rule in such cases, there will be a violation of Articles 14 and 16 of the Constitution to the extent of its retrospectivity. 21. The decisions relied upon by the learned counsel for the petitioner, viz. Kerala Electrical A.E. Co. Ltd.'s case (1999 (2) KLT 845) wpc 5401/2006 14 and U. Raghavendra Acharya's case (AIR 2006 SC 2145) will show that those are cases wherein the amendment came after the retirement of the pensioners concerned. It is in that context it was held that the vested right cannot be affected. The decision in T.R. Kapur's case (AIR 1987 SC 415) mainly concerned with the question with regard to the vested right conferred on the employees under Sub-section (6) of Section 82 of the Punjab Reorganisation Act. The said provision is extracted below: “82(6). Nothing in this section shall be deemed to affect on or after the appointed day the operation of the provisions of Chapter I of Part XIV of the Constitution in relation to the determination of the conditions of service of persons serving in connection with the affairs of the Union or any State. Provided that the conditions of service applicable immediately before the appointed day to the case of any person referred to in sub- s (1) or sub-s. (2) shall not be vested to his disadvantage except with the previous approval of the Central Government.” It was held that since the amendment is without previous approval of the Central Government, it cannot be accepted. It was also held that the conditions of service of any persons who immediately before the appointed day were serving in connection with the affairs of the existing State of Punjab and area as from that date allocated for service in connection with the affairs of the successor State, i.e. allocated Government servants cannot wpc 5401/2006 15 be varied to their disadvantage. (para 7). The circumstances herein are not identical. Therefore, the principle stated in Chairman, Railway Board 's case {(1997) 6 SCC 623} squarely applies to the facts of this case. If it is so, it can be seen that the petitioner was in service as on the date on which Ext.P10 was adopted. The payment of pensionary benefits and the claim for it arises as on the date of retirement. Therefore, the effect of Ext.P10 cannot be said to be retrospective, so as to affect a vested right of the petitioner. The following dictum of the Apex Court in Triloki Nath Khosa ({(1974) 1 SCC 19), that “if rules governing conditions of service cannot ever operate to the prejudice of those who are already in service, the age of superannuation should have remained immutable and schemes of compulsory retirement in public interest ought to have foundered on the rock of retroactivity. But such is not the implication of service rules nor is it their true description to say that because they affect existing employees they are retrospective”, clearly applies here. 22. The same being the real test, it can be seen that Ext.P10 cannot be said to be a retrospective measure to affect the vested right of the petitioner. It can be seen that the service under the third respondent was not pensionable. Going by Ext.P10, unless the pro-rata pension is paid by the wpc 5401/2006 16 former employer, the