IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 6715 of 2002 For Approval and Signature: HON'BLE MR.JUSTICE AKIL KURESHI ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------------- FORUM OF RETIRED OFFICERS/EMPLOYEES OF GUJARAT STATE FINANCIAL CORPORATION Versus STATE OF GUJARAT -------------------------------------------------------------- Appearance: 1. Special Civil Application No. 6715 of 2002 MRS KETTY A MEHTA for Petitioner No. 1-2 MR ND GOHIL, ASSTT.GOVERNMENT PLEADER for Respondent No. 1-2 MR KM PATEL for Respondent No. 3 -------------------------------------------------------------- CORAM : HON'BLE MR.JUSTICE AKIL KURESHI Date of decision: 29/09/2004 ORAL JUDGEMENT In this petition the employees, who have retired from service of the Gujarat State Financial Corporation, have sought a writ of mandamus against the respondent No.3 i.e. Gujarat State Financial Corporation (hereinafter referred to as "the Corporation"), directing the Corporation to implement the pension scheme as per its Resolution dated 27.1.1994, with effect from 1.4.1993. It is prayed that the scheme be implemented without any approval from the State Government and in case the approval of the State Government is necessary, the State Government be directed to give such an approval to the Corporation for implementation of the pension scheme in favour of all the employees who have retired with effect from 1.4.1993. The facts leading to the present petition need to be noted at the outset. 2. The petitioner No.1 claims to be the forum of retired officers/employees of the Gujarat State Financial Corporation, whereas petitioner No.2 is a joint secretary of the petitioner No.1 forum. It is the case of the petitioners that they are espousing the cause of the employees of the respondent No.3 Corporation, some of whom have retired after 1.4.1993. The petitioners have stated that the respondent No.3 is formed under the provisions of the State Financial Corporation Act, 1951 (hereinafter referred to as "the said Act"). It is pointed out that under Section 3(1) of the said Act, the Corporation is a body corporate having perpetual succession and a common seal. It is on the basis of the provisions of the Act that the petitioners have contended that the respondent No.3 Corporation is a State within the meaning of Article 12 of the Constitution of India. 3. The case of the petitioners is that the respondent No.3 Corporation in its Board meeting held on 27.1.1994, had resolved to introduce a pension scheme in the Corporation for the employees of the Corporation, to be brought into force with effect from 1.4.1993 on the lines of the pension scheme prevailing in the State Government. The petitioners have contended that the said Resolution was passed in the meeting of the board on 27.1.1994 and that therefore the decision to introduce the pension scheme with effect from 1.4.1993 was taken by the Corporation. The petitioners have further stated that the decision of the Corporation was in consonance with the recommendations of the Fourth Pay Commission report in which it is provided that all Government servants who are in service as on 1.1.1986 should be brought over to the pension scheme from that of contributory provident fund scheme, unless it is objected to by the Government servant concerned. 4. The petitioners have also stated that in the resolution dated 27.1.1994, it was further resolved to introduce pension scheme subject to approval/concurrence of the State Government and IDBI. In the said resolution it is also provided that the Managing Director is authorised to take necessary action to implement the scheme and to get necessary approval/concurrence of the State Government and IDBI. 5. The petitioners have further stated that though members of the forum were entitled to receive pension under the pension scheme with effect from 1.4.1993, the pension scheme was not implemented by the respondent No.3. The retired employees therefore created the forum of retired officers/employees of the Corporation to ventilate their grievances. It is also stated that the forum had represented before the Managing Director of the Corporation by its representation dated 23.4.2001 that the resolution to implement the pension scheme is not implemented though other financial institutions such as Reserve Bank of India, Industrial Development Bank of India, Life Insurance Corporation of India etc. have adopted the pension scheme. The petitioners have further stated that it was also pointed out to the respondent No.3 that the Government has power only with respect to the matters pertaining to policy under the provisions of the said Act, whereas fixation of grade, creation of posts, matters related to emoluments, pension etc. are not policy matters and that therefore the Corporation has a right to implement the scheme for pension without waiting for the approval of the State Government. It is stated that the petitioners had thereafter also made representations on 17th September, 2001, 9th October, 2001 and 11th October, 2001 and given details of the pension scheme adopted by other Corporations. It is however, stated that no action was taken by the respondent No.3 in response to the representations made by the petitioners. It is further stated that thereafter also representations were made by the petitioners without any response from the respondents. 6. The petitioners therefore have approached this Court by filing the present petition and seeking direction against respondent No.3 to implement the pension scheme as per resolution dated 27.1.1994, with effect from 1.4.1993. 7. Primarily the foundation of the present petition is that the respondent No.3 has erred in providing in the resolution dated 27.1.1994 that the pension scheme shall be introduced subject to the approval or concurrence of the State Government and/or Industrial Development Bank of India. It is contended that no such condition was necessary or even permissible to be imposed. The petitioners have relied upon several provisions of the said Act, to which this Court will advert attention at a slightly later stage, to canvass the argument that the resolution dated 27.1.1994 could not have validly contained a condition that the pension scheme will be introduced subject to approval/concurrence of the State Government and/or IDBI. It is contended that the State Government has no power under the said Act to grant any such approval/concurrence and it was not possible for the respondent No.3 to seek any such approval or the concurrence either from the State Government or from the IDBI. 8. The respondent No.3 had filed an affidavit dated 3rd September, 2002, opposing the petition and raised number of contentions. It is stated inter-alia in the said affidavit by the respondent No.3 that the Board of Directors of the Corporation had passed a Resolution dated 27.1.1994, resolving to introduce Pension Scheme for its employees, but the same was subject to the approval/concurrence of the State Government and the IDBI. It is stated that the Resolution has not been implemented as the State Government has not granted approval to the proposal for introduction of the Pension Scheme, nor has the IDBI granted such an approval. It is contended that the Corporation under the provisions of the said Act, was required to obtain such an approval/concurrence especially in view of Section 48 of the said Act. It is stated that the IDBI had not granted the concurrence and advised the Corporation to approach IDBI only after the State Government grants approval to the said proposal. It is further contended that the State Government has not communicated its approval and therefore, the conditions subject to which the Board of Directors of the respondent No.3 had passed the resolution not having been satisfied, the Pension Scheme cannot be implemented. It is further stated that with passage of time, the financial condition of the Corporation has changed and the Corporation has been incurring huge losses and is not in a position to bear the burden of the pension scheme. The respondent No.3 has also given figures with respect to its losses, which according to the said affidavit has mounted to Rs. 100.80 crores for the year 2000-2001; a further loss of Rs. 126.85 crores was suffered in the financial year 2001-2002 and for the part of the financial year 2002-2003 for which provisional figures were available also, the picture did not improve. It is therefore, stated that since the pension scheme is likely to put recurring burden on the respondent No.3 if introduced, the respondent No.3 will not be in a position to weigh the burden having regard to the heavy losses incurred by it in the recent years. It is therefore suggested that having regard to the changed situation, the Corporation is not in a position to implement the pension scheme. 8.1 In the affidavit in reply the respondent No.3 has also raised objection against retired employees who have retired and accepted contributory provident fund benefits without any protest, from approaching this Court seeking implementation of the pension scheme. 8.2 During the pendency of the petition, the respondent No.3 had passed a fresh Resolution dated 23.10.2002, by which the Corporation had resolved to revoke the earlier Resolution dated 27.1.1994, since the conditions of approval/concurrence from the State Government and IDBI had not been satisfied. It may be noted that the petitioners had amended the petition to bring on record the said resolution and had also taken by way of amendment, detailed grounds in the petition in support of their contentions that irrespective of the subsequent resolution dated 23rd October, 2002, those employees who were in service on 1.4.1993 cannot be deprived of the benefits of the resolution dated 27.1.1994 and the consequential benefits of the pension scheme which was to be implemented with effect from 1.4.1993. 8.3 The respondent No.3 had filed an additional affidavit dated 18.11.2002, through which the subsequent resolution dated 23rd October, 2002 was placed on record. 8.4 Yet another affidavit dated 24th September, 2004 came to be filed by the respondent No.3, in which it is stated inter-alia that the respondent No.3 had introduced a provident fund scheme through the Gujarat State Financial Corporation Employees' Provident Fund Regulation, 1961. It is stated that the said Regulations have been framed in exercise of power under Section 48 of the said Act and were framed with a previous sanction of the State Government and in consultation with the Reserve Bank of India, as required under Section 48 of the Act. The respondent No.3 in the said affidavit has further stated that similarly, gratuity payable to the employees is regulated by the Gujarat State Financial Corporation (Payment of Gratuity to its Employees) Regulations 1964, which Regulations were also framed in exercise of powers under Section 48 of the Act and with the previous sanction of the State Government and in consultation with Reserve Bank of India. It is further stated that for appointment, promotion, discipline and appeal, penalties etc. of the employees of the Corporation, Regulations called "Gujarat State Financial Corporation (Staff) Regulations, 1961 have been framed in exercise of powers under Section 48 of the said Act with previous sanction of the State Government and in consultation with Reserve Bank of India. It is therefore, suggested that for introduction of the pension scheme, framing of Regulations under Section 48 of the said Act would have been necessary. It is submitted that for switching over from Contributory Provident Fund Scheme to Pension Scheme, modifications in the existing Provident Fund Regulations would have been necessary. 9. The State Government has filed an affidavit in reply dated 3.12.2002 and supported the stand of the respondent No.3. It is stated that the Pension Scheme of the respondent No.3 required the Government approval and only if the Finance Department and other Administrative Department of the Government grant such an approval, the Pension Scheme could be introduced. The affidavit-in -reply also details the various stages through which the proposal of the respondent No.3 seeking to implement the Pension Scheme for its employees had moved. It is further suggested in the affidavit of the State Government that the Pension Scheme could not have been implemented without the sanction of the Government, as according to the affidavit, the powers of the Corporation under Section 48 of the Act are bridled with a condition that the Regulations can be made only after consultation with the Industrial Development Bank of India and with the previous sanction of the State Government. Date: 30th September, 2004. 10. The petitioners have filed rejoinders to meet with the averments made by the respondents in their affidavits. The petitioners have in the rejoinder affidavit dated 18th September, 2002, stated that the employees had been raising the demand for Pension Scheme through several representations and continued their demand all through out. They have therefore, denied the contention of the respondents that the petition suffers from delay and laches. Besides reiterating the stand that no approval of the Government was necessary as envisaged in the Resolution dated 27.1.1994, the petitioners have also sought to meet with the question of financial constraints as posed by the respondent No.3 by giving certain figures with respect to the possible financial burden on account of introduction of the pension scheme as envisaged in the Resolution dated 27.1.1994. The petitioners have also in the said rejoinder affidavit averred that the financial condition of the respondent Corporation at the relevant time in the year 1994 when the Pension Scheme was sought to be introduced, was sound. 10.1 The petitioners have also filed another affidavit-in-rejoinder dated 28th September, 2004, and contended inter-alia that to formulate the Pension Scheme, it was not necessary to frame Regulations under Section 48 of the said Act. The petitioners have stated that large number of service conditions of the employees of the Corporation are governed by executive instructions and not by any Regulations framed under the Act. It is also contended that in so far as the existing employees of the Corporation are concerned, an option was to be given whether to continue to be governed by the Contributory Provident Fund Scheme or to switch over to the Pension Scheme. On the basis of these averments it is sought to be projected that the Pension Scheme could have been introduced without having recourse to framing of Regulations under Section 48 of the said Act. 10.2 In light of the above pleadings, the learned Counsel for the petitioners has raised following contentions:- (a) That by resolution dated 27.1.1994, the respondent No.3 Corporation has already brought into existence a Pension Scheme. It is the contention of the learned Counsel for the petitioners that the condition of seeking approval/concurrence of the State Government and Industrial Development Bank of India was an invalid condition contained in the Resolution dated 27.1.1994 and that therefore, a validly framed Pension Scheme had already come into existence upon adoption of the Resolution to that effect by the Board of Directors of the Corporation in its meeting held on 27.1.1994; (b) That having introduced the Pension Scheme as mentioned above, it was not possible for the respondents to withdraw the same on the ground of financial constraints as is sought to be done by the subsequent Resolution dated 23rd October, 2002; (c) That it is not born out from the record that till the year 1999-2000 there were any financial difficulties faced by the respondent No.3 Corporation to permit the Corporation to withdraw the Pension Scheme. It is submitted that in fact till the year 1999-2000, the Corporation was making profit; (d) That the Pension Scheme cannot be withdrawn with retrospective effect and the Pension Scheme having been introduced by Resolution dated 27.1.1994, even if subsequent withdrawal thereof by Resolution dated 23rd October, 2002 is valid, the same cannot operate retrospectively; (e) That the decision to withdraw the Pension Scheme by the subsequent Resolution dated 23rd October, 2002, suffers from legal malafides since the said Resolution was passed during the pendency of the petition and even in the first reply filed by the respondent No.3 on 3rd September, 2002, it is not revealed that the Corporation is considering withdrawal of the earlier Resolution dated 27.1.1994; 10.3 In support of her contention, learned Advocate for the petitioners has relied on several decisions to which mention may be made at this stage. 10.4 Placing reliance on the decision of the Division Bench of the Rajasthan High Court dated 5th September, 1988 passed in Civil Writ Petition No. 669 of 1988, the learned Counsel has submitted that the question of grant of pension is not a policy decision and the State Government therefore, in exercise of powers under Section 39 of the said Act was not competent to issue any instructions to the Corporation. She submits that the above decision of the Rajasthan High Court was carried in appeal before the Hon'ble Supreme Court and the Special Leave Petition was dismissed. 10.5 The learned Counsel for the petitioners also placed reliance on the decision of the learned Single Judge of the Karnataka High Court, in the case of Dr. Y.B. Yalwar Vs. State of Karnataka & ors. reported in II (1997) BC 265, in which it was held that the State Government cannot interfere with discretion of the Corporation regarding payment of salary to its employees and no approval of the State Government is necessary for granting special pay to the employees. 10.6 Relying upon the Division Bench judgement of this High Court dated 31st July, 2001, passed in Letters Patent Appeal No. 788 of 1998 in Special Civil Application No. 3635 of 1982, in the case of State of Gujarat Vs. Kusumben E. Borasada, the learned Counsel for the petitioners has submitted that financial constraints cannot be a valid ground of defence to deny the pensionary benefits to the employees. For the same purpose, learned Counsel for the petitioners has also relied on the decision of the Division Bench of this High Court dated 10.3.2004 passed in Letters Patent Appeal No. 1134 of 1997 in Special Civil Application No. 11071 of 1993 in the case of Karshanbhai K. Rabari Vs. State of Gujarat. For the very same purpose, the Counsel for the petitioners has also relied on the decision of the learned Single Judge of this High Court in the case of Gujarat State Khadi Gramodhyog Board Pensioners' Association Vs. Gujarat State Khadi Gramodhyog Board, reported in 2004 (1) GLH p.18. In support of the same contention, reliance was also placed on the decision of this Court in Deva Gova Vs. Dist. Panchayat, reported in 2004 (2) GLH 273. 11. Appearing for the respondent No.3 Corporation, learned Counsel Mr. K.M. Patel has raised certain preliminary objections to the maintainability of the present petition. Firstly, he submitted that the petition in the present form is not maintainable since the petitioner No.1 is an unregistered Association and petitioner No.2 though a retired employee of the respondent No.3 Corporation is joined as a Joint Secretary of the petitioner No.1 Association. 11.1 Secondly Learned Counsel Mr. Patel has also contended that the petition suffers from delay and laches since the Resolution in question was passed as far back as in January, 1994 and no steps have been taken either to seek its implementation or to challenge the condition of approval/concurrence of the State Government and IDBI found in the said Resolution by the petitioners till filing of the petition in the year 2002. 11.2 Thirdly Learned Counsel Mr. Patel has contended that the employees concerned have acquiesced in the situation and given up their right by accepting full and final settlement of their Contributory Provident Fund dues upon retirement and that they therefore now cannot agitate the question of applicability of the Pension Scheme to them. In this regard, he also submitted that large number of employees have accepted voluntary retirement pursuant to a scheme circulated by the Corporation and such employees now cannot claim pensionary benefits. 11.3 Besides raising the above preliminary contentions, learned Counsel Mr. Patel further contended that by merely passing Resolution dated 27.1.1994, the Pension Scheme was not brought into effect. He submits that in the said Resolution itself it was clearly envisaged that the Pension Scheme will be brought into effect after approval/concurrence of the State Government and Industrial Development Bank of India. He therefore, submits that when admittedly such an approval was not granted by the Government, the Pension Scheme cannot be treated to have been brought in to existence. 11.4 Learned Counsel Mr. K.M Patel has further submitted that when the Pension Scheme was never implemented, it was always open for the respondent No.3 Corporation to withdraw the same subsequently by passing a proper Resolution taking in to account subsequent developments. 11.5 Counsel for the respondent No.3 has also submitted that formation of the Pension Scheme is a policy decision and no direction can be given by the Court for formulating such a policy. In this regard he has also submitted that financial capacity of the employer to weigh the burden of a Pension Scheme is a relevant consideration which is required to be taken in to account and if the Corporation has, on account of its financial condition, decided not to implement the Pension Scheme, it would not be possible for this Court to issue a mandamus directing the Corporation to formulate such a scheme regardless of its financial condition. 11.6 In support of his contention regarding delay and laches, learned Counsel Mr. Patel has relied on the decision of the learned Single Judge of this Court dated 1.12.2000, passed in Special Civil Application No. 607 of 1992 decided in the case of H.C. Mehta Vs. Managing Director and submitted that the petition should be rejected only on the ground of delay. On the ground of delay Mr. Patel also relies on the decision of the Hon'ble Supreme Court, reported in 2000-II LLJ p.202 (Narayan Singh Solanki V. Union of India & ors). 11.7 In support of his contention regarding estoppel, waiver and acquiescence, learned Counsel for the Corporation has relied on the decision of the Hon'ble Supreme Court, reported in 2001-I LLJ 604 (State of Orissa & anr. Vs. Prativa Ghosh and anr.) In support of the same contention, he has also sought to place reliance on the decision of the Hon'ble Supreme Court reported in 2002-III CLR 133 (E. Hill & Company Ltd. V. State of U.P & ors.). 11.8 Relying on the decision of the Hon'ble Supreme Court reported in (2003) 5 SCC 163 (A.K. Bindal & another Vs. Union of India and ors.), Mr. Patel has submitted that those of the employees who accepted voluntary retirement, cannot now turn around and claim the benefits of pension scheme also. 11.9 Relying on the decision of the Hon'ble Supreme Court in the case of All India Reserve Bank Retired Officers Association and others Vs. Union of India, reported in AIR 1992 SC 767, learned Counsel Mr. Patel has submitted that financial implication is a valid consideration and the capacity or otherwise of the employer to absorb the financial burden cannot be ignored. 11.10 For the same argument, learned Counsel for the Corporation has also placed reliance on the decision of the Hon'ble Supreme Court in the case of Delhi Development Horticulture Employees' Union Vs. Delhi Administration, Delhi and ors. reported in AIR 1992 SC 789. In support of the very same contention, reliance is also placed on the Division Bench judgement of this High Court in the case of Abad Dairy Vs. Manjibhai Dhanjibhai, reported in 2000 (3) GLH 409. 11.11 Referring to the decision of the Hon'ble Supreme Court in State of U.P Vs. U.P. University Colleges Pensioners' Association reported in AIR 1994 SC 2311, the learned Counsel for the Corporation has submitted that whether to implement a pension scheme or not is a policy decision and it is not open for the Court to