2000 (5) TMI 1019 - HC - Companies Law

Issues Involved:
1. Validity of the resolution to roll back the retirement age from 60 years to 58 years.
2. Allegation of arbitrariness and discrimination.
3. Validity of the exemption granted by the Central Government.
4. Quorum for the Board Meeting.
5. Legitimate expectation and promissory estoppel.
6. Class legislation and violation of Articles 14 and 16 of the Constitution.

Detailed Analysis:

1. Validity of the Resolution to Roll Back the Retirement Age
The petitioners challenged the resolution of the 50th Board Meeting of the respondent-company, which rolled back the retirement age of employees below the board level from 60 years to 58 years, arguing that it was arbitrary, illegal, and discriminatory. The respondent-company had previously raised the retirement age to 60 years following a direction from the Central Government. However, the rollback was done pursuant to an exemption granted by the Central Government through a subsequent notification dated 21-8-1998.

2. Allegation of Arbitrariness and Discrimination
The petitioners argued that the rollback decision was arbitrary and discriminatory, as the Central Government had allowed all its undertakings to fix the retirement age at 60 years. They contended that the exemption granted by the Central Government lacked guidelines, criteria, or norms, making it ultra vires Articles 14 and 16 of the Constitution. The petitioners cited several Supreme Court decisions to support their argument.

3. Validity of the Exemption Granted by the Central Government
The respondents argued that the exemption was necessary due to the financial stringency faced by the respondent-corporation. The Central Government had provided an option for public sector undertakings to apply for exemption from the earlier directive to raise the retirement age. The respondent-corporation, facing a decline in revenue and profit, applied for and was granted this exemption. The court found that the decision to grant the exemption was a policy decision taken in the larger public interest and was based on reasonable material.

4. Quorum for the Board Meeting
The petitioners contended that the resolution was invalid as there was no quorum during the 50th Board Meeting. However, the court found that the quorum was duly formed as per Section 287 of the Companies Act, 1956, and Article 107 of the Articles of Association of the respondent-company. The total strength of the board was six directors, and the presence of two directors constituted a valid quorum. The court also noted that the resolution was ratified by other directors.

5. Legitimate Expectation and Promissory Estoppel
The petitioners argued that the rollback violated the principle of legitimate expectation and promissory estoppel. However, the court noted that these arguments were not specifically pleaded in the petition. The court held that a case of legitimate expectation or promissory estoppel must be specifically pleaded and cannot be considered as pure questions of law without related facts.

6. Class Legislation and Violation of Articles 14 and 16
The petitioners argued that the exemption created class legislation among employees of central public enterprises, violating Articles 14 and 16 of the Constitution. The court, however, found that the classification was reasonable and aimed at the survival of the respondent-corporation. The court cited Supreme Court decisions that allowed for reasonable classification in public interest and held that the exemption did not amount to hostile discrimination.

Conclusion
The court concluded that the resolution to roll back the retirement age was valid, as it was adopted by a duly constituted Board of Directors with a proper quorum. The exemption granted by the Central Government was a policy decision taken in the public interest and was based on reasonable material. The arguments of legitimate expectation and promissory estoppel were not considered as they were not specifically pleaded. The exemption did not create class legislation or violate Articles 14 and 16 of the Constitution. Therefore, the writ petition was rejected, and there was no order as to costs.

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