2016 (9) TMI 1629 - SC - Indian Laws

Retirement benefits - applicability of Himachal Pradesh Corporate Sector Employees Pension (Family Pension, Commutation of Pension and Gratuity) Scheme, 1999 - Validity of Employees Provident Funds Scheme, 1995 - scheme was adopted for the corporate sector employees, engaged in the State of Himachal Pradesh. HELD THAT - It is no doubt true that we have concluded, that the 1999 Scheme , created a contingent right in the respondent-employees. The respondent-employees comprise of all those employees of corporate bodies, who had opted for the 1999 Scheme , immediately on its having been introduced; all those, who were deemed to have opted for the 1999 Scheme by not having exercised any option; and all those who were appointed after the introduction of the 1999 Scheme . Whether any express right or obligation existed, between the respondent-employees and the State Government? - HELD THAT - One can understand, such a claim arising out of an obligation between an employer and his employees, where there is a quid pro quo a trade off based on a relationship (as between, an employer and employee). It is however concluded, that there was no such relationship between the State Government, and the respondent-employees. All the corporate bodies in which the respondent-employees were/are engaged, are independent juristic entities. It is therefore apparent, that the claim raised by the respondent-employees, is not based on any right or obligation between the parties. The issue whether administrative review was permissible, after the 1999 Scheme had become operational, has been answered in the affirmative. And finally, it is concluded, that the exercise of such power, while issuing the repeal notification, was based on due consideration. The legality and constitutionality of the notification dated 2.12.2004 is upheld - appeal allowed.

Issues Involved:
1. Creation of vested rights under the 1999 Scheme.
2. Legality of the cut-off date for pension benefits.
3. Financial viability of the 1999 Scheme.
4. Application of estoppel/promissory estoppel.
5. Discrimination between employees of corporate bodies and government employees.
6. Right to repeal the 1999 Scheme.
7. Violation of Articles 14, 16, 21, and 300A of the Constitution of India.

Detailed Analysis:

1. Creation of Vested Rights Under the 1999 Scheme:
The Court held that employees who opted or were deemed to have opted for the 1999 Scheme had a contingent right to claim pension, which vested in them when they chose to forego their rights under the Employees’ Provident Funds Scheme, 1995. This contingent right created a legitimate expectation that could not be preempted by the State.

2. Legality of the Cut-off Date for Pension Benefits:
The Court acknowledged that a cut-off date can be legitimately prescribed for extending pensionary benefits based on the financial health of the employer. The State Government's decision to fix a cut-off date in the repeal notification dated 2.12.2004, thereby allowing only those who had already started drawing pensionary benefits to continue, was found to be reasonable and justifiable.

3. Financial Viability of the 1999 Scheme:
The Court accepted the State Government's assertion that the 1999 Scheme was not financially viable based on the report of the high-level committee. The Court found that the State Government's decision to repeal the scheme was based on legitimate financial considerations and was not arbitrary or unreasonable.

4. Application of Estoppel/Promissory Estoppel:
The principle of estoppel/promissory estoppel was found inapplicable as the original position of the employees under the Employees’ Provident Funds Scheme, 1995, was restored. The Court held that the State Government did not induce the employees to opt for the 1999 Scheme through misrepresentation, and the employees did not irretrievably alter their position to their detriment.

5. Discrimination Between Employees of Corporate Bodies and Government Employees:
The Court rejected the claim of discrimination, stating that employees of corporate bodies cannot demand parity with government employees as they are independent entities. The State Government's decision to treat these two sets of employees differently was found to be within its rights and not discriminatory.

6. Right to Repeal the 1999 Scheme:
The Court upheld the State Government's right to repeal the 1999 Scheme, emphasizing that the scheme was a welfare measure and its continuation was contingent on financial viability. The decision to repeal was found to be a policy decision within the administrative domain of the State Government.

7. Violation of Articles 14, 16, 21, and 300A of the Constitution of India:
The Court concluded that the repeal of the 1999 Scheme did not violate Articles 14, 16, 21, or 300A of the Constitution. The action was not arbitrary, discriminatory, or violative of the right to life and liberty or the right to property.

Conclusion:
The Supreme Court allowed the appeals, set aside the High Court's order, and upheld the legality and constitutionality of the notification dated 2.12.2004, which repealed the 1999 Scheme. The Court found that the State Government's actions were based on legitimate financial considerations and did not violate any statutory or constitutional rights of the respondent-employees.

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