Full Judgment Text
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CASE NO.:
Appeal (civil) 6449-6450 of 2005
PETITIONER:
Central Organisation of Tamil Nadu Electricity Employees
RESPONDENT:
Tamil Nadu Electricity Board
DATE OF JUDGMENT: 21/10/2005
BENCH:
B.N. Srikrishna & C.K. Thakker
JUDGMENT:
JUDGMENT
SRIKRISHNA, J.
Leave granted in all the Special Leave Petitions.
The issue of law to be decided in the present matter is: Whether an
establishment can modify pensions (and connected benefits) payable to
employees without first changing the Regulations that govern those
pensions? In other words, can pensions be changed (particularly, when the
change is to the detriment of the employees concerned) without recourse to
the proper procedure prescribed for changing them?
This group of appeals by special leave raises the same issues of facts and
law for a decision by this Court. Hence, they can all be dealt with by a
common judgment. For the sake of convenience, the facts shall be mentioned
from the appeal arising out of Special Leave Petition (Civil) Nos.
3759-3760/04.
A Survey of the Facts
These appeals have been filed by a registered Trade Union, which represents
nearly 30,000 employees of the Tamil Nadu Electricity Board ("the Board").
Prior to 1.7.57, the State of Tamil Nadu was departmentally carrying on the
work of distribution and supply of electric energy. On 1.7.57, the Board
was constituted by the State Government under Chapter III of the
Electricity (Supply) Act, 1948 ("the 1948 Act"). The employees of the Board
consisted of two different classes: (i) Employees who were already employed
by the State Government and were taken over into the service of the Board
upon its constitution; and (ii) Employees directly recruited by the Board
after its constitution. In exercise of its powers under Section 79(c) of
the 1948 Act, the Board brought into force a set of regulations styled as
the "Tamil Nadu Electricity Board Liberalised Pension Regulations, 1960"
("1960 Regulations") with effect from 1.7.60. These Regulations dealt with
the conditions of service specifically pension and death-cum-retirement
gratuity. Under Regulation 3 of the 1960 Regulations, the qualifying
service for earning pension was a period of thirty years.
The 1960 Regulations also contained a Savings Clause incorporated in
Regulation 9, which reads as under:
9. SAVING
(i) No provision in the Civil Service Regulations shall, so far as it
is inconsistent with any of the provisions of these regulations have any
effect.
(ii) Save as otherwise provided in these regulations, the provisions in
these regulations, shall be in addition to and not in derogation of the
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provisions in the Civil Service Regulations as amended from time to time by
the Government of Tamil Nadu."
The Board had its own Pension and Provident Fund Schemes, which, in the
opinion of the State of Tamil Nadu, gave to the employees benefits which
were on the whole not-less-favourable than the benefits provided under the
Employees’ Provident Fund Act, 1952 or the Employees Provident Fund Scheme,
1952. Hence, the State Government by Government Order ("G.O.") No. 988
(dated 13.7.70) exempted, under Section 17(1)(b) of the Employees’
Provident Fund Act, 1952, the establishment of the Board from the operation
of all the provisions of the Employees’ Provident Fund Scheme, 1952 framed
under the provisions of the Employees’ Provident Fund Act, 1952. The
exemption was, however, subject to the conditions specified in the G.O.
itself.
Further, by Central Government notification dated 25.6.1986, exemption
under Section 17(14) of the Employees’ Provident Funds and Miscellaneous
Provisions Act, 1952, was granted from the operation of all the provisions
of the Employees’ Family Pension Scheme, 1971 on the ground that the
benefits in the nature of Family Pension under the Tamil Nadu Electricity
Board Employees’ Family Pension Regulations, 1964 ("Family Pension
Regulations, 1964") were not-less-favourable than the benefits provided
under the Employees Family Pension Scheme, 1971. While granting this
exemption, a specific condition was imposed by clause (4) enumerated to the
Schedule to the notification, which reads as under:
"(4) No amendment to the provision of the said regulations shall be made
without the prior approval of the Central Provident Fund Commissioner and
there (sic) any amendment is likely to affect adversely the interest of the
employees of the Board the Central Provident Fund Commissioner shall before
giving his approval give reasonable opportunity to the employees to explain
their view-point."
Similar exemption was granted by the Central Government (by another
notification dated 25.6.86) from the provisions of the Employees’ Deposit
Linked Insurance Scheme, 1976, on the same ground (i.e. that the Board’s
Family Benefits Subsidiary Scheme provided no-less-favourable benefits to
the employees), but again subject to a condition of a similar nature.
On 26.6.86, after the workers made representations, the Board passed a
resolution (numbered B.P.Ms (F.B.) No. 5) by which it ordered that all the
Regular Work Establishment Workmen retiring/ expiring on or after 1.7.86
would be governed by the pension scheme of the Board. On 17.2.95, the Board
passed a resolution (No. B.P. (F.B.) No. 7) which amended Regulation 9 of
the 1960 Regulations. In the proceedings of the Board it was pointed out
that, since the formation of the Board on 1.7.57 till the Board’s 1960
Regulations came into force, the employees of the Board were governed only
by the Civil Service Regulations with respect to quantum of pension, death-
cum-retirement gratuity etc. After the framing of the 1960 Regulations and
the Family Pension Regulations, 1964, the provisions of the said
Regulations which were not inconsistent with the Civil Service Regulations
were followed. In addition, the provisions of the Civil Service
Regulations, with respect to matters not specifically governed by the
Board’s regulations, were also applicable.
With a view to creating a complete Pension Code, the Tamil Nadu Government
framed the Tamil Nadu Pension Rules (brought into force with effect from
18.7.76) and the Tamil Nadu Pension Rules, 1978 (brought into force with
effect from 1.1.79). These Rules replaced the Civil Service Regulations,
Madras Liberalised Pension Rules, 1960 and the Tamil Nadu Government
Servants Family Pension Rules, 1964.
It has also been pointed out in the Board’s Proceedings that the Board
having followed the Civil Service Regulations, in addition to the 1960
Regulations and the Family Pension Regulations, 1964, had also been
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following the Tamil Nadu Pension Rules, and the Tamil Nadu Pension Rules,
1978 for settling the terminal benefits of the retiring employees of the
Board. It was noted that the amendments made from time to time in the Tamil
Nadu Pension Rules and Tamil Nadu Pension Rules, 1978 were also being
followed by the Board in the light of the saving provisions contained in
Regulation 9 of the 1960 Regulations. The Board, "having considered the
matter carefully", decided that it was necessary to amend Regulation 9 of
the 1960 Regulations "so as to follow the provisions of the Pension Rules
of the Tamil Nadu Government". Towards this end, the Board decided to amend
Regulation 9 by exercising its powers under Section 79(c) of the
Electricity (Supply) Act, 1948. Regulation 9 was amended by substituting a
new regulation as under:
"9 SAVING
(i) No provision in the Tamil Nadu Pension Rules and Tamil Nadu Pension
Rules, 1978, shall, so far as it is inconsistent with any of the provisions
of these regulations have any effect.
(ii) Save as otherwise provided in these regulations, the provisions in
these regulations, shall be in addition to and not in derogation of the
provisions in the Tamil Nadu Pension Rules and Tamil Nadu Pension Rules,
1978, as amended from time to time by the Government of Tamil Nadu."
These amendments were directed to take effect respectively from 18.7.76 and
1.1.79.
On 8.7.98, a Memorandum of Settlement under Section 18(1) of the Industrial
Disputes Act, 1947 was reached between the Board and its workmen. Although
the settlement pertained to several conditions of service,1 we propose to
examine only the most relevant clauses.
Clause 14 of the settlement provides that a settlement under Section 12(3)
of the Industrial Disputes Act, 1947 would be secured immediately on wage
revision and on workload revision, after settlement of revisions of work
norms. By Clause 17, the settlement was to be in force for a period of four
years with effect from 1.12.96. Despite this period having expired, we are
informed by the counsels on both sides that the settlement was not formally
terminated under Section 19(2) of the Industrial Disputes Act, 1947. Clause
15 of the said settlement is of some importance and reads as under:
"15. IT IS ALSO AGREED THAT:
(i) The contract Labourers in thermal stations will be paid wages with
effect from 1.4.1997 with reference to settlement dated 21.7.1997. With
effect from 16.4.1998 according to the orders of the High Court in Writ
Appeal No. 1373 of 1993 will be implemented.
(ii) The contract labourers employed on daily wages in Distribution,
Generation and other Circles will be paid wages according to the PWD
schedule of rates with effect from 1.7.1998.
(iii) The revised pension scheme of the Government of Tamil Nadu and any
amendments there on from time to time will be applied to the pensioners of
the Tamil Nadu Electricity Board."
(Emphasis supplied)
While the conditions of service of the employees of the Board remained
thus, G.O. No. 71 was issued by the Government of Tamil Nadu on 19.3.03,
which purported to revise downwards various benefits accorded to Government
Servants. This was on the ground that pension payments and other benefits
had "reached a level far higher than any other State in India" and had,
therefore, become "fiscally unsustainable". Through the G.O., the State
Government directed that the maximum Qualifying service be enhanced to
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thirty-three years from thirty years in order to become eligible for full
pension by Government Servants after retirement. It also directed through
the said G.O. that pension would be determined on the basis of the average
emoluments drawn during the last ten months of service rendered only. These
amendments were directed to become operative in respect of Government
servants retiring on or after 1.4.03.
By another G.O. No. 74 dated 19.3.03, for identical reasons, the State
Government directed that the maximum limit for commutation of portion of
pension by the pensioner would be 33 1/3% of pension only. This order also
took effect from 1.4.03.
Following the amendments made by the State Government to the Pension Rules,
the Board by its Resolution B.P. (Ch) No. 64 (dated 31.3.03) brought about
corresponding changes in the rules of pension applicable to its employees.
This Board Proceeding is the crucial one and necessitates reproduction in
its entirety.
"Tamil Nadu Electricity Board
Abstract
Pension-Qualifying Service for pension and calculation of pension Revised
orders-Issued.
SECRETARIAT BRANCH
(Per.) B.P.(Ch) No. 64 Dated : 31st March, 2003
Chitrabanu, Panguni 17,
Thiruvalluvar Aandu 2034
Read.
(1) (Per) B.P.(CH) No. 253 (SB) dated 23.9.96.
(2) G.O. Ms. No. 71 Finance (Pension) Department,
dated 19.3.2003.
PROCEEDINGS:
In the B.P. first cited orders have been issued reducing the
maximum qualifying service from 33 years to 30 years to become
eligible for full pension by a Board employee after retirement. It
has also been ordered therein that pension shall be determined
based on 50% of average emoluments drawn during the last 10 months
service rendered or 50% of pay last drawn (sic) Board employee,
whichever is higher.
2. The Government have (sic) now issued orders in the Government Order
second cited enhancing the maximum qualifying service to 33 years from 30
years to become eligible for full pension by the Government Servants after
retirement. The Government have (sic) also ordered that Pension shall be
determined based on the average emoluments drawn during the last 10 months
of service rendered only.
3. The provisions in the Tamil Nadu Pension Rules 1978 have been made
applicable to the employees of the Tamil Nadu Electricity Board also by an
amendment to Regulation 9 of Tamil Nadu Electricity Board Liberalised
Pension Regulations 1960. It has, therefore, become necessary to adopt the
orders relating to Government Pensioners to the pensioners of the Board.
Adoption of Government orders in respect of pensionery benefits does not
attract the issue of notice under Section 9A of Industrial Dispute Act,
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1947.
4. Based on the orders of the Governments mentioned in para-2 above, the
Tamil Nadu Electricity Board hereby directs that the maximum qualifying
service be enhanced to 33 years from 30 years to become eligible for full
pension by the Board employees after retirement.
5. The Board also directs that pension shall be determined based on the
average emoluments drawn during the last 10 months of service rendered
only.
6. These orders shall be applicable to Board employees retiring on or after
1.4.2003.
7. The receipt of the Board Proceedings may be acknowledged in slip
enclosed.
(By order of the Chairman)
(G. Gnanaselvam)
Secretary.
To
..........................................
..........................................."
By a similar worded Board Resolutions B.P. (Ch) No. 65 (dated 31.3.2003)
and B.P. (Ch) No. 66 (dated 31.3.2003), commutation level for pension was
substantially revised downwards.
The Proceedings in the High Court
The Appellant-Trade Union filed Writ Petition Nos. 11899, 11900 and
11902/2003 before the High Court of Judicature at Madras challenging these
three orders (i.e. B.P. (Ch.) Nos.64-66) of the Board. It was contended by
the Trade Union that the Board being a Statutory Board was not required to
mechanically follow the G.O.s and, in any event, the action of the Board
adversely affecting the pensions of employees was unfair, arbitrary and
unconstitutional.
Around the same time, similar writ petitions (W.P. No. 11228/2003 etc.)
were moved by Government servants (The Madras High Court Staff
Association). These sought to impugn the changes brought about in their
pensionary conditions by G.O. Nos. 71 to 74. A Division Bench of the High
Court of Madras dismissed their Writ Petitions (through order dated
23.10.03). A survey of this judgment becomes necessary because it is
heavily relied upon while disposing off the present impugned judgment.
The High Court in its order dated 23.10.03 held that the action of the
Government in G.O. Nos. 71 to 74 was motivated by financial constraints and
was, therefore, not arbitrary. It observed that the cut-off date of 1.4.03
for the revised pension package was not arbitrary since only the terminal
benefits of future retirees were being affected and that no accrued rights
were affected. Moreover, the High Court held that the Government could
alter the service conditions of its employees in exercise of its powers
under Article 309 of the Constitution of India. However, the High Court set
aside G.O. Nos. 72 and 73 by which the State Government increased the
discount rate of commutation of pension and curtailed the encashment of
leave on retirement on the ground that these were accrued rights which
could not be prejudicially affected by the Government.
Now for the present impugned judgment. Following its own judgment in W.P.
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No. 11228/2003 (dated 23.10.03) etc., the High Court of Madras decided W.P.
Nos. 11899, 11900 and 11902/2003 along with a batch of connected matters,2
filed by a large number of employees through order dated 23.10.03 ("the
impugned judgment"). The impugned judgment held inter alia as under:
1. That the Settlement (dated 8.7.98) between the Board and its employees
provided for revised pension schemes of the Government to be applied to the
Board’s pensioners and hence no prior notice under Section 9A of the
Industrial Disputes Act, 1947 was necessary.
2. Regulation 9 of the 1960 Regulations as amended by B.P. No. 7 (dated
17.12.95), provided for the adoption of the Pension Rules of the Government
as amended from time to time.
3. The Board’s Service Regulation No.17 did not provide for payment of
pension and hence the qualifying service of 30 years mentioned therein
could not be relied upon.
4. Since G.O.Ms Nos. 71 and 74 have been upheld for Government servants
(vide Madras High Court order in W.P. No. 11228/2003 dated 23.10.03), B.P.
Nos. 64 and 66, which rely upon them, are valid.
5. Since G.O. No. 73 enhancing the rate of commuted pension was set aside
(vide Madras High Court order in W.P. No. 11228/03 dated 23.10.03), B.P.
No. 65 based thereon was illegal.
The Appellant-Trade Union is before this Court in appeal on behalf of the
employees of Tamil Nadu Electricity Board to challenge the impugned
judgment.
The Facts in the Connected Special Leave Petitions
Civil Appeals arising out of S.L.P.(C) Nos. 4598-4599/04 are filed by the
Tamil Nadu Electricity Board Accounts and Executive Staff Union on behalf
of the Accounts and Executive staff who are aggrieved by the disposal of
their Writ Petitions Nos. 11565 and 11567 of 2003 by common order of the
High Court of Madras (dated 23.10.03 in W.P. 10727/03 etc).
Civil Appeals arising out of S.L.P.(C) Nos. 4750-4751/04 are filed by the
Trade Union representing the Tamil Nadu Electricity Board Stores Union
aggrieved by the dismissal of their Writ Petitions Nos. 11937 and 12372 of
2003 by common order of the High Court of Madras dated 23.10.03 in W.P.
10727/03 etc.
Civil Appeals arising out of S.L.P.(C) Nos. 16305-16306/04 are filed by the
Tamil Nadu Electricity Workers Federation challenging the impugned common
judgment in dismissing their Writ Petitions Nos. 12349 and 12351 of 2003 by
common order of the High Court of Madras dated 23.10.03 in W.P. 10727/03
etc.
Civil Appeals arising out of S.L.P.(C) Nos. 8882-8883/04 are filed by the
Tamil Nadu Electricity Board Workers Progressive Union challenging the
impugned common judgment dated 23.10.03 in W.P. 10727/03 etc insofar as it
dismisses their Writ Petitions Nos. 11935 and 12370 of 2003.
The Contentions
Ms. Indira Jaising, learned Senior Counsel for the appellant-employees, who
led the arguments on behalf of the appellants, raised several contentions,
arguing on construction of the regulations and the settlement, and on
constitutional grounds.
Ms. Jaising’s contention on the construction of the Regulation was that the
Board had reduced the pensionary benefits through executive orders without
amending 1960 Regulations, an action which Ms. Jaising contends is ultra
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vires the powers of the Board.
Turning to the Settlement (dated 8.7.98) between the Board and its
employees, she urged that Clause 15(iii) did not have the effect of
rendering the amendments to the pension scheme of the State Government
employees automatically applicable to the employees of the Board.
Consequently, Ms. Jaising contended that the only method by which the Board
could have adversely affected the pension regulations applicable to its
employees was by the process of formal amendment of its regulations, which
admittedly has not been done.
She further contended that Clause 15(iii) of the Settlement could not be
treated as a waiver of the "fundamental rights" of the employees as there
was no conscious agreement discernible in the Settlement to reduce the
pensionary benefits. In her submission, the High Court erred in
interpreting Regulation 9(ii) of the 1960 Regulations as amended.
Ms. Jaising made two broad submissions on Constitutional grounds to
question the action of the Board. Her first broad contention was with
regard to the legal nature of pensions. Relying on several authorities of
this Court, she contended that pension is an accrued right, which could not
be taken away, that too by a mere executive action such as a resolution of
the Respondent-Board. She also contended that pension is in the nature of
property and it cannot be taken away except by procedure established by law
as provided under Article 300A consistent with Article 14 of the
Constitution of India.
Ms. Jaising’s second broad contention was that the action of the Board was
"unreasonable" and hence violative of Article 14. Relying upon a judgment
of this Court in D. S. Nakara and Ors. v. Union of India,3 ("Nakara") she
contended that the revision of the formula of the rate of pension in the
existing scheme makes an invidious distinction between those retired before
or after the cut-off date resulting in unequal treatment being meted out to
the two groups.
Mr. Ramamoorthy, learned Senior Counsel appearing for the Board attempted
to sustain the impugned judgment by advancing the reasoning of the High
Court.
Principle of Waiver and the Settlement
In our view, Clause 15(iii) of the Settlement (dated 8.7.98) merely
mollifies the rigour of requirement of advance notice of 15 days under
Section 9A of the Industrial Disputes Act, 1947. Ms. Jaising contended that
the conditions of service once settled can never be changed except by being
substituted by a fresh settlement or award. This may be true with regard to
conditions of service, which have been settled by a binding settlement/
award. With regard to matters which are in the realm of virgin territory,
we are afraid that this may not be the rule. In fact, we called upon Ms.
Jaising to show as to which provision of the Industrial Disputes Act, other
than Section 9A, prohibits the change by an employer of a condition of
service that it was not brought about by a settlement or award. No such
provision was cited before us.
We are, hence, unable to accept the contention of Ms. Jaising that the
Board could not have changed, by executive action, even those conditions of
service that were not the subject matter of regulations, a settlement or an
award. In our judgment, Clause 15(iii) of the Settlement merely operates to
exempt the employer (the Board) from giving a notice under Section 9A of
the Industrial Disputes Act, 1947.
It was not pleaded by the Board before the High Court, nor was it so held
by the High Court in the impugned judgment, that there was any waiver of
rights generally by reason of the said clause in the said Settlement.
Neither we are inclined to accept such an argument, nor did the learned
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counsel for the Board advance any such argument before us. The argument
with reference to the principle of waiver is, therefore, wholly irrelevant
and need not detain us. This takes us to the interpretation of Regulation 9
of the 1960 Regulations and its true import.
The 1960 Pension Regulations
This case really turns on the interpretation of the pension regulations,
particularly Regulation 9 of the 1960 Regulations. In considering the
import of Regulation 9 of the 1960 Regulations (amended on 17.2.95) a
historical overview is crucial. After the constitution of the Board in the
year 1957, a set of employees, erstwhile State Government’s servants were
taken over in the employment of the Board. They were governed by the Civil
Service Regulations inter alia with regard to their pensionary benefits.
Thus, when the 1960 Regulations were brought into force on 1.7.60, the
Board had in its employment the erstwhile Tamil Nadu Government servants as
well as employees directly recruited by it. A saving clause was necessary
in order to ensure that the erstwhile Tamil Nadu Government servants (who
were taken over into the service of the Board) were not adversely affected
by framing of the Regulations. Consequently, a Saving Clause was
introduced, vide Regulation 9.
This saving clause (as it stood before the amendment of 17.2.95) was in two
parts. Clause (i) ensured that no provision in the Civil Service
Regulations to the extent of its inconsistency with any of the provisions
of the 1960 Regulations would have any effect. This was obviously intended
to ensure that whatever better benefits were available to the employees of
the Board would be protected even if the Civil Service Regulations were
inconsistent with the Board’s Regulations.
Clause (ii) specifically provided that the provisions made in the
Regulations would be in addition to and not in derogation of the provisions
in the Civil Service Regulations as amended from time to time by the
Government of Tamil Nadu. The import of this clause was that, except as
otherwise provided in the 1960 Regulations, with regard to matters not
covered by the Civil Service Regulations, the 1960 Regulations would have
to be read additionally and not so as to derogate from the Civil Service
Regulations. In other words, the intention declared by clause (ii) is that
the persons covered by the Civil Service Regulations would be entitled to
the benefits thereunder and also to the benefits flowing from the 1960
Regulations.
In 1995, however, the Board proposed to amend Regulation 9 as it stood. The
preambulatory portion in the Board Proceedings (B.P. (FB) No. 7 dated
17.2.95) clearly sets forth the reasons, which motivated the Board to amend
Regulation 9. This became necessary, because in the period after the 1960
regulations were first operative, the State Government had replaced the
then existent Civil Service Regulations with the Tamil Nadu Pension Rules
and Tamil Nadu Pension Rules, 1978. Correspondingly, by the 1995 amendment,
the expression "Civil Service Regulations" in Regulation 9 was replaced by
"Tamil Nadu Pension Rules" and "Tamil Nadu Pension Rules, 1978". Regulation
9(ii) was also amended on the same lines. However, there were no other
changes either formal or substantive in Regulation 9. The amended
Regulation 9 took effect from the dates on which the Tamil Nadu Pension
Rules and Tamil Nadu Pension Rules, 1978 were brought into force (i.e.
18.7.76 and 1.1.79 respectively).
In our view, the amended Regulation 9 only makes explicit with reference to
the Tamil Nadu Pension Rules and Tamil Nadu Pension Rules, 1978 what was
already provided for in the unamended Regulation 9, which referred to the
Civil Service Regulations. A reading of the Board Proceeding (B.P. (FB) No.
7 dated 17.2.95) makes it clear that since the formation of the Board on
1.7.57 till the 1960 Regulations came into force, the employees of the
Board were governed only by the provisions of the Civil Service Regulations
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inter alia with respect to quantum of pension, death-cum-retirement
gratuity. After the Board framed its 1960 Regulations and the Family
Pension Regulations, 1964, the provisions of these Regulations, which were
not inconsistent with the Civil Service Regulations, were followed "in
addition to the provisions of the Civil Service Regulations with respect to
matters not specifically governed by the Board’s Regulations."
The said Board Proceedings also make it clear that once the Civil Service
Regulations were replaced by the Tamil Nadu Pension Rules and Tamil Nadu
Pension Rules, 1978, those were followed for settling the terminal benefits
of retiring employees of the Board. Similarly, according to the Board
Proceedings, the amendments made from time to time in the aforesaid Rules
of the State Government were also being applied to the retiring employees
of the Board "in the light of the saving provision contained in Regulation
9 of the 1960 Regulations." As we have previously discussed, the Board
Proceedings indicate that the 1995 amendment to Regulation 9 was only
intended to take into account the State Government’s action of replacing
the Civil Service Regulations with the Tamil Nadu Pension Rules and Tamil
Nadu Pension Rules, 1978.
The real question before us is: whether the Board could have followed the
State Government’s pension amendments by merely changing Regulation 9. It
appears to us that the decision taken by the Board to amend its own pension
rules and bring it in line with those applicable to the Government’s
servants was per se unexceptionable; however, this could not have been
achieved by a mere amendment in Regulation 9 as seems to have prevailed in
the opinion of the Board.
Ms. Jaising is right in her contention that the purpose and purport of
Regulation 9 was to ensure, firstly, that the State Government employees
taken over in the service of the Board were not prejudiced with regard to
their conditions of service, particularly pension and death-cum-retirement
gratuity. Secondly, the saving clause ensures that with regard to matters
which were not covered by the State Government rules but covered by the
Board’s Regulations, the benefit covered under the Board Regulations would
be in addition to and not in derogation of what was already available in
the Civil Service Regulations. It was open to the Board in exercise of its
statutory powers under Section 79(c) of the Electricity (Supply) Act, 1948
to amend its pension regulations in such manner as to bring it precisely in
line with the Tamil Nadu Government Rules with regard to pension and other
benefits as applicable to the State Government employees. Instead of
expressly amending the Regulations, the Board appears to have fallen back
on Regulation 9, which was merely a saving clause intended to insulate the
employees against erosion of their benefits granted in the provisions.
Whether such an amendment could have been successfully challenged on its
substantive merits is not a question with which we are concerned. We are
only concerned with whether the Board could have straightaway imported
wholesale the provisions of the pension rules applicable to the State
Government employees via the vehicle of the saving clause, Regulation 9.
Our answer to this issue is clearly in the negative because such a
possibility is evidently absent in the text of the said Regulation. For
this reason, we are of the view that the conditions of service pertaining
to pension that were already the subject matter of the Regulations could
not have been changed by the Board without amending the Regulations in
accordance with law.
Quantifying and Qualifying for Pensions
As under Regulation 3 of the 1960 Regulations, the qualifying service for
full pension was initially prescribed as thirty years. It was only by Board
Proceedings B.P.(Ch) No. 64 (dated 31.3.03) that the maximum qualifying
service for pension was increased from thirty years to thirty-three years.
By the same Board’s Proceedings, the pension was made relatable to the
average emoluments drawn during the last ten months service instead of the
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last drawn pay. These two aspects were the subject matters of the 1960
Regulations and, therefore, by a Board Proceeding, without amending the
Regulations, they could not have been modified to the prejudice of the
employees. B.P.(Ch) No. 64 (dated 31.3.03) is, therefore, bad in law and
illegal inasmuch as it purports to bring about adverse changes in the
quantification of pensions and the qualifying period of service for
pensions.
Commutation of Pension
We need to, however, draw a distinction between two different situations
which have arisen, namely: (i) an attempt by the Board to withdraw certain
benefits granted by a decision of the Board (without amending the
applicable regulations) by another Board decision, (ii) the other situation
is where a benefit granted under the 1960 Regulations was sought to be
taken away by a Board’s decision (without amending the applicable
regulations). As have seen in the previous situations discussed, the latter
is clearly impermissible. We, however, need to consider the former issue.
A change brought about by the Board that has also been impugned is with
regard to the decrease in the maximum permissible commutation of pension
from 40% to 33 1/3% by following G.O. No. 74 (dated 19.3.03) issued by the
Government of Tamil Nadu. As far as this change is concerned, it would
appear that Regulation 7 as framed in 1960 permitted a maximum commutation
of one-third. By a Board Proceeding B.P.(Ch) No. 208 (dated 18.8.98), the
commutation percentage was increased to 40%. This has now been reduced to
33 1/3% by another Board Proceeding B.P. (Ch) No. 66 (dated 31.3.03). In
other words, what was granted by a Board Proceeding, without amending the
Regulations, is sought to be taken away by another Board Proceeding with a
view to following G.O.Ms. No. 74 (dated 19.3.03) issued by the State
Government in respect of its own employees. As far as this change is
concerned, the argument of not following the proper procedure (i.e.
amending the Regulations) does not apply. In fact, the change made by
B.P.(Ch) No. 66 (dated 31.3.03) actually brings the level of commutation to
what was originally given by the 1960 Regulations. In our view, what was
granted by a mere Board Proceeding could be validly altered by another
Board Proceeding. Therefore, the challenge to the change in the commutation
percentage brought about by B.P.(Ch) No. 66 fails by the same token.
Ms. Jaising further contended that, with regard to the reduction in the
percentage of maximum commutation of pension, the employees who were
covered by the provisions of the Industrial Disputes Act, 1947 would be
entitled to raise an industrial dispute, and have it adjudicated according
to law. She also submitted that, if this Court were to hold against the
employees on the point of commutation of pension, some time may be
permitted to the employees to raise an industrial dispute with regard to
the change. Considering that the change is likely to have an impact on a
large number of employees of the Board, we are inclined to give reasonable
time to the employees to raise an industrial dispute before the change
impacts them.
The Constitutional Grounds
Turning to Ms. Jaising’s first argument on constitutional grounds, it
appears to us that even if pension is "property", all that Article 300A
provides is that: "No person shall be deprived of his property save by
authority of law." Thus, if deprivation of the pensionary benefits was by
"authority of law" then nothing survives in this contention. We have
already examined in depth whether the Board has acted with the "authority
of law" i.e. whether it has followed the prescribed procedure in bringing
about the changes in the pensionary benefits, and we have held accordingly.
Thus, this contention need not be examined any further.
As to Ms. Jaising’s contention that the Board’s actions violate Article 14
of the Constitution and the ratio in Nakara, we would have had to pursue
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this contention only if we had not been able to decide the case on narrow
interpretational grounds as we have already done. Ms. Jaising, however,
contended that if we did not decide on the broader constitutional ground
argued by her there would be multiplicity of litigation on the same issue.
We do not agree. In fact, at the present stage the argument of multiplicity
of litigation is only speculative since we cannot predict what future
course the Board or the employees will adopt. Further, even if multiple
litigations were a possibility that should not compel us to opine on every
ground argued before us, especially those involving constitutional issues.
In this context, we are reminded of a famous exchange in the U.S. Supreme
Court between Justice Frankfurter and the Counsel:4
"...Mr. Arnold pleaded with the Court that he would not like to win
the case on the narrow procedural, statutory ground to which a
majority of the members of the bench was evidently inclining.
Responded Mr. Justice Frankfurter: "The question is not whether you
want to win the case on that ground or not. This Court reaches
constitutional issues last, not first." He might well have quoted
Mr. Justice Brandeis’s famous assertion that the "...most important
thing we do is not doing.""
This is precisely the principle, which we intend to adopt. This Court must
be parsimonious on the grounds on which it chooses to decide a particular
case. If a case can be decided upon any ground other than constitutional
grounds, such as by statutory construction or the like, this Court must do
so. Despite the characteristic acuity with which Ms. Jaising argued the
constitutional grounds, in our opinion, they are not ripe for adjudication,
as we have been able to decide the matter on other narrower grounds. Where
a paring knife suffices, a battle axe is precluded.
The Final Conclusions
In the result we hold as under:
1. The change brought about in the qualifying service for full pension
by increasing it from thirty years to thirty-three years by B.P.(Ch) No. 64
(dated 31.3.03) is liable to be interfered with as it has been done without
amendment to the 1960 Regulations.
2. The change brought about by B.P.(Ch) No. 64 (dated 31.3.03) linking
the pension to the average emoluments of the last ten months before
retirement without amendment of the 1960 Regulations is bad in law.
3. The reduction in the maximum permissible commutation of pension
from 40% to 33 1/3% brought about by B.P.(Ch) No. 66 (dated 31.03.03),
without amendment of the 1960 Regulations is not liable to be interfered
with.
4. On the issue of whether the Board can adversely modify the pensions
payable even after following the prescribed procedure (i.e. after amending
the applicable pension regulations) and whether such change would be
violative of Article 14 or the ratio in Nakara we express no opinion
whatsoever, as it is unnecessary in the light of our findings above.
We, therefore, partly allow the appeals and interfere with the impugned
judgment of the High Court insofar as issues one and two are concerned and
set aside the action of the Board on the aforesaid issues. This shall be
without prejudice to the powers of the Board to bring about the changes
after proper amendment of the 1960 Regulations and also without prejudice
to the rights of the employees to challenge such amendments on any
permissible ground (including on the grounds we have chosen not to express
our opinions upon).
The impugned High Court judgment, insofar as it upholds the reduction of
the maximum permissible commutation from 40% to 33 1/3% is not interfered
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with without prejudice to the rights of the employees to raise an
industrial dispute.
We are informed that during the pendency of the writ petitions before the
High Court there was a stay operating in favour of the employees as a
result of which service conditions that were under challenge were not
permitted to be amended. There was also an interim stay of Board
Proceedings Nos. 64 and 66 (dated 31.3.03) granted by this Court on 8.3.04
which has continued till today. In the circumstances, we extend the stay in
respect of Board Proceeding B.P.(Ch) No. 66 (dated 31.3.2003) for a period
of eight weeks to enable the employees to raise an industrial dispute for
adjudication, if so advised.
The appeals are allowed in the aforesaid terms. No costs.