Hon'ble Mr. Justice Hemant Gupta
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 884 OF 2019
(Arising out of S.L.P (C) No. 18502 of 2018)
The State of Bihar & Anr. ........Appellants
Versus
Dr. Sachindra Narayan & Ors. ........Respondents
J U D G M E N T
Hemant Gupta, J.
The present appeal is directed against an order passed by the
Division Bench of the High Court of Judicature at Patna on 13.03.2018
whereby the Writ Petition was allowed directing the appellant to provide
financial assistance for payment of the arrears as well as current
pension to the employees of the Anugraha Narayan Sinha Institute of
Social Studies, Patna (Institute).
2. The Institute is incorporated by the Anugraha Narayan Sinha
Institute of Social Studies Act, 1964, (Act). The Institute has a perpetual
succession and a common seal. The Chairman of the Board of Control is
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a nominee of the State Government. The State Government is also to
nominate two persons of eminence in consultation with the Chairman;
whereas, the others are ex-officio members such as Vice-Chancellor of
Patna University, another Vice-Chancellor to be nominated by the State
Government other than that of Patna University in rotation in
alphabetical order as per names of Universities; two representatives of
the Indian Council of Social Science Research, New Delhi; one
representative of the University Grants Commission; one faculty
member not below the rank of a Professor and a Secretary to the State
Government in the Department of Education and in the Department of
Finance.
3. In terms of Section 6 of the Act, the Board is the supreme
governing body of the Institute and is to exercise all the powers of the
Institute. Section 8 mandates the State Government to contribute a
sum of rupees two lacs in each financial year for the maintenance of the
Institute and such other sums as it may deem fit for special items of
research or education work, publication, buildings and proper
maintenance and development of the Institute. Section 9 of the Act
provides for establishment of Institute Fund, whereas, Section 10 deals
with the budget of the Institute. Section 16 of the Act empowers the
Board to make rules not inconsistent with the provisions of the Act,
whereas, Section 17 empowers the Board to make regulations
consistent with the Act and the Rules framed thereunder. The relevant
provisions of the Act read as under:
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“6. Functions of the Board. – (1) The Board shall be the
supreme governing body of the Institute and shall exercise
all the powers of the Institute.
(2) Subject to the provisions of this Act the Board shall, in
particular-
(a) hold, control and administer the property and the funds
of the Institute;
(b) determine the form, provide for the custody and regulate
the use of the common seal of the Institute;
(c) determine and regulate all matter concerning the
Institute;
(d) administer any funds placed at the disposal of the Board
for specific purposes;
(e) create posts and appoint officers and other employees of
the Institute and define their duties and provide for the filling
of temporary vacancies:
Provided that no post the total emolument of which
exceeds Rs. 1,000 per month shall be created without the
previous sanction of the State Government;
(f) have power to accept transfers on behalf of the Institute
of any movable or immovable property to and for the
purposes of the Institute.
xxx xxx xxx
8. Payment to Institute. - (1) The State Government shall
contribute to the institute a sum of two lakhs of rupees in
each financial year for the maintenance of the institute.
(2) The State Government may contribute from time to time
such additional sums to the Institute as it may deem fit for
special items of research or educational work, publication,
buildings and for the proper maintenance and development
of the Institute.
9. The Institute Fund. - (1) There shall be established a
Fund to be called the Anugraha Narayan Sinha Institute Fund
which shall be vested in the Institute to which shall be
credited-
(a) the balance, if any, standing to the credit of the Anugraha
Narayan Sinha Institute of Social Studies, Patna, on the date
of commencement of this Act;
(b) all moneys contributed to the Institute by the State
Government;
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(c) all moneys received by or on behalf of the Institute from
the Central Government;
(d) all moneys received by or on behalf of the Institute by
way of grants, gifts, donations, benefactions, bequests or
transfers;
(e) all interests and profits arising from any transaction in
connection with any money belonging to the Institute;
(f) proceeds from the sale of the journals, pamphlets and
books; and
(g) all moneys received by the Institute in any other manner
or from any other source.
(2) All moneys credited to the Fund shall be deposited or
invested in such manner as the Institute may, with the
approval of the State Government, decide.
(3) The Fund shall be applied towards meeting the expenses
of the Institute including expenses incurred in the exercise of
its powers and discharge of its functions under this Act.
10. Budget. - (1) The Director shall, on or before the tenth
day of August each year, cause to be prepared and laid
before the Board, in such form as may be prescribed by the
Board, the budget estimate of the income and expenditure of
the Institute for the next financial year.
(2) The Board shall, as soon as may be after the tenth day of
August but not later than the first day of the following
September, examine and approve the estimate with or
without modification as it may deem fit and shall forthwith
submit a copy thereof to the State Government.
(3) The Board may from time to time during the financial
year reduce the amount of any item of budget grant or
transfer such amount or a portion thereof to any other item
of budget grant:
Provided that the Board shall have no power to transfer any
non-recurring grant for recurring expenditure:
[Provided further that the Board shall have no power to
transfer from one item to another item an amount exceeding
20 per cent of the original grant under any item.]
xxx xxx xxx
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12. Accounts and audit. - (1) Subject to any rules made by
the State Government in this behalf, the accounts of receipts
and expenditure of the Institute shall be kept in such manner
and in such form as the Board may from time to time
prescribe.
(2) The Board shall, as soon as may be after closing its
annual accounts, prepare an annual statement of accounts in
such form as the State Government may from time to time
prescribe and forward the same to the Accountant-General,
Bihar, by such date as the State Government may, in
consultation with the Accountant-General, Bihar, determine.
(3) The accounts of the Institute shall be audited by the
Accountant-General, Bihar, or some other officer appointed
by him in this behalf and the Board shall take suitable action
on the matters arising out of the audit report.
(3A) The State Government may call upon the Institute to
adopt concurrent audit by the Chief Controller of Accounts
and Audit of the State Government.
(4) The Board shall forward the annual accounts of the
Institute together with the audit report thereon to the State
Government and the State Government shall cause the same
to be laid before the Legislature of the State.”
xxx xxx xxx
4. In terms of Section 16 of the Act, the Anugraha Narayan Sinha
Institute of Social Studies, Rules 1966 (Rules) were framed by the
Board. “Pay” is defined in Rule 2(xii), whereas Rule 9 provides for
maintenance of Institute’s provident fund and Rule 19 provides for
amendment of the Rules at any time by 2/3 majority of the members
at the meeting of the Board.
5. In terms of Section 17 of the Act, the Anugraha Narayan Sinha
Institute of Social Studies, Patna Regulation, 1966 (Regulations) have
been framed, which inter-alia empowers the Board to sanction
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Dearness Allowance; House Rent Allowance and also the service
conditions of the employees of the Institute. Regulation 9 empowers
the Board to create such posts as may be necessary and may fix scale
of pay and allowances for posts subject to Section 6 of the Act. In
terms of Clause 16 of the Regulations, Staff Service Condition Rules
have been framed, however, such Rules do not provide for payment
of pension.
6. The Board in its meeting held on 15.02.1985 passed the
following resolution:
“The Board accepted the recommendation of the Committee
on Retirement Benefits dated 11.2.85 and decided that the
scheme as prepared may be implemented, provided that the
scheme as reported would be operated from Institute
resources and that no separate grant would be sought for it
from the Government…………. “
7. In this factual background, 27 petitioners (respondents 1 to 27
herein), in the present appeal invoked the writ jurisdiction of the High
Court for a direction to the respondents (appellants herein) to pay the
arrears as well as current pension on the month to month basis which
has been stopped from the month of January 2014. The Writ Petition
was dismissed on 20.06.2017 holding that the resolution of the Board
dated 15.02.1985 was inconsistent with the Act and Rules, therefore,
the writ petitioners were not vested with any legal right.
Correspondingly, there is no legal obligation on the State to pay and
that a writ of mandamus cannot be issued to the authority of the
State to act contrary to law. It was also held that, the payment of
pension/family pension by the State for the last few years is an
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illegality, the same cannot be directed to be perpetuated by an order
of the Court.
8. However, an intra Court appeal was allowed on 13.03.2018
noticing that the Government of Bihar has earmarked grants under
the pension head during 2004-05 to 2010-11. It was held that though
the recommendations of the Committee on retirement benefits may
be implemented, provided that the scheme is operated from the
Institute’s resources, but the fact remains that the liability on account
of pension was duly mentioned in the annual budget of the State
Government, therefore, such release of the funds by the State
Government will be in the nature of grant as envisaged under Section
9(g) of the Act. The State Government would be estopped from
saying that it never considered payment of pension as a responsibility
after about 30 years. The Government approved the budget and
provided additional funds to meet the liabilities, therefore, it would
amount to consideration and acceptance of responsibility, may be in
form of grants only.
9. Learned Counsel for the appellant argued that the resolution of
Board was that the Retirement Benefit Scheme was to be operated
from the resources of the Institute and that “no separate grant would
be sought for it from the State Government”. Therefore, the financial
burden of the Retirement Benefit Scheme cannot be foisted upon the
State. The pension was resolved to be borne by the Institute from its
own funds. Still further, such resolution of the Board was not
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approved by the State Government creating extra financial liability on
the State.
10. It is argued that in terms of Section 8 of the Act, the State
Government is to contribute a sum of rupees two lacs in each
financial year or such other sums for research or education work,
publication, buildings and for proper maintenance and development
of the Institute. Such provision does not contemplate payment of
recurring expenditure of pension which is not contemplated by
Section 8 of the Act. The money contributed by the State
Government is one source of the Institute funds. The Board has
limited power to transfer funds from one item to another item
exceeding 20 per cent of the original grant under any item. The
accounts of the Institute are required to be audited. Thus, it is
contended that though the officers of the State are members of the
Board and that such fact will make the Institute a “State” within the
meaning of Article 12 of the Constitution. But that fact will not make
the Institute as extension of the State Government, as the Institute is
a creation of a separate juristic entity under the State Statute. The
rules framed in terms of Section 16 of the Act again do not provide for
Provident Fund/Gratuity and for pension. It is argued that the Board as
an independent juristic entity is empowered to prepare its budget but
in terms of the resolution of the Board, financial burden of the pension
scheme cannot be passed on to the State Government.
11. It is further pointed out that the State Government has
disbursed grant from the year 2002-03 uptill 2010-11 which included
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the break up of pension but it was a mistake, which was rectified from
the year 2011-12. It is contended that the State Government can
grant funds under the heads (1) Grant-in-aid for Salary, (2) Grant-inaid for creation of infrastructure, (3) Grant-in-aid other than salary
and infrastructure. Therefore, some amount released towards
pension in certain years including in terms of an order of this Court
will not create any right in favour of the writ petitioners as the role of
the State Government is to give grants as provided in Section 6 of the
Act but such grant cannot be claimed as matter of right.
12. On the other hand, the learned counsel for the Instituterespondent No. 28, submitted that the State Government has been
releasing Grant-in-aid including amount towards pension since the
Board has passed the resolution in the year 1985. Reference was
made to communications dated 09.09.2010 and 29.03.2005. It is also
pointed out that the Chief Minister of the State Government presided
over the meeting of the Board on 28.05.1985, wherein, the poor
financial condition of the Institute was discussed. It was resolved that
the three alternative schemes of retirement benefits, i.e. (i)
Contributory Provident Fund; (ii) Contributory Provident Fund-cumGratuity; (iii) General Provident Fund-cum-Pension-cum-Gratuity
including benefit of commutation of pension will at all times be the
same as provided for in the statutes and Rules of Patna University
from time to time.
13. It is contended that contribution towards the amount of
pension has created legitimate expectation of the employees of the
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Institute that they are entitled to pension at par with the employees
of Patna University. Thus, the employees have legitimate expectations
of receipt of pension from the State Government. Therefore, the
order passed by the Division Bench of the High Court does not call for
any interference.
14. On the other hand, Mr. V. N. Sinha, learned senior counsel
appearing for the respondent Nos. 1 to 27 submitted that the State
Government is bound to disburse the amount necessary for payment
of pension as was being done from the date when the resolution was
passed in the year 1985. Therefore, it is too late for the State to turn
around to take a plea that the responsibility of the pension amount is
not of the State Government.
15. Section 6 of the Act empowers the Board to hold control and
administer the property and the funds of the Institute. The Board is
further empowered to create posts and appoint officers with a
condition that a post of which emoluments exceed rupees one
thousand per month shall not be created without the previous
sanction of the State Government. Therefore, the Board has freedom
to create posts and to hold, control and administer its property and
the funds, but the post carrying an emolument of rupees one
thousand per month or more cannot be created without the previous
approval of the State Government. Though the proviso to Section 6(2)
of the Act requires approval of the State Government in respect of
creation of post carrying pay of more than Rs.1000/-, but the intention
is that any financial expenditure of recurring nature would require the
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approval of the State Government. Therefore, if the amount of
pension exceeds rupees one thousand per month, the same could not
be claimed from the State Government as a right without approval.
The State Government cannot be called upon to bear the burden of
the pension as such scheme was not approved or even sought for.
The provision of payment of pension in the Budget of the State
Government is a voluntary act not enforceable by a writ of
mandamus. The release of grant is in discretion of the grantor and
cannot be forced by the grantee.
16. It is true that in certain financial years as per documents on
record, the amount of pension was specifically mentioned while
granting grant to the Institute, but such amount is in discretion of the
State and cannot be enforced by a writ of mandamus. There is no
obligation on the State to disburse the grant towards the pension
amount in terms of the Act or the Rules or even in terms of the
resolution of the Board.
17. Sub-Section (1) of Section 8 of the Act mandates the State
Government to contribute a sum of rupees two lacs in each financial
year for the maintenance of the Institute, whereas, sub-Section (2)
empowers the State Government to contribute from time to time,
such additional sums as it may deem fit for special items of research
or education work, publication, buildings and for proper maintenance
and development of the Institute. Such payment for the special
projects, is in discretion of the State Government in view of the object
for which the grant is to be disbursed, but sub-Section (2) does not
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include disbursement of the amount of pension as the contribution is
for limited purpose which is not recurring in nature.
18. The money contributed to the Institute by the State
Government is one source of the fund of the Institute fund. Section
9(3) of the Act provides that the funds shall be applied towards
meeting the expenses of the Institute including expenses incurred in
exercise of its powers and discharge of its functions under the Act.
Therefore, the retirement pension scheme, at best can be treated to
be a part of obligation of utilization of funds of the Institute but such
obligation to bear the amount of pension fund is not on State
Government as it is not mandated either by Section 8 or Section 9 of
the Act.
19. The argument of learned counsel for the Institute is that the
State Government has provided funds for payment of pension for the
last many years, therefore, the Institute and the employees of the
Institute have legitimate expectations to receive the amount of
pension, is again not tenable.
20. In the judgment reported as Union of India & Ors. v.
Hindustan Development Corporation & Ors.
1
, it was held that a
pious hope even leading to moral obligation cannot amount to a
legitimate expectation. The legitimacy of an expectation can be
inferred only if it is founded on the sanction of law or custom or an
established procedure followed in regular and natural sequence. It
was held: -
1 (1993) 3 SCC 499
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“28. Time is a three-fold present: the present as we
experience it, the past as a present memory and future as a
present expectation. For legal purposes, the expectation
cannot be the same as anticipation. It is different from a
wish, a desire or a hope nor can it amount to a claim or
demand on the ground of a right. However earnest and
sincere a wish, a desire or a hope may be and however
confidently one may look to them to be fulfilled, they by
themselves cannot amount to an assertable expectation and
a mere disappointment does not attract legal consequences.
A pious hope even leading to a moral obligation cannot
amount to a legitimate expectation. The legitimacy of an
expectation can be inferred only if it is founded on the
sanction of law or custom or an established procedure
followed in regular and natural sequence. Again it is
distinguishable from a genuine expectation. Such
expectation should be justifiably legitimate and protectable.
Every such legitimate expectation does not by itself fructify
into a right and therefore it does not amount to a right in the
conventional sense.
xxx xxx xxx
33. On examination of some of these important decisions it is
generally agreed that legitimate expectation gives the
applicant sufficient locus standi for judicial review and that
the doctrine of legitimate expectation is to be confined
mostly to right of a fair hearing before a decision which
results in negativing a promise or withdrawing an
undertaking is taken. The doctrine does not give scope to
claim relief straightaway from the administrative authorities
as no crystallised right as such is involved. The protection of
such legitimate expectation does not require the fulfilment of
the expectation where an overriding public interest requires
otherwise. In other words where a person's legitimate
expectation is not fulfilled by taking a particular decision
then decision-maker should justify the denial of such
expectation by showing some overriding public interest.
Therefore even if substantive protection of such expectation
is contemplated that does not grant an absolute right to a
particular person. It simply ensures the circumstances in
which that expectation may be denied or restricted. A case
of legitimate expectation would arise when a body by
representation or by past practice aroused expectation which
it would be within its powers to fulfil. The protection is
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limited to that extent and a judicial review can be within
those limits. But as discussed above a person who bases his
claim on the doctrine of legitimate expectation, in the first
instance, must satisfy that there is a foundation and thus has
locus standi to make such a claim. In considering the same
several factors which give rise to such legitimate expectation
must be present. The decision taken by the authority must
be found to be arbitrary, unreasonable and not taken in
public interest. If it is a question of policy, even by way of
change of old policy, the courts cannot interfere with a
decision…..
xxx xxx xxx
35….It can therefore be seen that legitimate expectation can
at the most be one of the grounds which may give rise to
judicial review but the granting of relief is very much limited.
It would thus appear that there are stronger reasons as to
why the legitimate expectation should not be substantively
protected than the reasons as to why it should be protected.
In other words such a legal obligation exists whenever the
case supporting the same in terms of legal principles of
different sorts, is stronger than the case against it. As
observed in Attorney General for New South Wales case: “To
strike down the exercise of administrative power solely on
the ground of avoiding the disappointment of the legitimate
expectations of an individual would be to set the courts adrift
on a featureless sea of pragmatism. Moreover, the notion of
a legitimate expectation (falling short of a legal right) is too
nebulous to form a basis for invalidating the exercise of a
power when its exercise otherwise accords with law.” If a
denial of legitimate expectation in a given case amounts to
denial of right guaranteed or is arbitrary, discriminatory,
unfair or biased, gross abuse of power or violation of
principles of natural justice, the same can be questioned on
the well-known grounds attracting Article 14 but a claim
based on mere legitimate expectation without anything more
cannot ipso facto give a right to invoke these principles. It
can be one of the grounds to consider but the court must lift
the veil and see whether the decision is violative of these
principles warranting interference…..”
21. In a judgment reported as Ram Pravesh Singh and Others
v. State of Bihar and Others
2
, the Court was examining the
2 (2006) 8 SCC 381
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decision of the State Government that the assets and the liabilities of
a Society should be transferred to the State Electricity Board, but not
the services of the employees to the Board. It was the said decision
of the State which came up for consideration before this Court. It was
held that the Board never agreed nor decided to take services of any
of the employees of the Society. Therefore, it cannot be said that
there was any regularity or predictability or certainty in action which
can lead to a legitimate expectation. It was held:-
“22. The Board had never agreed nor decided to take
services of any of the employees of the Society. In fact, it is
not even the case of the appellants that the Board had at
any point of time held out any promise or assurance to
absorb their services. When the licence of the Society was
revoked, the State Government appointed a committee to
examine the question whether the Board can take over the
services of the employees of the Society. The Committee no
doubt recommended that the services of eligible and
qualified employees should be taken over. But thereafter the
State Government considered the recommendation and
rejected the same, apparently due to the precarious
condition of the Board which itself was in dire financial
straits, and was contemplating retrenchment of its own
employees. At all events, any decision by the State
Government either to recommend or direct the absorption of
the Society's employees was not binding on the Board, as it
was a matter where it could independently take a decision. It
is also not in dispute that for more than two decades or
more, before 1995, the Board had not taken over the
employees of any private licensee. There was no occasion for
consideration of such a course. Hence, it cannot be said that
there was any regularity or predictability or certainty in
action which can lead to a legitimate expectation.”
22. In view of the above judgments, legitimate expectation is one
of the grounds of judicial review but unless a legal obligation exists,
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there cannot be any legitimate expectation. The legitimate
expectation is not a wish or a desire or a hope, therefore, it cannot be
claimed or demanded as a right. The payment of pension in the past
will not confer an enforceable right in favour of the Institute or its
employees.
23. Thus, the resolution of the Board of the Institute to implement
a retirement benefit scheme from its own resources will not bind the
State Government to pay the amount of pension to the employees of
the Institute. The employees of such Institute cannot be treated at
par with the employees of the State Government nor the State can be
burdened with the responsibility to pay pension to the employees of
the Institute. Consequently, we find that the order of the Division
Bench is not legally sustainable. Hence, we allow the appeal and
dismiss the Writ Petition.
The pending applications, if any, shall stand disposed of.
….…………..........................J.
(Dr. Dhananjaya Y. Chandrachud)
…………….................................J.
(Hemant Gupta)
New Delhi,
January 30, 2019.
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