This case deals with the Pension Act passed by the Bihar State government in 2001 which was challenged by the association representing the pensioners in the State. of Bihar stating that this Act is violative of Art. 14 and 16 of Indian Constitution. It was first challenged in the Honorable High Court of Bihar which quashed the Act as invalid . the judgment of the High Court was challenged in the Supreme court by State. of Bihar. The apex court passed a judgment in favour of State. of Bihar.
Facts of the Case
Notification, Resolution dated 19.4.1990 was issued by the State government relating to provisions regulating pension and Death cum-Retirement Gratuity pursuant to the recommendations of a Special Committee known as “Fitment- cum- Pay Revision Committee”. The notification declared that after considering the recommendations of the aforesaid Committee the State Government after due deliberations had decided to revise the provisions regulating pension. However the effective of the notification was fixed as 1.1.1986, although the notification declared that, the financial benefits of revision of pension would be admissible only with effect from 1.3.1989 and no arrears would be paid for the period 1.1.1986 to 28.2.1989.
Another notification, dated 19.4.1990, was issued for rationalization of pensionary principles and structure of pre 1.1.1986 Pensioners/Family pensioners. This notification also had identical terms with regard to the date of effect, although the revised pensionary provisions applicable to pre 1.1.1986 notionally, the financial benefits were directed to accrue only from 1.3.1989.
The respondent, an Association representing the pensioners I the St. of Bihar, challenged the aforesaid two notifications before the High Court by a writ petition. The High Court disposed of this writ petition by a judgment dated 21.8.1996. This writ petition was allowed, by which two notifications in question were quashed and the St. Government was directed to reconsider the matter “ in accordance with law and in the light of the observation made above”. The High Court made the following observations in the judgment : “ It is no doubt open to the State Government to revise rationalize(sic) its pension scheme either on the same pattern as followed by the Government Of India or to form its own scheme and to also fix a cut-off date. In fact, in the present case it could as well, have fixed 1.3.1989 or date of issue of impugned (sic) resolution i.e. 19.4.90 as the cut off date. The question for consideration nevertheless whether having decided to revise/ rationship (sic) the pension scheme with effect from 1.1.86 on the central pattern, the State Government had any justification to deny the consequential monetary benefits thereof and make the same effective only from 1.3.1989”.
The appellants challenged the judgment of the High Court by their S.L.P( Civil) before the Supreme court and the Court was pleased to summarily dismiss the S.L.P on 20.1.1997.
Another similar writ petition being which was pending in the Ranchi Bench of the High Court, was dismissed by the learned single Judge on 10.7.1997. the said judgment was impugned in a Letters Patent Appeal before the division Bench. During its pendency, the respondent initiated contempt proceedings. The contempt proceedings were closed by a direction of the High Court that non-implementation of the order was due to a bonafide misunderstanding and State Government was granted three weeks' time for implementation of the judgment. The State Government moved a SLP before the Supreme Court which was disposed of on 8.3.1999 with the direction that the contempt proceedings would be stayed foe a period of three months and the letters patent appeal would e disposed of by the High court within two months.
The Division Bench of Patna High Court allowed the Letters Patent appeal and set aside the judgment of the learned single Judge. It was challenged but the court dismissed it accordingly.
On 15.12.2000 the Governor of Bihar issued an Ordinance styled as “ The Bihar State Government Employees Revision Of pension, Family Pension and Death-cum- retirement Gratuity Ordinance 2000”. The validation act purports to validate the revision of pension and gratuity in accordance with the two Resolutions. The respondent impugned the Validation Act before the High Court which was allowed and the Validation Act was struck down as unconstitutional. This decision was challenged on appeal.
Argument Made By the Counsel for The AppellantsLearned counsel for the appellants relied on the judgment of a Constitution Bench in St. Of Orissa v. Bhupendra Kumar Bose in which it was observed :
“ The judgment delivered by the High Court under Art.226 must be respected but that is not to say that the Legislature is incompetent to deal with problems raised by the said judgment if the said problems and their proposed solutions are otherwise within their legislative competence. It would be erroneous to equate the judgement of the High Court under Art.226 with Art.226 itself and confer upon it all the attributes of the said constitutional provison.”
The counsel for the appellants urged that an Act of the State legislature can be struck down by the courts only on following grounds:
a) That the State legislature was incompetent to enact the legislation.
b) That it was violative of any provisions contained in Part 3 of the Constitution, or
c) That it was violative of any other provisions of the Constitution; or
d) That it was an infringement of the basic features of the Constitution.
Appellant's counsel argued that except these available grounds, there is no other ground on which an Act of a State legislature can be struck down and declared to be ineffective.
The counsel also relied on Bakhtawar Trust & Others v. M.D. Narayan where it was observed:“ The validity of any statue may be assailed on the ground that it is ultarvires the legislative competence of the legislature which enacted it or it is violative of Part 3 or any other provision of the Constitution. It is well settled that Parliament & State legislature have plenary powers of the legislation within the fields assigned to them and subject to some constitutional limitations, can legislate prospectively as well as retrospectively. This power to make retrospective legislation enables the legislature to validate prior executive and legislative Acts retrospectively after curing the defects that led to their invalidation and thus makes ineffective judgments and orders of the competent courts declaring the invalidity. It is also well settled that a Validating Act may even make ineffective judgments and orders of competent courts provided it, by retrospective legislation removes the cause of invalidity or the basis that had led to those decisions.”
Argument Made by the Counsel for the RespondentMr. Ranjit Kumar, senior counsel on behalf of the respondent contended that the notification was bad for inconsistency with Art 14 . The notifications introduced invidious distinction between persons who had retired between 1.1.1986 & 28.2.1989 and those who retired on and from 1.3.1989. While in former class of employees the arrears arising out of the implementation of the notification from 1.1.1986 was denied, although the notification itself was made effective from 1.1.1989. so the High Court has rightly quashed the offending notifications.
Supreme Court's ObservationThe Supreme Court observed that the decision of the Division Bench of the High Court that its open to the State Government to fix 1.3.1989 as the effective date of notifications is correct. The Supreme Court relying on the observation made in Bakhtawar Trust case stated that it's always open to the Legislature to alter the retrospectively as long as the very premise on which the earlier judgment declared a certain action as invalid is removed. Such Validating Act was not opened to challenge on the ground that it amounted to usurpation of judicial power.
The Court further stated that the argument given by the counsel on behalf of the respondent is not res integra as in many judgments it has been held that fixing of cut-off dates for granting of benefits is well within the powers of the Government as long as the reasons are not arbitrary.
The Bihar Government by a supplementary affidavit mentioned the reason for declining to pay the arrears from 1.1.1986 on the ground of financial consideration, which according to the Court is a material consideration. For this the court referred to St. Of Punjab & Others v. Amar Nath Goyal where the court consider the same issue and it was held that financial constraints could be a valid ground for introducing a cutoff date while introducing pension scheme.
Critical AppreciationThe main issue of the Bihar State Pensioner Samaj case may deals with Equality before law i.e. ARTICLE 14 of Indian Constitution but this case deals with another aspect of constitutional law which is not explicitly mentioned in the facts or the judgment of the case. The case highlights the Doctrine Of Territorial Nexus which is the underlying principle of ARTICLE 245.
Article 245 clause (1) reads:Subject to the provisions of this Constitution, Parliament may make laws for the whole or nay part of the territory of India, and the Legislature of a state may make laws for the whole or any part of the State.
So the Doctrine of Territorial Nexus signifies that the object to which the law applies need not be physically located within the territorial boundaries of the State, but what is necessary is that it should have a sufficient territorial connection with the State . If there is a territorial nexus between the subject-matter of the Act and the State making the law, then the statute in question is not regarded as having extra-territorial operation . So as per this doctrine the State can make laws regarding any subject and it will not be invalid unless the law extra-territorial.
In one case related to Bihar Hindu Religious Trusts Act,1950 enacted by the Bihar Legislature for the protection & preservation of properties appertaining to the Hindu Religious trust. Question was raised whether the Act would apply to trust properties outside the State. The Supreme Court apply the doctrine held that the Act could affect the trust property in Bihar and not outside it. So the Act thus has no extra territorial operation.
Similarly in the present case also as per the judgment of the Apex Court goes is based on the Doctrine of Territorial Nexus. The court has validated the Bihar Pensioner's Act, 2001 stating that the division bench of the High court has taken the view that it's open to the State to fix the implementation date of notification. It has observed, though not explicitly that the State can make any law pertaining to its territory. Thus the doctrine of territorial nexus is taken care off by the Apex Court. So it can be presumed that the judges of the Supreme Court as well as the High Court must have taken this decision on keeping the doctrine in mind.
But another aspect of the judgment of this case is that it has neglected the Principle of Natural Justice. The contention of not making payments of arrears from 1.1.1986 to 28.2.1989 for financial burden on State was held as valid reason by the Apex Court but it has failed to take into account of the social aspect of a government employee after he/she retire from the service. The provision of pensioner's act doesn't mention about the class of employees it will affect so it can be presumed that it was for all the class of State employees. It can be well presumed that not every employees will be financially secure the day they retire, the pension maybe the only source of financial security. This aspect was neglected by the court as per as my understanding goes. No safety net was applied to provide minimum financial security to the employees till the date the payment would be given. The court must have ordered the State government to facilitate the retired employees with some alternative or temporary relief till the time the actual provision was implemented.
Bihar Pensioner's Samaj case is unique in it self. As per as the legal aspect goes the decision given by the Supreme Court is at its best. It is interesting to see that the court without explicitly mentioning about the Doctrine of Territorial Nexus based its judgment on it. Legally it's the apt judgment the court can give. But law in a democracy is made keeping in view the social scenario of the country also. So a judgment of the Apex Court must depict the balance between the social as well as the legal criteria. This is where the judgment of the concerned case is lacking . The judgment was legally valid but the court failed to appreciate the social aspect concerning the case. Hope that there will be other case judgments in future which will be more balanced one and will remove the lacuna of this case.
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