State of Rajasthan Vs A.N. Mathur .

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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8469 OF 2013 (Arising out of SLP (C) No.12350 of 2013)

State of Rajasthan …APPELLANT

VERSUS

A.N. Mathur & Ors. ....RESPONDENTS

WITH

C.A.No.8470/2013 @ SLP(C)No.12351/2013, C.A.No.8471/2013 @ SLP(C)No.12352 /2013, C.A.No.8472/2013 @ SLP(C)No.12353/2013, C.A.No.8473/2013 @ SLP(C)No.12354/2013, C.A.No.8474/2013 @ SLP(C)No.12355/2013, C.A.No.8475/2013 @ SLP(C)No.12356/2013, C.A.No.8476/2013 @ SLP(C)No.12357/2013,C.A.No.8477/2013 @ SLP(C)No.12358/2013, C.A.No.8478/2013 @ SLP(C)No.12361/2013, C.A.No.8479/2013 @ SLP(C)No.12362/2013 & C.A.No.8480/2013 @ SLP(C)No.14191/2013.

J U D G M E N T

ANIL R. DAVE, J.

1. Leave granted in all the special leave petitions.

2. Being aggrieved by the judgment delivered in D.B. Civil Special

Appeal (Writ) No.431 of 2012 in S.B. Civil Writ Petition No.9843 of 2011

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dated 19th July, 2012, delivered by the High Court of Rajasthan, the

appellant-State of Rajasthan has filed the present set of appeals.

3. As all the appeals arise out of a common judgment delivered by the

Rajasthan High Court, all the appeals were heard together at the request of

the learned counsel appearing for the concerned parties.

4. The facts giving rise to the present litigation, in a nutshell, are as

under:

Maharana Pratap University of Agriculture and Technology

(hereinafter called ‘the University’) is an autonomous body performing the

function of making provisions for imparting education in different branches

of study, particularly Agriculture, Horticulture, Veterinary Science, Animal

Husbandry etc. to the students and is constituted under the provisions of the

Rajasthan Agricultural University, Udaipur Act, 2000 (hereinafter referred

to as ‘the Act’). The University is the employer of other respondents, who

had been either working under the University and now retired or they are

still in the employment of the University.

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5. The University had framed a Provident Fund Scheme for its

employees. Accordingly, in the past, upon retirement, the employees of the

University used to get their own contribution as well as contribution of the

University by way of retiral benefits as per the provisions of the

Contributory Provident Fund Scheme. On 7th December, 2000, the Board of

Management of the University passed a resolution whereby it gave an option

to its employees to either continue under the Contributory Provident Fund

Scheme or to opt for a pension scheme under the Pension Rules, 1990.

Certain employees had opted for the pension scheme. Once again, the Board

of Management of the University passed another resolution on 18th

December, 2009 inviting options from the employees as to whether they

wanted to join the Pension Scheme or wanted to continue under the

Contributory Provident Fund Scheme. In pursuance of the second resolution,

some more employees had opted for the pension scheme.

6. Though the University is an autonomous body constituted under the

provisions of ‘the Act’, it is dependant on the appellant in its financial

matters, as the University is unable to generate sufficient funds to meet with

its expenditure. According to Section 36 of the Act, the appellant-has to

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provide grant to the University to meet its expenditure, especially in relation

to the expenditure pertaining to salary and allowances given to its

employees. Thus, the University gets substantial funds from the appellant.

Due to the option exercised by several employees in favour of the pension

scheme, financial burden of the University had been substantially increased

and the said burden was ultimately to be discharged by the appellant. It is

pertinent to note here and it is an admitted fact that before giving such an

option under the resolutions dated 7th December, 2000 and 18th December,

2009, the University did not even consult the appellant in the matter of

changing the scheme with regard to payment of retiral benefits to its

employees.

7. The appellant was unaware of the resolutions passed by the Board of

Management of the University, whereby its employees were offered an

opportunity to opt for the pension scheme, but upon getting information

about the change effected by the University regarding implementation of the

Pension Scheme, upon due deliberation by the Finance Department of the

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appellant, under its order dated 3rd June, 2011, the appellant did not approve

the same.

8. When the order dated 3rd June, 2011 issued by the appellant had been

communicated to the University, by an order dated 30th November, 2011, the

University withdrew its resolutions dated 7th December, 2000 and 18th

December, 2009.

9. As a result of the withdrawal of the two resolutions by the University

on 30th November, 2011, the employees, who had opted for the pension

scheme were deprived of the benefit of the pension scheme, and the

University had to make necessary accounting adjustments for making

payment of the provident fund to the employees, which the employees were

entitled to upon their retirement. Some of the employees are very much in

service and therefore, there was no question of any recovery and the

University had to merely pass necessary book entries.

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10. Upon the Pension Scheme being abolished and as the employees had

to either pay back the amount of pension received from the University or

they had to accept the Contributory Provident Fund scheme, they had

approached the High Court of Rajasthan by filing several writ petitions.

Some of the employees, who had not opted for the pension scheme, had also

filed petitions praying that they be permitted to opt for the pension scheme

even if there was delay in opting for the same. The said writ petitions had

been heard together by the learned single Judge of the High Court and they

had been allowed by a common judgment dated 5th April, 2012. By virtue

of the said judgment, the order dated 3rd June, 2011 passed by the appellant-

the Government of Rajasthan had been quashed and as a result thereof, the

employees who had opted for the Pension Scheme were to be paid pension

by the University in accordance with the Pension Rules.

11. Being aggrieved by the aforestated judgment delivered by the learned

Single Judge, the University preferred intra-court appeals and the said

appeals have been dismissed by the Division Bench of the Rajasthan High

Court by virtue of the impugned judgment and therefore, the State of

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Rajasthan has filed these appeals because ultimately, the burden of payment

of pension to the employees would be passed over to the State of Rajasthan

as per Section 36 of the Act.

12. The learned counsel appearing for the appellant, while challenging the

validity of the impugned judgment as well as the judgment delivered by the

learned single Judge of the Rajasthan High Court had mainly submitted that

the Resolutions passed by the Board of Management of the University

inviting options in relation to the Pension Scheme were in violation of the

provisions of Section 39 of the Act. Extracts of Sections 38 and 39 of the

Acts are reproduced hereinbelow:

“38. Statutes – Subject to the provisions of this Act, the Statutes of

the university may provide for any matter connected with the affairs

of the university and shall in particular, provide the following

namely:-

1. to 6. xxx xxx xxx.

7. Establishment of pension and insurance schemes for the

benefit of officers, teachers and other employees of the

University and the rules, terms and conditions of such schemes.

8 to 14. xxx xxx xxx”

“39. Statutes how made –

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1. Statutes under this Act shall be proposed by the Board and

submitted to the Chancellor for his assent and shall come

into force only after the assent is received and notified by

the Vice-Chancellor.

2. Any statutes may be amended or repealed by the Board with

the assent of the Chancellor.

3. All Statutes made under this Act shall be published in the

official Gazette.”

13. Section 38 of the Act clearly indicates that the University can provide

for any matter connected with the affairs of the University and in

particular, the matters which have been referred to under Section 38 of

the Act. In the instant case, we are concerned with clause 7 of Section

38 of the Act, which also pertains to establishment of pension scheme

for the benefit of the employees of the University. Thus, it is open to

the University to frame or change any scheme with regard to payment

of retiral benefits to its employees.

14. In the instant case, the University wanted to change the scheme–from

the Contributory Provident Fund scheme to the Pension Scheme. The

University had given option to its employees to opt either for the

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Pension Scheme or to continue with the Contributory Provident Fund

scheme and for that purpose, two resolutions, viz. resolutions dated 7th

December, 2000 and 18th December, 2009 had been passed by the

Board of Management of the University. In the said process, the

University missed to look at the provisions of Section 39, which

makes it obligatory for the Board of Management of the University to

submit the proposed amendment to the Chancellor for his assent and

the amended statute would come into force only after the assent is

received and notified by the Vice-Chancellor of the University. The

Chancellor, as per the provisions of Section 2(h) read with

Section 8 of the Act, is the Governor of the State of Rajasthan.

15. According to the aforestated provision of Section 39 of the Act, it was

obligatory on the part of the Board of Management of the University to

submit the resolutions dated 7th December, 2000 and 18th December, 2009 to

the Chancellor i.e. to the Governor of the State of Rajasthan before inviting

options from the employees. If the assent of the Chancellor, i.e. the

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Governor of the State of Rajasthan is not received by the University, the

amended statute would not come into force.

16. The aforestated provisions in Section 39 of the Act are of vital

importance because the legislature wanted to have some control over the

University, though the University is an autonomous body. The reason

behind having such a control could be for the fact that the University is

given substantial financial assistance by the appellant as one can see from

the provisions of Section 36 of the Act. Any financial liability is incurred by

the University that is to be ultimately discharged by the University with the

financial help of the State.

17. The learned counsel appearing for the appellant had vehemently

submitted that before considering the change in the scheme with regard to

giving different retiral benefits to its employees, the Board of Management

of the University ought to have taken consent of the Chancellor, i.e. the

Governor of the State of Rajasthan because the increased financial burden

was to be borne by the State of Rajasthan. Thus, without consent of the

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State of Rajasthan, who is ultimately going to be burdened with the financial

liability relating to payment of retirement benefits, the University could not

have changed the policy with regard to payment of the retirement benefits.

18. When the facts about the resolutions passed by the Board of

Management of the University, which had not been approved by the

Chancellor, were brought to the notice of the State of Rajasthan, the said

resolutions were duly considered by the State of Rajasthan and when it was

found that because of the said resolutions financial liability of the State was

being increased for no justifiable reason, the State was constrained to pass

the order dated 3rd June, 2011, whereby both the resolutions passed by the

Board of Management of the University had been quashed and set aside.

19. Thus, the short but forceful submission of the learned counsel

appearing for the State was that the change effected in the scheme under

which the employees were given retiral benefits was not legal or was not in

accordance with the provisions of the Act and therefore, the employees who

had opted for the Pension Scheme cannot be given pension and they will

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have to continue with the Contributory Provident Fund scheme. In the

circumstances, he had prayed that the appeals should be allowed and the

impugned judgment confirming the judgment of the learned single Judge

should be quashed and set aside.

20. On the other hand, the learned counsel appearing for the University

had passively supported the submissions made by the learned counsel

appearing for the State and he had to admit the fact that before inviting

options from the employees in pursuance of the two resolutions referred to

hereinabove, approval of the Chancellor, i.e. the Governor of the State of

Rajasthan had not been obtained by the Board of Management of the

University.

21. The appeal was vehemently opposed on behalf of the employees of

the respondent- University.

22. The learned counsel appearing for the employees had submitted that

the employees had opted for the Pension Scheme within the period

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prescribed by the resolutions passed by the Board of Management of the

University and therefore, the University had no right to make any change in

the policy thereafter.

23. It had been further submitted that some of the respondent employees

had also started getting pension upon their retirement in pursuance of the

option exercised by them. According to the learned counsel, it would be

unjust to change the scheme with regard to the retiral benefits considering

the lapse of time and it would be unfair to the employees who are getting

pension as per the option exercised by them. It had been further submitted

that the change effected in the policy with regard to payment of retiral

benefits by the University was retrospective in nature and therefore, it was

bad in law.

24. The learned counsel appearing for the employees had also submitted

that before effecting change in the scheme, no notice was ever issued to the

employees and therefore, the action of the withdrawal of the Pension

Scheme was against the principles of natural justice.

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25. The learned counsel appearing for the employees had supported the

reasons given in the impugned judgment and had also submitted that certain

other universities in the State of Rajasthan were also giving benefit of a

pension scheme to its employees and therefore, there was no justification on

the part of the University from preventing its employees from getting the

benefit of the Pension Scheme. He had, therefore, submitted that the appeals

should be dismissed.

26. We have heard the learned counsel at length and have carefully

considered the provisions of the Act, and the resolutions passed by the

University as well as the order dated 3rd June, 2011 passed by the appellant-

State.

27. Upon carefully going through the statutory provisions, we are of the

view that the High Court ought not to have constrained the University to

continue to pay pension to the respondent-employees, especially in view of

the fact that the change effected in the payment of retiral benefits to the

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employees was never approved by the Chancellor of the University as

required under Section 39 of the Act.

28. As stated hereinabove, though the University is an autonomous body,

it is much dependent on the State of Rajasthan in its financial matters. It

gets substantial funds from the State for performing its duties and possibly

for the said reason the State has control over it in the financial affairs. Be

that as it may, Section 39 of the Act makes it mandatory to get approval or

assent of the Chancellor of the University before effecting any change in the

Statute.

29. In spite of clear and unambiguous provisions of Section 39 of the Act,

the Board of Management of the University did not get necessary assent of

the Chancellor, i.e. the Governor of the State of Rajasthan before effecting

the change in the scheme with regard to payment of retiral benefits to its

employees. The change in scheme would result into a huge financial

liability on the University, which ultimately will have to be borne by the

appellant- the State of Rajasthan. Had the University been having complete

autonomy and had been not dependent on the State of Rajasthan in its

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financial matters, possibly Section 39 of the Act would not have been

incorporated in the Act in the form in which it is at present. When the

appellant is reimbursing the expenditure incurred by the University by

giving grants or financial aids in one form or the other, the control exercised

by the State on the University in the financial matters is completely justified.

The University cannot unilaterally decide to give huge financial benefit to its

employees without taking consent of the Chancellor, i.e. the Governor of the

State of Rajasthan in violation of the provisions of Section 39 of the Act.

30. From the contents of the order dated 3rd June, 2011, passed by the

State of Rajasthan it is clear that because of the changed policy adopted by

the University in the matter of payment of the retiral benefits to its

employees, financial burden on the University would be substantially

increased and ultimately that burden will have to be discharged by the State

of Rajasthan. As the University had taken the decision to give an option to

its employees for changing the manner in which they were to be given retiral

benefits in violation of Section 39 of the Act, the State of Rajasthan was

entitled to reject the change effected by the University.

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31. For the aforestated reasons, in our opinion, the order dated 3rd June,

2011 passed by the appellant, whereby both the resolutions passed by the

University in relation to giving options to its employees for changing the

Contributory Provident Fund scheme to the Pension Scheme, is absolutely

just and legal. We are, therefore, of the view that the High Court was not

correct while quashing and setting aside the order dated 3rd June, 2011

passed by the appellant-State of Rajasthan.

32. A submission had been made on behalf of the employees that some

other universities in the State of Rajasthan are giving pension to its

employees. Be that as it may, each University has a different set of rules and

if another university had adopted a different policy in accordance with law

or as per its rules and regulations, we cannot say that the order dated 3 rd

June, 2011 passed by the appellant is incorrect. According to us, the said

submission is not relevant and therefore, we do not accept the said

submission.

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33. So far as the submission with regard to violation of the principles of

natural justice is concerned, in our opinion, by not giving hearing to the

concerned employees, the action of the University would not become void.

Violation of one of the principles of natural justice would make the action

voidable and not void.

34. Let us see as to what would happen if the University gives notices to

all the employees calling upon them to show cause as to why the option

exercised by them should not be cancelled so as to restore the original

scheme of the Contributory Provident Fund. Even after considering the

replies of the employees, the question is whether the University can continue

to give pension to the employees? Answer to the question would be in the

negative. If issuance of show cause notice is a mere formality, in our

opinion, that would not affect the decision taken by the University in

pursuance of the order dated 3rd June, 2011 because the order dated 3rd June,

2011 passed by the appellant-State is absolutely legal and by virtue of the

said order, the resolutions dated 7th December, 2000 and 18th December,

2009 passed by the University have been quashed.

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35. In view of the above circumstances, we are of the view that even if the

employees were not given any notice, the final decision taken by the

University is not bad in law.

36. In the aforestated circumstances, we quash and set aside the impugned

judgment delivered by the Division Bench of the Rajasthan High Court,

which has confirmed the judgment delivered by the learned single Judge.

The order dated 3rd June, 2011 passed by the appellant-State shall operate

and the employees shall be given retiral benefits as per the Contributory

Provident Fund Scheme which was in force prior to 7th December, 2000. So

far as the retired employees are concerned, they must have been paid

pension in pursuance of the judgment delivered by the Division Bench of the

High Court. As all the appeals have been allowed, some financial

adjustments will have to be made and possibly there would be some

recovery from some of the employees. We clarify that upon overall

adjustment of the entire amount, if any employee has to return any amount

to the University, as a special case, no demand shall be raised by the

University in view of the fact that the employees must have retired long back

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and they must have adjusted their financial affairs upon knowing the fact

that they had a regular income of pension. We also clarify that if prior to

passing the resolution dated 7th December, 2000 by the Board of

Management of the University, if there was any scheme about payment of

pension to its employees and if some of the employees had opted for the said

scheme, payment of pension to such employees would not be affected by

virtue of this judgment.

37. The appeals are allowed with no order as to costs.

…..……………................J. (ANIL R. DAVE)

….....................................J. (DIPAK MISRA) New Delhi September 23, 2013.

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ITEM NO.1A COURT NO.12 SECTION XV (For judgment)

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS CIVIL APPEAL No........../2013 @ SLP(C)No(s).12350/2013

STATE OF RAJASTHAN Petitioner(s)

VERSUS

A.N. MATHUR & ORS. Respondent(s)

WITH CIVIL APPEAL No........../2013 @ SLP(C)No(s).12351 of 2013, CIVIL APPEAL No........../2013 @ SLP(C)No(s).12352 of 2013, CIVIL APPEAL No........../2013 @ SLP(C)No(s).12353 of 2013, CIVIL APPEAL No........../2013 @ SLP(C)No(s).12354 of 2013, CIVIL APPEAL No........../2013 @ SLP(C)No(s).12355 of 2013, CIVIL APPEAL No........../2013 @ SLP(C)No(s).12356 of 2013, CIVIL APPEAL No........../2013 @ SLP(C)No(s).12357 of 2013, CIVIL APPEAL No........../2013 @ SLP(C)No(s).12358 of 2013, CIVIL APPEAL No........../2013 @ SLP(C)No(s).12361 of 2013, CIVIL APPEAL No........../2013 @ SLP(C)No(s).12362 of 2013 & CIVIL APPEAL No........../2013 @ SLP(C)No(s).14191 of 2013.

Date: 23/09/2013 These Appeals were called on for pronouncement of Judgment today.

For Petitioner(s) Dr. Manish Singhvi,AAG Mr. Amit Lubhaya,Adv.

Ms. Pragati Neekhra,AOR

For Respondent(s) Mr. Vivek Tankha,Sr.Adv. Mr. T. Mahipal,AOR

Mr. Rishabh Sancheti,Adv. Mr. Padmapriya,Adv.

Mr. Milind Kumar,AOR Ms. Charu Mathur,AOR

Mr. Mukul Kumar,AOR ..2/-

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.2.

Mr. Justice Anil R. Dave pronounced the

reportable judgment of the Bench comprising

Hon'ble Mr. Justice Dipak Misra and His

Lordship.

The appeals are allowed in terms of the

signed reportable judgment.

(Sarita Purohit) Court Master

(Indu Pokhriyal) Court Master

(Signed reportable judgment is placed on the file)

STATE OF RAJASTHAN Vs A.N. MATHUR .

STATE OF RAJASTHAN Vs A.N. MATHUR .