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

1

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:  

2

“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;

3

(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

4

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

5

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

6

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

7

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

8

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-in-

aid 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  Institute-

respondent 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-cum-

Gratuity;  (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

9

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

10

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

11

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 12

“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

13

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  Others2,  the  Court  was  examining  the

2 (2006) 8 SCC 381 14

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,

15

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.

16