1998 (8) TMI 597 - SC - Indian Laws

NBCC employees cannot claim 125% foreign allowance on revised basic pay without contractual promise

NATIONAL BUILDINGS CONSTRUCTION CORPORATION Versus S. RAGHUNATHAN & ORS.

SC reversed HC decision denying foreign allowance at 125% of revised basic pay to NBCC employees. Court held respondents had no legitimate expectation for ... Payment of Foreign Allowance at 125% of revised basic pay - Denial of right guaranteed - doctrine of 'legitimate expectation' - effect to the recommendations of the Fourth Pay Commission - HELD THAT:- In the instant case, it will be seen that Foreign Allowance was not one of the allowances which was promised to be paid to the respondents at the time of their induction in the service of NBCC nor had NBCC, at any time, given any assurance to any of the respondents that this allowance would be payable to them at the revised rate. The agreement or the contract of service, executed between the respondents and the NBCC, does not stipulate payment of Foreign Allowance to them. Incidentally, in this case, the question of 'Legitimate Expectation' was not raised in the petition and no foundation was laid in the pleadings for such a plea being advanced before the Court. Strangely, the High Court allowed this plea at the stage of argument and allowed the petitions only on the ground of 'Legitimate Expectation' without least realising that there was hardly at legitimacy in the claim of the respondents. In the absence of pleading and the affidavit of the respondents in support thereof, the whole exercise done by the High court cannot but be termed to be speculative. The Ministry of External Affairs had already fixed Foreign Allowance under F.R. 51(2) for its officers and other staff working in its Missions abroad. The NBCC, therefore, issued the order dated 15th October, 1990 specifying the benefits which would be available to its employees and deputationists with effect from 1.1.1986. It was in this order that it was indicated that Foreign Allowance would continue to be payable at the rate of 125% of the basic pay (prerevised) as on or upto 31.12.1985. There was thus no increase in the Foreign Allowance payable to the respondents; nor was the amount reduced in any way. NBCC had taken a policy decision on account of strange situations and conditions prevailing in Iraq where respondents were deputed on foreign projects assigned to NBCC, that Foreign Allowance would be payable only on the original basic salary of the respondents and not on the salary as revised on account of the recommendations of the Fourth Pay Commission. In such a situation, the policy decision shall have the effect of displacing the doctrine of 'Legitimate Expectation', particularly as the decision was based on objective assessment of the prevailing circumstances including the financial stringency in which Iraq came to be placed. There is, therefore, no element of arbitrariness in that decision. Thus, he appeals are allowed, the judgment and order dated 13.9.96 and 25.7.97 passed by the Delhi High Court are set aside and the writ petitions relating to Foreign Allowance are dismissed, but without any order as to costs. Issues Involved:1. Payment of Foreign Allowance at 125% of revised basic pay.2. Application of the doctrine of 'Legitimate Expectation'.Summary:Issue 1: Payment of Foreign Allowance at 125% of Revised Basic PayThe respondents, who were on deputation with NBCC in Iraq, claimed Foreign Allowance at 125% of their revised basic pay following the Fourth Pay Commission's recommendations. The Delhi High Court had directed NBCC to pay this allowance based on the revised pay. However, NBCC contended that Foreign Allowance was not part of the contractual terms and was to be paid on the pre-revised basic pay. The Supreme Court observed that Foreign Allowance was not included in the original terms of deputation and was considered a discretionary compensatory allowance u/s F.R. 51(2). The High Court's decision to link Foreign Allowance to revised pay was found speculative and erroneous.Issue 2: Application of the Doctrine of 'Legitimate Expectation'The High Court allowed the respondents' claim based on the doctrine of 'Legitimate Expectation,' stating that the respondents expected Foreign Allowance to increase with the revised basic pay. However, the Supreme Court highlighted that this doctrine requires reliance on representations and resulting detriment, which was not established in this case. The respondents' claim of 'Legitimate Expectation' was not pleaded in the writ petition, and no foundation was laid for such a plea. The Supreme Court emphasized that the doctrine cannot override a policy decision taken by NBCC based on objective assessment and financial constraints in Iraq.Conclusion:The Supreme Court allowed the appeals, setting aside the Delhi High Court's judgments dated 13.9.96 and 25.7.97. The writ petitions relating to Foreign Allowance were dismissed, with no order as to costs.