2006 (4) TMI 559 - SC - Indian Laws

Supreme Court Upholds Bihar Pension Act 2001, Validates Retrospective Legislation and Financial Constraints Justification.

State of Bihar and Ors. Versus Bihar Pensioners Samaj

The SC allowed the appeal, overturning the HC's decision, and upheld the constitutionality of the Bihar State Government Employees Revision of Pension ... Validity of striking down of the Bihar State Government Employees Revision of Pension, Family Pension and Death-cum-Retirement Gratuity Act, 2001 ('Validation Act') - HELD THAT:- The only ground on which Article 14 has been put forward by the learned Counsel for the respondent is that the fixation of the cut-off date for payment of the revised benefits under the two concerned notifications was arbitrary and it resulted in denying arrears of payments to certain sections of the employees. This argument is no longer res integra. It has been held in a catena of judgments that fixing of a cut-off date for granting of benefits is well within the powers of the Government as long as the reasons therefore are not arbitrary and are based on some rational consideration. A supplementary affidavit filed on behalf of the State Government by Mukesh Nandan Prasad dated 9.9.2002 brings out in paragraph 8 that the total amount of financial burden, which would arise as a result of making effective the payments from 1.1.1986 would be about 2,038.34 crores. In other words, the State Government declined to pay the arrears from 1.1.1986 on the ground of financial consideration, which, undoubtedly, is a very material consideration for any administration. In State of Punjab and Ors. v. Amar Nath Goyal and Ors. : (2005)IIILLJ759SC this Court had occasion to consider the very same issue. After referring to a number of other authorities, it was held that financial constraints could be a valid ground for introducing a cut-off date while introducing a pension scheme on revised basis. Thus, refusal to make payments of arrears from 1.1.1986 to 28.2.1989 on the ground of financial burden cannot be held to be an arbitrary ground or irrational consideration. Hence, the argument based on Article 14 of the Constitution must fail. We see no other contention justifying the striking down of the Validation Act passed by the competent Legislature. At any rate, none has been pointed out to us. Thus, the only argument in favour of the striking down having been found unacceptable, we are of the view that the impugned judgment of the High Court is erroneous and needs to be interfered with. In the result, we allow the appeal and set aside the impugned judgment of the High Court and declare the constitutionality of the Validation Act. No order as to costs. Issues Involved:1. Validity of the Bihar State Government Employees Revision of Pension, Family Pension and Death-cum-Retirement Gratuity (Validation and Enforcement) Act, 2001.2. Fixation of the cut-off date for the revised pensionary benefits.3. Financial constraints as a valid ground for not paying arrears.Summary:1. Validity of the Validation Act:The appellants challenged the judgment of the Division Bench of the High Court of Patna, which struck down the Validation Act on the ground that it was enacted to frustrate an earlier decision of the High Court. The Supreme Court noted that an Act of the State legislature can be struck down only if it is beyond legislative competence, violates Part III or any other provision of the Constitution, or infringes the basic features of the Constitution. The Court upheld the legislative competence to enact retrospective legislation to validate prior executive and legislative acts.2. Fixation of the Cut-off Date:The High Court had previously quashed the notifications fixing 1.3.1989 as the effective date for financial benefits of the revised pension scheme, while the scheme was notionally effective from 1.1.1986. The Supreme Court observed that fixing a cut-off date is within the powers of the Government, provided it is not arbitrary and is based on rational considerations. The Court found the cut-off date of 1.3.1989 justified and not arbitrary.3. Financial Constraints as a Valid Ground:The State Government justified the refusal to pay arrears from 1.1.1986 to 28.2.1989 due to financial constraints, estimating the financial burden to be about 2,038.34 crores. The Supreme Court held that financial constraints are a valid ground for introducing a cut-off date in a pension scheme, referencing previous judgments that supported this view. The argument based on Article 14 of the Constitution was thus rejected.Conclusion:The Supreme Court allowed the appeal, set aside the impugned judgment of the High Court, and upheld the constitutionality of the Validation Act. The Court found no other grounds to justify striking down the Act and ruled in favor of the appellants. No order as to costs was made.