TaxTMI 
TaxTMI 
2010 (7) TMI 1195
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....ga Hills-Tuensang Areas Act, 1957 was enacted by the Parliament by which certain changes were brought about with regard to the administration of the area viz., Naga Hills - Tuensang Area within the State of Assam. The pay structure applicable to civil servants of Assam was made applicable to the civil servants of the Naga Hills-Tuensang Area and as regards the service conditions including the age of superannuation, the Central Government Fundamental Rules and Subsidiary Rules were made applicable to them. After creation of the State of Nagaland, the conditions of service of the State Government employees continued to be governed by the same Rules. In 1990, the superannuation age of all the State Government employees other than grade-IV employees was raised from 55 years to 58 years. The 1991 Act 3. In 1991, Nagaland Retirement from Public Employment Act, 1991 (for short, `the 1991 Act') was enacted by the State Legislature which came into force on June 18, 1991. Section 3 thereof provided for retirement from public employment. It states: Section.-3. Retirement from public employment: (1) Notwithstanding anything contained in any rule or orders for the time ....
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....e is not permissible since retirement of government employees must be attributable to the age and not the length of tenure of service. 5. The Single Judge of the Gauhati High Court vide judgment dated January 18, 1993 upheld the reduction of retirement age from 58 to 57 years but struck down part of Section 3 of 1991 Act which prescribed the retirement from service on completion of 33 years of service. But no consequential relief was granted to the employees. 6. The Confederation challenged the order of the Single Judge dated January 18, 1993 by way of an intra court appeal insofar as consequential reliefs were denied to the employees. The Division Bench allowed the appeal on September 6, 1995 and held that affected employees shall be entitled to get their salary and other allowances and all other consequential benefits which they would have been entitled to upto the age of 57 years, except those employees who were gainfully employed elsewhere. 7. The State of Nagaland (for short, `the State') challenged the judgment and order dated September 6, 1995 to the extent the Division Bench granted consequential relief's to the employees in Special Leave Petition (SLP) bef....
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....d, accordingly, recommended that DOP & AR should be nodal agency to streamline date base of government employees, and put in place a Common Data Base System by coordinating with the concerned departments. It transpires that based on the data available with the Government, the following compilations were made: 13. HPC on the basis of the aforesaid figures observed that most of the non-gazetted (Class-III and IV) employees have joined the service at a very early age, i.e. before 20 years and hence fixation of length of service as a criterion for superannuation may affect many of the Class-III and IV employees who joined the service at the age of 18-20 years. HPC also observed that employment opportunity in the government sector is limited but the qualified job seekers have increased manifold, thus, causing mismatch in the demand and supply for public jobs in the State. 2nd Amendment Act, 2009 14. On July 8, 2009 a Bill titled `The Nagaland Retirement from Public Employment (Second Amendment) Bill, 2009' (for short, `Amendment Bill') was introduced on the floor of the House. By the said Bill the length of service of the State Government employees was proposed to be re....
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....h is not in tune with the law; and that the amended law would result in removal of stagnation in the matters of employment to the unemployed and thereby making employment opportunities less arbitrary, reasonable and in consonance with the constitutional provisions. It was submitted that by 2nd Amendment Act, 2009, the employment prospects of the youth are protected whereby the number of years of service would be restricted to 35 years while maintaining the age of superannuation at 60 years. The State also submitted that the literacy rate in Nagaland is amongst one of the highest in India and the high literacy rate coupled with the fact that there are no other avenues for employment except through the Government sector has increased the unemployment problem to an alarming extent. After a thorough and systematic appreciation and study of the unemployment problem and also the social aspects, the State decided to prescribe the maximum length of service for retirement of its employees in addition to the upper age limit of 60 years. The State explained the peculiar circumstances that necessitated the insertion of 35 years of length of service in the government employment for superannuati....
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.... not on the grounds of such action being arbitrary, irrational or unreasonable. 22. Mr. Ram Jethmalani, learned senior counsel vehemently contended that even if it be assumed that the alternative method of retirement by way of length of service is permissible in law, still the 2nd Amendment Act, 2009 prescribing retirement of government employees in the State on completion of 35 years of service is violative of Article 14 of the Constitution being arbitrary, unreasonable and unconstitutional. In this regard, he placed heavy reliance upon judgment of this Court in the case of K. Nagaraj and Ors. v. State of Andhra Pradesh and Anr. (1985) 1 SCC 523 It was submitted that the needs/responsibilities of a person between the age of 50 to 60 are the most as he has to educate his children, marry his children in addition to maintaining his family. He submitted that Class III and IV employees constitute 93 per cent of total employee strength in the State and that as a result of prescription of maximum length of service of 35 years, most of the government employees (who joined service before 20 years, i.e. at 18 and 19 years) would retire at the age of 53 or 54 years which is an unreasonabl....
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....ies are made available to the youth in the State although percentage of literacy is as high as 70%; that for lack of avenues of employment there is a grave danger arising out of insurgency and potential danger of educated youth joining underground movement; that increase of retirement age from 57 years to 60 years in the year 2007 resulted in grave resentment from the Naga youth who protested through NSF which finally led to the enactment of the 2nd Amendment Act, 2009 and that alternative mode of retirement on completion of 35 years of service is consistent with the judgment of this Court in Yeshwant Singh Kothari 1993 Suppl. (2) SCC 592 and based on the policy of the Government and in public interest. 25. Mr. K.K. Venugopal, learned senior counsel argued that there is always presumption of constitutionality arising in favour of a statute and onus to prove its invalidity lies on a party which assails the same. He submitted that the Legislature is the best judge of the needs of the particular classes and to estimate the degree of evil so as to adjust its legislation accordingly. In this regard, he sought support from the decisions of this Court in Mahant Moti Das v. S.P. Sahi AI....
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.... SCC 592. In that case, the appellants - employees of the State Bank of Indore (a subsidiary bank of the State Bank of India) - were aggrieved by their retirement on completion of 30 years of service whereas according to them they were entitled to service upto 58 years of age. They were initially in the employment of the Bank of Indore Limited which ceased to exist with effect from January 1, 1960 and became a subsidiary bank known as the State Bank of Indore. The issue was raised in the context of the State Bank of India (Subsidiary Banks) Act, 1959 and the Regulations framed there under. This Court referred to Section 11(1) of 1959 Act and Regulation 19(1) which are as follows: Section 11. - Transfer of services of employees of existing banks.-- (1) Save as otherwise provided in this Act, every employee of an existing Bank in the employment of that bank immediately before the appointed day, shall, on and from that day, become an employee of the corresponding new bank and shall hold his office or service therein by the same tenure at the same remuneration and upon the same terms and conditions and with the same rights and privileges as to pension, gratuity and other....
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.... be held to be unjustified or impermissible. (B) K. Nagaraj Case 30. In the case of K. Nagaraj (1985) 1 SCC 523, the employees of the Government of Andhra Pradesh were aggrieved by an amendment in the Fundamental Rules and Hyderabad Civil Services Rules reducing the retirement age from 58 to 55 years. As a result of these amendments, over 18,000 government employees and 10,000 public sector employees were superannuated. The government employees challenged the said amendments on diverse grounds, inter-alia that the said amendment violated Articles 14, 16 and 21 of the Constitution. This Court held that it was in public interest to prescribe age of retirement and while holding so observed that fixation of age would be unreasonable or arbitrary if it does not accord with the principles which are relevant for fixing the age of retirement or if it does not sub-serve any public interest. While ruling that in reducing the age of retirement from 58 to 55, the State Government cannot be said to have acted arbitrarily or irrationally, it was held: On the basis of this data, it is difficult to hold that in reducing the age of retirement from 58 to 55, the State Government....
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....ary. The reasonableness of a decision, in any jurisdiction, does not depend upon the time which it takes. A delayed decision of the executive can also be bad as offending against the provisions of the Constitution and it can be no defence to the charge of unconstitutionality that the decision was taken after the lapse of a long time. Conversely, decisions which are taken promptly cannot be assumed to be bad because they are taken promptly. Every decision has to be examined on its own merits in order to determine whether it is arbitrary or unreasonable. Besides, we have to consider the validity of a law regulating the age of retirement. It is untenable to contend that a law is bad because it is passed immediately on the assumption of office by a new Government. It must also be borne in mind that the question as to what should be the proper age of retirement is not a novel or unprecedented question which the State Legislature had to consider. There is a wealth of material on that subject and many a Pay Commission has dealt with it comprehensively. The State Government had the relevant facts as also the reports of the various Central and State Pay Commissions before it, on the basis o....
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....son, who attacks it is a fairly well settled proposition. In Mohd. Hanif Quareshi and Ors. v. State of Bihar AIR 1958 SC 731, this Court stated: ...The classification, it has been held, may be founded on different bases, namely, geographical, or according to objects or occupations or the like and what is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. The pronouncements of this Court further establish, amongst other things, that there is always a presumption in favour of the constitutionality of an enactment and that the burden is upon him, who attacks it, to show that there has been a clear violation of the constitutional principles. The courts, it is accepted, must presume that the legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds. 33. The aforesaid legal position was reiterated in Mahant Moti Das v. S.P. Sahi the Special Officer In Charge of Hindu Religious Trust and Ors. AIR 1959 SC 942 in the following words: The decis....
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....nr. v. Mst. Ram Kali etc. AIR (1968) SC 1, the Constitution Bench of this Court reiterated the legal position thus: ...The presumption is always in favour of the constitutionality of an enactment, since it must be assumed that the legislature understands and correctly appreciates the needs of its own people, and its laws are directed to problems made manifest by experience and its discriminations are based on adequate grounds. 36. In Pathumma and Ors. v. State of Kerala and Ors. (1978) 2 SCC 1, a seven-Judge Bench of this Court highlighted that the Legislature is in the best position to understand and appreciate the needs of the people as enjoined by the Constitution. It was stated: It is obvious that the Legislature is in the best position to understand and appreciate the needs of the people as enjoined by the Constitution to bring about social reforms for the upliftment of the backward and the weaker sections of the society and for the improvement of the lot of poor people. The Court will, therefore, interfere in this process only when the statute is clearly violative of the right conferred on the citizen under Part III of the Constitution or when....
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....d by 2nd Amendment Act, 2009 is designed to lay down a general framework of retirement policy. It seeks to put a cap on the number of years an employee may be allowed to be in the service of the State Government in order to make available job opportunities in a more equitable manner to its educated youth. In the counter affidavit filed by the State before this Court in opposition to the SLP, the impugned clause has been principally sought to be justified on the following grounds: * Nagaland is a small State, and industrially and economically, the State is in disadvantageous position. * The avenues of employment in the State is strictly limited. There are about 3 lac educated unemployed youths waiting for their employment under the State. * With the raising of retirement age from 57 to 60 years, it became necessary for the State to ensure and provide reasonable avenues of employment to a large body of educated youth. * On delicate end fine balancing of the competing interest of different groups, namely, people waiting for employment and those already in employment, the State Government evolved an additional mode of retireme....
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....gument advanced on behalf of the petitioners that the Second Amendment Act infringes Article 14 and 16 of the Constitution by prescribing a low retirement age has already been dealt with in the discussions that have preceded. We have also held that prescription of length of service of 35 years cannot be said to be unreasonably short or small to bring about a situation of arbitrariness or unreasonableness, as has been contended on behalf of the petitioners. We have also held that retirement at the age of 53/54 years on completion of 35 years of service is a consequential effect of completion of the prescribed period of service.... 22. ...The rule of retirement on completion of 35 years of service has relevance to employees who have joined service at an age below 25 years and the prescription with regard to retirement at the age of 60 years is in respect of the persons joining service at the age of 25 and thereafter. The above two categories of employees, though performing similar duties and may be identically placed otherwise, can still be reasonably understood to form two different classes to whom application of two rules of retirement will not violate Article 14. Th....
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...., the impugned provision founded on peculiar considerations of the State does not appear to be unreasonable nor it smacks of any arbitrariness. Moreover, the impugned provision is in consonance with the legal position highlighted by this Court in Yeshwant Singh Kothari 1993 Suppl. (2) SCC 592 and K. Nagaraj (1985) 1 SCC 523 and as stated in K. Nagaraj (1985) 1 SCC 523, that while testing the validity of policy issues like the age of retirement, it is not proper to put the conflicting claims in a sensitive judicial scale and decide the issue by finding out which way the balance tilts. Such an exercise is within the domain of the Legislature. By the impugned provision, the Legislature, after balancing the competing interest of different groups, has sought to open avenues of employment for a large number of educated youth in the State. From the material placed on record it cannot be said that impugned provision has been enacted without any data and consideration of broad aspects of the question. 42. We are not impressed by the argument of the appellants that impugned provision is arbitrary not only from the point of view of the employees as a whole but also from the point of view o....
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....e from public employment on completion of 35 years of service although they have not completed 55 years of age does not lead to any conclusion that the impugned enactment is arbitrary, irrational, unfair and unconstitutional. The fact that provision such as the impugned provision that allows the retirement from public employment on completion of 35 years' service is not to be found in other States is of no relevance. As a matter of fact, retirement policy concerning public employment differs from State to State. Kerala retires employees from public employment at the age of 55 years. In any case there is nothing wrong if the legislation provides for retirement of the government employees based on maximum length of service or on attaining particular age, whichever is earlier, if the prescribed length of service or age is not irrational. 46. The appellants' contention that alternative method of retirement by way of length of service would result in different age of superannuation of employees holding the same post depending upon their age of entry into service and would be manifestly violative of Articles 14 and 16 of the Constitution is noted to be rejected. Suffice it to ....