Denial Of Pension By Retrospectively Applying Amended Rule Violates Constitutional Rights Under Articles 14, 16: Allahabad High Court

The Allahabad High Court has held that denial of pension by retrospectively applying amended rule is a violation of Articles 14 and 16 of the Constitution of India.

While restoring pension of retired members State Electricity Regulatory Commission as prescribed under the unamended Uttar Pradesh Electricity Regulatory Commission (Appointment and Condition of Service of the Chairperson and Members) Rules, 2008, the bench comprising of Justice Attau Rahman Masoodi and Justice Om Prakash Shukla held,

“The denial of payment of pension to the petitioner as per the un-amended Rules, 2008 and application of National Pension Scheme to the petitioners on account of the retrospective application of Rule 15 of the Rules, 2008 as amended vide Rules, 2021 is absolutely arbitrary and also in violation of Articles 14 and 16 of the Constitution of India as well as in violation of Section 89 (2) of the Act.”(Referring to Electricity Act, 2003)

The Court relied on Punjab State Cooperative Agriculture Development Bank v. Registrar Co-operative Societies wherein the Supreme Court had held that a retrospective amendment taking away the benefit already available to an employee under the existing rules divests him of his vested right and is in violation of rights guaranteed under Articles 14 and 16 of the Constitution of India.

The Court held that in case of vested rights, an amendment will always be prospective to protect the vested right.

Background

Pursuant to Section 82 of the Electricity Act, 2003, State Electricity Regulatory Commission was established. Section 89 of the Act which provides for terms and conditions of service of the members provides that salary, allowances and other terms and conditions of service of the Members, shall not be varied to their disadvantage after appointment.

Section 180 (2)(d) of the Act empowers the State Government to frame Rules regarding the salary, allowances and other terms and conditions of service of the Chairperson and Members of the State Commission under 89 (2) of the Act. In exercise of this power, the State Government notified the Uttar Pradesh Electricity Regulatory Commission (Appointment and Condition of Service of the Chairperson and Members) Rules, 2008.

Rule 15 of the 2008 Rules governs the payment of pension. It provides that a Chairman or member is not entitled to pension if the service is for less than 2 years or has been removed from office under the Act. The proviso to Rule 15 is

“Provided further that the aggregate amount of the pension payable to any person under this rule together with amount of any pension (including commuted portion of pension), if any, admissible to him in respect of the service rendered by him prior to his appointment in the Commission as a Judge of the High Court or a Government Servant shall not exceed the maximum amount of pension admissible to a Judge of the High Court or a Secretary to the Government of India, whichever is more.”

Petitioner moved from National Thermal Power Corporation, which was non-pensionable job to the post of member to the Commission in 2013. Petitioner was granted pension in 2016.

In 2020, an amendment was proposed in Rule 15 to the effect that all members appointed on or after 1st April, 2005 shall be covered under the National Pension Scheme. Subsequently, petitioner's pension was stopped and a recovery of Rs.22,65,528/- was sought to be made from the servant allowance of the petitioner.

Counsel for petitioner contended that the amendment was published in 2021 vide Uttar Pradesh Electricity Regulatory Commission (Appointment and Conditions of Service of the Chairperson and Members) (First Amendment) Rules, 2021. It was further argued that the procedure prescribed under Section 182 of the Act was not followed before amending the rules.

Relying on the decision of Supreme Court in Bank of Baroda and another v. G. Palani and others, counsel for petitioner contended that pension is a right and the same cannot be taken away retrospectively.

Per contra, counsel for respondents submitted that the amendment was made after obtaining approval from the Council of Ministers. It was submitted that the Commission had contributed to the National Pension Scheme.

High Court Verdict

The question before the Court was whether amendment made in 2021 to Rule 15 of Rules, 2008 to apply National Pension Scheme is applicable to the petitioners or not.

The Court observed that

“Legislation cannot be implemented retrospectively to affect pre-existing rights unless expressly stated otherwise or by necessary implication. Whether a law is applied in the future or in the past depends entirely on the legislative intent. If the terms of the statute are unambiguous and it is obvious that the legislature intended for it to apply retrospectively, then it must without a doubt be interpreted as written. However, if the terms of a statute do not by themselves make the intention clear or certain, the statute will be presumed to operate prospectively, where it is in derogation of a common law right or where it would interfere with an existing contract, destroy a vested right, create a new liability in connection with a past transaction, or invalidate a defense that was valid at the time the statute was passed.”

The Court relied on Arjan Singh and another v. The State of Punjab and others, wherein the Apex Court held that statutory provisions cannot be retrospectively applied unless the Legislature made it retrospective in express terms or by necessary implications. It was also held that if a provision has been made retrospectively applicable, then care must be taken to not extend it beyond what was intended.

The Court held that the amendment made to Rule 15 by the Uttar Pradesh Electricity Regulatory Commission (Appointment and Conditions of Service of the Chairperson and Members) (First Amendment) Rules, 2021 was to the detriment of the petitioners and therefore, ultra vires Section 89 of the Act. Consequently, the Court held that divesting an employee of a vested right guaranteed by the existing provisions of an Act is violative of Articles 14 and 16 of the Constitution of India.

Further, reliance was placed on State of Punjab and others v. Rafiq Masih (White Washer) and others wherein the Supreme Court had held that payments mistakenly made to retired employee or employees due to retire within one year was impermissible.

Accordingly, the Court directed payment of the same pension to the three petitioners which they were drawing before the amendment in 2021. While parting the Court clarified that the said judgment shall only be applicable to the three petitioners, and not be treated as a precedent.

Case Title: Indu Bhushan Pandey vs. State Of Up Thru Prin Secy Dept Of Energy And 2 Others 2024 LiveLaw (AB) 42 [WRIT - A No. - 5813 of 2022]

Case Citation: 2024 LiveLaw (AB) 42

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