Employees Of A State Board Can't Be Treated As State Govt Employees : Supreme Court

The Supreme Court has held that the employees of a body corporate established by a State Government cannot be treated at par with the employees of the State Government.

A bench comprising Justices Dinesh Maheshwari and PV Sanjay Kumar made this observation while holding that the employees of Orissa Khadi and Village Industries Board are not entitled to pension on a par with Government employees. The bench observed that even if the State had established the Board to discharge its obligations under Article 43 of the Constitution of India to promote cottage industries, its employees cannot be treated at par with the State Government employees.

"Even when the State has established the Board to carry out its obligations in terms of Article 43 of the Constitution of India, it cannot follow as a corollary that the employees of this body corporate have to be treated as State Government employees in all respects. Such a corollary proposition would practically amount to merging of the Board with the State Government; rather making it as one of the Departments of the Government", the Court observed while allowing the State's appeal against the High Court's judgment which held that the Board's employees are entitled to pension at par with the Government employees.

The Supreme Court noted that the service conditions of the Board's employees are specifically governed by the regulations made in this regard- Orissa Khadi and Village Industries Board Regulations, 1960 (‘Regulations, 1960’). The Regulations specifically contain the stipulation in Regulation 52 that they shall not be entitled to pension. Hence, the employees cannot claim a right overriding this regulation.

Before the Supreme Court, the respondents cited several judgments which held that pension is neither a charity nor a bounty nor a gratuitous payment but, is earned for past services rendered; and that non-availability of financial resources cannot be a defence by the Government or any of its agencies or instrumentalities in taking away vested right accrued to the employees. While holding that these principles are beyon any doubt nor of any dispute, the Court held that they are not applicable in the instant case in view of the specific condition in the Regulation.

Concerning the plea of the respondents that this Court may exercise the powers under Article 142 of the Constitution of India to fill the gaps and to provide for pensionary benefits to the employees of the Board to do complete justice, the Court observed that under Article 142, it cannot issue directions in violation of the statutory provisions; and sympathy or sentiment, by itself, cannot be a ground for passing an order beyond and contrary to the legal rights.

"In the face of existing Regulation 52, we find it difficult to accede to the prayer made by the learned counsel for the respondents. In this regard, we could only reiterate that nothing contained in this judgment shall otherwise be of any impediment, if the State Government would be willing to carry out any amendment to the Regulations of 1960.

Case Title : State of Orissa v Orissa Khadi and Village Industries Board Karmachari Sangh.

Citation : 2023 LiveLaw (SC) 214

Pension - Supreme Court holds that the employees of Orissa Khadi and Village Industries Board are not entitled to pension on a par with Government employees-employees of a body corporate created by the State cannot be treated as State Government employees in all respects. Such a corollary proposition would practically amount to merging of the Board with the State Government- Entitlement of pension will be as per the Regulations of the Board - Para 16.1

Constitution of India 1950- Article 142- under Article 142 of the Constitution of India, this Court cannot issue directions in violation of the statutory provisions; and sympathy or sentiment, by itself, cannot be a ground for passing an order beyond and contrary to the legal rights - Para 23

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