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Pension Scheme by Autonomous University with out approval of Governor which depends for Grants on Govt. – not valid = 39. Statutes how made – 1. Statutes under this Act shall be proposed by the Board and submitted to the Chancellor for his assent and shall come into force only after the assent is received and notified by the Vice-Chancellor. 2. Any statutes may be amended or repealed by the Board with the assent of the Chancellor. 3. All Statutes made under this Act shall be published in the official Gazette.”= Section 39 of the Act, it was obligatory on the part of the Board of Management of the University to submit the resolutions dated 7th December, 2000 and 18th December, 2009 to the Chancellor i.e. to the Governor of the State of Rajasthan before inviting options from the employees. If the assent of the Chancellor, i.e. the Governor of the State of Rajasthan is not received by the University, the amended statute would not come into force.- Upon carefully going through the statutory provisions, we are of the view that the High Court ought not to have constrained the University to continue to pay pension to the respondent-employees, especially in view of the fact that the change effected in the payment of retiral benefits to the employees was never approved by the Chancellor of the University as required under Section 39 of the Act.- though the University is an autonomous body, it is much dependent on the State of Rajasthan in its financial matters. It gets substantial funds from the State for performing its duties and possibly for the said reason the State has control over it in the financial affairs. Be that as it may, Section 39 of the Act makes it mandatory to get approval or assent of the Chancellor of the University before effecting any change in the Statute.= For the aforestated reasons, in our opinion, the order dated 3rd June, 2011 passed by the appellant, whereby both the resolutions passed by the University in relation to giving options to its employees for changing the Contributory Provident Fund scheme to the Pension Scheme, is absolutely just and legal. We are, therefore, of the view that the High Court was not correct while quashing and setting aside the order dated 3rd June, 2011 passed by the appellant-State of Rajasthan.= whether the University can continue to give pension to the employees? Answer to the question would be in the negative. If issuance of show cause notice is a mere formality, in our opinion, that would not affect the decision taken by the University in pursuance of the order dated 3rd June, 2011 because the order dated 3rd June, 2011 passed by the appellant-State is absolutely legal and by virtue of the said order, the resolutions dated 7th December, 2000 and 18th December, 2009 passed by the University have been quashed. In the aforestated circumstances, we quash and set aside the impugned judgment delivered by the Division Bench of the Rajasthan High Court, which has confirmed the judgment delivered by the learned single Judge. The order dated 3rd June, 2011 passed by the appellant-State shall operate and the employees shall be given retiral benefits as per the Contributory Provident Fund Scheme which was in force prior to 7th December, 2000. So far as the retired employees are concerned, they must have been paid pension in pursuance of the judgment delivered by the Division Bench of the High Court. As all the appeals have been allowed, some financial adjustments will have to be made and possibly there would be some recovery from some of the employees. We clarify that upon overall adjustment of the entire amount, if any employee has to return any amount to the University, as a special case, no demand shall be raised by the University in view of the fact that the employees must have retired long back and they must have adjusted their financial affairs upon knowing the fact that they had a regular income of pension.

published in http://judis.nic.in/supremecourt/imgst.aspx?filename=40829

 

English: The supreme court of india. Taken abo...

English: The supreme court of india. Taken about 170 m from the main building outside the perimeter wall (Photo credit: Wikipedia)

 

REPORTABLE

 

IN THE SUPREME COURT OF INDIA

 

CIVIL APPELLATE JURISDICTION

 

CIVIL APPEAL NO. 8469 OF 2013
(Arising out of SLP (C) No.12350 of 2013)

 
State of Rajasthan …APPELLANT

 
VERSUS

 

A.N. Mathur & Ors. ….RESPONDENTS

 

WITH

 

C.A.No.8470/2013 @ SLP(C)No.12351/2013, C.A.No.8471/2013 @ SLP(C)No.12352
/2013, C.A.No.8472/2013 @ SLP(C)No.12353/2013, C.A.No.8473/2013 @
SLP(C)No.12354/2013, C.A.No.8474/2013 @ SLP(C)No.12355/2013,
C.A.No.8475/2013 @ SLP(C)No.12356/2013,
C.A.No.8476/2013 @ SLP(C)No.12357/2013,C.A.No.8477/2013 @
SLP(C)No.12358/2013, C.A.No.8478/2013 @ SLP(C)No.12361/2013,
C.A.No.8479/2013 @ SLP(C)No.12362/2013 & C.A.No.8480/2013 @
SLP(C)No.14191/2013.

 
1 J U D G M E N T

 

 

 

1 ANIL R. DAVE, J.

 

 

 

1. Leave granted in all the special leave petitions.

 
2. Being aggrieved by the judgment delivered in D.B. Civil Special
Appeal (Writ) No.431 of 2012 in S.B. Civil Writ Petition No.9843 of 2011
dated 19th July, 2012, delivered by the High Court of Rajasthan, the
appellant-State of Rajasthan has filed the present set of appeals.

 
3. As all the appeals arise out of a common judgment delivered by the
Rajasthan High Court, all the appeals were heard together at the request of
the learned counsel appearing for the concerned parties.

 

 

 

 

 

4. The facts giving rise to the present litigation, in a nutshell, are
as under:

 

Maharana Pratap University of Agriculture and Technology (hereinafter
called ‘the University’) is an autonomous body performing the function of
making provisions for imparting education in different branches of study,
particularly Agriculture, Horticulture, Veterinary Science, Animal
Husbandry etc. to the students and is constituted under the provisions of
the Rajasthan Agricultural University, Udaipur Act, 2000 (hereinafter
referred to as ‘the Act’). The University is the employer of other
respondents, who had been either working under the University and now
retired or they are still in the employment of the University.

 
5. The University had framed a Provident Fund Scheme for its employees.
Accordingly, in the past, upon retirement, the employees of the University
used to get their own contribution as well as contribution of the
University by way of retiral benefits as per the provisions of the
Contributory Provident Fund Scheme. On 7th December, 2000, the Board of
Management of the University passed a resolution whereby it gave an option
to its employees to either continue under the Contributory Provident Fund
Scheme or to opt for a pension scheme under the Pension Rules, 1990.
Certain employees had opted for the pension scheme. Once again, the Board
of Management of the University passed another resolution on 18th December,
2009 inviting options from the employees as to whether they wanted to join
the Pension Scheme or wanted to continue under the Contributory Provident
Fund Scheme. In pursuance of the second resolution, some more employees had
opted for the pension scheme.

 
6. Though the University is an autonomous body constituted under the
provisions of ‘the Act’, it is dependant on the appellant in its financial
matters, as the University is unable to generate sufficient funds to meet
with its expenditure. According to Section 36 of the Act, the appellant-
has to provide grant to the University to meet its expenditure, especially
in relation to the expenditure pertaining to salary and allowances given to
its employees. Thus, the University gets substantial funds from the
appellant. Due to the option exercised by several employees in favour of
the pension scheme, financial burden of the University had been
substantially increased and the said burden was ultimately to be discharged
by the appellant. It is pertinent to note here and it is an admitted fact
that before giving such an option under the resolutions dated 7th December,
2000 and 18th December, 2009, the University did not even consult the
appellant in the matter of changing the scheme with regard to payment of
retiral benefits to its employees.

 

 

 

 

 

7. The appellant was unaware of the resolutions passed by the Board of
Management of the University, whereby its employees were offered an
opportunity to opt for the pension scheme, but upon getting information
about the change effected by the University regarding implementation of the
Pension Scheme, upon due deliberation by the Finance Department of the
appellant, under its order dated 3rd June, 2011, the appellant did not
approve the same.

 

 

 

 

 

8. When the order dated 3rd June, 2011 issued by the appellant had been
communicated to the University, by an order dated 30th November, 2011, the
University withdrew its resolutions dated 7th December, 2000 and 18th
December, 2009.

 

 

 

 

 

9. As a result of the withdrawal of the two resolutions by the
University on 30th November, 2011, the employees, who had opted for the
pension scheme were deprived of the benefit of the pension scheme, and the
University had to make necessary accounting adjustments for making payment
of the provident fund to the employees, which the employees were entitled
to upon their retirement. Some of the employees are very much in service
and therefore, there was no question of any recovery and the University had
to merely pass necessary book entries.

 

 

 

 

 

10. Upon the Pension Scheme being abolished and as the employees had to
either pay back the amount of pension received from the University or they
had to accept the Contributory Provident Fund scheme, they had approached
the High Court of Rajasthan by filing several writ petitions. Some of the
employees, who had not opted for the pension scheme, had also filed
petitions praying that they be permitted to opt for the pension scheme even
if there was delay in opting for the same. The said writ petitions had been
heard together by the learned single Judge of the High Court and they had
been allowed by a common judgment dated 5th April, 2012. By virtue of the
said judgment, the order dated 3rd June, 2011 passed by the appellant- the
Government of Rajasthan had been quashed and as a result thereof, the
employees who had opted for the Pension Scheme were to be paid pension by
the University in accordance with the Pension Rules.

 

 

 

 

 

11. Being aggrieved by the aforestated judgment delivered by the learned
Single Judge, the University preferred intra-court appeals and the said
appeals have been dismissed by the Division Bench of the Rajasthan High
Court by virtue of the impugned judgment and therefore, the State of
Rajasthan has filed these appeals because ultimately, the burden of payment
of pension to the employees would be passed over to the State of Rajasthan
as per Section 36 of the Act.

 
12. The learned counsel appearing for the appellant, while challenging
the validity of the impugned judgment as well as the judgment delivered by
the learned single Judge of the Rajasthan High Court had mainly submitted
that the Resolutions passed by the Board of Management of the University
inviting options in relation to the Pension Scheme were in violation of the
provisions of Section 39 of the Act. Extracts of Sections 38 and 39 of the
Acts are reproduced hereinbelow:

 

“38. Statutes – Subject to the provisions of this Act, the Statutes
of the university may provide for any matter connected with the
affairs of the university and shall in particular, provide the
following namely:-
1. to 6. xxx xxx xxx.
7. Establishment of pension and insurance schemes for the
benefit of officers, teachers and other employees of the
University and the rules, terms and conditions of such schemes.
8 to 14. xxx xxx xxx”
“39. Statutes how made –
1. Statutes under this Act shall be proposed by the Board and
submitted to the Chancellor for his assent and shall come
into force only after the assent is received and notified by
the Vice-Chancellor.
2. Any statutes may be amended or repealed by the Board with the
assent of the Chancellor.
3. All Statutes made under this Act shall be published in the
official Gazette.”

 

13. Section 38 of the Act clearly indicates that the University can
provide for any matter connected with the affairs of the University
and in particular, the matters which have been referred to under
Section 38 of the Act. In the instant case, we are concerned with
clause 7 of Section 38 of the Act, which also pertains to
establishment of pension scheme for the benefit of the employees of
the University. Thus, it is open to the University to frame or change
any scheme with regard to payment of retiral benefits to its
employees.

 

 

 

 

 

14. In the instant case, the University wanted to change the scheme–from
the Contributory Provident Fund scheme to the Pension Scheme. The
University had given option to its employees to opt either for the
Pension Scheme or to continue with the Contributory Provident Fund
scheme and for that purpose, two resolutions, viz. resolutions dated
7th December, 2000 and 18th December, 2009 had been passed by the
Board of Management of the University. In the said process, the
University missed to look at the provisions of Section 39, which makes
it obligatory for the Board of Management of the University to submit
the proposed amendment to the Chancellor for his assent and the
amended statute would come into force only after the assent is
received and notified by the Vice-Chancellor of the University. The
Chancellor, as per the provisions of Section 2(h) read with

 
Section 8 of the Act, is the Governor of the State of Rajasthan.

 

 

 

 

 

15. According to the aforestated provision of Section 39 of the Act, it
was obligatory on the part of the Board of Management of the University to
submit the resolutions dated 7th December, 2000 and 18th December, 2009 to
the Chancellor i.e. to the Governor of the State of Rajasthan before
inviting options from the employees. If the assent of the Chancellor, i.e.
the Governor of the State of Rajasthan is not received by the University,
the amended statute would not come into force.

 

 

 

 

 

16. The aforestated provisions in Section 39 of the Act are of vital
importance because the legislature wanted to have some control over the
University, though the University is an autonomous body. The reason behind
having such a control could be for the fact that the University is given
substantial financial assistance by the appellant as one can see from the
provisions of Section 36 of the Act. Any financial liability is incurred
by the University that is to be ultimately discharged by the University
with the financial help of the State.

 

 

 

 

 

17. The learned counsel appearing for the appellant had vehemently
submitted that before considering the change in the scheme with regard to
giving different retiral benefits to its employees, the Board of Management
of the University ought to have taken consent of the Chancellor, i.e. the
Governor of the State of Rajasthan because the increased financial burden
was to be borne by the State of Rajasthan. Thus, without consent of the
State of Rajasthan, who is ultimately going to be burdened with the
financial liability relating to payment of retirement benefits, the
University could not have changed the policy with regard to payment of the
retirement benefits.

 

 

 

 

 

18. When the facts about the resolutions passed by the Board of
Management of the University, which had not been approved by the
Chancellor, were brought to the notice of the State of Rajasthan, the said
resolutions were duly considered by the State of Rajasthan and when it was
found that because of the said resolutions financial liability of the State
was being increased for no justifiable reason, the State was constrained to
pass the order dated 3rd June, 2011, whereby both the resolutions passed by
the Board of Management of the University had been quashed and set aside.

 

 

 

 

 

19. Thus, the short but forceful submission of the learned counsel
appearing for the State was that the change effected in the scheme under
which the employees were given retiral benefits was not legal or was not in
accordance with the provisions of the Act and therefore, the employees who
had opted for the Pension Scheme cannot be given pension and they will have
to continue with the Contributory Provident Fund scheme. In the
circumstances, he had prayed that the appeals should be allowed and the
impugned judgment confirming the judgment of the learned single Judge
should be quashed and set aside.

 

 

 

 

 

20. On the other hand, the learned counsel appearing for the University
had passively supported the submissions made by the learned counsel
appearing for the State and he had to admit the fact that before inviting
options from the employees in pursuance of the two resolutions referred to
hereinabove, approval of the Chancellor, i.e. the Governor of the State of
Rajasthan had not been obtained by the Board of Management of the
University.

 

 

 

 

 

21. The appeal was vehemently opposed on behalf of the employees of the
respondent- University.

 

 

 

 

 

22. The learned counsel appearing for the employees had submitted that
the employees had opted for the Pension Scheme within the period prescribed
by the resolutions passed by the Board of Management of the University and
therefore, the University had no right to make any change in the policy
thereafter.

 

 

 

 

 

23. It had been further submitted that some of the respondent employees
had also started getting pension upon their retirement in pursuance of the
option exercised by them. According to the learned counsel, it would be
unjust to change the scheme with regard to the retiral benefits considering
the lapse of time and it would be unfair to the employees who are getting
pension as per the option exercised by them. It had been further submitted
that the change effected in the policy with regard to payment of retiral
benefits by the University was retrospective in nature and therefore, it
was bad in law.

 

 

 

 

 

24. The learned counsel appearing for the employees had also submitted
that before effecting change in the scheme, no notice was ever issued to
the employees and therefore, the action of the withdrawal of the Pension
Scheme was against the principles of natural justice.

 

 

 

 

 

25. The learned counsel appearing for the employees had supported the
reasons given in the impugned judgment and had also submitted that certain
other universities in the State of Rajasthan were also giving benefit of a
pension scheme to its employees and therefore, there was no justification
on the part of the University from preventing its employees from getting
the benefit of the Pension Scheme. He had, therefore, submitted that the
appeals should be dismissed.

 

 

 

 

 

26. We have heard the learned counsel at length and have carefully
considered the provisions of the Act, and the resolutions passed by the
University as well as the order dated 3rd June, 2011 passed by the
appellant-State.

 

 

 

 

 

27. Upon carefully going through the statutory provisions, we are of the
view that the High Court ought not to have constrained the University to
continue to pay pension to the respondent-employees, especially in view of
the fact that the change effected in the payment of retiral benefits to the
employees was never approved by the Chancellor of the University as
required under Section 39 of the Act.

 

 

 

 

 

28. As stated hereinabove, though the University is an autonomous body,
it is much dependent on the State of Rajasthan in its financial matters.
It gets substantial funds from the State for performing its duties and
possibly for the said reason the State has control over it in the financial
affairs. Be that as it may, Section 39 of the Act makes it mandatory to get
approval or assent of the Chancellor of the University before effecting any
change in the Statute.

 
29. In spite of clear and unambiguous provisions of Section 39 of the
Act, the Board of Management of the University did not get necessary assent
of the Chancellor, i.e. the Governor of the State of Rajasthan before
effecting the change in the scheme with regard to payment of retiral
benefits to its employees. The change in scheme would result into a huge
financial liability on the University, which ultimately will have to be
borne by the appellant- the State of Rajasthan. Had the University been
having complete autonomy and had been not dependent on the State of
Rajasthan in its financial matters, possibly Section 39 of the Act would
not have been incorporated in the Act in the form in which it is at
present. When the appellant is reimbursing the expenditure incurred by the
University by giving grants or financial aids in one form or the other, the
control exercised by the State on the University in the financial matters
is completely justified. The University cannot unilaterally decide to give
huge financial benefit to its employees without taking consent of the
Chancellor, i.e. the Governor of the State of Rajasthan in violation of the
provisions of Section 39 of the Act.

 

 

 

 

 

30. From the contents of the order dated 3rd June, 2011, passed by the
State of Rajasthan it is clear that because of the changed policy adopted
by the University in the matter of payment of the retiral benefits to its
employees, financial burden on the University would be substantially
increased and ultimately that burden will have to be discharged by the
State of Rajasthan. As the University had taken the decision to give an
option to its employees for changing the manner in which they were to be
given retiral benefits in violation of Section 39 of the Act, the State of
Rajasthan was entitled to reject the change effected by the University.

 

 

 

 

 

31. For the aforestated reasons, in our opinion, the order dated 3rd
June, 2011 passed by the appellant, whereby both the resolutions passed by
the University in relation to giving options to its employees for changing
the Contributory Provident Fund scheme to the Pension Scheme, is absolutely
just and legal. We are, therefore, of the view that the High Court was not
correct while quashing and setting aside the order dated 3rd June, 2011
passed by the appellant-State of Rajasthan.

 
32. A submission had been made on behalf of the employees that some other
universities in the State of Rajasthan are giving pension to its employees.
Be that as it may, each University has a different set of rules and if
another university had adopted a different policy in accordance with law or
as per its rules and regulations, we cannot say that the order dated 3rd
June, 2011 passed by the appellant is incorrect. According to us, the said
submission is not relevant and therefore, we do not accept the said
submission.

 

 

 

 

 

33. So far as the submission with regard to violation of the principles
of natural justice is concerned, in our opinion, by not giving hearing to
the concerned employees, the action of the University would not become
void. Violation of one of the principles of natural justice would make the
action voidable and not void.

 

 

 

 

 

34. Let us see as to what would happen if the University gives notices to
all the employees calling upon them to show cause as to why the option
exercised by them should not be cancelled so as to restore the original
scheme of the Contributory Provident Fund. Even after considering the
replies of the employees, the question is whether the University can
continue to give pension to the employees? Answer to the question would be
in the negative. If issuance of show cause notice is a mere formality, in
our opinion, that would not affect the decision taken by the University in
pursuance of the order dated 3rd June, 2011 because the order dated 3rd
June, 2011 passed by the appellant-State is absolutely legal and by virtue
of the said order, the resolutions dated 7th December, 2000 and 18th
December, 2009 passed by the University have been quashed.

 

 

 

 

 

35. In view of the above circumstances, we are of the view that even if
the employees were not given any notice, the final decision taken by the
University is not bad in law.

 

 

 

 

 

36. In the aforestated circumstances, we quash and set aside the impugned
judgment delivered by the Division Bench of the Rajasthan High Court, which
has confirmed the judgment delivered by the learned single Judge. The
order dated 3rd June, 2011 passed by the appellant-State shall operate and
the employees shall be given retiral benefits as per the Contributory
Provident Fund Scheme which was in force prior to 7th December, 2000. So
far as the retired employees are concerned, they must have been paid
pension in pursuance of the judgment delivered by the Division Bench of the
High Court. As all the appeals have been allowed, some financial
adjustments will have to be made and possibly there would be some recovery
from some of the employees. We clarify that upon overall adjustment of the
entire amount, if any employee has to return any amount to the University,
as a special case, no demand shall be raised by the University in view of
the fact that the employees must have retired long back and they must have
adjusted their financial affairs upon knowing the fact that they had a
regular income of pension. We also clarify that if prior to passing the
resolution dated 7th December, 2000 by the Board of Management of the
University, if there was any scheme about payment of pension to its
employees and if some of the employees had opted for the said scheme,
payment of pension to such employees would not be affected by virtue of
this judgment.

 
37. The appeals are allowed with no order as to costs.

 

 

 

…..………………………….J.

 

(ANIL R. DAVE)

 

 

 

………………………………
….J.

 

(DIPAK MISRA)
New Delhi
September 23, 2013.

 
ITEM NO.1A COURT NO.12 SECTION XV
(For judgment)

 

S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS

 

CIVIL APPEAL No………./2013 @ SLP(C)No(s).12350/2013

 

STATE OF RAJASTHAN Petitioner(s)

 

VERSUS

 

A.N. MATHUR & ORS. Respondent(s)

 

WITH
CIVIL APPEAL No………./2013 @ SLP(C)No(s).12351 of 2013,
CIVIL APPEAL No………./2013 @ SLP(C)No(s).12352 of 2013,
CIVIL APPEAL No………./2013 @ SLP(C)No(s).12353 of 2013,
CIVIL APPEAL No………./2013 @ SLP(C)No(s).12354 of 2013,
CIVIL APPEAL No………./2013 @ SLP(C)No(s).12355 of 2013,
CIVIL APPEAL No………./2013 @ SLP(C)No(s).12356 of 2013,
CIVIL APPEAL No………./2013 @ SLP(C)No(s).12357 of 2013,
CIVIL APPEAL No………./2013 @ SLP(C)No(s).12358 of 2013,
CIVIL APPEAL No………./2013 @ SLP(C)No(s).12361 of 2013,
CIVIL APPEAL No………./2013 @ SLP(C)No(s).12362 of 2013 &
CIVIL APPEAL No………./2013 @ SLP(C)No(s).14191 of 2013.

 

Date: 23/09/2013 These Appeals were called on for
pronouncement of Judgment today.

 

For Petitioner(s) Dr. Manish Singhvi,AAG
Mr. Amit Lubhaya,Adv.
Ms. Pragati Neekhra,AOR

 

For Respondent(s) Mr. Vivek Tankha,Sr.Adv.
Mr. T. Mahipal,AOR
Mr. Rishabh Sancheti,Adv.
Mr. Padmapriya,Adv.

 

Mr. Milind Kumar,AOR
Ms. Charu Mathur,AOR
Mr. Mukul Kumar,AOR
..2/-
.2.

 

 

 

Mr. Justice Anil R. Dave pronounced the reportable judgment of
the Bench comprising Hon’ble Mr. Justice Dipak Misra and His Lordship.
The appeals are allowed in terms of the signed reportable
judgment.

 

 

 
|(Sarita Purohit) | |(Indu Pokhriyal) |
|Court Master | |Court Master |

 

 

 

(Signed reportable judgment is placed on the file)

 

 

 

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