Madras High Court
G.Pandiyan vs The Bharathidasan Institute
Author: Abdul Quddhose
Bench: Abdul Quddhose
W.P.(MD) No.15048 of 2015
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
Date of Reserving the Order Date of Pronouncing the Order
25.09.2024 04.10.2024
CORAM:
THE HONOURABLE MR.JUSTICE ABDUL QUDDHOSE
W.P.(MD) No.15048 of 2015
and
M.P.(MD) Nos.1, 2 & 3 of 2015
and
W.M.P.(MD) No.19954 of 2023
G.Pandiyan ... Petitioner
-vs-
1.The Bharathidasan Institute
of Management
(Tiruchirappalli) Society
BHEL Complex
Trichy-14
rep.by its Director
2.The Secretary to Government
Department of Higher Education
Fort St.George
Chennai-600 006
_______________
Page 1 of 41
https://www.mhc.tn.gov.in/judis
W.P.(MD) No.15048 of 2015
3.The Registrar
Bharathidasan University
Tiruchirappalli ... Respondents
[R2 & R3 are impleaded vide Court order
dated 14.06.2019 in M.P.(MD) No.4 of 2015]
PRAYER: Petition filed under Article 226 of the Constitution of India, to issue
a writ of certiorarified mandamus calling for the records relating to the
impugned orders of the respondent in Lr.No.BIM.Admn.Pension.01/2015
dated 09.04.2015, Lr.No.BIM.Estt No.004.2015-01, dated 27.05.2015 and
Lr.No.BIM.Admn. Pension 2:1/2015, dated 30.07.2015, quash the same and
consequently direct the respondent herein to reinstate the petitioner as College
Librarian till attaining superannuation at the age of 60 years as per the
Bharathidasan University norms and pay pension to the petitioner as per
Sec.III of the Trust Deed for Superannuation Scheme dated 30.03.2002 with
18% interest from the date of retirement till the date of retirement till
realization.
For Petitioner : Mr.Sri Charan Rangarajan
Senior Counsel
assisted by Mr.D.Saravanan
For Respondents : Mr.V.M.Shivakumar for R1
Mr.T.Amjad Khan
Government Advocate for R2
Mr.V.R.Shanmuganathan for R3
_______________
Page 2 of 41
https://www.mhc.tn.gov.in/judis
W.P.(MD) No.15048 of 2015
ORDER
The issues that arise for consideration in this writ petition are as follows:
(a) Whether Bharathidasan Institute of Management, the first respondent herein, falls within the purview of “State” under Article 12 of the Constitution of India?
(b) Whether under a Superannuation Pension Scheme, an amendment can be introduced having retrospective operation, which has the effect of taking away the benefit already available to the employees under the existing Pension Scheme?
(c) Whether the doctrine of Legitimate Expectation can be made applicable to the employees, who were earlier given certain benefits under a Pension Scheme, but the said benefits were reduced drastically through an amendment scheme introduced at a later point of time by the first respondent having retrospective operation.
_______________ Page 3 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015
2. The brief facts leading to the filing of this writ petition are as follows:
2.1. The petitioner was initially appointed as a Junior Assistant by the first respondent – Institute for one year, on 20.08.1986. On 17.06.1987, he was confirmed in the post of Junior Assistant / Librarian with effect from 16.06.1987. After completing his probation, he was promoted as Assistant with effect from 01.08.1990 and further promotion as Technical Assistant / Librarian was granted to him on 25.03.1994. By an order, dated 30.08.2010, the petitioner was promoted as Senior Section Officer, which is equivalent to the post of Assistant Registrar of Bharathidasan University, the third respondent herein, with effect from 01.10.2007. Thereafter, the petitioner was designated as College Librarian by the first respondent - Institute through its proceedings dated 03.01.2012 and with effect from 01.01.2012, he was allowed to continue in service till his date of superannuation in the post of College Librarian.
_______________ Page 4 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 2.2. According to the petitioner, the first respondent – Institute was established for imparting education in Management Studies. According to him, previously, it was under the control of the third respondent – University. It is further contended that the entire scheme of appointment, scale of pay, conditions of service and other criteria pertaining to the service were fully regulated by the third respondent – University and all the salary and monetary benefits were paid by the third respondent – University and the post held by the petitioner is a public post under the Bharathidasan University Act.
2.3. According to the petitioner, subsequently, the first respondent – Institute got autonomous status from the Vice Chancellor and now, the first respondent – Institute is having a self-financing scheme for paying the salary and for running its administration. According to the petitioner, his appointment was made only in accordance with the rules and regulations of the third respondent – University and it's Syndicate. According to him, _______________ Page 5 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 till the autonomous status was granted to the first respondent – Institute, the salary and other service conditions were fixed on par with the employees of the third respondent – University. It is also contended by the petitioner that the post of College Librarian is also a classified post in the third respondent – University and the scale of pay, which is available to the employees of the respondent – Institute, is also governed on par with the employees of the third respondent – University.
2.4. According to the petitioner, the employees of the third respondent – University are also paid pension and their services are treated as pensionable service. According to him, he was initially appointed as an employee of the third respondent – University and after getting autonomous status, the Management of the first respondent – Institute followed separate rules and regulations as a self-financing management Institute. _______________ Page 6 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 2.5. According to the petitioner, the first respondent – Institute formed a Trust viz., Trust Deed for Superannuation Scheme on 30.03.2002 by a registered document vide document No.370 of 2003. According to him, the said Deed of Trust stipulates that a retired employee of the first respondent – Institute is entitled to 50% of his last drawn pay as the basis for pension in addition to that, he is entitled to dearness allowance as per Section III of the said Trust Deed.
2.6. The petitioner claims that he, being a member, is also eligible for pension under the Pension Scheme dated 30.03.2002. But, according to him, to his surprise, just few days before his retirement, he claims to have received a communication from the first respondent – Institute by proceedings dated 09.04.2015 that there is a change in the Pension Scheme and the members of the unamended Pension Scheme were informed that the Pension Scheme is modified with another scheme and as per the amended Scheme, the employees will get the benefit of interest _______________ Page 7 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 in the fixed deposit made by the first respondent – Institute, which is very meager and the new scheme is called as “Contributory Pension Scheme”, under which a particular portion of the basic salary will be credited as deposits to the Life Insurance Corporation of India and the accumulated deposits will be treated as investments by the first respondent – Institute and the interest of the accumulated deposits will be paid as pension to the employees and the said scheme is called as the “Defined Contribution Scheme”.
2.7. According to the petitioner, the Defined Contribution Scheme introduced through the impugned order dated 09.04.2015 is arbitrary and illegal. According to him, the difference of amount between what is payable under the Defined Contribution Scheme and the Pension Scheme as per the 2002 Trust Deed Superannuation Scheme is huge. According to the petitioner, if the new scheme is made applicable for the petitioner and other members of the earlier scheme, it will be detrimental to their interest as the pension amounts payable to them gets _______________ Page 8 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 drastically reduced and any amendment having retrospective operation is unconstitutional.
2.8. The petitioner has challenged the following impugned orders in this writ petition.
(a) Denying his right of employment upto the age of 60 years.
(b) Denying reconsideration of his request for employment upto the age of 60 years.
(c) Denying pension as per the Pension Scheme of the year 2002 by introduction of a new scheme, which drastically reduces the quantum of pension.
2.9. Even though the petitioner has challenged the impugned orders denying his right of employment upto the age of 60 years and has also sought for reinstatement into service in the first respondent – Institute in this writ petition, learned Senior Counsel appearing for the petitioner, on instructions, would submit that due to the petitioner's retirement from service, the _______________ Page 9 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 petitioner is not pressing for his right of employment upto the age of 60 years and is also not pressing the relief of his reinstatement into service. He would submit that the petitioner is now aggrieved only by the denial of pension as per the Pension Scheme of the year 2002 and by the introduction of the new Pension Scheme by the first respondent – Institute, which, if implemented, will drastically reduce the pension amount payable to him.
3. A counter affidavit has been filed by the first respondent – Institute reiterating the contents of the impugned orders. At the outset, they would submit that this writ petition is not maintainable, since the first respondent – Institute is not a “State” coming under the purview of Article 12 of the Constitution of India. They would contend that since the first respondent – Institute is a Society registered under the Tamil Nadu Societies Registration Act, 1975, it cannot be considered as a “State” or “Instrumentality of State” or “Authority”, within the meaning of Article 12 of the Constitution of India. The first respondent – Institute also denies the contention of the petitioner that their Institute was essentially under the control of the third respondent – University. It is also contended by them that the first _______________ Page 10 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 respondent – Institute is a School of Excellence governed by a separate Board of Governors and registered under the Societies Act and they are not under the control of the third respondent – University and hence, this writ petition is not maintainable as the first respondent – Institute will not fall within the purview of Articles 12 and 226 of the Constitution of India.
4. According to the first respondent – Institute, only due to the reason that the Bharathidasan Institute of Management Employees' Superannuation Scheme implemented under the Trust Deed dated 30.03.2002, registered as document No.370 of 2003, violates Rules 87 and 88 of the Income Tax Rules, 1962, there became a necessity for amending the earlier Superannuation Scheme.
5. According to the first respondent - Institute, the Board of Governors of the Bharathidasan Institute of Management Society (Autonomous), in its 47th meeting held on 09.09.2000, vide resolution No.47.2, had decided to introduce, under their discretion, a superannuation pension scheme called as “Defined Contribution Scheme” for the benefit of teaching and non-teaching staff of the first respondent – Institute, who have completed _______________ Page 11 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 ten years of service as a welfare measure. But, according to the first respondent – Institute, contrary to the said resolution passed by the Board of Governors, a scheme known as “Defined Benefit Scheme” was introduced by means of a Trust Deed dated 30.03.2002, registered as document No.370 of 2003.
6. According to first respondent – Institute, if the earlier scheme is not amended, it would amount to violation of Rules 87 and 88 of the Income Tax Rules, 1962 in making ordinary annual contribution and also initial contribution for the past service to the Defined Benefit Superannuation Fund, by incorporating an enabling provision in note (a) under clause 7(A)(i) & (ii) under Section II of the Rules in the Trust Deed providing for contribution over and above the maximum ceiling of 27% of salary including the contribution towards provident fund permissible under the income tax law. According to the first respondent – Institute, this enabling provision made in the Trust Deed is in violation of the income tax law and as such, the contributions already made in excess of 27% of salary to the fund have become invalid and also the above enabling provision made in the Trust Deed to contribute over and above the permissible limit of 27% of salary becomes void ab initio from the date of _______________ Page 12 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 introduction of the enabling provision in the above Trust Deed dated 30.03.2002, necessitating an amendment to the Trust Deed by converting the existing Defined Benefit Scheme into the Defined Contributory Scheme with consequential changes for facilitating the operation of the Defined Contributory Scheme as originally approved by the Board.
7. According to the first respondent – Institute, violation of law under the Old Pension Scheme is so serious, which may even warrant, de- recognition of the Employees Superannuation Scheme, by the Income Tax Department, under Rules 87 and 88 of the Income Tax Rules, 1962, with penal consequences. According to the first respondent – Institute, only in order to prevent any possible de-recognition of the Bharathidasan Institute of Management Employees' Superannuation Scheme with penal consequences, a meeting of the 13 members in service was convened by the Director of the third respondent - Institute, as a Trustee of the Fund, on 03.09.2014 and only 11 members attended the meeting, except Mr.Kanagasundaram and Mr.Prabhakaran. During the meeting, the Director explained the serious violation of law in the implementation of the previous Superannuation Scheme of the third respondent - Institute and explained that unless the violations are _______________ Page 13 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 rectified by introduction of the Defined Contribution Scheme, which is already approved by the Board, in place of the Defined Benefit Scheme, which was wrongly, introduced in repugnance to the original Board's decision and consequential regulation of the contribution, within the allowed limit by expressly obtaining the extent of contribution to the scheme from the Board, there is a possibility for the Income Tax Department to de-recognise the Superannuation Scheme for the employees of the first respondent – Institute, resulting in loss of the benefits even under the Defined Contribution Scheme.
8. According to the first respondent – Institute, even though there was no specific quantum of contribution expressed by the Board either in the resolution approving the Defined Contribution Scheme or in the Trust Deed, the contribution had been made over and above 27% of salary, including contribution to provident fund account, in violation of the Rules 87 and 88 of the Income Tax Rules, 1962. This excess contribution has been resorted to by incorporating an enabling provision in note (a) under clause 7(A)(i) & (ii) under Section II of the Rules framed under the Trust Deed. According to the first respondent – Institute, any provision made in the Trust Deed cannot supersede the income tax law in Rules 87 and 88 of the Income Tax Rules, _______________ Page 14 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 1962 and as such, the above enabling provision and the contribution made in violation of the income tax law becomes invalid and void ab initio right from the date of incorporation of the above enabling provision from 30.03.2002 vide document No.370 of 2003.
9. According to the first respondent – Institute, only to protect the interest of the members of the Superannuation Scheme, they finally decided, through their resolution dated 12.09.2014, to make an amendment with retrospective effect to the Trust Deed and Rules dated 30.03.2002 registered as document No.370 of 2003, by incorporating the Defined Contribution Scheme in place of the Defined Benefit Scheme by expressly fixing a reasonable contribution of 15% of pay for each of the members admitted to the scheme, in addition to the contribution made towards provident fund of the members and that the total contribution payable to the superannuation fund would now be within the maximum permissible contribution of 27% of salary including provident fund, as provided in Rules 87 and 88 of the Income Tax Rules, 1962.
_______________ Page 15 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015
10. According to the first respondent – Institute, the Income Tax Department was also requested with a plea to consider the whole case sympathetically and ignore the violation that had crept in the implementation of the schemes and grant approval for the implementation of the Defined Contribution Scheme retrospectively, in place of the Defined Benefit Scheme, in the best interest of the members of the scheme, without resorting to any penalty whatsoever for the violation. The Commissioner of Income Tax (Exemptions), Chennai-34, allowed the implementation of the Defined Contribution Scheme with consequential amendments retrospectively from 30.03.2002, in his letter dated 09.03.2015.
11. According to the first respondent – Institute, pursuant to the above mentioned amendment, the petitioner is eligible for a sum of Rs. 12,19,076/- as total contribution upto 31.03.2015 to his account for the past service from the date of his joining till 31.03.2015 at 15% of pay per annum with interest at the rate of 9% per annum. Further, it has been clarified that the contribution at the rate of 15% of pay will continue to be made from 01.04.2015 till the date of his superannuation.
_______________ Page 16 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015
12. The respondents 2 and 3 have also filed their separate counter affidavits denying the contentions of the petitioner and categorically asserting that there is no cause of action against them in this writ petition and hence, this writ petition has to be dismissed against them.
13. Heard Mr.Sri Charan Rangarajan, learned Senior Counsel, assisted by Mr.D.Saravanan, learned counsel for the petitioner, Mr.V.M.Shivakumar, learned counsel appearing for the first respondent – Institute, Mr.T.Amjad Khan, learned Government Advocate appearing for the second respondent – State and Mr.V.R.Shanmuganathan, learned counsel appearing for the third respondent - University.
14. Learned Senior Counsel appearing for the petitioner reiterated the contents of the affidavit filed in support of this writ petition during the course of his submissions and he also drew the attention of this Court to the impugned orders as well as the Pension Scheme of the year 2002 as applicable to the petitioner, who is a member of the said scheme. He would reiterate that a Pension Scheme cannot be amended retrospectively and the amended _______________ Page 17 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 Pension Scheme should not be detrimental to the interest of the members of the earlier Pension Scheme. He would submit that the petitioner having served in the first respondent – Institute for more than thirty years and having an unblemished track record, has a legitimate expectation for getting pension as assured by the first respondent - Institute under the Trust Deed of the year 2002, wherein 50% of the last drawn pay of the petitioner is the pension payable to him on his superannuation. According to the petitioner, arbitrarily, all of a sudden, in the year 2014, the earlier Pension Scheme was sought to be amended retrospectively, which is detrimental to the interest of the petitioner and other members of the earlier Pension Scheme, as the pension amount gets drastically reduced under the new Pension Scheme, which is violative of Articles 14 and 16 of the Constitution of India.
15. Learned Senior Counsel for the petitioner also drew the attention of this Court to an order passed by the Income Tax Appellate Tribunal, dated 22.11.2021, in the case of Bank of India vs. The Principal Commissioner of Income Tax-2, Mumbai, and would submit that it is made clear in the said decision that the contribution payable by the first respondent – Institute under the earlier pension scheme of the year 2002 will not come _______________ Page 18 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 under the restrictions specified under Section 36(1)(iv) of the Income Tax Act, 1961 and Rules 87 and 88 of the Income Tax Rules, 1962.
16. On the other hand, learned counsel appearing for the first respondent – Institute, reiterates the contents of the counter affidavit filed by the first respondent – Institute before this Court. At the outset, he would submit that the first respondent – Institute will not fall within the purview of “State” under Article 12 of the Constitution of India. He would submit that the first respondent is an autonomous institute and not controlled or governed by the third respondent – University and therefore, the first respondent – Institute being a private body and being a self-financed institute, the present writ petition is not maintainable against them.
17. Learned counsel appearing for the first respondent also drew the attention of this Court to the following authorities in support of his contention that the first respondent – Institute is not a “State” falling within the purview of Article 12 of the Constitution of India.
(i) Pradeep Kumar Biswas vs. Indian Institute of Chemical Biology, reported in (2002) 5 SCC 111. _______________ Page 19 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 (ii) Jatyapal Singh vs. Union of India, reported in (2013) 6 SCC 452. (iii) Jagdish Prasad Sharma vs. State of Bihar, reported in (2013) 8 SCC 633. (iv) Sabhajit Tewary vs. Union of India and others, reported in 1975 AIR 1329.
18. Learned counsel appearing for the first respondent - Institute would submit that if the earlier Pension Scheme is implemented, it would amount to violation of Rules 87 and 88 of the Income Tax Rules, 1962, which prohibit contribution in excess of 27%, as under the Pension Scheme of the year 2002, in which the petitioner is a member, the contribution of the employer (first respondent - Institute) is 50%, which exceeds the legally permissible limit.
19. Learned counsel appearing for the first respondent would also submit that if the earlier Pension Scheme is implemented by the first respondent – Institute, there is every possibility of cancellation of all the Superannuation Schemes, which are meant for the benefit of the employees, _______________ Page 20 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 by the Income Tax Authorities and in such an event, it will be detrimental to the interest of the employees. He would also submit that the financial implication for the first respondent – Institute under the Pension Scheme of the year 2002 will make the first respondent – Institute to become bankrupt as a huge financial outlay of Rs.105 Crores will have to be parted with towards the payment of pension, which is not financially viable.
20. Learned Standing Counsel appearing for the third respondent / University also submitted that the third respondent / University is not a necessary party in respect of the relief sought for by the petitioner in this writ petition. According to him, there is no cause of action for the petitioner to sue the third respondent / University as the first respondent / Institute is an independent body under whom the petitioner was working and therefore, the writ petition has to be dismissed as against the third respondent.
21. Both the learned Government Advocate appearing for the second respondent as well as the learned Standing Counsel appearing for the third respondent reiterated the contents of the counter affidavits filed by the _______________ Page 21 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 respective respondents and they denied the contentions of the petitioner as raised in this writ petition against the second and third respondents. Discussion:
22. This Court will have to first decide as to whether the first respondent / Institute will fall within the definition of "State" under Article 12 of the Constitution of India. Bharathidasan Institute of Management / the first respondent is an Educational Institution. The posts offered by the first respondent / Institute is open to the public at large and therefore, the first respondent / Institute is a Public Educational Institution. It is an admitted fact that the first respondent / Institute is an offshoot of Bharathidasan University as it was earlier governed by the rules and regulations of the said University as the said University had control over it. Bharathidasan Institute of Management / the first respondent became a self financing institution having autonomous status only with the consent of Bharathidasan University.
23. The first respondent, through their office order dated 29.09.2005 and the Office Order dated 25.08.2010, which have been placed on record by the petitioner, makes it clear that the petitioner would continue _______________ Page 22 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 to be governed under the service rules and scales of pay of Bharathidasan University. Even the promotion order dated 30.08.2010 issued in favour of the petitioner promoting him to the post of Senior Section Officer discloses that the equivalent post under the Bharathidasan University is Assistant Registrar.
24. As seen from the materials placed on record, when the petitioner was appointed, the entire scheme of appointment, scale of pay, conditions of service and other criteria, pertaining to the service of the petitioner, were regulated by Bharathidasan University and all the salary and monetary benefits were also paid to the petitioner from the grants received by the first respondent / Institute from Bharathidasan University.
25. It is also noticed from the grounds of appeal filed by the first respondent / Institute before the District Registrar, Tiruchirappalli, filed to revive the registration of the first respondent/ Institute under the Tamil Nadu Societies Registration Act that the Vice Chancellor of Bharathidasan University is the Vice Chairman of the first respondent / Institute and personnel of various Government departments are also members of the board of the first respondent / Institute. It is also noticed that the registration of _______________ Page 23 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 Bharathidasan Institute of Management under the Societies Registration Act was revived by the order of the District Registrar on 17.06.1998 recording the fact that the first respondent is a unit of Bharathidasan University. Further, the accounts such as the balance sheets, income and expenditure statement of Bharathidasan Institute of Management also highlights the fact that Bharathidasan University has contributed funds for the salaries of the staffs of Bharathidasan Institute of Management. Even the Policy Note of the Government, Higher Education, has treated Bharathidasan Institute of Management as a part and parcel of Bharathidasan University in the same breath as the School of Engineering and Technology at the University.
26. It is also noticed from the materials placed on record that Bharathidasan Institute of Management / first respondent, which is a part of Bharathidasan University, had altered its bye-laws without the sanction and authorisation from Bharathidasan University, which gave rise to several issues between Bharathidasan Institute of Management and Bharathidasan University. A confusion arose between Bharathidasan University and Bharathidasan Institute of Management as to who remains in the control of Bharathidasan Institute of Management. When Bharathidasan University _______________ Page 24 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 refused to confer degree upon the graduates from Bharathidasan Institute of Management, the first respondent / Bharathidasan Institute of Management, which claims to be a Society registered under the Societies Registration Act, had filed a writ petition before the Madurai Bench of the Madras High Court in W.P. (MD) No.9641 of 2022. In the said writ petition, Bharathidasan Institute of Management has consented for conferment of degree by Bharathidasan University as it continues to be a School of Excellence as defined under Section 2(k) of the Bharathidasan University Act, 1981. After considering the said submission and the letter of Bharathidasan University to A1CTE dated 04.04.2016, wherein it has been recorded that Bharathidasan Institute of Management is a recognised School of Excellence, sponsored and affiliated to Bharathidasan University in the University statute itself, this Court, had allowed the writ petition in favour of Bharathidasan Institute of Management. Therefore, in the aforesaid writ petition filed by Bharathidasan Institute of Management, the first respondent herein has admitted that they are governed by the rules and regulations of Bharathidasan University. _______________ Page 25 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015
27. With regard to the contentions of the respondents that Bharathidasan Institute of Management being a society is not amenable to writ jurisdiction is concerned, the said contention has to be rejected in view of the decision rendered by the Hon’ble Supreme Court in the case of Pradeep Kumar Biswas vs Indian Institute of Chemical Biology reported in (2002) 5 SCC 111, wherein it has been held that even a Society, registered under the Societies Registration Act, is amenable to writ jurisdiction if it does a public function. Therefore, even though Bharathidasan Institute of Management is a society, being a School of Excellence under Bharathidasan University, it is amenable to the writ jurisdiction of this Court, as it is an educational institution, which was under the control of Bharathidasan University and was also affiliated to it when the petitioner had joined employment with Bharathidasan Institute of Management, the first respondent herein.
28. The issue whether Bharathidasan Institute of Management is amenable to writ jurisdiction or not is no longer res integra as this Court in C.N.S.Ramnath Babu vs Bharathidasan University reported in 2023 SCC Online Madras 6884 after giving due consideration to the Act, Statute, Policy Note etc. has held that Bharathidasan Institute of Management is an authority _______________ Page 26 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 falling under the purview of Article 12 of the Constitution of India and is amenable to writ jurisdiction under Article 226 of the Constitution of India.
29. The character of public Law is involved in the lis between the petitioner and the respondents and there is a violation of a fundamental legal right of the petitioner due to the first respondent, all of a sudden, amending the favourable pension scheme for the petitioner and other members of the said scheme, which is detrimental to the petitioner’s interest as the amended scheme drastically reduces the pension payable to the petitioner. To impart education is a State function. It is the obligation of the welfare state to ensure that children are imparted education, which is one of the directive principles of State policy enshrined in Article 41 of the Constitution of India. The State can, however, delegate its function to the Private Sector Educational Institutions and while doing so, the State has created its limbs as it was in the case of companies and corporations to discharge its Constitutional obligation of imparting education at all levels from primary to Higher education. To impart quality education, teaching and non-teaching staff play a pivotal role. Quality education to students cannot be imparted without the support of teaching and Non-teaching staff. Therefore, in order to effectively achieve the _______________ Page 27 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 public function of imparting education, there is a duty cast upon the State / Educational Institutions to protect the rights of the teaching and non-teaching staff. The teaching and non-teaching staff of an Educational Institution, which discharges public function of imparting education to the students, are entitled to seek redressal of their grievances against the educational institutions in which they are working and are legally allowed to file writ petitions under Article 226 of the Constitution of India as against the said educational institution, which imparts education to all in a State and therefore, such an educational institution will definitely fall under the purview of Article 12 of the Constitution of India as it is discharging a public duty.
30. The contention of the respondents that the petitioner is not a State for the purpose of Article 12 of the Constitution of India has to be rejected by this Court for the aforesaid reasons.
31. In the case of Pradeep Kumar Biswas vs Indian Institute of Chemical Biology reported in (2002) 5 SCC 111, the Honourable Supreme Court had an occasion to decide as to whether the institute CSIR falls within the definition of "State" under Article 12 of the Constitution of India. Though _______________ Page 28 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 the Honourable Supreme Court in the aforesaid decision held that CSIR is not a "State" falling within Article 12 of the Constitution of India, the facts of that case will not have a bearing for the facts of the instant case.
32. In the instant case, the first respondent / Institute is a Public Educational Institution catering to the needs of the public at large. The first respondent / Institute was also started pursuant to a statute passed by the Government. The functions of "CSIR" as held by the Honourable Supreme Court in the aforesaid decision that it cannot be regarded as governmental or of essential public importance or as closely related to governmental functions or being fundamental to the life of the people or duties and obligations to public at large and only due to the same, the Honourable Supreme Court held that the institution "CSIR" will not fall within the definition of "State" under Article 12 of the Constitution of India. However, in the case on hand, the first respondent / Institute is a Public Educational Institution imparting quality education for Management students. The first respondent / Institute is open to all and is considered to be a School of Excellence in Management Studies. The education imparted by the first respondent / institute is of public importance and is fundamental to the life of the people at large, who seek for _______________ Page 29 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 quality education in Management Studies. Therefore, the decision relied upon by the learned Standing Counsel for the first respondent in the case of Pradeep Kumar Biswas vs Indian Institute of Chemical Biology reported in (2002) 5 SCC 111, referred to supra, has no bearing for the facts of the instant case.
33. The payment of pension is a legitimate expectation for any employee, who was assured of a specified benefit by the Institution under an earlier pension scheme.
34. The legitimate expectation is the hope or the desire of a person to obtain a favourable order, inspired by past practice or promoted by representation. Legitimate expectation gives the applicant sufficient locus standi for judicial review. This doctrine can be applied whenever there is a change in the public policy, change in the law and change in the behaviour and approach of the Executives by virtue of which someone is deprived of the express promise or representation made to him earlier. This doctrine not only takes care of Promissory Estoppel, but also the rules of natural justice, rule of law, non-arbitrariness, reasonableness, fairness, fiduciary duty and perhaps _______________ Page 30 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 to check the abuse of the exercise of administrative power. The doctrine of legitimate expectation in essence imposes a duty to act fairly. The principle underlying “legitimate expectation” is based on Article 14 of the Constitution and the rule of fairness.
35. In the case on hand, the petitioner was assured of payment of a specified pension as per the pension scheme under the Trust Deed dated 30.03.2002 of the first respondent, which provides for payment of pension on his superannuation at 50% of his last drawn salary. However, the first respondent, after a lapse of almost 13 years from the date of implementing the previous pension scheme, has altered the pension scheme through a Deed of Amendment of Trust dated September 2015, drastically reducing the pension amount payable to the petitioner and other members, who were part of the earlier pension scheme under the Trust Deed dated 30.03.2002. Admittedly, as on date, the beneficiaries under the earlier pension scheme of the year 2002 are only 13 in number. Even though the first respondent / Institute admits that the Amended Pension Scheme dated September 2015 drastically reduces the pension to the members of the earlier pension scheme, which includes the petitioner, they contend that it became a necessity for them to _______________ Page 31 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 amend the pension scheme as according to them, the earlier pension scheme of the year 2002, is not legally enforceable as it is in violation of Rules 87 and 88 of the Income Tax Rules, 1962.
36. Rules 87 and 88 of the Income Tax Rules, 1962 only fixes the ceiling limit for the annual contribution to be made by the employer for the purpose of claiming the deductions under Section 36 of the Income Tax Act, 1961 and it does not prohibit any employer to provide better pensionary benefits to its employees. The ceiling limit of contribution, namely, 27% of the employees' salary fixed under Rules 87 and 88 of the Income Tax Rules, 1962 does not prohibit the first respondent – Institute from implementing a pension scheme, wherein better pensionary benefits are given to its employees. However, as seen from the proviso to Clause 6 (viii) read with Clause 6 (ix)(a)(ii) of the Trust Deed dated 30.03.2002 (earlier pension scheme), which is beneficial to the petitioner to which the petitioner had a legitimate expectation as an employee, it is clear that the pension scheme cannot be altered. However, contrary to the said clause, the first respondent / Institute has altered the pension plan in the year 2015 after a lapse of almost 13 years from the date of the earlier pension scheme, drastically reducing the pension _______________ Page 32 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 payment payable to the members, which includes the petitioner that too having retrospective operation. Under the pension scheme of the first respondent / Institute of the year 2015, the amendment is having retrospective operation, which has the effect of taking away the benefit available to the employees (members) of the earlier pension scheme of the year 2002.
37. The Honourable Supreme Court in the case of Punjab State Cooperative Agricultural Development Bank Ltd. vs The Registrar, Cooperative Societies and others reported in 2022 4 SCC 363 has held that the amendment of rules, which has the effect of taking away the benefits already availed by the employee under the existing rule would divest an employee from his vested or accrued rights and would violate Article 14 of the Constitution of India. Thus, there is no justification for the retrospective operation of the amended pension scheme brought into force by the first respondent / Institute in the year 2015 and therefore, the said scheme cannot be made applicable to the petitioner, who was assured of a higher pension under the earlier pension scheme of the year 2002, during which period, the petitioner was admittedly in service with the first respondent / Institute. _______________ Page 33 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015
38. The Division Bench of the Allahabad High Court in the case of Indu Bhushan Pandey vs State of Uttar Pradesh through Principal Secretary, Department of Energy and two others through its recent decision dated 23.01.2024, by following the Honourable Supreme Court's decision rendered in Punjab State Cooperative Agricultural Development Bank Ltd. vs The Registrar, Cooperative Societies and others reported in 2022 4 SCC 363 has also held that an amendment having retrospective operation, which has the effect of taking away the benefit already available to the employee under the existing rule indeed would divest the employee from his vested rights and that being so, it was held to be violative of the rights guaranteed under Articles 14 and 16 of the Constitution of India and the Allahabad High Court directed the respondents therein to pay pension and other allowances to the petitioner therein as was drawn by him before the amendment.
39. The pension schemes can be amended, but they cannot be amended retrospectively. On account of funding difficulties, the pension scheme can be amended, but, the amendment cannot have retrospective operation and be made applicable to the employees, who are the beneficiaries _______________ Page 34 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 under the earlier pension scheme, which is much more beneficial to them than the amended one and they have a legitimate expectation to receive pension as per the unamended scheme. The denial of payment of pension to the petitioner and other members of the earlier pension scheme by retrospectively applying the amended rules violates constitutional rights under Articles 14 and 16 of the Constitution of India as such a retrospective operation is absolutely arbitrary, defeating legitimate expectation of the employee, who was assured with a much better pension under the earlier pension scheme of the first respondent in the year 2002 to which the petitioner is a member and he was admittedly in the service of the first respondent even during that point of time.
40. If the amended pension scheme is made applicable retrospectively, it would divest an employee of a vested right granted to him earlier under the earlier pension scheme of the year 2002 and would amount to violation of Articles 14 and 16 of the Constitution of India. Funds constraint will not legally permit the first respondent / Institute to amend the earlier pension scheme, which is beneficial to the petitioner and other members to the said scheme. The act of the first respondent to amend the pension scheme _______________ Page 35 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 retrospectively after a lapse of almost 13 years is arbitrary and illegal as it violates Article 14 of the Constitution of India. An employee, who had retired from the first respondent / Institute in the year 2003 or in the subsequent years prior to the date of the Amended Pension Scheme, would have got benefit as per the earlier scheme. But an employee, who was in service in the year 2002 when the earlier pension scheme was introduced, but retired after the date of the amended pension scheme, will not be able to get the benefit of the earlier pension scheme since the amended pension scheme is being made applicable retrospectively, which would clearly amount to violation of Article 14 of the Constitution of India as the same would amount to arbitrary discrimination.
41. The first respondent, which is falling within the purview of "State" as per Article 12 of the Constitution of India and is a Public Educational Institution imparting education to the students community at large, is bound to adhere to its commitment to pay pension to its employees, who are members of the earlier pension scheme of the year 2002 and they cannot wriggle out of the said scheme, which is beneficial to the petitioner and other members of the said scheme by altering the same through an _______________ Page 36 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 amendment passed after a lapse of almost 13 years in the year 2015. It is also to be noted that it is an admitted fact that presently there are only 13 members who are eligible to receive pension as per the earlier pension scheme of the year 2002 of which the petitioner is one amongst them. The petitioner having worked for 30 years in the first respondent / Institute and who is admittedly having an unblemished track record, cannot be deprived of receiving his pension as per the earlier pension scheme in which he was a member, which is more beneficial to him than that of the amended pension scheme introduced by the first respondent after a lapse of almost 13 years from the date of the earlier pension scheme in the year 2015.
42. For the foregoing reasons, this Court answers the issues formulated in the opening paragraph of this order in the following manner:
a) Bharathidasan Institute of Management, the first respondent herein, falls within the purview of "State" under Article 12 of the Constitution of India and therefore, this writ petition is maintainable;
b) An amendment to superannuation pension scheme cannot be introduced having retrospective operation as it takes _______________ Page 37 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 away the benefit already available to the employees under the existing pension scheme which would amount to violation of Articles 14 and 16 of the Constitution of India;
c) Doctrine of legitimate expectation is applicable to the employees, who were earlier given the benefit under a pension scheme, but the said benefit was reduced drastically through an amendment by the first respondent having retrospective operation, which has taken away the benefit already available to the employees covered under the un-
amended pension scheme of the year 2002;
d) Bharathidasan University, though may have some control over the first respondent / Institute, is not a necessary party in this writ petition as the cause of action in respect of the petitioner’s claim is only against the first respondent / Institute, which certainly falls under the purview of "State" under Article 12 of the Constitution of India as it is imparting education to students at large and the petitioner, who was employed in the first respondent / Institute also helps the first respondent / Institute to achieve its goals of _______________ Page 38 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 imparting quality education. Similarly, there is no cause of action against the second respondent as well with regard to the prayer sought for in this writ petition as the duty to pay pension vests only with the first respondent – Institute.
43. For the foregoing reasons, this Court is of the considered view that the impugned orders dated 09.04.2015, 27.05.2015 and 30.07.2015 passed by the first respondent - Institute are arbitrary and illegal and violative of Articles 14 and 16 of the Constitution of India and they have to be necessarily quashed and the writ petition will have to be allowed by directing the first respondent to pay pension to the petitioner as per Section III of the Trust Deed for Superannuation Scheme dated 30.03.2002 and also pay the arrears of pension as per the said scheme.
44. Accordingly, Lr.No.BIM.Admn.Pension.01/2015 dated 09.04.2015, Lr.No.BIM.Estt No.004.2015-01, dated 27.05.2015 and Lr.No.BIM.Admn. Pension 2:1/2015, dated 30.07.2015 are quashed and the writ petition is allowed and the first respondent is directed to pay the arrears of pension to the petitioner as per Section III of the Trust Deed for _______________ Page 39 of 41 https://www.mhc.tn.gov.in/judis W.P.(MD) No.15048 of 2015 Superannuation Scheme dated 30.03.2002, introduced by the first respondent within a period of one month from the date of receipt of a copy of this order and the first respondent is also directed to pay the pension amount to the petitioner as per the aforesaid scheme in future as well, without committing any default. However, this Court, considering the fact that the first respondent is an Educational Institution, who has expressed its financial difficulty, is not awarding any interest for the delayed payments to the petitioner. No costs. Consequently, connected miscellaneous petitions are closed.
04.10.2024
Speaking Order/Non Speaking Order
NCC : Yes / No
Index : Yes / No
krk/vga
To:
The Secretary to Government,
Department of Higher Education,
Fort St.George,
Chennai-600 006.
_______________
Page 40 of 41
https://www.mhc.tn.gov.in/judis
W.P.(MD) No.15048 of 2015
ABDUL QUDDHOSE, J.
krk/vga
ORDER
IN
W.P.(MD) No.15048 of 2015
and
M.P.(MD) Nos.1, 2 & 3 of 2015
and
W.M.P.(MD) No.19954 of 2023
04.10.2024
_______________
Page 41 of 41
https://www.mhc.tn.gov.in/judis