# [2005] Supp. 4 S.C.R. 407

- **Citation:** [2005] Supp. 4 S.C.R. 407
- **Court:** Supreme Court of India
- **Decided:** 2005-10-21
- **Case number:** Civil Appeal Nos. 6449-6450 D of 2005
- **Bench:** B.N. Srikrishna, C.K. Thakker
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/2005-supp-4-s-c-r-407-20958
- **Pages:** 24

## Headnote

Labour Laws:
Industrial Disputes Act, 1947: Sections 9A and 18-Settlement between C
employer-Electricity Board and its employees that revised pension scheme of
State Government and any amendments thereon applicable to the pensioners
of the Board-Effect of-Held: Settlement merely operates to exempt employer
from giving notice under s. 9A-Board not barred from changing even those
conditions of service that were not subject matter of Regulations, fresh D
settlement or award-Conditions of service settled by a binding settlement/
award cannot be changed-Tamil Nadu Electricity Board Liberalised Pension
Regulations, 1960.
TN. Electricity Board Liberalised Pension Regulations, 1960:
E
Regulations 9 and 3-Amendment made to Regulation 9-'Expression'
Civil Service Regulations in Regulation 9 replaced by Tamil Nadu Pension
Rules and Tamil Nadu Pension Rules, 1978-Permissibility of-Held: Decision
taken by Board to amend its own pension Rules and bring it in line with State
Government Rules, those applicable to Government servants was per se
unexceptionable-However, it could not have been done by mere amendment F
in Regulation 9 but by amending the Regulations in accordance with lawElectricity (Supply) Act, 1948.
Regulation 7-Commutation of pension-Commutation percentage
increased to 40% by Board Proceedings, without amending the Regulations- G
Thereafter, another Board Proceeding reducing it to 33 113 'Yo-Permissibility
of-Held: Grant of benefit by mere Board Proceeding could be validly altered
by another Board Proceeding-Change in maximum permissible commutation
of pension from 40% to 33113% brought level of commutation to what was
originally given by 1960 Regulations-Thus, not liable to be interfered with407
II
408
SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.
A Electricity (Supply) Act, 1948.
Regulation 3-Aspect with regard to qualifYing period of service for
pension and quantification of pension covered by 1960 Regulations-Board
Proceedings enhanced qualifving service for pension from thirty years to thirty
three years and made pension relatable to average emoluments draw_n during
B last ten month service instead of last drawn pay-Legality of-Held: Board
Proceedings could not have brought adverse changes in quantification of
pensions and the qualifYing period of service for pension without amendment
to 1960 Regulations-Hence, bad in law and illegal-Electricity (Supply) Act,
1948
c
Judicial Process: If case can be decided on narrower grounding-statutory
construction, constitutional grounds should be avoided-Practice and
Procedure.
The question which arose for consideration in these appeals was
D whether an establishment can modify pensions (and connected benefits)
payable to employees without first changing the Regulations that govern
those pensions.
State Government constituted the Tamil Nadu Electricity Board in
1957. Thereafter, the Board brought into force "Tamil Nadu Electricity
E Board Liberalised Pension Regulations, 1960 which dealt with the
condition of service specifically pension and death-cum-retirement
gratuity. At that time the Board had in its employment the erstwhile Tamil
Nadu Government servants as well as employees directly recruited by it.
They were governed by the Civil Service Regulations inter a/ia with regard
to their pensionary benefits. Under Regulation 3 of the 1960 Regulations,
F the qualifying service for earning pension was thirty years. A Saving
Clause was incorporated in Regulation 9 that no provision in the Civil
Service Regulations to the extent of its inconsistency with any of the
provisions of the 1960 Regulations would have any effect and that the
provisions made in the Regulations would be in addition to and not in
G derogation of the provisions in the Civil Service Regulations as amended
from time to time.
The Board had its own Pension and Provident Fund Schemes. It
passed a resolution that all the Regular Work Establishment Workmen
retiring/expiring on or after l. 7.86 would be governed by the pens

## Text

_Characters 0–39,789 of 54,690. This is a partial read: ask again with offset=39789 for what follows._

CENTRAL ORGANISATION OF TAMIL NADU ELECTRICITY
A .
EMPLOYEES
v:
TAMIL NADU ELECTRICITY BOARD
OCTOBER 21, 2005
B
[B.N. SRIKRISHNA AND C.K. THAKKER, JJ.]
Labour Laws:
Industrial Disputes Act, 1947: Sections 9A and 18-Settlement between C
employer-Electricity Board and its employees that revised pension scheme of
State Government and any amendments thereon applicable to the pensioners
of the Board-Effect of-Held: Settlement merely operates to exempt employer
from giving notice under s. 9A-Board not barred from changing even those
conditions of service that were not subject matter of Regulations, fresh D
settlement or award-Conditions of service settled by a binding settlement/
award cannot be changed-Tamil Nadu Electricity Board Liberalised Pension
Regulations, 1960.
TN. Electricity Board Liberalised Pension Regulations, 1960:
E
Regulations 9 and 3-Amendment made to Regulation 9-'Expression'
Civil Service Regulations in Regulation 9 replaced by Tamil Nadu Pension
Rules and Tamil Nadu Pension Rules, 1978-Permissibility of-Held: Decision
taken by Board to amend its own pension Rules and bring it in line with State
Government Rules, those applicable to Government servants was per se
unexceptionable-However, it could not have been done by mere amendment F
in Regulation 9 but by amending the Regulations in accordance with lawElectricity (Supply) Act, 1948.
Regulation 7-Commutation of pension-Commutation percentage
increased to 40% by Board Proceedings, without amending the Regulations- G
Thereafter, another Board Proceeding reducing it to 33 113 'Yo-Permissibility
of-Held: Grant of benefit by mere Board Proceeding could be validly altered
by another Board Proceeding-Change in maximum permissible commutation
of pension from 40% to 33113% brought level of commutation to what was
originally given by 1960 Regulations-Thus, not liable to be interfered with407
II
408
SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.
A Electricity (Supply) Act, 1948.
Regulation 3-Aspect with regard to qualifYing period of service for
pension and quantification of pension covered by 1960 Regulations-Board
Proceedings enhanced qualifving service for pension from thirty years to thirty
three years and made pension relatable to average emoluments draw_n during
B last ten month service instead of last drawn pay-Legality of-Held: Board
Proceedings could not have brought adverse changes in quantification of
pensions and the qualifYing period of service for pension without amendment
to 1960 Regulations-Hence, bad in law and illegal-Electricity (Supply) Act,
1948
c
Judicial Process: If case can be decided on narrower grounding-statutory
construction, constitutional grounds should be avoided-Practice and
Procedure.
The question which arose for consideration in these appeals was
D whether an establishment can modify pensions (and connected benefits)
payable to employees without first changing the Regulations that govern
those pensions.
State Government constituted the Tamil Nadu Electricity Board in
1957. Thereafter, the Board brought into force "Tamil Nadu Electricity
E Board Liberalised Pension Regulations, 1960 which dealt with the
condition of service specifically pension and death-cum-retirement
gratuity. At that time the Board had in its employment the erstwhile Tamil
Nadu Government servants as well as employees directly recruited by it.
They were governed by the Civil Service Regulations inter a/ia with regard
to their pensionary benefits. Under Regulation 3 of the 1960 Regulations,
F the qualifying service for earning pension was thirty years. A Saving
Clause was incorporated in Regulation 9 that no provision in the Civil
Service Regulations to the extent of its inconsistency with any of the
provisions of the 1960 Regulations would have any effect and that the
provisions made in the Regulations would be in addition to and not in
G derogation of the provisions in the Civil Service Regulations as amended
from time to time.
The Board had its own Pension and Provident Fund Schemes. It
passed a resolution that all the Regular Work Establishment Workmen
retiring/expiring on or after l. 7.86 would be governed by the pension
H scheme of the Board. State Government replaced the then existent Civil
CENTRAL ORGANISATION OFT AMIL NADU ELEC EMP. , .. TAMIL NADU ELECT. BOARD
409
Service Regulations with the Tamil Nadu Pension Rules and Tamil Nadu A
Pensio;i Rules, 1978. In 1995, the Board passed a resolution B.P. (FB) No.
7 which amended Regulation 9 of the 1960 Regulations and the expression
"Civil Service Regulations" in Regulation 9 was replaced by "Tamil Nadu
Pension Rules" and "Tamil Nadu Pension Rules, 1978" which were to take
effect retrospectively. On 8. 7.98, the Board and its workmen entered into B
a Settlement under section 18(1) of the Industrial Disputes Act, 1947.
Clause 14 of the settlement provided that the settlement would be secured
immediately on wage revision and on workload revision, after settlement
of revisions of work norms. By Clause 17, the settlement was to be in force
for a period of four years with effect from 1.12.96. Clause 15(iii) made
the revised pension scheme of the Government and any amendments there C
on from time to time applicable to the pensioners of the Electricity Board.
On 19.3.03, State Government issued G.O. No. 71 enhancing the maximum
qualifying service for full pension to thirty-three years from thirty years
and that pension would be determined on the basis of the average
emoluments drawn during the last ten months of service rendered. By D
another G.O. State Government directed that the maximum limit for
commutation of portion of pension by the pensioner would be 33 1/3% of
pension only. Following the amendments made by the State Government
to the Pension Rules, the Board passed Resolution B.P. (Ch) Nos. 64, 65
and 66 dated 31.3.03.
Different trade Unions of the employees of Tamil Nadu Electricity
Board filed Writ Petition challenging these Resolutions. High Court held
that the Settlement dated 8.7.98 provided for revised pension schemes of
E
the Government to be applied to the Board's pensioners and hence, no
prior notice under section 9A of the Industrial Disputes Act, 1947 was F
necessary; that Regulation 9 of the 1960 Regulations as amended provided
for the adoption of the Pension Rules of the Government as amended from
time to time; that the Board's Service Regulation No.17 did not provide
for payment of pension and hence the qualifying service of 30 years could
nnt be relied upon; that H.P. Nos. 64 and 66 are valid; and that B.P. No.
65 was illegal.
G
Partly allowing the appeals, the Court
HELD: I. Clause 15(iii) of the Settlement dated 8.7.98 between the
Board and its employees merely operates to exempt the employer-Board
from giving a notice under Section 9A of the Industrial Disputes Act, 1947. H
410
SUPREME COURT REPORTS (2005] SUPP. 4 S.C.R.
A It cannot be said that the Board could not have changed, by executive
action, even those conditions of service that were not the subject matter
of.regulations, a settlement or an award. The submission that the
conditions of service once settled can never be changed except by being
substituted by a fresh settlement or award may be true with. regard to
conditions of service, which have been settled by a binding settlement/
B award. With regard to matters which are in the realm of virgin territory,
this may not be the rule. [423-C, A, Cl
2.1. The decision taken by the Board to amend its own pension rules
and bring it in line with those applicable to the Government servants was
C per se unexceptionable; however, this could not have been achieved by a
mere amendment in Regulation 9 of the Tamil Nadu Electricity Board
Liberalised Pension Regulations, 1960. [425-E]
2.2. The purpose and purport of Regulation 9 was to ensure, firstly,
that the State Government employees taken over in the service of the
D Board were not prejudiced with regard to their conditions of service,
particularly pension and death-cum-retirement gratuity. Secondly, .the
saving clause ensures that with regard to matters which were not covered
by the State Government rules but covered by the Board's Regulations,
the benefit covered under the Board Regulations would be in addition to
E and not in derogation of what was already available in the Civil Service
Regulations. (425-F, G]
2.3. It was open to the Board in exercise of its statutory powers under
Section 79(c) of the Electricity (Supply) Act, 1948 to amend its pension
regulations in such manner as to bring it precisely in line with the Tamil
F Nadu Government Rules with regard to pension and other benefits as
. applicable to the State Government employees, Instead of expressly
amending the Regulations, the Board appears to have fallen back on
Regulation 9, which was merely a saving clause intended to insulate the
employees against erosion of their benefits granted in the provisions. The
G Board could not have straightaway imported wholesale the provisions of
the pension rules applicable to the State Government employees via the
vehicle of the saving clause, Regulation 9. The conditions of service
pertaining to pension that were already the subject matter of the
Regulations could not have been changed by the Board without amending
the Regulations in accordance with law. [425-H; 426-A, B, CJ
H
3. By Board Proceedings B.P.(Ch) No. 64 dated 31.3.03 the maximum
CENTRAL ORGANISATION OF TAMIL NADU ELEC EMP. "·TAMIL NADU ELECT BOARD
4 J j
qualifying service for pension was increased from thirty years to thirty A
three years and the pension was made relatable to the average emoluments
drawn during the last ten months service instead of the last drawn pay.
These two aspects were the subject matters of the 1960 Regulations and,
therefore, by a Board Proceeding, without amending the Regulations, they
could not have been modified to the prejudice of the employees. Therefore B
B.P.(Ch) No. 64 dated 31.3.03 is bad in law and illegal inasmuch as it
purports to bring about adverse changes in the quantification of pensions
and the qualifying period of service for pensions. 1426-E, F]
4. G.O. No. 74 dated 19.3.03 issued by the Government of Tamil
Nadu decreased the maximum permissible commutation of pension from C
40% to 33 l/3%. Regulation 7 as framed in 1960 permitted a maximum
commutation of one-third. By a Board Proceeding B.P.(Ch) No. 208 dated
18.8.98, the commutation percentage was increased to 40%. By another
Board Proceeding B.P. (Ch) No. 66 dated 31.3.03 this was reduced to 33
1/3%. What was granted by a Board Proceeding, without amending the
Regulations, is sought to be taken away by another Board Proceeding with D
a view to following G.O.Ms. No. 74 dated 19.3.03 issued by the State
Government in respect of its own employees. The change made by B.P.(Ch)
No. 66 dated 31.3.03 actually brings the level of commutation to what was
originally given by the 1960 Regulations. What was granted by a mere
Board Proceeding could be validly altered by another Board Proceeding. E
Therefore, the reduction in the maximum permissible commiltation of
pension from 40% to 33 1/3% brought about by B.P.(Ch) No. 66 dated
31.03.03, without amendment of the 1960 Regulations is not liable to be
interfered with without prejudice to the rights of the employees to raise
an industrial dispute. 1427-B, C, D, Fl
F
5.1. Supreme Court must be parsimonious on the grounds on which
it chooses to decide a particular case. If a case can be decided upon any
ground other than constitutional grounds, such as by statutory
construction or the like, this Court must do so. Despite the characteristic
acuity with which the constitutional grounds were argued, they are not
ripe for adjudication, as this court has been able to decide the matter on G
other narrower grounds. Therefore, on the issue of whether the Board can
adversely modify the pensions payable even after following the prescribed
procedure (i.e. after amending the applicable pension regulations) and
whether such change would be violative of Article 14 or the ratio in D.S
Nakara no opinion is expressed as it is not necessary. [428-F, G; 429-E]
H
412
SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.
A
D. S. Nakara and Ors. v. Union of India, (1983} l SCC 305, referred
B
to.
The Judicial Process: An Introductory Analysis of the Courts of The
United States, England, and France by Henry J Abraham, (3d ed 1975) p.371,
referred to.
5.2. It cannot be said that if the matter is not decided on the broader
constitutional ground argued, there would be multiplicity of litigation on
the same issue. In fact, at the present stage the argument of multiplicity
of litigation is only speculative since it cannot predict what future course
C the Board or the employees will adopt. Further, even if multiple litigations
were a possibility that would not compel this Court to opine on every
ground argued before it, especially those involving constitutional issues.
(428-C]
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 6449-6450
D of 2005.
From. the Judgment and Order dated 23.10.2003 of the Madras High
Court in W.P. Nos. 11899 and 11900 of 2003.
WITH
E
C.A. Nos. 6451-6452, 6453-6454, 6455-6456 and 6457-6458 of 2005.
Ms. Indra Jaising, Mrs. R. Vaigai, Ms. Anna Mathew and S.R. Setia for
the Appellant in C.A. Nos. 6449-6450/2005.
K.V. Vishwanathan, B. Raghunath, Abhijit Sengupta and K.V. Vijay
F Kumar for the Appellant in C.A. Nos. 6451-6452, 6453-6456 and 6457-58/
2005.
G
S. Guru Krishna Kumar and S.R. Setia for the Appellant in C.A. Nos.
6455-6456/2005.
K. Ramamoorthy, S. Vallinayagam and R. Ayyam Perumal for the
Respondent.
The Judgment of the Court was delivered by
SRIKRISHNA, J. Leave granted in all the Special Leave Petitions.
H
The issue of law to be decided in the present matter is: Whether an
CENTRAL ORGANISATION OFT AMIL NADU ELEC EMP v. TAMIL NADUELECT. BOARD [SRIKRISHNA,J] 4 13
establishment can modify pensions (and connected benefits) payable to A
employees without first changing the Regulations that govern those pensions?
In other words, can pensions be changed (particularly, when the change is to
the detriment of the employees concerned) without recourse to the proper
procedure prescribed for changing them?
This group of appeals by special leave raises the same issues of facts B
and law for a decision by this Court. Hence, they can all be dealt with by a
common judgment. For the sake of convenience, the facts shall be mentioned
from the appeal arising out of Special Leave Petition (Civil) Nos. 3759-3760/
04.
A Survey of the Facts
c
These appeals have been filed by a registered Trade Union, which
represents nearly 30,000 employees of the Tamil Nadu Electricity Board
("the Board"). Prior to l.7.57, the State of Tamil Nadu was departmentally
carrying on the work of distribution and supply of electric energy. On l.7.57, D
the Board was constituted by the State Government under Chapter III of the
Electricity (Supply) Act, 1948 ("the 1948 Act"). The employees of the Board
consisted of two different classes: (i) Employees who were already employed
by the State Government and were taken over into the service of the Board
upon its constitution; and (ii) Employees directly recruited by the Board after
its constitution. In exercise of its powers under Section 79(c) of the 1948 Act, E
the Board brought into force a set of regulations styled as the "Tamil Nadu
Electricity Board Liberalised Pension Regulations, 1960" (" 1960 Regulations")
with effect from 1.7.60. These Regulations dealt with the conditions of service
specifically pension and death-cum-retirement gratuity. Under Regulation 3
of the 1960 Regulations, the qualifying service for ·earning pension was a F
period of thirty years.
The 1960 Regulations also contained a Savings Clause incorporated in
Regulation 9, which reads as under:
9. SAVING
(i)
No provision in the Civil Service Regulations shall, so far as it
is inconsistent with any of the provisions of these regulations
have any effect.
(ii) Save as otherwise provided in these regulations, the provisions
G
in these regulations, shall be in addition to and not in derogation H
. '·
A
414
SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.
of the provisions in the Civil Service Regulations as amended
from time to time by the Government of Tamil Nadu."
The Board had its own Pension and Provident Fund Schemes, which,
in the opinion of the State of Tamil Nadu, gave to the employees benefits
which were on the whole not-less-favourable than the benefits provided under
B the Employees' Provident Fund Act, 1952 or the Employees Provident Fund
Scheme, 1952. Hence, the State Government by Government Order ("G.O.")
No. 988 (dated 13.7.70) exempted, under Section 17(l)(b) of the Employees'
Provident Fund Act, 1952, the establishment of the Board from the operation
of all the provisions of the Employees' Provident Fund Scheme, 1952 framed
C under the provisions of the Employees' Provident Fund Act, 1952. The
exemption was, however, subject to the conditions specified in the G.O.
itself.
Further; by Central Government notification dated 25 .6 .1986, exemption
under Section 17(14) of the Employees' Provident Funds and Miscellaneous
D Provisions Act, 1952, was granted from the operation of all the provisions of
the Employees' Family Pension Scheme, 1971 on the ground that the benefits
in the nature of Family Pension under the Tamil Nadu Electricity Board
Employees' Family Pension Regulations, 1964 ("Family Pension Regulations,
1964") were not-Jess-favourable than the benefits provided under the
Employees Family Pension Scheme, 1971. While granting this exemption, a
E specific condition was imposed by clause ( 4) enumerated to the Schedule to
the notification, which reads as under:
F
"(4) No amendment to the provision of the said regulations shall be
made without the prior approval of the Central Provident Fund
Commissioner and there (sic) any amendment is likely to affect
adversely the interest of the employees of the Board the Central
Provident Fund Commissioner shall before giving his approval give
reasonable opportunity to the employees to explain their view-point."
Similar exemption was granted by the Central Government (by another
G notification dated 25.6.86) from the provisions of the Employees' Deposit
Linked Insurance Scheme, 1976, on the same ground (i.e. that the Board's
Family Benefits Subsidiary Scheme provided no-less-favourable benefits to
the employees), but again subject to a condition of a similar nature.
On 26,6.86, after the workers made representations, the Board passed
H a resolution (numbered B.P.Ms (F.B.) No. 5) by which it ordered that all the
..
CENTRAL ORGANISATION OFT AMIL NADU ELEC. EMP. •'. TAMIL NADU EL~CT. BOARD {SRIKRISHNA. J.] 4 J 5
Regular Work Establishment Workmen retiring/ expiring on or after 1.7.86 A
would be governed by the pension scheme of the Board. On 17.2.95, the
Board passed a resolution (No. B.P. (F.B.) No. 7) which amended Regulation
9 of the 1960 Regulations. In the proceedings of the Board.it was pointed out
that, since the formation of the Board on 1.7.57 till the Board's 1960
Regulations came into force, the employees of the Board were governed only B
by the Civil Service Regulations with respect to quantum of pension, deathcum-retirement gratuity etc. After the framing of the 1960 Regulations and
the Family Pension Regulations, 1964, the provisions.ofthe said Regulations'-
which were not incopsistent with the Civil Service Regulations were foil owed.
In addition, the provisions of the .Civil Service Regulations, with respect to
matters not specifically governed by the Board's regulations, were also C
applicable.
With a view to creating a complete Pension Code, the Tamil Nadu
Government framed the Tamil Nadu Pension Rules (brought into force with
effect from 18.7.76) and the Tamil Nadu Pension Rules; 1978 (brought into
force with effect from I. I. 79). These Rules replaced the Civil Service D
Regulations, Madras Liberalised Pension Rules, 1960 and the Tamil Nadu
Government Servants Family Pension Rules, 1964.
It has also been pointed out in the Board's Proceedings that the Board
having followed the Civil Service Regulations, in addition to the 1960
Regulations and the Family Pension Regulations, 1964, had.also been following E
the Tamil Nadu Pension Rules, and the Tamil Nadu Pension Rules; I 978 for
settling the terminal benefits of the retiring employees of the Board. It was
noted that the amendments made from time to time in the Tamil Nadu Pension
Rules and Tamil Nadu Pension Rules, 19'.8 were also being followed by the
Board in the· light of the saving provisions contained in Regulation 9 of the p
I 960 Regulat.ions. The Board, "having considered the matter c~efully",
decided that it was necessary to amend Regulation 9·.Qflhe. 1960 ~gulations
"so as to follow the provisions of the Pension JWle~ .. of the' l)lfnil Nadu
Government" .. · Towards this end, the Board decided'tO amend Rqulation 9
by exerdslng its powers under Section 79(c) ofthe.El~~tricity (~~p~ly) Act,
1948. Regulation 9 was amended by substituting a iiew. l'egulafioni:u under: G
"9 SAVING
(i)
No provision in the Tamil Nadu Pension·Rules and.Tamil Nadu
Pension Rules, 1978, shall, so far as it is inconsistent with any
of the provisions of these regulations have any effect.
H
416
SUPREME COURT REPORTS. [2005] SUPP. 4 S.C.R.
A
(ii) Save as otherwise provided in these regulations, the provisions
in these regulations, shall be in addition to and not in derogation
of the provisions in the Tamil Nadu Pension Rules and Tamil
Nadu Pension Rules, 1978, as amended from time to time by the
Government of Tamil Nadu."
B
These amendments were directed to take effect respectively from 18.7.76
and 1.1.79.
On 8.7.98, a Memorandum of Settlement under Section 18(1) of the
Industrial Disputes Act, 1947 was reached between the Board and its workmen.
Although the settlement pertained to several conditions of service, 1 we propose
C to examine only the most relevant clauses.
Clause 14 of the settlement provides that a settlement under Section
12(3) of the Industrial Disputes Act, 1947 would be secured immediately on
wage revision and on workload revision, after settlement of revisions of work
D norms. By Clause 17, the settlement was to be in force for a period of four
years with effect from 1.12.96. Despite this period having expired, we are
informed by the counsels on both sides that the settlement was not formally
terminated under Section 19(2) of the industrial Disputes Act, 1947. Clause
15 of the said settlement is of some importance and reads as under:
E
"15. IT IS ALSO AGREED THAT:
F
G
(i)
The contract Labourers in thermal stations will be paid wages
with effect from 1.4.1997 with reference to settlement dated
21.7.1997.-With effect from 16.4.1998 according to the orders of
the High Court in Writ Appeal No. 1373 of 19~3 will be
implemented.
(ii) The contract labourers employed on daily wages in Distribution,
Generation and other Circles will be paid wages according to the
PWD schedule of rates with effect from 1.7 .1998.
(iii) The revised pension scheme of the Government of Tamil Nadu
and any amendments there on from time to lime will be applied
'Clauses 1 to 13 in the Memorandum of Settlement covered the following topics: Revision of
Scales of Pay; Fixation of Pay in the Revised Scale; Minimum Benefit: Service Weightage
Dearness Allowance; House Rent Allowance; City Compensation Allowance; Allwoances and
Special Pays; Revised rates of House Rent Allowance; City Compensatory Allowance; Allowance
and special pays; Payment of Arre;rrs; Selection grade; Stagnation in promotion; Work norms
H and Staff Pattern etc.
CENTRAL ORGANISATION OFT AMIL NADU ELEC. EMP. '· TAMIL NADU ELECT. BOARD [SRJKRISHNA. J.j 4 J 7
to the pensioners of the Tamil Nadu Electricity Board."
A
(Emphasis supplied)
While the conditions of service of the employees of the Board remained
thus, G.O. No. 71 was issued by the Government of Tamil Nadu on 19.3.03,
which purported to revise downwards various benefits accorded to Government B
Servants. This was on the ground that pension payments and other benefits
had "reached a level far higher than any other State in India" and had,
therefore, become "fiscally unsustainable". Through the G.O., the State
Government directed that the maximum Qualifying service be enhanced to
thirty-three years from thirty years in order to become eligible for full pension
by Government Servants after retirement. It also directed through the said C
G.O. that pension would be determined on the basis of the average emoluments
drawn during the last ten months of service rendered only. TI:iese amendments
were directed to become operative in respect of Government servants retiring
on or after 1.4.03.
By another G.O. No. 74 dated 19.3.03, for identical reasons, the State D
Government directed that the maximum limit for commutation of portion of
pension by the pensioner would be 33 1/3% of pension only. This order also
took effect from 1.4.03.
Following the amendments made by the State Government to the Pension E
Rules, the Board by its Resolution B.P. (Ch) No. 64 (dated 31.3.03) brought
about corresponding changes in the rules of pension applicable to its
employees. This Board Proceeding is the crucial one and necessitates
reproduction in its entirety.
'Tamil Nadu Electricity Board
Abstract
Pension-Qualifying Service for pension and calculation of pension
Revised orders-Issued.
SECRETARIAT BRANCH
(Per.) B.P.(Ch) No. 64
Dated : 31st March, 2003
Chitrabanu, Panguni 17,
Thiruvalluvar Aandu 2034
Read.
F
G
H
418
SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.
A
(I) (Per) B.P.(CH) No. 253 (SB) dated 23.9.96.
B
c
D
E
F
G
(2) G.O. Ms. No. 71 Finance (Pension) Department,
dated 19.3.2003.
PROCEEDINGS:
Jn the B.P. first cited orders have been issued reducing the
maximum qualifying service from 33 years to 30 years to become
. eligible for full pension by a Board employee after retkement. It has
· also been ordered therein that pension shall be detennined based on
50% of average emoluments drawn during the last 10 months service
rendered or 50% of pay last drawn (sic) Board employee, whichever
is higher.
2. The Government have (sic) now issued orders in the Government
·order second cited enhancing the maximum qualifying service to 33
years from 30 years to become eligible for full pension by the
Government Servants after retirement. The Government have (sic)
also ordered that Pension shall be determined based on the average
emoluments drawn during the last I 0 months of service rendered
only.
3. The provisions in the Tamil Nadu Pension Rules 1978 have been
made applicable to the employees of the Tamil Nadu Electrieity Board
also by an amendment to Regulation 9 of Tamil Nadu Electricity
Board Liberalised Pension Regulations 1960. It has, therefore, become
necessary to adopt the orders relating to Government Pensioners to
the pensioners of the Board. Adoption of Government orders in respect
of pensionery benefits does not attract the issue of notice under Section
9A of Industrial Dispute Act, 1947.
4. Based on the orders of the Governments mentioned in pani-2
above, the Tamil Nadu Electricity Board hereby directs that the
maximum qualifying service be enhanced to 33 years from 30 years
to become eligible for full pension by the Board employees after
• retirement.
5. The Board also directs that pension shall be determined based on
the average emoluments drawn during the last 10 months of service
rendered only.
H
6. These orders. shall be applicable to Board employees retiring on or
..
CENTRAL ORGANISATION OF TAMlL NADU ELEC. EMP. '·TAMIL NADU ELECT. BOARD [SRIKRISHNA. J] 4 J 9
after 1.4.2003.
7. The receipt of the Board Proceedings may be acknowledged in slip
enclosed.
(By order of the Chairman)
A
B
· (G. Gnanaselvam)
Secretary.
To
.
.
By a similar worded Board Resolutions B.P. (Ch) No. 65 (dated3 i.3.2003)
and B.P. (Ch) No. 66 (dated 31.3.2003), commutation level for pe!lSion was
substantially revised downwards.
The Proceedings in the High Court
c
D
The Appellant-Trade Union filed Writ Petition Nos. 11899, l 1900 and
11902/2003 before the High Court of Judicature at Madras challenging these
three orders (i.e. B.P. (Ch.) Nos.64-66) of the Board. It was contended by the
Trade Union that the Board being a Statutory Board was not required. to E
mechanically follow the G.O.s and, in any event, the action .of the Board
adversely affecting the pensions of employees was unfair, arbitrary and
unconstitutional.
Around the same time, similar writ petitions (W.P. No. l 122S/2003 .etc.)
were moved by Government servants (The Madras High Court Staff F
Association). These sought to impugn the changes brought about in their
pensionary conditions by G.O. Nos. 71 to 74. A Division Bench ofthe High
Court of Madras dismissed their Writ Petitions (through order dated 23.10.03).
A survey of th is judgment b.ecomes necessary because it is heavily relied
upon ·while disposing off the present impugned judgment,
: ·
G
. . .
.
·~
,,.
.
· The High Court in its order dated 23.i-0.03 held that the actionof the
Government in G.O. Nos. 71 to 74 was motiv.ated by financial constraints and
was, therefore, not arbitrary. It observed that the cut"off date of l.4:03 for the
revised pension package was not arbitrary since only the terminal benefits of
future retirees were being affected and that no accrued rights were affected. H
420
SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.
A Moreover, the High Court held that the Government could alter the service
conditions of its employees in exercise of its powers under Article 309 of the
Constitution of India. However, the High Court set aside G.O. Nos. 72 and 73
by which the State Government increased the discount rate of commutation
of pension and curtailed the encashment of leave on retirement on the ground
that these were accrued rights which could not be prejudicially affected by
B the Government.
Now for the present impugned judgment. Following its own judgment
in W.P. No. 11228/2003 (dated 23.10.03) etc., the High Court of Madras decided
W.P. Nos. 11899, 11900 and 11902/2003 along with a batch of connected
C matters, 2 filed by a large number of employees through order dated 23. l 0,03
("the impugned judgment"). The impugned judgment held inter alia as under:
1. That the Settlement (dated 8.7.98) between the Board and its employees
provided for revised pension schemes of the Government to be applied to the
Board's pensioners and hence no prior notice under Section 9A of the Industrial
D Disputes Act, 194 7 was necessary.
2. Regulation 9 of the 1960 Regulations as amended by B.P. No. 7 (dated
17.12.95), provided for the adoption of the Pension Rules of the Government
as amended from time to time.
E
3. The Board's Service Regulation No.17 did not provide for payment
of pension and hence the qualifying service of 30 years mentioned therein
could not be relied upon.
4. Since G.0.Ms Nos. 71 and 74 have been upheld for Government
servants (vide Madras High Court order in W.P. No. 11228/2003 dated 23.10.03),
F B.P. Nos. 64 and 66, which rely upon them, are valid.
5. Since G.O. No. 73 enhancing the rate of commuted pension was set
aside (vide Madras High Court order in W.P. No. 11228/03 dated 23.10.03), B.P.
No. 65 based thereon was illegal.
G
The Appellant-Trade Union is before this Court in appeal on behalf of
the employees of Tamil Nadu Electricity Board to challenge the impugned
judgment.
'The main matter being titled as: Bhaarathiya Electricity Employees Federation and Ors.
v. The Management Tamil Nadu Electricity Board and Ors., W.P.No. 10727/03 etc. (decided
H on 23.10.03).
CENTRAL ORGANISATION OF TAMIL NADU ELEC. EMP. \".TAMIL NADU ELECT. BOARD (SRJKRISHNA. J J 42}
The Facts in the Connected Special leave Petitions
Civil Appeals arising out of S.L.P.(C) Nos. 4598-4599/04 are filed by the
Tamil Nadu Electricity Board Accounts and Executive Staff Union on behalf
of the Accounts and Executive staff who are aggrieved by the disposal of
their Writ Petitions Nos. 11565 and 11567 of 2003 by common order of the
A
High Court of Madras (dated 23.10.Q3 in W.P. 10727/03 etc).
B
Civil Appeals arising out ofS.L.P.(C) Nos. 4750-4751/04 are filed by the
Trade Union representing the Tamil Nadu Electricity Board Stores Union
aggrieved by the dismissal of their Writ Petitions Nos. 11937 and 12372 of
2003 by common order of the High Court of Madras dated 23.10.03 in W.P. C
10727/03 etc.
Civil Appeals arising out of S.L.P.(C) Nos. 16305-16306/04 are filed by
the Tamil Nadu Electricity Workers Federation challenging the impugned
common judgment in dismissing their Writ Petitions Nos. 12349 and 12351 of
2003 by common order of the High Court of Madras dated 23.10.03 in W.P. D
10727/03 etc.
Civil Appeals arising out of S.L.P.(C) Nos. 8882-8883/04 are filed by the
Tamil Nadu Electricity Board Workers Progressive Union challenging the
impugned common judgment dated 23.10.03 in W.P. 10727/03 etc insofar as it
dismisses their Writ Petitions Nos. 11935 and 12370 of2003.
E
The Contentions
Ms. Indira Jaising, learned Senior Counsel for the appellant-employees,
who le~ the arguments on behalf of the appellants, raised several contenti?ns,
arguing on construction of the regulations and the settlement, and on F
constitutional grounds.
Ms. Jaising's contention on the construction of the Regulation was that
the Board had reduced the pensionary benefits through executive orders
without amending 1960 Regulations, an action which Ms. Jaising contends is
ultra vires the powers of the Board.
G
Turning to the Settlement (dated 8.7.98) between the Board and its
employees, she urged that Clause 15(iii) did not have the effect of rendering
the amendments to the pension scheme of the State Government employees
automatically applicable to the employees of the Board. Consequently, Ms. H
422
SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.
A Jaising contended that the only method by which the Board could have
adversely affected the pension regulations applicable to its employees was
by the process of formal amendment of its regulations, which admittedly has
not been done.
She further contended that Clause 15(iii) of the Settlement could not be
B treated as a waiver of the "fundamental rights" of the employees as there was
no conscious agreement discernible in the Settlement to reduce the pensionary
benefits. In her submission, the High Court erred in interpreting-Regulation
9(ii) of the 1960 Regulations as amended.
Ms. Jaising made two broad submissions on Constitutional grounds to
C question the action of the Board. Her first broad contention was with regard
to the legal nature of pensions. Relying on several authorities of this Court,
she contended that pension is an accrued right, which could not be taken
away, that too by a mere executive action such as a resolution of the
Respondent-Board. She also contended that pension is in the nature of
D property and it cannot be taken away except by procedure established by law
as provided under Article 300A consistent with Article 14 of the Constitution
of India.
Ms. Jaising's second broad contention was that the action of the Board
was "unreasonable" and hence violative of Article 14. Relying upon a judgment
E of this Court in D. S. Nakara and Ors. v. Union of India, 3 ("Nakara") she
contended that the revision of the formula of the rate of pension in the
existing scheme makes an invidious distinction between those retired before
or after the cut-off date resulting in unequal treatment being meted out to the
two groups.
F
G
Mr. Ramamoorthy, learned Senior Counsel appearing for the Board
attempted to sustain the impugned judgment by advancing the reasoning of
the High Court.
Principle of Waiver and the Settlement
In our view, Clause 15(iii) of the Settlement (dated 8.7.98) merely mollifies
the rigour of requirement of advance notice of 15 days under Section 9A of
the Industrial Disputes Act, 1947. Ms. Jaising contended that the conditions
of service once settled can never be changed except by being substituted by
H '[1983] I S.C.C. 305.
CENTRAL ORGANISATION OFT AMIL NADU ELEC. EMP. v. TAMIL NADU ELECT. BOARD (SRIKRJSHNA. J.j 423
a fresh settlement or award. This may be true with regard to conditions of A
service, which have been settled by a binding settlement/ award. With regard
to matters which are in the realm of virgin territory, we are afraid that this may
not be the rule. In fact, we called upon Ms. Jaising to show as to which
provision of the Industrial Disputes Act, other than Section 9A, prohibits the
change by an employer of a condition of service that it was not brought about B
by a settlement or award. No such provision was cited before us.
We are, hence, unable to accept the contention of Ms. Jaising that the
Board could not have changed, by executive action, even those conditions
of service that were not the subject matter of regulations, a settlement or an
award. In our judgment, Clause 15(iii) of the Settlement merely operates to C
exempt the employer (the Board) from giving a notice under Section 9A of the
Industrial Disputes Act, 194 7.
It was not pleaded by the Board before the High Court, nor was it so
held by the High Court in the impugned judgment, that there was any waiver
of rights generally by reason of the said clause in the said Settlement. Neither D
we are inclined to accept such an argument, nor did the learned counsel for
the Board advance any such argument before us. The argument with reference
to the principle of waiver is, therefore, wholly irrelevant and need not detain
us. This takes us to the interpretation of Regulation 9 of the 1960 Regulations
and its true import.
The 1960 Pension Regulations
This case really turns on the interpretation of the pension regulations,
particularly Regulation 9 of the 1960 Regulations. In considering the import
of Regulation 9 of the 1960 Regulations (amended on 17.2.95} a historical
overview is crucial. After the constitution of the Board in the year 1957, a set
of employees, erstwhile State Government's servants were taken over in the
employment of the Board. They were governed by the Civil Service Regulations
inter a/ia with regard to their pensionary benefits.
E
F
Thus, when the 1960 Regulations were brought into force on 1.7.60, the G
Board had in its employment the erstwhile Tamil Nadu Government servants
as well as employees directly recruited by it A saving clause was necessary
in order to ensure that the erstwhile Tamil Nadu Government servants (who
were taken over into the service of the Board) were not adversely affected
by framing of the Regulations. Consequently, a Saving Clause was introduced,
vide Regulation 9.
H
424
SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.
A
This saving clause (as it stood before the amendment of 17.2.95) was
in two parts. Clause (i) ensured that no provision in the Civil Service Regulations
to the extent of its inconsistency with any of the provisions of the 1960
Regulations would have any effect. This was obviously intended to ensure
that whatever better benefits were available to the employees of the Board
would be protected even if the Civil Service Regulations were inconsistent
B with the Board's Regulations.
Clause (ii) specifically provided that the provisions made in the
Regulations would be in addition to and not in derogation of the provisions
in the Civil Service Regulations as amended from time to time by the
C Government of Tamil Nadu. The import of this clause was that, except as
otherwise provided in the 1960 Regulations, with regard to matters not covered
by the Civil Service Regulations, the 1960 Regulations would have to be read
additionally and not so as to derogate from the Civil Service Regulations.