# STATE OF ORISSA & ANR v. ORISSA KHADI AND VILLAGE INDUSTRIES BOARD KARAMCHARI SANGH & ANR

- **Citation:** [2023] 2 S.C.R. 1049
- **Court:** Supreme Court of India
- **Decided:** 2023-03-17
- **Case number:** Civil Appeal No. 6944 of 2015
- **Bench:** Dinesh Maheshwari, Sanjay Kumar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-orissa-anr-v-orissa-khadi-and-village-industries-board-karamchari-36749
- **Pages:** 32

## Headnote

Orissa Khadi and Village Industries Board Act,1955 - s.36 -
Orissa Khadi and Village Industries Board Regulations, 1960 -
Regulation 40 and 52 - State Government decided not to introduce
pension scheme for the employees of Orissa Khadi and Village
Industries Board due to the financial hardship - Respondents
challenged it before the High Court - The Single Judge issued
directions to the State Government to amend the Regulations of 1960
and to take appropriate steps to incorporate the pension scheme
for the Board's employees at par with the State Government
employees - On appeal, the Division Bench of High Court dismissed
the appeal and held that the direction of the Single Judge was only
advisory in nature and the State Government shall honour the same
while keeping in view the interest of the retired employees - In appeal
before the Supreme Court, the State Government contended before
the Supreme Court that the High Court was not justified in issuing
such directions, which are contrary to the regulations that rule out
pensionary rights to Board employees - Held: Board has been
established under enactment of the State, it could be considered to
be an instrumentality of the State, its distinct characteristic of being
a Board established with particular aim and objective cannot be
ignored - The employees of the Board cannot be treated as State
Government employees in all respects just because the State has
established the Board - Regulation 40 starts with exception clause,
making that provision subject to other provisions of the Regulation
- Regulation 52 specifically provides that the employees of the Board
shall not be entitled to any pension - Further held, mandamus could
not have been issued to the State to carry out amendment - Under
Art. 142, the Supreme Court cannot issue directions in violation of
statutory provisions - Orders of High Court were set aside.
[2023] 2 S.C.R. 1049
1049
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SUPREME COURT REPORTS
[2023] 2 S.C.R.
Allowing the appeal, the Court
HELD: 1. The contentions urged on behalf of the
respondents, seeking to put the employees of the Board at par
with the employees of the State Government for all purposes,
carry their own shortcomings. Even if Orissa Khadi and Village
Industries Board has been established under an enactment of
the State and for several relevant factors, it could be considered
to be an instrumentality of the State, its distinct characteristic of
being a Board established with particular aim and objective cannot
be ignored altogether. The Board being a body corporate,
incorporated by its name, has been established to carry out the
purposes of the Act of 1955 and not beyond. In view of its
independent corporate entity and existence, the provisions have
been made in the Act of 1955 for making regulations by the Board
consistent with the Act of 1955 and rules made thereunder with
the previous sanction of the State Government, where the
Regulations could provide, inter alia, for remuneration,
allowances and other conditions of service of the staff of the Board
(vide Section 36 of the Act). The Regulations of 1960 were framed
accordingly. Therein, even while otherwise applying a substantial
part of the Rules in the Orissa Service Code mutatis mutandis to
the employees of the Board, Regulation 40 itself starts with a
clause of exception, making that provision subject to the other
provisions of the Regulations. Then, in Regulation 52 it has
specifically been provided that the employees of the Board shall
not be entitled to any pension except gratuity and CPF benefits;
and further provisions have been made for the purpose of
subscription/contribution to CPF. Thus, even when the State has
established the Board to carry out its obligations in terms of
Article 43 of the Constitution of India, it cannot follow as a
corollary that the employees of this body corporate have to be
treated as State Government employees in all respects. Such a
corollary proposition would practically amount to

## Text

_Characters 0–39,841 of 77,623. This is a partial read: ask again with offset=39841 for what follows._

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STATE OF ORISSA & ANR.
v.
ORISSA KHADI AND VILLAGE INDUSTRIES BOARD
KARAMCHARI SANGH & ANR.
(Civil Appeal No. 6944 of 2015)
MARCH 17, 2023
[DINESH MAHESHWARI AND SANJAY KUMAR, JJ.]
Orissa Khadi and Village Industries Board Act,1955 - s.36 -
Orissa Khadi and Village Industries Board Regulations, 1960 -
Regulation 40 and 52 - State Government decided not to introduce
pension scheme for the employees of Orissa Khadi and Village
Industries Board due to the financial hardship - Respondents
challenged it before the High Court - The Single Judge issued
directions to the State Government to amend the Regulations of 1960
and to take appropriate steps to incorporate the pension scheme
for the Board's employees at par with the State Government
employees - On appeal, the Division Bench of High Court dismissed
the appeal and held that the direction of the Single Judge was only
advisory in nature and the State Government shall honour the same
while keeping in view the interest of the retired employees - In appeal
before the Supreme Court, the State Government contended before
the Supreme Court that the High Court was not justified in issuing
such directions, which are contrary to the regulations that rule out
pensionary rights to Board employees - Held: Board has been
established under enactment of the State, it could be considered to
be an instrumentality of the State, its distinct characteristic of being
a Board established with particular aim and objective cannot be
ignored - The employees of the Board cannot be treated as State
Government employees in all respects just because the State has
established the Board - Regulation 40 starts with exception clause,
making that provision subject to other provisions of the Regulation
- Regulation 52 specifically provides that the employees of the Board
shall not be entitled to any pension - Further held, mandamus could
not have been issued to the State to carry out amendment - Under
Art. 142, the Supreme Court cannot issue directions in violation of
statutory provisions - Orders of High Court were set aside.
[2023] 2 S.C.R. 1049
1049
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[2023] 2 S.C.R.
Allowing the appeal, the Court
HELD: 1. The contentions urged on behalf of the
respondents, seeking to put the employees of the Board at par
with the employees of the State Government for all purposes,
carry their own shortcomings. Even if Orissa Khadi and Village
Industries Board has been established under an enactment of
the State and for several relevant factors, it could be considered
to be an instrumentality of the State, its distinct characteristic of
being a Board established with particular aim and objective cannot
be ignored altogether. The Board being a body corporate,
incorporated by its name, has been established to carry out the
purposes of the Act of 1955 and not beyond. In view of its
independent corporate entity and existence, the provisions have
been made in the Act of 1955 for making regulations by the Board
consistent with the Act of 1955 and rules made thereunder with
the previous sanction of the State Government, where the
Regulations could provide, inter alia, for remuneration,
allowances and other conditions of service of the staff of the Board
(vide Section 36 of the Act). The Regulations of 1960 were framed
accordingly. Therein, even while otherwise applying a substantial
part of the Rules in the Orissa Service Code mutatis mutandis to
the employees of the Board, Regulation 40 itself starts with a
clause of exception, making that provision subject to the other
provisions of the Regulations. Then, in Regulation 52 it has
specifically been provided that the employees of the Board shall
not be entitled to any pension except gratuity and CPF benefits;
and further provisions have been made for the purpose of
subscription/contribution to CPF. Thus, even when the State has
established the Board to carry out its obligations in terms of
Article 43 of the Constitution of India, it cannot follow as a
corollary that the employees of this body corporate have to be
treated as State Government employees in all respects. Such a
corollary proposition would practically amount to merging of the
Board with the State Government; rather making it as one of the
Departments of the Government. This, in the face of existing
statute, cannot be done. That being the position and when
Regulations in question specifically make a distinct provision as
regards retiral benefits, the same cannot be ignored by any stretch
of arguments. [Para 16.1][1076-C-H; 1077-A-B]
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2. Putting it differently, even if development of khadi and
cottage industry is a Directive Principle of State Policy, it does
not follow as a corollary that if the State establishes a Board or
any organisation to carry out the obligations under such Directive
Principles, it cannot make separate arrangements as regards the
service conditions of the employees of such a Board or
organisation. Significantly, Regulation 40 of the Regulations of
1960 starts with an exception clause and while general conditions
of service of the Board's employees have been provided in terms
of the service conditions of the employees of the State
Government, the provision is subject to the other provisions of
the Regulations. Hence, the other provision, that is the one
contained in Regulation 52, cannot be ignored. [Para 16.1.1]
[1077-B-D]
2. In regard to the submissions made on behalf of the State
that the aforesaid existing Regulation 52 had neither been
challenged nor declared invalid, it has been suggested on behalf
of the respondents that when the employees had regularly been
raising the demand for pension by way of representations and
had taken up litigation too, challenge to the contrary provisions
is inherent in their demands/prayers. These submissions have
only been noted to be rejected for more than one reason. First,
that merely making a prayer contrary to the existing provision in
the statute does not carry in itself a challenge to the provision.
Secondly, for challenging a particular provision, specific case is
required to be made out of either want of statutory powers or of
violation of any constitutional mandate. Neither any such ground
of challenge had been urged nor could be assumed. Thirdly, it is
ex facie evident that all through the prayer had been for
amendment of Regulation 52 and not of declaring the same in its
existing frame as being invalid. A prayer for amendment of the
Regulation cannot be equated with a prayer to declare the same
as invalid. As noticed hereinbefore, the State Government's denial
of the proposed alteration was essentially based on its
disagreement to alter the service conditions with effect from
01.04.1976. Viewed from any angle, invocation of the principles
forbidding hostile discrimination remains baseless and the
contentions urged on that basis are required to be rejected. [Para
16.2][1077-D-H; 1078-A]
STATE OF ORISSA v. ORISSA KHADI AND VILLAGE INDUSTRIES
BOARD KARAMCHARI SANGH
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SUPREME COURT REPORTS
[2023] 2 S.C.R.
3. The other factor indicated on behalf of the respondents
that a small number of affected employees may not bring about
much financial burden on the State hardly make out a case for
issuing a mandamus to the State to amend the Regulations.
Whether to amend the Regulations or not, in the scheme of Act
of 1955 as also the Regulations of 1960, is required to be left to
the State and for that matter, the number of employees to be
affected/benefitted is not of much relevance. In this regard too,
as noticed hereinbefore, apparently the objections of the State
were against retrospective amendment of the Regulations and
thereby allowing pension with effect from 01.04.1976. Moreover,
the indications in the referred communications that such a
prescription is likely to bring about a huge amount of
administrative trouble to the Government cannot be dubbed as
mere pretence or a bogus alibi. This Court would hasten to
observe that irrespective of these observations and irrespective
of the result of this litigation, nothing would prevent the State
Government to carry out the amendment in the form suggested
or in any other modified form, if the State Government would be
willing to do so. The only question in the present appeal is as to
whether a mandamus could have been issued to the State to carry
out amendment. As noticed, the answer could only be in the
negative. [Para 19][1079-D-H]
4. For what has been discussed hereinabove, this Court is
clearly of the view that the direction issued in the impugned order
dated 25.10.2010 by the Single Judge could not have been
approved. The Division Bench of the High Court was conscious
of the fact that such a mandamus cannot be issued so as to direct
the State Government to carry out a particular amendment and,
therefore, in the impugned judgment and order dated 20.12.2012,
termed such a direction as being "advisory" in nature. However,
the Division Bench went miles ahead in the very next proposition
while observing that the State Government "shall" carry out this
direction. Converting an advice to the State Government into a
mandate in this manner, with great respect, is neither permissible
nor countenanced by law. [Para 21][1080-B-D]
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5. Under Article 142 of the Constitution of India, this Court
cannot issue directions in violation of the statutory provisions;
and sympathy or sentiment, by itself, cannot be a ground for
passing an order beyond and contrary to the legal rights. [Para
22][1080-F]
D. S. Nakara and Ors. v. Union of India (1983) 1 SCC
305 : [1983] 2 SCR 165; State of Jharkhand and Ors.
v. Jitendra Kumar Srivastava and Anr. (2013) 12 SCC
210 : [2013] 8 SCR 177; Deokinandan Prasad v. State
of Bihar (1971) 2 SCC 330 : [1971] Suppl. SCR 634;
Haryana State Minor Irrigation Tubewells Corporation
and Ors. v. G. S. Uppal and Ors. (2008) 7 SCC 375 :
[2008] 6 SCR 662; Punjab State Cooperative
Agricultural Development Bank Ltd. v. Registrar,
Cooperative Societies and Ors. (2022) 4 SCC 363 -
held inapplicable.
Air India v. Nergesh Meerza and Ors. (1981) 4 SCC
335 : [1982] 1 SCR 438; Gujarat State Khadi
Gramodyog Board v. Gujarat State Khadi Gramodyog
Pensioners Association 2004 SCC OnLine Guj 105;
University of Delhi v. Shashi Kiran and Ors. 2022 SCC
OnLine SC 594 - referred to.
Case Law Reference
[2008] 6 SCR 662
held inapplicable
Para 11.3
[1983] 2 SCR 165
held inapplicable
Para 11.4
[2013] 8 SCR 177
held inapplicable
Para 11.4
[1982] 1 SCR 438
referred to
Para 11.4
[1971] Suppl. SCR 634
referred to
Para 14.2
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6944
of 2015.
From the Judgment and Order dated 20.12.2012 of the High Court
of Orissa at Cuttack in WA No. 268 of 2011.
Shibashish Misra, Adv. for the Appellant.
STATE OF ORISSA v. ORISSA KHADI AND VILLAGE INDUSTRIES
BOARD KARAMCHARI SANGH
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SUPREME COURT REPORTS
[2023] 2 S.C.R.
Rana Mukherjee, Abhay K. Behera, Sr. Advs., Ms. Filza Moonis,
Ms. Oindrilla Sen, Samarth Mohanty, V. K. Verma, Tarun Verma, Rajat
Srivastav, Kedar Nath Tripathy, Advs. for the Respondents.
The Judgment of the Court was delivered by
DINESH MAHESHWARI, J.
1. This appeal is directed against the judgment and order dated
20.12.2012 in Writ Appeal No. 268 of 2011 whereby, the Division Bench
of the High Court of Orissa has dismissed the intra-court appeal filed by
the appellant State of Orissa and has affirmed the order dated 25.10.2010
in W.P. (C) No. 8438 of 2010, as passed by the learned Single Judge of
the High Court, holding the employees of the Orissa Khadi and Village
Industries Board1 entitled to pension at par with the Government
employees and also directing the State Government to amend the
applicable regulations accordingly.
2. In this appeal, the appellant State of Orissa has essentially
contended that the High Court was not justified in issuing directions
contrary to the applicable regulations, which rule out pensionary rights
to the employees of the Board in specific terms; and when the provisions
contained in the regulations were neither under challenge nor were
declared invalid.
3. While embarking upon the questions arising in this appeal, it
shall be apposite to take note of the relevant statutory provisions at the
outset.
3.1. The Orissa Khadi and Village Industries Board was established
under the Orissa Khadi and Village Industries Board Act, 19552 with the
aim and objective to organize, promote, develop, and regulate Khadi and
Village Industries throughout the State of Orissa.
3.2. Section 3 of the Act of 1955 reads as under: -
"3. Incorporation of the Board.- (1) The State
Government with effect from such date as they may by
notification appoint in this behalf, shall establish for the purpose of
this Act a Board to be called the Orissa Khadi and Village Industries
Board.
1 Hereinafter also referred to as 'the Board'.
2 Hereinafter also referred to as 'the Act of 1955'/'the Act'.
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(2) The Board established under Sub-section (1) shall be a
body corporate incorporated by its name with perpetual succession
and common seal and may sue and be sued in its corporate name
and shall be competent to acquire and hold and dispose of property
both movable and immovable and to contract and do all things
necessary for the purposes of this Act."
3.3. Section 36 of the Act of 1955 stipulates that the Board may,
with previous sanction of the State Government, make regulations
consistent with the Act and the rules made thereunder to provide, inter
alia, for the remuneration, allowances, and other conditions of service
of the staff. It reads as under: -
"36. Regulations.- (1) Subject to the provisions of Section
12 the Board may, with the previous sanction of the State
Government by notification, make regulations consistent with this
Act and rules made thereunder.
(2) In particular and without prejudice to the generality of
the foregoing power, the Board may make regulations providing
for -
(a) the procedure and disposal of its business;
(b) remuneration, allowances and other conditions of service
of the staff of the Board;
(c) functions and duties of the Staff of the Board;
(d) functions of Committees and the procedure to be
followed, by such Committees in the discharge of their functions."
3.4. In exercise of the powers so vested under Section 36 of the
Act of 1955, the Board has made the Orissa Khadi and Village Industries
Board Regulations, 19603 providing for general conditions of service of
its staff, remuneration, allowances, grant of leave, retirement benefits
etc.
Regulation 40 of the Regulations of 1960 reads as under: -
"40. General conditions of service.- Unless otherwise provided
in these regulations, the rules in the Orissa Service Code, Volume
I with all its Appendices, except Appendices 1 to 4, 8 and 12, as
STATE OF ORISSA v. ORISSA KHADI AND VILLAGE INDUSTRIES
BOARD KARAMCHARI SANGH [DINESH MAHESHWARI, J.]
3 Hereinafter also referred to as 'the Regulations of 1960'/'the Regulations'.
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amended from time to time by the Government shall apply to the
employees of the Board mutatis mutandis. For this purpose, the
words "Government", "Government Servant" and "Head of
Department" wherever they occur except in Chapter-I of the
Code shall mean "the Board" "the employees of the Board" and
"the President" respectively. "Superior Service" referred to in
the Orissa Service Code shall mean posts in Classes I, II and III
and "Inferior Service" shall mean posts in Class IV."
Regulation 52 of the Regulations of 1960, which is of direct
relevance in the present appeal, reads as under:
"52. Retirement benefits.- The employees of the Board shall
not be entitled to any pension except the gratuity and the
Contributory Provident Fund benefits admissible under these
regulations."
Regulations 53 to 57 deal with the matters related to the
Contributory Provident Fund4, subscriptions, realization of subscriptions,
and contributions etc.
4. The factual aspects of the matter are not of much dispute.
However, a few background aspects and their salient features may be
noticed, particularly concerning the proposition for providing pension to
the employees of the Board and for amendment of the above-noticed
Regulation 52 of the Regulations of 1960.
4.1. It would appear that the proposition for providing pensionary
rights to the employees of the Board had been a matter of several
communications between the Board and the State Government and had
also been the subject of a few litigations in the past. Shorn of unnecessary
details, it could be noticed that from 06.10.1982 onwards, various proposals
were mooted by the Board for providing pensionary benefits to its
employees and requests were also made to the State Government to
amend the Regulations of 1960 in this regard. On 25.02.1985, the
Industries Department of the Government of Orissa sought for the views
of the Director of the Industries on the proposal to provide pension to
the employees of the Board and in response, on 31.10.1985, the Additional
Director of Industries, Government of Orissa opined that there should
not be any objection to allow the pensionary benefits to the employees
of the Board. Thereafter, on 18.12.1985, the Industries Department,
4 'CPF', for short.
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Government of Orissa sought for certain information from the Board as
regards the annual requirement of funds if pension was paid to the
employees of the Board and as to whether the amount required for
payment of pension was more or less in comparison to Employees'
Provident Fund5 amount as also the details of the employees to be retired
in the coming 5 years and the amount required for payment of pension to
them. This was followed by the letter dated 15.05.1990 from the President
of the Board stating justification for payment of pension to the Board's
employees. On 19.09.1991 and then, on 08.10.1992, the Industries
Department again sought for information regarding functioning of the
Board, its objectives and updated financial statements as also the
calculation of expenditure, if the pensionary benefits were extended to
the employees of the Board. In response to this, on 18.12.1992, the
Secretary of the Board furnished a reply to the State Government with
justification for extending the pension scheme to the employees of the
Board.
4.2. Pursuant to the aforementioned exchange of communications,
on 17.03.1993, the Handicraft and Cottage Industries Department of
the Government of Orissa asked the Board to obtain written clearance
from the EPF Commissioner that they will refund the amount and forward
the reply so as to enable the Department to submit the proposal to the
Finance Department. On 24.04.1993, the Regional Provident Fund
Commissioner intimated to the Board that the proposal for refund would
be considered only as and when the proposed pension scheme was
approved by the Government of Orissa. Thereafter, on 30.04.1993, the
Board informed the Handicraft and Cottage Industries Department the
total amount of accumulation, as indicated by the Regional Provident
Fund Commissioner and requested to take up the matter with the
Government and followed it up on 19.08.1993, with a request to the
Department to expedite the matter. Again on 29.09.1993, the Department
sought for certain clarifications from the Board and thereupon, on
25.07.1994, the Board informed that there will be no extra financial burden
on the Government if pension scheme was made applicable to the
employees of the Board.
4.3. After the aforesaid communications, the Handicraft and
Cottage Industries Department, in its communication dated 26.10.1994,
indicated the anomalies which were likely to result if the pensionary
STATE OF ORISSA v. ORISSA KHADI AND VILLAGE INDUSTRIES
BOARD KARAMCHARI SANGH [DINESH MAHESHWARI, J.]
5 'EPF', for short.
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benefits to the employees of the Board were allowed with effect from
01.04.1976 and suggested that Regulation 52 be suitably revised so that
the date of implementation of the pension scheme would be decided by
the Government instead of the Board. The relevant part of this
communication reads as under: -
"I am directed to refer to your letter No. 10491 dated 25.07.1994
on the above subject and to say that it has been proposed by the
Orissa Khadi & VI Board (in regulation 52) to substitute every
employee who has retired on or after the 1st day of April, 76 be
entitled either to the benefit of pension schemes as applicable to
the State Government employees as amended from time to time
or to the benefit of employees provident fund as he may opt. It is
relevant to point out that the Orissa Civil Service Pension Rules,
and Orissa Civil Service Commutation of Pension Rules have come
into force with effect from 01.04.1992. Some of the provisions of
pension and commutation Rules, i.e. commutation of pension and
50% of the last pay drawn, maximum limit of gratuity, revised
rate of family pension, liberalized voluntary retirement schemes
and the revised procedure on medial examination in connection
with pension etc. were not in existence during the year 1976 and
such applicability of pensionary benefits to the Board employees
with effect from 01.04.1976 will create discrimination and
confusion. As such, the regulation 52 may be suitably revised with
approval of the OK & VI Board so that the date of implementation
of the pension scheme will be decided by the Government instead
of the Board."
4.4. Thereafter, on 06.10.1995, the Deputy Secretary, Handicraft
and Cottage Industries Department made a request to the Accountant
General (A&E), Orissa to examine the proposal for introduction of
pension scheme and to send his comments to the Finance Department,
while stating that there will be no extra financial burden on the Government
if the pension scheme was made applicable to the Board's employees
with effect from 01.04.1976.
4.5. However, by way of the letter dated 31.07.1996, the Industries
Department informed the Board that the proposal for introduction of
pension scheme for its employees had not been agreed to by the Finance
Department for a variety of reasons, including that: (a) earlier, by the
letter dated 18.12.1992, the pension scheme was proposed to be
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introduced with effect from 01.04.1985 but subsequently, the same was
revised to be effective from 01.04.1976; (b) giving retrospective effect
to pension scheme was rare and it would create administrative and
financial complications in future; (c) the employees of the Board who
had retired prior to 01.04.1976 will also claim pensionary benefits; and
(d) all other Corporations/Institutions/Bodies of the State will agitate for
pensionary benefits retrospectively, which would land the Government
in administrative and financial trouble. The Board was, therefore,
requested to re-examine the proposal in the light of the observations of
Finance Department and to re-submit the same while keeping in view
the factors concerning the sources of finance and financial burden on
the Government.
4.6. In the aforementioned backdrop, some retired employees of
the Board filed a writ petition, being OJC No. 15344 of 1998, before the
High Court, which came to be disposed of by the order dated 06.02.2001,
whereby the High Court directed the Industries Department to take a
decision with regard to extension of pension scheme to the employees
of the Board.
4.7. Thereafter, on 20.07.2001, the Board wrote a letter to the
Industries Department giving justification for introducing the pension
scheme in the manner that the requirement of funds to meet the pensionary
scheme will be Rs. 1.83 crore; that by introduction of pensionary scheme,
the Government will save Rs. 1.90 crore in the coming ten years; and
that the retired employees were to refund a sum of Rs. 75.07 lakh towards
EPF amount if they come over to the pensionary scheme. However, on
27.03.2002, the Industries Department intimated that the State
Government had decided not to introduce the pensionary scheme for the
employees of the Board after taking into account the precarious financial
condition of the State.
5. Aggrieved by the aforesaid communication dated 27.03.2002,
the ex-employees of the Board filed a writ petition before the High Court,
being W.P. (C) No. 1951 of 2002. During the pendency of this writ
petition, the existing employees of the Board filed another writ petition,
being W.P.(C) No. 14729 of 2007, claiming pensionary benefits at par
with other organizations of the State and the State Government
employees.
5.1. On 12.09.2008, the High Court disposed of W.P. (C) No.
1951 of 2002 with the observations, inter alia, that the said petitioners
STATE OF ORISSA v. ORISSA KHADI AND VILLAGE INDUSTRIES
BOARD KARAMCHARI SANGH [DINESH MAHESHWARI, J.]
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having retired long back and there being no provision for pension in their
service conditions, no directions could be issued qua them for payment
of any pension. However, in view of the pendency of other writ petition,
the High Court provided that the claim of the said petitioners will be
subject to the result of the other writ petition filed by the employees who
were in service.
5.2. Thereafter, the said other writ petition, being W.P. (C) No.
14729 of 2007, was disposed of by the High Court on 25.11.2008, with
direction to the appellant State to reconsider the matter and to take the
decision expeditiously. The High Court observed and directed as under:-
"3. No Counter Affidavit has been filed by the State. Be that as it
may, it appears that the State Government has decided to introduce
the pension scheme but then refrained from doing so due to
financial emergency. In view of the fact that six years have passed
in the meanwhile and as pension is no more a bounty this Court
feels that ends of justice and equity will be better served if Opposite
Party No. 1 is directed to reconsider the direction issued by this
Court in the earlier Writ Petition and take a decision as expeditiously
as possible, preferably within a period of six months, from the
date of communication of this order, and directs accordingly."
6. Even after re-examination of the matter pursuant to the
directions aforesaid, the Finance Department observed that the State
Government could not bear the liabilities in implementing the pension
scheme for the employees of the Board and this was communicated to
the Board by the Industries Department, by way of its letter dated
14.12.2009, in the following terms: -
"In inviting a reference to your letter No. 2128 dated 12.05.2009
on the above subject, I am directed to say that after detail
examination Finance Department have been pleased to observe
that State Government cannot bear the liabilities in implementing
a pension scheme for the OK & VI Board."
7. Dissatisfied with such a response, the writ petition leading to
this appeal, being W.P. (C) No. 8438 of 2010, was filed by respondent
No. 1 (an association of the employees of the Board) on 04.05.2010
with the following prayers: -
"Under the circumstances, it is humbly requested that the Hon'ble
Court be pleased to issue a writ in the nature of mandamus or any
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other appropriate writ/writs quashing the letter dated 14.12.2009
as per Annexure - 17.
And further be pleased to direct the Opposite Party No. 1 and 2
to give previous sanction under Section 36(1) of the Khadi and
Village Industries Board Act, 1955 at an early date the Opposite
Party No. 2 make regulation under Section 36(2) of the said Act
introducing pension scheme as per the Resolution of the Orissa
Khadi and Village Industries Board dated 10.02.2009.
And further be pleased to direct the Opposite Parties to grant
pension to the Employees of Orissa Khadi and Village Industries
Board from the date of their respective retirement.
Or pass appropriate direction(s) and order(s) as this Hon'ble Court
thinks fit and proper."
7.1. A learned Single Judge of the High Court disposed of the writ
petition so filed by respondent No. 1 by way of the impugned order
dated 25.10.2010, with directions to the State Government to amend the
Regulations of 1960 and to take appropriate steps to incorporate the
pension scheme for the Board's employees at par with the State
Government employees. The learned Single Judge took note of the
exchange of communications as above noticed and deduced that the
State Government was desirous of extending the benefit to the Board's
employees but, ultimately the proposition was rejected only on the ground
that the State Government could not bear the liabilities of pension scheme
for the Board. The learned Single Judge observed that if one benefit
was extended to the counterpart employees, the same could not be denied
to the others and in this regard, took note of pensionary benefits extended
to the employees of a couple of Universities as also the Social Welfare
Advisory Board; and found that not introducing pension scheme in favour
of the employees of the Board on the ground of financial stringencies,
where similarly situated organisations were enjoying the benefits, was a
matter of sheer discrimination and as a result, violative of Articles 14
and 16 of the Constitution of India. The learned Single Judge also observed
that the Board is a part and parcel of the State Government when all
service rules of the State Government employees were adopted and,
therefore, it was a moral duty of the opposite parties to enact the
provisions for providing pensionary benefits to the employees of the
Board. A reference was also made to certain decisions relied upon on
behalf of the employees with regard to the pensionary benefits extended
STATE OF ORISSA v. ORISSA KHADI AND VILLAGE INDUSTRIES
BOARD KARAMCHARI SANGH [DINESH MAHESHWARI, J.]
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to the employees of different Khadi and Village Industries Boards of
other States and the learned Single Judge observed that consistently, it
was held by the Courts that financial hardship was not at all a criterion
or ground for depriving the employees of the Board of service benefits,
such as pension. With these observations and analysis, the learned Single
Judge proceeded to set aside the impugned communication dated
14.12.2009 and issued directions to the State Government in the following
terms: -
"17. As such the order dated 14.12.2009 vide Anenxure-12 is not
sustainable and the same is quashed. In view of the aforesaid
submission my considered opinion is that the Board employees
are entitled to pension at par with the Government employees of
the State and like other State Government organizations and for
which the State Government should amend the Orissa Khadi and
Village Industries Board Regulation by extending the pensionary
benefit to the employees of the Orissa Khadi and Village Industries
and accordingly, the Opposite Party Nos. 1 and 2 are directed to
take appropriate steps to incorporate pension scheme for the
Board's employees at par with State Government employees. The
entire exercise shall be completed within a period of three months
from the date of communication of this order."
8. In challenge to the order so passed by the learned Single Judge,
the appellant State preferred an intra-court appeal, being W.A. No. 268
of 2011, which was decided by the impugned order dated 20.12.2012.
The Division Bench of the High Court observed that the direction of the
learned Single Judge was only advisory in nature and the same was in
the welfare of the employees of the Board; and the State Government
shall honour the same while keeping in view the interest of the retired
employees in terms of the mandate of Article 41 of the Directive Principles
of State Policy by discharging its constitutional obligations towards aged
persons who have served the State through the Board. The relevant
parts of the impugned order dated 20.12.2012 could be usefully
reproduced as under:
"10. After hearing learned counsel for the respective parties, we
have examined the matter at length. Perusal of the different
provisions of the Act, 1955, Rule, 1956 and Regulation, 1960 framed
thereunder by the Government leaves no manner of doubt that
the real control, authority of the Board rests with the Industries
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Department of the Government, in other words the Board is under
the direct control of the State Government and is totally dependant
on the Government for running its administration and in carrying
out its activities including finance. Notwithstanding the fact that
the Board is a statutory one and right from the commencement,
the management, the administration, the appointment, framing
regulations, carrying on with its activities, formulations of policy
are all controlled by the State Government. Furthermore, the
employees of the Board in question are governed and controlled
by Rules as are applicable to the State Government servants and
the provisions of the Odisha Service Code, which are applicable
to the State Government servants, are also applicable to the
employees of the Board. The Travelling Allowance Rules and
Odisha Leave Rules are also applicable to the employees of the
Board. The function of the Board is well defined in Section 17 of
the Act, 1955. To discharge such functions, programmes have
been drawn by the Board with the sanction of the State Government
and therefore, the State Government has all pervasive control
over the Board and got power to frame Rules under Section 35 of
the Act, 1955. It is true that the Regulation 52 of the Regulation,
1960 provides that the employees of the Board are not entitled to
pensionary benefits but to overcome such a hurdle the Board have
recommended to the Government for amending Regulation 52 and
this Court also directed the Government to consider such demand
of pension to the employees of the Board in OJC No.15344 of
1998 and W.P. (C) No.14729 of 2007. But the State Government
on the ground that it cannot take extra burden of providing pension
to the employees of the Board did not comply with the directions
of this Court. Admittedly, when all conditions of service of the
State Government employees are applicable to the Board
employees, refusal to extend the pensionary scheme to such
employees of the Board, in our considered view, amounts to
discrimination and violative of Articles 14 and 16 of the Constitution
of India. The learned Single Judge has dealt with the important
aspect in detail in the impugned judgment. It was brought to our
notice that the Board on several occasions moved the State
Government through the Industries Department which is the
controlling authority of the Board for extending pensionary benefits
to the employees of the Board, but the same did not find favour
STATE OF ORISSA v. ORISSA KHADI AND VILLAGE INDUSTRIES
BOARD KARAMCHARI SANGH [DINESH MAHESHWARI, J.]
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with the Government on the ground that the State Government
cannot carry the extra financial burden. In our opinion, the view
taken by the learned Single Judge with regard to making provision
for providing pension to the employees of the Board is quite justified
and calls for no interference, as the same is in conformity with
the decisions of Gujarat and Bombay High Courts in the cases
referred to supra upon which learned Senior Counsel has rightly
placed reliance. For all practical purposes, the Board is an
instrumentality of the State and therefore, it is covered under the
Article 12 of the Constitution of India and undoubtedly amenable
to the writ jurisdiction of this Court. We are quite aware of our
limitations under Article 226 of the Constitution. The direction of
the learned Single Judge to Opposite Party Nos.1 and 2 to take
appropriate steps to incorporate the pension scheme for the
employees of the Board at par with the State Government
employees is only advisory in nature and the same is in the welfare
of the employees of the Board. The State Government shall honour
such advisory note keeping in view that the interest of the retired
employees shall be taken care of by the State Government as
mandated under Article 41 of the directive principles of the State
policy by discharging its constitutional obligations towards aged
persons who have served the State through Board, as the State
has decentralized its power and functions through its
instrumentalities such as the Board and other statutory Corporation
for good governance of the people under the Constitution of India.
11. In the result, after making a threadbare analysis and appraisal
of factual and legal profile and proposition highlighted before us,
we find no merit in this writ appeal and the impugned order of the
learned Single Judge does not call for any interference in any
manner.
Accordingly, the writ appeal stands dismissed."
9. The appellant State of Orissa is aggrieved by the orders so
passed by the High Court. Before proceeding further, it may be noticed
that while entertaining the petition seeking leave to appeal in this matter,
on 11.04.2014, this Court stayed the operation of the impugned judgment
and order of the High Court; and on 07.09.2015, while granting leave to
appeal, the interim order dated 11.04.2014 was continued. The same
position has continued hitherto.
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10. While questioning the impugned orders and the directions issued
thereunder, learned counsel for the appellant State, after an elaborate
reference to the provisions of the Act of 1955 and the Regulations of
1960 as also the exchange of communications, has submitted that the
impugned orders remain unsustainable in law and deserve to be set aside.
10.1. Learned counsel for the appellant has contended that no
direction contrary to Regulation 52 of the Regulations of 1960 could
have been issued, particularly when the said Regulation 52 was neither
a subject-matter of challenge before the High Court nor was declared
invalid in any proceedings. Learned counsel has yet further submitted
that the directions of the learned Single Judge, as approved by the Division
Bench, without deliberating on Regulation 52 as also the other provisions
in the Regulations of 1960 including those contained in Regulations 53 to
56, remain wholly unjustified and cannot be approved.
10.2. Learned counsel would submit that the prayers based on
certain communications exchanged between the Board and the State
Government could not have been countenanced at the instance of the
employees, who had joined the services with the Board while being
conscious of the stipulations in the Regulations and thereby, the conditions
of their service. Learned counsel has submitted that even when relying
on the resolutions adopted by the Board and the exchange of
communications, the learned Single Judge has failed to consider that at
no point of time, the State ever acceded to the proposal of the Board;
and certain suggestions made by some of the officers of the Government
at different levels could not have been taken in aid to direct the appellants
to amend the said Regulation 52. Learned counsel has further submitted
that the Division Bench of the High Court, although consciously took
note of the stipulations of Regulation 52 and observed that the directions
of the learned Single Judge were only advisory in nature but then,
proceeded to make further observations, which are practically of issuing
mandamus to the State Government to amend the Regulations. These
directions, according to the learned counsel, enter into the arena of policy
decisions and legislative functions; and the High Court has not been
justified in issuing the same.
10.3.