In an unusual move, the Supreme Court set aside the Allahabad High Court’s decision that had asked New Okhla Industrial Development Authority (NOIDA) to implement its decision taken in September 2012 to increase the retirement age of employees from 58 years to 60 years with effect from September 2002. A Division Bench of Justices DY Chandrachud and MR Shah allowed the appeal filed by NOIDA against the High Court judgment and observed that it had encroached upon the jurisdiction of the executive. The bench said that whether the retirement age should be increased or not and from when, was a matter of policy and the High Court should not have interfered in this matter.
The Uttar Pradesh government had on September 30, 2012 agreed to a proposal of the appellant to enhance the age of superannuation of its employees from 58 years to 60 years, prospectively. However, a Division Bench of the High Court had set aside the decision by exercising its power of judicial review under Article 226 of the Constitution. It directed that retrospective effect be given to the government order from September 29, 2002. The appeals by NOIDA and the state government had questioned the verdict in the Supreme Court. The appeals raised the issue that the High Court had transcended the limits of its power of judicial review.
NOIDA was formed under the provisions of the UP Industrial Area Development Act, 1976. The aim was to constitute an Authority for the development of certain areas of Uttar Pradesh notified under Section 3 of the Act, into industrial and urban townships. In pursuance of its power under Section 9 of the Act, the Authority had framed the New Okhla Industrial Development Authority Service Regulations, 1981, governing recruitment, appointment, pay, and other service conditions of the staff. Regulation 25 of the NOIDA Regulations, 1981, states that the age of superannuation of the employees is 58 years.
The state government had on November 28, 2001 issued a notification enhancing the age of retirement of government servants from 58 years to 60 years. Thereafter, the Fundamental Rule 56A was amended on June 27, 2002 raising the age of superannuation of government servants to 60 years with effect from November 28, 2001.
On June 29, 2002, the board of NOIDA resolved to recommend that the age of superannuation of its employees be increased from 58 years to 60 years. A recommendation to this effect was submitted to the state government on March 22, 2005 because an amendment of the NOIDA regulations, 1981, needed the approval of the state government in terms of Section 19 of the Act.
However, a Division Bench of the High Court on January 17, 2012, asked NOIDA to reconsider the issue at its next board meeting after taking into account the financial burden that may befall on the Authority due to an increase in the age of retirement. The High Court also left it open for the state government to consider whether to give effect to the increase from the date on which NOIDA resolved on the issue or from any other date which may be expedient for the government.
On July 9, 2012, the board of NOIDA resolved to recommend to the state government to increase the age of retirement for its employees from 58 years to 60 years “with immediate effect”. The resolution was communicated to the state government by a letter, dated July 17, 2012.
On August 27, 2012, a writ petition was instituted by the respondents to (i) challenge the order of the state government dated September 22, 2009 rejecting the original proposal for the enhancement of the age of retirement; and (ii) for a direction not to retire the first and second respondents at the age of 58 and allow them to continue until the age of 60.
Now, at this stage it is material to take note of certain facts pertaining to the first and second respondents. The second respondent was appointed in service on March 21, 1977 (his date of birth being August 18, 1954). One of the respondents was appointed on March 6, 1980 (his date of birth being August 15, 1954). Both the employees were due to retire on August 31, 2012 on attaining the then prevailing age of superannuation. On August, 31 2012, a notice was issued on the writ petition but no interim order was passed resulting in both of them superannuating on August 31, 2012.
Challenging the judgment of the High Court in the Supreme Court, Ravindra Kumar, the counsel appearing for NOIDA urged:
(i) The Service Regulations and consequently amendments to them are in the nature of subordinate legislation. No part of the amended Regulations could have been struck down—para 1(ii) in this case—unless they were declared to be ultra vires the provisions of the Constitution or the parent Statute. There is no such declaration by the High Court while delivering the impugned judgement;
(ii) The High Court has committed a manifest error while directing that the revision in the age of the retirement shall apply retrospectively with effect from the date of the Resolution dated June 29, 2002.
The apex court bench said that NOIDA, as an authority, constituted by the UP Industrial Area Development Act 1976, was bound by the rigour and discipline of the statute. The power to appoint officers and employees was conferred upon the Authority by Section 5(i) “subject to such control and restrictions as may be determined by general or special orders of the State government”. Section 19 requires the prior approval of the state government to the regulations framed by the authority. The regulations governing the conditions of service were notified on January 14, 1981 with the previous approval of the state government. Under Regulation 25 of the NOIDA Regulations 1981, the age of superannuation was fixed at 58 years. Consequently, any enhancement of the age of superannuation would require an amendment of the service regulations necessitating, in terms of Section 19, the prior approval of the state government.
The bench further observed in its judgment:
“Whether the age of superannuation should be enhanced is a matter of policy. If a decision has been taken to enhance the age of superannuation, the date with effect from which the enhancement should be made falls within the realm of policy.
The infirmity in the judgment lies in the fact that the High Court has trenched upon the realm of policy making and has assumed to itself, jurisdiction over a matter which lies in the domain of the executive. Whether the age of superannuation should be increased and if so, the date from which this should be effected is a matter of policy into which the High Court ought not to have entered.”
The apex court also said that the decision to increase the age of superannuation should date back to the resolution passed by NOIDA or should be made effective from the date of the approval by the state government and was a matter for the state government to decide. Ultimately, in drawing every cut-off, some employees would stand on one side of the line while the others would be positioned otherwise. This element of hardship cannot be a ground for the High Court to hold that the decision was arbitrary. When the state government originally decided to increase the age of superannuation of its own employees from 58 to 60 years on November 28, 2001, it had left the public sector corporations to take a decision based on the financial impact which would result if they were to increase the age of superannuation for their own employees.
The apex court also held that since the enhancement of the age of superannuation is a “public function” channelised by the provisions of the statute and the service regulations, the doctrine of promissory estoppel cannot be used to challenge the action of NOIDA. Though NOIDA sought the approval of the state government for the enhancement with “immediate effect”, it never intended or portrayed to have intended to give retrospective effect to the prospectively applicable government order. The representation of NOIDA could not have given rise to a legitimate expectation since it was a mere recommendation which was subject to the approval of the state government. Hence, the doctrine of legitimate expectation also finds no application to the facts of the present case.
“The argument of the employees that since they had moved the Chief Minister with a representation in August 2012 before their date of superannuation which was to fall at the end of the month and that they should have the benefit of the enhancement in the age of superannuation has no substance. On 31 August 2012, the respondents moved the High Court but no interim relief was granted to them and they attained the age of superannuation. They have not worked in service thereafter. Since the High Court’s judgment dismissing the challenge to the government order dated 30 September 2012 has attained finality, the submission cannot be accepted,” the order said.
—By Adarsh Kumar and India Legal News Service