STATE OF ORISSA & ANR. versus ORISSA KHADI AND VILLAGE INDUSTRIES BOARD KARAMCHARI SANGH & ANR on 17 March 2023

[2023] 2 S.C.R. 1049

STATE OF ORISSA & ANR.

v.

ORISSA KHADI AND VILLAGE INDUSTRIES BOARDKARAMCHARI 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 introducepension scheme for the employees of Orissa Khadi and VillageIndustries Board due to the financial hardship – Respondentschallenged it before the High Court – The Single Judge issueddirections to the State Government to amend the Regulations of 1960and to take appropriate steps to incorporate the pension schemefor the Board’s employees at par with the State Governmentemployees – On appeal, the Division Bench of High Court dismissedthe appeal and held that the direction of the Single Judge was onlyadvisory in nature and the State Government shall honour the samewhile keeping in view the interest of the retired employees – In appealbefore the Supreme Court, the State Government contended beforethe Supreme Court that the High Court was not justified in issuingsuch directions, which are contrary to the regulations that rule outpensionary rights to Board employees – Held: Board has beenestablished under enactment of the State, it could be considered tobe an instrumentality of the State, its distinct characteristic of beinga Board established with particular aim and objective cannot beignored – The employees of the Board cannot be treated as StateGovernment employees in all respects just because the State hasestablished 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 Boardshall not be entitled to any pension – Further held, mandamus couldnot have been issued to the State to carry out amendment – UnderArt. 142, the Supreme Court cannot issue directions in violation ofstatutory provisions – Orders of High Court were set aside.

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AAllowing the appeal, the Court

HELD: 1. The contentions urged on behalf of therespondents, seeking to put the employees of the Board at parwith the employees of the State Government for all purposes,carry their own shortcomings. Even if Orissa Khadi and VillageBIndustries Board has been established under an enactment ofthe State and for several relevant factors, it could be consideredto be an instrumentality of the State, its distinct characteristic ofbeing a Board established with particular aim and objective cannotbe ignored altogether. The Board being a body corporate,incorporated by its name, has been established to carry out theCpurposes of the Act of 1955 and not beyond. In view of itsindependent corporate entity and existence, the provisions havebeen made in the Act of 1955 for making regulations by the Boardconsistent with the Act of 1955 and rules made thereunder withthe previous sanction of the State Government, where theDRegulations 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 framedaccordingly. Therein, even while otherwise applying a substantialpart of the Rules in the Orissa Service Code mutatis mutandis tothe employees of the Board, Regulation 40 itself starts with aEclause of exception, making that provision subject to the otherprovisions of the Regulations. Then, in Regulation 52 it hasspecifically been provided that the employees of the Board shallnot be entitled to any pension except gratuity and CPF benefits;and further provisions have been made for the purpose of

Fsubscription/contribution to CPF. Thus, even when the State hasestablished the Board to carry out its obligations in terms ofArticle 43 of the Constitution of India, it cannot follow as acorollary that the employees of this body corporate have to betreated as State Government employees in all respects. Such a corollary proposition would practically amount to merging of theGBoard with the State Government; rather making it as one of theDepartments of the Government. This, in the face of existingstatute, cannot be done. That being the position and whenRegulations in question specifically make a distinct provision asregards retiral benefits, the same cannot be ignored by any stretchHof arguments. [Para 16.1][1076-C-H; 1077-A-B]

2. Putting it differently, even if development of khadi andcottage industry is a Directive Principle of State Policy, it doesnot follow as a corollary that if the State establishes a Board orany organisation to carry out the obligations under such DirectivePrinciples, it cannot make separate arrangements as regards theservice conditions of the employees of such a Board ororganisation. Significantly, Regulation 40 of the Regulations of1960 starts with an exception clause and while general conditionsof service of the Board’s employees have been provided in termsof the service conditions of the employees of the StateGovernment, the provision is subject to the other provisions ofthe Regulations. Hence, the other provision, that is the onecontained in Regulation 52, cannot be ignored. [Para 16.1.1][1077-B-D]

2. In regard to the submissions made on behalf of the Statethat the aforesaid existing Regulation 52 had neither beenchallenged nor declared invalid, it has been suggested on behalfof the respondents that when the employees had regularly beenraising the demand for pension by way of representations andhad taken up litigation too, challenge to the contrary provisionsis inherent in their demands/prayers. These submissions haveonly been noted to be rejected for more than one reason. First,that merely making a prayer contrary to the existing provision inthe statute does not carry in itself a challenge to the provision.Secondly, for challenging a particular provision, specific case isrequired to be made out of either want of statutory powers or ofviolation of any constitutional mandate. Neither any such groundof challenge had been urged nor could be assumed. Thirdly, it isex facie evident that all through the prayer had been foramendment of Regulation 52 and not of declaring the same in itsexisting frame as being invalid. A prayer for amendment of theRegulation cannot be equated with a prayer to declare the sameas invalid. As noticed hereinbefore, the State Government’s denialof the proposed alteration was essentially based on itsdisagreement to alter the service conditions with effect from01.04.1976. Viewed from any angle, invocation of the principlesforbidding hostile discrimination remains baseless and thecontentions urged on that basis are required to be rejected. [Para16.2][1077-D-H; 1078-A]

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A3. The other factor indicated on behalf of the respondentsthat a small number of affected employees may not bring aboutmuch financial burden on the State hardly make out a case forissuing a mandamus to the State to amend the Regulations.Whether to amend the Regulations or not, in the scheme of Actof 1955 as also the Regulations of 1960, is required to be left toBthe State and for that matter, the number of employees to beaffected/benefitted is not of much relevance. In this regard too,as noticed hereinbefore, apparently the objections of the Statewere against retrospective amendment of the Regulations andthereby allowing pension with effect from 01.04.1976. Moreover,Cthe indications in the referred communications that such aprescription is likely to bring about a huge amount ofadministrative trouble to the Government cannot be dubbed asmere pretence or a bogus alibi. This Court would hasten toobserve that irrespective of these observations and irrespectiveof the result of this litigation, nothing would prevent the StateDGovernment to carry out the amendment in the form suggestedor in any other modified form, if the State Government would bewilling to do so. The only question in the present appeal is as towhether a mandamus could have been issued to the State to carryout amendment. As noticed, the answer could only be in theEnegative. [Para 19][1079-D-H]

4. For what has been discussed hereinabove, this Court isclearly of the view that the direction issued in the impugned orderdated 25.10.2010 by the Single Judge could not have beenapproved. The Division Bench of the High Court was consciousFof the fact that such a mandamus cannot be issued so as to directthe 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 propositionwhile observing that the State Government “shall” carry out thisGdirection. Converting an advice to the State Government into amandate in this manner, with great respect, is neither permissiblenor countenanced by law. [Para 21][1080-B-D]

STATE OF ORISSA v. ORISSA KHADI AND VILLAGE INDUSTRIESBOARD KARAMCHARI SANGH

5. Under Article 142 of the Constitution of India, this Courtcannot issue directions in violation of the statutory provisions;and sympathy or sentiment, by itself, cannot be a ground forpassing an order beyond and contrary to the legal rights. [Para22][1080-F]

D. S. Nakara and Ors. v. Union of India (1983) 1 SCC305 : [1983] 2 SCR 165; State of Jharkhand and Ors.v. Jitendra Kumar Srivastava and Anr. (2013) 12 SCC210 : [2013] 8 SCR 177; Deokinandan Prasad v. Stateof Bihar (1971) 2 SCC 330 : [1971] Suppl. SCR 634;Haryana State Minor Irrigation Tubewells Corporationand Ors. v. G. S. Uppal and Ors. (2008) 7 SCC 375 :[2008] 6 SCR 662; Punjab State CooperativeAgricultural Development Bank Ltd. v. Registrar,Cooperative Societies and Ors. (2022) 4 SCC 363 –held inapplicable.

Air India v. Nergesh Meerza and Ors. (1981) 4 SCC335 : [1982] 1 SCR 438; Gujarat State KhadiGramodyog Board v. Gujarat State Khadi GramodyogPensioners Association 2004 SCC OnLine Guj 105;University of Delhi v. Shashi Kiran and Ors. 2022 SCCOnLine SC 594 – referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6944of 2015.

From the Judgment and Order dated 20.12.2012 of the High Courtof Orissa at Cuttack in WA No. 268 of 2011.

Shibashish Misra, Adv. for the Appellant.

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ARana Mukherjee, Abhay K. Behera, Sr. Advs., Ms. Filza Moonis,Ms. Oindrilla Sen, Samarth Mohanty, V. K. Verma, Tarun Verma, RajatSrivastav, Kedar Nath Tripathy, Advs. for the Respondents.

The Judgment of the Court was delivered by DINESH MAHESHWARI, J.B

1. This appeal is directed against the judgment and order dated20.12.2012 in Writ Appeal No. 268 of 2011 whereby, the Division Benchof the High Court of Orissa has dismissed the intra-court appeal filed bythe appellant State of Orissa and has affirmed the order dated 25.10.2010in W.P. (C) No. 8438 of 2010, as passed by the learned Single Judge ofCthe High Court, holding the employees of the Orissa Khadi and VillageIndustries Board[1] entitled to pension at par with the Governmentemployees and also directing the State Government to amend theapplicable regulations accordingly.

2. In this appeal, the appellant State of Orissa has essentiallyDcontended that the High Court was not justified in issuing directionscontrary to the applicable regulations, which rule out pensionary rightsto the employees of the Board in specific terms; and when the provisionscontained in the regulations were neither under challenge nor weredeclared invalid.E3. While embarking upon the questions arising in this appeal, itshall be apposite to take note of the relevant statutory provisions at theoutset.

3.1. The Orissa Khadi and Village Industries Board was establishedunder the Orissa Khadi and Village Industries Board Act, 1955[2] with theFaim and objective to organize, promote, develop, and regulate Khadi andVillage 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 StateGovernment with effect from such date as they may byGnotification appoint in this behalf, shall establish for the purpose ofthis Act a Board to be called the Orissa Khadi and Village IndustriesBoard.

1 Hereinafter also referred to as ‘the Board’.H2 Hereinafter also referred to as ‘the Act of 1955’/’the Act’.

(2) The Board established under Sub-section (1) shall be abody corporate incorporated by its name with perpetual successionand common seal and may sue and be sued in its corporate nameand shall be competent to acquire and hold and dispose of propertyboth movable and immovable and to contract and do all thingsnecessary 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 regulationsconsistent with the Act and the rules made thereunder to provide, interalia, for the remuneration, allowances, and other conditions of serviceof the staff. It reads as under: - “36. Regulations.- (1) Subject to the provisions of Section12 the Board may, with the previous sanction of the StateGovernment by notification, make regulations consistent with thisAct and rules made thereunder.

(2) In particular and without prejudice to the generality ofthe foregoing power, the Board may make regulations providingfor –

(a) the procedure and disposal of its business; (b) remuneration, allowances and other conditions of serviceof the staff of the Board;

(c) functions and duties of the Staff of the Board; (d) functions of Committees and the procedure to befollowed, by such Committees in the discharge of their functions.”

3.4. In exercise of the powers so vested under Section 36 of theAct of 1955, the Board has made the Orissa Khadi and Village IndustriesBoard Regulations, 1960[3] providing for general conditions of service ofits staff, remuneration, allowances, grant of leave, retirement benefitsetc.

Regulation 40 of the Regulations of 1960 reads as under: -

“40. General conditions of service.- Unless otherwise providedin these regulations, the rules in the Orissa Service Code, VolumeI with all its Appendices, except Appendices 1 to 4, 8 and 12, as 3 Hereinafter also referred to as ‘the Regulations of 1960’/’the Regulations’.

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SUPREME COURT REPORTS

Aamended from time to time by the Government shall apply to theemployees of the Board mutatis mutandis. For this purpose, thewords “Government”, “Government Servant” and “Head ofDepartment” wherever they occur except in Chapter-I of theCode shall mean “the Board” “the employees of the Board” and“the President” respectively. “Superior Service” referred to inBthe Orissa Service Code shall mean posts in Classes I, II and IIIand “Inferior Service” shall mean posts in Class IV.”Regulation 52 of the Regulations of 1960, which is of directrelevance in the present appeal, reads as under:

C“52. Retirement benefits.- The employees of the Board shallnot be entitled to any pension except the gratuity and theContributory Provident Fund benefits admissible under theseregulations.”

Regulations 53 to 57 deal with the matters related to theDContributory Provident Fund[4], 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 benoticed, particularly concerning the proposition for providing pension toEthe employees of the Board and for amendment of the above-noticedRegulation 52 of the Regulations of 1960.

4.1. It would appear that the proposition for providing pensionaryrights to the employees of the Board had been a matter of severalcommunications between the Board and the State Government and hadFalso been the subject of a few litigations in the past. Shorn of unnecessarydetails, it could be noticed that from 06.10.1982 onwards, various proposalswere mooted by the Board for providing pensionary benefits to itsemployees and requests were also made to the State Government toamend the Regulations of 1960 in this regard. On 25.02.1985, theIndustries Department of the Government of Orissa sought for the viewsGof the Director of the Industries on the proposal to provide pension tothe employees of the Board and in response, on 31.10.1985, the AdditionalDirector of Industries, Government of Orissa opined that there shouldnot be any objection to allow the pensionary benefits to the employeesof the Board. Thereafter, on 18.12.1985, the Industries Department,H4 ‘CPF’, for short.

Government of Orissa sought for certain information from the Board asregards the annual requirement of funds if pension was paid to theemployees of the Board and as to whether the amount required forpayment of pension was more or less in comparison to Employees’Provident Fund[5] amount as also the details of the employees to be retiredin the coming 5 years and the amount required for payment of pension tothem. This was followed by the letter dated 15.05.1990 from the Presidentof the Board stating justification for payment of pension to the Board’semployees. On 19.09.1991 and then, on 08.10.1992, the IndustriesDepartment again sought for information regarding functioning of theBoard, its objectives and updated financial statements as also thecalculation of expenditure, if the pensionary benefits were extended tothe employees of the Board. In response to this, on 18.12.1992, theSecretary of the Board furnished a reply to the State Government withjustification for extending the pension scheme to the employees of theBoard.

4.2. Pursuant to the aforementioned exchange of communications,on 17.03.1993, the Handicraft and Cottage Industries Department ofthe Government of Orissa asked the Board to obtain written clearancefrom the EPF Commissioner that they will refund the amount and forwardthe reply so as to enable the Department to submit the proposal to theFinance Department. On 24.04.1993, the Regional Provident FundCommissioner intimated to the Board that the proposal for refund wouldbe considered only as and when the proposed pension scheme wasapproved by the Government of Orissa. Thereafter, on 30.04.1993, theBoard informed the Handicraft and Cottage Industries Department thetotal amount of accumulation, as indicated by the Regional ProvidentFund Commissioner and requested to take up the matter with theGovernment and followed it up on 19.08.1993, with a request to theDepartment to expedite the matter. Again on 29.09.1993, the Departmentsought for certain clarifications from the Board and thereupon, on25.07.1994, the Board informed that there will be no extra financial burden on the Government if pension scheme was made applicable to theemployees of the Board.

4.3. After the aforesaid communications, the Handicraft andCottage Industries Department, in its communication dated 26.10.1994,indicated the anomalies which were likely to result if the pensionary 5 ‘EPF’, for short.

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Abenefits to the employees of the Board were allowed with effect from01.04.1976 and suggested that Regulation 52 be suitably revised so thatthe date of implementation of the pension scheme would be decided bythe Government instead of the Board. The relevant part of thiscommunication reads as under: - B“I am directed to refer to your letter No. 10491 dated 25.07.1994on the above subject and to say that it has been proposed by theOrissa Khadi & VI Board (in regulation 52) to substitute everyemployee who has retired on or after the 1[st] day of April, 76 beentitled either to the benefit of pension schemes as applicable tothe State Government employees as amended from time to timeCor to the benefit of employees provident fund as he may opt. It isrelevant to point out that the Orissa Civil Service Pension Rules,and Orissa Civil Service Commutation of Pension Rules have comeinto force with effect from 01.04.1992. Some of the provisions ofpension and commutation Rules, i.e. commutation of pension andD50% of the last pay drawn, maximum limit of gratuity, revisedrate of family pension, liberalized voluntary retirement schemesand the revised procedure on medial examination in connectionwith pension etc. were not in existence during the year 1976 andsuch applicability of pensionary benefits to the Board employeeswith effect from 01.04.1976 will create discrimination andEconfusion. As such, the regulation 52 may be suitably revised withapproval of the OK & VI Board so that the date of implementationof the pension scheme will be decided by the Government insteadof the Board.”

4.4. Thereafter, on 06.10.1995, the Deputy Secretary, HandicraftFand Cottage Industries Department made a request to the AccountantGeneral (A&E), Orissa to examine the proposal for introduction ofpension scheme and to send his comments to the Finance Department,while stating that there will be no extra financial burden on the Governmentif the pension scheme was made applicable to the Board’s employeesGwith effect from 01.04.1976.

4.5. However, by way of the letter dated 31.07.1996, the IndustriesDepartment informed the Board that the proposal for introduction ofpension scheme for its employees had not been agreed to by the FinanceDepartment for a variety of reasons, including that: (a) earlier, by theHletter dated 18.12.1992, the pension scheme was proposed to be

introduced with effect from 01.04.1985 but subsequently, the same wasrevised to be effective from 01.04.1976; (b) giving retrospective effectto pension scheme was rare and it would create administrative andfinancial complications in future; (c) the employees of the Board whohad retired prior to 01.04.1976 will also claim pensionary benefits; and(d) all other Corporations/Institutions/Bodies of the State will agitate forpensionary benefits retrospectively, which would land the Governmentin administrative and financial trouble. The Board was, therefore,requested to re-examine the proposal in the light of the observations ofFinance Department and to re-submit the same while keeping in viewthe factors concerning the sources of finance and financial burden onthe Government.

4.6. In the aforementioned backdrop, some retired employees ofthe Board filed a writ petition, being OJC No. 15344 of 1998, before theHigh Court, which came to be disposed of by the order dated 06.02.2001,whereby the High Court directed the Industries Department to take adecision with regard to extension of pension scheme to the employeesof the Board.

4.7. Thereafter, on 20.07.2001, the Board wrote a letter to theIndustries Department giving justification for introducing the pensionscheme in the manner that the requirement of funds to meet the pensionaryscheme 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; andthat the retired employees were to refund a sum of Rs. 75.07 lakh towardsEPF amount if they come over to the pensionary scheme. However, on27.03.2002, the Industries Department intimated that the StateGovernment had decided not to introduce the pensionary scheme for theemployees of the Board after taking into account the precarious financialcondition 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 writpetition, the existing employees of the Board filed another writ petition,being W.P.(C) No. 14729 of 2007, claiming pensionary benefits at parwith other organizations of the State and the State Governmentemployees.

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 A

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Ahaving retired long back and there being no provision for pension in theirservice conditions, no directions could be issued qua them for paymentof any pension. However, in view of the pendency of other writ petition,the High Court provided that the claim of the said petitioners will besubject to the result of the other writ petition filed by the employees whowere in service.B

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, withdirection to the appellant State to reconsider the matter and to take thedecision expeditiously. The High Court observed and directed as under:- C“3. No Counter Affidavit has been filed by the State. Be that as itmay, it appears that the State Government has decided to introducethe pension scheme but then refrained from doing so due tofinancial emergency. In view of the fact that six years have passedin the meanwhile and as pension is no more a bounty this Courtfeels that ends of justice and equity will be better served if OppositeDParty No. 1 is directed to reconsider the direction issued by thisCourt in the earlier Writ Petition and take a decision as expeditiouslyas possible, preferably within a period of six months, from thedate of communication of this order, and directs accordingly.”

6. Even after re-examination of the matter pursuant to theEdirections aforesaid, the Finance Department observed that the StateGovernment could not bear the liabilities in implementing the pensionscheme for the employees of the Board and this was communicated tothe Board by the Industries Department, by way of its letter dated14.12.2009, in the following terms: -F“In inviting a reference to your letter No. 2128 dated 12.05.2009on the above subject, I am directed to say that after detailexamination Finance Department have been pleased to observethat State Government cannot bear the liabilities in implementinga pension scheme for the OK & VI Board.”

G7. Dissatisfied with such a response, the writ petition leading tothis appeal, being W.P. (C) No. 8438 of 2010, was filed by respondentNo. 1 (an association of the employees of the Board) on 04.05.2010with the following prayers: - “Under the circumstances, it is humbly requested that the Hon’bleHCourt be pleased to issue a writ in the nature of mandamus or any other appropriate writ/writs quashing the letter dated 14.12.2009as per Annexure – 17.

And further be pleased to direct the Opposite Party No. 1 and 2to give previous sanction under Section 36(1) of the Khadi andVillage Industries Board Act, 1955 at an early date the OppositeParty No. 2 make regulation under Section 36(2) of the said Actintroducing pension scheme as per the Resolution of the OrissaKhadi and Village Industries Board dated 10.02.2009.

And further be pleased to direct the Opposite Parties to grantpension to the Employees of Orissa Khadi and Village IndustriesBoard from the date of their respective retirement.

Or pass appropriate direction(s) and order(s) as this Hon’ble Courtthinks fit and proper.”

7.1. A learned Single Judge of the High Court disposed of the writpetition so filed by respondent No. 1 by way of the impugned orderdated 25.10.2010, with directions to the State Government to amend theRegulations of 1960 and to take appropriate steps to incorporate thepension scheme for the Board’s employees at par with the StateGovernment employees. The learned Single Judge took note of theexchange of communications as above noticed and deduced that theState Government was desirous of extending the benefit to the Board’semployees but, ultimately the proposition was rejected only on the groundthat the State Government could not bear the liabilities of pension schemefor the Board. The learned Single Judge observed that if one benefitwas extended to the counterpart employees, the same could not be deniedto the others and in this regard, took note of pensionary benefits extendedto the employees of a couple of Universities as also the Social WelfareAdvisory Board; and found that not introducing pension scheme in favourof the employees of the Board on the ground of financial stringencies,where similarly situated organisations were enjoying the benefits, was amatter of sheer discrimination and as a result, violative of Articles 14and 16 of the Constitution of India. The learned Single Judge also observedthat the Board is a part and parcel of the State Government when allservice rules of the State Government employees were adopted and,therefore, it was a moral duty of the opposite parties to enact theprovisions for providing pensionary benefits to the employees of theBoard. A reference was also made to certain decisions relied upon onbehalf of the employees with regard to the pensionary benefits extended AB

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Ato the employees of different Khadi and Village Industries Boards ofother States and the learned Single Judge observed that consistently, itwas held by the Courts that financial hardship was not at all a criterionor ground for depriving the employees of the Board of service benefits,such as pension. With these observations and analysis, the learned SingleJudge proceeded to set aside the impugned communication datedB14.12.2009 and issued directions to the State Government in the followingterms: -

“17. As such the order dated 14.12.2009 vide Anenxure-12 is notsustainable and the same is quashed. In view of the aforesaidsubmission my considered opinion is that the Board employeesCare entitled to pension at par with the Government employees ofthe State and like other State Government organizations and forwhich the State Government should amend the Orissa Khadi andVillage Industries Board Regulation by extending the pensionarybenefit to the employees of the Orissa Khadi and Village IndustriesDand accordingly, the Opposite Party Nos. 1 and 2 are directed totake appropriate steps to incorporate pension scheme for theBoard’s employees at par with State Government employees. Theentire exercise shall be completed within a period of three monthsfrom the date of communication of this order.”

E8. In challenge to the order so passed by the learned Single Judge,the appellant State preferred an intra-court appeal, being W.A. No. 268of 2011, which was decided by the impugned order dated 20.12.2012.The Division Bench of the High Court observed that the direction of thelearned Single Judge was only advisory in nature and the same was inthe welfare of the employees of the Board; and the State GovernmentFshall honour the same while keeping in view the interest of the retiredemployees in terms of the mandate of Article 41 of the Directive Principlesof State Policy by discharging its constitutional obligations towards agedpersons who have served the State through the Board. The relevantparts of the impugned order dated 20.12.2012 could be usefullyGreproduced as under:

“10. After hearing learned counsel for the respective parties, wehave examined the matter at length. Perusal of the differentprovisions of the Act, 1955, Rule, 1956 and Regulation, 1960 framedthereunder by the Government leaves no manner of doubt thatHthe real control, authority of the Board rests with the Industries

Department of the Government, in other words the Board is underthe direct control of the State Government and is totally dependanton the Government for running its administration and in carryingout its activities including finance. Notwithstanding the fact thatthe Board is a statutory one and right from the commencement,the management, the administration, the appointment, framingregulations, carrying on with its activities, formulations of policyare all controlled by the State Government. Furthermore, theemployees of the Board in question are governed and controlledby Rules as are applicable to the State Government servants andthe provisions of the Odisha Service Code, which are applicableto the State Government servants, are also applicable to theemployees of the Board. The Travelling Allowance Rules andOdisha Leave Rules are also applicable to the employees of theBoard. The function of the Board is well defined in Section 17 ofthe Act, 1955. To discharge such functions, programmes havebeen drawn by the Board with the sanction of the State Governmentand therefore, the State Government has all pervasive controlover the Board and got power to frame Rules under Section 35 ofthe Act, 1955. It is true that the Regulation 52 of the Regulation,1960 provides that the employees of the Board are not entitled topensionary benefits but to overcome such a hurdle the Board haverecommended to the Government for amending Regulation 52 andthis Court also directed the Government to consider such demandof pension to the employees of the Board in OJC No.15344 of1998 and W.P. (C) No.14729 of 2007. But the State Governmenton the ground that it cannot take extra burden of providing pensionto the employees of the Board did not comply with the directionsof this Court. Admittedly, when all conditions of service of theState Government employees are applicable to the Boardemployees, refusal to extend the pensionary scheme to suchemployees of the Board, in our considered view, amounts todiscrimination and violative of Articles 14 and 16 of the Constitutionof India. The learned Single Judge has dealt with the importantaspect in detail in the impugned judgment. It was brought to ournotice that the Board on several occasions moved the StateGovernment through the Industries Department which is thecontrolling authority of the Board for extending pensionary benefitsto the employees of the Board, but the same did not find favour AB

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Awith the Government on the ground that the State Governmentcannot carry the extra financial burden. In our opinion, the viewtaken by the learned Single Judge with regard to making provisionfor providing pension to the employees of the Board is quite justifiedand calls for no interference, as the same is in conformity withthe decisions of Gujarat and Bombay High Courts in the casesBreferred to supra upon which learned Senior Counsel has rightlyplaced reliance. For all practical purposes, the Board is aninstrumentality of the State and therefore, it is covered under theArticle 12 of the Constitution of India and undoubtedly amenableto the writ jurisdiction of this Court. We are quite aware of ourClimitations under Article 226 of the Constitution. The direction ofthe learned Single Judge to Opposite Party Nos.1 and 2 to takeappropriate steps to incorporate the pension scheme for theemployees of the Board at par with the State Governmentemployees is only advisory in nature and the same is in the welfareof the employees of the Board. The State Government shall honourDsuch advisory note keeping in view that the interest of the retiredemployees shall be taken care of by the State Government asmandated under Article 41 of the directive principles of the Statepolicy by discharging its constitutional obligations towards agedpersons who have served the State through Board, as the StateEhas decentralized its power and functions through itsinstrumentalities such as the Board and other statutory Corporationfor good governance of the people under the Constitution of India.

11. In the result, after making a threadbare analysis and appraisalof factual and legal profile and proposition highlighted before us,Fwe find no merit in this writ appeal and the impugned order of thelearned Single Judge does not call for any interference in anymanner.

Accordingly, the writ appeal stands dismissed.”

9. The appellant State of Orissa is aggrieved by the orders soGpassed by the High Court. Before proceeding further, it may be noticedthat while entertaining the petition seeking leave to appeal in this matter,on 11.04.2014, this Court stayed the operation of the impugned judgmentand order of the High Court; and on 07.09.2015, while granting leave toappeal, the interim order dated 11.04.2014 was continued. The sameHposition has continued hitherto.

10. While questioning the impugned orders and the directions issuedthereunder, learned counsel for the appellant State, after an elaboratereference to the provisions of the Act of 1955 and the Regulations of1960 as also the exchange of communications, has submitted that theimpugned orders remain unsustainable in law and deserve to be set aside.

10.1. Learned counsel for the appellant has contended that nodirection contrary to Regulation 52 of the Regulations of 1960 couldhave been issued, particularly when the said Regulation 52 was neithera subject-matter of challenge before the High Court nor was declaredinvalid in any proceedings. Learned counsel has yet further submittedthat the directions of the learned Single Judge, as approved by the DivisionBench, without deliberating on Regulation 52 as also the other provisionsin the Regulations of 1960 including those contained in Regulations 53 to56, remain wholly unjustified and cannot be approved.

10.2. Learned counsel would submit that the prayers based oncertain communications exchanged between the Board and the StateGovernment could not have been countenanced at the instance of theemployees, who had joined the services with the Board while beingconscious of the stipulations in the Regulations and thereby, the conditionsof their service. Learned counsel has submitted that even when relyingon the resolutions adopted by the Board and the exchange ofcommunications, the learned Single Judge has failed to consider that atno point of time, the State ever acceded to the proposal of the Board;and certain suggestions made by some of the officers of the Governmentat different levels could not have been taken in aid to direct the appellantsto amend the said Regulation 52. Learned counsel has further submittedthat the Division Bench of the High Court, although consciously tooknote of the stipulations of Regulation 52 and observed that the directionsof the learned Single Judge were only advisory in nature but then,proceeded to make further observations, which are practically of issuingmandamus to the State Government to amend the Regulations. Thesedirections, according to the learned counsel, enter into the arena of policydecisions and legislative functions; and the High Court has not beenjustified in issuing the same.

10.3. Learned counsel has further submitted that the learned SingleJudge has referred to the pension granted to the employees of the StateSocial Advisory Board but, has failed to notice that 50% of those expenseswere borne by the Government of India. Further, the employees of the A

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AUniversity and the employees of the Board do not form a homogenousclass and cannot be treated at par, especially when the Regulations of1960 carry statutory force and Regulation 52 therein cannot be ignored.

10.4. Learned counsel for the appellant has also submitted thatany reference to the provisions contained in relation to different StateBBoards remain inapposite because any prescription by any other Statecannot be ipso facto imposed on the appellant State. According to thelearned counsel, contrary to the suggestions of the writ petitioners, thereare many other State Boards in the country who have not grantedpensionary benefits to their employees.

C10.5. It is also submitted that the writ petition by the retiredemployees of the Board seeking pension after having withdrawn theamount from their CPF/EPF account was liable to be dismissed andhence, the impugned orders deserve to be set aside.

11. Per contra, learned senior counsel for respondent No. 1 hasDduly supported the orders impugned and has made a variety ofsubmissions which could be summarised as follows:

11.1. Learned senior counsel has referred to the provisionscontained in the Act of 1955 and has submitted that respondent No. 2 isa statutory Board with the State Government exercising absolute controlEover its affairs including budgetary control; and by virtue of powersunder Section 36, the Regulations of 1960 were framed. In terms ofRegulation 40, the rules in the Orissa Service Code, Volume I applymutatis mutandis to the employees of the Board, meaning thereby thatthe employees of the Board were and are treated at par with StateGovernment employees but, Regulation 52, which provides for gratuityFand contributory provident fund benefits, unjustifiably denies pensionarybenefits to the employees of the Board.

11.2. Learned senior counsel for respondent No. 1 has referredto the aforementioned exchange of communications and has submittedthat in the given set of circumstances and in the wake of repeatedGrepresentations, the Board, in all earnestness, took up the cause for grantof pension to its employees and also requested the Government to bringabout appropriate amendments in view of the powers under Section 36so that Regulation 52 could be amended to include pension, particularlywhen Regulation 40 did equate the employees of the Board at par withthe State Government employees. Learned senior counsel has strenuouslyH

argued that the State Government, while in principle agreeing to grant ofpensionary benefits by the letter dated 26.10.1994, cited only a speciousplea of financial stringency for denying such pensionary benefits to theemployees of the Board which could not have been countenanced.According to the learned counsel, the writ petition filed by the employeeson the grounds of hostile discrimination and non-consideration ofrepresentation was rightly decided by the learned Single Judge withdirections to the State Government to amend the Regulations so as toextend the pensionary benefits to the employees of the Board at parwith the employees of the State Government. Further, the Division Benchof the High Court, while affirming the ultimate conclusion of the learnedSingle Judge, rightly observed that the State Government, while followingArticle 41 of the Directive Principles of State Policy, should honour theadvice given by the Single Judge, by incorporating the pension schemefor the employees of the Board.

11.3. Learned senior counsel has vehemently argued that financialstringency cannot be a reason for denying pensionary benefits to theemployees with reference to the decisions of this Court, including that inHaryana State Minor Irrigation Tubewells Corporation and Ors. v.G.S. Uppal and Ors.: (2008) 7 SCC 375, where, in paragraphs 33and 34, this Court held that the High Court was right in rejecting the pleaof the Corporation about inability to revise the pay scales of the employeeson account of the financial burden on the Corporation. The learnedcounsel has also referred to the decision of this Court in Punjab StateCooperative Agricultural Development Bank Ltd. v. Registrar,Cooperative Societies and Ors.:(2022) 4 SCC 363. It has furtherbeen submitted that other Departments of the State, as noticed by theHigh Court, have been granted pensionary benefits where the cadrestrength is much larger and hence, any reference to financial stringencyis nothing but a bogey argument of the State Government.

11.4. Learned senior counsel for respondent No. 1 has furtherargued, with reference to the decisions of this Court in D.S. Nakaraand Ors. v. Union of India:(1983) 1 SCC 305 and State of Jharkhandand Ors. v. Jitendra Kumar Srivastava and Anr.:(2013) 12 SCC210, that pension is neither a bounty nor is it a matter of grace, but is aclaimable right. Therefore, feeble reasons such as financial constraintscannot be considered good enough for not extending pensionary benefitsto retired employees, who are anyways treated at par with the State A

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AGovernment employees for other purposes. Rather, the denial of suchpensionary rights amounts to hostile discrimination between two sets ofemployees who are otherwise similarly circumstanced, and remainsimpermissible, as held by this Court in the case of Air India v. NergeshMeerza and Ors.:(1981) 4 SCC 335.

B11.5. It has also been submitted that there were 383 employees(past and present) eligible for pension with effect from 01.04.1976, outof which, between the year 1976 to the month of May, 2022, 140employees have died; at present, the existing posts are only 210 as theGovernment has abolished 173 posts; and the existing staff strength isonly 58 because no appointment has been made since the year 1996. ItChas, thus, been contended that while the State Government employees,who are huge in number, are entitled to pension, denial of the same to aminiscule number of the Board employees (who are otherwise treatedat par with State Government employees), on the ground of financialstringency does not behove well of a model employer like the State ofDOrissa, which is one of the few financially strong States within the Unionof India.

11.6. Learned senior counsel has further submitted that in similarcircumstances, a Division Bench of the Gujarat High Court, by thejudgment dated 23.07.2004 in the case of Gujarat State KhadiEGramodyog Board v. Gujarat State Khadi Gramodyog PensionersAssociation: 2004 SCC OnLine Guj 105, allowed the grant ofpensionary benefits to the employees of Gujarat State Khadi GramodyogBoard; and thesaid judgement was not interfered with by this Court inSLP (Civil) CC No.1321- 1482 of 2005, which also persuaded theHigh Court of Orissa to grant similar reliefs by the impugned orders andFin the given set of facts, the impugned orders would call for nointerference.

11.7. Further, it has been submitted on behalf of respondent No. 1that in very many cases, the employees who were drawing or contributing,or had withdrawn the CPF after retirement, were given the liberty ofGrefunding such amount with interest as was determined in this Court forgrant of pension; and with reference to the decision in the case ofUniversity of Delhi v. Shashi Kiran and Ors.: 2022 SCC OnLineSC 594, it has been contended that similar treatment may be provided inrelation to the employees of the Board for grant of pensionary benefits.

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11.8. In the last, learned senior counsel has made a fervent pleathat the case of the employees concerned may be sympatheticallyconsidered by this Court and for that matter, by using extraordinary powersunder Article 142 of the Constitution, to render complete justice, thisCourt may call upon the State Government to facilitate grant of pensionby recommending the amendment of Regulation 52 so that the employees,who have toiled on behalf of the Board representing the State Government,would have a secured retired life.

12. Learned counsel appearing for respondent No. 2, the Board,has duly supported the claim made by the employees for pensionarybenefits and has opposed this appeal with a few additional submissions.

12.1. Learned counsel for the Board would submit that promotionof khadi and cottage industries being the constitutional obligation of theState in terms of Article 43 of the Constitution of India, the appellantState has enacted the Act of 1955 and has established the Board. Thisbeing essentially State endeavour, the parity claimed by the employeesof the Board with their counterparts in State services could not havebeen denied.

12.2. It has also been submitted that there are two type ofemployees in the Board, one being those who have been recruited bythe Board and the others being those who come on deputation to theBoard for a particular period of time. While the deputationists who comefrom State Government are entitled to pension and pension relatedbenefits, the employees who are recruited by the Board have beendeprived of the same even though essentially, they are discharging theState functions, as enshrined in Article 43 of the Constitution of India.

12.3. It has further been submitted that not only the deputationistsbut even the employees of the Board are governed by the rules applicableto the State Government employees like Service Code, Financial Rules,Record Manual, Pay Scale Rules, Leave Rules, Reservation Rules,Conduct and Discipline Rules etc. Thus, when all other rules applicableto the State Government employees are applicable to the employees ofthe Board, it is rather unjust and violative of the principles of fairnessenvisaged by Article 14 to deny pension to such employees in terms ofthe Orissa Government Pension Rules.

12.4. According to the learned counsel, the High Court has rightlydrawn analogy from Khadi Boards of different States as also from other A

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AOrissa Government institutions, where the employees are entitled topension; and the direction for granting pension to the employees of theBoard is neither unjust nor unreasonable nor unfair.

12.5. Learned counsel for the Board has again referred to thestatistics to submit that only a small number of employees are to beBbenefitted by grant of pension in the present case and that the Boardemployees are essentially appointed in Group B and Group C posts.Thus, the pension in their relation would not be of an astronomical figure;and, the contention of alibi based on lack of financial resources deservesto be rejected.

C12.6. As regards the question of challenge to the provision byvirtue of which pension has been denied to the employees of the Board,it has been argued that the employees of the Board have been fightingfor grant of pension for a long period of time and the instant litigation isnot the first round of litigation. The very fact of demanding pension onthe part of these employees in itself is a direct challenge to the provisionDdenying pension to them; and in the backdrop of the present case, itcannot be construed that the employees of the Orissa Khadi Board havenot raised a direct grievance against the provision denying pension tothem.

12.7. Learned counsel for the Board has reiterated the plea thatEin this matter of grant of pension to employees who are direct Statefunctionaries in terms of Article 43 of the Constitution of India, a broadview is required to be taken and the grievance cannot be stiffened on anarrow technicality. It has, thus, been submitted that in the broader interestof justice and for doing complete justice, this Court could invoke ArticleF142 of the Constitution of India to maintain the direction for grant ofpension to the employees concerned.13. We have given anxious considerations to the rival submissionsand have examined the record with reference to the law applicable.

14. It may be observed in the first place that the principlesGenunciated in the decisions cited by the learned counsel for respondents,that pension is neither a charity nor a bounty nor a gratuitous paymentbut, is earned for past services rendered; and that non-availability offinancial resources cannot be a defence by the Government or any of itsagencies or instrumentalities in taking away vested right accrued to theemployees, are neither of any doubt nor of any dispute. However, whileH

adverting to the question about applicability of these principles to thecase at hand, we may examine the relevant observations and expositionsin the cited decisions as infra.

14.1. In D.S. Nakara (supra), this Court reaffirmed the principlesthat pension is not a bounty or a matter of grace depending on the sweetwill of the employer as also that pension is not an ex gratia payment andis a social welfare measure rendering socio-economic justice. In thereferred passages, this Court observed and exposited as under: -

“20. The antequated notion of pension being a bounty, a gratuitouspayment depending upon the sweet will or grace of the employernot claimable as a right and, therefore, no right to pension can beenforced through Court has been swept under the carpet by thedecision of the Constitution Bench in Deokinandan Prasad v.State of Bihar [(1971) 2 SCC 330] wherein this Courtauthoritatively ruled that pension is a right and the payment of itdoes not depend upon the discretion of the Government but isgoverned by the rules and a government servant coming withinthose rules is entitled to claim pension. It was further held that thegrant of pension does not depend upon anyone’s discretion. It isonly for the purpose of quantifying the amount having regard toservice and other allied matters that it may be necessary for theauthority to pass an order to that effect but the right to receivepension flows to the officer not because of any such order but byvirtue of the rules. This view was reaffirmed in State of Punjabv. Iqbal Singh. [(1976) 2 SCC 1]

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30. The discernible purpose thus underlying pension scheme or astatute introducing the pension scheme must inform interpretativeprocess and accordingly it should receive a liberal constructionand the courts may not so interpret such statute as to render theminane (see American Jurisprudence, 2d, 881).

31. From the discussion three things emerge: (i) that pension isneither a bounty nor a matter of grace depending upon the sweetwill of the employer and that it creates a vested right subject to1972 Rules which are statutory in character because they areenacted in exercise of powers conferred by the proviso to Article309 and clause (5) of Article 148 of the Constitution; (ii) that the A

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Apension is not an ex gratia payment but it is a payment for the pastservice rendered; and (iii) it is a social welfare measure renderingsocio-economic justice to those who in the hey-day of their lifeceaselessly toiled for the employer on an assurance that in theirold age they would not be left in lurch. It must also be noticed thatthe quantum of pension is a certain percentage correlated to theBaverage emoluments drawn during last three years of servicereduced to 10 months under liberalised pension scheme. Itspayment is dependent upon an additional condition of impeccablebehaviour even subsequent to retirement, that is, since the cessationof the contract of service and that it can be reduced or withdrawnCas a disciplinary measure.”

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14.2. In the case of Jitendra Kumar Srivastava (supra), thisCourt reaffirmed that pension is not a bounty but is a hard earned benefitwhich accrues to an employee and is in the nature of property, whichcannot be taken away without the due process of law. This CourtDpronounced against denial of right of the petitioner to receive pensionand, with reference to the Constitution Bench decision in DeokinandanPrasad v. State of Bihar: (1971) 2 SCC 330 as also with reference toD.S. Nakara (supra), said as under:- “8. It is an accepted position that gratuity and pension are notEbounties. An employee earns these benefits by dint of his long,continuous, faithful and unblemished service. Conceptually it is solucidly described in D.S. Nakara v. Union of India [(1983) 1SCC 305…..

……It is thus a hard earned benefit which accrues to an employeeFand is in the nature of “property”. This right to property cannot betaken away without the due process of law as per the provisionsof Article 300-A of the Constitution of India.”

14.3. In the case of Haryana State Minor Irrigation TubewellsCorporation (supra), this Court disapproved the denial of revised payGscale to the employees on the specious grounds of financial constraintsand said as under: - “33. The plea of the appellants that the Corporation is runningunder losses and it cannot meet the financial burden on accountof revision of scales of pay has been rejected by the High Courtand, in our view, rightly so. Whatever may be the factual position,H

there appears to be no basis for the action of the appellants indenying the claim of revision of pay scales to the respondents. Ifthe Government feels that the Corporation is running into losses,measures of economy, avoidance of frequent writing off of dues,reduction of posts or repatriating deputationists may provide thepossible solution to the problem. Be that as it may, such a contentionmay not be available to the appellants in the light of the principleenunciated by this Court in M.M.R. Khan v. Union of India [1990Supp SCC 191] and Indian Overseas Bank v. Staff CanteenWorkers’ Union [(2000) 4 SCC 245] . However, so long as theposts do exist and are manned, there appears to be no justificationfor granting the respondents a scale of pay lower than thatsanctioned for those employees who are brought on deputation.In fact, the sequence of events discussed above clearly showsthat the employees of the Corporation have been treated on a parwith those in Government at the time of revision of scales of payon every occasion.

34. It is an admitted position that the scales of pay were initiallyrevised w.e.f. 1-4-1979 and thereafter on 1-1-1986. On both theseoccasions, the pay scales of the employees of the Corporationwere treated and equated on a par with those in Government. It isthus an established fact that both were similarly situated.Thereafter, nothing appears to have happened which may justifythe differential treatment. Thus, the Corporation cannot put forthfinancial loss as a ground only with regard to a limited category ofemployees. It cannot be said that the Corporation is financiallysound insofar as granting of revised pay scales to other employeesis concerned, but finds financial constraints only when it comes todealing with the respondents who are similarly placed in the samecategory….”

14.4. In the case of Punjab State Cooperative AgriculturalDevelopment Bank Ltd. (supra), this Court held that non-availability offinancial resources could not be a defence by an agency or instrumentalityof the Government in taking away vested right accrued to the employees.This Court said as follows: - “57. In our view, non-availability of financial resources would notbe a defence available to the appellant Bank in taking away thevested rights accrued to the employees that too when it is for AB

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Atheir socio-economic security. It is an assurance that in their oldage, their periodical payment towards pension shall remain assured.The pension which is being paid to them is not a bounty and it isfor the appellant to divert the resources from where the fundscan be made available to fulfil the rights of the employees inprotecting the vested rights accrued in their favour.”B15. A close look at the decisions aforesaid makes it clear that theprinciples therein, though hardly requiring reiteration, are not of anyapplication to the present case.

15.1. It is evident that in all such cases where this Court frownedCupon denial of pension, the right to receive the same was found flowingfrom the applicable rules and the service conditions. The said decisionscannot be weighed to mean that pension is required to be granted as amatter of right even if prescription to the contrary is found in the rulesand/or service conditions.

D15.2. In the present case, it remains indisputable that theRegulations of 1960 governing the service conditions of the employeesof the Board specifically contain the stipulation in Regulation 52 thatthey shall not be entitled to pension. The cited decisions on behalf of therespondents cannot be read as overriding the said Regulation 52.

E15.3. So far as the questions relating to financial constraints areconcerned, true it is that in the communications exchanged between theBoard and the Government as also in the decisions communicated,financial constraints had also been indicated on behalf of the StateGovernment as being one of the reasons for not acceding to the requestfor retrospective amendment of Regulation 52. The question is as toFwhether the Government could not have at all referred to the financialconstraints as one of the reasons for not acceding to such a prayer foramendment.

15.4. In our view, a reference to financial constraints by theGovernment while denying the prayer for retrospective amendment ofGRegulation 52 cannot be disapproved with reference to the decisionsaforesaid. A matter of denial of the revised pay scale to the employeeswho were otherwise treated at par with those with the Governmentemployees at the time of revision of pay scale (as in the Haryana case,supra); or taking away vested rights accrued to the employees (as in thePunjab case, supra), cannot be imported to the present case where theH

Government has not found itself agreeable to the proposed alteration ofthe service conditions of the Board’s employees with retrospective effect,i.e., with effect from 01.04.1976. It has not been a case of denial of anyvested or accrued right of the employees of the Board.

16. In the given set of facts and circumstances, the decision ofthis Court in the case of Air India (supra), reaffirming the principlesagainst hostile discrimination is also of no assistance to the respondentsbecause what Article 14 forbids is hostile discrimination but notreasonable classification. In the referred passage in the case of AirIndia (supra), this Court re-emphasised the principles against hostilediscrimination but, at the same time, underscored the principles ofreasonable classification while observing as under:

“39….

“(1)…..

(2) Article 14 forbids hostile discrimination but not reasonableclassification. Thus, where persons belonging to a particularclass in view of their special attributes, qualities, mode ofrecruitment and the like, are differently treated in public interestto advance and boost members belonging to backward classes,such a classification would not amount to discrimination havinga close nexus with the objects sought to be achieved so that insuch cases Article 14 will be completely out of the way.

(3) Article 14 certainly applies where equals are treateddifferently without any reasonable basis.

(4) Where equals and unequals are treated differently, Article14 would have no application.

(5) Even if there be one class of service having severalcategories with different attributes and incidents, such acategory becomes a separate class by itself and no differenceor discrimination between such category and the generalmembers of the other class would amount to any discriminationor to denial of equality of opportunity.

(6) In order to judge whether a separate category has beencarved out of a class of service, the following circumstanceshave generally to be examined:

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(a) the nature, the mode and the manner of recruitment of A

a particular category from the very start, (b) the classifications of the particular category,

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(d) the nature and character of the posts and promotionalavenues, (e) the special attributes that the particular category possesswhich are not to be found in other classes, and the like.””

C16.1. The observations in the impugned judgment and order dated20.12.2012 as also the contentions urged on behalf of the respondents,seeking to put the employees of the Board at par with the employees ofthe State Government for all purposes, carry their own shortcomings.Even if Orissa Khadi and Village Industries Board has been establishedunder an enactment of the State and for several relevant factors, it couldDbe considered to be an instrumentality of the State, its distinctcharacteristic of being a Board established with particular aim andobjective cannot be ignored altogether. The Board being a body corporate,incorporated by its name, has been established to carry out the purposesof the Act of 1955 and not beyond. In view of its independent corporateEentity and existence, the provisions have been made in the Act of 1955for making regulations by the Board consistent with the Act of 1955 andrules 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 BoardF(vide Section 36 of the Act). The Regulations of 1960 were framedaccordingly. Therein, even while otherwise applying a substantial part ofthe Rules in the Orissa Service Code mutatis mutandis to the employeesof the Board, Regulation 40 itself starts with a clause of exception, makingthat provision subject to the other provisions of the Regulations. Then, inRegulation 52 it has specifically been provided that the employees of theGBoard shall not be entitled to any pension except gratuity and CPFbenefits; and further provisions have been made for the purpose ofsubscription/contribution to CPF. Thus, even when the State hasestablished the Board to carry out its obligations in terms of Article 43 ofthe Constitution of India, it cannot follow as a corollary that the employeesof this body corporate have to be treated as State Government employeesH

in all respects. Such a corollary proposition would practically amount tomerging of the Board with the State Government; rather making it asone of the Departments of the Government. This, in the face of existingstatute, cannot be done. That being the position and when Regulations inquestion specifically make a distinct provision as regards retiral benefits,the same cannot be ignored by any stretch of arguments.

16.1.1. Putting it differently, even if development of khadi andcottage industry is a Directive Principle of State Policy, it does not followas a corollary that if the State establishes a Board or any organisation tocarry out the obligations under such Directive Principles, it cannot makeseparate arrangements as regards the service conditions of the employeesof such a Board or organisation. Significantly, Regulation 40 of theRegulations of 1960 starts with an exception clause and while generalconditions of service of the Board’s employees have been provided interms 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 beignored.

16.2. In regard to the submissions made on behalf of the Statethat the aforesaid existing Regulation 52 had neither been challengednor declared invalid, it has been suggested on behalf of the respondentsthat when the employees had regularly been raising the demand forpension 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 thanone reason. First, that merely making a prayer contrary to the existingprovision in the statute does not carry in itself a challenge to the provision.Secondly, for challenging a particular provision, specific case is requiredto be made out of either want of statutory powers or of violation of anyconstitutional mandate. Neither any such ground of challenge had beenurged nor could be assumed. Thirdly, it is ex facie evident that all throughthe prayer had been for amendment of Regulation 52 and not of declaringthe same in its existing frame as being invalid. A prayer for amendmentof the Regulation cannot be equated with a prayer to declare the sameas invalid. As noticed hereinbefore, the State Government’s denial ofthe proposed alteration was essentially based on its disagreement toalter the service conditions with effect from 01.04.1976. Viewed fromany angle, invocation of the principles forbidding hostile discrimination A

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Aremains baseless and the contentions urged on that basis are required tobe rejected.

17. On behalf of respondents, strong reliance has also been placedon the decision of the Gujarat High Court in the case of Gujarat StateKhadi Gramodyog Board (supra), while pointing out that this Court didBnot interfere with the same and rejected the petition seeking leave toappeal. It has been argued on the basis of this decision that the pensionrights having been allowed to the employees of the similar Board in theState of Gujarat, there is every reason to endorse the same treatmentfor the employees of the respondent Board. The submissions do nottake the case of the employees of the respondent Board any further.CThis is for the simple but pertinent reason flowing from a markeddifference of the service conditions. The High Court noticed in paragraph14 of the referred judgment that pension scheme in relation to employeesof that Board was made applicable with effect from 12.11.1973; andthose who were members of the contributory provident fund were alsoDmade eligible for the pension scheme. In paragraph 14, the High Courtnoticed, inter alia, as under: - “14. For all practical purposes, respondent no. 1-Board is aninstrumentality of the State and, therefore, it is covered underArticle 12 and undoubtedly amenable to the writ jurisdiction ofEthis Court. Since 1973 in the set-up of respondent no. 1, pensionscheme was introduced and was made applicable from 12.11.1973,and who were the members of the Contributory Provident Fund(CPF), they were made eligible for the pension scheme. It is,also, corroborated and supported and reinforced by the Resolutiondated 06.11.87. It is, therefore, clear that the petitioners, who wereFemployees of the respondent No. 1-Board, and who have retiredafter 1.1.86 were also entitled to pensionary benefits. Therespondent No. 1-Board, undoubtedly, has been paying pension tothe employees, those who have retired from service of the Board,got pensionary benefits but not in terms of the recommendationsGmade by the 5th Pay Commission report until 31.12.1995. As aresult of which, the pension which was being paid to the petitioners,were due and payable, prior to the recommendations of the 5thPay Commission and it continued. However, the effect of therecommendations made by the 5th Pay Commission report,accepted by the State and despite that the respondent no. 2-State, H

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as well as, the respondent No. 1-Board, have not been given. Inother words, the pensionary benefits which were available underthe pension scheme, which were not revised in terms of the 5thPay Commission report, though accepted and adopted by therespondents authorities, have not been paid so far.”

17.1. Thus, in the said case, pension scheme had already beenintroduced and was made applicable from 12.11.1973; and the employeeswho were the members of CPF, were made eligible for the pensionscheme. In fact, the question therein was as to whether the employeesof the Gujarat State Khadi Gramodyog Board, who had retired prior to01.01.1996, were entitled to the payment of pension according to therevised pay scale as per the recommendations of the 5[th] Pay CommissionReport. The observations in the said decision cannot be applied to issuea writ of mandamus to the appellant State to amend the Regulations andto change the service conditions.

18. In view of the foregoing, it follows that the cited decisions areof no assistance to the claim of the respondents.

19. The other factor indicated on behalf of the respondents that asmall number of affected employees may not bring about much financialburden on the State hardly make out a case for issuing a mandamus tothe State to amend the Regulations. Whether to amend the Regulationsor not, in the scheme of Act of 1955 as also the Regulations of 1960, isrequired to be left to the State and for that matter, the number ofemployees to be affected/benefitted is not of much relevance. In thisregard too, as noticed hereinbefore, apparently the objections of the Statewere against retrospective amendment of the Regulations and therebyallowing pension with effect from 01.04.1976. Moreover, the indicationsin the referred communications that such a prescription is likely to bringabout a huge amount of administrative trouble to the Government cannotbe dubbed as mere pretence or a bogus alibi. We would hasten to observethat irrespective of these observations and irrespective of the result ofthis litigation, nothing would prevent the State Government to carry outthe amendment in the form suggested or in any other modified form, ifthe State Government would be willing to do so. The only question in thepresent appeal is as to whether a mandamus could have been issued tothe State to carry out amendment. As noticed, the answer could only bein the negative.

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A20. The other submission made on behalf of the respondents asregards refund of amount with interest in case of grant of pensionaryrights does not make out any case in favour of the employees of theBoard. As observed hereinabove, writ of mandamus cannot be issued tothe appellant State to carry out amendments as desired by the respondent.Hence, the question of refund of the amount received by the employeesBconcerned does not arise in this case.

A

21. For what has been discussed hereinabove, we are clearly ofthe view that the direction issued in the impugned order dated 25.10.2010by the learned Single Judge could not have been approved. The DivisionBench of the High Court was conscious of the fact that such a mandamusCcannot be issued so as to direct the State Government to carry out aparticular amendment and, therefore, in the impugned judgment and orderdated 20.12.2012, termed such a direction as being “advisory” in nature.However, the Division Bench went miles ahead in the very nextproposition while observing that the State Government “shall” carry outDthis direction. Converting an advice to the State Government into amandate in this manner, with great respect, is neither permissible norcountenanced by law.

22. Learned counsel for the respondents, in all fairness, have madea plea in the last that this Court may exercise the powers under ArticleE142 of the Constitution of India to fill the gaps and to provide for pensionarybenefits to the employees of the Board so as to do complete justice. Inthis regard too, even while respecting the endeavour, we could onlyobserve that under Article 142 of the Constitution of India, this Courtcannot issue directions in violation of the statutory provisions; andsympathy or sentiment, by itself, cannot be a ground for passing an orderFbeyond and contrary to the legal rights. In the face of existing Regulation52, we find it difficult to accede to the prayer made by the learnedcounsel for the respondents. In this regard, we could only reiterate thatnothing contained in this judgment shall otherwise be of any impediment,if the State Government would be willing to carry out any amendment toGthe Regulations of 1960.

23. Subject to the observations foregoing, this appeal succeedsand is allowed; the impugned orders are set aside; and the writ petitionfiled by the respondent No. 1 is dismissed. No costs.

HAnkit Gyan

(Assisted by : Vinayak and Aarsh Choudhary, LCRAs)