Scrapping of 1999 pension scheme just: Apex court

R Sedhuraman

New Delhi, September 28 

The Supreme Court today upheld the validity of Himachal Pradesh scrapping the 1999 pension scheme in December 2004 for employees of the state-run corporations.

A Bench comprising Justices Jagdish Singh Khehar and C Nagappan held that employees of corporate bodies could not demand as a matter of right to be treated on a par with government employees. 

“Corporate bodies are independent entities and their employees cannot claim parity with employees of the state government. The government has a master-servant relationship with civil servants of the state, whilst it has no such direct or indirect nexus with the employees of the corporate bodies,” Justice Khehar, who authored the verdict for the Bench, ruled.

 The government had the right to extend different pay-scales and retiral benefits to the civil servants and refuse to offer the same benefits to employees of corporate bodies. The state government would be well within its right to deny similar benefits to employees of the corporate bodies, which were financially unviable, or if their activities had resulted in financial losses

“The claim for parity with the government employees is therefore wholly misconceived. It is, therefore, not possible for us to accept the contention advanced on behalf of the respondent-employees, that the action of the state government was discriminatory. Another reason for us to conclude that the action of the state government was not discriminatory is that despite having revoked ‘the 1999 scheme’ through the notification dated 2.12.2004, the state government had permitted such of the government-owned corporations which were not suffering any losses, to promote their own pension scheme.”

It was not possible for the state government to take upon itself the financial burden of the 1999 scheme. As on March 31, 2014, the cumulative losses of government-owned corporations stood at Rs 2,819.86 crore, the apex court pointed out.

“It is also not possible for us to accept that any court has the jurisdiction to fasten a monetary liability on the state government...budgetary allocations, are a matter of policy decisions. The state government while promoting the 1999 scheme felt that the same would be self-financing.”

It never intended to allocate financial resources out of state funds to run the pension scheme. The state government, in the instant view of the matter, could not have been burdened with the liability, which it never contemplated, in the first place, the apex court ruled.

The government had come to the SC challenging the High Court directive.