Supreme Court Upholds Cut-off Date for Triple Benefit Scheme in Bihar Deficit Colleges: Md. Ali Imam & Ors. vs. The State of Bihar (2020) INSC 92 (04 February 2020)

Date of the Judgment: 04 February 2020
Citation: (2020) INSC 92
Judges: Sanjay Kishan Kaul, J. and K.M. Joseph, J.
Can a government set a cut-off date for extending benefits to employees, even if it creates a distinction between those who retired before and after that date? The Supreme Court of India recently addressed this question in a case concerning the implementation of the Triple Benefit Scheme for employees of deficit grant minority colleges in Bihar. The Court examined whether the cut-off date of 31.08.2010 was arbitrary and discriminatory. The judgment was delivered by a two-judge bench comprising Justice Sanjay Kishan Kaul and Justice K.M. Joseph.

Case Background

The case revolves around the implementation of the Triple Benefit Scheme, a pension-cum-gratuity scheme, for teaching and non-teaching employees of deficit grant minority colleges in Bihar. The Government of Bihar initially introduced the scheme on 05.11.1980, effective from 01.04.1978, through resolution No. 1500. The scheme was later approved by the Chancellor on 18.11.1980, with amendments made on 25.11.1982.

In 1998, a representation was made to extend the scheme to employees of deficit colleges. After some communications and inquiries, the government finally extended the Triple Benefit Scheme to deficit colleges on 18.01.2011. However, this extension included a clause stating that the amendment would not apply to teaching and non-teaching staff who had retired before the amendment.

An amendment on 15.01.2014 introduced a cut-off date of 31.08.2010, making the scheme applicable to those in service on that date. The rationale behind this cut-off was that the Cabinet had made the decision on that date. This decision resulted in a distinction between employees who retired before 31.08.2010 and those who retired after, with the former being excluded from the benefits of the amended scheme. The appellants, retired employees who were excluded from the scheme, challenged this decision, arguing that it was discriminatory and arbitrary.

Timeline

Course of Proceedings

The appellants, aggrieved by the cut-off date, filed a writ petition before the Patna High Court. The Division Bench of the Patna High Court dismissed the writ petition on 08.11.2017, upholding the validity of the cut-off date. The High Court reasoned that the cut-off date was not arbitrary and was based on the date of the Cabinet decision to grant the Triple Benefit Scheme to deficit grant colleges. Subsequently, the appellants appealed to the Supreme Court of India.

Legal Framework

The core legal issue revolves around the government’s power to set cut-off dates for the implementation of beneficial schemes and whether such cut-off dates can result in discrimination. The Triple Benefit Scheme was introduced by the Government of Bihar through resolution No. 1500, dated 05.11.1980, which was later extended to deficit grant minority colleges.

The amendment to the scheme, which introduced the cut-off date of 31.08.2010, is central to the dispute. The relevant clauses of the resolution extending the scheme to deficit colleges, which have been assailed, are as follows:

“(i) xxx xxx
(ii) This amendment statute will not be applicable to such teaching and non-teaching staffs who retired before the amendment of statute.
(ii) xxx xxx
(iii) xxx xxx
(iv) xxx xxx
(v) xxx xxx
(vi) This scheme will be applicable from the date of amendment in statute.”

The Supreme Court considered the government’s power to revise salaries and terminal benefits, emphasizing that such power includes the ability to set cut-off dates, provided they are reasonable.

Arguments

Appellants’ Arguments:

• The appellants argued that the cut-off date of 31.08.2010 was discriminatory and violated the principles of law laid down by the Supreme Court in D.S. Nakara & Ors. v. Union of India [(1983) 1 SCC 305].
• They contended that the distinction between employees who retired before and after the cut-off date was arbitrary and unreasonable, depriving those who retired before the date of the benefits of the amended scheme.
• The appellants argued that all retired employees of deficit colleges should be treated equally, irrespective of their retirement date, for the purpose of granting the Triple Benefit Scheme.

Respondents’ Arguments:

• The respondents argued that the State has the power to change the conditions of service unilaterally, and terminal benefits and pensionary benefits constitute conditions of service. They cited State of West Bengal & Ors. v. Ratan Behari Dey & Ors. [(1993) 4 SCC 625] in support of this argument.
• They submitted that the government has the power to revise salaries and pay scales, as well as terminal benefits, and can specify a reasonable cut-off date for such revisions.
• The respondents contended that the cut-off date was not arbitrary but was based on the date of the Cabinet decision to grant the Triple Benefit Scheme to deficit grant colleges.
• They also highlighted the financial implications of extending the scheme and argued that the government has the right to consider these implications when deciding the extent to which benefits can be extended.

The innovativeness of the argument by the appellants was that the cut-off date was discriminatory and violated the principles of law laid down in D.S. Nakara & Ors. v. Union of India [(1983) 1 SCC 305], which is a landmark case on pension benefits. The respondents innovatively argued that the government has the power to change conditions of service and the cut-off date was based on the date of the Cabinet decision, and they cited State of West Bengal & Ors. v. Ratan Behari Dey & Ors. [(1993) 4 SCC 625] to support their argument.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame specific issues in a separate section. However, the core issue before the Court was whether the cut-off date of 31.08.2010 for the applicability of the amended Triple Benefit Scheme was arbitrary and discriminatory, thus violating the rights of those who retired before that date.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• D.S. Nakara & Ors. v. Union of India [(1983) 1 SCC 305]: The Court distinguished this case, stating that much water had flowed since that judgment and that the government has the power to set cut-off dates.
• State of West Bengal & Ors. v. Ratan Behari Dey & Ors. [(1993) 4 SCC 625]: The Court relied on this case to support the government’s power to change conditions of service and set cut-off dates for benefits.
• Government of Andhra Pradesh & Ors. v. N. Subbarayudu & Ors [(2008) 14 SCC 702]: The Court relied on this case to state that if no reason is forthcoming from the executive for fixation of a particular date, it should not be interfered with by the Court unless the cut-off date leads to some blatantly capricious or outrageous result.

The Court dismissed the appeals, upholding the decision of the Patna High Court. The Court found no fault with the reasoning of the High Court, which had held that the cut-off date was not arbitrary and was based on the date of the Cabinet decision. The Supreme Court stated that the State Government had taken beneficial steps by extending the scheme, and it was not liable to extend the benefits across the board without considering the financial implications.

The Court emphasized that the amendments could have been implemented prospectively but were given part-retrospective effect based on the rationale of the date of the Cabinet decision. It also noted that the government has some leeway in fixing cut-off dates, and the Court should not interfere unless the cut-off date is blatantly capricious or outrageous.

What weighed in the mind of the Court?

The Court’s decision was primarily influenced by the following factors:

• Government’s Power to Set Cut-off Dates: The Court recognized the State’s power to change conditions of service and set cut-off dates for the implementation of beneficial schemes.
• Rationale for the Cut-off Date: The Court accepted that the cut-off date was not arbitrary but was based on the date of the Cabinet decision, which provided a rational basis for the distinction.
• Financial Implications: The Court acknowledged the government’s need to consider financial implications when extending benefits and the fact that the scheme was extended to affiliated colleges, which are not constituent units of the universities.
• Judicial Restraint: The Court emphasized the need for judicial restraint in interfering with the government’s decision on cut-off dates unless they are blatantly capricious or outrageous.
• Beneficial Steps Taken by the State: The Court noted that the State had taken beneficial steps by extending the scheme and giving it part-retrospective effect, which was not an obligation, and it was not liable to extend the benefits across the board without considering the financial implications.

The Court’s reasoning was primarily based on legal principles and precedents, with a significant emphasis on the government’s power to set cut-off dates and the need for judicial restraint. The factual aspects of the case, such as the date of the Cabinet decision and the financial implications, also played a role in the Court’s decision, but the legal considerations were more dominant.

The Court considered alternative interpretations, such as extending the benefits to all retired employees irrespective of the cut-off date. However, the Court rejected this interpretation, stating that the government has the power to set cut-off dates, and the date was not arbitrary but was based on the Cabinet decision. The Court emphasized that the government has the right to consider financial implications when deciding the extent of benefits.

The Court’s decision was clear and accessible, stating that the cut-off date was not arbitrary and was based on the date of the Cabinet decision. The Court emphasized that the government has the power to set cut-off dates for the implementation of beneficial schemes, taking into account financial implications and other considerations.

The reasons for the decision were:

• The government has the power to set cut-off dates for the implementation of beneficial schemes.
• The cut-off date was based on the date of the Cabinet decision and was not arbitrary.
• The government has the right to consider financial implications when deciding the extent of benefits.
• The Court should not interfere with the government’s decision on cut-off dates unless they are blatantly capricious or outrageous.
• The State had taken beneficial steps by extending the scheme and giving it part-retrospective effect, which was not an obligation.

The Court quoted the following from the judgment:

“The amendments could have, in fact, been implemented prospectively, but were given part-retrospective effect based on the rationale of the date of the Cabinet decision.”

“Apart from this, there may be other considerations in the mind of the Executive authority while fixing a particular date i.e. economic conditions, financial constraints, administrative and other circumstances, and if no reason is forthcoming from the executive for fixation of a particular date, it should not be interfered with by the Court unless the cut-off date leads to some blatantly capricious or outrageous result.”

“Even if no particular reasons are given for the cut-off date by the Government, the choice of cut-off date cannot be held to be arbitrary (unless it is shown to be totally capricious or whimsical).”

There was no minority opinion in this judgment. The decision was unanimous, with both Justice Sanjay Kishan Kaul and Justice K.M. Joseph agreeing on the dismissal of the appeals.

The Court’s reasoning was based on the legal principle that the government has the power to set cut-off dates for beneficial schemes, and the cut-off date was not arbitrary but was based on the date of the Cabinet decision. The Court applied this principle to the facts of the case, considering the financial implications and the nature of the colleges involved. The Court’s analysis was thorough and comprehensive, considering all the relevant factors and legal precedents.

The potential implications for future cases are that the judgment reinforces the government’s power to set cut-off dates for beneficial schemes, provided they are not arbitrary and are based on a rational basis. This decision could impact future cases involving similar issues, where the government sets cut-off dates for the implementation of beneficial schemes.

No new doctrines or legal principles were introduced in this judgment. The Court relied on existing legal principles and precedents to reach its decision. The Court’s decision was based on the principle that the government has the power to set cut-off dates for beneficial schemes, and the cut-off date was not arbitrary but was based on the date of the Cabinet decision.

Key Takeaways

• The government has the power to set cut-off dates for the implementation of beneficial schemes, provided they are not arbitrary and are based on a rational basis.
• Financial implications are a valid consideration for the government when deciding the extent to which benefits can be extended.
• Courts should exercise judicial restraint in interfering with the government’s decision on cut-off dates unless they are blatantly capricious or outrageous.
• This decision reinforces the government’s power to set cut-off dates for beneficial schemes, which could impact future cases involving similar issues.

Directions

No specific directions were given by the Supreme Court in this judgment. The appeals were dismissed, and the parties were left to bear their own costs.

Development of Law

The ratio decidendi of this case is that the government has the power to set cut-off dates for the implementation of beneficial schemes, provided they are not arbitrary and are based on a rational basis. The Court reinforced the principle that the government has the right to consider financial implications when deciding the extent of benefits. This decision does not change the previous position of law but reinforces the existing legal principles.

Conclusion

The Supreme Court dismissed the appeals, upholding the cut-off date of 31.08.2010 for the applicability of the amended Triple Benefit Scheme for retired employees of deficit grant minority colleges in Bihar. The Court found that the cut-off date was not arbitrary but was based on the date of the Cabinet decision and that the government has the power to set cut-off dates for beneficial schemes, taking into account financial implications and other considerations. The judgment reinforces the government’s power to set cut-off dates for beneficial schemes, provided they are not arbitrary and are based on a rational basis.