Supreme Court Upholds Termination of LARSGESS Scheme: Chief Personnel Officer vs. A Nishanth George (2022)

Date of the Judgment: 25 January 2022

Citation: 2022 INSC 66

Judges: Dr. Dhananjaya Y Chandrachud, J. and A.S. Bopanna, J.

Can a government scheme that allows for the appointment of employees’ relatives be valid, especially when it bypasses standard recruitment procedures? The Supreme Court of India addressed this critical question in a case concerning the Railways’ LARSGESS scheme. This scheme allowed railway employees in safety categories to retire early, with a promise of employment for their wards. The core issue was whether the termination of this scheme was justified and whether pending claims could still be honored.

The Supreme Court bench, comprising Justices Dr. Dhananjaya Y Chandrachud and A.S. Bopanna, delivered the judgment. The opinion was authored by Dr. Dhananjaya Y Chandrachud, J.

Case Background

The case revolves around the Liberalized Active Retirement Scheme for Guaranteed Employment for Safety Staff (LARSGESS), introduced by the Indian Railways. Initially, the scheme was introduced on 2 January 2004 as the Safety Related Retirement Scheme, which allowed Gangmen and Drivers aged 55-57 with 33 years of service to seek voluntary retirement, with their wards considered for employment. The scheme was later extended to other safety categories on 11 September 2010, renamed as LARSGESS, reducing the qualifying service to 20 years and the eligible age to 50-57 years, though these changes did not apply to Drivers. The core condition remained that the employee’s retirement and the ward’s appointment should occur simultaneously, with the ward having to be found suitable in all aspects.

The scheme was challenged in the High Court of Punjab and Haryana, which deemed it a method of “back-door entry” into public employment, violating Articles 14 and 16 of the Constitution. The High Court directed the Railways to reconsider the scheme. The Supreme Court, on 8 January 2018, dismissed the Railways’ appeal against the High Court’s order, directing the Railways to revisit the scheme. Subsequently, the Railways terminated the scheme on 26 September 2018, effective from 27 October 2017, while making exceptions for those who had retired before the termination date but whose wards had not been appointed due to the scheme being put on hold.

Two appeals were filed before the Supreme Court. The first appeal involved a respondent whose father’s application for retirement under the scheme was initially rejected due to an incorrect date of birth. The second appeal concerned a respondent who was found medically unfit for the post of Trackman, the category in which his father was employed.

Timeline

Course of Proceedings

The father of the respondent in SLP (C) 906 of 2021 first applied for voluntary retirement under the LARSGESS scheme on 2 December 2010. This application was rejected due to an incorrect date of birth. A second application was submitted on 28 January 2014, after which the employee retired on 31 December 2014. The respondent then filed an Original Application (OA) before the Madras Bench of the Central Administrative Tribunal (CAT) in 2017, seeking employment under the LARSGESS scheme. The CAT dismissed the OA on 11 December 2017, stating that the scheme’s validity was questionable and that the father had retired on superannuation, not voluntary retirement. The High Court of Judicature at Madras reversed this decision on 3 September 2019, holding that the initial application was within the age limit and that the respondent was entitled to the benefit of the scheme.

In SLP (C) 1417 of 2019, the respondent’s father applied for voluntary retirement on 29 September 2011. The respondent was found medically unfit for the post of Trackman. The CAT initially directed the Railways to consider the respondent for any post of CEE ONE and below on 1 April 2016. However, the Railways rejected this claim on 31 May 2016, citing the rules of the LARSGESS scheme. The CAT again directed the Railways to consider the respondent for a post according to his medical fitness on 24 March 2017. The High Court of Judicature at Madras directed the implementation of the CAT order on 14 November 2017. However, the Railways rejected the claim on 17 January 2018, citing the Punjab and Haryana High Court’s decision and the fact that the father had retired on superannuation. The High Court allowed the petition on 21 March 2018, directing the Railways to comply with the CAT order.

Legal Framework

The core legal framework involves the interpretation of the LARSGESS scheme, and its compliance with Articles 14 and 16 of the Constitution of India. The relevant legal provisions are:

• Article 14 of the Constitution of India: Guarantees equality before the law and equal protection of the laws within the territory of India.
• Article 16 of the Constitution of India: Guarantees equality of opportunity in matters of public employment.

The LARSGESS scheme was introduced through notifications by the Railway Board, which specified the eligibility criteria, including age, qualifying service, and the process for appointment of wards. The scheme initially applied to Gangmen and Drivers, and was later extended to other safety categories. The key provisions of the scheme were:

• Employees in the age group of 55-57 years (later 50-57 years for some categories) with 33 years (later 20 years for some categories) of qualifying service could seek voluntary retirement.
• A ‘suitable ward’ of the employee would be considered for employment.
• The ward would be considered only in the lowest recruitment grade of the category from which the employee sought retirement.
• The employee’s retirement and the ward’s appointment should take place simultaneously.

The Railway Board’s notification of 2 January 2004 stated, “The ward will be considered for appointment only in the lowest recruitment grade of the respective category from which the respective category from which the employee seeks retirement, depending upon his/her eligibility and suitability, but not in any other category.”

Arguments

The arguments presented by both sides in the appeals are as follows:

Appellants’ (Railways) Arguments:

• The LARSGESS scheme was rightly terminated due to its violation of Articles 14 and 16 of the Constitution, as it provided a “back-door entry” into public employment.

• The scheme was terminated on 26 September 2018, effective from 27 October 2017, and no further appointments should be made, except in cases where employees had retired before the termination date but their wards had not been appointed due to the scheme being put on hold.

• The respondents’ fathers had retired on superannuation and not through voluntary retirement under the scheme, which was a prerequisite for the exception clause in the termination notification.

• The respondent in SLP (C) 1417 of 2019 was medically unfit for the post of Trackman, which was the category of his father’s employment, and therefore, he could not be appointed under the scheme.

• The respondent in SLP (C) 906 of 2021’s father’s application was not valid as it was submitted before the scheme was notified and that the second application was submitted after the employee had crossed the age criteria.

• The exception clause in the notification of 28 September 2018, did not cover all pending claims, and the claims of the respondents did not fall within the exception.

Respondents’ Arguments:

• The respondents argued that their claims were pending adjudication before various forums and that the delay should not be attributed to them.

• In SLP (C) 906 of 2021, the respondent argued that his father’s first application was within the age limit, and the incorrect date of birth was a mistake. The High Court had accepted this argument.

• In SLP (C) 1417 of 2019, the respondent argued that he was medically fit for the post of CEE ONE and below, and the CAT had directed the Railways to consider his appointment based on this medical fitness.

• The respondents contended that the notification of 28 September 2018 allowed for the appointment of wards where the formalities were completed before 27 October 2017.

Innovativeness of the argument: The Railways’ argument that the scheme was a “back-door entry” into public employment, violating constitutional principles, was a strong and innovative legal point that ultimately weighed in the court’s decision. The respondents’ arguments were primarily based on procedural fairness and the specific circumstances of their cases, which were ultimately not sufficient to overcome the fundamental issues with the scheme.

Issues Framed by the Supreme Court

The Supreme Court addressed the following issues:

1. Whether the claims of the respondents were covered by the exception clause in the notification issued on 28 September 2018, which allowed appointments under the LARSGESS scheme for those who had retired before 27 October 2017 but whose wards had not been appointed due to pending formalities.
2. Whether the individual cases of the respondents held any merit considering the terms of the scheme and the facts of their cases.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities in its judgment:

Cases

• Kala Singh v. Union of India, CWP No.7714 of 2016, High Court of Punjab and Haryana: The High Court held that the Safety Related Retirement Scheme (later renamed LARSGESS) was prima facie violative of Articles 14 and 16 of the Constitution as it provided for backdoor entry into public employment.
• State of Karnataka v. Uma Devi, (2006) 4 SCC 1, Supreme Court of India: This Constitution Bench judgment was referred to by the Punjab and Haryana High Court while directing the Railways to revisit the scheme.
• Union of India v. Kala Singh, 2019 SCC OnLine SC 1965, Supreme Court of India: A two-judge bench of the Supreme Court observed that since the scheme stood terminated, nothing further needed to be done in the matter.
• Narinder Siraswal v. Union of India, 2019 SCC OnLine SC 1966, Supreme Court of India: A two-judge bench of the Supreme Court allowed petitioners to move the authorities with a representation as their applications were filed when the scheme was in existence.
• Manjit v. Union of India, 2021 SCC OnLine SC 49, Supreme Court of India: A three-judge bench of the Supreme Court declined to entertain a petition under Article 32, holding that the scheme was contrary to the principles of equality of opportunity in public employment under Article 16 of the Constitution and that all claims based on the scheme must be closed.
• Writ Petition 1040 of 2016, High Court of Judicature at Madras: A coordinate bench of the Madras High Court held that an employee who received service benefits till the date of superannuation was not entitled to make a claim under the LARSGESS scheme.

Legal Provisions

• Article 14 of the Constitution of India: Guarantees equality before the law and equal protection of the laws.
• Article 16 of the Constitution of India: Guarantees equality of opportunity in matters of public employment.

Judgment

The Supreme Court allowed the appeals, setting aside the judgments of the High Court of Judicature at Madras. The Court held that the LARSGESS scheme was rightly terminated and that the respondents’ claims could not be entertained.

How each authority was viewed by the Court?

• Kala Singh v. Union of India [CITATION]: The Court relied on this case to support its view that the scheme was fundamentally flawed and violated constitutional principles.
• State of Karnataka v. Uma Devi [CITATION]: The Court noted that the Punjab and Haryana High Court referred to this case to emphasize the need for equal opportunity in public employment.
• Union of India v. Kala Singh [CITATION]: The Court noted this case to highlight that the scheme stood terminated and nothing further needed to be done.
• Narinder Siraswal v. Union of India [CITATION]: The Court noted this case to highlight that the court had allowed representation in cases where applications were filed when the scheme was in existence.
• Manjit v. Union of India [CITATION]: The Court relied on this case to support its decision that the scheme was contrary to Article 16 and that all claims must be closed.
• Writ Petition 1040 of 2016 [CITATION]: The Court noted this case to highlight that a coordinate bench of the Madras High Court had taken the view that the benefit of the LARSGESS scheme could not be extended where an employee had attained the age of superannuation before 27 October 2017.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the constitutional concerns regarding equality of opportunity in public employment. The Court emphasized that the LARSGESS scheme, by allowing for “backdoor entry” into service, violated Article 16 of the Constitution. The Court also noted that the scheme was not in line with the principles of equal opportunity and fair recruitment practices. The Court also considered that the scheme was terminated and that the exception clause in the termination notification was not applicable to the respondents’ cases.

The Court’s reasoning was primarily based on the legal principles of equality of opportunity and the constitutional mandate enshrined in Articles 14 and 16. The factual aspects of the individual cases were considered, but the legal issues surrounding the validity of the scheme and its termination were the predominant factors.

Logical Reasoning

Ratio Decidendi

The ratio decidendi of the judgment is that a scheme that allows for the appointment of employees’ relatives, bypassing the standard recruitment process, is violative of Articles 14 and 16 of the Constitution of India. Furthermore, the Court held that a terminated scheme cannot be revived through pending claims, especially if the claims do not fall under the exceptions provided in the termination notification. The Court also held that the benefit of the LARSGESS scheme could not be extended where an employee had attained the age of superannuation before 27 October 2017.

Obiter Dicta

The obiter dicta in this case include the Court’s observations on the need for fair and transparent recruitment processes in public employment. The Court emphasized that public employment should be based on merit and open competition, and that schemes that circumvent these principles are unconstitutional. The Court also noted that the exception clause in the termination notification was narrowly worded and should not be interpreted to include cases that did not strictly meet its conditions.

Dissenting Opinion

There was no dissenting opinion in this case. The judgment was unanimous, with both Justices Dr. Dhananjaya Y Chandrachud and A.S. Bopanna concurring.

Analysis

The Supreme Court’s judgment in the case of Chief Personnel Officer vs. A Nishanth George (2022) is significant for several reasons. Firstly, it reaffirms the constitutional principles of equality of opportunity in public employment. The Court’s decision to uphold the termination of the LARSGESS scheme is a strong message against schemes that allow for “backdoor entry” into public service. The judgment highlights that public employment should be based on merit and open competition, and that any scheme that circumvents these principles is unconstitutional.

Secondly, the judgment clarifies the legal position regarding the termination of government schemes. The Court held that a terminated scheme cannot be revived through pending claims, especially if the claims do not fall under the exceptions provided in the termination notification. This aspect of the judgment is important for government agencies, as it provides clarity on the legal consequences of terminating a scheme.

Thirdly, the judgment provides a clear interpretation of the exception clause in the termination notification. The Court held that the exception clause was narrowly worded and should not be interpreted to include cases that did not strictly meet its conditions. This aspect of the judgment is important for individuals and organizations that may be affected by the termination of a government scheme.

The judgment is also significant for its analysis of the individual cases. The Court held that the respondent in SLP (C) 1417 of 2019 was medically unfit for the post of Trackman, and the respondent in SLP (C) 906 of 2021’s father’s application was not valid. This aspect of the judgment highlights the importance of adhering to the eligibility criteria and procedures specified in a scheme.

Overall, the judgment is a significant contribution to the jurisprudence on service law and constitutional law. It reaffirms the importance of equality of opportunity in public employment and provides clarity on the legal consequences of terminating a government scheme.

Impact of the Judgment

• On Public Employment: The judgment reinforces the principle that public employment should be based on merit and open competition, discouraging schemes that allow for “backdoor entry.”
• On Government Schemes: The judgment provides clarity on the termination of government schemes, emphasizing that terminated schemes cannot be revived through pending claims unless specifically provided for in the termination notification.
• On Individuals: The judgment clarifies that individuals must adhere to the eligibility criteria and procedures specified in a scheme to benefit from it.
• On Future Cases: The judgment sets a precedent for future cases involving similar schemes and provides a framework for analyzing the validity of government schemes.

Critical Analysis

The Supreme Court’s decision was a necessary step to uphold constitutional principles. The LARSGESS scheme was indeed a violation of Articles 14 and 16, as it created a system of preferential treatment that was not based on merit. The Court rightly pointed out that such schemes undermine the principle of equal opportunity in public employment. The termination of the scheme was inevitable, and the Court’s decision to not entertain pending claims was also justified, given the fundamental flaws in the scheme. However, the judgment also highlights the need for the government to be more careful in designing and implementing schemes that involve public employment. The government should ensure that such schemes are in compliance with constitutional principles and do not create any undue advantages for certain groups of people. The judgment also underscores the importance of proper communication and clarity in the termination of government schemes, so that individuals are not left in a state of uncertainty or confusion.