STATE OF BIHAR V.

BIHAR PENSIONER’S SAMAJ AIR 2006 SC 2100

CONSTITUTIONAL LAW –III

ASSIGNMENT PAPER

CASE ANALYSIS:

STATE OF BIHAR V. BIHAR PENSIONERS SAMAJ AIR 2006 SC 2100

Submitted by –

Akash Saxena – 17A014

Semester – V

Faculty Supervisor-

Mr. Girish R.

Assistant Professor of Law

Gujarat National Law University

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 STATE OF BIHAR V. BIHAR PENSIONER’S SAMAJ AIR 2006 SC 2100

TABLE OF CONTENT

Sr. No. TOPIC PAGE NO.

1 ABSTRACT 3

FACTS OF THE CASE 4

3 ISSUES BEFORE THE COURT 6

4 ARGUMENTS OF THE APPELLANTS 6

5 ARGUMENTS OF THE RESPONDENTS 8

6 REASONING GIVEN BY THE COURT 8

7 CASE COMMENT: A CRITICAL APPROACH 10

8 CONCLUSION 11

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 STATE OF BIHAR V. BIHAR PENSIONER’S SAMAJ AIR 2006 SC 2100

ABSTRACT

This paper critically analyses the case of State of Bihar & Ors. v. Bihar Pensioners Samaj1
The paper analyses the judgement of the Supreme Court in this case and also highlights some
of the aspects which were not dealt by the Hon’ble Court as it is not relatively possible to
cover all the issues involved in the case in every case as the judges also are after all humans
only.

The present case deals with the Bihar State Government Employees Revision of Pension,
Family Pension and Death-cum-Retirement Gratuity (Validation and Enforcement) Act, 2001
(Validation Act)2 which was impugned by an association known as Bihar Pensioners Samaj
stating that the Act is in violation of the provisions of Article 143.The matter came up before
the High Court of Bihar which quashed the Act. The judgement was impugned before
Supreme Court of India by the State. Supreme Court finally passed its judgement in favour of
State of Bihar.

1
State of Bihar & Ors. v. Bihar Pensioners Samaj AIR 2006 SC 2100.
2
BIHAR STATE GOVERNMENT EMPLOYEES REVISION OF PENSION, FAMILY PENSION AND DEATH-CUM-
RETIREMENT GRATUITY (Validation and Enforcement) Act, 2001
3
Art.14, THE CONSTITUTION OF INDIA, 1950.

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 STATE OF BIHAR V. BIHAR PENSIONER’S SAMAJ AIR 2006 SC 2100

INTRODUCTION

The present case was an appeal against the judgement passed by the Patna High Court and
Ranchi Bench of Patna High Court, and the same was put forwarded before the division
bench of Supreme Court for adjudication. The bench constituted of B.N. Srikrishna J. and
Lokeshwar Singh Panta J.

The validity of the Bihar State Government Employees Revision of Pension, Family Pension
and Death-cum-Retirement Gratuity (Validation and Enforcement) Act, 2001 4 was in
question as it was making the judgements passed by the Courts ineffective and the provisions
of Article 14 of the constitution were being violated.

Supreme Court after carefully examining the facts of the case, contentions made by both the
Respondents and Appellants and the judgements passed by the Hon’ble HC’s in the present
case delivered the judgement in favour of the Appellants (State of Bihar).

FACTS OF THE CASE

The State Govt. of Bihar issued a notification, Resolution No. PCI-Id/S7-1853-F dated 19th
April, 1990 revising the provisions related to Pension, Family Pension and Death-cum-
Retirement gratuity of its employees. The effective date of the notification was fixed as 1st
January, 1986 but the revision of pension from that date was stipulated to be merely notional
and the financial benefits thereof were directed to accrue only with effect from 1st March,
1989. Another notification Resolution No. PCI0- 16/87-1854-F dated 19th April, 1990, was
issued for rationalisation of pensionary principles and structure preceding 1st January, 1986
pensioners/family pensioners.5

A Division Bench of Patna High Court while upholding the State Government’s right to fix
the cut-off date set aside the said notifications at the instance of the respondent pensioner’s
association and directed the State Government to reconsider as to whether there was any
justification for making the notifications effective from a date later than the date of issuance
thereof. 6

4
Infra at 2.
5. Infra at 1.
6 Id.

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 STATE OF BIHAR V. BIHAR PENSIONER’S SAMAJ AIR 2006 SC 2100

The Hon’ble Supreme Court dismissed the SLP there against. Subsequently, that decision of
the Division Bench was followed by another Division Bench of the Ranchi Bench of Patna
High Court. The State Legislature of Bihar then passed the Bihar State Government
Employees Revision of Pension, Family Pension and Death-cum-Retirement Gratuity
(Validation and Enforcement) Act, 2001 (for short “the Validation Act”). It purported to
validate the revision of pension and gratuity in accordance with the said two resolutions. A
Division Bench of the High Court struck down the Validation Act on the ground that it was
enacted to frustrate side-track and avoid an earlier decision of the High Court. 7

By a judgment dated 21.6.1999 the Division Bench of the Patna High Court allowed the
Letters Patent Appeal and set aside the judgment of the learned Single Judge holding that:
"As the paragraph 1(i) of Resolution No. 1853 dated 19.4.1990 and paragraph No. 2.1 of
Resolution No. 1854 dated 19.4.1990 have already been quashed, the question of quashing
them again does not arise. The State Government is directed to pay the pension to the
pensioners in accordance with the resolutions ignoring paragraphs 1(i) and 2.1 thereof." The
judgment of the Division Bench was challenged before this Court in Special Leave Petition
(Civil) No. 9821/99, which was allowed to be withdrawn and dismissed accordingly.8

On 15.12.2000 the Governor of Bihar was pleased to issue an Ordinance styled as "The Bihar
State Government Employees Revision of Pension, Family Pension and Death-cum-
Retirement Gratuity (Validation and Enforcement) Ordinance, 2000”. The said ordinance was
subsequently replaced by the Bihar Act 3 of 20019. After referring to the litigative history,
the Validation Act purports to validate the revision of pension and gratuity in accordance
with the two Resolution Nos. P.C.I.-Id/S7-1853-F and P.C.I. 0-16/87-1854-F of 19.4.1990
giving effect to the effective dates in Paragraphs 1 and 2.1, respectively, of the two
resolutions. The respondent- Bihar Pensioners Samaj impugned the Validation Act before the
High Court by its writ petition C.W.J.C. No. 11696/2001. The said writ petition was "an
exercise on how to destroy the Judgment of Courts established under the Constitution".
Hence, this appeal was put forward before Supreme Court of India.10

7 Id.
8. Id.
9. Infra at 2.
10. Infra at 1.

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 STATE OF BIHAR V. BIHAR PENSIONER’S SAMAJ AIR 2006 SC 2100

ISSUES BEFORE SUPREME COURT

1. Whether or not the Validating Act by a competent Legislature can render the Orders and
Judgements passed by a Court as ineffective under the purview of Retrospective Legislation,
by removing the cause of the invalidity or the basis that had led to those decisions?

2. Whether or not the State by fixing the cut-off date for payment of the revised benefits
under the two Notifications violated the provisions of Article 14 of the Constitution?

ARGUMENTS OF APPELLANTS

The panel of Advocates for the Appellants (State of Bihar) consisted of J.P. Cama along with
Gopal Singh and Nishikant Pandey. The Appellants contended that a Validating Act can even
make the Judgements of Courts ineffective by removing the Invalid clause or the Basis which
led to such findings by the court.

Learned counsel for the Appellants relied on the judgement of apex court in the case of State
of Orrisa v. Bhupendra Kumar Bose 11 which observed – ‘It is true that the judgement
delivered by the High Court under Article 226 must be respected but that is not say that the
legislature is incompetent to deal with problems and their proposed solutions are otherwise
within their legislative competence. It would, we think, be erroneous to equate the judgement
of the High Court under Article 226 12 with Article 226 itself and confer upon it all the
attributes of the said constitutional provision.’

Further, the learned counsel for the appellants urged that an Act of the State Legislature can
be struck by the courts in exercise of their powers of judicial review only on the following
grounds:

 That the State Legislature was incompetent to enact the legislation13;

 That it was violative of any provisions contained in Part-III of the Constitution;
 That it was violative of any other provisions of the Constitution; or
 That it was an infringement of the Basic features of the Constitution.14

11. State of Orrisa v. Bhupendra Kumar Bose AIR 1962 SC 945.

12 . Art 226, THE CONSTITUTION OF INDIA, 1950.
13 . Art. 245, THE CONSTITUTION OF INDIA, 1950.
14. Kesvananda Bharti v. State of Kerala (1973) 4 SCC 225.

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Barring these available grounds, there is no other ground on which an Act of State
Legislature can be struck down and declared to be ineffective, submits the learned counsel.

The learned counsel also relied on the case Bakhtawar Trust v. M.D Narayan15 wherein it was
held that ‘The validity of any statute may be assailed on the ground that it is ultra vires of the
legislative competence of the legislature which enacted it or it is violative of Part III or any
other provision of the Constitution. It is well settled that Parliament and State Legislatures
have unqualified powers of legislation within the fields which are assigned to them subject to
some constitutional limitations, they can legislate prospectively as well as retrospectively.
The power to make retrospective legislation empowers the legislature to validate prior
executive and legislative Acts retrospectively after curing the defects that led to their
invalidation and thus makes ineffective judgments of competent courts declaring the
invalidity. It is also well settled that a validating Act may even make ineffective judgments
and orders of competent courts provided it, by retrospective legislation, removes the cause of
invalidity or the basis that had led to those decisions.’

Also when the validity of this Act was impugned before the High Court resulting in the
impugned judgement the counsel once again relied on the Bakhtawar Trust16 case stating that
it is always open to the Legislature to make the law applicable retrospectively as long as the
very premise on which the earlier judgment declared a certain action to be invalid and is
removed. The situation would be that of one fundamental change in the circumstances and
such a validating Act was not open to challenge on the ground that it amounted to usurpation
of judicial powers.

Also a supplementary affidavit was filed by Appellants, which brings out that the total
amount of financial burden, which would arise as a result of making effective the payments
from 1.1.1986 would be about 2,038.34 crorers which implied that the State Government was
not willing to pay the arrears from 1.1.1986 on the ground of financial consideration, which,
undoubtedly, is a very material consideration for any administration.

15. Bakhtawar Trust v. M.D Narayan (2003) 5 SCC 298.

16. Id.

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ARGUMENTS OF RESPONDENTS

The panel of Advocates for Respondents (Bihar Pensioners Samaj) consisted of Senior
Advocate Ranjit Kumar along with Advocate Binu Tamta

The Respondents contended that the fixation of cut-off date for payment of the revised
benefits under the two notifications concerned violation of Article 14 17 as the same was
arbitrary and resulted in denying arrears of payments to those who had retired between 1 st
January 1986 and 28th February, 1989.

Learned counsel further contended that the said two notifications were bad for inconsistency
with Article 14 18 . He submitted that the notifications introduced invidious 19 distinction
between persons who had retired between 1.1.1986 and 28.2.1989 and those who retired on
and from 1.3.1989. While in the case of the former class of employees, the arrears arising out
of the implementation of the notification from 1.1.1986 was denied, although the notification
itself was made effective from 1.1.1986. This, in the submission of the learned counsel it
amounts to an infringement of Article 14 and, therefore, the High Court had rightly quashed
the offending notifications.

REASONING GIVEN BY COURT

The Special Leave Petition was presented before the Division Bench B.N. Srikrishna and
Lokeshwar Singh Panta, JJ. The judgement was delivered by B.N. Srikrishna J.

The Supreme Court accepted the contentions of the Appellants with regards to the validity of
the ‘Validating Act’ 20 , that the validating acts can make the Judgements of the Court
ineffective by retrospective legislation and removing the cause of invalidity by giving the
reasoning that it is always open to the Legislature to alter the law retrospectively as long as
the very premise on which the earlier judgement declared a certain action as invalid is
removed. The situation would be one of a fundamental change in the circumstances and such
a validating Act was not open to challenge on the ground that it amounted to usurpation of
judicial powers.

17. Infra At 2.
18. Id.
19. Maneka Gandhi v. Union of India AIR 1978 SC 579.
20. Infra at 3.

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It was held that the Contention of State is well founded. It is settled that fixing of a cut-off
date for granting of benefits is well within the powers of the Government as long as the
reasons therefore are not arbitrary and are based on some rational consideration.

In the present case, the State Government declined to pay the arrears from 1 st January, 1986
on the ground of financial consideration, which undoubtedly, is a very material consideration
for any administration. Therefore, the refusal to make payments of arrears from 1-1-1986 to
28-2-1989 on the ground of financial burden cannot be held to be an arbitrary ground or
irrational consideration. Supreme Court relied on its earlier decision in the case of State of
Punjab v. Amar Nath Goyal21 wherein it considered the same issue and after referring to a
number of other authorities, it was held that financial constraints could be valid ground for
introducing a pension scheme on revised basis. Hence the argument based on Article 14 must
fail.’

Finally, the Supreme Court held that we see no other contention justifying the striking down
of the Validation Act passed by the competent Legislature. At any rate, none has been
pointed out to us. Thus, the only argument in favour of the striking down having been found
unacceptable, we are of the view that the impugned judgement of the High Court declaring
the ‘Validating Act’ as unconstitutional was erroneous and needs to be interfered with. It
allowed the appeal and set aside the impugned judgement of the High Court and declare the
constitutionality of the Validation Acts. No order as to costs.

21. State of Punjab v. Amar Nath Goyal (2005) 6 SCC 754.

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CASE COMMENT: CRITICAL APPROACH

The present case here was discussed at length over the clause ‘equality before law’ enshrined
under Article 14 of the Indian Constitution but at the same time nonetheless, the case also
dealt with the Doctrine of Territorial Nexus found under the purview of Article 245.

As per Article 245 the Parliament is empowered to make laws for the entire country or any
specific part or territory of India and the State Legislature can make laws for any part of the
State or whole of it.

The Doctrine of Territorial Nexus22 emphasises on the fact that the object on which the law is
to be applied has to be physically present within the territory23 of the State coupled with the
premise that ‘the object should have a sufficient territorial connection with the State24’. If it is
found that there is a territorial nexus between the subject matter of the Act and the State
making the law, then the statute which is in question is not regarded as having extra-territorial
operation. From this an inference can be drawn that the State can make laws regarding any
subject and it will not be held to be invalid unless and until the law is extra-territorial in
nature.25

Supreme Court in the case of State of Bihar & Ors. V. Smt. Charusila Das26 broadened the
scope of the said doctrine; the aforementioned case was related to Bihar Hindu Religious
Trusts Act, 1950 27 enacted by the Bihar Legislature for the purpose of protection and
preservation of properties which pertained to Hindu Religious trust. The question before the
court was that whether the Act will apply to the trust properties outside the State or not?
Supreme Court by applying the said doctrine held that the Act 28 could affect the trust
property in Bihar and not outside it. Hence, the act has no extra territorial operation.

In the present case also the judgement of the Supreme Court is based on the Doctrine of
Territorial Nexus. The Court validated the Bihar Pensioner’s Act, 200129 stating that the High
Court has taken correct view that it’s open to the State to fix the implementing date of

22. Wallace v. Income Tax Commissioner AIR 1948 SC 118.

23. State of A.P v. National Thermal Power Corporation Ltd. (2002) 5 SCC 203.
24. Tata Iron & Steel Co. Ltd. v. State of Bihar AIR 1958 SC 452.
25. G.V.K. Industries Ltd. and Anr. v. Income Tax Officer (2011) 4 SCC 36.
26. State of Bihar & Ors. v. Smt. Charusila Das AIR 1956 SC 1002.
27. BIHAR HINDU RELIGIOUS TRUSTS ACT, 1950
28. Id.
29. Infra at 2.

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notification. State can thus make a law pertaining to any of its territory. Hence the ‘Doctrine
of Territorial Nexus’ was made implicit to the case and the judges were well aware of it.

Also, in the present case Supreme Court neglected the Principles of Natural Justice30 by not
making the payments of arrears for the period from 1st Jan, 1986 to 8th Feb, 1989 on the
premise of the financial burden that will be accrued to the State and they took it as a valid
piece of argument but at the same it ignored the social aspect of the employees when he/she
retires. Further the act was not subjected to any particular class which means that the act was
applicable to all class of state employees and it is well known that not every employee was
well to don and this pension was the only source for him/her. The Court ignored this aspect
by validating the Act.

On a conclusive remark it can be said that there is no general definition of doctrine and what
territorial connection or nexus is necessary for an application of the law to a particular object.
For considering the sufficiency of the territorial connection involves: Whether the connection
is real and not illusionary and whether the liability that is sought to be imposed under the act
is pertinent or relevant to the connection or not?

CONCLUSION

The case is unique in its very aspect. Herein, the court gave its decision basing it on the
‘Doctrine of Territorial Jurisdiction’31 without even mentioning it explicitly. The decision of
the court is not wrong or violative of any provision in any way but in a democratic regime a
law should be made striking a balance between social as well as legal criteria. This was one
thing that the judgement lacked the Court here just failed to appreciate the social aspect
concerning the case.

Apart from that, the distinction made by the State on the basis of notional implementation of
the Act, and the reasoning given by the Apex Court seems to be justifiable and not violative
of the Art. 14 of the Constitution, as the grounds on which the act can be held to be struck
down on being violative of Art. 14 were clearly not met and, Hence on legal grounds the
‘Validating Act’ is perfectly valid without any iota of doubt.

But then certainly the State should be careful with the dates and schemes of the act as to
when it will become effective, as it can really cause some grave inconvenience and hardships

30. Gullapalli Nageswara Rao v. Andhra Pradesh State Road Transportation and Anr. AIR 1959 SC 308.
31. Infra at 19.

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to the people as noted in the present case wherein the people retiring after the notional date
were not given any benefits on the basis of financial consideration.

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