Can the Concluded Transactions Be Permitted to Be Unsettled by the State at Strength of Pension Validating Act, 2021

A sense of contentment ran across hundreds of Government Employees who had rendered services in the work-charge establishment after the Apex Court pronounced its verdict in the case of Prem Singh vs State of U.P and Others (reported in (2019) 10 SCC 516), wherein the Apex Court held that the services rendered by the employees in the work-charge establishment shall be included in the “qualifying service” for the purpose of computing the post-retirement dues. Large number of Government Employees who had extended their services in the work-charged establishments or on an ad hoc basis in the Government establishments, prior to their regularisation were immensely benefited by the aforesaid decision of the Apex Court.  With the effect of the said judgment, the period spent by the employees in service, prior to their regularisation, was directed to be included as a qualifying service for their pensionary benefits.   

Post the decision rendered in Prem Singh (supra), the State promulgated an Ordinance viz. The Uttar Pradesh Qualifying Service for Pension and Validation Ordinance 2020 (U.P. Ordinance No. 19 of 2020). The Ordinance was thereafter replaced by an Enactment [U.P. Act No. 01 of 2021] The Uttar Pradesh Qualifying Service for Pension and Validation Act, 2021 which was notified on 05.03.2021. Both the Ordinance  and the Validating Act introduced provisions with retrospective effect, providing that the provisions of the said Act shall be deemed to have come into effect from 01.04.1961 i.e the date on which the U.P Retirement Benefit Rules 1961 were enforced. The Validating Act provides that qualifying service for determining the post-retirement benefits viz pensionary benefits would include only such services that were rendered by an employee appointed on a temporary or permanent post in accordance with the provisions of  service rules prescribed for the post.  In other words, the services carried out by  employees in a work-charge establishment or on an ad hoc basis in any Government organization would not be included in the “qualifying service” for the purpose of computing the post-retiral dues.

Thus, the present legal scenario with respect to the computation of qualifying service which existed prior to the passing of Prem Singh’s (supra) judgment by Supreme Court recommended post promulgation of the Validation Act 2021 i.e the services rendered by the employees in the work-charge establishment or on ad hoc basis in the Government establishment were again made un-countable for computing the qualifying services.

Subsequent to the promulgation of the Validation Ordinance 2020, the State Government issued a Government Order on 01.03.2021 directing the concerned officials to file supplementary affidavit/ review petition/ special appeal/ curative petition/ special leave to appeal, as the case may be, in already decided matters pertaining to the aforesaid issue. The Ordinance further instructed the officials to bring on record the said Ordinance before the relevant Courts in order to reverse any previous decisions made in the light of Prem Singh (supra) judgment on the ground that the Validation Ordinance has a retrospective effect.

In the interregnum period between the judgment passed under Prem Singh (supra) and prior to promulgation of the Validation Ordinance 2020, several judgments were passed by the High Court in U.P. following law laid down in Prem Singh (supra) whereby services rendered on work charge establishments were included in computing the qualifying services and based thereon, the pension was computed. Not only so in certain cases the judgments were complied as such the post retiral benefits had been paid. In such a scenario, the question arises that whether a concluded transaction which had concluded prior to the promulgation of the Validation Ordinance, can be sought to unsettled at the strength of the Validation Ordinance/ Act.

It is more than well settled that legislature has power to remove the foundation of law, based whereupon judgment has been passed by the Supreme Court or High Court as has been held by Constitution Bench of Supreme Court in matter of Prithvi Cotton Mills Ltd. Vs Broach Borough Municipality in re: (1969) 2 SCC 283.

Indisputably, a Court’s decision would bind parties until and unless the conditions on which it is based are fundamentally altered that decision could not be given by the Court in such altered circumstances. The Legislature is empowered to promulgate the Validation Law and to enact the same retrospectively, so as to even bind the past transactions.

   However, whether at all a concluded transactions, where the judgment of Court has been complied with by one of the parties to the litigation, can be sought to be unsettled by filing an Appeal/Review/Special Leave Petition/Curative petition at the strength of Validation Act, is an issue which requires clarity, being a grey area.

The State of U.P. enacted the Validation Act, 2021 so as to alter the U.P. Retirement Benefit Rules, 1961 based whereupon judgment in Prem Singh (supra) was passed and applied the same retrospectively so that the employees may not seek benefit of law laid down by the Supreme Court in Prem Singh (Supra).

Since the law has been enacted with retrospective effect by the Legislature, no doubt the State in such cases, where it has consciously chosen not to comply with the judgment at the strength of Validation Act, can assail the judgment on the ground of Legal position having altered by means of Validating Act.

However, once the State had chosen consciously to comply with the directions passed by the Court by means of judgment, passed prior to enactment of Validation Act and making actual payment in compliance thereof, such would be a concluded transactions. In such a scenario it would not be open for the State after complying with the judgment and making payments, to seek to unsettle such a concluded transaction by filing an Appeal/Review/Special Leave Petition/Curative Petition assailing the judgment based on subsequent enactment of Validating Act promulgated retrospectively. The aforesaid area being grey area needs clarity by a judgment clarifying the aforesaid legal position.

If such an act by State would be permitted where State consciously complies with judgment and makes actual payment thus concluding the transactions in question and subsequently challenges the judgment already complied by it, seeking to unsettle the concluded transaction and consequently seeking to recover the amount already paid, the same would bring uncertainty and may result in chaos.

Author- Gaurav Mehrotra, Advocate

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