Supreme Court holds challenge to earlier ruling on corporate-sector pension scheme is impermissible; petition dismissed

A Bench of Justices Surya Kant, Dipankar Datta and Ujjal Bhuyan heard a petition under Article 32 by three retired officers of the Himachal Pradesh State Forest Development Corporation challenging denial of enhanced pensionary benefits after repeal of the Himachal Pradesh Corporate Sector Employees (Pension) Scheme, 1999. The petition invited reconsideration of this Court’s two-Judge Bench decision in State of H.P. v. Rajesh Chander Sood (2016), which had upheld the State’s repeal notification dated 02.12.2004 and the cut-off date therein.

The Court dismissed the petition as an impermissible collateral challenge to the prior judgment and upheld the legal propositions in Rajesh Chander Sood. The Court held that the State, in exercise of administrative power, could fix a cut-off date where financial viability of a welfare scheme was at issue, and that the High Court’s reading down of the repeal notification had been set aside correctly in the earlier appeal. The Court, in its reasoning, observed: "Having given our thoughtful consideration to the issue canvassed, and having gone through the judgments cited, we are of the considered view that this Court has repeatedly upheld a cut-off date, for extending better and higher pensionary benefits, based on the financial health of the employer. A cut-off date can, therefore, legitimately be prescribed for extending pensionary benefits, if the funds available cannot assuage the liability, to all the existing pensioners. We are, therefore, satisfied to conclude that it is well within the authority of the State Government, in exercise of its administrative powers (which it exercised, by issuing the impugned Repeal Notification dated 02-12-2004) to fix a cut-off date, for continuing the right to receive pension in some, and depriving some others of the same. This right was unquestionably exercised by the State Government, as determined by this Court, in R.R. Verma case ... But this Court in the abovementioned judgment, placed a rider on the exercise of such power by the Government. In that, the exercise of such power should be in consonance with all legal and statutory obligations." The Court also emphasised that "Finality of a lis is a core facet of a sound judicial system. Litigation which had concluded or had reached finality cannot be reopened."

Background The petitioners were retired employees of the Himachal Pradesh State Forest Development Corporation who had opted for the 1999 Scheme, which adopted Central Civil Services (Pension) Rules and envisaged creation of a pension corpus. The State repealed the 1999 Scheme by notification dated 02.12.2004, saving only employees who had retired between 01.04.1999 and 02.12.2004 and had opted for the scheme. A batch of writ petitions before the Himachal Pradesh High Court (lead P.D. Nanda v. State of H.P.) succeeded and the High Court read down the repeal notification to extend 1999 Scheme benefits to similarly placed employees who retired thereafter. The State appealed; a two-Judge Bench of this Court in Rajesh Chander Sood set aside the High Court order, upholding the State’s authority to fix the cut-off date on administrative and financial grounds and rejecting estoppel and parity claims. The present petition under Article 32 sought to re-open those issues, contending Rajesh Chander Sood was per incuriam and that the petitioners had vested pensionary rights under the 1999 Scheme.

The three-Judge Bench found that the contentions raised here had been canvassed and adjudicated in Rajesh Chander Sood, and that the earlier decision did not ignore binding precedent nor suffer per incuriam. The Court reiterated that questions regarding budgetary allocation and the financial viability of welfare schemes were matters of policy and administrative review; the High Court could not fasten the financial liability of corporations on the State. The petition was dismissed as a collateral attack on this Court’s earlier judgment. The Court refrained from imposing costs given the petitioners’ status as retired senior citizens.

Case Details: Case No.: 2025 INSC 491; Writ Petition (Civil) No. 179 of 2018 Case Title: Satish Chander Sharma & Ors. v. State of Himachal Pradesh & Ors. Appearances: For the Petitioner(s): Gopal Sankaranarayan, Senior Advocate For the Respondent(s): Devadatt Kamat, Senior Advocate (for State of Himachal Pradesh)