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Sankaranarayanan (C.) and ors. Vs. State of Kerala (by Chief Secretary) - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKerala High Court
Decided On
Judge
Reported in(1970)ILLJ263Ker
AppellantSankaranarayanan (C.) and ors.
RespondentState of Kerala (by Chief Secretary)
Cases ReferredSrinivasan (N.) and Anr. v. State of Kerala
Excerpt:
.....value, was entitled to have the licence issued to him notwithstanding the change of policy by the government in the meanwhile. no doubt the government, can bind itself through its officers by a commercial contract, and if it does so, it must perform it like anybody else on pay damages for the breach. his claim based upon a breach of contract failed simply on the ground that the contract was discharged by alteration of law and the discussion of the appellant's rights apart from this must therefore be obiter. lord atkin's reference is precisely applicable to those in the case before him which were statutory, and the suggestion that it was statutory with which he was dealing seems reinforced by his reference to gould v. it is not contended that these limits can as yet be precisely defined..........and necessary amendments were effected both in the kerala education rules and the kerala service rules. rules 1 and 2 of chap. xiv-c were suitably amended so also rules 2 and 8 of chap. xxvii-a. the age of retirement of all government servants and aided school teachers, whose age of retirement on superannuation under the then existing orders was 58 years, was lowered to 55 years as per g.o. (p.) no. 176/67/fin., dated 4 may 1967. amendments to the relevant statutory rules were issued separately, i.e., to the kerala education rules and kerala service rules. amendments to the kerala education rules were effected as per g.o. (p.) no. 326/edn., dated 25 july 1967, published in the kerala gazette, dated 1 august 1967.20. rule 2a in chap. xiv-c which was newly inserted by the government.....
Judgment:

K.K. Mathew, J.

1. The petitioner is Original Petition No. 1794 of 1968 is a teacher in an aided school and in Original Petition No. 1795 of 1968 a teacher in a Government school. They question the validity of Ex. P. 5 order passed by the Government on 4 May 1967 reducing the age of retirement of the teachers in Government and aided schools to 55. They contend that the Government is estopped from reducing the age of retirement of the teachers to 55. The petitioner in Original Petition No. 1794 of 1968 also contends that the relevant rule is the Kerala Education Act has not been amended to give effect to Ex. P. 5 order, and therefore, as the rule stands, he can be retired only at the age of 60.

2. Exhibit P. 2 is a memorandum of the Private School Teachers' Association presented to the Adviser to the Governor in November 1955. In that., the association raised twelve demands, the eleventh being that the age of retirement of teachers be raised to 60. Exhibit P. 3 is a press release, dated 24 June 1966 and that states that the age of retirement of teachers both in Government and aided schools will be raised to 60 with effect: from 1 July 1966. On 14 July 1966, Government passed an order, Ex. P. 4, stating that the age of retirement of teachers both is Government and aided schools is raised to 58 with effect from 1 July 1986. Thereafter, the Government passed, on 4 May 1967, Ex, P. 5 order, reducing the age of retirement of Government employees and aided school teachers to 55.

3. As regards the contention of the petitioners that Ex. P. 3 embodies the terms of as agreement between the Private School Teachers' Association and the Government and that by Ex. P. 4 order, the Government affirmed the right of the teachers of both Government and aided schools to remain in service till they attain the age of 58, and therefore, the Government was bound to honour its promise and was estopped from reducing the age of retirement of the teachers to 55, counsel relied on the recent ruling of the Supreme Court in Union of India v. Anglo Afghan Agencies A.I.R. 1968 S.C. 718. In that case, the Supreme Court said that the Government must honour its promise just, like any other individual, and that a person who acting upon the representation contained is the Export Promotion Scheme adumbrating the policy of Government, makes an application for import licence of wool of a specified value, was entitled to have the licence issued to him notwithstanding the change of policy by the Government in the meanwhile. The court said that where a person had acted upon a representation made in the Export Promotion Scheme, that import licence up to the value of goods, will be issued and has exported goods, his claim for import for the maximum value cannot be arbitrarily rejected, that the doctrine of equitable estoppel is applicable to Government and that the claim of the respondents there was appropriately founded upon the equity which arises in their favour as a result of the representations made on behalf of the Union of India in the Export Promotion Scheme and the action taken by the respondents actiug upon that representation under the belief that Government would carry out the representation made by it. The Court relied on the observations of Denning, J., it Robertson v. Minister of Pensions (1949) 1 K.B. 227 for distinguishing the decision of Rowiatt, J., in Amphitrite v. Rex (1921) 3 K.B. 500 and said that executive necessity would not justify Government in not honouring its solemn promises relying on which citizens have acted to their prejudice.

4. In Amphitrite v. Rex (1921) 3 K.B. 500 (vide supra), the Court suggested that the Crown can plead executive necessity by way of defence to an action for breach of contract. During the War of 1914-18, the British Legation at Stockholm on behalf of the Government gave a neutral shipowner an undertaking that one of his ships carrying a certain cargo for England would not be detained if sent there. Acting on this, the shipowner allowed the ship to proceed, but on its arrival the Crown nevertheless detained it. The shipowner took proceedings, by Petition of Right for breach of contract, and Rowlatt, J., dismissed the action saying:

No doubt the Government, can bind itself through its officers by a commercial contract, and if it does so, it must perform it like anybody else on pay damages for the breach. But this was not a commercial contract; it was as arrangement whereby the Government purported to give as assurance as to what its executive action would be in the future in relation to a particular ship in the event of her coming to this country with a particular kind of cargo. And that; is, to my mind, not a contract for the breach of which damages can be sued for in a Court of law. It was merely an expression of intention to act in a particular way in a certain event. My main reason for so thinking is that it is not competent for the Government to fetter its future executive action, which must necessarily be determined by the needs of the community when the question arises. It cannot by contract hamper its freedom of action in matters which concern the welfare of the State.

5. In Robertson v. Minister of Pensions (1949) 1 K.B. 227 (vide supra), the claimant was injured in an accident in December 1939, and in July 1949, the claimant, a serving military officer, wrote to the War Office regarding his disability and received a reply stating ' your disability has been accepted as attributable to military service.' Relying on that assurance he forbore to obtain an independent medical opinion. The Minister of Pensions later decided that the appellant's disability was not attributable to war service. It was held that such, an assurance would be enforceable because it was intended to be binding, intended to be acted upon, and was, in fact, acted upon, that the assurance was binding on the Crown because no term could be implied that the Crown was at liberty to revoke it; and that the assurance was, therefore binding on the Minister of Pension?, the claimant being entitled to assume that the War Office had consulted any other departments concerned before it gave the assurance. Denning, J., observed:

The next question is whether the assurance in the War Office letter is binding on the Crown. The Crown cannot escape by saying that estoppels do not bind the Crown, for that doctrine has long been exploded. Nor can the Crown escape by praying in aid the doctrine of executive necessity, that is, the doctrine that, the Crown cannot bind itself so as to fetter its future executive action. That doctrine was propounded by Rowlatt, J., in Amphitrite v. King, but it was unnecessary for the decision because the statement there was not a promise which was intended to be binding but only an expression of intention. Rowlatt, J., seems to have been influenced by the cases on the right of the Crown to dismiss its servants at pleasure, but those case must now all be read is the light of the judgment of Lord Atkin in Reilly v. King. That judgment shows that in regard to contracts of service, the Crown is bound by its express promises as much as any subject. The cases where it has been held entitled to dismiss at pleasure are based on an implied term which cannot, of course, exist where there is an express term dealing with the matter, is my opinion, the defence of executive necessity is of limited scops, it only avails the Crown where there is an implied term to that effect; or that is the true meaning of the contract. It certainly has no application in this case. The War Office letter is clear and explicit and I see no room for implying a term that the Crown is to be at liberty to revoke the decision at its pleasure and without cause.

The case of Amphitrite v. Rex (1921) 3 K.B. 500 (vide supra) has been regarded as deciding that the Crown can only make contracts of a commercial nature and that Crown cannot by a contract fetter its future executive discretion (see the criticisms of the case by Holdsworth in XLI Law Quarterly Review, p. 162 at 166). It has been suggested that although the rule in Amphitrite case is too wide, the case may be regarded as an example of a general rule of public policy that a public authority cannot be prevented by an existing contract from performing functions essential to its existence and for which it was created (see 'Governmental Liability ' by H. Street, p. 98).

6. In the case Reilly v. King 1934 A.C. 176 relied on by Deaning, J., in Robertson case, the Privy Council expressly rejected the idea, which had found favour with the Exchequer Court of Canada, that in no case of a public office can there be contractual relationship as to salary or term of employment on the one hand or a duty to serve faithfully on the other. The office there in question was one created by statute which provided for removal at any time for cause but subject thereto for appointment for a fixed time. The appellant was appointed for five years but within that period the office was abolished by statute without compensation. His claim based upon a breach of contract failed simply on the ground that the contract was discharged by alteration of law and the discussion of the appellant's rights apart from this must therefore be obiter. Nevertheless, the remarks of Lord Atkin on this topic have been treated in Robertson v. Minister of Pensions (1949) 1 K.B. 227 (vide supra) as effecting a modification of the principle of dismissibility of a public servant at the pleasure of the Crown. In rejecting the view of Orde, J., in the Supreme Court of Canada, that every contract of service with the Crown must, be subject to a term for dismissal at. pleasure, Lord Atkin Said:

If the terms of appointment definitely prescribe a term and expressly provide for a power to determine for cause it appears necessarily to follow that any implication of a power to dismiss at pleasure is necessarily excluded.

This reference to the ' terms of appointment ' may, however, only be to statutory term. Lord Atkin's reference is precisely applicable to those in the case before him which were statutory, and the suggestion that it was statutory with which he was dealing seems reinforced by his reference to Gould v. Stuart 1896 A.C. 575 and to the appointment to judicial offices in both of which the limitation of the right to dismiss is statutory. It does not seem therefore to follow without any doubt that the dictum was necessarily intended to cover cases where the limitation of the right to dismiss is found not in statute but in the contract itself, particularly since in a later passage Lord Atkin dealing with the allegation that there is in such appointment no contractual relationship emphasizes that the power to determine at will is not inconsistent with the existence of a contract until so determined. The dictum of Lord Atkin was ignored by Tucker, J., in Rodwell v Thomas 1944 K.B. 596 and he said:

The authorities show, not only that prima facie an established civil servant can be dismissed at pleasure, but that the Court will disregard any term of his contract expressly providing for employment for a specified time or that his employment can only be terminated in specified ways. The Court regards such a provision in a contract as a clog on the right of the Crown to dismiss at pleasure at any time.

Whether Tucker, J., is right or not is his opinion, in India, the matter is governed by Article 310 of the Constitution, the material part of which reads:

(1) Except as expressly provided by this Constitution, every person who is a member of a defence service or of a, civil Service of the Union or of an all-India service or holds any post connected with defence or any civil post under the Union, holds office during the pleasure of the President, and every person who is a member of a, civil service of a State or holds any civil poet under a State holds office during the pleasure of the Governor of the State.

7. In State of Uttar Pradesh v. Babu Ram A.I.R. 1961 S.C. 761 at 761, the Supreme Court said that the pleasure of the President under Article 310 cannot be fettered by any statute or rule and that it can be fettered, if at all, only by some other provision in the Constitution. The pleasure of the President to dismiss a public servant cannot be fettered by any provisions in the contract of Service. It will be observed that Denning, J., relied on Atkin's observations in Reilly v. King 1934 A C. 176 (vide supra) and said that Crown's right to dismiss at pleasure can be fettered by contract, a proposition which has no application in India because of Article 310,

8. As already indicated, the wide expressions used in Amphitrite case (1921) 3 KB. 500 (vide supra) are not certainly justified but within the narrower limits suggested above, the principle of that case is reasonable and finds support in older authorities. It is not contended that these limits can as yet be precisely defined but clearly they are not limited to the military protection of the State; it is thought that they include other matters where the contract would prevent the State from fulfilling its essential functions. The principle was described by Lord Birkenhead in Birkdale District Electric Supply Company v. Southport Corporation 1926 A.C. 355 at 364 as a well-established principle of law. Ha said:

if a person or public body is entrusted by the legislature with certain powers and duties expressly or impliedly for public purposes, those persons or bodies cannot divest themselves of these powers and duties. They cannot enter into any contract or take any action incompatible with the due exercise of their powers or the discharge of their duties.

In that case, the electric supply company had authority to make charges for the supply of electricity as may be agreed, subject to the maxima and restrictions against undue preference; they had made an agreement tying their charges to those made by Southport, an agreement which they then alleged was ultra vires on the ground that it interfered with the exercise of their statutory power to fix charges. This argument was rejected both in the Court of Appeal and House of Lords, both holding that the agreement was not compatible with the public duties of the electric supply company. The speeches in the case show an inclination to confine the principle stated by Lord Birkenhead within reasonable bounds. It seems that, at any rate, in the view of Lord Sumner, the incompatibility, if it was to vitiate the contract, must amount to a ' renunciation of a part of their statutory birthright,' or be contrary to the fundamental objects of the Corporation. In effect, this case does not so much involve a proposition that discretion cannot be fettered but is rather concerned with the ultra vires doctrine that a body entrusted with special powers for public purposes should not be allowed to disable itself from exercising these powers, since to do so is to deny the object for which that body was created. There is no authority for any general proposition that any agreement fettering a discretion is bad; but that the authorities show that, provided a power is given to enter into a contract, it will not be invalidated by the fact that it will in the future hamper a public authority in exercising its discretionary powers, unless the effect is to prevent the authority from carrying out some fundamental public purpose for which it has been created.

9. The power of the Governor under Article 309 of the Constitution to lay down rules for regulating the conditions of service of Government employees or of Government to lay down the conditions of service of teachers in aided schools under Section 12 of the Kerala Education Act is a power vested in them for carrying out a fundamental public purpose, and I think they cannot fetter the exercise of the power by any agreement. I, therefore, hold that there is no substance in the contention that Ex. P. 3, as it embodies the terms of an agreement, would preclude the Governor or Government from reducing the age of retirement of the teachers in Government or aided schools by laying down appropriate rules from time to time.

10. Nor do I think that they are estopped by any representations contained in Ex. P. 3 or P. 4 from exercising the power to change the rules regulating the conditions of service from time to time as occasion arises.

11. In Maritime Electric Company v. General Dairies Ltd. 1937 A.C. 610, the relevant words of the New Brunswick statute, which fell for consideration, were

no public utility shall charge, demand, collect or receive a greater or less compensation for any service than is prescribed....

The Privy Council held that the Maritime Electric Company was not estopped from claiming the balance due to them although the dairy company had paid more to the farmers for their cream than they would have paid had the electricity been properly charged, and that to have admitted the estoppel would have had the effect of repealing the statute in the particular case. In R. v. Blenkinshop (1892) 1 Q.B. 43, it was held that the overseers of a parish who had charged a railway company only one-third of their correct share of the rates could recover the balance in an action for arrears. The Court said that an estoppel could not arise in this case since the rate-payer's liability was not a private debt but a public obligation. The subsequent authorities show that the result is the same in cases where the statute lays down a duty to exercise a discretion. In Southend Corporation v. Hodgson (1962) 1 Q.B. 416, the defendant, a southend builder, received a letter from the borough engineer and surveyor to the effect that certain plot of land had an existing use as a builder's yard. In reliance on this he purchased the land for use In his trade. He pleaded against an enforcement notice from the Corporation that they were estopped from denying that the land had an existing use as a builder's yard by the statement of their borough engineer and surveyor. The Divisional Court held that the estoppel could not be used to prevent the local authority from assuming the obligation under the Town and County Planning Act, 1947, to exercise their discretion with regard to the service of a notice on the owner and occupier of the land. To hold that they were estopped by the borough engineer's letter would effectively prevent them from exercising this discretion.

12. It is generally said that there can be no estoppel against a statute. People cannot avoid their statutory duties in the face of an estoppel as people are never estopped from performing duties; they are only estopped from exercising rights and privileges.

13. In the Privy Council case referred to above, the situation was somewhat confused by the fact that the Maritime Electric Company were exercising a right as well as per-forming a duty in claiming the scheduled charges for the electricity. As against General Dairies they were exercising a right. In so far as the electric company were exercising a right in claiming the balance due from General Dairies the defence of estoppel would be available, but in so far as the claim was a performance of a duty there could be no estoppel because the correlative right of this duty lay in the Province of New Brunswick.

14. So, we come to the crux of the matter, and that is, that there cannot be an estoppel in respect of statutory provisions which are made for the benefit of some one other than the person against whom the estoppel is asserted, and this is not peculiar to statute law. There are provisions in the common law against which there can be no estoppel (see Kok Soong v.Lenng Cheong Mines 1964 A.C. 993 at 1015-1016). The application of the principle of estoppel to a provision depends not upon its origin, statutory or otherwise, but on its nature. Some incapacities arise under common law and it has been held that there can be no estoppel against a person under an incapacity. In all cases where the Courts have excluded the operation of the doctrine of estoppel It will be found that there has either been a strict prohibition against the consequences of the estoppel (as in the incapacity cases) or the person, corporation or authority against whom the estoppel is pleaded has owed a duty to the public or a section of the public, or possibly, occasionally to some other individual, against whom the estoppel cannot fairply operate.

15. To allow a plea of estoppel in these cases would prevent the Governor or the Government from exercising his or its discretionary power under Article 309 of the Constitution or Section 12 of the Kerala Education Act, as the case may be, to regulate from time to time the conditions of service of Government employees or teachers in aided schools. The question of the age of retirement of the teachers in Government and in aided schools is a matter of public importance. It concerns the public much more than the Governor or the Government. By a plea of estoppel, the Governor or the Government cannot be precluded from exercising the power under Article 309 or under Section 12 of the Kerala Education Act, as the power is vested In them for a purpose, In which the public are interested or at any rate in which persons other than the Governor or the Government are interested. Besides, there is also no specific plea as to the nature of the detriment suffered by the petitioners.

16. Raman Nayar J., said in Srinivasan (N.) and Anr. v. State of Kerala 1968-II L.L.J. 233 at 242:.For a time he enjoyed the benefit of the higher age of superannuation, first conferred by a mere executive order and then granted retrospectively by the amended rule. This, it is said, gives rise to an equitable if not to a legal estoppel against lowering the age. But, as we have already observed, this amounts to a plea of estoppel against Article 309 which undoubtedly confers on the Governor the power to change the age of superannuation from time to time. We might also observe that the detriment pleaded by the petitioner seems to be hypothetical rather than actual, and that there was at no time any promise or representation that the age of superannuation which was raised from 55 to 58 would not be lowered again, even if such representation regarding future conduct could found an estoppel.

17. It was next contended for the petitioner in Original Petition No. 1794 of 1968 that the note to Rule 8 of Chap. 27A is categorie that the age of superannuation of all teachers who were in service before 4 September 1967 is 60 and that what Rule 2A of Chap. 14C has done is only to say that service after 55 shall not qualify for pension and gratuity. On the other hand, the learned Government Pleader contended that Rule 2A of Chap. 14C excluded the teachers who opted for Chap. 14C from the purview of the note to Rule 8 in Chap. 27A.

18. Rule 8 in Chap. 27A of the Kerala Education Rules, as it stood on 27 December 1960, provided that the age of retirement shall be 55 years. There was a note to it which said that in the case of those who were in the service of any aided school prior to 4 September 1957, the age of retirement, on superannuation, shall be 60 years, subject to the condition that the service beyond the age of 55 years shall not qualify for pension and gratuity under the rules. This position continued till the notification dated 2 February 1965 which was published in the Gazette dated 23 February 1965. By that notification Chaps. 14C and 27B were added to the Kerala Education Rules. The rules in Chap. 14C applied to teachers of aided schools and who opted under Rule 2 to be governed by these rules and to teachers appointed after 1 October 1964, Rule 2 gives the teachers who were in service on 1 October 1964 the option to continue under the rules in Chap. X1V-B or to come under these rules (i.e., Chap. XXVII-B). As per the notification, dated 2 February 1965, Chap. XXVII (original) was renumbered as Chap. XXVII-A and six rules were added under a new Chap. XXVII-B. As per Rule 2 of the rules, the rules in Chap. XXVIIB will apply to aided school teachers to whom the rules in Chap. XIV-C apply. Rule 8, Chap. XXVII-A, is in the following terms:

The age of retirement on superannuation shall be 55 years:

Note.-In the case of those who were in the service of any aided school prior to 4 September 1965 (and who have not opted for the rules in Chap. XIV-C) the age of retirement on superannuation shall be 60 years, subject to the condition that the service beyond the age of 55 years shall not qualify for pension and gratuity under these rules.

The words in bracket occurring in the note to Rule 8 were inserted by the notification dated 2 February 1965. These words were not there in the note to Rule 8 as it stood on 27 December 1960. The age of retirement of those teachers who have opted for the rules in Chap. XIV-C, is as provided for in the rules of the newly added Chap. XXVII-B, viz., the same as that of the teachers of Government schools.

19. Under Rule 4 of Chap. XXVII-B the date of compulsory retirement on superannuation applicable to teachers in Government schools shall apply to teachers of aided schools. On 14 July 1966 the age of retirement was raised to 58 years by the notification published in the Gazette, dated 19 July 1967, and necessary amendments were effected both in the Kerala Education Rules and the Kerala Service Rules. Rules 1 and 2 of Chap. XIV-C were suitably amended so also Rules 2 and 8 of Chap. XXVII-A. The age of retirement of all Government servants and aided school teachers, whose age of retirement on superannuation under the then existing orders was 58 years, was lowered to 55 years as per G.O. (P.) No. 176/67/Fin., dated 4 May 1967. Amendments to the relevant statutory rules were issued separately, i.e., to the Kerala Education Rules and Kerala Service Rules. Amendments to the Kerala Education Rules were effected as per G.O. (P.) No. 326/Edn., dated 25 July 1967, published in the Kerala Gazette, dated 1 August 1967.

20. Rule 2A in Chap. XIV-C which was newly inserted by the Government order dated 25 July 1967 provides that

teachers who remain under the rules in this chapter (i.e., XIV-C) or who re-opt from the rules under Chap. XIV-B, to the rules in this chapter shall retire at the age of 55.

This removed the necessity for continuing' the words ' who have not opted to Chap. XIV-C... 'in the note to Rule 8 of Chap. XXVII-A. Rules 2 and 4 of Chap. XXVII B as they now stand read along with Rules 2 and 4 of Chap. XIV-C make the position clear that the omission of the words ' who have not opted to Chap. XIV-C... In the note to Rule 8 of Chap. XXVI-A is of no consequence. I overrule the contention.

21. The last ground urged on behalf of the petitioners is that they had a vested right to remain in service until they attained the age of 58 and the Government cannot reduce the age to 55. I do not think that this plea is entitled to any weight as it is open to the Governor to regulate the conditions of service of Government employees and for Government the conditions of service of aided school teachers. Petitioners' counsel referred me to a judgment of the Andhra High Court in Writ Petition No. 3105 of 1967. But I do not think that there are an y observations in that judgment which would help the petitioners in their contention. I do not think that the petitioners had a vested right to remain in service till they attained the age of 60 or 58, or that the vested right cannot be destroyed Fay changing the rules regulating the conditions of service.

22. I dismiss the petitions, but in the circumstances, without any order as to costs.


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