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The State of Bihar & Anr. v. Dr. Sachindra Narayan & Ors.

Civil Appeal · 2019 INSC 115Decided 30 Jan 2019
Civil Appeal No. 884 of 2019
Dr. Justice D.Y. Chandrachud · Justice Hemant Gupta

Background

Employees of the Anugraha Narayan Sinha Institute of Social Studies, Patna, a body created by a Bihar state Act, had their pension stopped from January 2014. They went to the Patna High Court, which initially dismissed their plea but then, on intra-court appeal, ordered the State of Bihar to pay the arrears and current pension, reasoning that the State had been including pension amounts in its annual grants to the Institute for years. The State of Bihar appealed to the Supreme Court, arguing it was never legally obligated to fund the Institute's self-created pension scheme.

Decision Breakdown

The Supreme Court held that the Institute's governing Act only required the State to pay a fixed annual maintenance grant and discretionary special-purpose funds: it did not mandate funding recurring pension liabilities. The 1985 Board resolution creating the pension scheme had itself specified it would be run from the Institute's own resources, not state funds. The Court ruled that merely disbursing some grant amounts earmarked for pension in past years, even for decades, did not create a legally enforceable "legitimate expectation," since that doctrine requires a foundation in law, custom, or established right, not just past voluntary practice. The appeal was allowed and the High Court's order directing the State to pay pension was set aside.

Lesson Learnt

A government's past voluntary or discretionary financial support, however long continued, does not by itself create a legal right to that support going forward: "legitimate expectation" as a ground for relief requires a legal or statutory foundation, not merely a pattern of past grants.

Official source (sci.gov.in)View Judgment (PDF)

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