Supreme Court in the case of State of Orissa v Orissa Khadi and Village Industries Board Karmachari Sangh observed “Even when the State has established the Board to carry out its obligations in terms of Article 43 of the Constitution of India, it cannot follow as a corollary that the employees of this body corporate have to be treated as State Government employees in all respects. Such a corollary proposition would practically amount to merging of the Board with the State Government; rather than making it as one of the Departments of the Government.”

The High Court earlier held that the Board’s employees are entitled to a pension at par with the Government employees, which was challenged by the State before the honourable Supreme Court. The respondents also quoted various judgements which held that pension is neither a charity nor a bounty nor a gratuitous payment but, is earned for past services rendered; and that non-availability of financial resources cannot be a defence by the Government or any of its agencies or instrumentalities in taking away vested right accrued to the employees.

A bench comprising Justices Dinesh Maheshwari and PV Sanjay Kumar, further observed that “The service conditions of the Board’s employees are specifically governed by the regulations made in this regard- Orissa Khadi and Village Industries Board Regulations, 1960 (‘Regulations, 1960’).

The Regulations specifically contain the stipulation in Regulation 52 that they shall not be entitled to a pension. Hence, the employees cannot claim a right overriding this regulation.”