JUDGMENT Tarlok Singh Chauhan, Judge. The petitioner Association by medium of this writ petition has claimed the following substantive reliefs:- “a) Declare notification dated 9th November 2005, Annexure P6, whereby Regulation 66-A has been inserted in Himachal Pradesh Financial Corporation Staff Regulations, 2004 with the sole purpose to defeat the judgment delivered by the Hon’ble High Court of Himachal Pradesh in CWP No.791/1991 and which regulation has been inserted in violation of the Statutory provisions of Section 48 of 1951 Act as arbitrary, illegal an act of colourable exercise of power and hence unconstitutional and quash the same. b) Direct the respondent Corporation to pay to the members of the original applicant Association ex gratia at the rate of 20 percent of pay and DA or two months ten days pay which ever is less from 9.11.2005 onwards.” The facts may first be noticed. 2. Petitioner is an Association of the Officers of the respondent Corporation and is registered and recognized as such by the respondent Corporation. 3. Respondent Corporation is a statutory body and has been constituted/established under the provisions of the State Financial Corporation Act, 1951 (for short the ‘Act’). 4. The respondent was paying to its employees including members of the petitioner Association apart from pay and allowances an ex gratia amount equivalent to 20% of pay and D.A. or equivalent to two months and ten days’ pay whichever was less for every Financial Year from 1st April to 31st March. 5. It appears that the respondent Corporation vide communications dated 15.10.1988, 10.01.1991 and 05.09.1991 stopped the payment of these amounts constraining them to file CWP No.791 of 1991 before this Court claiming therein the following substantive reliefs:- “(ii) that the respondent-corporation be directed to release and disburse the exgratia @ 20% of pay and DP or equivalent to 2 months and 10 days pay subject to 20% of pay and DA as in the previous years to its employees for the years 1989-90 and 1990-91 and also to continue to make payment at the usual rates in the coming years as well without seeking any approval from the State Government; (iii) That the letters and the communications as contained in Annexures P-5, P-9, P-10, P-12, P-14,P-15 and P-19 be quashed as violative of the Constitution of India and the provisions of the State Financial Corporations Act, 1951;” 6. The learned Division Bench of this Court vide judgment dated 11th December, 1992 allowed the petition in the following terms:- “The result of the aforesaid discussion, therefore, is that the present writ petition succeeds and is allowed. The respondents are directed to make exgratia payments to the petitioners regularly at the rate of 20% of pay and DA or two months 10 days’ pay, which-ever is less, and the directions to the contrary issued on the subject by the respondents are hereby quashed.” 7. The judgment passed by this Court was assailed by the State of H.P. as also the respondent Corporation by way of SLP Nos.13292/93 and 7789/93. These SLPs were dismissed by the Hon’ble Supreme Court vide its judgment dated 19.10.1995 by holding that the findings of the High Court that ex gratia payment had become a condition of service cannot be said to be unsustainable. 8. Members of the petitioner Association continued to receive the ex gratia payment every year until a notification was issued by the respondent dated 09.11.2005 which was published in the gazette on 12.11.2005 whereby regulation 66A was introduced which reads as under:- “66A Good Performance Reward The Board of Directors of the Corporation may sanction Good Performance Reward in the form of ex gratia payment in favour of all the regular employees of the Corporation including the Managing Director, for the proceeding accounting year, at such rate as may be considered appropriate depending upon the working results/liquidity position of the Corporation during the relevant accounting year. No employee shall be entitled for the ex gratia unless the Corporation earns a net profit in the relevant accounting year and unless approved by the Board of Directors as heretofore.” 9. The net result of the introduction of the aforesai d regulation was that henceforth the payment of ex gratia was made dependent on the respondent earning a net profit with a further rider that the same would also require an approval by the Board of Directors of the respondent Corporation. Even the rate at which the ex gratia was to be paid had now been left to the discretion of the Cor poration on yearly basis. 10. Even the rate at which the ex gratia was to be paid had now been left to the discretion of the Cor poration on yearly basis. 10. Aggrieved by the action of the respondent, the petitioners have filed this petition on the ground that the introduction and insertion of regulation 66A is in violation of the statutory provisions contained in Section 48 of the Act. The impugned regulation has been introduced to circumvent and set at naught the judgment passed by this Court in CWP No.791 of 1991 as affirmed by the Hon’ble Supreme Court in SLP Nos.13292/93 and 7789/93 and that the impugned regulation gives unfettered powers and discretion to the authorities in the matter regarding payment of ex gratia to its employees and is, therefore, arbitrary and unconstitutional being violative of Article 14 of the Constitution of India. Lastly, it was contended that even if it is assumed that regulation 66A is valid, even then it could have only been applied prospectively to those employees, who joined service after coming into force of the said regulation and not to the employees, who are already in service of the respondent. 11. The respondent Corporation in their reply has raised certain preliminary objections like the Association having no legal enforceable right against the respondent and the petition being barred by delay and laches. The factual aspects of the matter have not been denied. However, the justification for introducing regulation 66A has been set out in para-12 of the reply wherein it is stated that the respondent had been incurring losses continuously from the year 1998-99 when it incurred a loss of 218.78 lacs and the cumulative losses upto 31.03.2006 have now swelled to 8959.22 lacs (with provisioning of `5947.56 lacs in accordance with the RBI guidelines). Despite such huge losses, the respondent still continued releasing ex gratia payment. 12. During the Financial Year 2003-04, the Small Industries Development Bank of India (for short ‘SIDBI’) from whom the respondent borrows money had infact prepared a revival package for the State Financial Corporation subject to signing of Memorandum of Understanding (for short ‘MOU’) by the concerned State Financial Corporation and the State Government with ‘SIDBI’ incorporating the undertaking to initiate various measures for improving the working of the Corporation. 13. In order to avail the said package, the respondent also took up the matter with the ‘SIDBI’. 13. In order to avail the said package, the respondent also took up the matter with the ‘SIDBI’. The terms and conditions of the ‘MOU’ required to be signed by the respondent for availing of the said revitalization package had stipulated conditions like reduction in establishment cost/expenditure to the extent of 10% of income in a phased manner, improvement in quality of loan portfolio, reduction of non-performing assets etc. On 25.06.2004, the respondent, the State Government and ‘SIDBI’ finally signed the ‘MOU’. 14. The respondent in furtherance of the ‘MOU’ closed two of its branch Offices at Mehatpur and Barmana and also introduced Voluntary Retirement Scheme for its employees and also encouraged its employees to go on deputation and get absorbed in other Government Departments/Organizations as a measure to cut down the administrative and establishment costs. But, despite these measures the Corporation was not even close to the target stipulated in the ‘MOU’. 15. The matter regarding payment of ex gratia was also considered by the Board of Directors of the respondent in its meeting dated 13.12.2004 and the Board observed that in view of the ‘MOU’, it was imperative for the respondent to reduce its administrative costs and release of ex gratia payment of the employees would adversely affect the liquidity position of the Corporation making its recuperation and improvement very difficult. However, since the ex gratia was being paid as per the orders passed by this Court in CWP No.791 of 1991, the Board desired that further action be taken only after obtaining legal advice. 16. The Board of Directors again considered the matter for payment of ex gratia in its meeting on 01.03.2005 and on the basis of legal advice, the Board approved the proposal for insertion of regulation 66A and resolved that the proposal for insertion of this regulation be sent to the State Government and ‘SIDBI’ for approval under Section 48 of the Act. ‘SIDBI’ in response to the proposal informed the respondent Corporation vide their letter dated 13.04.2005 that in terms of the provisions of Section 48(1) of the Act, it was only required to be consulted for making regulations and no ‘approval’ was required in the matter. It further advised that the respondent may with the sanction of the State Government take a view in the matter as it may deem fit in the interest of the Corporation. 17. It further advised that the respondent may with the sanction of the State Government take a view in the matter as it may deem fit in the interest of the Corporation. 17. The State Government vide its letter dated 22.07.2005 accorded its approval for the insertion of the regulation 66A and thereafter the necessary notification for enforcing the provisions was issued by the respondent and published as aforesaid. 18. The respondent Corporation has sought to justify action by claiming that the impugned regulation has been inserted after complying with the provisions of Section 48 of the Act and it therefore in no manner amounts to circumventing or setting at naught the judgment passed by this Court in CWP No.791 of 1991 as affirmed by the Hon’ble Supreme Court. It is also claimed that the Corporation had not discontinued the payment of ex gratia to its employees in future but the same had been made dependent upon the working results and profitability of the Corporation and lastly that the respondent Corporation is well within its rights to make applicable the provisions of the impugned regulation to the employees, who are already on its rolls and the same cannot be termed to be illegal or arbitrary. We have heard the learned counsel for the parties and have gone through the records. 19. From the stand taken by the respondent which has not been disputed even by the petitioner, there is an indication that the respondent’s financial condition is not conducive for purposes of releasing the payment of ex gratia and, therefore, impugned regulation was introduced. This aspect cannot be ignored because respondent has specifically and categorically stated and referred to the financial crunch of the Corporation without specifically denying the entitlement of the petitioner, however, making the same conditional in terms of the impugned regulation. 20. In the backdrop of the aforesaid facts, one of the questions, therefore, falls for our consideration is as to whether the respondent Corporation which is limping under financial stress and strain can nevertheless be whipped by a judicial order to go on paying the ex gratia as before. Similar question fell for consideration before the Hon’ble Supreme Court in Officers & Supervisors of I.D.P.L. versus Chairman & M.D., I.D.P.L and others (2003) 6 SCC 490 wherein the Hon’ble Supreme Court after taking into consideration the earlier judgments on the subject held as under:- “7. Similar question fell for consideration before the Hon’ble Supreme Court in Officers & Supervisors of I.D.P.L. versus Chairman & M.D., I.D.P.L and others (2003) 6 SCC 490 wherein the Hon’ble Supreme Court after taking into consideration the earlier judgments on the subject held as under:- “7. In the above background, the question, which arises for consideration, is whether the employees of public sector enterprises have any legal right to claim revision of wages that though the industrial undertakings or the companies in which they are working did not have the financial capacity to grant revision is pay-scale, yet the Government should give financial support to meet the additional expenditure incurred in that regard. 8. We have carefully gone through the pleadings, the Annexures filed by both sides and the orders passed by the BIFR and the judgments cited by the counsel appearing on either side. Learned counsel for the contesting respondent drew our attention to a recent judgment of this Court in A.K. Bindal and Anr. v. Union of India (2003) 5 SCC 163 in support of her contention. We have perused the said judgment. In our opinion, since the employees of government companies are not government servants, they have absolutely no legal right to claim that the Government should pay their salary or that the additional expenditure incurred on account of revision of their pay-scales should be met by the Government, Being employees of the companies, it is the responsibility of the companies to pay them salary and if the company is sustaining losses continuously over a period and does not have the financial capacity to revise or enhance the pay-scale, the petitioners, in our view, cannot claim any legal right to ask for a direction to the Central Government to meet the additional expenditure which may be incurred on account of revision of pay-scales. We are unable to countenance the submission made by Mr. Sanghi that economic viability of the industrial unit or the financial capacity of the employer cannot be taken into consideration in the matter of revision of pay-scales of the employees. 9. A Constitution Bench of this Court had examined the questions of revision of wages of workmen in Express Newspaper (P) Ltd. v. Union of India AIR 1958 SC 578 . 9. A Constitution Bench of this Court had examined the questions of revision of wages of workmen in Express Newspaper (P) Ltd. v. Union of India AIR 1958 SC 578 . This Court land down the following principles for fixation of rates of wages : (AIR p.605 para 73) “(1) that in the fixation of rates of wages which include within its compass the fixation of scales of wages also, the capacity of the industry to pay is one of the essential circumstances to be taken into consideration except in cases of bare subsistence or minimum wage where the employer is bound to pay the same irrespective of such capacity. (2) that the capacity of the industry to pay is to be considered on an industry-cum-region basis after taking a fair cross section of the industry, and (3) that the proper measure for gauging the capacity of the industry to pay should take into account the elasticity of demand for the product the possibility of tightening up the organization so that the industry could pay higher wages without difficulty and the possibility of increase in the efficiency of the lowest-paid workers resulting in increase in production considered in conjunction with the elasticity of demand for the product-no doubt against the ultimate background that the burden of the increased rate should not be such as to drive the employer out of business.” 10. The same question was again examined in Hindustan Times Ltd v. Workmen, AIR 1963 SC 1332 and this Court gave the following reasons: (AIR p. 1336, para 7) “7. While industrial adjudication will be happy to fix a wage structure which would give the workmen generally a living wage, economic considerations make that only dream for the future. That is why the Industrial Tribunals in this country generally confine their horizon to the target of fixing a fair wage. But there again, the economic factors have to be carefully considered. For these reasons, this Court has repeatedly emphasized the need of considering the problem on an industry-cum-region basis and of giving careful consideration to the ability of the industry to pay.” 11. In our view, the economic capability of the employers also plays a crucial part in it, as also its capacity to expand business or earn more profits. The contention of Mr. In our view, the economic capability of the employers also plays a crucial part in it, as also its capacity to expand business or earn more profits. The contention of Mr. Sanghi, if accepted that granting higher remuneration and emoluments and revision of pay to workers in the other governmental undertakings and, therefore, the petitioners are also entitled to the grant of pay revision may, in our opinion, only lead to undesirable results. Enough material was placed on record before us by the respondents which clearly show that the first respondent had been suffering heavy losses for the last many years. In such a situation the petitioners, in our opinion, cannot legitimately claim that their pay-scales should necessarily be revised and enhanced even though the organization in which they are working are making continuous losses and are deeply in the red. As could be seen from the counter affidavit, the first respondent company which is engaged in the manufacture of medicines became sick industrial company for various reasons and was declared as such by the BIFP. and the revival package which was formulated and later approved by the BIFR for implementation could not also be given effect to and that the modifications recommended by the Government of India to the BIFR in the existing revival package was ordered to be examined by an operating agency and, in fact, IDBI was appointed as an operating agency under Section 17(3) of SICA. It is also not in dispute that the production activities had to be stopped in the two major units of the company at Rishikesh and Hyderabad w.e.f. October, 1996 and the losses and liabilities are increasing every month and that the payment of three instalment of interim relief could not also be made due to the threat of industrial unrest and the wage revision in respect of other employees is also due w.e.f. 1992 which has also not been sanctioned by the Government of India. 16. We have already referred to the judgment of this Court in A.K. Bindal (supra) in which this Court had decided that the employees under public sector enterprises cannot be treated as Central Government employees and if the company does not have enough funds no way the revision can be given. 17. 16. We have already referred to the judgment of this Court in A.K. Bindal (supra) in which this Court had decided that the employees under public sector enterprises cannot be treated as Central Government employees and if the company does not have enough funds no way the revision can be given. 17. In A.K. Bindal (supra) this Court specifically held that the economic viability or the financial capacity of the employer is an important factor which cannot be ignored while fixing the wage structure otherwise the unit itself may not be able to function and may have to close down which will inevitably have disastrous consequences for the employees themselves. The Court also negatived other contentions raised by the employees and referred to and relied upon the fact that the company was a sick unit. Facts in the present case are similar. 18. Further directions issued in Jute Corpn. of India Officers’ Assn. v. Jute Corpn. Of India Ltd., (1990) 3 SCC 436 would have no bearing in the present case as the Scheme under the SICA has failed to revive the Company. When the Company cannot be revived because of large losses, there is no question of enhancing scales of pay and dearness allowances. Direction (ii) issued in that case indicates that the employees appointed on or after 1-1-1989 will be governed by such pay scales and allowances as may be decided by the Government in its discretion. If the company itself is dying, the government has discretion not to grant enhanced pay scales or deamess allowances and for the same reason Direction (i) cannot be implemented.” 21. A perusal of the aforesaid judgment would clearly show that the economic capacity of the employer is also a relevant yardstick while adjudicating the claims of the present kind. Even otherwise, it is the respondent, who is the best authority to decide regarding payment of ex gratia and this Court will not interfere so long as the decision is not unconstitutional, arbitrary, unreasonable or otherwise illegal. 22. It cannot be disputed that the regulation framed in exercise of powers conferred under Section 48 of the 1951 Act is statutory in nature and, therefore, binding not only upon the Corporation, but also on its employees with equal force. It was on account of the continuous financial losses that the respondent was constrained to introduce the impugned regulation. 22. It cannot be disputed that the regulation framed in exercise of powers conferred under Section 48 of the 1951 Act is statutory in nature and, therefore, binding not only upon the Corporation, but also on its employees with equal force. It was on account of the continuous financial losses that the respondent was constrained to introduce the impugned regulation. Therefore, in such circumstances, the Corporation itself required financial restructuring and several measures were indeed taken towards the same. 23. Indisputably, it was on account of the conditions set-forth by the ‘SIDBI’ that reduction in establishment cost/expenditure to the extent of 10% of income in a phased manner had to be adopted by the Corporation. Admittedly, the respondent in furtherance of the ‘MOU’ closed two of its branch Offices at Mehatpur and Barmana and even introduced Voluntary Retirement Scheme for its employees and at the same time had encouraged them to go on deputation and get absorbed in other Government Departments/Organizations as a measure to cut down the administrative and establishment cost. It can also not be disputed that the decision taken to reduce the staff strength or steps taken to reduce the establishment cost are actions taken in public interest. 24. It is further indisputable that the Corporation is a statutory Corporation, a State within the meaning of Article 12 of the Constitution of India, well-funded by the public funds. The loss incurred by the Corporation is loss to the public fund. The expenses incurred by the Corporation are also funded by the public exchequer, therefore, any action taken to save pubic fund or public exchequer would definitely be a step taken in public interest. 25. The next question which arises for consideration is as to whether the notification introducing regulation 66A has been inserted solely for the purpose to defeat the judgment delivered by this Court in CWP No.791 of 1991 which in turn has been affirmed by the Hon’ble Supreme Court. We do not feel so. Once the action of the respondent is in public interest and is further supported by relevant record showing that it had suffered a loss of `218.78 lacs in 1998-99 and the cumulative losses upto 31.03.2006 have now swelled to `8959.22 lacs (with provisioning of `5947.56 lacs in accordance with the RBI guidelines), it cannot be said that the impugned regulation only seeks to defeat the earlier judgment rendered by this Court. Indisputably, the financial implication is a valid consideration and the capacity or otherwise of the employees to absorb, the financial burden cannot be ignored. (Refer: All India Reserve Bank Retired Officers Association and others versus Union of India and others AIR 1992 SC 767 , Delhi Development Horticulture Employees’ Union versus Delhi Administration, Delhi and others AIR 1992 SC 789 ). 26. Now the mere fact that the ex gratia payment has been made dependent on the working results and the profitability of the Corporation cannot be in any manner termed to be arbitrary, unreasonable or even illegal. After-all, the financial constraints which are beyond the means of the Corporation is a valid reason for making the scheme of releasing the ex gratia subjective. Even otherwise, while considering the question of implication of any scheme, it is not possible to dissociate the question from financial solvency and the capacity of the employer to bear financial burden pursuant to any such scheme. 27. The matter can be looked at from a different angle. The question relating to the Constitution, pattern, nomenclature of posts, cadres, categories their creation/abolition, prescription of qualifications and other conditions of service including avenues of promotion etc. pertained to the field of policy and within the exclusive discretion and jurisdiction of the employer subject, of course, to the limitations or restrictions envisaged in the Constitution of India. There is no right in any employee to claim that the rules governing conditions of service should be forever the same as the one when he entered service for all purposes. In taking this view, we are supported by the judgment of the Hon’ble Supreme Court in P.U. Joshi and others versus Accountant General, Ahmedabad and others (2003) 2 SCC 632 wherein it has been held as under:- “10. We have carefully considered the sub-missions made on behalf of both parties. In taking this view, we are supported by the judgment of the Hon’ble Supreme Court in P.U. Joshi and others versus Accountant General, Ahmedabad and others (2003) 2 SCC 632 wherein it has been held as under:- “10. We have carefully considered the sub-missions made on behalf of both parties. Questions relating to the constitution, pattern, nomenclature of posts, cadres, categories, their creation/abolition, prescription of qualifications and other conditions of service including avenues of promotions and criteria to be fulfilled for such promotions pertain to the field of Policy is within the exclusive discretion and jurisdiction of the State, subject, of course, to the limitations or restrictions envisaged in the Constitution of India and it is not for the Statutory Tribunals, at any rate, to direct the Government to have a particular method of recruitment or eligibility criteria or avenues of promotion or impose itself by substituting its views for that of the State. Similarly, it is well open and within the competency of the State to change the rules relating to a service and alter or amend and vary by addition/substraction the qualifications, eligibility criteria and other conditions of service including avenues of promotion, from time to time, as the administrative exigencies may need or necessitate. Likewise, the State by appropriate rules is entitled to amalgamate departments or bifurcate departments into more and constitute different categories of posts or cadres by undertaking further classification, bifurcation or amalgamation as well as reconstitute and restructure the pattern and cadres/categories of service, as may be required from time to time by abolishing the existing cadres/posts and creating new cadres/posts. There is no right in any employee of the State to claim that rules governing conditions of his service should be forever the same as the one when he entered service for all purposes and except for ensuring or safeguarding rights or benefits already earned, acquired or accrued at a particular point of time, a Government servant has no right to challenge the authority of the State to amend, alter and bring into force new rules relating to even an existing service.” 28. It may be noticed that the decision to grant ex gratia was not a policy decision but an administrative action. This was so held even by this Court while adjudicating CWP No.791 of 1991. It may be noticed that the decision to grant ex gratia was not a policy decision but an administrative action. This was so held even by this Court while adjudicating CWP No.791 of 1991. That being so, then it was always open for the respondent to change its decision from time to time under the changing circumstances which cannot be questioned. It is not within the domain of the Court to weigh the pros and cons of administrative decision, or scrutinize it, except where the same is arbitrary or violative of any constitutional or statutory or any other provisions of law. 29. The petitioner would then argue that prior to introduction of the impugned regulation there was no effective consultation by the respondent with ‘SIDBI’. We are afraid that even this submission of the petitioner cannot be accepted because there is no material placed on record by the petitioner whereby it can be inferred that there has been no effective consultation before introducing the impugned regulation. Afterall, consultation is nothing but a process which requires meeting of minds between the parties involved to evolve a correct or atleast a satisfactory solution. 30. It is not in dispute that it was ‘SIDBI’ which prepared the revival package for the respondent subject to its signing a tripartite Memorandum of Understanding (MOU) wherein apart from ‘SIDBI’ and the Corporation, even the State Government would be a party. It is also not disputed that the ‘MOU’ was duly signed by the parties and in the terms and conditions incorporated therein, the respondent for availing revival package was required to reduce its establishment cost/expenditure to the extent of 10% of income in a phased manner, improve the quality of loan portfolio, reduc tion of non-performing assets etc. Therefore, in the given circumstances, it cannot be said that there was no effective consultation prior to introduction of the impugned regulation. 31. Lastly, it is forcefully argued by learned counsel for the petitioner that if at all the validity of the regulation is to be upheld, the same should be made prospective and should not be made applicable to employees, who are in the service of the Corporation. 32. This submission is equally meritless because there is no provision whereby the regulation can only be made applicable to a selective section of the employees or else the same will be discriminatory. 32. This submission is equally meritless because there is no provision whereby the regulation can only be made applicable to a selective section of the employees or else the same will be discriminatory. It is in administrative exigencies that the earlier decision has been altered and the same cannot be dubbed to be arbitrary unless it is shown to be capricious and whimsical. After all, the Courts have always recognized the absolute administrative right of the employer to change, alter or modify the rules of service if the justice of the matter so requires. 33. In view of the aforesaid discussion, we find no merit in this petition and the same is accordingly dismissed leaving the parties to bear their own costs. Pending application (s), if any, also stands disposed of.